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Mon 6 Dec 2010 04:13 PM

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A UAE, Canadian resolution must be found

Relations between the two countries have deterioratered ever since the Canadian government refused UAE carriers extra landing rights.

A UAE, Canadian resolution must be found

It seems the Canadian government’s reluctance to offer Etihad Airways and Emirates Airlines additional landing slots at the country’s airports is starting to take its toll on relations between the two countries.

Despite repeated requests to increase their flights from three times a week to daily, both airlines were refused in October after the Canadian government remarked that the market between the two countries was “not underserved” by the two carriers.

Relations between the two countries have been deteriorating ever since. On October 11, the UAE refused to renew Canada’s lease on a Dubai airbase that had been used to ferry troops and supplies to Afghanistan. The decision was said to have cost Canada’s military $300m. The same weekend a Canadian newspaper reported that the Gulf state had denied permission for its defence minister, Peter MacKay, to land at the Al Minhad base. They also reportedly refused him permission to fly through its airspace.

Weeks later the UAE announced a new set of visa regulations which means Canadian visitors will have to apply for visas from January 2, 2011, in order to enter the country. “In 2009 the UAE made a decision to pursue visa reciprocity with many countries, including Canada, that did not offer UAE citizens visa-free access,” Jacques Labrie, Foreign Affairs Department spokesman, told Canada’s The Star newspaper.

The UAE is one of Canada’s largest trading partners in the Middle East and North Africa. Bilateral trade between the two countries is around $1.5bn and around 27,000 Canadians are currently resident in the UAE. But how long this relationship will continue is anyone’s guess.

While the introduction of a visa is unlikely to severely impact tourism between the two countries this tit for tat row could seriously affect Canadian businesses operating in the Gulf as well as risk the billions of dollars of trade the two countries currently enjoy. Both governments must come to some understanding before the Canadian business community in the Gulf starts paying the price for their government’s poor handling of the situation.

Spending during a downturn does have its benefits

We’ve dubbed this month’s issue of CEO Middle East, the luxury issue. In addition to our cover star, Patrick Chalhoub, the CEO of the Chalhoub Group, we’ve got interviews with the new CEO of Rolls-Royce and the chief executive of Vertu, Nokia’s luxury phone subsidiary.

People often think that the luxury sector is the first to suffer during a recession but that’s not always the case, as our CEOs tell us this month. Sure, the industry didn’t walk away completely unscathed by the global downturn — Bain & Company said global luxury sales declined 10 percent in 2009 compared to the previous year — but it certainly fared better than many.

Those that can afford to splash out over $250,000 on a Rolls-Royce during the boom years can still afford to do so during the tougher times. But don’t be fooled, this type of spending isn’t done on a whim and customers still expect the same level of service they have become accustomed. This is why the Chalhoub Group decided to spend $30m on restructuring its entire organisation at a time when most companies were looking at ways to cut back. Service, quality and choice are all what are important to the group’s customers and you can’t do that with reduced staff and little marketing exercises.

It was a big risk and even Chalhoub admits he had his doubts when he first announced his plans. But the move is already starting to reap the benefits of this injection of cash. This year the firm has opened 50 new retail outlets and expects to see its business grow 8-12 percent in 2011. Chalhoub’s multimillion dollar decision will certainly make CEOs think twice before they make rash decisions and downsize too quickly.

Claire Ferris-Lay is the deputy editor of CEO Middle East.

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Xmas 9 years ago

“While the introduction of a visa is unlikely to severely impact tourism between the two countries”
Claire, what made you think that the VISA rule will not impact tourism between the two countries!!? I am a Canadian that use to travel through the UAE every year on my way to India and spend a week or two in Dubai, and I can tell you with certainty that if the VISA rule stands, I will not go through the UAE, I will look for another alternative such as Qatar or may be go direct to India without making a stop anywhere.

Rahul Gurg 9 years ago

I think the same. I work for a Canadian company and look after MENA market. I used to make Dubai and later Abu Dhabi (due to poor service from Emirates and introduction on A380 takes forever to board) hub for my Middle East travel. I used to use UAE based airline to do my Middle East travel but now it seems due to visa problem, I will fly with Qatar airways and make Doha my hub. It makes perfect sense especially when Qatar is going to spend 100 b in next 5 years on infrastructure projects.

Sen 9 years ago

The canadian government seems inclined to apply the recipe of an ancient age to forge bilateral relations with a boomingly modern country like the UAE. The basics of reciprocity in bilateral relations are ignored and they still expect favors in return from the UAE. Canada cannot have its cake and eat it at the same time. Make no mistake, with or without Canada, the UAE will continue to flourish.