Filed under: Ripoffs and Scams, Transportation, Travel

Smack in the middle of the American Airlines fiasco I read an article in Business Week about the outsourcing of our airline plane maintenance. It quotes the U.S. Dept. of Transportation’s report that two-thirds of all maintenance on our country’s commercial airline fleet is done outside the U.S.

At airports in San Salvador, China, Singapore and Dubai, shops are opening to provide airliner services at a fraction of the cost of home service. In San Salvador, for example, an experienced mechanic takes around $5,000 vs. $50,000 in the United States.

The FAA oversees these 700 shops for quality, but critics (including the U.S. mechanics’ unions) question the efficacy of the Adminstration’s vetting. Another thorn in the process is the lack of drug and alcohol testing at some of these foreign shops, a stipulation that’s included in a new bill working its way through Congress.

Frankly, I have to wonder at the wisdom of outsourcing our plane maintenance to shops with questionable security at the same time Americans are being strip searched before they have the ability to board those planes. This seems like another example of exceeding common sense in our quest for the lowest price.

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Filed under: Engagements, Private equity industry, Investments

Dubai International Capital and Chinese private equity First Eastern Investment Group have announced a new joint fund, China Dubai Capital.

The fund will focus on China’s growing economy in sectors such as infrastructure, health care, and resources and will attempt to capitalize on the growing ties between the UAE and China. Companies with strong growth possibilities and the potential to eventually trade on Dubai national securities markets will be primary recipients of the fund. The first closing of the fund will tag at least $500 million and will close this May. By the final closing expected in October, the fund is expected to reach $1 billion.

First Eastern currently manages over $1.5 billion for direct Chinese investments and is the first Chinese financial company to be established in the Dubai International Financial Center. Dubai International Capital manages Jordan Dubai Capital, a $300 million fund, and plans to launch a fund focused on Saudi Arabia.

$100 per barrel oil is increasing the face amounts of funds being committed. As high oil prices remain, expect more and more from Middle Eastern private equity and sovereign wealth funds to buy up infrastructure projects. That’s the new world.
If you think this is a massive deal for private equity or sovereign wealth funds, check out the Dubai $54 billion proposed eco-project.

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