What Does Your Airfare Actually Buy?

American Airlines introduced a fee for a passenger’s first checked bag in 2008. Fees have proliferated for flyers since.

Credit Robert Nickelsberg/Getty Images
American Airlines introduced a fee for a passenger’s first checked bag in 2008. Fees have proliferated for flyers since. Credit Robert Nickelsberg/Getty Images
TT

What Does Your Airfare Actually Buy?

American Airlines introduced a fee for a passenger’s first checked bag in 2008. Fees have proliferated for flyers since.

Credit Robert Nickelsberg/Getty Images
American Airlines introduced a fee for a passenger’s first checked bag in 2008. Fees have proliferated for flyers since. Credit Robert Nickelsberg/Getty Images

It’s not enough to look for the cheapest airfare anymore.

Not when airlines are increasingly dividing and subdividing their cabins and charging separately for what used to be part of the fare. More legroom? That will be an extra charge. Overhead bin space? Only if you buy a more expensive ticket.

In the new world of airfares, similar-sounding fare classes like “economy” and “basic economy” can mask big differences in the level of service being offered. Complicating matters further, booking websites often do a poor job of explaining what travelers are actually getting for the listed price.

“You need a supercomputer sometimes to figure out what you are getting and what you are not getting,” said Henry Harteveldt, a travel industry analyst at Atmosphere Research Group. “Just to add confusion to the mix, obviously not every airline’s lowest fare includes or excludes the same things.”

With a basic economy ticket on American Airlines, Delta Air Lines and United Airlines, travelers can’t select a seat in advance. But on Delta, basic economy passengers are still permitted to use the overhead bins if there is available space. On American and United, those overhead compartments are off limits to those who purchase the lowest fares — unless the passenger is an elite member of the airlines’ reward programs.

“You have to do more research than ever,” said Paul Hudson, the president of FlyersRights.org, a consumer advocacy group. “Even if you think you know your way around this, things are changing to the point that you have to constantly review what’s best for you.”

Continue reading the main story
RELATED COVERAGE

THE GETAWAY
Those Pesky Airline Fees and How to Avoid Them MARCH 27, 2017

UPDATE
Trump’s Moves on Airline Fees Prompt Transparency Questions MARCH 28, 2017

How Low-Cost Airlines Alter the Economics of Flying SEPT. 1, 2017
ADVERTISEMENT

Continue reading the main story

Not that long ago, airline tickets were much more self-explanatory. There were just two or three “classes” of seats, and even the coach fare came with decent legroom and allowed at least one checked bag. For no extra charge, a lucky traveler might wind up with some extra legroom in an exit or bulkhead row.

That started to change in 2008, when American Airlines introduced a fee for a passenger’s first checked bag. Since then, the whole industry has introduced more and higher fees each year, charging for priority boarding, Wi-Fi, onboard entertainment and even selecting a seat in advance. The Trump administration recently rejected a rule that would have compelled airlines to alert passengers to baggage fees earlier and more prominently in the booking process.

All those fees have played a big role in helping airlines return to profitability after years of losses and bankruptcies. The airlines have also benefited from lower fuel costs over the past decade and less competition on most routes.

Revenue from fees and other payments is “growing every year because it works,” said Jay Sorensen, the president of IdeaWorksCompany, a consulting firm that focuses on the airline industry.

According to a report his company released this fall, the airlines made more than $82 billion in ancillary revenue — fees from passengers and other payments from partners like credit card companies and hotels — in 2017. That is about $46 billion more than five years ago. The report, sponsored by CarTrawler, a company that provides car rental recommendations on many airlines’ websites, used data released by 66 airlines last year to extrapolate the likely ancillary revenue of 184 carriers worldwide. The majority of the reported revenue came from à la carte service fees.

“Airlines that make good profits are better airlines,” Mr. Sorensen said in a phone interview between connecting flights. “We came through the ’80s where the airlines were threadbare. I’m in Minneapolis right now in a gate area where there are new carpets, all the seats work and there’s lots of information available on flat screens.”

Alison McAfee, a spokeswoman for Airlines for America, an industry trade group, defended the new fare and fee structure as a good thing for everyone. “The concept of unbundling fares has enabled carriers to keep base fares low, while providing customers with more choice about what they value and are willing to pay for to meet their individual needs, at price points that work for their budgets,” she said in an email.

Many travelers are especially concerned with the initial cost of their ticket. “They will spend hours, sometimes as much as several days, shopping for flights where the airfare fits their budget,” Mr. Harteveldt said. However, once they buy the cheapest ticket, many travelers go on to purchase small upgrades that improve the quality of their trip.

“While they’ll certainly shop to find that base airfare, they’ll turn around and spend some of that money they saved on amenities to have a more pleasant trip, whether that’s a seat with more legroom or lounge access or whatever else,” Mr. Harteveldt said.

He also pointed out that booking megasites like Kayak and Orbitz usually emphasize low prices above all, but do a poor job of explaining what is excluded from basic economy fares. Often, he said, such sites do not detail the benefits of buying a slightly more expensive standard economy ticket — if the option to do so is listed at all. Mr. Hudson, the consumer advocate, said that many times, travelers are best off visiting individual airline websites to see the full array of options available to them.

As the airlines continue to further unbundle their fares, Mr. Harteveldt said, customers may have to change the way they consider ticket purchases. “It helps to think about shifting your minds from buying fares to buying products,” he said. “Nose to tail, it’s just a matter of time before everything on the airplane becomes an à la carte experience.”

Carriers have also been using years of data on passenger preferences and behaviors to determine which amenities can be mined for moneymaking fees.

“Airlines have perfect information on this because every time someone assigns themselves a seat, they know about it,” Mr. Sorensen said. “They can go in and capture that data and learn when this happened and which seats go first.”

He compared choosing — and possibly paying extra for — a particular seat to buying real estate. “A lakefront cabin with a beach is worth more,” he said

Business travelers can often opt for that higher priced ticket. Corporate policies vary, but many companies allow their employees to buy regular economy fares rather than basic tickets, Mr. Harteveldt said.

He suggested that leisure travelers consider more than just the official price tag. Booking a ticket or flying an airline that prevents you from selecting a seat in advance, for example, can mean getting separated from your family on the plane.

Some may find a more expensive ticket with fewer restrictions worth the extra cost “if they’re traveling with children or a trip where there’s a lot of emotional pressure on them — a family vacation or something,” Mr. Harteveldt said. “The last thing you want to do is have your vacation ruined.”

The New York Times



UAE, Kenya Seal Comprehensive Economic Partnership Deal

A UAE flag flies over a boat at Dubai Marina, Dubai, United Arab Emirates May 22, 2015. (Reuters)
A UAE flag flies over a boat at Dubai Marina, Dubai, United Arab Emirates May 22, 2015. (Reuters)
TT

UAE, Kenya Seal Comprehensive Economic Partnership Deal

A UAE flag flies over a boat at Dubai Marina, Dubai, United Arab Emirates May 22, 2015. (Reuters)
A UAE flag flies over a boat at Dubai Marina, Dubai, United Arab Emirates May 22, 2015. (Reuters)

The United Arab Emirates and Kenya have concluded a comprehensive economic partnership agreement (CEPA), UAE Minister of Foreign Trade Thani Al Zeyoudi said on Friday.

"We will now look to expand across sectors from food production and mining to technology and logistics," he said of the agreement.

UAE state news agency WAM quoted Kenya's trade minister Rebecca Miano as saying the deal would play an important role in enabling Kenyan exports to reach important markets in Asia and the Middle East and "in stimulating investment inflows that will further develop our national capabilities".

The CEPA will have significant positive impact on accelerating investment flows in high potential areas such as logistics, healthcare, travel and tourism, infrastructure, and ICT, and will offer a platform for SME cooperation and expansion on both sides, WAM said.


Saudi Companies Outline Challenges in Facilitating Flow of Goods with GCC Countries

The Federation of Gulf Cooperation Council Chambers (FGCCC) aims to ensure the smooth flow of goods within member states. (Asharq Al-Awsat)
The Federation of Gulf Cooperation Council Chambers (FGCCC) aims to ensure the smooth flow of goods within member states. (Asharq Al-Awsat)
TT

Saudi Companies Outline Challenges in Facilitating Flow of Goods with GCC Countries

The Federation of Gulf Cooperation Council Chambers (FGCCC) aims to ensure the smooth flow of goods within member states. (Asharq Al-Awsat)
The Federation of Gulf Cooperation Council Chambers (FGCCC) aims to ensure the smooth flow of goods within member states. (Asharq Al-Awsat)

The Federation of Gulf Cooperation Council Chambers (FGCCC) is collecting proposals from member states on the technical challenges and non-tariff obstacles that hinder the agreement on the requirements for certificates of conformity and quality.

Sources told Asharq Al-Awsat that the Gulf Cooperation Council (GCC) member states continue to make progress towards completing the necessary steps to reach Gulf economic integration.

They said this step aims to understand the challenges facing the industrial and commercial sectors, whether technical or non-tariff obstacles, that affect the completion of the Gulf customs union and the common market.

The efforts exerted by the Federation help in enhancing the effective flow of goods and products between member states.

Informing Saudi companies

The Federation asked the Saudi private sector to fill out a special questionnaire outlining the challenges facing them in establishing the Gulf customs union and the mechanisms of the common Gulf market.

The Federation recently launched the first GCC Business and Tenders Gate within a series of platforms to keep pace with digital transformation and facilitate cooperation by providing and displaying the most essential Gulf trade and economic opportunities.

GCC Business and Tenders Gate is a fully functional business guide, service search engine, and business accelerator that connects all public and private businesses.

It is the only official governmental platform representing the GCC countries in all the updated tenders and projects, providing an additional unique service feature with daily updated tenders in all the GCC.

It will also update members in the six countries with all the business and tender news and the latest updates for any sector or service.

Tenders and trade

The platform is divided into three main sections: the government and private tenders section, which contains all government agencies and departments, as well as private sector tenders.

It also includes all decisions and cooperation mechanisms between local and regional companies for entrepreneurship.

The third section is a media center that includes the latest news and reports on Gulf projects, which helps investors and business owners follow up on projects and participate in them to increase the local and Gulf national product.


Iraq Reopens North Refinery in Baiji Closed for a Decade 

The sun sets over an oil refinery in the southern Iraqi town of Nasiriyah on March 8, 2021. (AFP via Getty Images)
The sun sets over an oil refinery in the southern Iraqi town of Nasiriyah on March 8, 2021. (AFP via Getty Images)
TT

Iraq Reopens North Refinery in Baiji Closed for a Decade 

The sun sets over an oil refinery in the southern Iraqi town of Nasiriyah on March 8, 2021. (AFP via Getty Images)
The sun sets over an oil refinery in the southern Iraqi town of Nasiriyah on March 8, 2021. (AFP via Getty Images)

Iraq on Friday reopened the North Refinery in the Baiji complex, which came to symbolize the country's turbulence, after being closed for a decade, Prime Minister Mohammed Shia al-Sudani said in a statement.

The refinery was shut in 2014 when ISIS fighters seized it after taking over large swathes of the country, a major OPEC oil producer.

It has a refining capacity of 150,000 barrels per day after reopening.

It also faced threats from Al-Qaeda. The group had enough control over the Baiji area that it was able to intimidate refinery workers and hijack its refined products. It sold the products to neighboring countries and used the profits to finance its operations.


Suez Canal to Diversify Income Sources Through Logistical Projects

An aerial view of the northern entrance to the Suez Canal in Egypt. (Reuters)
An aerial view of the northern entrance to the Suez Canal in Egypt. (Reuters)
TT

Suez Canal to Diversify Income Sources Through Logistical Projects

An aerial view of the northern entrance to the Suez Canal in Egypt. (Reuters)
An aerial view of the northern entrance to the Suez Canal in Egypt. (Reuters)

The Suez Canal Authority (SCA) is seeking to diversify sources of income by establishing logistical and maritime projects that serve the global trade movement in the region, announced Chairman Osama Rabie.

On Wednesday, Rabie discussed ways to enhance cooperation with the Italian shipping line with MESSINA CEO Ignazio Messina and Executive Director Stefano Messina.

Rabie lauded the longstanding relationship with MESSINA, which has recently seen an increase in the number of vessels transiting through the Suez Canal despite the challenges in the Red Sea region.

The chairman stressed the authority's commitment to boosting cooperation with its clients and leveraging collaboration to open new horizons through partnerships and investments, diversifying sources of income, and establishing logistics and maritime projects that serve global trade movements in the region.

Messina confirmed the company's intention to increase the number and capacities of its vessels transiting through the Suez Canal in the coming period.

The expansion aligns with the group's policy focus and plans to acquire and construct large-capacity container ships to operate on maritime routes in the Middle East and Africa.

The CEO expressed his eagerness to strengthen cooperation with the Suez Canal Authority.

He proposed joint efforts in providing logistical services to elevate the Suez Canal's leading position.

He also expressed a commitment to supporting the canal's transformation into a regional hub for maritime and logistical services in the Middle East and Africa.

MESSINA was established over a century ago. Since the 1930s, it has maintained cooperative relations with the Suez Canal Authority. One of the group's vessels was among the first to transit the canal after reopening in 1975.

On Monday, President Abdel Fattah al-Sisi confirmed that Suez Canal revenues had dropped between 40 and 50 percent since the beginning of this year due to the disruption of navigation traffic in the Red Sea as a result of the Houthi attacks.

Rabie recently said that revenues had declined from $804 million recorded in January last year to $428 million during the same month this year, a drop of 46%.

The canal's revenues constitute one of Egypt's most prominent sources of foreign exchange revenues.

In the fiscal year 2022-2023, the channel generated $9.4 billion in revenues, the highest annual revenue recorded, a 35% increase compared to the previous year.


Saudi Arabia to Establish Marketing Tourism Offices

The Red Sea project is one of the major tourist destinations in Saudi Arabia (Asharq Al-Awsat)
The Red Sea project is one of the major tourist destinations in Saudi Arabia (Asharq Al-Awsat)
TT

Saudi Arabia to Establish Marketing Tourism Offices

The Red Sea project is one of the major tourist destinations in Saudi Arabia (Asharq Al-Awsat)
The Red Sea project is one of the major tourist destinations in Saudi Arabia (Asharq Al-Awsat)

The Saudi Tourism Authority has set 24 plans that place Saudi Arabia as a top tourist destination on the local, regional, and global levels.
Last week, the Council of Ministers, headed by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, approved the regulations of the Saudi Tourism Authority to play a crucial role in promoting Saudi Arabia as a top tourist destination on both regional and international levels.
- Establishing a database
According to the regulation, a copy of which was seen by Asharq Al-Awsat, the Authority achieved its goals in developing the necessary plans and policies for tourism marketing in the Kingdom, locally and internationally.
It must also promote destinations, propose developments in coordination with the Ministry of Tourism, and support and market events held by government agencies and the private sector.
The Authority will create a database of all available sites, tourist destinations, resorts, services, and events and update it periodically with the relevant authorities.
It will also be tasked with all Umrah-related promotions, including the development and management of its platform, in coordination with the relevant agencies.

Furthermore, the Authority will develop the necessary standards, tools, and mechanisms to measure visitor's experience and determine the priorities and challenges facing tourists. Reports will be shared with the Ministry.
The Authority will propose the necessary designs, policies, and procedures to prepare the development of tourist sites and destinations that need rehabilitation and submit them to the Ministry of Tourism.
- Marketing studies and research
Moreover, the Authority will work with the private sector to develop products and display them on platforms for local and global marketing.
It will prepare marketing studies and research on opportunities to develop the visitor experience in the Kingdom and cooperate with regional and international bodies and organizations.
The Authority must carry out marketing campaigns inside and outside the Kingdom to introduce tourism sites and products and register trademarks and any other intellectual property in its name, in accordance with the relevant regulations.
According to the new regulation, the Authority will develop media plans that support tourism marketing to be disseminated inside and outside the Kingdom.
It will also organize tourism forums, conferences, events, and exhibitions and participate.
- Small and medium enterprises
The Authority is scheduled to provide administrative, technical, and advisory assistance to tourism products' owners in the Kingdom and support small and medium enterprises in cooperation with the competent authorities.
It will also develop and implement training programs aimed at raising the efficiency of tourism marketing and contribute to the qualification and training of human cadres in this field.
Under the new regulations, the Authority will supervise media campaigns and advertisements promoting destinations and suggest investment opportunities that are required to improve the sector in the Kingdom.
It coordinates with the Ministry of Tourism, government agencies, and the private sector to develop a marketing policy for destinations and distribute tourism products outside the Kingdom to enhance the country's position as a global tourist destination.
- Tourist tracks

The Authority will determine the tourist tracks under the tourism sector strategy, in coordination with the Ministry, to ensure an experience consistent with the highest global standards.
The Minister of Tourism and Chairman of the Board of Directors of the Saudi Tourism Authority, Ahmed al-Khateeb, said the approval of the Authority's regulations confirms the government's continued support to achieve the goals consistent with Vision 2030.
Khateeb emphasized that the significant growth witnessed by the Saudi Tourism Authority is a direct result of the Saudi leadership's commitment to organizing and supporting the tourism sector in general and the Authority in particular.
The Minister stressed that the leadership's support has also helped attract visitors worldwide, develop tourism products, empower the private tourism sector, and participate in the most important local and international tourism forums and events.
He asserted that this alignment with the Kingdom's Vision 2030 is a significant milestone for the tourism sector in Saudi Arabia.


PIF Governor: Saudi Arabia Seeks to Become Global Hub for AI

Yasir Al-Rumayyan said the FII focuses on several key sectors, primarily sustainability, education, healthcare, artificial intelligence (AI), and robotics. SPA
Yasir Al-Rumayyan said the FII focuses on several key sectors, primarily sustainability, education, healthcare, artificial intelligence (AI), and robotics. SPA
TT

PIF Governor: Saudi Arabia Seeks to Become Global Hub for AI

Yasir Al-Rumayyan said the FII focuses on several key sectors, primarily sustainability, education, healthcare, artificial intelligence (AI), and robotics. SPA
Yasir Al-Rumayyan said the FII focuses on several key sectors, primarily sustainability, education, healthcare, artificial intelligence (AI), and robotics. SPA

Public Investment Fund (PIF) Governor, Chairman of the Future Investment Initiative (FII) Institute, and Chairman of Saudi Aramco’s Board of Directors Yasir Al-Rumayyan said that the FII focuses on several key sectors, primarily sustainability, education, healthcare, artificial intelligence (AI), and robotics.

He said it has invested in several companies operating in these sectors and established partnerships with research, academic and consulting institutions to support these goals.

Delivering a speech at the FII PRIORITY summit in Miami, Al-Rumayyan explained that the initiative will expand its global presence in the coming period by organizing events in Brazil and Kenya to enhance links and investment opportunities with markets in Latin America and Africa and discuss issues such as environmental protection and the transition towards renewable energy.

According to the Saudi Press Agency, he also addressed the PIF’s strategy, saying that more than 70% of its investments are local and directed towards the Kingdom's economy, while the public share of international investments has declined to less than 25%.

Al-Rumayyan also explained that PIF investments mainly target new sectors under its goal to make a long-term impact by being the economic driver of the transformation journey within the Saudi Vision 2030, which is distinguished from other international strategic plans by its success in achieving many of its goals before their set timelines.

“The fund invests between $40 billion to $50 billion annually and this will continue until 2025, and we look at our investments in the Kingdom with regard to their impact on the gross domestic product, job creation, and local content increase, and we are looking forward to increase local revenues generated from investments as per the framework to create sustainable impact on the Saudi economy and realize the targets of the Saudi Vision 2030,” he said.

On the fund's international investments, Al-Rumyyan said that their value continues to rise in terms of volume despite a decline in their percentage compared to local investments, pointing out that investments in the US market amount to 40% of the fund's total international investments in the form of investments or purchases, which amounted to more than $100 billion between 2017 and the end of 2023.

The PIF governor stressed that Saudi Arabia is well positioned to be a major global hub for AI and related industries, explaining that it has many competitive advantages to achieve this goal, including its leadership in clean energy resources, political will, funding capabilities, and human competencies.

The Aramco chairman also discussed the priority that the company gives to sustainability issues, saying that it is the most sustainable of all oil producers in the world, with the amount of carbon produced per barrel of oil not exceeding 25% of what other companies produce. He also said that Aramco has 12 research-and-development centers around the world to work on clean energy technology.

Aramco and the PIF are interested in blue hydrogen, SPA quoted him as saying.

He added that the Kingdom aims to provide 15% of blue hydrogen production globally and it pays special attention to green hydrogen while having clean energy resources that contribute to hydrogen production.

“The price per kilowatt-hour of solar energy in the Kingdom does not exceed 2 cents, making it the lowest in the world and giving the Kingdom a key competitive advantage,” he said.


Oil Falls after US Fed Governor Says No Rush to Cut Interest Rates

TT

Oil Falls after US Fed Governor Says No Rush to Cut Interest Rates

Oil prices fell on Friday after a US Fed official said interest rate cuts should be delayed at least two more months, but indications of healthy demand and concerns over supplies could boost prices in the coming days.
Brent crude futures were down 38 cents, or 0.5%, at $83.29 a barrel at 0524 GMT, while US West Texas Intermediate crude futures were 40 cents, or 0.5%, lower at $78.21, Reuters said.
US Federal Reserve policymakers should delay interest rate cuts by at least another couple of months to see if a recent uptick in inflation signals stalling progress toward price stability or is just a bump in the road, Fed Governor Christopher Waller said on Thursday.
Higher interest rates for longer slow economic growth, which could curb oil demand in the world's largest oil consumer. But some analysts say demand has remained largely healthy, including in the US.
Analysts at ANZ research said US crude oil inventories rose at a less-than-expected rate last week, while run rates at refineries ended a streak of declines and may increase in coming weeks.
JPMorgan's high frequency demand indicators are showing oil demand rising 1.7 mbd month-over-month through February 21, its analysts said in a note on Friday.
"This compares to 1.6 mbd increase observed during the prior week, likely benefitting from increased travel demand in China and Europe," the analysts said.
Oil benchmarks pared some of their Thursday gains after Waller's comments.
The US central bank has held its policy rate steady in the 5.25%-5.5% range since last July, and minutes of its policy meeting last month show most central bankers were worried about moving too quickly to ease policy.
Waller also pushed back on the idea that the Fed risks sending the economy into recession if it waits too long to cut rates, saying the Fed can afford to "wait a little longer".
Oil futures had settled higher on Thursday as hostilities continued in the Red Sea, with Iran-aligned Houthis stepping up attacks near Yemen to show support for Palestinians in the Gaza war.
Israel Prime Minister Benjamin Netanyahu's war cabinet has approved sending negotiators to truce talks taking place in Paris on Friday as pressure mounts in the Middle East, according to a source briefed on the matter and Israeli media.


Saudi Arabia, China Sign MoU to Develop Air Transport Cooperation

The MoU was signed during the visit to China of Saudi officials as part of ongoing cooperation between the two countries in air transportation. SPA
The MoU was signed during the visit to China of Saudi officials as part of ongoing cooperation between the two countries in air transportation. SPA
TT

Saudi Arabia, China Sign MoU to Develop Air Transport Cooperation

The MoU was signed during the visit to China of Saudi officials as part of ongoing cooperation between the two countries in air transportation. SPA
The MoU was signed during the visit to China of Saudi officials as part of ongoing cooperation between the two countries in air transportation. SPA

General Authority of Civil Aviation (GACA) President Abdulaziz bin Abdullah Al-Dauilej on Thursday signed a memorandum of understanding (MoU) in the field of air transportation with Civil Aviation Administration of China Administrator Song Zhiyong.
The MoU was signed during the visit to China of Saudi civil-aviation officials as part of the ongoing cooperation between the two countries in the air transportation sector.
The areas of cooperation outlined in the MoU include expanding the number of air transportation stops, promoting air traffic, and developing and regulating frameworks for cooperation in the field of transportation and air freight between the two nations.
The MoU also includes an initial consensus to update the existing agreement between the Kingdom and China in this field, with the aim of enhancing global connectivity in line with Saudi Vision 2030 and the Saudi Aviation Strategy.
These efforts seek to enhance trade exchange and stimulate economic growth between the two countries.


Turkish Central Bank Keeps its Key Interest Rate Unchanged

A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)
A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)
TT

Turkish Central Bank Keeps its Key Interest Rate Unchanged

A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)
A man carries sacks of goods at Eminonu commercial area in Istanbul, Türkiye, Wednesday, Feb. 21, 2024. (AP Photo/Khalil Hamra)

Türkiye’s central bank left its key interest rate unchanged at 45% on Thursday, pausing a series of aggressive rate hikes aimed at taming high inflation.
The central bank said it was keeping the benchmark one-week repo rate on hold, according to a statement. It was the bank's first interest rate decision under its newly appointed governor, Fatih Karahan.
The move was in line with expectations that the rate would be kept constant after the bank said last month that monetary tightness needed to “establish the disinflation course” was achieved.
On Thursday, the bank suggested the current rate would be maintained until “there is a significant and sustained decline in the underlying trend of monthly inflation,” The Associated Press reported.
President Recep Tayyip Erdogan appointed Karahan as central bank governor on Feb. 3, replacing Hafize Gaye Erkan who resigned after claims of nepotism emerged in local media. Erkan, a former US-based bank executive and Türkiye’s first woman governor, strongly rejected the claims.
Under Erkan's tenure, the central bank had raised the benchmark interest rate from 8.5% in June to 45% last month.
The rate hikes came after Erdogan, who was reelected in May, reversed his unconventional policies that economists say helped trigger a currency crisis and drove up the cost of living, leaving households struggling to afford basic goods.
Despite the series of hikes, inflation remains high — consumer prices rose nearly 65% in January. The Turkish lira, meanwhile, has slumped to a new record low against the dollar this week, going for 31 lira for $1.


Saudi Arabia Ranks 3rd in Global Retail Development Index

The retail sector represents about 12% of the Kingdom's GDP, according to Kearney (Reuters)
The retail sector represents about 12% of the Kingdom's GDP, according to Kearney (Reuters)
TT

Saudi Arabia Ranks 3rd in Global Retail Development Index

The retail sector represents about 12% of the Kingdom's GDP, according to Kearney (Reuters)
The retail sector represents about 12% of the Kingdom's GDP, according to Kearney (Reuters)

Saudi Arabia jumped nine places in the Global Retail Development Index, ranking third globally and first in the Arab world.

Kearney International Consulting issued the Global Retail Development Index by the end of 2023.

It is prepared based on a survey conducted every two years to evaluate promising retail markets and measure progress in developing trade globally, taking into account economic growth, consumer wealth, and the regulatory framework.

Based on a report issued by Kearney and viewed by Asharq Al-Awsat, the retail sector represented about 12% of Riyadh's GDP.

With more than 5 million households, Saudi Arabia has the largest consumer market among the Gulf Cooperation Council (GCC) nations.

Saudi Arabia's economy has been consciously evolving away from oil dependence, which accounts for about 40% of the GDP.

Kearney partner Mohammed Dhedhi expected Saudi Arabia to continue its excellent performance in the index for 2024, influenced by the continued growth in its non-oil sector and the rise in disposable income.

Dhedhi explained to Asharq Al-Awsat on the sidelines of the 10th edition of the Retail Leaders Circle MENA Summit in Riyadh that the non-oil domestic product in Saudi Arabia will continue to grow at a faster pace than the gross domestic product, expecting it to grow in the range of 0.3-0.5% points in 2024.

He further noted that several factors enhance the retail sector's contribution to the Saudi economy, noting that Saudization, government reforms, and increasing digitization in the retail ecosystem will accelerate growth.

Saudi Minister of Municipal, Rural Affairs, and Housing Majed al-Hogail said that the retail sector currently constitutes 23% of the non-oil GDP in the Kingdom and is expected to grow to more than $122.6 billion by the end of 2024.

Speaking during the Summit, Hogail noted that the total number of active commercial licenses for the sector exceeded 400,000 licenses from 2019 until the end of 2023, as efforts to stimulate the industry resulted in the issuance of no less than 70,000 annual licenses, recording a steady growth of about 6%.

According to the report, Kearney expects the non-oil sector growth to remain robust thanks to steady, ongoing investment activity in Vision 2030-related projects, local industrial and construction sector expansion, and the government's resilient commitment to progress with Vision 2030 reforms.

Saudi Arabia has made significant regulatory strides to promote diversification and private sector growth. New laws promote entrepreneurship, protect investors' rights, and reduce business costs in the Kingdom.