Golden times for Dubai

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Golden times for Dubai

 

 

 

 

Tom Ballantyne

 

Last month, Dubai International Airport celebrated its golden anniversary. A lot has changed since 1960 when it began operating in the desert with a single 1,800 metre airstrip of compacted sand, an apron, a fire station and a small terminal building. Now joined by a second facility, the still developing Al Maktoum International Airport, Dubai is at the heart of the Middle East’s drive for global hub dominance. And it is not alone in the Gulf.

 

'On the passenger side we expect to see numbers skyrocket from the 41 million that passed through Dubai International in 2009 to 98 million by 2020 and 150 million by 2030'

Paul Griffiths

Chief Executive

Dubai Airports

If anyone thought the global financial crisis would slam the brakes on the Gulf region’s ambitious and highly expensive plans to become the central hub of world airline operations, then think again. The economies of the United Arab Emirates (UAE) were certainly hit hard by fiscal gloom, but airport expansion has hardly skipped a beat.

 

Traffic through the region’s airports is continuing to break records and there is growing evidence some of it is being siphoned away from traditional Asia-Pacific hubs such as Singapore, Bangkok and Hong Kong.

 

Following a record month in July, in its latest traffic statistics for August, Dubai airports reported a 14.7% year-on-year rise in international passenger traffic and a 21.5% surge in cargo.

 

But the devil is in the detail. Among the largest percentage increases in passenger numbers were traffic on routes from Asia, up 25%, and Australasia, up14%.

 

To many observers it is a sign that some long-haul traffic, which would traditionally fly between Asia and Europe through Southeast Asia, is re-routing through the Middle East.

 

While Dubai has also seen a traffic boost from the emergence of its own regional low-cost carrier (LCC) flydubai, the continuing addition of new destinations and increased frequencies by Gulf majors Emirates Airline, Qatar Airways and Etihad Airways across the Asia-Pacific region is making inroads in the long-haul market

 

“Growth continues from the very strong base that was established last year and is largely the result of the rapid expansion of flydubai, which is now the second largest source of passenger traffic at Dubai International, and the broadening of Emirates’ already impressive network with the addition of new destinations in Europe, Africa and Asia,” said Dubai Airports chief executive, Paul Griffiths.

 

“In the past 12 months we have seen our rolling passenger total rise to 45 million, which puts us on track to meet our projection for 46 million passengers this year.”

 

Dubai is not alone. Abu Dhabi Airports Company (ADAC) saw a 7% increase in passenger traffic in August, with cargo up 12%. While the U.S. was its major growth market, with traffic up 130.2%, it also attracted 70.2% more passengers from the Philippines. Manila and Bangkok were amongst Abu Dhabi’s top five growth markets.

 

Another of the emirates in the UAE, Sharjah, virtually next door to Dubai, is spending US$136 million on a new runway as it also witnesses impressive air traffic growth at the Sharjah International Airport. Fuelling most of the airport’s growth is its flagship carrier, Air Arabia. In the year to August the airport handled 104.2 million passengers, up 10.5% on last year.

 

Once they complete current expansion plans, the seven airports in the UAE will collectively serve more than 300 million passengers annually. Of this, Dubai’s two airports will have a combined capacity of 240 million, including 160 million at Al Maktoum International.

 

Griffiths blasts Gulf critics

 

Gulf airlines and airports are no strangers to criticism, mostly revolving around allegations of government subsidies and favouritism for local operators. Airlines in Europe and North America launched another salvo in the direction of the Middle East last month and it brought instant response from Dubai Airports chief executive, Paul Griffiths.

 

“The only thing Dubai is guilty of is providing an environment that supports aviation. Most governments around the world treat aviation as a pariah, choking its growth with costly, misdirected regulation,” he said.

 

Griffiths was responding after a group of 24 European and North American airline executives called on their governments to cap export credits on the sale of passenger jets at 20%. They claimed Gulf-based carriers are using the export credits to grow at breakneck pace and unfairly take market share.

 

North American and European airlines can’t receive export credits because they operate in the regions where the planes are manufactured by Boeing and Airbus.

 

Griffiths said implications of government subsidies and preferential treatment for Dubai-based Emirates Airline were wrong.

 

“Another key to Dubai’s success has been equal treatment of airlines. Dubai Airports and Dubai Air Navigation Services offer the same competitive rates and charges to all airlines. That, combined with the UAE’s open skies policy and the attractiveness of Dubai as a business and leisure destination, is why we have 130 airlines operating into one of the fastest growing airports in the world.”

 

The pressure is unlikely to ease. Boeing forecasts a near quadrupling of air traffic in the Middle East over the next 20 years. In September, it said the annual average traffic growth rate in the region in the next two decades will be 7.1%, which equates to a 287% rise over the period, running ahead of global annual traffic growth of 5.3%.

 

Boeing projects a requirement for 2,340 new planes in the region by 2029 and expected the market would continue to be dominated by twin-aisle, long-range planes, which account for almost 43% of demand.

 

These planes will have to fly somewhere and the Asia-Pacific will be a primary target.

 

“The Middle East continues to outperform the rest of the world in air travel growth and is poised to continue growing in the next 20 years,” said Martin Bentrott, Boeing vice-president of sales for the Middle East, Central Asia and India.

 

“In fact, Middle East demographics, where over half the population is under the ageof 25, favours continued growth since younger people will account for much of the future market.”

 

In its latest revised report, the International Air Transport Association (IATA) expected Middle Eastern carriers to realise a significant rise in profits this year, from US$100 million previously forecast to $400 million, benefiting from strong regional economies and “an expanded share of long-haul markets”.

 

Dubai’s second airport will undoubtedly be at the forefront of this growth. With a price tag of some $82 billion – Hong Kong International Airport cost $20 billion – it is, according to some, the most expensive infrastructure project in the world. The first phase of the development, a cargo hub, opened its doors in June.

 

When completed and to be known as Dubai World Central-Al Maktoum International, it will be the largest airport in the world with five runways, four terminal buildings and capacity for 160 million passengers and 12 million tonnes of cargo.

 

Officially, it is scheduled to be complete by 2017, but there have been reports the financial crisis will delay this until as late as 2022.

 

At the June opening, Dubai Airports chief executive Griffiths said the original airport, Dubai International, currently has capacity for 2.5 million tonnes of cargo while volumes are expected to increase 48% to three million tonnes by 2015.

 

“On the passenger side we expect to see numbers skyrocket from the 41 million that passed through Dubai International in 2009 to 98 million by 2020 and 150 million by 2030,” he said.

 

The opening of the second airport has not halted expansion of the original facility. Work is on track to build what will be the world’s largest dedicated A380 facility, which will be used exclusively by Emirates.

 

Part of the larger Terminal 3 complex, Concourse 3 will have a total of 20 contact gates, all of which will serve Emirates Airline’s growing fleet of A380s. Upon its completion at the end of 2012, C3 will increase Dubai International’s capacity from the current 60 million to 75 million passengers a year.

 

In the half-century since its opening, Dubai International has welcomed over 402 million passengers at an impressive average annual growth rate of 15.5%. It has handled over 3.87 million aircraft movements at an average annual growth rate of 12.4%.

 

The rapid expansion of air freight traffic has been equally remarkable, with total volumes moved between 1977 and August 2010, exceeding 17.9 million tonnes at an annual average growth rate of 14.3%.

 

“The past 50 years have been nothing short of remarkable,” said Griffiths. “And the future holds even greater promise as we build our infrastructure to support the impressive expansion of Emirates and flydubai and ascend the ranks of global aviation hubs.”