Dubai offers competitive aviation environment
Oxford Economics released a report in June explaining the success of Dubai’s aviation model. Commissioned by Emirates and Dubai Airport it is believed the report demystifies some of the workings of the ‘Dubai Model’. The report entitled ‘Explaining Dubai’s Aviation Model’ finds the sector to be consensus-based, highly-competitive and consumer-centric; generating significant economic benefits for Dubai and the countries it connects.
The findings of the report include quantifying the significant contribution the aviation sector makes to Dubai’s economy, as well as the fact that the sector generates benefits for the global economy and consumers. In accounting for the success of the sector, Oxford Economics verifies that claims of unfair competition and government support are unfounded. In fact, awareness of the strategic importance of aviation, backed by an openness to competition in Dubai and a consensus-based approach to investment has fostered success of the sector. In accounting for Emirates’ success, Oxford affirms its business model which is focused on under served markets, growth, efficient operations and the global geographical advantage which Dubai enjoys.
Oxford Economics’ research calculates that Dubai’s aviation sector supports 125,000 total jobs in the Emirates. The study also quantifies the wider catalytic benefits the aviation generates through tourism and connectivity. As the overwhelming majority of foreign visitors who travel to Dubai arrive by air, Oxford calculates that their spending supports nearly 134,000 jobs and contributes an additional US $7.9 billion to Dubai’s GDP. In total, aviation supports over 250,000 jobs and contributes over US $22 billion; representing around 19 percent of total employment in Dubai and 28 percent of Dubai’s GDP, according to the report. The report also examines the direct and flow-on economic benefits of ten case study countries.
“These benefits extend beyond Dubai’s borders to the global economy through enhanced global tourism and trade via the provision of efficient and high quality air services,” said Adrian Cooper, CEO of Oxford Economics. “Air travellers and shippers using Dubai and Emirates Airline make an important contribution to many national economies.”
Dubai’s aviation sector has seen tremendous growth in a short time frame. Over the past five years alone, the number of international passengers at Dubai International has virtually doubled from 24.8 million in 2005 to 47.2 million in 2010. Dubai International airport ranks fourth globally in terms of international passenger and cargo traffic. Emirates’ passenger numbers have increased six-fold over a decade, making it the largest airline in the world in terms of international revenue passenger kilometres.
“In some quarters, this success is viewed with suspicion, being seen as evidence of government support and unfair competition,” added Cooper. “We looked at this in depth and concluded that this view is incorrect.”
Oxford Economics notes that the sector’s success stems from government awareness of aviation’s economic importance, a consensusbased approach to investment, open competition, a focus on growth and linking underserved markets with efficient operations; plus Dubai’s favourable location at the intersection of Europe, Asia and Africa placing it within eight hours flying time for two-thirds of the world’s population.
Aviation’s importance to Dubai is expected to grow further over the next decade. Oxford Economic expects the economic contribution of the aviation sector to rise up to US $44.5 billion or 32 percent of Dubai’s GDP and about 372,900 jobs representing approximately 22 percent of its employment by 2020.
“Aviation is one of the main engines driving Dubai’s emergence as a global centre for trade, commerce and tourism,” said HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group, Chairman of Dubai Airports and President of Dubai Civil Aviation Authority. “That is why we have created a business and regulatory environment that supports its growth by encouraging open competition between all airlines, efficient operations and customer satisfaction. There is no magic here. It’s just good business.” ◆