GCC aviation projects airborne
dubai — With the Middle East on track to see a two-fold growth in air traffic within years, the value of 152 active aviation-related projects in the region rose to Dh211 billion in April 2017 regardless of a huge drop in oil revenues.
While nearly a fifth of Middle East aviation projects with a combined estimated value of Dh42.2 billion are on hold, the GCC’s aviation sector constitutes 69 per cent of the number of all active aviation projects in the region.
According to research and intelligence provider BNC Network, Saudi Arabia has the largest share (46 per cent) of upcoming aviation projects in the GCC in terms of value followed by the UAE (26 per cent) and Kuwait (12 per cent). The latest BNC report reflects increasing focus by the governments of the Gulf countries on aviation and tourism sectors to diversify their economies and reduce dependence on hydrocarbon.
“A strong aviation infrastructure will be a fundamental driver of development across the region. Connecting the region through a network of small airports facilitates urbanisation across a country rather than just around major cities. Small airports support the need to continue to build larger airports as well as airlines require hubs to manage their growing operations,” said Avin Gidwani, chief executive officer of BNC Network.
He noted that air travel is being rapidly
commoditised — people expect and demand fast, easy and economical mobility and for the region to stay economically competitive and attractive for business and tourism it must put in place a world-class aviation infrastructure.
Airports in the GCC have been on an expansion and upgrade mode as they gear up for an exponential surge in traffic. GCC states have been investing $100 billion in airport expansion projects. Apart from the ongoing Dh28 billion expansion of Dubai International Airport, the Dh125 billion Dubai World Central project, which involves construction of five runways and the capacity to handle 160 million passengers a year, is making headway. Most other airports in the region are also investing billions of dollars to upgrade and expand capacity. Other mega airport projects include Abu Dhabi International Airport’s expansion, valued at Dh25 billion, and the ongoing expansion of Saeb International Airport in Muscat as well as Kuwait International Airport.
Saj Ahmad, analyst at London’s StrategicAero Research, said the entire global air travel market today gravitates around key hubs in the GCC — most notably Dubai International, which has for the last few years already been the world’s busiest international gateway.
“Investment alongside passenger growth has meant that Dubai has put in place a long-term strategy to develop Al Maktoum International as a way of expanding Dubai’s capabilities to handle more traffic, particularly as its two biggest money spinners and operators in Emirates and flydubai continue their huge organic growth programmes,” Ahmad told Khaleej Times. “In tandem, we have seen neighbouring Etihad gearing up for its long-awaited move to the Midfield Terminal over at Abu Dhabi — this facility alone will allow Etihad to focus on growth and handle up to 50-60 million passengers in its own right as the terminal is designed for strategic add-ons to raise capacity over time,” he added.
He said the sheer pull and demand for traffic to and through the UAE has meant that Dubai International and Abu Dhabi International Airports are literally putting money where their mouths are. They have understood quicker than most that to stay in front of the competition, investment is the only solution.
“The challenge now going forward is not investment, but a way for the UAE to lift commercial air space usage beyond the 40 per cent limit today to enable the region to fully unlock its potential to handle close to 400 million by 2035,” he said.
Carriers in the region are also fast boosting their capacity. The combined aircraft order backlog by Middle Eastern carriers reached Dh1.01 trillion, or 14.4 per cent of the total global aircraft order backlog, according to a report by Deloitte. This involves more than 1,000 aircraft on order to serve over 400 million passengers by 2025.
Middle East carriers had the strongest regional annual traffic growth for the fifth year in a row in 2016, according to the International Air Transport Association (Iata). Revenue passenger kilometres expanded 11.8 per cent, consolidating the region’s position as the thirdlargest market for international passengers. Capacity growth (13.7 per cent) continued to outstrip demand, with the result that the load factor fell 1.3 percentage points to 74.7 per cent, according to the Iata.
Richard Stolz, head of Corporate Development at GRMC Advisory Services, said the UAE’s major airports in Dubai and Abu Dhabi have been growing steadily year on year and are poised to further growth ahead. “For instance, it seems DXB Airport is on track to achieve its overall forecast to reach 89 million passengers in 2017. As for international passengers DXB is already ranked as the world’s number one airport,” Stolz told Khaleej Times.
Looking ahead, he said further airport infrastructure investments as the continuous development of Dubai World Central Airport (DWC) or the nearing completion of Abu Dhabi’s Midfield Terminal Complex (MTC) will continue to drive the UAE’s ambition to become one of the world’s premier travel & transport hubs.
“Continuous economic growth in Arab countries and empowerment of the region’s population will encourage more people to travel across the region and out of the region for business and leisure, pushing the demand for additional airport capacity — both passenger terminal and aircraft take-off and landing facilities. Therefore, the governments of the Middle Eastern countries are expected to increase investment in aviation infrastructure in the coming years,” Gidwani said.
— issacjohn@khaleejtimes.com