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AVIATION | SPECIAL REPORT


GULF AVIATION INDUSTRY GETS CONNECTED


WITH LATEST STATISTICS INDICATING THAT AIR TRAFFIC IN THE MIDDLE EAST HAS NOWFULLY RECOVERED ANDWITH INTERNATIONAL PASSENGER NUMBERS SET TO REACH 220 MILLION IN 2030, WILL THE REGION BECOME THEWORLD'S MOST DOMINANT TRAVEL HUB BY 2025?


W


hen Amadeus launched its 'Securing the Prize for the Middle East'


report in 2010, which suggested the Middle East was on the brink of becoming the world's dominant travel hub, it provided the fuel needed for key players to sit up and take note. Two years on, despite various chal- lenges, aviation's rapid pace of development in the region shows no signs of abating. Indeed, aviation has been at the centre of the economic transformation in the Gulf region for the past 25 years. A study by Oxford Economics shows the industry supports 2.7 million jobs and has a value of US$129 billion. What's more, interna- tional passenger numbers in the Gulf are set to rise from 77.1 million in 2010 to 220 million in 2030. So how are airports, airlines and other stakeholders working together to facilitate this major development? The MENA region has already invested more than US$100 billion on airport projects and, while the Arab Spring has had a negative impact on air travel, latest International Air Transport Association (IATA) global traffic results for February 2012 have spurred a fresh sense of optimism.


According to the latest statistics, the region is now fully recovered, with Middle East carriers achieving a huge 23.4 percent international year-on-year growth. Further- more, average load factors for the region showed the most dramatic improvement to 76.9


percent, compared to 72.4 percent the previous year. Cargo growth was led by Middle East carriers with an 18.2 percent increase in demand, matched exactly with an 18.2 percent increase in capacity. Now it's time for the hard work to continue, with the Gulf's big three carriers (Emirates Airline, Qatar Airways and Etihad Airways) all looking to establish global aviation hubs in their respective base cities. What remains to be seen is whether there's room for all of them and, if not, who will come out on top. The benefits of having a large hub are multifold Ð huge econo- mies of scale allow for greater competitiveness and, in turn, a greater slice of market share. In short, this equals more passen- gers, more routes and higher profiles, as well as a marked impact on the local economy. As a case in point, a recent report prepared for the UK's Heathrow Airport (Europe's busiest) by Frontier Economics, revealed that UK businesses trade 20 times as much with emerging market countries that have direct daily flights to the UK. ÒThe centre of gravity in the world economy is shifting and Britain should be forging new links with emerging markets,Ó said British Airports Authority (BAA) Chief Executive Colin Matthews in a foreword to the report. He believes that the lack of direct flights to emerg- ing markets may already be costing the economy GBP£1.2 billion (US$1.9 billion) a year, as trade goes to better-


Emirates Airline leads the way with 123 connections worldwide


Etihad Airways


The aim for any aspiring hub is to have as many connections as possible and, more importantly, routes to markets that have the most potential for passengers


connected competitors, such as Paris and Frankfurt, each offer- ing 1,000 more annual flights to the largest cities in China. Heathrow is missing out simply because it does not have the capacity for extra-long-haul flights, without reducing impor- tant short-haul flights. Without those connections, Heathrow becomes less of a hub, less attractive to airlines and less attractive to passengers. Gulf airlines and airports are well-placed to learn from this. The aim for any aspiring hub is to have as many connections as possible and, more importantly, routes to markets that have the most potential for passengers. Having the capacity and aircraft to manage these passengers is, therefore, crucial. Ensuring


Midfield Terminal Complex, Abu Dhabi International Airport (interior)


the airport and the destination appeal to transit passengers is the final piece of the jigsaw. Currently, Emirates leads


the way with connections to 123 cities around the world served by a fleet of 171 aircraft and is slated to become the world's largest airline by 2015. It is closely followed by Qatar Airways, with 112 conn- ections at the last count, 15 of which were added in 2011, with a further 11 new routes launched during 2012, includ- ing to Perth (Australia), Zagreb (Croatia) and Gassim (Saudi Arabia). No wonder the airline currently has orders worth over US$50 billion for more than 250 aircraft, including A380s. Etihad Airways, the much


younger airline formed just nine years ago, chases the pack with 84 destinations on its books. However, it is something of a dark horse, having reported phenomenal growth in the first quarter of 2012, with a 28 percent rise in revenue to US$989 million year on year and passenger numbers soar- ing by 500,000 to 2.4 million. Etihad Airways President and Chief Executive Officer James Hogan has announced plans for a significant expansion of the airline's global network over the next 18 months, including a daily service to Etihad Airways' first South America destination and a new service to Vietnam.


ÒThis is a logical next step for us and will mark the sixth continent we serve and our coming of age as a truly global airline,Ó he said. ÒWe continue to outperform much of the global airline industry, with spectacular growth in revenue, the number of passengers flown and freight carried. Our expanded network through organic growth and partnerships has reached a critical mass that is now powering our business forward. Our seat factor hit a record high, but yields, particularly in the premium cabins, remain a challenge.Ó Etihad Airways will take delivery of seven new aircraft in 2012 Ð three Airbus A320s and four Boeing B777s, with the first three-class B777- 300ER deployed on the London route from July. The carrier's fleet will have grown to 71 aircraft by year's end. Airport development is also steaming ahead. Dubai Inter- national Airport is ranked the fourth busiest in the world in terms of international passengers and has more than 150 airlines flying to 220 destinations across six continents. With a capacity of 60 million and passenger numbers reaching almost 51 million in 2011, a new airport is under construction. When completed in 2020, Dubai World Central (DWC) is scheduled to have the capacity to handle 160 million passengers per annum, making it the world's largest. New Doha International Airport, due to open this year, will have the capacity for 50 million passengers when complete and Qatar Tourism Authority (QTA) is targeting five percent of these passengers (2.5 million) to stay an extra 48 hours in the country.


Abu Dhabi International Airport handled more than 12 million passengers in 2011. However, first quarter results for 2012 show that more than 3.4 million passengers passed through the airport, repre senting a 21.2 percent uplift compared to the same period last year. Cargo traffic increased by 11 percent. Latest figures from Abu Dhabi Airports Company (ADAC) also show that the month of March saw a significant surge in traffic with passenger numbers reaching 1,196,000, an increase of 22 percent in comparison to the same month last year. To make way for the expected future hike, the new Midfield Terminal Complex (MTC), able to handle up to 30 million passengers a year, is scheduled to open in 2017. When it comes to the lure of the destinations themselves, the USPs and their respective selections of hotels has been well-documented. Ultimately, offering the best service, the best price and have the best facilities will ensure the success of a hub, regardless of whether those passengers are reaching their destinations or are in transit. There is little doubt that competition is fierce, with the 'big three' airlines target- ing many of the same routes, aiming to connect Asia with Europe and beyond. Dubai may have led the way, but both Abu Dhabi and Doha are laying solid and considerable foundations to, not only take a slice of that action, but lay claim to the title of leading hub. Whichever way the race pans out, it can only be seen as good news for the regional tourism industry as a whole.


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