WORLD ROUTES 2011: Dubai Airports and the Significance of Aviation to Local Economy

Dubai’s emergence as one of the world’s leading global aviation hubs in a matter of a few decades would seem to provide irrefutable evidence that the Emirate’s aviation model works. The proof is in the facts – most notably its 50 years of double-digit average annual growth in passenger traffic, an equally impressive track record in cargo, the Emirate’s steady rise as a regional centre for trade, tourism and commerce and the well-timed realisation of numerous development plans over the years to build and expand infrastructure capacity in tandem with growth.

Local carrier Emirates Airline has seen passenger numbers increase six-fold over the course of a decade, making it the largest airline in the world in terms of international revenue passenger kilometres. Dubai Duty Free has become the biggest single airport retail operation in the world, with revenues of US$1.27 billion (AED4.6bn) in 2010. And now flydubai is the world’s fastest growing start-up airline, emerging as one of the region’s leading low-cost carrier.

Simply put, Dubai’s aviation models revolves around a liberal regulatory climate, a tax-free business environment, a customer-centric focus that provides value for money, and close coordination and collaboration within the sector. It’s no wonder favourable conditions coming out of this combination have been playing a major role in the ongoing success of Dubai’s flagship carrier Emirates and local low cost airline Flydubai, and have made Dubai International a magnet for international airlines. Thanks to Dubai’s open skies policy the airport is connected to more than 220 destinations across six continents through 150 airlines.

The model has also paid considerable dividends to the local economy, according to an exhaustive study conducted by leading global research firm Oxford Economics. The research calculates that in total (direct and indirect) aviation supports over 250,000 jobs and contributes over US$22 billion (AED80.8bn), which represents around 19 per cent of total employment in Dubai, and 28 per cent of Dubai’s US$80 billion GDP.

Those contributions are expected to continue to grow over the next decade. On the basis of these strengths and the forecasts for passenger growth from Boeing and Airbus, Oxford Economics expects the economic contribution of Dubai’s aviation sector to rise to 32 per cent of Dubai’s GDP and about 22 per cent of its employment by 2020.

Dubai’s aviation sector has seen tremendous growth in a short time frame, with passenger numbers at Dubai International almost doubling from 24.8 million in 2005 to 47.2 million in 2010. The airport is on track to handle nearly 51 million passengers in 2011 and now ranks fourth globally for international passenger and cargo traffic.

If industry projections are anything to go by, it is very clear that the future holds great promise. The combination of a booming tourism industry, Dubai’s proximity to the emerging economies of the East, and the emirates’ established role as a trading hub linking economies in the Far East, Europe, Africa and North America, is together expected to drive growth and further elevate Dubai’s status as a global centre for trade, tourism and commerce.

According to projections some 98.5 million passengers and over four million tonnes of air freight will pass through its airports by 2020. The fleets and network of Emirates and flydubai will grow considerably to accommodate traffic and capture market share. Dubai International’s infrastructure must therefore continue to expand to enable this growth and facilitate the trade, tourism and commerce that in turn will support the prosperity of Dubai.

Even as work to build the Airbus A380-dedicated Concourse 3, which is part of the greater Terminal 3 complex utilised exclusively by Emirates Airline, continues, Dubai Airports is focusing on the scenario beyond. Following its endorsement by HH Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister, and Ruler of Dubai, in July this year, Dubai Airports is working on a US$ 7.8 billion expansion plan for Dubai International.

The strategy includes aggressive expansion plans for airspace, airfield, aircraft stands and terminal areas at Dubai International over the remainder of the decade which will optimise investment, deliver timely capacity, from the existing 60 million to 90 million passengers per year by 2018, and create a robust revenue stream, fuelled by increased commercial and retail income, which will fund the development of Dubai World Central in the long term.

Within the local airport environment, airspace expansion plans focus on optimising runway capacity and implementing efficient systems and processes in order to accommodate and manage additional aircraft movements. Beyond the vicinity of the airport itself, Dubai Airports is engaging national and regional civil aviation authorities and air navigation service providers to ensure that air routes are decongested, bottlenecks are reduced and latent airspace capacity is unlocked. Next generation technology such as performance based navigation and dynamic airspace management will be deployed over the coming years to harness the capabilities of modern fleets and increase airspace capacity.

As airspace opens up, additional aircraft movements will be accommodated on the ground with the addition of a new taxiway and a 60 per cent increase in the number of stands (from 144 to 230) needed to park and service aircraft. Beyond Concourse 3, which will boost capacity to 75 million passengers when it is completed at the end of 2012, Dubai Airports will commission the construction of additional terminal space and concourse areas comprising an extra 675,000sqm of floor space – twice the footprint of London Heathrow Terminal 5. This includes the expansion of Terminal 2 and the construction of a new concourse - Concourse 4 – which will be connected to Terminal 1 to facilitate check-in and baggage servicing.

Additionally, Dubai Airports will upgrade baggage systems across the airport to accommodate demand over the life of the project. Plans include the construction of a remote baggage facility and a high-speed baggage link that will support efficient and timely connections. Cargo capacity will also be augmented with a 30,000sqm expansion of the cargo mega terminal. This will cater for the additional hold cargo delivered by larger joint-production (passenger and cargo) aircraft flying into Dubai with greater frequency.

With additional facility enhancements and operational efficiencies contained in SP2020, Dubai International’s capacity will expand to 90 million passengers per year by 2018. During 2018–2023, with construction completed at Dubai International, the additional aeronautical and non-aeronautical revenue generated by the higher traffic flows will be used to fund further airport development at Dubai World Central (DWC).

Construction of Phase 2 of DWC will escalate during this period with the initial iteration allowing for 80 million passengers per year to facilitate the eventual relocation of the Emirates hub. DWC will feature a modular design that can be expanded incrementally to accommodate growth for both Emirates and other airlines. Once fully completed, Dubai World Central will be the world’s largest airport with five runways and capacity for 160 million passengers and 12 million tonnes of cargo annually.

“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, President of Dubai Civil Aviation Authority and Chairman of Dubai Airports. “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.”