uae airports booming, may reach 80 million pax throughput in 2012; dubai to become world's biggest _...
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19th November, 2012
CAPA
The UAE has experienced a decade of relentless aviation growth.
Separated by less than 120km, the three largest airports in the country at
Dubai, Abu Dhabi and Sharjah have seen their traffic driven by their home
carriers, Emirates, flydubai, Etihad and Air Arabia, each of which handles
the majority of passengers passing through the airports.
This year could see the three airports reach a combined 80 million
passenger throughput. With each achieving double digit growth, a
combination of large order books for the local airlines and an increasing
fleet of foreign carriers attracted to the market, the UAE airports are fast
approaching the total airport traffic of New York City's system, stagnating
at a little above 100 million passengers annually.
Despite a massive airport construction programme, capacity is being challenged and the restrictions on air traffic
movements among the UAE and its neighbours are increasingly a constraint on efficient operation.
UAE airports
Source: UAE General Civil Aviation Authority
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The three main UAE airports are on course to handle almost 80 million passengers in 2012, all while achieving
double-digit growth. This is four times the amount of traffic they handled in 2002 and double the amount they
handled in 2006. The largest of course is Dubai, Emirates' hub, but both Abu Dhabi and Sharjah and are growing
fast, off smaller bases.
Abu Dhabi, Dubai and Sharjah airport traffic 2008 to 2012*
Source: Abu Dhabi Airports Corporation, Dubai Airports, Sharjah Airport*Based on airport projections
Over the first nine months of the year, the three airports have handled a combined 59 million passengers. If theymeet their comparatively subdued projections, they will see at least 77.5 million passengers pass through their
doors by the end of the year.
If their current growth rates continue over the last quarter of the year, combined traffic may just reach 80
million.
Dubai aiming to become the worlds largest international airport
Leading the local growth is Dubai International Airport (DIA), home to Emirates and one of the regions fastest
expanding LCCs in the shape of flydubai. Comfortably the Middle Easts busiest airport, Dubai is also on its way
to becoming the worlds largest airport for international passenger traffic.
Traffic at DIA for the first nine months of 2012 reached 42.6 million passengers almost exclusively international
an increase of 13.4% year-on-year.
Abu Dhabi International Airport passenger traffic: Jan-2011 to Sep-2012
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Source: Dubai Airports
The rapid expansion of Emirates and LCC flydubai are the cornerstone of growth at the airport. Emirates controls
60% of seats and 75% of capacity (in ASKs) at the airport and has been busy adding up to three widebodies per
month to its fleet this year. The carrier handled 18.7 million passengers for the six months to the end of
Sep-2012, up 15.4%.
flydubai has added a comparatively modest five 737-900ERs, but has another two aircraft due for delivery over
the final two months of the year. Since the carriers launch in 2009, it has rapidly expanded to secure around
10% of the seat capacity at the airport.
But Dubai is no longer an Emirates-only airport. More than 80 airlines fly into Dubai and the airport also
continues to attract new airlines and add new destinations outside of the Emirates/flydubai pairing. Pegasus
Airlines, NordStar Airlines and TransAvia have all added service to the airport over the past few months. Existing
operators continue to raise capacity as well, particularly airlines from the Indian sub-continent, Africa and the
Middle East. Qantas will also be diverting most of its long-haul European operations through Dubai once its
Emirates partnership is sealed in 2013.
Cargo traffic has also continued to grow, although at slower rates than passenger growth. Freight levels at Dubai
have built steadily through the year, in contrast to freight tonnage at most major international airports which has
either declined or registered tepid growth. DIA handled 1,674,997 tonnes of cargo for the year to Sep-2012, an
increase of 3.7% on the same period last year. During Sep-2010, cargo traffic was 193,261 tonnes, an increase
of 9.1% and the highest monthly increase in tonnage since Oct-2010.
Dubai Airport is well on track to meet its target of handling 56.5 million passengers in 2012. This will bring the
airport uncomfortably close to its design capacity of 60 million passengers p/a, but new capacity is due to come
on stream at the beginning of 2013 with the new, Emirates-dedicated, Concourse 3 opening up.
Abu Dhabi Airport supported by and supports local economic
development
Abu Dhabi International Airport (ADIA) is less than a quarter of the size of its big brother up the road at Dubai,
but the level of growth it has witnessed this year is equally impressive, if not more so. For the first nine months
of the year, ADIA handled 10.9 million passengers, traffic growth of 19.8%.
Sep-2012 traffic was up 14.5%, with the airport handling 1.2 million passengers. For the first time in the airports
history, ADIA has handled more than 1 million passengers every month of the year.
Abu Dhabi International Airport passenger traffic: Jan-2011 to Sep-2012
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Source: Abu Dhabi Airports Company
Like Dubai, Abu Dhabi possesses a strong and fast growing home carrier, this time in the form of UAE national
carrier Etihad Airways. The airline controls around 70% of seats and 80% of capacity by ASKs at the airport.
Etihad is only nine years old, but it has already built a network of 87 routes, including six added this year.
Another four destinations Addis Ababa, Washington, Sao Paulo and Ho Chi Min City have already been
announced for launch in either late 2012 or 2013.
Just as important to its growth has been Etihads relentless build up of a global network of codeshares and
alliances. Etihad has strategic shareholdings in Air Seychelles, Aer Lingus, Virgin Australia and airberlin. These
partnership quadruple the number of destinations available to the carrier, providing vital behind-gate access topoints in the US and Asia-Pacific and funnelling passengers onto Etihads sixth freedom network through Abu
Dhabi. The 38 codeshares and alliance agreements signed by the carrier also make a sizable contribution to
Etihads bottom line.
Cargo growth at ADIA has also been strong, more so than at Dubai. For the nine months to Sep-2012, freight
tonnage at the airport increased 14.7%. Abu Dhabi Airports Company credits the continued strong growth of
cargo at the airport to the ongoing development of Abu Dhabi as a trade and tourism destination.
The scale of the airline traffic development is helping Abu Dhabi meet its other goals. In September, the Abu
Dhabi Tourism & Culture Authority reported that the Emirate was on track to meet its 2012 hotel guest target of
2.3 million stays. Guest arrivals at Abu Dhabis hotels are up 15% this year.
Sharjah approaching capacity limits, but Air Arabia confident
Sharjah International Airport, base of the region's largest LCC, recorded a 12.5% increase in passenger traffic in
the first nine months of the year, with a total of 5.6 million passengers. Highly profitable Air Arabias passenger
traffic over 1H2012 improved 11% while load factors have improved 3 ppts this year, with levels hovering around
85%.
Sharjah International Airport passenger traffic: Jan-2011 to Sep-2012
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Source: Sharjah International Airport
Traffic is up by more than 700,000 passengers on the same point last year, with just a 3.9% increase in aircraft
movements. Part of this is attributable to Air Arabia's load factor improvement, as the carrier accounts for around
80% of traffic at the airport, both in terms of seats and ASKs. Another factor has been the steady increase in
larger aircraft operating to the airport. Smaller regional jets and turboprops have been predominantly phased out
at the airport, in favour of Airbus and Boeing narrowbodies, as well as the occasional widebody service from
carriers such as Uzbekistan Airways and Sudan Airways.
Air Arabia has also been seeking to increase its operations into the high volume Indian market, where it operates
to 13 destinations. Under the existing UAE-India bilateral agreement, access and seat allocations have beenexhausted (despite coming from separate Emirates, access regimes are based on the volume which the UAE is
able to negotiate, so Air Arabia competes with Emirates and Etihad for scarce resources). However, the carrier
has been lobbying Indian aviation authorities to allow it to increase its number of Indian destinations to 20 and
secure rights to operate more seats.
Sharjah is rapidly becoming a major hub for UAE-India flights. Around one third of the airports capacity is
dedicated to operations to/from India. After Air Arabia, the two biggest carriers at the airport are Air India and its
low-cost unit, Air India Express. The two airlines operate more than 45 services per week between India and the
UAE.
Premium airline traffic is shifting to the Middle East, anchoring airline flows
One feature which has much greater significance than mere numbers is the continuing expansion of premium
traffic flows over the Gulf. As this valued traffic globally becomes harder to attract, the Gulf carriers, with their
expanding networks, are increasingly improving their passenger value profile. This is important too for the
region's airports as it tends to anchor in the viability of services, where business, corporate and other high value
passengers are attracted. London's Heathrow has been a good example of the pulling power that premium flows
attract. The main gateway to a major financial centre, its proportion of premium traffic leads the world. Despite
the often less than attractive operating environment, with congestion, expensive slots, air traffic issues and the
like, Heathrow remains a must-go airport which network airlines continually seek to serve.
With the rapid growth of the super-connector airlines in the Gulf region, premium traffic has become
increasingly important in the Middle East. The joint attractions of geographical convenience and superior servicestandards (including high frequency widebody service to most major cities in the world) has allowed the airlines
and airports in the Middle East to divert premium traffic away from traditional sixth freedom hubs in Europe and
Asia.
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At London's Heathrow Airport, 16.0% of all seats flown (including premium economy) are in the premium
category, according to Innovata data, against a world average of 7.0%. Paris Charles de Gaulle, also a
reasonably high value market, has 10.5% of seats in this category. Meanwhile 12.4% of the seats through Dubai
Airport are now premium; and Abu Dhabi has 11.5%. (The influence of Qatar Airways on neighbouring Doha
Airport is also powerful, with 10.3% of seats through the airport composed of premium). These are powerful
drawcards for airports as airlines seek to generate a solid base for their revenue profiles.
Since 2007, the share of global premium traffic connected to the Middle East has swelled from between 8% and
9% to around 12% to 14% of global premium traffic.
Middle East premium traffic and revenue share: Jun-2007 to Aug-2012
Source: CAPA Centre for Aviation & IATA
Much of this growth has been substitution away from European and some Asian carriers to the Gulf airlines, but
the relentless growth of developing markets connecting to the Middle East has also contributed to the
development of the regional premium traffic performance. Long-haul flights from fast growing markets such as
Africa and Asia Pacific have been increasingly using the Middle East as a connecting hub.
Local premium traffic performance remains comparatively subdued and is much more dependent on local and
global economic conditions than long-haul flights.
UAE creating the worlds premier air transport network, while traditionalhubs are starved of new capacity
The massive development of the UAEs airport infrastructure and the level of passenger growth gives the country
one of the worlds premier air transport networks, as well as one of the busiest local airport systems. With
passenger operations at the immense Al Maktoum International Airport in Dubai set to commence from 2H2013,
the scale of the UAEs airport network will be eclipsed only by cities that have historically been at the heart of
international air transport.
London still plays home to the worlds busiest air transport system, yet the UAEs airports are rapidly catching up.
Passenger flows in the UAE doubled over the past five years and are forecast to double again by 2020, reaching
more than 150 million p/a.
Londons five major airports Heathrow, Gatwick, Stansted, Luton and London City handled 133 million
passengers last year. However, growth in the southeast of England is constrained by airport capacity, and the
seeming intractable political opposition to new airport development or the expansion of existing facilities. New
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Yorks major airports handled 105.5 million, and growth over the past three years has averaged just 1.5%
growth, also approaching their own capacity limits.
UAE, London and New York area airport traffic: 2009 to 2011
Source: CAPA Centre for Aviation
This stands in direct contrast to the relationship between the various UAE local governments and their airports
and the local carriers. Dubais two airports alone will add a combined capacity for another 20 million passengers
next year, including the Emirates-dedicated Concourse 3 at DIA. Capacity for another 90 million passengers will
be added in Dubai over the next decade. Abu Dhabi will see capacity for another 27-30 million passengers p/a
added by 2017, with the development of the new Midfield Terminal Complex. In line with the Emirates planning
for the future, the terminal complex will ultimately have capacity for 50 million passengers p/a.
To support the development of the UAEs major carriers, as well as broader national development goals, billions
are being invested in development of aviation infrastructure. Overall, aviation contributes just under 15% of the
UAEs GDP, a figure that will only increase as the countrys major airlines continue to grow. In Dubai, aviation is
expected to generate 22% of total employment and 32% of the Emirates GDP by 2020.
DIA aims to eclipse London Heathrow as the worlds single largest airport for international passenger traffic by
2020. This is a target that even London Heathrow operator BAA admits is likely, given that the airport is already
operating in excess of 99% of runway capacity. Dubai expects to handle almost 100 million international
passengers p/a by 2020, and has forecast an average annual growth rate for passenger traffic of 7.2%.
Dubai International Airport passenger traffic forecast: 2010 to 2020
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Source: Dubai Airports
Separated by less than 120km, the three largest airports in the UAE now represent an immensely complex
aviation system. The major problem on the horizon is not capacity on the ground, but capacity in the air. IATA
director general and CEO Tony Tyler recently warned that the Gulf region is already nearing crisis levels" and air
traffic management delays are the arch enemy of any successful hub.
Airspace constraints mount as traffic grows
Regional solutions will be needed to sort out airspace congestion, otherwise bottlenecks in neighbouring airspace
will hamper growth just as much as congestion in local airspace. The UAE has been proactive about engaging itsneighbours in airspace development. On a local level, there are a number of efficiency and capacity
enhancement projects ongoing at Abu Dhabi and Dubai.
UAE airspace map
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Source: Dubai Airports
Otherwise there is little to stop the burgeoning growth
The UAEs airport network is set to become every bit as dense as similar networks in Europe, Asia and NorthAmerica. These networks serve cities with vastly greater local populations than the combined populations of Abu
Dhabi and Dubai.
However, the UAE is not thinking locally but globally. With one third of the worlds population within four and a
half hours flight and two thirds of the worlds population within eight hours flying time, the UAEs airports and
airlines will increasingly connect the globe.
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