The multi-billion dollar expansion of airports and airline fleets in the Middle East are setting the trend for a new form of airspace race. As the economies grow in a handful of countries in the region, it's no wonder that Abu Dhabi, Dubai, Doha, Bahrain, Muscat, Istanbul and Riyadh are each vying to throw up the biggest and grandest transportation hub in the region. Surya Kannoth...
With aircraft fleets across the Middle East forecast to grow at an annual rate of more than 10 percent over the forthcoming decade, carriers and airports in the region are ruling the roost.
According to a CAPA study, nearly $60 billion was being spent on airport developments in the Middle East region. A substantial portion of regional airports’ expansion budgets has been earmarked for airside facilities development.
The Arab Air Carriers Organisation (AACO) said the number of passengers flying through Arab airports will grow to 571 million by 2026 while the fleet count of Arab carriers will grow from 1069 to 1685.
So what is that makes the air freight industry in the Middle East achieve rapid growth?
As trade patterns continue to shift eastwards, this region is increasingly becoming a pivot for freight movement, an area that the logistics industry is already exploiting.
There has been a remarkable change in the GCC’s transport infrastructure from twenty or even ten years ago, facilitating connectivity and ease of movement which has had a tremendous impact on the regional business scene from a trade and commerce perspective. Today, there is more trade between this part of the world and the global marketplace than ever before, pushing airlines, airports and cargo companies to continuously invest in new facilities, route development, enhanced air networks and cost effective processes to take advantage of the region’s massive growth potential.
“The past ten years have also witnessed some of the fastest growing economies in the world rise out of the GCC with strategic powerhouses such as Dubai and Saudi Arabia gaining momentum as significant cargo hubs - this naturally converts into higher than average air freight growth levels to the GCC countries,” observes Mohamed Yousif Al Binfalah, CEO, Bahrain Airport Company.
“Aviation and logistics have always enjoyed the support of the government which rightly recognises the sector as being at the centre of the national economy spurring growth in other industries such as trade, travel, tourism, and services,” explains a spokesperson from Dubai Airports.
The Dubai Model – which is based on a collaborative approach, is the secret of the success of the city of Dubai as an international hub of choice for trade, commerce and as a destination in itself. The growth of aviation, including cargo, can be attributed to all these factors, the Dubai Airports’ spokesperson added. Dubai Airports announced its plans to invest $32 billion to build the world’s biggest airport at Al Maktoum International at Dubai World Central (DWC - now rebranded as Dubai South), and with it, develop and set new industry standards in innovation and service. Intended to be the world’s leading airport hub, DWC will have capacity of over 200 million passengers and 16 million tonnes of freight annually when it is complete.
“The $7.8 billion SP2020 project announced in 2011 under which DXB’s passenger capacity was to be increased from 75 million to 100 million and cargo capacity from 2.5 to 4.1 million tonnes by the end of the decade is well underway. As part of this project, Terminal 2 has been expanded to double its capacity, while work on Concourse D (which will serve over 100 airlines that fly into DXB) is well on track for completion in 2015. On the cargo side a new perishable area is ready for operation in the Cargo Terminal Operation (CTO) and another perishable facility is being constructed and is due to commence operation in 2015,” said the spokesperson.
While Emirates, the world’s fastest growing airline, has built itself into a top cargo player using belly space in a fleet of 217 passenger jets that serve 127 cities, the carrier's SkyCargo arm offers freighter flights to 50 locations from Al Maktoum International Airport. North America, along with Africa, is the company's main growth target.
The growth targets of Etihad Airways and Qatar Airways, are also ambitious which along with Emirates, have been changing the contours of the aviation industry.
Qatar Airways Cargo, the freighter arm of Qatar Airways, recently added a B747F to its existing fleet of 14 freighters with the aim of enhancing its business offering to its customer base. “There is a growing requirement in the Middle East for the transportation of outsized cargo and we aim to meet that demand with the introduction of this new aircraft, which will supplement the capacity on our existing routes and also provide service integrity whenever needed. With the addition of our B747, we can now provide transportation of oversized goods such as engines, heavy industrial equipment and more,” said Qatar Airways Chief Officer Cargo, Ulrich Ogiermann.
Just this year Qatar Airways Cargo has expanded its network to include four new destinations (Basel, Ahmedabad, Los Angeles and Djibouti) and increased tonnage capacity by 30-40 percent. The strategic location of the region as a transit hub is also a significant factor in the success of the Middle East air freight industry. “Qatar Airways Cargo currently counts 85 percent of its freight as transit cargo, which passes through its state-of-the-art hub at Hamad International Airport in Doha, Qatar, where we can handle 1.4 million tonnes of cargo a year, and on to the more than 150 destinations on its global network,” Ogiermann added.
Etihad Airways’ cargo division also delivered a standout performance in 2014, becoming a billion dollar company one year ahead of schedule. Cargo revenues were up 19.2 percent to $ 1.1 billion, with freight and mail volumes rising from 487,000 to 569,000 tonnes.
“Etihad Cargo has consistently outperformed the global market. Its impressive 17 percent growth in freight tonne kilometres in 2014 is four times the industry average,” said James Hogan in a press statement. “Today, Etihad Cargo is one of the largest cargo operators in the world. We are forecasting significant growth for 2015, driven by key initiatives to expand its capacity and scope, and to leverage equity and other partnerships.” Etihad Airways also made important investments in its long-term business infrastructure, diversifying its activities to ensure greater control over its service standards and delivery.
The Sultanate of Oman is also furthering its capabilities as an industrial trading hub, ensuring that aviation is up to world class standards is vital. The country has made huge strides in investing in aircraft and infrastructure. The new Muscat International Airport’s infrastructure will be able to handle 12 million passengers annually in phase one, reaching up to 48 million passengers annually in phase 3, raising the opportunities for inbound tourism and more business opportunities. The construction in Muscat International Airport will be completed in the coming two years.
The New Salalah Airport commenced operations in the new terminal on June 15, 2015. The new terminal has enhanced capabilities to handle around 100,000 tonnes of cargo and a hangar for the maintenance of a wide-body aircraft.
“The modernised state of the art airports at Muscat and Salalah feature expanded air cargo terminals, while the regional airports at Sohar and Duqm will include air cargo components as well. As a first step in the development of a strong air logistics hub in the Sultanate, the authority is taking steps to ensure that the required infrastructure is in place on the ground. Furthermore, an additional capacity to the existing air cargo terminal at Muscat International Airport,” explained Sheikh Samer bin Ahmed Al Nabhani, commercial general manager, Oman Airports Management Company.
In regards to the new airport, the development of a 200,000-tonne capacity air cargo facility, and at Salalah, an establishment of a 100,000-tonne capacity terminal, and the regional airports of Sohar and Duqm will each feature a 25,000-tonne capacity facility in the first phase, and expandable in later phases.
The national carrier of the Sultanate, Oman Air is also pursuing an ambitious fleet expansion and simplification as part of a plan to double its fleet and add more than 25 new destinations over the next six years. The flag carrier has decided to phase out ATR turboprops and Embraer regional jets as it seeks to operate two or – at most – three aircraft types.
Earlier this year, Oman Air-Cargolux launched a second full freighter flight from Chennai to Muscat, strengthening its presence in the Indian market by accessing the industrial belts of South India. The addition of Chennai to the Oman Air Cargolux network is the cooperation's latest step in expanding its air freight services from Oman to India, according to the airline.
The Oman Air-Cargolux cooperation was established to enable state-run airline and Luxembourg-based Cargolux to jointly access new freighter destinations and contribute to the development of Oman's logistics hub. It will allow Cargolux to utilise Oman Air's experience of flying to a range of global destinations, including 11 destinations in India. In addition, it enables Oman Air to further expand its cargo operation and build on the range of initiatives the airline has introduced over recent years, the statement said.
Bahrain has also left no stone unturned in transforming itself into a leading aviation hub. Bahrain Airport Company has embarked on a strategic venture to modernise and transform Bahrain International Airport in line with the Kingdom’s Economic Vision 2030, global aviation trends and projected growth in passenger numbers and freight movement in this region.
The Airport Modernisation Programme (AMP) currently underway, will increase the airport’s handling capacity from 9 million to 14 million passengers per annum and elevate the airport’s infrastructure, facilities and services, enhancing its regional competitiveness and furthering its status as a leading aviation hub.
“We are focusing all of our resources on the success of the AMP which by 2019 will bring a new modern 206,000sqm. state-of-the-art passenger terminal building to the Kingdom of Bahrain. The new facility will be more than quadruple in size offering expanded passenger capacities, world-class facilities and commercial offerings, placing BIA on par with its global counterparts,” said Mohamed Yousif Al Binfalah, CEO, Bahrain Airport Company.
“We anticipate construction to kick off by early 2016. The accomplishment of the AMP will reflect on the entire nation and will further fuel the growth of Bahrain’s tourism and aviation sectors and boost economic development as a result,” he added.