Aviation flies over financial turbulence

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By Saifur Rahman, Business Editor  www.gulfnews.com

Dubai: Although small in size, the UAE has managed to connect itself to global economies and serve larger populations due to its success in the aviation, transport and logistics sectors, despite the international financial crisis.

    *  Dubai International Airport Terminal 3.     * Image Credit: Megan Hirons Mahon/Gulf News
* Dubai International Airport Terminal 3. * Image Credit: Megan Hirons Mahon/Gulf News

This has helped the collection of what were once small fishing settlements to transform themselves into a thriving economy, feeding a consumer base of 1.5 billion people in Asia, Europe and Africa, which amounts to nearly a fourth of mankind.

“The growth in the aviation industry in the UAE no doubt reflects a growth in its economy as it brings in further trade and investment,” said Max Sukkhasantikul, Commercial Aviation Consulting Analyst with the Frost and Sullivan Aerospace and Defence.

It looks likely too that oil and gas will remain the largest economic contributors to the UAE, simply because of the volume of trade and investment which has already occurred in this sector.

“Aviation is there to complement the industry, together with other emerging industries in the region in line with the vision and growth of the cities in the UAE,” he says.

It is, therefore, no wonder that the country is pouring billions of dollars into the industry. Cumulative investment in the country’s aviation sector is expected to cross Dh500 billion between 2000 and 2020.

Of this, Dh70-75 billion is being invested in airport infrastructure, while the largest chunk, or Dh430-435 billion is being channelled to expanding the fleets of the three carriers — Emirates, Etihad and Air Arabia.

In addition, the government and private sectors are investing heavily in developing aviation professionals, technicians and technical capabilities that will see the country join the aviation supply chain in two years.

Airbus and Boeing have already agreed to manufacture aircraft spare parts and components, and eventually become partners in future aircraft development programmes. Abu Dhabi Government’s investment arm Mubadala is also developing a business jet that should start flying by 2018.

Passenger numbers to grow

Once completed, the UAE’s seven airports will collectively serve more than 300 million passengers per annum. Of this, Dubai will have a combined capacity of 240 million, including 160 million at Al Maktoum International.

The combined size of the entire fleet of the UAE’s three airlines, is currently 225, and is expected to be more than 550 in eight years. However, investment in aviation infrastructure and in the airline, has served the country well. Not only has it helped reduce dependence on oil, but it has also become a cash cow for Dubai.

In April this year, Emirates, the biggest Arab carrier, paid Dh1.6 billion to its shareholder — Dubai Government.

Saj Ahmad, an aerospace and airline analyst with FBE Aerospace based in the UK, says, “Aviation has largely become a big economic tool for the UAE thanks largely to its geographic position. The country offers a unique ‘one-stop’ to anywhere in the world and it is of little surprise that projects like Al Maktoum International Airport have been realised. Supporting this has been the massive investment made in tourism and retail businesses — the UAE continues to get millions of visitors, from Europe and beyond, who ready and willing to spend money despite financial pressures.”

Did you know?

Cumulative investment in the country’s aviation sector is expected to cross Dh500 billion between 2000 and 2020.

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