Does Dubai need another airport?

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By Rasha Reslan  www.kippreport.com

It has the world’s tallest building, the flashiest hotel, and more artificial palm-shaped islands than anywhere else. So it was only a matter of time before Dubai built the world’s biggest airport. But is DXB 2.0 really necessary?

Dubai’s colossal new transport hub, Al Maktoum International Airport, is set to open in June – albeit for cargo flights only.

No date has been set for the launch of passenger flights, but the airport’s management is in ongoing talks with airlines over relocation to the new hub.

“The company is in advanced talks with airlines, both passenger and cargo, across the globe to start operations from the new airport,” Paul Griffiths, CEO of Dubai Airports Co, told Emirates Business recently.

The fact that a concrete date has been set for the launch of cargo flights does, perhaps, reiterate the commitment to building the $820 million airport – despite the recession and the crippling debt problems that have hit Dubai.

The new airport is part of the gigantic $33 billion Dubai World Central (DWC) real estate development in Jebel Ali, some 40km from DXB. It will eventually have five runways, four passenger terminals able to accommodate 160 million arrivals a year, and 18 cargo terminals with a capacity of 12 million tons. The whole thing is expected to be completed within 15 years.

But does Dubai actually need another airport?

On paper, the prospects for growth in the region’s aviation sector – and therefore the feasibility of constructing the world’s largest airport – certainly look good.

UAE airspace is getting busier. Passenger numbers at DXB continue to rise, and the UAE General Civil Aviation Authority (GCAA) says that UAE air traffic movements increased by 12.7 percent in February 2010 compared to the same month the year before.

The wider Middle East aviation industry is also in relative good health. According to the International Air Transport Association (IATA), Middle Eastern airlines saw passenger demand climb 11.3 percent in 2009, the only area in the world to report significant growth in what was a dismal year for the industry.

“Arab airlines were able to increase their market share tremendously, and that’s why they concluded the year with double digit growth,” says Abdul Wahab Teffaha, Secretary General of the Arab Air Carriers’ Organisation.

On top of this, regional carriers may see losses reducing from $1.2 billion in 2009 to just $300 million in 2010, thanks to increasing passenger demand and decreasing non-fuel costs.

But while Dubai will indeed need a new airport, it may not need one quite so big.

Existing capacity at Dubai International Airport is 60 million passengers a year, and infrastructure works at the airport will see this boosted to a maximum capacity of 90 million. Industry professionals predict that Dubai’s total passenger demand will approach 100 million by 2020 and reach 140 million by 2025.

If these predictions are accurate, DXB will indeed become inadequate. Capacity for 10 million additional passengers will be required by 2020, and 50 million by 2025. But does that warrant a new airport with a capacity of 160 million, bringing the total capacity to 250 million?

Would this represent over-capacity, an issue voiced previously by IATA concerning Gulf airlines in general?

Paul Griffiths, CEO of Dubai Airports Co, told Emirates Business recently that the strategy behind the new airport involves a “gradual build-up” of passenger numbers.

But that build-up could be ever more gradual, not least because of the decision made by Emirates airline – Dubai’s flagship carrier, and principal customer at the new airport – to delay relocation to the new site.

Tim Clark, the president of Emirates, told The National that the airline aims to move to the new airport between 2022 and 2030, and not between 2018 and 2020 as previously planned. “We have refocused here [at Dubai International],” Mr Clark said. “With a certain amount of investment here, you can get a lot more out of this airport.”

And so without Emirates fully on board until 2030, it is unlikely that the 15-year target for the completion of the entire airport will be met.

The airport has already been hit by delays. As Andrew Walsh, vice-president for cargo and logistics at Dubai World Central, told Bloomberg recently: “The global recession has slowed the timetable for construction of the airport, which is expected to be largely completed within 15 years; Dubai pushed back the opening of the first section to this year because of building delays.”

Given the current financial climate, delays are to be expected. But as for the general feasibility of Al Maktoum International Airport, things will depend entirely on the growth in passenger numbers, and tourists visiting Dubai. And that is, of course, still up in the air.

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