On A Rise

Middle East Airports have postedabove average growth rates in the past several years and 2011 looks set to continue the trend despite the Arab Spring and political unrest that has at times paralyzed commercial airline operations in several countries in the region.

So while Airports Council International (ACI) data for the 2011 first half shows that Middle East airports’ traffic growth was down year-over-year, the region still enjoyed a 6.9% increase in passenger throughput compared to the worldwide average was 5.7%.

In 2010, passenger numbers handled by airports in the Middle East registered a robust 12% hike, according to ACI.  This compared with a 6.6% increase in global airport passenger traffic and with a modest 2.3% expansion in passenger traffic posted by airports in North America and 4.3% growth by European peers. As highlighted in ATW’s World Airport Report (ATW, Sept. 2011, p. 24-52), based on an analysis by Arthur D. Little, the upward trend in passenger throughput reported by the region is due mainly to the continued expansion of the Gulf’s “big three” global airlines, Emirates (EK), Etihad Airways (EY) and Qatar Airways (QR). While most main airports in the Middle East, with the exceptions of Bahrain, Jeddah and Kuwait, reported strong growth last year, it was those airports in the United Arab Emirates (UAE) that remained by far the largest growth contributor (49%) with 8.1 million additional passengers. Relative growth at Dubai International (DXB), base of EK and of LCC flyDubai, was 15.3% last year, while Abu Dhabi Airport (AUH), home of EY, handled 12.2% more passengers than in 2009.  Qatar took second place in pushing growth in the Middle East, with Doha (DOH) adding 2.6 million passengers. This equates to a 20% increase over the prior year. 

DOH, DXB and AUH all claim places in the top 10 world’s fastest growing hubs in the 2001-2010 period with compound annual growth rates of 21%, 14% and 13.1%, respectively. Doha airport passenger traffic in the first seven months of this year increased 15.1% over the year-ago period to 10.2 million; Dubai saw an 8.9% increase to 24.6 million passengers for the first half against the year-ago period, while Abu Dhabi registered an 11.7% increase to 5.7 million passengers. With this double-digit growth, AUH once again outpaced the worldwide average as calculated by ACI, and it was also ahead of the region’s average increases. Aircraft movements at the UAE’s second busiest airport rose by 3.5% compared with the first half of last year and cargo throughput saw a 10.4% hike to 231,733 tonnes. 

“Abu Dhabi has seen a tremendous growth. This year the airport will accommodate 12 million passengers. This is not large, but it represents a 12% increase on the levels of last year,” Abu Dhabi Airports Company (ADAC) CEO Jim Bennett said. “When we look at the future, we anticipate growing at a 10% to 12% compounded annual growth rate between now and 2020. After that, our growth rates are forecasted to slow to about 5% for a few years and then to about 4%.”

Intertwined Goals 

As in the past, the bulk of this anticipated growth will come from the airport’s home carrier, Etihad. EY accounts for 70% of passenger movements at the airport and is on an ambitious expansion course, backed by a $43 billion order placed in 2008 for 100 firm aircraft, 55 options and 50 purchase rights for delivery between 2011 and 2020. The original firm order comprised 10 Airbus A380s, 25 A350s, 20 A320s, 10 Boeing 777-300ERs and 35 787s. In February, three 777-300ERs were swapped out for four 787s. A September Boston Consulting Group (BCG) report, Middle East Megacarriers: Gaining Altitude, ranked Etihad in the top 20 of largest operators of widebody aircraft in the world by 2015, ahead of long-established airlines like Virgin Atlantic and Air Canada.

EY is the youngest of three Middle Eastern megacarriers. It started operations in November 2003 and in 2010 it carried already 7.1 million passengers; it anticipates increasing that figure “considerably” this year. It did not release a full-year forecast, but its first-half enplanements increased 14% to 3.8 million over the year-ago period and third-quarter passenger numbers were up 18% to 2.3 million. At the end of September, EY deployed 61 aircraft (54 passenger aircraft and seven dedicated freighters) on a network spanning 72 destinations in 47 countries and it had a further six new destinations on sale, with Male, Seychelles, Chengdu and Düsseldorf coming online in November and December. The airline took delivery this year of five new widebody passenger aircraft—three A330-300s and two 777-300ERs—and a Boeing 777 Freighter; an A320-220 will arrive in December. It will add four 777-300ERs and two A320s next year and has A380s scheduled to begin deliveries in 2014. Deliveries of the Dreamliners are scheduled to start in the last quarter of 2014.

EY has mapped out a network consisting of 100 destinations by 2017 and 119 in 2019.

“We plan to improve frequencies on existing routes and add more secondary cities in Europe, more flights to the US and to Canada depending on the bilateral situation. We also see good opportunities in Africa and Southeast Asia.  South America is an untapped market for us for now, but that could change,” Etihad CEO James Hogan said.

About 50% of EY’s traffic is origin & destination (O&D) and the other half is transfer.

“Our mandate is to support building Abu Dhabi and bringing people into and out of Abu Dhabi, and Abu Dhabi is becoming a destination in its own right. But there are clear growth opportunities in flow traffic. We are doing nothing different than other small countries with a small population. We are improving our hub functionality, exploiting Abu Dhabi’s strategic geographic location,” Hogan said, dismissing claims that the Middle East hub landscape is getting too crowded. “Quite frankly, I do not see the difference with the situation in Southeast Asia where Singapore, Hong Kong and Kuala Lumpur and their respective home carriers vie for the same transfer traffic. The same competition existed between European hubs.”

The Middle East has established itself as an important hub for long-haul travel, the BGC report concluded, pointing out that passenger flows to and from the region increased by 45 million passengers over the five-year period from 2005 through 2010. They are expected to increase by another 45 million over the next five-year period, from 2010 through 2015, it said.

Infrastructure expansion 

Abu Dhabi Airport does not impose any environmental or night restrictions on aircraft movements. It has two widely spaced (2,000 m apart) parallel runways allowing for simultaneous operations; both runways extend over 4,100 m (13,451 ft.) and the north runway received the CAT IIIB classification in January 2009.  “The category IIIB capability is a tremendous asset given the fact that the UAE does get fog,” Bennett said, noting, however,  that full use of the CAT IIIB is limited “because not all aircraft operating to AUH are equipped with the right instruments or their flight crew are not certified for category IIIB approaches.”

A new iconic control tower, located between the two runways, became operational this year and the airport’s AED1 billion terminal 3 (T3) was inaugurated in 2009. T3 is exclusively dedicated to Etihad and its main codeshare partners, including Virgin Australia. T1 is used by international network carriers, while T2 is a low-cost, point-to-point facility used by carriers such as Nas Air, Air Arabia Egypt, Sudan Airways and Pakistan’s PIA and Airblue. Terminal 1, which was the airport’s first terminal building when it commenced operations at its present location in 1982, was recently totally remodelled to “align it with the premium passenger experience offered by Terminal 3,” ADAC COO Ahmad Al Haddabi said. The lounges were refurbished, check-in and immigration counters were expanded, the technology platform upgraded and passenger flow improved.

In total, the airport features 119 check-in desks and 18 Common Use Self-Service kiosks, 40 commercial aircraft parking stands, 16 bus gates and 20 boarding bridges. Terminal 2 has no contact gates and only two of the eight aerobridges in T3 can accommodate the A380, but ADAC is planning to add a third one to cater for EY’s operations. So far, no other operators have indicated their interest to operate the aircraft to AUH, according to Bennett who joined the company in June last year. Bennett was formerly president and CEO of the Metropolitan Washington Airports Authority.

The airport’s terminals have a handling capacity of around 12 million passengers per year, which is the level of throughput it expects to reach this year.

“As a result, we are in the process of trying to execute some additional internal capacity improvements, that would bring the capacity up to about 17-18 million passengers a year. And then, ultimately we will migrate to the future midfield terminal complex (MTC),” Bennett said.

As the name implies, the building will be located between the airport’s two runways. In its initial phase it will be able handle up to 27 million passengers per year, with options for this to grow to a 40 million passenger capacity.

AUH’s ambitious midfield terminal complex has been on the drawing board for some years. “It is a long story. But the bottom line is that we’ve gone over a whole validation process again, working with Etihad, with all our stakeholders and partners to verify the needs, the forecast, the design, the costs . . . All the components have been reviewed before embarking on it,” Bennett said. He did not detail the reasons for the delay.

“We’re not giving dates at this time for opening of the new complex; we’re currently in the tender mode for the contractor,” he said.

Broader Portfolio 

Abu Dhabi’s passenger traffic is about an even split between O&D and transfer, “which is very healthy to have that kind of ratio. As the airport grows overtime, that will somewhat change towards a bit more transfer,” Bennettt said.

The airport operator is actively trying to attract other airlines. “One thing we want to do is make sure we diversify our airline offering,” he said. “Etihad is a great partner. We are thrilled with what they are doing, with their growth plans and we work very closely, but even they would like to see other airlines in the market because it’s like a critical mass [effect].  The more people come, the more people want to be here and they [Etihad] will in turn pick up additional transfer traffic to their network. It’s good for Abu Dhabi. It supports the Plan Abu Dhabi 2030.”

Some 40 airlines operate from/to AUH serving more than 80 destinations in 46 countries. Additions to the airport’s portfolio in 2011 include Virgin Australia, which launched a thrice-weekly from/to Sydney in February; Cathay Pacific, which started a four-times-weekly service from/to Hong Kong in June; CSA Czech Airlines, which started a four-times-weekly to/from Prague in September; and Arik Air will start flying a thrice-weekly from Lagos in November. Other airlines such as Yemenia Airways, Air India Express, Syrian Arab Airlines increased frequencies or added routes from the airport.

“We’re looking to add more airlines, more routes and adding competition on heavily travelled routes,” Bennett said, confirming that, like other airports, the company offers market intelligence, incentives and marketing support to attract new traffic. The proximity of its larger peer, Dubai, is not a detrimental factor to Abu Dhabi airport’s development, Bennett said. “When we go to the market we sell Abu Dhabi, which is a very different market [from Dubai], and we market that our airport is convenient for customers. We have a very strong reputation for getting through the facility quickly and offering a high-quality service.” 

ADAC will host the 18th World Route Development Forum in 2012. “This is a great opportunity for us to showcase the airport and show the industry what is going on in Abu Dhabi, to show how it has grown into a dynamic and attractive destination with the business and leisure potential that ensures a successful and sustainable route for airlines,” Bennett said. “The event will bring together 2,500 to 3,000 professionals from all over the world for several days in Abu Dhabi and we will talk about what we love: airlines and air services.”