All Aboard

Moving into the 21st century, the eastern Gulf is leading the way in airport expansion, but how viable are these projects?

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By  John Irish Published  March 30, 2003

|~||~||~|The world has indeed moved on from Orville Wright’s first successful leap into the air almost a century ago. With planes taking off at almost every major city in the world, architects are developing the new palaces of the world by creating and expanding airports.

While airport expansion in the Eastern Gulf may appear foolhardy in the current climate of increasing war risk premiums, rising fuel prices for airlines and consequently escalating passenger fares, investment into regional airport development is turning into an unstoppable animal. Be it the smaller UAE states of Ras Al Khaimah, Fujairah or Al Ain, the tourism hungry Qatar, or the established hubs of Bahrain and Dubai, everybody wants a piece of the pie.

“As the world is transforming into a global village, and due to the lifting of trade blocks, countries will have to open up borders and attract foreign investment by developing its service sector to meet the market needs,” says Sheikh Salem bin Sultan Al Qassimi, chairman of the Ras Al Khaimah’s Department of Civil Aviation, as he announced the emirate’s plans for a US $16.3 million 5-year airport expansion plan.

The Middle East’s strategic position makes it one of the busiest regions worldwide and with the Gulf gradually becoming a popular winter sun destination for Europeans in particular, these plans appear to be catering to new opportunities for trade and tourism development. In terms of tourists and cargo, the region’s airports have seen steady growth, but while the short-term benefits are self-evident, the airports will need to market themselves and target specific niche markets to run successfully in the long-term.

Dubai sets the trend

Dubai, which is currently undergoing a US $2.5 billion expansion programme that will see the construction of a third terminal by 2006, a second concourse and a mega cargo terminal, has set the example for the rest of the region and will be the template for further development in the Gulf.

Over the last ten years, passenger throughput increased by 125%, going from 4.3 million in 1988 to reach 9.7 million in 1998. By 2001, the airport saw 13.5 million passengers and predictions are that by 2010, with its ongoing real estate plans and tourism infrastructure development, the emirate will witness arrivals exceeding 30 million. But where Dubai has stormed ahead of its regional rivals is in its marketing and liberal airport policies, which have attracted airlines to its international hub.
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In its early stages, Dubai was quick to see that although in the 1980s it received just 2 million passengers annually, the need to find a unique selling point for the airport was crucial to secure its future survival and expansion. That alternative turned out to be the grandiose duty free areas that the airport is now renowned for, and with the airport now seeing almost 16 million passengers a year through its gates, it is concentrating on specific airport expansion to take it into the 21st century and allow it to compete on a global scale rather than remaining solely the region’s number one.

“A good airport needs an attachment area or should have some attraction like a retail offer or duty free, for example, and I think that all Arab airports are understanding this,” explains Manfred Manburger, a freelance aviation journalist and author of several books on Middle East airports.

Muscat’s Seeb International Airport, which has invested $150 million to increase its capacity to 5 million passengers per annum (Seeb received 2.5 million in 2001), has taken the first steps to doing just this. Rather than wholesale changes, the Omanis are finely tuning and trying to adapt to passengers requirements and demands.
“[Take] Oman’s Seeb International Airport: it had a little shopping area, but now they are building a new terminal with a big shopping area, because that’s essential for these airports. They don’t make enough money with passengers alone. They have to do their sums and make money somewhere,” explains Manburger.

On the other hand, Bahrain International Airport (BIA), which for many years had the biggest potential as a transfer airport, has fallen behind Dubai. Although it considered itself the gateway to the Far East, the airport suffered on two fronts.

Firstly, as soon as technological advances made it possible for aircraft to fly from Australia to Europe non-stop, it immediately made BIA less important as a transfer destination. Consequently, this led to the airport losing lucrative partnerships with airlines such as Qantas, which it has only recently begun recovering.

Secondly, Bahrain’s hesitance to go down the retail route held up its development as a prime international hub. For the Kingdom, the process has been a learning curve and things are slowly back on track, with a development programme worth $815 million that includes a second runway, a new state-of-the-art control tower and, of course, a comprehensive duty free shopping area.
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“As long as we can remain competitive in terms of facilities and overall costs, we will remain a destination and transit point to consider,” says Les Kentwell, public relations manager for BIA.

Too much competition?

With the number of airports restructuring and redeveloping in the Gulf, the question that springs to mind is how can there be room for all of them? The UAE, for example, has major expansion projects in almost all its states, while the plans above are popping up alongside expansion plans in both Qatar and Kuwait.

From an airline perspective, the amount of airports can cause more problems than it’s worth, particularly when many of these have restricted air space, according to officials at the International Aviation Transport Authority. “We believe this area has good prospects, since a lot of expansion means an attraction for trade and tourism, but from an airline point of view, we don’t think that there is a need to expand in all these areas. They may have other needs, but we don’t see a big demand in having two or three airports in the UAE.”

Manburger disagrees, claiming that with the current regional traffic volume the market is becoming saturated and needs projects like the $1 billion investment project in Doha, where the existing facilities are too small. As far he is concerned, it’s not a question of building new airports, but developing the present ones. Of course, while the main national airports may need expansion he also defends the development of smaller sites such as Fujairah, Ras al Khaimah and Sharjah.

“You cannot handle the big volumes like Dubai does in all the places, it’s impossible because passenger streams will not follow, but there is space for niche markets, niche airports and niche airlines,” he explains. “I don’t think there are too many airports in the region; on the contrary, Fujairah has developed its business in the sea air cargo and Ras Al Khaimah is developing a little niche for itself as [the hub] for ex-Soviet Union business, so if they do their marketing intelligently, they will have a little niche.”

Nevertheless, the challenges in the Gulf remain the same. While the political risk of conflict in the region along with the possible anti-American post war backlash would undoubtedly have an affect on the Eastern Gulf’s aviation industry, the big airport players and their governments are persisting with their plans.

As Francisco Frangialli, secretary general of the World Tourism Organization highlighted in March, “The tourism industry has always come out of crises in much better shape than it has gone into them. The economic and financial crisis of Asia-Pacific and Russia in 1997-1998 is a clear example. These destinations came out of the recession stronger and more firmly on the road to sustainable development. We can see this happening once again.”

It now remains to be seen whether in the long term, the region will be able to take Orville Wright’s innovation well into the next century.
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