Bahrain's big moment

Bahrain is investing US $815 million in a bid to make its airport a key regional and international hub

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By  Massoud Derhally Published  May 6, 2003

|~||~||~|Turbulent times and increasing competition from neighbouring countries have not weakened Bahrain’s resolve to become a major hub of international and regional travel. The Kingdom, which stands already as a centre for offshore and Islamic banking, is now spending big on infrastructure and support services to become a prime destination and transit point for international travellers. In place is a massive US $815 million development programme that will take the Kingdom’s airport a step further towards challenging the region’s largest international airport in Dubai.

Passenger traffic and cargo volumes have been driving factors in the move to expand the airport and services. David Ryan, director of marketing at Bahrain’s Ministry of Transportation and Civil Aviation Authority, says traffic and business had stagnated at the Kingdom’s airport since the first Gulf War up to the late 1990s. But this changed in 2000 when it jumped by 15% from the year before, marking the first big increase that the airport had seen in a number of years. According to Ryan, this was because the authorities began to open up and introduce ‘open skies.’ “We gave permission to Emirates to fly in here, Gulf Air increased its Gulf frequencies and we opened air services to Air Iran. Meanwhile, other airlines like Cathay Pacific and KLM increased their flights,” says Ryan.

For much of 2001, traffic began to grow very strongly and Bahrain was on the rebound. On the morning of September 11, growth over 2000 was 14% ahead for passengers. “That is serious growth by any yardstick,” says Ryan.

“But unfortunately, like everywhere else, we saw a drop in traffic after September 11 and the effects of that carried right through until the end of the first quarter of 2002 and 2001 ended up 2% ahead of 2000,” adds Ryan. Despite the negative effects of September 11, which resulted in a reduction in transit business and chartered airlines bypassing the Gulf, Bahrain airport’s core businesses continued to grow.

“Even though traffic stagnated up to the end of April 2002 (13% down on the previous year), the negative impacts of September 11 began to wear off,” says Ryan. “Business began to recover and recovered very strongly. Beginning from May 2002, we began to see substantial growth in traffic and ended the year up 4% from 2001,” adds Ryan.

Ryan suggests that the period after September 11 until the end of April 2002 was nothing more than a hiccup in the development of the industry in this part of the world. “If you take out those six months, traffic was growing very strongly everywhere. Our business earnings recovered, more airlines were coming and more flights were being operated. From our point of view, there is an increased use of Bahrain as an international gateway to the region both by air and by surface,” he says.
Airport numbers appear to echo Ryan’s point of view. According to
official figures, Bahrain’s airport saw 4.15 million passenger arrivals in 2002, a 4% increase from 3.99 million in 2001. For the same period, 181 tons of cargo passed through the airport, an increase of 15.6% year on year. In 2002, the airport saw 62,000 aircraft movements, 2.5% ahead of the previous year. While in percentage terms it may be small growth, the average aircraft size actually increased, more people were operating bigger aircraft, and there was a large increase in aircraft activity between Bahrain and Iran, adds Ryan.

“From the figures we have, we see that the end to end traffic is increasing. The philosophy is to create a friendly environment, where passengers relax and enjoy their experience of Bahrain as much as possible, so we’re not targeting any type of passengers, it is the overall [number of] passengers,” says Sheikh Hisham Al Khalifa, assistant undersecretary for airport services. “We saw a big jump in passenger figures in 2002, and we saw a very healthy continuation of that in January with a 21% increase over January 2002, and ended February 17% higher than February 2002,” adds Sheikh Hisham.

The main objective over the past few years, according to the Sheikh, has been to maximise the size of the airport. The capacity for the arrivals area has increased, with check in facilities growing from ten to eighteen. Immigration processing capacity has expanded and the baggage reclaim area has increased capacity by 20%.

The airport has also added parking spaces for an overspill of 500 cars. “We are working on a dedicated first class check-in lounge; these passengers will have their own security checks, immigration processing, and access to the departure lounges. The airport is also in the process of reshuffling first class and business lounges,” continues Sheikh Hisham.

The authorities are also investing in infrastructure. Bahrain International Airport, currently with a single runway, is investing US $20.6 million to upgrade the taxi runway and effectively have an emergency strip that would minimise disruption of operations. The scope of work will comprise an upgrade of 2500 metres of the existing 23 metre wide parallel taxi-way to 45 metres. Completion of the project is expected in December 2003 and has been awarded to Jacob Gibbs consultancy.

The terminal extension will have parking stands for large aircraft like the A380s. Ryan says the airport could see a doubling of traffic and still have runway capacity. Work on a new 49.5 meter high control tower, designed by Ahmed Abubaker Janahi Architects, is set to start in January 2004 and be completed by January 2005 at a cost of US $5.3 million.
There are also plans to extend the terminal building. In January 2004, work will begin on the first phase, which will see the addition of business satellite facilities with eight air bridges and additional stands. Floor area will, as a result of the new expansion, double the size of the existing airport facility. The project, which will be completed in January 2006, is valued at US $52.9 million. The expansion plan over the next four years also includes a multi-storey car park that comes at a hefty US $115 million and a leisure shopping centre, which can have 4,500 cars.

Bahrain Airport Services (BAS), which is the airport’s handling agent, is also on the move. BAS, which has been the main ground handler since 1977 in Bahrain, is doubling the size of its lounges, which will include a new dedicated area for British Airways. This is in addition to a bigger Cathay Pacific lounge, says Tom Nolan, general manager of BAS.

BAS will also put 60% of its staff through customer service programmes in order to improve the level of operations. “This is in line with initiatives like Formula One coming to Bahrain, which we know will bring outsiders for the first time. We want to project the very best public image of the Kingdom and one of the best ways to do that is to be able to deliver a friendly and efficient service at the airport,” says Nolan.

Last year, BAS spent over US $5 million on new equipment and it looks like the hard work is paying off. After recently signing a deal with Kuwait Airport to start providing services there from this coming summer, the company is in discussion with other airports in the region. “Kuwait is going to be a springboard for us. We are looking at mass catering. The Kuwait project has given us the vision to look outside and we are looking to form a trading company,” says Nolan. The company is also looking at services it can provide in the rebuilding of Iraq.

Authorities are paying attention to detail in the airport as much as they are to infrastructure. The duty free area and the food courts have gradually increased in size. In 2002, $10 million was invested in new shops. In 1997, Bahrain’s duty fee became a public company and was listed on the Bahrain Stock Exchange. According to Maurice Burke, general manager of Bahrain Duty Free, sales in 2002 were US $38 million and the company has been paying shareholders a 40% dividend for the past 5 years.

“The expansion at the airport is something that we look forward to because you can never have enough retail opportunity at the airport,” says Burke. “We are looking for upmarkets area in the future, where we go for international brands. This is an area of the market where we have not had too much exposure,” he adds.

Perfume sales over the last three years have gone from good to better, accounting for 18% of sales, says Burke. Confectionary makes up 9% of sales and since mobile phones took off, electronics have become a major player, now accounting for 9%. Meanwhile, tobacco sales account for 11%. “Growth over the past eight months has been steady, with over 20% growth in the first two months of 2003. We have seen a good lift up in the average spend per passenger and our average transaction value. The expansion of the airport, when it comes will give us what we are looking for in terms of extra retail,” explains Burke.

The millions of dollars invested in expanding and refurbishing Bahrain’s airport highlight its drive to take it to the next level. It now remains to be seen whether it will be able to find its place amongst the plethora of new airport projects sprouting up throughout the region.||**||

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