Taking to the skies

Budget airlines need their own airport to make the business plan work. By the end of next year, the Middle East will have its first ever dedicated passenger terminal for low cost airlines. Given the fact it will be at the new Jebel Ali International Airport – 40 kilometres from Dubai – passengers are right to be cautious. But history suggests this will prove to be the real spark for growth in the industry.

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By  Richard Agnew Published  February 19, 2006

|~||~||~|Budget airlines need their own airport to make the business plan work. By the end of next year, the Middle East will have its first ever dedicated passenger terminal for low cost airlines. Given the fact it will be at the new Jebel Ali International Airport – 40 kilometres from Dubai – passengers are right to be cautious. But history suggests this will prove to be the real spark for growth in the industry. First the down side. Having to drive for half an hour from Dubai to reach the airport, and even longer from Sharjah, does not sound like a good thing. Currently Air India Express and Kuwait-based Jazeera Airways are the only low-cost carriers operating to Dubai. But the number of budget airlines operating in the region is expected to rise considerably in the next few years. And as the Europeans have found out, budget airlines simply do not operate efficiently at major international airports. Take London’s Heathrow and Gatwick – the smaller carriers such as RyanAir and easyJet have long realised that they simply cannot afford to wait for take off slots, when low turnaround time is the premise of their business plan. Nor can they afford endless circling around a city waiting for landing slots. The only way for their business to work is not just a dedicated terminal, but a dedicated airport. “Gradually, flights of low-cost airlines will be moved from Dubai International Airport to the Jebel Ali International Airport,” Michael Proffitt, chief executive of Dubai Logistics City (DLC) told Dubai Property Group officials last week. He is absolutely right to do so. Tenders for the new terminal at the airport will be issues shortly and it is expected the first flight will touch down in December 2007. The terminal will be part of an airport with six parallel runways, two permanent terminals and six concourses to handle passengers.In total, it will be capable of handling more than 120 million passengers and more than 12 million tonnes of cargo per year. This is the right move at the right time. It would appear that the era of the low cost airline is finally beginning in the Middle East. ||**||Time to stay low|~||~||~|This magazine has been a champion of Emaar and Mohamed Alabbar, but it seems we are fighting a lonely battle. The Dubai Financial Market’s obsession with knocking down Emaar’s shares shows no sign of stopping. You will recall the 180% rise in profits just three weeks ago. That resulted in the shares slumping 5% as analysts claimed the results could have been much better. They also pointed out, and I think with some justification, that US$200 million worth of that profit came from the sale of Emaar’s stake in Dubai Bank. So last week, when Emaar announced a 40% cash dividend for investors, many experts expected a change in fortunes. Not so. Investors say they have been left disappointed that no bonus is being given for the second year running. The shares have fallen another 5%. Emaar needs a period of calm and stability, preferably with few or no new announcements. It should get back to doing what it does best: building magnificent buildings. Otherwise, it will become bogged down in daily battles with the financial markets, which it ultimately can never win.||**||Dubai's needs F1|~||~||~|As the Formula One circus prepares to roll into the Middle East for the start of the new season, questions will again be asked about Bahrain’s ability to stage a Grand Prix race. Let us be clear about one thing: the Bahrain International Circuit is world class; its facilities are second to none for both spectators and sponsors. The viewing points from the stands and elsewhere around the circuit are far better than at most other races. So what is the problem? I have been at the last two races, and the one thing Bahrain lacks is an absolute passion for Formula One. The sport is not just about a motor race – it is an occasion. And increasingly the view is, amongst myself and other observers, it is an occasion that would be better received in neighbouring Dubai. I have a feeling that even the race organizers at Formula One Management, who spend several days in Dubai before the Bahrain race, are thinking the same. ||**||

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