Dubai International airport (DIA) has come a long way from its humble beginnings in 1960 when it served as a refuelling stop, with just a few thousand passengers trickling through each year.
Fast forward 52 years and the airport, which now serves more than 150 airlines and currently ranks as the world’s fourth busiest hub for international travellers and cargo, exceeded the 4.5-million passenger mark in August alone.
“We are on track to meet the annual projected traffic of 56.5 million passengers [for 2012], which will bring us very close to Dubai International’s operational capacity of 60 million passengers a year,” says Dubai Airports chief executive officer Paul Griffiths. “The addition of Concourse 3 [will] boost our [annual] capacity to 75 million.”
|Dubai passenger traffic|
|Source: Dubai Airports|
When completed at the end of this year, the AED12bn ($3.3bn) Concourse 3, which is part of the exclusive Emirates airline Terminal 3 complex at Dubai International, will become the world’s first A380-dedicated facility of its kind.
Dubai’s aviation masterplan
But as Griffiths explains, it is just one of the many facets of Dubai Airports’ $7.8bn Strategic Plan 2020 (SP 2020). The masterplan calls for the exponential growth of Dubai as a global aviation hub for passengers and cargo that will see Dubai International pushed to maximum capacity before the development of the emirate’s new mega hub, Dubai World Central’s (DWC) Al-Maktoum International, is ramped up.
“Because Dubai International is a 24/7 operation, with no restrictions [in terms of night flights], the idea is to sweat the assets we have there and get throughput to 90 million passengers [annually] by investing in infrastructure and technology to accommodate round-the-clock activity,” he says.
Essentially, the SP 2020 masterplan outlines “aggressive expansion plans for airspace, air field, stands and terminal areas at Dubai International,” he adds.
|Dubai cargo throughput (million tonnes)|
|Source: Dubai Airports|
In the air, this involves complex airspace optimisation plans, and on the ground, the addition of new taxiways and rapid entry/exit points on Dubai International’s two runways, a 60 per cent increase in the number of stands by 2015, and the construction of additional terminals and concourse areas.
SP 2020 also includes the creation of an additional 675,000 square metres of floor space, representing twice the footprint of London Heathrow’s Terminal 5.
In addition to the construction of Concourse 3, it involves the expansion of Terminal 2 (due for completion in 2013) to allow for the growth of low-cost carrier Flydubai, plus the construction of Concourse 4 (2015 completion) and a monorail transit system linking it to Terminal 1. “Once completed, this will take passenger capacity to 90 million – a target we expect to reach by 2018,” adds Griffiths.
We are on track to meet the annual projected traffic of 56.5 million passengers [for 2012]
Paul Griffiths, Dubai Airports
Running parallel to the enhancement of ground facilities, Dubai Airports has announced a major modernisation and expansion programme for cargo facilities. Another element of SP 2020 will boost DIA’s cargo capacity to 3.1 million tonnes by 2018. This involves the addition of 30,000 sq m to Dubai International’s 1.2-million tonne cargo mega terminal (CMT), increasing capacity by 25 per cent to 1.5 million tonnes a year (t/y).
Dubai International’s original cargo facilities, Hall A and Freight Gate 1, located adjacent to the CMT, will also undergo a complete refurbishment. Together, these facilities will be reserved for the sole use of Emirates airline.
A new trans-shipment facility with capacity for 400,000 t/y of freight is under construction at the former Airport Expo site. Once completed, it will handle about 60 per cent of cargo transferred between Dubai International and DWC. Dubai Airports predicts that total cargo volumes across both airports will hit 4.1 million t/y by 2020, compared with 2.19 million t/y reported in 2011.
Transition to DWC
Dubai International’s “sweating” of its assets will facilitate passenger and cargo growth for the next five years, but with the airport set to reach its full 90 million passenger capacity in 2018, all eyes are on what happens next.
DWC might be the long-term solution to Dubai’s aviation needs, but the question is how and when the transition from Dubai International to the new mega hub will be executed.
“We need to develop enough capacity at DWC to be the airport of the future, but the difficulty we have is that we can’t make a meaningful contribution to the capacity at DWC until we have enough capacity to move Emirates airline there,” says Griffiths.
“We need to build and finance DWC to reach capacity of at least 80 million in order to cope with the Emirates move and I don’t think this will be possible before 2025, maybe 2027.”
This leaves Griffiths with a seven to nine-year hiatus where Dubai’s aviation industry growth will be stunted unless a solution is found to develop enough capacity at DWC, where more cargo and passenger aircraft players are required. “This is the issue we are considering right now and we have several options on the table,” he says. “These are quite far ranging and I wouldn’t want to prejudice these options by revealing details at this stage.”
Phase one of DWC includes a single A380 runway, a passenger terminal with capacity for 5 million passengers a year (expandable to 7 million a year); a cargo terminal with a capacity of 250,000 t/y (expandable to 600,000 t/y) and a 92-metre air traffic control tower.
Once completed in the 2020s, DWC will be the biggest airport in the world, boasting four passenger terminals and five parallel runways, catering to 160 million passengers annually and capable of handling 12 million tonnes of cargo.
Dubai Airports currently has 22 freight carriers operating at DWC. The facility handled 106,333 tonnes of freight in the first half of 2012, compared with 32,634 tonnes in the first six months of 2011, representing a 226 per cent increase in cargo volumes.
Air traffic movements at the airport also increased sharply during the first half of 2012, rising 196 per cent to 7,474, compared with 2,526 during the same period in 2011.
Griffiths says cargo operations at DWC are “growing steadily” and will continue to do so with the airport’s “close proximity to Jebel Ali port proving a major advantage”.
He adds that the new trans-shipment facility at Dubai International, combined with the Dubai Bypass road linking it with DWC, will ensure that “the two airports work as one” for Dubai’s cargo handling requirements in the short-term.
Dubai Airports launched general aviation operations at DWC in April 2011. But because the transportation of passengers is much more time sensitive than the transportation of freight, luring airlines to operate from DWC, which is yet to be linked to Dubai International by a fast-train transit system, will prove more challenging. Carriers such as Emirates and now Flydubai base their strategies on fast connection times.
The immediate answer is to get executive aviation operators on board, says Griffiths.
“A move to DWC makes sense for executive jet companies because it is far less congested than Dubai International, where they can struggle to get slots,” he says. “[But] it’s more difficult to get passenger airlines to DWC because Dubai International is where all the connecting flights are.”
Griffiths also notes that passenger flights carry a high percentage of cargo in their holds, throwing another hurdle in the path of DWC’s cargo growth plans. “So for now, DWC cargo growth is driven by the dedicated freighter operator, whereas at Dubai International it’s driven by belly-hold capacity,” says Griffiths.
Transition challenges aside, Dubai’s aviation infrastructure is, and will remain, a significant contributor to the emirate’s economy, according to a June 2011 report by Oxford Economics.
“Taking into account all the ways in which the aviation sector contributes to Dubai’s economy, we calculate that today it supports more than 250,000 jobs and contributes more than $22bn to Dubai’s gross domestic product (GDP). To give a sense of the scale of these benefits, they represent about 19 per cent of total employment in Dubai and 28 per cent of Dubai’s GDP,” says the report.
“We expect the economic contribution of the aviation sector to rise to 32 per cent of Dubai’s GDP and about 22 per cent of its employment by 2020.”
Griffiths also stresses how, within two years, Dubai International will rank as the world’s busiest airport in terms of passenger numbers.
“We will soon overtake Hong Kong and Paris to take the number two slot next year, and in 2014 we will surpass London Heathrow, which is currently the world’s busiest with 68 million passengers a year,” he says.
“We will have a little bit of headroom to move beyond 68 million [to 90 million] passengers at Dubai International and once we move to DWC, we will leave them for dust. It is unlikely they will catch up as there is not much room for expansion at Heathrow, plus we consistently report double-digit growth compared to their single digits.”
DWC is also on track to hit the record books for overall passenger traffic, which at domestic-flight heavy airport facilities such as Beijing and Atlanta, currently hovers around the 90 million mark. The 160 million capacity at DWC will overshadow these super hubs when reached. It is a target, Griffiths says, that takes into account 50 years of further growth of Dubai as a global aviation powerhouse.
He is also confident about the facility’s ability to survive adverse geopolitical conditions.
“Of course, we have to factor this in, but we are pretty resilient,” he says. “In the 50 years since the airport opened, it has achieved an average annual growth rate of 15.5 per cent.”
During the 1973 oil crisis, two Gulf wars and the recent economic downturn, the airport has handled 402 million passengers and 3.87 million aircraft movements at an average annual growth rate of 12.4 per cent.
“The UAE is economically and politically stable, particularly compared with other countries in the region and is often considered a safe haven. This gives us confidence about the future,” says Griffiths.
“Airport infrastructure is a long-term investment and even when there are hiccups in demand, history tells us that we recover.”
For those reasons, investment in DWC is fluid, particularly given that the Dubai government not only recognises the aviation sector’s substantial contribution to GDP, but that its success also underpins growth in other key sectors.
Dubai’s aviation industry has benefited from the collaborative approach of Dubai Airports, the government and Emirates airline towards infrastructure investment.
“As Emirates airline grows and tourism contributes more to the local economy, we are generating cash flow to support the level of investment to keep growth going. In the round, the sums add up,” says Griffiths.
“Investors are confident because this is a solid asset and a very real business model.”
Dubai Airports will no doubt face unforeseen challenges in the years to come and will be forced to solve its short-term DWC capacity issues sooner rather than later to avoid negative speculation about its future.
But the viability of its ambitious aviation infrastructure plans is hard to fault, given its track record for consistent year-on-year growth. The sound investment structure and solid strategy to link all five continents with fast connections make it the envy of rival hubs worldwide that, in years to come, will be dwarfed by DWC’s capacity potential.
$7.3bn: Total value of Dubai Airports’ Strategic Plan 2020
$3.3bn: Cost of constructing Dubai International airport’s Concourse 3
Source: MEED; Dubai Airports