Dubai International airports fourth concourse is planned to open in September. It will have 17 gates and the capacity to handle 15 million passengers. When flag carrier Emirates Airline was launched in 1985, that figure would have been enough to make the concourse on its own one of the worlds biggest aviation hubs.
It will be linked to the refurbished Terminal 1 by an elevated rail system, and will lift the airports capacity to 90 million passengers. The numbers are impressive, but only a taste of what is to come.
Dubai Airports, the operator, plans to accelerate the movement of people and baggage through Dubai Internationals three terminals to create capacity for 100 million passengers in 2020, when the World Expo opens in Dubai. That year, 126 million people are forecast to pass through Dubai International and the new Al-Maktoum International airport, located to the south of the emirate.
Plans for expansion beyond 2020 are extraordinary. Al-Maktoum International Airport is designed to handle 120 million passengers in its first phase and up to 240 million when the second phase is completed sometime before 2050.
Dubai Airports forecasts the aviation sectors contribution to Dubais GDP will quadruple to $88.1bn by 2030. That would be equivalent to 44.7 per cent of GDP. The industry would by then employ about 1.2 million people.
Dubai has done more than other GCC economies to diversify away from producing oil, first discovered in 1969. Output is now less than 100,000 barrels a day (b/d) and hydrocarbons account for less than 10 per cent of GDP. The emirates 2030 plan means it will become as dependent upon the income generated by aviation as Saudi Arabia is upon crude production.
Aviation is more than important to Dubai and its future. It is Dubais future.
Dubai Airports was probably the most important reason why the emirate weathered the storm that erupted in November 2009, when the government announced Dubai World, a state-related company that owns and operates the Jebel Ali sea port, was unable to meet its loan obligations.
The emirates real estate sector had already ground to a halt as a result of the global economic crisis that started two years earlier. With the port company in trouble as well, Dubai seemed to be on the brink of financial meltdown.
Most of the debt problems were finally settled this spring and banks are preparing to lend to the emirate once more. There is more than one reason why Dubais creditworthiness has been restored, but none is more important than the contribution made by Dubai Airports and Emirates.
The figures speak volumes. In 2014, the number of passengers travelling through Dubais airports rose to more than 70 million, twice the figure recorded in 2008. Air cargo, which accounts for more than one-quarter of Dubai Airports income, has grown significantly over the same period.
Emirates is at the heart of Dubais aviation vision. With a fleet of 230 aircraft, the airline serves 148 passenger and cargo destinations, and operates an average of 3,500 flights a week. It plans to have more than 250 flights serving about 70 million passengers by 2020, compared with 44.5 million in 2013-14.
Dubais aviation industry now faces two critical challenges.
The first is building the capacity to deal with the additional passengers Dubai will welcome in the next decade. In 2013, Dubai World Central (DWC) unveiled more details of its plans for Al-Maktoum International in anticipation of the Expo 2020, which is forecast to attract almost 20 million international visitors. Its masterplan calls for the airport to be part of an integrated commercial and residential development.
The $33bn first phase, historys largest airport construction scheme,excited the projects industry. In September, UK Export Finance, Britains export credit agency, offered $2bn in finance to pay for some of the work involved provided that it benefited UK construction and engineering firms. More than 100 companies expressed interested in being involved. But the UK is still waiting for Dubai Aviation Engineering Projects, the client, to finalise its procurement plans and float the first contract tenders.
The reasons for the delay could encompass design changes and DWCs capacity to finance its plans. The first major project to be put out to tender this year could be the terminal for low-cost carrier Flydubai, which plans to shift its operations to Al-Maktoum International.
To meet expected demand in 2020, Al-Maktoum International will need capacity for least 20 million passengers. Work has to start soon. These concerns may explain why Dubai Airports and Emirates are working on plans to expand Dubai Internationals capacity to 100 million, as Paul Griffiths, CEO of Dubai Airports, announced at the Britain in the Region conference held in Dubai on 17 March.
The second challenge has emerged as a result of Dubais success. Dubai Airports argues that growing passenger and cargo numbers are essential for Dubai and good for the world as well.
A report published in March by Emirates and London/Australia-registered consultancy Frontier Economics estimated the airlines operations supported more than 85,000 EU jobs and added 6.8bn ($7.2bn) to the regions GDP in 2013/14. Emirates Airbus A380 deliveries in this period supported 41,000 jobs and added 3.4bn to Europes GDP, the report said.
Not only is the success of Dubais aviation sector good for Dubais economy, it also benefits the global economy, Dubai Airports says in its 2020 strategic plan. But not everyone agrees.
On 9 April, the US government announced it would set up a forum to hear allegations that Gulf carriers including Emirates were in breach of Open Skies guidelines, an initiative championed by Washington in the 1990s to reduce restrictions on international air services. The departments of state, commerce and transportation called for submissions for consideration by an open forum which is expected at the end of May.
This followed the publication on 5 March of the full text of a 55-page report backed by Americas biggest airlines, which called for the US administration to open consultations under Open Skies agreements with Qatar and the UAE about allegations that Emirates, Abu Dhabis Etihad Airways and Qatar Airways are unfairly subsidised. It called for a freeze on expansions in passenger services involving the three airlines. The report is supported by American Airlines, Delta Air Lines and United Airlines, as well as American unions. Last month, they jointly launched the Partnership for Open & Fair Skies to lobby congress and the administration.
Fuelled by massive government subsidies, state-owned Qatar Airways, Etihad and Emirates are aiming to dominate global aviation by exploiting the open skies policy, the report says. These three airlines, wholly owned by their governments, are using unprecedented subsidies to exploit their open and unfettered access to the US market. This threatens our US airline industry, airline jobs and the US economy.
Claims of unfairness
It claimed the three Gulf airlines collectively received more than $42bn in subsidies and other unfair government support in violation of the open skies policy, and estimated every international round-trip route lost to Gulf carriers cost America more than 800 jobs.
Emirates, Etihad and Qatar Airways, which together operate an average of 25 daily flights from their countries to the US, responded immediately. Emirates CEO Tim Clark, who said in November that the US could become one of the airlines three largest revenue sources, and Etihad CEO James Hogan visited Washington in the week ending 19 March to counter the reports findings.
US companies and individuals with strong links to the UAE are dismissing the campaign and say Washington would never jeopardise its strategic relationship with the federation by penalising Emirates and Etihad. But the same was initially said about complaints in the US about Dubai Worlds acquisition of management businesses in six US ports as part of its purchase of P&O in 2006. The issue became politicised and Hillary Clinton, then a US senator, demanded action on national security grounds. Dubai World eventually sold P&Os US operations to the asset management division of American International Group.
It was a painful and costly experience for Dubai as well as the UAE. They do not want a repetition.
Dubais aviation industry today finds itself between the prospect of further uninterrupted growth and the hard realities involved with building the capacity it needs at home and addressing the jealousies of powerful vested interests abroad.
The challenges are a measure of how far the emirates aviation industry has come in 30 years. Mocked at first and then ignored, the masters of Dubais aviation revolution subsequently became the model for others in the region and, more recently, the target for collaboration rather than competition for the international airline establishment.
That establishment is now trying to halt Dubai in its tracks. It is perhaps the highest compliment of all.
The war of the words
What leaders of US and Gulf airlines have been saying:
And its a great irony to have the UAE from the Arabian Peninsula talk about that [accusations that US airlines have benefited from government-supported bailouts], given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula.
Delta Air Lines CEO Richard Anderson on CNN on 17 February
I am delighted that Richard Anderson of Delta is not here. First of all, we dont fly crap airplanes that are 35 years old.
What Qatar Airways CEO Akbar al-Baker was reported as saying at an arts event in Doha on 16 March
If you dont level the playing field, jobs will flow from the US to the Gulf. It certainly wont be good for the consumer if we start flying less and they fly more, then youll start seeing those fares going up over time.
American Airlines Group CEO Doug Parker in an interview with Bloomberg TV in Washington DC on 17 March
The three biggest US carriers, who together with their partners already control about two-thirds of international flights from the US, want to further limit the international air transport choices available to American consumers, airports, local and regional economies.
Emirates president Tim Clark, during a press conference in Washington on 18 March
The worlds two largest airline markets, the US and the EU, are closed, giving their own airlines a huge advantage in scale and scope.
Etihad Airways CEO James Hogan at the US Chamber of Commerce Foundations 14th aviation summit in Washington on 18 March.
The history of Dubai airports
1937 An Imperial Airlines flying boat lands in Dubai Creek
1959 Dubai airport opens
1974 1 million passengers pass through Dubai International airport
1983 Dubai Duty Free opens
1984 Second runway at Dubai International completed
1985 Emirates airline starts operating
1990 5 million passengers pass through the airport
1999 Terminal 2 opens
2000 Concourse 1 opens
2008 Terminal 3 opens
2009 Flydubai, the low-cost carrier owned by Emirates, starts operating
2010 Cargo operations start at Al-Maktoum International airport
2013 Concourse A opens to expand capacity of Dubai International to 60 million passengers
2013 Passenger flights start at Al-Maktoum International
2015 Concourse D to open.