In the summer of 2008, the first passengers will check in to a new terminal at Dubai International Airport. At a stroke, the airport will have almost trebled its original capacity to 70 million passengers a year, from 24 million. The extra space will be welcome. The airport is already the busiest in the region and working well beyond its design capacity 28 million passengers used it in 2006 and 33 million are expected in 2007.

Doubling capacity

This capacity increase is part of the Dubai International Airport expansion programme. It is costing $4,500 million and involves building terminal 3 and concourses 2 and 3, the latter designed exclusively for the Airbus A380 super-jumbo, which Emirates is due to start flying next year. In addition, a cargo terminal will have annual capacity of 1.4 million tonnes, doubling the airport's handling ability.

But the lifespan of these new facilities could be cut short. Just 40 kilometres away, the world's biggest airport is under construction. In mid-2008, Dubai World Central will take its first flights. The entire project, including adjacent real estate projects, is costing an estimated $33,000 million and will cover an area twice the size of Hong Kong island. Some $10,000 million will be spent on developing the airport infrastructure alone.

Redevelopment opportunity

Its developers have revealed that a low-cost carrier will be the first to fly out of the airport, but it is still uncertain who that carrier will be. By 2015, all 117 airlines using Dubai International are expected to have moved their activities to the new mega-airport. Will Dubai International still have a role once Dubai World Central, with its capacity for 120 million passengers a year, opens? There is no clear plan for what will happen to the existing airport. Those close to the airport claim it will remain open, but others say the new facilities will only run for 10 years. However, according to Khalid Harib bin Harib, chief executive officer of real estate at Dubai World Central, the site will be closed and redeveloped as real estate.

This land is in a prime location, close to the heart of old Dubai and convenient for several of the massive developments being planned in the emirate. In addition, most of the alternative specialisations as an airport appear to have been ruled out.

Cargo flights will be among the first to use Dubai World Central airport, which will be linked directly to Jebel Ali port, allowing cargo to move from air to sea within four hours and stay within free zones for the entire time. Given this infrastructure, there is little incentive for businesses to remain at Dubai International.

With the maiden passenger flight being a no-frills service, retaining Dubai International as a hub for low-cost airlines also appears to have been ruled out. Another option would be to keep it for private jets, but an executive jet terminal is being built as part of the Dubai World Central development, as is a dedicated royal terminal. The final alternative would be as a military airport, but it is probably too close to the city centre for comfort, and in any case the UAE's air force is small.

Dubai International is ranked the 37th busiest airport in the world, and as such has proved successful. The existing terminal opened in 2000 and has averaged growth of more than 15 per cent a year since 2002.

The pace of growth is accelerating, with passenger numbers up by 16.6 per cent in 2006, making it second only to Beijing in terms of growth among international airports. In the first six months of 2007, passenger numbers rose by 18 per cent year on year to reach 16.2 million.

Supporting aviation

The next largest airport in the region is King Abdulaziz International Airport in Jeddah, which handles 13.4 million passengers a year. While these figures are impressive, it will be dwarfed by the new World Central airport in Jebel Ali. The airport is part of a 140-square-kilometre development designed to support Dubai's aviation, tourism, commercial and logistics requirements to 2050.

Progress has been swift. The first runway is close to completion and will be followed by at least five others, with room for a further two. One of the runways has been earmarked for royal flights. There will be two mainstream passenger terminals: one just for Emirates Airline; the second for other regional and international carriers. A third terminal will be for low-cost carriers. There will also be a royal terminal, along with a 92-metre-high control tower able to deal with 1 million aircraft movements a year. This would be more than any airport currently manages, although Atlanta, Georgia, comes close with 976,000 flights a year.

The executive jet centre will act as a dedicated terminal for private jets, with facilities for the leasing and chartering of planes as well as VIP passenger handling. This alone is designed to handle 100,000 flights a year.

Up to 1 million people are expected to live in the real estate developments alongside the airport: at Residential, Logistics, Commercial cities, Enterprise Park and Golf Resort. Residential City alone will have room for 269,000 people, even though it is just a kilometre from the nearest runway. Forecasts estimate that between them, these areas should provide jobs for 400,000 people.

Of the 120 million passengers passing through the new airport each year, some 20 per cent, or 24 million people, are likely to stay in Dubai, according to Rashed Aldhebaiei, general manager for sales and leasing, real estate at Dubai World Central. The other 80 per cent will connect with other flights and fly straight out again.

If those figures are to be reached, it means the emirate will need to start attracting a lot more tourists and business people. In 1991, Dubai had 1 million hotel guests, a figure that rose to 6.4 million by 2006. Ali bin Abdul Wahab of Dubai's Department of Tourism & Commerce Marketing predicts the city will attract 15 million tourists by 2010.

Expanding network

A key factor in hitting these targets will be the ability of Emirates to keep on expanding its route network and filling ever more planes. The airline has ordered 116 Airbus A380 super-jumbos, with the first due to be delivered by August 2008. It flies to almost 100 destinations, almost half the total served from Dubai International Airport. A direct route to Sao Paolo is the latest to be added, in early October, and is the first Emirates service to South America. The newest airline to start flights from Dubai is the business class-only Silverjet, which begins flying to London from mid-November.

It is not just passengers that it will have to attract in record numbers. The airport will have cargo handling capacity of 12 million tonnes a year and 16 cargo terminals. At the moment, the busiest cargo airport in the world is Memphis, Tennessee, which handles 3.7 million tonnes a year.

Dubai International is ranked 17th busiest in the world for cargo, with 1.5 million tonnes a year. It is also expanding fast in this area, although not as quickly as with passenger numbers. It grew by 14.3 per cent in 2006 in terms of the amount of cargo handled. In the first half of 2007 it grew by a further 10.4 per cent to reach 751,575 tonnes.

In its favour, the new airport should prove attractive, with the Logistics City development alongside the runways and Jebel Ali port nearby. Logistics City covers 25 square kilometres and will offer direct access to the airport, along with a dedicated cluster for aviation industry suppliers, warehouses and cargo-handling facilities. It will also have a dedicated labour village, with a built-up area of 350,000 square metres, capable of accommodating up to 40,000 workers.

Despite the huge scope of the new airport, it is unlikely that business activity at the current Dubai International Airport will shut down overnight. There will be a dedicated road and rail link between the two airports, with journey times on the rail link of around 15 minutes. The customs-bonded road and rail corridor between the two airports should enable fast cargo and passenger movement between the two sites.

Those already based at the existing airport appear unconcerned about any plans to change its function. 'The airport will stay open so no problem,' says a senior source at the Dubai Airport Free Zone Authority (Dafza), which acts as a base for about 1,300 companies.

The authority is backing up this air of confidence by expanding its zone, with a new area to the east of its existing plot due to be completed in three years' time. However, it is also weighing up international expansion plans, holding talks with potential partners in Tanzania, Nigeria and Sudan.

Creeping costs

Other than meeting its ambitious traffic targets, both in terms of passengers and cargo, perhaps the biggest problem for Dubai World Central is the potential for its $33,000 million budget to escalate sharply. It is keenly aware of the impact that rising costs have had on other construction projects.

'That is a concern for the whole of Dubai, but hopefully the government will intervene,' says Aldhebaiei. 'In a few years they may have to because the downside for Dubai of the high construction costs is people leaving. When there is a need, the government will do something.'

Aldhebaiei suggests it could introduce price caps, in a similar way to the system to restrict rises in the price of rental accommodation.

There is another nearby rival to worry about too. Just 70 kilometres further down the road is Abu Dhabi's international airport, home to the fast-growing Etihad Airways. The airport is undergoing a multi-billion-dollar expansion plan of its own, boosting its passenger capacity to 20 million a year by 2010 and adding a second runway, a new cargo complex and a duty free zone. It is growing even faster than Dubai, with passenger numbers in the first half of 2007 passing the 3 million figure, a rise of 27 per cent year on year.

Dubai's existing airport faces an uncertain future and Dubai World Central will have stiff competition for both business and passengers. Time will tell whether Dubai is big enough for both of them.