Region steps up airport investment

03 July 2014

More than $40bn-worth of airport schemes are under way in the Middle East, with a further $48bn at the bid or design stage, as governments look to boost tourism and trade

Governments across the Middle East are spending billions of dollars to build or expand airports to meet the rising needs of their national carriers and to cater to their growing economies.

The region’s airlines, especially those in the Gulf, are some of the fastest-growing carriers in the world and require large increases in airport capacity to achieve their ambitious growth strategies. At the same time, governments are increasingly seeing investment in airports as a means to boost tourism and trade.

At present, some $41bn-worth of airport schemes are under way in the Gulf, while a further $48bn are at the bid or design stage, according to regional projects tracker MEED Projects. While the biggest airport projects are located in the UAE and Qatar, major airport schemes are also taking shape in Saudi Arabia, Kuwait, Oman and Bahrain.

Hamad International

In Doha, the long-delayed $15.5bn Hamad International Airport officially opened to all airlines on 27 May, bringing much-needed additional capacity to national carrier Qatar Airways. The project had suffered a string of delays and contract cancellations since its launch in 2004. The US’ Bechtel oversaw the scheme, after winning the engineering, procurement, construction and management contract in 2005. The Sky Oryx joint venture of Turkey’s TAV and Japan’s Taisei Corporation was awarded construction deals for the main terminal building and concourses A, B and C in early 2006.

The airport will initially be able to handle 30 million passengers a year, more than double the design capacity of the old Doha International airport. Concourses D and E are being built by a consortium of Belgium’s Besix and the local Midmac Contracting, and will increase capacity to nearly 50 million passengers a year.

Midfield Terminal

In the UAE, the capacity of Abu Dhabi International is being increased from 12 million to 32 million passengers a year, as part of the government’s Plan Abu Dhabi 2030. The expansion involves several elements, of which the biggest is the Midfield Terminal, being built between the two existing runways at the airport. In May 2012, a joint venture of Hill International and Aecom, both of the US, was selected as consultants for the terminal, in a contract worth at least $85m.

The UAE’s Arabtec, TAV and Athens-based Consolidated Contractors Company formally signed the main construction deal for the Midfield Terminal, worth $2.9bn, in June 2012. At the time, it was the largest construction contract ever awarded in the UAE.

The terminal, which will be built over a total area of 630,000 square metres, will have the world’s biggest baggage-handling system, capable of processing 19,000 bags an hour. Once completed, the terminal will be one of the biggest in the world, but operator Abu Dhabi Airports has said it will consider a further expansion in 2020, depending on national carrier Etihad Airways maintaining its strong growth rate. In 2013, India’s Larsen & Toubro won a $256m contract for airside construction, while the local/Australian Habtoor Leighton Group signed a $160m deal to carry out the infrastructure works.

Additional contracts have been awarded for civil works, the expansion of fuel storage capacity and the rehabilitation of the South Airfield runway. The US’ Parsons International is the programme manager for the entire scheme, which has also suffered a series of delays. However, the new terminal is expected to open at 7am on 17 July 2017.

Dubai airports

Even bigger plans are under way in Dubai, home to Emirates Airline. Dubai International airport has been continually expanded for more than a decade, and in the first quarter of this year edged out London’s Heathrow as the busiest airport in the world for international traffic.

At present, the airport is progressing with a $4.6bn expansion that will boost its capacity to more than 90 million passengers a year. Since the beginning of 2012, about $300m of deals related to the expansion of the airport have been awarded, including a $48m contract awarded to the local Alec for concourse D and a $153m deal issued to Arabtec covering the expansion of Terminal 2.

Located about 40 kilometres from the original airport, Al-Maktoum International at Dubai World Central is set to become an even bigger transport hub for the Middle East. It will gradually replace Dubai International as the emirate’s primary airport and, once fully completed, will be the world’s largest airport.

Al-Maktoum International

Al-Maktoum International’s first passenger terminal, which opened in October 2013, is one of four planned, and is designed to have a capacity of 5 million passengers a year, expandable to 7 million. Although this figure is dwarfed by Dubai International’s current capacity of 75 million, the long-term vision for the new airport is for it to be able to handle 160 million passengers and 12 million tonnes of cargo a year by the early 2020s. This will be possible once five planned runways and three more terminals are built.

Earlier this year, firms submitted prequalification documents for upcoming construction projects at the airport. Dubai Aviation Engineering Projects, the government agency that manages airport developments in the emirate, asked companies to prequalify for two categories of work. The first is for terminals, concourses, cargo terminals and support facility building deals worth more than AED1bn ($272m). The second is for infrastructure contracts covering site grading, tunnelling, runways, stands and roads, also valued at more than AED1bn.

Saudi investments

While other countries in the Middle East may have lesser ambitions for their aviation sectors, they stand to benefit greatly from enhancing their airports. This is especially the case for Saudi Arabia, which is struggling to keep pace with a sharp increase in religious tourism and is keen to diversify its economy. 

Following years of delays, the kingdom has recently started to make rapid progress on a raft of airport projects. In May, a consortium led by Germany’s Hochtief submitted the low bid of SR10.8bn ($2.9bn) for the expansion of Riyadh’s King Khaled International Airport. The Hochtief team, which also includes India’s Shapoorji Pallonji and the local Al-Nahda, was the lowest bidder for both parts of the project, with a price of SR5.2bn for part A, which involves the upgrade of terminals 3 and 4, and a price of SR5.6bn for part B, which covers the expansion of terminals 1 and 2.

The contracts mark the latest major expansion work to be tendered at the airport, which aims to increase its annual capacity to about 24 million passengers a year from the current 14 million. In May 2013, a joint venture of TAV and the local Al-Arrab Contracting Company was awarded the estimated SR1.5bn contract to construct the new Terminal 5 building.

Beyond Riyadh, the General Authority for Civil Aviation (GACA) awarded an estimated SR2.5bn deal in early May to a local consortium for the construction of the new King Abdullah bin Abdulaziz airport in Jizan. The group, which consists of Saudi Lebanese Modern Construction Company (Salmoc), Safari and Al-Subaie, will build a three-storey passenger terminal, a control tower, air cargo zones and other facilities. In February, the local Al-Jaber submitted a low bid of SR1.8bn for the deal to build the new Abha airport. The terminal will cover a total area of 80,000 sq m and have 21 passenger gates. In March, Gaca issued two tenders for the redesign of seven domestic airports as part of an ongoing expansion of regional airports across the kingdom.

Oman progress

Elsewhere in the region, Oman’s Transport & Communications Ministry has received bids from seven local and international contractors for package three of the new Sohar regional airport, which includes the construction of passenger and cargo terminals. The airport is being built 10km northwest of Sohar and will serve the Batinah region and the growing flows of cargo going in and out of the expanding Sohar port. The first two packages for the airport project have already been awarded, with both the civil works package and the construction of the runway handed to Austria’s Strabag in 2009 and 2010.

The construction of passenger terminals for four new regional airports, at Sohar, Ras al-Hadd, Adam and Duqm, was delayed in late 2011, following the ministry’s decision to put the tendering process on hold, but they are now moving ahead again. In December 2013, the Special Economic Zone Authority at Duqm invited bids for the main building works for the airport being built in the economic zone. The local/Indian Larsen & Toubro Partners Oman submitted the lowest bid in June.

Bahrain activity

In Bahrain, the Transport Ministry awarded a BD6.9m ($18.3m) contract to the US’ Hill International in January 2013 to provide project management consultancy services for its airport modernisation programme. The programme, which has been developed by the ministry and operator Bahrain Airport Company to improve the infrastructure and services at Bahrain International, aims to increase the airport’s capacity to 13.5 million passengers a year. 

In Kuwait, the Public Works Ministry reopened the prequalification in June to attract more bidders for the deal to build a KD900m ($3.2bn) new terminal at Kuwait International. Firms had been preparing to submit bids in late May. The terminal will increase the capacity of the airport from 6 million passengers a year to 13 million and will include car parking for 4,500 vehicles.

The total investment in developing Kuwait International Airport is expected to reach $6bn. In addition to the new terminal, an estimated $3bn will be spent on widening runways, enhancing control tower facilities and building new cargo facilities.

Key fact

The total investment in developing Kuwait International airport is expected to reach $6bn

Source: MEED

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