Special Report: Aviation & Airports - Soaring fuel costs hit airlines

13 July 2008

Few sectors have been hit harder by rising fuel costs than the aviation industry. High oil prices have already driven several airlines out of business and grounded older, less fuel-efficient planes.

Inevitably, this has added to concerns that too much new airport capacity is being built in the Middle East.

The region’s airports boom is exemplified by the massive expansion of the UAE’s airport capacity from 40 million passengers a year to more than 200 million.

Many say the UAE’s plans are excessive, but Dubai Airports, which runs Dubai International Airport and will also manage the forthcoming giant Al-Maktoum International Airport at Jebel Ali, argues that the quicker it can bring new capacity on stream, the faster business will grow.

The operator is right in believing that capacity should be added before it is needed. Growth at Dubai International Airport alone was 19.3 per cent in 2007, outperforming everywhere else in the world in terms of international passenger growth.

Investment in airport infrastructure promises wide-ranging benefits, including improved access to global markets and skilled labour, better logistics operations and jobs.

Gulf governments can afford to build in new capacity and as a business decision, it is a smart one.

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