Middle East airport investments to hit $90bn by 2020

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Middle East aviation industry will require an investment of around $90bn by 2020 to handle 400 mn passengers.
Passenger terminal at the new Hamad International Airport, Qatar, which was to open on 1st April 2013, was postponed at the last minute. According to industry sources, the Middle East aviation industry will require an investment of around $90 billion by 2020 to handle 400 million passengers.

Middle East holds ‘highest potential’ for airport investments, says GALF survey

A survey of aviation industry professionals, carried out by the Airport Show ahead of the next month’s inaugural Global Airport Leaders’ Forum (GALF), has rated the Middle East with the world’s ‘highest potential’ for airport investment and expansion over the next five years.

An overwhelming 64.4% of respondents voted online for the Middle East region, followed by the Asia Pacific with 16.7%, Central Asia and Africa regions with 5.2% each and 3.4% for Europe.

An investment of $90bn is projected to boost infrastructure in the Middle East’s aviation industry. The region is projected to handle 400 million air passengers by 2020, including 98 million by Dubai airport, now ranked the world’s second busiest airport.

IATA predicts that the Middle East will see the strongest passenger growth until 2016. The Middle East is expected to have the third fastest growth rate at 6.6%. In 2012, the region saw a whopping 15.4% growth, while the world’s average was 5.3%, which is a respectable growth rate by any standard.

“Senior executives from across the international aviation industry have contributed to the survey, and we are very grateful that they have shared their insights with us. We believe the survey results will contribute significantly to the important discussions at the Global Airport Leaders’ Forum and help highlight the key challenges and opportunities industry leaders face today.” — Daniyal Qureshi, event director of the Airport Show

The survey, based on responses from 273 senior executives, underlined their thoughts on airport growth sustainability, non-aeronautical revenue creation, human resources development, areas of improvement for enhanced airport passenger experience and the importance of airport technology investments.

Over 88% of participants agreed satisfactory and sustainable airport growth could be achieved if leadership and stakeholders work together to develop collaborative aviation policies. Airports are increasingly recognising the impact stakeholders can have upon the viability of future developments and as a result are moving towards greater levels of participation. Such close cooperation could lead to remarkable results in terms of performance and profitability as the airports’ business models are transformed.

Some 63.4% of respondents highlighted the importance of human capital development as one the biggest challenges that the airport CEOs face due to the massive growth in airport expansions and increased air traffic volumes until 2020 and beyond. Air transport supports 2.7 million jobs and $129bn in GDP in the Middle East. In the UAE, it supports 224,000 jobs and will create over 400,000 new jobs until 2023.

Respondents suggested the highest growth potential for non-aeronautical revenue streams would be Duty Free, topping the preference list with 53.4% considering it of paramount importance, followed by advertising at 33.3% and 32.8% for food and beverage.

Spa services got the lowest response rate from the respondents, followed by Beauty concessions at 28.7%. Other high potential revenue streams include Short Stay Terminal Hotels (21.3%), VIP Lounges (21.8%) and Fashion Stores (24.7%) rounding out the list.

Dubai Duty Free is currently the world’s top airport retailer with $1.6bn turnover last year, while the duty free operations at Abu Dhabi, Doha, Bahrain, Oman and Kuwait airports also scored impressive performances. These facilities are being expanded to accommodate growth.

Regarding the enhancement of the airport passenger experience, the survey revealed  security checkpoint systems and procedures ranking prominently at 33.9%, followed by check-in and baggage drop (29.3%), and baggage collection and customs clearance (20.7%) as main areas of focus.

Other areas that were identified for improvement are communication regarding flight changes (16.1%), services available in the airport terminal (17.8%), in-terminal signage (20.7%), transfer between flights and in-terminal transportation (19.5%) and immigration check points (17.2%) within the terminal buildings.

According to Airports Council International (ACI), about 60% of airport operation costs goes into the facility’s safety and security technology and services.

Survey respondents agreed (86.2%) that investment in new airport technology will improve operations performance, thereby contributing for the airport’s profitability.

The findings are due to be discussed by experts and thought-leaders from across the world at the Global Airport Leaders’ Forum, at the 13th Airport Show, taking place May 6-8, in Dubai.

Middle East Aviation Market Analysis

As the global economy remains unstable with unhealthy growth prospects in several sectors, the GCC region is witnessing a massive growth in the aviation industry. Middle East-based airlines currently account for 8% of the global air transport industry, as stated by the Arab Air Carriers Organization (AACO), and are collectively growing at a 10% rate annually, double the global 5% average.

Airports in the region aim at catering for 400 million passengers by 2020. This unparalleled growth is reflected in the huge investments and expansions in the regions airports. By 2016, contracts in the region are forecasted to reach $119bn. This is bringing global airport builders and airline manufacturers in hordes to a region of the world where airport development is a priority for governments. Airport expansions are going to continue in the coming years as many Gulf destinations compete to provide the best air transport hub. — theairportshow.com

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