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Dubai Airport eclipses Singapore

1-May-2008

Move over Changi

It’s official – Dubai Airport has edged ahead of Singapore Changi Airport, in terms of passenger throughput, for the first time. It achieved this breakthrough in the first quarter of 2008 and leads a region attracting increasing Australian investment and global aviation industry attention.

In the three months ended 31 March, Dubai handled 9.34 million passengers, up 15.1 per cent year-on-year, fractionally more than Changi’s 9.32 million, up 6.7 per cent. With the help of an early Easter, Changi handled about 10,000 more passengers in March than Dubai, but the Middle East hub’s stronger performance in the first two months of the year was enough to take the mantle from Changi in the quarter.

Dubai looks set to accelerate ahead of Changi for the full year, handling just under 40 million passengers, compared to just over 39 million at Changi this year (assuming first quarter growth rates continue).

Dubai Airport vs Singapore Changi Airport annual passenger volumes:
1991 to 2009F


Source: Centre for Asia Pacific Aviation and company reports

Chairman of Dubai Airports, Sheikh Ahmed bin Saeed Al Maktoum, is confident this will be the case, stating the first quarter achievements “will set the tempo for the remainder of the year”.

Dubai still has some ground to catch up in the cargo sector, handling 399,718 tonnes in the first quarter against Changi’s 466,000 tonnes, but it is growing more than twice as quickly, up 10 per cent year-on-year in the first quarter, against Changi’s 4 per cent increase.

Dubai's ascendency has much to do with Emirates’ expansion, but is much more broad-based than most industry commentators believe.

Changi Airport is served by 80 airlines serving 188 destinations, with Singapore Airlines (SIA) accounting for 47 per cent of total weekly seats (week commencing 21 April). And if SIA's low cost subsidiary, Tiger Airways, and regional unit, SilkAir, are added in, the flag carrier's home share is 55.4 per cent.

Dubai meanwhile is served by 124 airlines serving 207 destinations, with Emirates accounting for just under 55 per cent of total weekly seats.

Emirates to become the world’s largest international carrier by 2012

Starting with just two aircraft in 1985, Emirates has since grown to a carrier with 115 aircraft, operating to 100 destinations, uniquely serving all continents in the world non-stop from its home base. Without a significant domestic market, the overwhelming majority of Emirates’ traffic is long-haul international, destined for, or connecting over, Dubai.

According to Shaikh Ahmad Bin Saeed Al Maktoum, Chairman & CEO Emirates Group & President of Dubai Civil Aviation Authority, Emirates has been doubling in size every three to four years since its inception.

Capacity to/from the Middle East has almost doubled since 2001, with the region topping international traffic growth rates over the past two years. Regional forecasts expect Middle East traffic to expand by around 7% p/a for the next four years.

Capacity to/from Middle East: Nov-01 to Nov-07

Source: OAG & Centre for Asia Pacific Aviation

Emirates’ stated aim is to become the world’s largest international carrier by 2012, by which time it expects to handle more than 33 million passengers p/a with a fleet of 200 aircraft.

Executive Vice-Chairman, Maurice Flanagan, stated this month that the carrier could potentially operate up to 600 aircraft by 2020, but would instead “settle” for 450. The limitation on growth is the pace of development of airport infrastructure, which, even in fast-moving Dubai, is unable to keep pace with the magnitude of Emirates’ ambitions.

The carrier is unfazed by the possible consolidation in the US and Europe. It has no plans to grow through acquisition, preferring instead to focus on its own development.

Emirates has a backlog of 243 aircraft on order, all widebodies, including 58 A380s, of which four are scheduled for delivery by the end of 2008. In 2008 alone, the carrier will receive 22 aircraft, mostly long-range B777 variants, which it will use to mainland expand or reinforce its non-stop network in Asia and the Americas.

Middle East aviation outlook strong

Dubai overtaking Singapore represents a highly significant milestone in global aviation. The Middle East hub now has only Hong Kong, Frankfurt, Amsterdam, Paris and London ahead of it in the world international passenger throughput stakes.

Overall, the UAE aviation market heads the steep growth path of much of the region. The rapidity of expansion of the key airlines in the Middle East – Emirates Airline, Etihad Airways and Qatar Airways – is unprecedented and, despite the doubters, most probably sustainable.

IATA reports continued strong premium travel demand to/from the Middle East in its latest Premium Traffic Monitor for Feb-08. The industry body stated, “the strength of business travel from Europe to the Middle East and the Middle East to the Far East partly reflects business traffic being attracted to services using Middle Eastern hub airports. There is also of course considerable business activity attracting travel to the Middle East as a result of the investment associated with booming oil revenues”.

Faced with a near-inevitable economic slowdown in the US and Europe (and probably Asia) this year, the growing Middle East airlines could well confound the opposition, as long as protectionist policies do not re-emerge. They have large aircraft orders and cash balances to allow them to follow through.

And they have intelligently coordinated infrastructure to support them. Over USD50 billion is being spent on Middle East airport infrastructure, developing throughput capacity within the next four years, allowing for an additional 320 million passengers per year.

In addition to this flurry of infrastructure investment, a handful of Gulf airlines have order books that strike fear among some of the oldest and strongest names in the business – over USD50 billion in aircraft orders last year alone.

Most of these are for twin-aisle, long-haul equipment. Vitally, this region is ideally placed geographically to derive the greatest value from a new generation of extra-long range aircraft, making one-stop travel possible between any two points on earth via this region – and this region alone.

And, as liberalisation sweeps through intra-Middle East aviation, there will be more to come, from established flag carriers too, along with more short-haul expansion.

On long-haul routes, the substantial aircraft delivery schedules of the UAE airlines in particular make it likely that if a global economic slowdown does eventuate, those airlines will be well-positioned – not only to survive it, but to exploit it.

2008 and 2009 could be very big years for Middle East aviation.

For more information on the Middle East Aviation, see the Centre’s just-released Aviation Outlook report for 2008 – now available for purchase (or free download for CAPA Members).


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