Spreading its wings: Higher passenger numbers lead to expansion plans and a new airport

For much of recent history, the emirate’s position has made it a hub for air travel. The city’s aviation history stretches as far back as 1937, when Dubai reached an agreement with the British government allowing Imperial Airways to land flying boats on the Dubai Creek in between buoys. The British carrier used the location for important flight routes, such as London-Bombay.

In 1959 the emirate built Dubai International (DXB), a small airport located 4 km into the desert on what was then the edge of the city. Growth at the airport picked up over the following decades, with passenger throughput reaching 9.7m by 1998. In 2000 the Dh2bn ($544m) construction of Sheikh Rashid Terminal, known more commonly as Terminal 1, heralded a new era for the airport, boosting passenger capacity by 150%, from 10m to 25m. In 2010 DXB was joined by Dubai World Central (DWC), an airport located in the south-west of Dubai, adjacent to neighbouring Abu Dhabi. With an ever-growing demand for air transit through the emirate, expansion of both airports is under way.

At the helm of these efforts is the Dubai Civil Aviation Authority (DCAA), a government entity created in 2007 to lead the development of the air transport industry and manage matters related to the aviation sector. With this mission comes a broad range of responsibilities that include international affairs, regulations, security and corporate support. Another government-owned entity called Dubai Airports, meanwhile, owns and manages the airports themselves.

GROWTH SPURT: Aviation’s contribution to the Dubai economy – both in terms of revenue and employment – cannot be understated. In many ways Dubai’s economy has grown around the activities of airports. “The aviation industry represents 28% of Dubai’s GDP and the sector employs more than 250,000 people while generating roughly $22bn, which is expected to double by 2020,” Mohammed Ahli, the director-general of the DCAA, told OBG. “As a result, the aviation industry plays an integral role, not only for the overall economy, but as part of the social fabric of the emirate as well.”

For years, growth has been the norm across indicators. Total passengers passing through DXB rose over 77% from 28.78m to 50.97m between 2006 to 2011, according to statistics from the DCAA. As of the end of 2012 DXB’s total passenger numbers seemed set to amount to 66m, surpassing a target for the year of 55.6m, according to Dubai Airports.

CARGO: Cargo throughput has also seen significant growth. Between 2006 and 2011, the tonnes of cargo processed through DXB increased from 1.41m to 1.99m, marking a 41% increase over the six-year period.

Cargo volumes have also been on the up at DWC, which opened in June 2010, the numbers have also been positive. The airport processed 89,729 tonnes of cargo in its first calendar year, and 164,757 tonnes of freight in the first nine months of 2012.

EXPANSION PLANS: DXB’s passenger numbers are set to increase between 8% and 9% each year through 2015, bringing estimated annual passenger movement to 71m, according to DCAA projections from April 2012. Cargo movement at DXB, meanwhile, is set to grow at an average of 9.7% per annum through 2015, bringing the total to 3.3m tonnes. The authorities are preparing for future growth, with investments to ensure that the airports are equipped to handle anticipated increases in passengers and cargo. Their strategy consists of a two-pronged approach. In the short and medium terms, expansion of DXB is set to allow the emirate to handle growing passenger and cargo numbers.

The most recent expansion of DXB was announced in July 2011. The $7.8bn plan is set to expand the existing Terminal 2, while adding Concourses 3 and 4. As of May 2012 Dubai Airports began testing Concourse 3, which will operate flights solely for Emirates, Dubai’s flagship carrier, and it is the first terminal specially designed to handle Airbus A380s. Concourse 3 came on-line in early 2013, while the entire expansion is set to finish by 2018. Upon completion of the terminal upgrade and concourse additions, DXB passenger capacity will rise 50%, from 60m to 90m per annum.

By the mid-2020s the completion of DWC will drastically increase Dubai’s airport capacity, with the addition of what is set to be the largest airport in the world. The new airport is part of a broader project to build up logistics, industry and other business enterprises near Jebel Ali Port and Jebel Ali Free Zone. Surrounding logistics connections are set to be key for growth.

“Although the airport is in its infancy, incremental cargo traffic growth has been steady and continues to ramp up as new operations are launched,” Dubai Airports CEO Paul Griffiths said in a press release at the beginning of 2012. “Sea to air freight traffic growth was particularly robust as airlines took advantage of the airport’s bonded link to the Jebel Ali Port.”

Indeed, DWC is in the direct vicinity of several planned free zones, including Dubai Logistics City, Commercial City, Residential City, Aviation City and Golf City. Once completed, the airport is set to have a capacity of 160m passengers and 12m tonnes of cargo per annum, according to Dubai Airports.

MORE ELBOW ROOM: Although upgrades to the airports are expected to prevent overcrowding on the ground, the authorities are also looking at ways to begin avoiding bottlenecks in the air. “While the aviation industry has experienced tremendous growth, it is imperative that we address the issue of Dubai’s air space, which must be expanded in order to accommodate that growth,” Ahli told OBG.

Indeed, consistent growth in the past two decades has meant more jets in the UAE’s skies. The country hosts 35 international air corridors over its 120,000 sq km of airspace – though half is restricted for military use, according to a study from Dubai-based firm Nadd Al Shiba PR and Event Management.

As a result of the projected growth, aviation authorities are looking into ways to alleviate spatial pressures. One approach to this problem is the implementation of technologies that could help streamline the current use of the country’s airspace. Ensuring optimal use of current areas will likely require two separate sets of agreements: cooperation within the UAE and cooperation within the wider Gulf region.

UAE authorities are building more connections among the emirates. In 2009 the UAE Federal Government’s General Civil Aviation Authority (GCAA), opened the Sheikh Zayed Air Navigation Centre in Abu Dhabi. The Dh300m ($81.7m) project is intended to help manage air traffic increases in coming decades. The GCAA and DCAA also announced they would cooperate to boost efficiency in the use of airspace. In August 2012 the GCAA announced the daily tele-coordination effort, the UAE Airspace Coordination and Contingency Cell.

The sector is also progressing in international coordination efforts. In June 2011 the GCAA concluded an agreement with Bahrain to create a new airway. Called M600, the corridor is set to ease congestion and boost airspace utilisation, creating a number of benefits. Air traffic controllers can use airspace more effectively to reduce traffic, while airlines and passengers can benefit from quicker flights and fewer delays.

BEYOND PLANES: The aviation sector represents nearly a third of Dubai’s economy. Its effects, however, are not limited to the skies. Larger airports and more flights passing through will likely have positive knock-on effects for other sectors. More options for flight connections could do much to buoy tourism, another rising star in Dubai’s economy. Retail could benefit as well, thanks to increased visitor numbers, lower shipping costs and the success of duty-free shopping areas. Indeed, 8.8m visitors arrived to Dubai in 2011 and spent an estimated $8.8bn, according Mastercard’s Worldwide Index of Global Destination Cities 2012. Making connections faster will likely help push those numbers even higher.