Vertical take-off: Airport capacity is set to rise and plans for more extensive metro and tram services are in the pipeline

Presenting more of a conundrum than a problem, Dubai is climbing up the league of the world’s busiest international airports. It entered 2014 smaller than only London Heathrow Airport and with ample ideas of what to do on the inevitable day when it finally takes over the top spot. In 2001 Dubai International was ranked 99th in the world, and 13 years later it is preparing to top the list. After taking note of its own meteoric rise – and its planning over the past few years for how to stay ahead of the game – Dubai now has the possibility of operating two airports that have a joint capacity to handle more than a quarter of a billion people each year. Dubai International is undergoing expansion that will lift its capabilities to just under 100m and Al Maktoum International Airport in Dubai World Central at Jebel Ali was designed to accommodate 160m when complete.

Taking Off

The economic interaction and interdependence between aviation, trade, tourism and retail is such that sometimes it is difficult to see where one ends and the other begins. Certainly their significance to the economy and employment is undoubted, but trying to calculate the separate contribution of these four closely related sectors is difficult at best and misleading at worst. Transport and communication led growth in Dubai’s non-oil sector in 2012 by together contributing 7.5%. However, since the ethos is not to choose a course of action to achieve simply one goal if a slightly different modus operandi can achieve two or more, it is probably not important to be able to assign GDP contribution figures to each of them.

Aviation is not the only sector that is expecting a period of rapid development. The Dubai Metro mass transit system is heading for an expansion programme that will make it available to tens of thousands of people that so far have been outside its orbit. However, none of this is a result of Dubai’s success in being awarded the right to stage the 2020 World Expo. All the extensions or modernisation of the transport set-up are being implemented with goals that were determined long before the day in November 2013 when the Expo decision was announced in Paris. Planning is set to proceed in 2014. If Dubai was on the move before, it is even more so now.

Al Maktoum International

 There is no immediately pressing reason to start the years of detailed planning needed to organise the move from Dubai International of more than 140 carriers and their 65m passengers – or whatever the total has reached by the time the move takes place. Expansion still under way at Dubai International will raise its capacity to just under 100m passengers a year by 2018, effectively buying all the airlines, but especially Emirates Airlines, more time to consider the 35-km move to Al Maktoum. Many other options are still on the table. Retaining Dubai International with a capacity enhanced to just under 100m is one option. With Al Maktoum International’s five runways and eventual room to handle 160m passengers a year this would provide the emirate with the overall ability to handle 260m people a year. There are broader reasons, however, for why that may not be a viable option.

Another alternative is to increase Al Maktoum International’s size to handle 200m passengers annually. The scale of that number comes into perspective by comparing it with London’s Heathrow, which has a capacity of 70m. For the moment few possibilities have been excluded and no firm decisions have been made. In its desire to build new airport facilities to last for 50 years, Dubai is constrained only by estimates of the future size required by the growth of the aviation sector.

For the moment Al Maktoum International is open for business with one passenger terminal capable of handling up to 7m passengers, a trickle of carriers to get the airport moving and a switch of all cargo carriers. Al Maktoum International has been handling an increasing volume of cargo since the summer of 2010 as more airlines elect to take advantage of the greater flexibility in operations at the airport. Full cargo capacity at the airport will be 12m tonnes. Al Maktoum International’s capacity to transport passengers will probably need to be heading fast to around 100m at least in order for Emirates to consider moving its base. Given the rapid acquisition of new aircraft – it ordered 50 A380s, the biggest passenger aircraft in the world, from Airbus at the 2013 Dubai Airshow (see analysis) – and the load factor of its flights, almost no capacity figure could be proffered as too optimistic.

Splitting its operations between the two airports is not an acceptable option because it would damage Dubai’s attraction as a hub, increase its maintenance costs and reduce its flexibility. More than half of all passengers fly into Dubai to get somewhere else. If Emirates separated its long-haul jumbos from the rest of the fleet, for example, the 35-km gap would seriously disrupt the rapid transfer element of its business model. Certainly there would be no shortage of takers for the Dubai International land if it were eventually to close. It is in a prime area and only 10 minutes from the downtown area of Deira.

Dubai International

 Dubai International has overtaken Paris’ Charles de Gaulle Airport as the world’s second-busiest airport for international passengers, and London Heathrow’s leading place was expected to fall in 2015. In the first eight months of 2013 traffic was reported to have increased by 16.4% to 43.9m passengers. Unofficial figures for Dubai’s passenger total in 2013 put the number at more than 65m. The airport serves upwards of 140 airlines flying to more than 260 destinations across six continents. Speaking about the potential move to Al Maktoum International, Anita Mehra, vice-president of marketing and corporate communications for Dubai Airports Company, told OBG, “We don’t want to force a move on anyone and we want it to be economically viable for them. Ultimately, Emirates will probably go to Al Maktoum, but no decisions have been taken.” In the expansion of Dubai International, Concourse C will be taken over by Emirates and linked to Terminal 3. Passengers for all other airlines will check in at Terminal 1 and then proceed to Concourse D, which will open in early 2015. It is only when all the work has been done that Dubai International’s capacity will reach almost 100m.

Mehra told OBG that Emirates SkyCargo’s dedicated freighter service will move to Al Maktoum International entirely later in 2014 when it has completed its new 700,000-tonne facility at the airport. Similarly, Air France-KLM moved its regional cargo hub in 2013 and Cathay Pacific will do so in 2014. The SkyCargo move is scheduled to begin in April 2014 after the installation of the cargo handling system and the fitting out of the interior. By the time the move is complete in mid-September 2014, the terminal will be equipped to handle 700,000 tonnes of cargo, which can be expanded by an additional 300,000 tonnes in the second phase.

Air Space

 The number of aircraft in Dubai's skies increased by more than 7% in the first half of 2013, according to the Dubai Civil Aviation Authority (DCAA), which forecast 375,000 aircraft movements for both Dubai International and Al Maktoum International in 2013.

However, the real problem is less one of safety given the availability of sophisticated tracking devices than of costly congestion (see analysis). Tony Tyler, director-general and CEO of the International Air Transport Association, said aircraft in the Gulf region were being frequently delayed on the ground or kept flying in holding patterns for between 40 minutes and an hour. Even with new fuel-efficient fleets that represents a significant waste given oil prices.

Control over air space in the area is split among many entities, between Dubai and Abu Dhabi, for example. Qatar was also regulated by independent air traffic controllers. The wide distribution of responsibility is costly not because it is dangerous, but due to its inefficiency. With so many countries involved, agreeing on a regional air traffic control system might be an arduous task, but it is still one that should come sooner rather than later.

Qantas

Dubai International is due for extensive runway maintenance and upgrades starting in May 2014, and Qantas is continuing discussions with Dubai Airports to ensure the disruption to its schedule is minimised. Under its partnership with Emirates, Qantas shifted its overseas base for flights to Europe from Singapore to Dubai. The two airlines now have a share of more than 50% of the passengers who fly between Australia and Europe. The airline flies only to Heathrow via Dubai, but with Emirates passengers can connect in Dubai to other European destinations.

Emirates now operates more flights from Australia to Europe than Qantas. In 2002, before the deal, it carried 0.4% of the 17m passengers who flew to and from Australia; by 2012 its share had grown to 8.4%, government data shows. However, Qantas has benefitted, too. Its net income for the fiscal year ending June 2014 is expected to rise to its highest since Alan Joyce, who negotiated the deal, became CEO in 2008. Qantas is not the only airline affected by the maintenance programme, of course, and it is possible that some traffic may move to Al Maktoum International during that period.

FlyDubai

Meanwhile, the state-owned carrier flydubai has worked itself into a position of profitability in its third year of existence and has also established a place for itself as the second-largest carrier in Dubai International by number of passengers. Although it has carved out a set of niche routes, such as Juba, South Sudan, which is not served by Emirates, there are other places where the two airlines compete. The airline carried 5.1m passengers in 2012 and has become an early adherent of the move by a few carriers in that segment to establish business-class facilities and vary the standard lowcost carrier offer. It also showed its confidence at the 2013 Dubai Airshow by placing an order for 75 Boeing 737 MAX 8 and 11 Next-Generation 737-800 aircraft, while retaining purchase rights for a further 25 737 MAX aircraft.

Aircraft Sales

The 2013 Dubai Airshow hit the headlines because of the record-breaking orders announced at the event. Boeing’s 777X was launched there with what was said to be the fattest order book ever produced to support a new aircraft. The vast majority of those had been sold to Emirates, Qatar Airways and Etihad Airways. Altogether the world’s aircraft manufacturers rang up orders worth more than $200bn at list prices (see analysis).

Bargain Jet

 Beechcraft, the US manufacturer of private jets, discovered from its research that just under 20% of the light and medium-sized jets in Europe – 1440 planes – are on sale. The company, which makes the Beechcraft King Air 350i and the Baron G58, maintained that when more than 10% of private jets are for sale at any one time, it is definitely a buyers’ market. However, that does not universally affect every part of the market.

The top end, in which private jets can cost at least $25m, is untouched. Nine out of 10 times, companies or individuals buying jets at the top end of the market use their balance sheet or a “big pile of cash”, according to Richard Aboulafia, vice-president of analysis at aerospace consultants Teal Group. Light to medium-sized jets are a whole other story. Aboulafia attributed a drop in other markets to lagging credit lines. “What was the number one defining characteristic of this recession? It’s the collapse of commercial credit as lenders seek safety in the form of US government bonds. … It used to be that you could get a loan for 90% of the value or something like that,” said Aboulafia. Now it might be 60%. There is no relief in the Middle East and other emerging markets, as ultra-high-net-worth individuals and companies tend to favour bigger jets, he added.

New Stations

 The 75 km of Dubai’s Metro is to get a 50% expansion over the next few years to take its total length to 111 km. Apart from lengthening the Red Line by 3.5 km and the Green Line by 20 km, a new spur will be built connecting the Red Line along Sheikh Zayed Road to the Expo 2020 site near Al Maktoum Airport. The Red Line extension will run from Rashidiya to Mirdif, while that of the Green Line will connect Al Jaddaf to Academic City.

Although the World Expo 2020 is not the primary reason for either of the schemes, both should nevertheless be complete by 2020 and doubly useful as Dubai anticipates 20m regular tourists and the first of 25m Expo visitors that year. And neither of those two figures include the estimated expected increase in residents as Dubai’s population is forecast to grow to around 3m by 2020.

The present network has 75 km and 47 stations. It was opened in September 2009. By the scheduled completion time of the entire network in 2030, it will have 421 km of track with just under 200 stations. The Red Line extension will serve communities such as Shurooq and Ghuroob in Mirdif, although the longer Green Line extension will be more significant in terms of gaining additional passengers. It will run through the Ras Al Khor Industrial Area and the heavily populated areas of International City, Silicon Oasis and Academic City (see analysis).

Trams

The first trams ordered from Alstom in France arrived in Dubai in December 2013 for testing ahead of their introduction into the Dubai Marina area. Although the network is scheduled to have 15 km of track upon completion, phase one will be confined to the 10.6 km from Dubai Marina to the Tram Depot near Dubai Police Academy and is set to begin operations in November 2014 with 11 stations. When fully operational the network will be served by 25 trams and connect with certain metro stations via footbridges in Marina Mall and Jumeirah Lakes Tower (see analysis).

Rail

A new law on railway development and safety regulations is expected to be passed in 2014 covering various aspects of the $25bn programme to develop a rail network in the UAE. The law will address safety regulation and operational standards and may include provisions that make it easier for foreign companies to invest in the project. The amount of money anticipated for the UAE’s rail programme over the next decade could constitute around 10% of overall spending in the region.

The first phase, a line in Abu Dhabi to send sulphur from the Shah sour gas field to Habshan, is almost complete, according to local press reports quoting Abdulla Al Nuaimi, the minister of public works and chairman of the National Transport Authority (NTA). The second phase involves laying 628 km of track connecting cities and industrial hubs, including Dubai Industrial City, Jebel Ali, Musaffah, Fujairah and Khalifa Port, which would eventually connect to a rail network linking all GCC states and scheduled for 2018.

One aspect still under study by officials from Etihad Rail, the NTA, Abu Dhabi’s Department of Transport, and Dubai’s Roads and Transportation Authority (RTA) is the connection between Dubai and Abu Dhabi. The options are light rail, heavy rail or a combination of the two.

Roads

A new Dh2.1bn ($571.6m) Abu Dhabi-Dubai highway is being built, according to an announcement by Abu Dhabi General Services. The new 62-km road is an extension to Mohammed bin Zayed Road, from the Saih Shuaib area, Al Maha Forest and Khalifa Industrial Zone Abu Dhabi, to join up with the Sweihan Road (E20). It is expected to take around two-and-a-half years to build and should be complete by 2017. The project is intended to ease congestion on the highway linking Abu Dhabi and Dubai, and the decision to build it was taken after studies showed that by 2030 there would be an increase in traffic at peak times from 700 vehicles an hour to more than 12,000 as a result of population growth. Initially the road will have four lanes in each direction, with a possibility to increase to six lanes later.

Taxis

The RTA has also set up a new system to help deal with the 12,000 taxi booking requests made every day at the Booking and Dispatch Centre of the RTA Public Transport Agency. Under an agreement between the RTA and Dubai taxi franchise Cars Taxi, 155 WiFi-enabled vehicles will be removed from regular taxi work on the streets and designated as hala taxis to service requests received by the agency’s dispatch centre. Some hala taxis will be dedicated to women, though reservations will be required to be made two hours in advance. The total number of taxis was estimated to have grown to 8662 in 2013.

Creek Canal 

Dubai has revealed plans for a Dh2bn ($544.m) downtown canal project that will span more than 80,000 sq metres and encompass new shopping and entertainment centres, more than 450 new restaurants, several bridges and four new hotels. The 3-km-long canal will run from the Business Bay district to Jumeirah Beach. The development, planned to be completed in 2017, will allow for construction of deluxe residences and private marinas for boats, along with pedestrian pathways and cycle tracks. It has been projected as capable of attracting up to 22m visitors every year.

New Orders

Dubai-headquartered Tomini Shipping is returning to the dry cargo market and has ordered nine ultramax bulkers, according to local press reports. The Pakistani shipowner was reported to have sourced the 64,000-deadweight-tonne, eco-design vessels from China Shipbuilding Industry and delivery should start in the middle of 2015. Imtiaz Shaikh, the chairman of Tomini Shipping, told Arabian Supply Chain that the company planned to acquire at least 20 new vessels over the next few years. He added that while growth rates in the Gulf region were encouraging, he felt there were still many problems in the rest of the world.

Port Cranes

 Jebel Ali Port, the ninth-biggest container terminal in the world, is situated next door to Al Maktoum International, 35 km south of Dubai International and destined to become the biggest airport in the world. Jebel Ali Port is the largest man-made harbour in the world and has not yet been expanded to its maximum capacity. Its latest extension was officially opened in June 2013, adding capacity at its Terminal 2 (T2) of 1m twenty-foot equivalent units (TEUs) to take the port’s total capacity to 15m. The works lengthened the T2 quay wall by 400 metres to 3000 metres, allowing simultaneous handling of six mega-ships.

Construction is now under way on Container Terminal 3 (T3), which when complete in 2014 will rocket the overall capacity to 19m TEUs. At that point the port will be the only one in the region capable of handling 10 of the new-generation giant container ships at the same time. These large container ships are wide enough to carry 25 containers side by side. To a degree container discussions revolve around a series of numbers that either match or they do not. The Panama Canal, currently undergoing a $5bn expansion, became too small for the then-biggest container ships 25 years ago. Those ships carried 4300 TEUs, less than the capacity of the giants of the world fleet today.

Giants of Industry

 Jebel Ali says it can accommodate ships of any size whether in existence or just on the order book. To do that, it needs not only long enough docks and a deep enough draught but also a lot of help from some ultra-powerful machines. In December 2013 four of the world’s largest quay cranes were delivered to Jebel Ali to be installed in T3. They were the first of a total of 19 ship-to-shore (STS) cranes, measuring 138 metres high, and joined the first four of 50 rail-mounted gantry cranes that arrived the month before. The quayside of T3 is 1860 metres long and the draught 17 metres.

Graphic descriptions of the STS metal monsters range from pointing out that at full boom extension six of them standing on top of each other would be roughly the same height as the 820-metre tall Burj Khalifa and that each one weighs 1.85m kg – the equivalent of three fully loaded Airbus A380 superjumbo aircraft at take-off. Nabil Qayed, director of DP World’s Technical Department for the UAE region, said, “They can lift four twenty-foot containers at one time, handling up to 100,000 kg a lift. And with their 69.5-metre lifting height and extended reach, they can easily handle the 25 container-wide new-generation ultra-large container ships.”

Big & Bold

 Shipping lines are looking for ports equipped with high-speed cranes of this kind to help achieve the fastest turnaround possible. The STS cranes for Jebel Ali were delivered from Shanghai’s Zhenhua Port Machinery Company yards in China. There will be 98 quay cranes in total at the port once all those on order are in place.

The new giant ships of the container world, Triple Es, went into service for Maersk in 2013. At 400 metres long and 59 metres wide, they are capable of carrying 18,000 TEUs. Put another way, that is enough to fill 30 mile-long trains stacked two containers high. Jebel Ali is one of only a handful of ports in the world capable of handling vessels of this size. A vessel approaching that size was docked at Jebel Ali in June for the official opening of T2. Captain Dirk Radig, master of MSC La Spezia, a 366-metre long vessel with a capacity of 14,000 TEUs, and Nigel Fernando, the general manager of the firm that owns the ship, Mediterranean Shipping Company, were welcomed to the new facility by Sultan Ahmed bin Sulayem, the chairman of DP World.

Apart from its size and high-speed equipment, Jebel Ali has one other significant asset. As the port approaches the celebration of its 35th anniversary, it can boast extensive experience and a good reputation. The Jebel Ali Free Zone, established in 1985, now houses more than 6400 companies active in manufacturing, trade, logistics, and a range of industrial and service-oriented sectors.

Mohammed Sharaf, group CEO of DP World, told OBG, “Dubai has a unique position as a true hub because it is neither totally a destination port nor a trans-shipment port. A little over 50% of its cargo unloaded is bound for the UAE. Trans-shipment is also extremely important, but not so much as with other major hub ports, where upwards of 80% of shipments are re-exported.”

OUTLOOK

Although winning the bid for Expo 2020 will require considerable development on the site allotted to the event in Dubai World Central, there will be comparatively little transport-related work that was not already planned for the next decade. The advent of Expo 2020 may change some of the scheduled timing as an insurance policy against any projects over-running, however.

Development of any transport infrastructure that impacts access to Al Maktoum International could also have a beneficial spin-off in encouraging some airlines to move from Dubai International sooner rather than later and thus smooth the transition from one place to the other by having it take place over, say, 15 years. The timely expansion of the Dubai metro will come during a period of economic boom and expanding population. It is unlikely that both airports would continue on a permanent basis, and it is impossible to forecast whether Al Maktoum International will be extended to a 200m capacity, but it is a virtual certainty that there will be provision in the planning. Although this may not have a direct effect on reducing the number of cars on the road, it will almost certainly slow the rate of increase. It will also encourage higher property valuations in some areas, especially in the southern parts of Dubai, which are being served by trains for the first time.