UAE carriers set to scale new heights

Led by Emirates and Etihad Airways, UAE’s aviation industry is set to boost passenger traffic, cargo volumes, fleet expansion and route network

Amid a brightening outlook forecast for the UAE aviation by the International Air Transport Association, or Iata, over the next few years, the country’s four airlines recorded stellar performances in 2014 across all business segments of the industry while achieving new milestones in their spectacular growth.

Led by Emirates airline and Etihad Airways, two of the world’s fastest growing iconic legacy carriers, the UAE aviation industry continued to scale new heights in passenger traffic, cargo volumes, fleet expansion and route network development.

While the Dubai-based Emirates, the world’s largest international airline, is set to round off 2014 as the airline boasting the world’s largest wide-body passenger fleet of 218 aircraft, in addition to 14 freighters, Abu Dhabi’s Etihad is ringing off the year by completing its acquisition of a 49 per cent stake in Italian carrier Alitalia to end in style the latest phase of its aggressive inorganic expansion through a spate of buyouts and airline alliances across the globe. Both airlines have been adding new routes and boosting capacities and respective fleets with more wide-bodied aircraft throughout 2014.

In 2014, Emirates added 27 aircraft — 13 Airbus A380s, 12 Boeing 777-300ERs two Boeing 777 freighters — to its fleet. These included its 50^th A380 and its 100^th 777-300ER aircraft, strengthening Emirates’ position as the world’s largest operator of both the A380 and 777.

Etihad Airways continued to script it success story through a mix of organic growth, codeshare partnerships and minority investments in some strategically-important airlines. The airline, which carried 11.5 million passengers in the previous year, is set to finish 2014 with a remarkable surge in passenger traffic, given the fast-track growth it achieved through new routes and capacity increases.

From its Abu Dhabi base, Etihad Airways flies to over 110 destinations with a fleet of over Airbus and Boeing aircraft, and more than 200 aircraft on firm order, including 71 Boeing 787s, 25 Boeing 777-X, 62 Airbus A350s and 10 Airbus A380s. The airline also holds equity investments in airberlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways, and in Swiss-based Etihad Regional.

For Air Arabia, the region’s largest low-cost carrier, 2014 was a period of consolidation and growth as it opened its second hub in the UAE and fourth worldwide at Ras Al Khaimah International Airport. The first flight from RAK took off on May 6, and the carrier is currently offering direct services from the emirate to Jeddah, Cairo, Muscat, Islamabad, Lahore, Peshawar and Dhaka. Air Arabia also added two new routes to its network in the third quarter. From its primary hub of Sharjah, it added Antalya in Turkey. It also added direct flights to Chittagong in Bangladesh from RAK.

In summer 2014, Air Arabia added an additional aircraft to its Morocco hub, as demand on routes to Europe increased during the summer. Currently, the airline operates two aircraft from Alexandria and four planes from Casablanca.

Dubai’s low-cost carrier flydubai, now flying to 89 destinations, has confirmed the first phase of its 2015 network expansion as it seeks to continue its rapid development and introduce additional non-stop links from its Dubai International Airport base to destinations across Eastern Europe, the Middle East, Africa and the Indian sub-continent. Over the past five years, flydubai has seen it grow its share of capacity at its Dubai International Airport base to 12.1 per cent this year as its annual network capacity has grown 3.9 per cent from 10.38 million seats in 2013 to 10.78 million seats in 2014. In 2014, it announced 26 new routes and launched 23 routes as it added eight new aircraft to its fleet.

In 2015 flydubai, currently with a fleet of 43 Boeing 737-800 aircraft, will see another three destinations added to its route map, further expanding the carrier’s footprint to 89 destinations in 46 countries. The airline, building on the momentum from this and last year, when 20 and 19 new destinations were added to the network, has further cemented its commitment to enhance connectivity between different cultures.

Iata said in its latest forecast that the number of passengers travelling to and from the UAE is expected to increase at an average annual pace of 5.6 per cent until 2034, a higher rate than the regional average. The Middle East is expected to grow annually by 4.9 per cent and will see an extra 237 million passengers a year on routes to, from and within the region. Globally, Iata projected that passenger numbers are expected to reach 7.3 billion by 2034, representing a 4.1 per cent average annual growth

The UAE will add 29.2 million passengers over the next four years at a compound annual growth rate of 6.6 per cent as total global air passenger numbers are expected to rise to 3.91 billion by 2017. As airlines across the globe expect to see a 31 per cent increase in passenger numbers between 2012 and 2017, the Middle East will report the strongest international passenger growth with a 6.3 per cent CAGR, the global body said in its Airline Industry Forecast.

While the global aviation industry expects to see massive growth over the next 20 years with seven billion passengers anticipated to take to the skies by 2034, the Middle East region is on track to have the highest growth rate at 4.9 per cent per annum, the same rate as Asia Pacific, while Africa will see a growth rate of 4.7 per cent per annum.

Shaikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates Airline and Chief Executive of the Emirates Group, is upbeat about the sustained buoyancy of the aviation sector which is a key economic driver in the UAE as well as most Middle East and North African countries.

The latest study from Oxford Economics shows that the aviation sector contributed 26.7 per cent to Dubai’s GDP in 2013, and supported over 400,000 jobs. In 2020, aviation’s contribution to Dubai’s GDP is expected to be $53 billion. And by 2030, this will rise to $88.1 billion.

“Dubai has its own model. But we are certainly not the only ones in the Arab world who see aviation as a key economic driver. Many Arab airlines are investing in new efficient aircraft, new technologies, better onboard products, and better service. Many of the world’s latest — and biggest — infrastructure projects in aviation, are happening right here in the Arab world,” Shaikh Ahmed said at the conference.

“Both Airbus and Boeing forecast that airlines in our region will need more than 2,000 new aircraft over the next 20 years. That’s worth hundreds of billions of dollars. Think about what this might mean for the global aviation supply chain in terms of jobs and more. There is no doubt that our impact on the global aviation industry is increasing,” he has said.

Underscoring the bullish outlook was the remarkable increase in passenger traffic at Dubai International over the past months putting the airport on track to surpass the 71 million passenger mark by year-end. “We are on track to exceed 71 million passengers by year-end which is a remarkable number when you consider we lost the services of one or our runways for almost three months,” said Paul Griffiths, CEO of Dubai Airports.

“We are neck-and-neck with London Heathrow in our race for the number one position coming down the home stretch. It is sure to be a photo finish.”

Saj Ahmad, chief analyst at London-based StrategicAero Research, said with impressive monthly traffic growth, Dubai airport is primed to create a new record for three years despite the 80-day disruption caused by the runways being upgraded.

“Coupled with the spectacular growth at Emirates and flydubai, the two biggest operators at the airport, Dubai International has boosted operational efficiencies in the months since the runway work has been completed, allowing more flights and movements. Whether or not Dubai International eclipses Heathrow in 2014 is irrelevant. The real status comes early next year when Dubai International permanently takes the lead and stays there,” Ahmad said.

The robust outlook for regional air traffic comes in the wake of a stellar 14 per cent year-on-year growth in passenger traffic recorded by Middle East carriers in October, much higher than the global average of 6.9 per cent.

In air cargo sector also the UAE is set to replace Germany to become the world’s third largest air cargo market by 2018, according to Iata forecast.

“The US, China and the UAE will each be adding more than one million additional tonnes of freight by 2018 compared to today. The UAE will have replaced Germany as the third largest market,” Iata said in its Airline Industry Forecast 2014-2018.

By 2018, the 10 largest international freight markets will be the US (10,054,000 tonnes), China (5,639,000), the UAE (4,974,000), Germany (4,763,000), Hong Kong (4,648,000), Republic of Korea (3,487,000), Japan (3,480,000), the United Kingdom (2,808,000), Chinese Taipei (2,350,000) and India (2,223,000)..

Propelling the aviation sector growth is the massive investments the governments continue to earmark for aviation infrastructure in the UAE. Dubai International’s expansion plans costing more than $7.8 billion are progressing swiftly to increase the airport’s capacity to more than 90 million passengers with the completion of Concourse D by 2015 along with the expansion and modernisation of Terminals 1 and 2. This is in addition to the opening of the passenger terminal of Al Maktoum International Airport in Dubai World Central last year, which will be transformed into an international travel hub in the next few years.

Abu Dhabi International Airport recently re-opened its newly renovated Southern Runway as part of its expansion plans in preparation for the iconic Midfield Terminal Complex (MTC) becoming operational in 2017. The re-opening of the Southern Runway comes ahead of the much-awaited scheduled flights of Etihad Airways’ Airbus A380 and Boeing Dreamliner 787 aircraft.

The re-opening of the Southern Runway comes ahead of the much-awaited scheduled flights of Etihad Airways’ Airbus A380 and Boeing Dreamliner 787 aircraft, which were unveiled at Abu Dhabi International Airport last week.

Travel industry pundits estimate that with such massive on-going expansion on track, Dubai airport is set to emerge as the No. 1 airport in the world, not only for international passengers, which it is expected to become by 2015, but also in terms of services and facilities for the passengers.

Mohammed Ahli, Director-General of the Dubai Civil Aviation Authority, said: “Dubai continues its amazing growth rate with more airlines and frequencies to and from different parts of the world. Dubai International Airport is moving forward towards becoming the world’s top airport for international passengers by 2015 after recording 66 million passengers in 2013. Despite the phenomenal growth that it has been witnessing over the years, Dubai boasts of an excellent aviation safety track record and its stakeholders have been working towards maintaining the hard-earned excellence.”

Emirates to end 2014 in style

Emirates, the world’s largest international airline, said on Wednesday that it would finish 2014 in style as the carrier with the world’s largest wide-body passenger fleet of 218 aircraft, in addition to 14 freighters.

The Dubai-based airline said it added 27 aircraft — 13 Airbus A380s, 12 Boeing 777-300ERs two Boeing 777 freighters — to its fleet in 2014. These included its 50^th A380 and its 100^th 777-300ER aircraft, strengthening Emirates’ position as the world’s largest operator of both the A380 and 777. These modern and efficient aircraft not only help reduce environmental impact, but also enable Emirates to offer the latest facilities and comfort on board.

The carrier also expanded its global route network by launching services to four new destinations — Abuja, Chicago, Oslo, and Brussels — exponentially increasing the number of city-pair flight options that it provides to customers across the globe with each new city served.

In the first half of the 2014-15 fiscal year, Emirates airlines’ net profit rose to Dh1.9 billion, up eight per cent from the same period last year. Emirates revenue, including other operating income, of Dh44.2 billion was higher by 11 per cent compared with Dh39.8 billion recorded last year, reflecting strong passenger and cargo demand.

In a statement, Sir Tim Clark, President Emirates Airline, said: “This year we have navigated through an 80-day period of reduced operations due to runway upgrades at our hub airport, regional conflicts which impacted our operations and flight routes, the Ebola outbreak, fluctuations in oil prices and currency exchange rates, and economic uncertainty in many markets worldwide.

“Despite all that, Emirates has continued to grow, adding capacity equivalent to a mid-sized airline while maintaining our seat load factors. We also expanded and strengthened our global network, which gives us the flexibility to cope with regional shocks and redeploy strategically to maximise opportunities. We deal with the short term challenges, but are not distracted from our long-term plans. This is why Emirates continues to invest heavily in new technology and initiatives to enhance our product offering and customer experience.”

In 2014, Emirates has carried over 45 million passengers, operating 3,516 flights per week on average. The airline carried over 2.1 million tonnes of cargo, served over 47 million meals and flew 756 million kilometres – equivalent to circumnavigating the globe 18,552 times.

Emirates said it introduced services to eight new destinations this year, with each new point exponentially increasing the number of city-pair combinations that the airline offers to its leisure, business and cargo customers across its global network. The new cities launched in 2014 were: Kiev, Taipei, Boston, Abuja, Chicago, Oslo, Brussels and Budapest.

In addition, Emirates added frequencies to 20 existing destinations, increasing flight choices for its customers.

Saj Ahmad, chief analyst at London-based StrategicAero Research, said Emirates wraps up 2014 in much the way it started — “a continuation of its highly successful expansion via an organic growth strategy that has become the envy of the airline world.”

He said as the launch customer for the revolutionary 777X family with orders and options on up to 200 airplanes, Emirates is capitalising on its growth today with continued inductions of the A380 and 777-300ER jets which form the backbone of its international operations.

In 2014, Emirates’ deliveries paved the way for the launch of 10 new A380 destinations including Zurich, Barcelona, London Gatwick, Kuwait, Mumbai, Frankfurt, Dallas/Fort Worth, San Francisco, Milan and Houston. Emirates currently operates its highly-popular flagship A380 to 32 scheduled destinations. In 2014, Emirates also led one-off A380 services to Glasgow, Manila, Tehran and Vienna.

On the cargo front, Emirates SkyCargo marked a momentous year with the move of its freighter operations to Dubai World Central’s (DWC) Al Maktoum International Airport in May. Its new cargo terminal at DWC offers the capacity that positions Emirates SkyCargo for future growth, and enables the cargo division to provide a better experience for its customers.

The airline said it continued to be a trailblazer for onboard connectivity, investing over $20 million a year to install and operate inflight connectivity systems. Wi-Fi services are available on over 80 aircraft in Emirates’ fleet, and the airline is looking to roll it out across all its aircraft.

By 2020, as Dubai expects to welcome over 20 million visitors for Expo 2020, it is estimated that Emirates will fly 70 million passengers, and the airline and its partners are already progressing plans for the right infrastructure to be in place to support and capitalise on passenger growth, Oxford Economics said in its forecast.

The report said Emirates airline, Dubai Airports and the aviation sector as a whole contributed $26.7 billion to the Dubai economy in 2013, which was almost 27 per cent of Dubai’s gross domestic product, or GDP, and supported a total of 416,500 jobs accounting for 21 per cent of the emirates’ total employment.

The report explains the benefits that aviation brought to Dubai’s economy in 2013 in terms of gross value added, or GVA, and employment, and provides forecasts for the sector and its knock-on effects in 2020 and 2030.issacjohn@khaleejtimes.com