LOOK-AHEAD 2018: UAE aviation will soar higher

dubai - The sector is expected to contribute nearly Dh200b to the economy by 2020

Propelled by four flagship carriers that are on a consistently vibrant expansion mode and spurred by ongoing huge spending on aviation and tourism infrastructure by governments, the UAE aviation industry is set to reinforce its role as a key driver of the nation's diversified economy in 2018.

With non-oil sectors expected to account for nearly 90 per cent of the UAE's economy by 2025, aviation and logistics will continue to be the highest contributor to the gross domestic product (GDP) after manufacturing. While manufacturing will contribute 21 per cent by 2025, aviation will account for 16 per cent and logistics at 15 per cent of the nation's GDP by 2025.

According to aviation experts at a recent Arab Aviation Summit, the sector is expected to contribute nearly Dh200 billion to the country's economy by 2020, providing up to 750,000 jobs.

"The aviation sector is a crucial economic pillar for Dubai, accounting for more than 27 per cent of Dubai's GDP, or $26.7 billion, according to Oxford Economics. This is expected to increase to 37.5 per cent by 2020 with a total annualised impact of $53.1 billion," according to Dubai Airports CEO Paul Griffiths.

"I think you will find that today and most definitely in the future, the relationship between the city and the aviation industry productivity of Dubai is unparalleled," said Griffiths.

In the next 20 years, the UAE's aviation sector is expected to stand next to that of the US and China, according to Jeff Johnson, vice-president of Boeing International and president of Boeing Middle East.

Job creation
He said the UAE would need more than 55,000 pilots and 62,000 technicians in the same period as a result of its growing aviation industry.
Looking at the Middle East, 3,000 aeroplanes are set for delivery in the next 20 years - triple the current capacity, Johnson said.

Analysts said the growth of the aviation sector over the past three decades has been exponential and is a testament to the country's dynamic non-oil diversification drive.

While Dubai-based Emirates has focused on making Dubai the world's busiest hub airport and operates hundreds of routes with its own ever expanding fleet, Etihad has opted for an inorganic expansion drive involving alliances and partnerships. Sharjah's Air Arabia, the region's first low cost airline, and flydubai, one the world's fastest growing budget carriers, are expanding their network across the short- and medium-haul destinations to transport millions of passengers using UAE airports as hubs.

Led by Emirates and Etihad, the Middle East is set to be the fastest-growing region of the world for the airline industry, according to forecasts issued by ratings agency Moody's.

Sir Tim Clark, president, Emirates airline, said the airline is entering 2018 with optimism and an unflagging drive to keep raising the bar in terms of customer experience and business performance.

"Throughout 2017, we challenged convention and acted nimbly to mitigate challenges and maximise opportunities. We implemented initiatives to boost revenues, trim costs and used emerging technologies to make our business and operations more agile, without compromising on quality or service," said Clark.

Emirates made global headlines at the Dubai Airshow when it placed a $15.1 billion for 40 Boeing 787 Dreamliners. The order will enable the airline to maintain a young and efficient fleet, complementing its Boeing 777 and A380 fleet by providing more flexibility to serve a host of new destinations and help unlock further growth.

In 2017, the Dubai-based carrier - the largest operator of wide-body aircraft in the world - grew its fleet by 21 new aircraft, with nine A380 and 12 Boeing 777-300ER deliveries, rounding off the year with 269 aircraft and 243 aircraft pending delivery. The airline also retired 11 aircraft over the course of the year.

Driven by a predicted two-fold growth in net profit by Middle East carriers, in particular UAE carriers, net profits in the global aviation industry are set to surge by some 11 per cent in 2018, said the International Air Transport Association's director-general and CEO Alexandre de Juniac.

Profits to improve
While airlines in the Middle East are forecast to see net profits improve 100 per cent to $600 million in 2018, up from $300 million in 2017, global aviation industry net profit will rise to $38.4 billion in 2018, an improvement from the revised $34.5 billion expected net profit in 2017, de Juniac said.

Abdul Wahab Teffaha, secretary-general, Arab Air Carriers Organisation, said Dubai's government has subscribed not only to open skies but also to openness to everything. "We have tried protectionism and failed because it creates inefficiencies. Dubai has succeeded due to openness and the removal of the idea of protectionism," he said at the recent Arab Aviation Summit.

Adel Al Ali, Arab Aviation Summit chairperson and group CEO of Air Arabia, said Arab aviation is highly affected by the evolving geo-political situation, the global economy, technological developments and others.

"Our region is witnessing constant development and the theme for this year's edition, 'Time to Transform', reflects this fact. Today, we address the sustainability of our industry and the challenges and opportunities it faces in the short and long term," said Al Ali.

Ghaith Al Ghaith, CEO of flydubai, said the big change over the years is the opening up of aviation markets in the region.

"There are still more opportunities to be tapped here and we are still behind the curve. There are still no open skies and we need to work towards changing that situation. Why is Dubai the tourism and aviation hub of the region? Regional governments need to learn from Dubai. There is no set model that says that low cost airlines have to behave in a certain way. In our region, we have different types of customers and you have to offer options," he said.

According to Airbus' Global Market Forecast released this year, the fleet size of operators in the Middle East is forecast to more than double from 1,250 to 3,320 aircraft over the next two decades. By 2036, there will be 95 mega-cities, catering to 98 per cent of the world's long-haul services.

According to Iata, the Middle East's aviation market is forecast to grow five per cent annually until 2036. Predictions show the sector will witness an extra 322 million passengers a year on routes to, from and within the region and the total market size will expand to 517 million passengers over this period.

The Middle East gained a five per cent share of the global aviation market last year, flying 206.1 million passengers - an increase of 9.1 per cent over 2015.

- issacjohn@khaleejtimes.com