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UAE on course to soar higher: IATA
The UAE will be the world's second fastest growing market for international passenger numbers after China by 2014, according to the International Air Transport Association.
- PUBLISHED: Wed 16 Feb 2011, 1:08 AM UPDATED: Thu 22 Aug 2024, 12:19 PM
The aviation body on Monday released the industry forecast and said international passenger numbers are expected to rise from 952 million in 2009 to 1.3 billion passengers in 2014.
The fastest growing markets for international passenger traffic will be China (10.8 per cent), the UAE (10.2 per cent), Vietnam (10.2 per cent), Malaysia (10.1 per cent) and Sri Lanka (9.5 per cent).
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For its regional outlook, the IATA said the Middle East is expected to have the fastest growth rate at 9.4 per cent. The UAE, Kuwait, Jordon will be among the top 10 fastest growing countries in the region.
The UAE will lead the region for international freight demand as the country is expected to handle 2.7 million tonnes of cargo. While the region, according to IATA, will record 8.1 per cent growth in freight demand.
Last year, top three UAE airports recorded double-digit growth in passenger numbers. The Abu Dhabi International Airport recorded a 12 per cent year-on-year increase in passenger traffic in 2010. The Sharjah International Airport registered record passenger growth by 9.41 per cent over 2009.
The Dubai International Airport, which enjoys major share of the total international air passengers in the country, reported over 15 per cent year-on-year growth in passenger numbers for 2010. Dubai Airports, the operator of the Dubai airport, also predicted a double-digit growth in passenger demand with 52.2 million passengers.
The Dubai International Airport is undergoing a massive development for its Terminal 2 and a new Concourse 3. These developments will boost its capacity from the current 60 million passengers annually to 75 million, which, when combined with other facility enhancements and operational efficiencies will boost capacity to 90 million by 2018.
According to IATA's industry consensus forecast, there will be 3.3 billion air travellers by 2014, up by 800 million from the 2.5 billion in 2009. By 2014 international aviation will handle 38 million tonnes of air cargo, up 12.5 million tonnes from the 26 million tonnes carried in 2009.
China will be the biggest contributor of new travellers. Of the 800 million new travellers expected in 2014, 360 million (45 per cent) will travel on Asia Pacific routes and of those 214 million will be associated with China (181 million domestic and 33 million international). The United States will remain the largest single country market for domestic passengers (671 million) and international passengers (215 million).
“Despite some regional differences, the forecast indicates that the world will continue to become more mobile. This creates enormous opportunities but also presents some challenges. In five years we need to be able to handle 800 million more passengers and 12.5 million more tonnes of international cargo. To realise the economic growth potential that this will bring, we will need even more efficient air traffic management, airport facilities and security programmes. Industry and governments will be challenged to work together even more closely,” said Giovanni Bisignani, IATA's Director-General and chief executive.
Consolidation is must for airlines industry
- By Shweta Jain
GENEVA - It is anticipated that with capacity growing faster than demand for the Middle Eastern carriers, there will also be a downward pressure on yields for the region's carriers.
However, Giovanni Bisignani, the Director-General and Chief Executive Officer of International Air Transport Association (IATA) estimates that the premium travel on most Middle Eastern markets has now recovered to pre-recession levels.
In an exclusive interview with Khaleej Times, Bisignani talks about the promising future growth of the Middle East airlines as well as the challenges ahead.
How profitable do you see the Middle East airlines becoming in the coming few years?
Globally we are projecting profits of $15.1 billion in 2010 to fall to $9.1 billion in 2011.
After a sharper than expected rebound in 2010, we expect cooling off in 2011 as the global economy returns to a more normal pattern. Alongside this, we see global capacity growth of 6.1 per cent exceeding the expected 5.3 per cent growth in demand. And we estimate the average oil price to rise to $84 per barrel in 2011, up from $70 in 2010.
In line with these global trends, we are expecting to see 2010 profits of $700 million for the Middle East carriers shrink to $400 million in 2011. It is important to note that this is big improvement on the losses that the region made between 2007 and 2009.
Do you see premium travel coming back to its pre-recession levels in the Middle East in 2011? How would that compare to the premium travel globally?
Premium traffic on routes linked to the Middle East have largely been growing above the global average. Specifically the Middle East to Asia routes, which saw very strong growth of almost 24 per cent for the first 10 months of 2010 - well above the global average of 9.2 per cent.
We estimate that premium travel on most Middle Eastern markets has now recovered to pre-recession levels, whereas international premium travel worldwide is still 12 per cent below its pre-recession peak.
With a huge number of aircraft orders lined up for the Middle East, is the region facing a danger of over-capacity? How can this issue be tackled?
The Middle East has been the fastest growing region for some time. Last year it led industry growth with a 21.5 per cent expansion in demand outstripping the 15.8 per cent increase in capacity, boosting load factors. This year, we are forecasting growth in demand to cool to 10.5 per cent while the region adds capacity of 11.4 per cent.
Matching capacity to demand is a constant challenge. The region's carriers are clearly winning some market share along the way. And this growth is being supported by enormous investments in infrastructure in the range of $100 billion.
The level of the yields seems to be declining fast. How do you think the Middle East needs to handle effectively the capacity?
We cannot comment or discuss specific activities of airlines, but in general, with capacity increasing faster than demand, there is always pressure on yields.
Higher fuel costs are creating upward pressure on overall costs but the ability of airlines to reflect higher costs in their fares is starting to diminish as capacity increases.
We expect to see yields increase globally by 0.5 per cent for passenger and be flat for cargo as compared to an increase of about seven per cent in 2010. We do not have a regional breakdown for yields, but we anticipate that with capacity growing faster than demand in the Middle East, there will also be a downward pressure on yields for the region's carriers as well.
Do you agree that overcapacity may upset the Middle East region becoming a travel hub? If so, please elaborate.
The Middle East airlines carry 11.5 per cent of international scheduled air traffic and 10.8 per cent of international freight. The double-digit growth in traffic is partly due to the ability of the carriers to attract long haul traffic through the region's hubs.
The challenge is to manage the capacity profitably. The region's economies are robust and the connectivity of its hubs is proving effective. So far, the region has been able to more or less match the increases in capacity with corresponding increases in demand.
What can Middle East airlines do to improve their margins?
Aligning capacity growth more closely with demand has already positively affected the region's profits. The growth is being facilitated by cost-efficient new fleets. And IATA's 'Simplifying the Business' programme is helping to keep costs in check with new technology.
One area where the Middle East could be more aggressive is with e-freight. Currently only the UAE and Egypt are participating in e-freight. The other Middle East countries need to come on board in order to deliver the potential $4.9 billion in industry savings.
Although some countries in the region have adopted an “open skies” policy, governments in the region also need to take a more proactive approach to liberalisation, balancing long-haul opportunities with short-haul regional liberalisation.
You said, consolidation is the way to go for global airlines. Do you expect consolidation taking place in a region like Middle East? If not, why not? If yes, how soon?
Consolidation is must for the industry. We are too fragmented. We are seeing some consolidation within political borders. But the bilateral system with its ownership and control restrictions is holding the industry back.
I would expect to see the move toward consolidation having the greatest impact in regions where the industry has largely been privatised and where markets have matured.
Consolidation, I believe, is inevitable. And it will bring benefits to the industry and to consumers. But it is required more in mature and more slowly growing markets. I would not expect to see the Middle East at the forefront of this process just yet.
How do you see airfares faring in the Middle East in 2011? How does that compare to 2009-2010 levels?
With capacity expected to grow faster than demand in 2011 and fuel costs rising, yields are expected to be relatively stable compared to 2010.
What are some of the biggest challenges being faced by the Middle East aviation industry at present? How can these be tackled?
Running an airline in any region is always challenging. That is no different in the Middle East. The region has the advantage of governments that see the economic benefits of aviation. We see this in the incredible infrastructure boom in airports, particularly in the Gulf region.
A challenge will be to ensure that this is matched with advancements in airspace management and expanding the airspace available for civilian use.
What about safety?
Another constant challenge is safety. As at November 2010, the Middle East carriers saw their hull loss rate for western built aircraft improve to 0.86 compared to the 3.63 the year before. Nonetheless, it is still higher than the global hull loss rate of 0.66. Global standards – the IATA Operational Safety Audit (IOSA) and the IATA Safety Audit for Ground Operations (ISAGO) – are available.
Egypt, Lebanon, Syria and Bahrain have mandated IOSA, while Kuwait, Jordan and Oman have expressed formal support for ISAGO. I urge the governments in the region to take advantage of these standards and mandate both IOSA and ISAGO.
