The annual Dubai Airshow is underway this week and has set records for new aircraft orders. In fact, the first day of the show saw Boeing accept over 200 orders estimated at over $100bn. Not surprisingly, most of the buyers have been those from the Middle East. While most of the orders are for passenger airplanes, the investments highlight the growing importance of the Middle East for the aviation industry.
According to Boeing’s spokesperson Doug Alder, “International traffic growth in the Middle East continues to outpace the rest of the world. The Gulf region benefits from a unique geographic position that enables one-stop connectivity between Europe, Africa, Asia and Australasia”.
Indeed, from a cargo perspective, IATA data seems to support this. For the month of September, IATA noted global freight tonne kilometers (FTKs) increased 0.5%. This increase was led by Middle East carriers which noted a 9.9% year-over-year increase in FTKs for the month. Year-to-date, Middle East carriers have reported a 12.3% increase in FTKs. Much of the cargo increase may be attributed to the expanding trade routes the “Gulf Big 3”, Etihad, Emirates and Qatar, have undertaken.
For example, after acquiring a 33.3% stake in Swiss airline Darwin, Etihad recently launched a daily non-stop flight to Zurich, Switzerland. The airline also recently announced an agreement with Singapore Airlines Cargo to exchange confirmed cargo capacity on services operated by both airlines from Abu Dhabi to London and Frankfurt.
November has proved to also be a busy month for Emirates and Qatar. Among its announcements, Emirates Cargo introduced a fifth weekly flight to Pakistan. In total, its weekly cargo flights to Pakistan comprise of 1,400 tonnes of cargo space, a 5% increase. Also, Qatar announced cargo routes to Beirut, Madrid, Paris and Tbilisi, Georgia.
Recent monthly data from the Dubai International Airport further suggests the region’s growing importance. For October, the airport reported a 13.1% year-over-year increase in passengers to 5.4m while cargo volume increased 1.8% to 196,823 tonnes. Year-to-date cargo traffic is up 6.6% to 1.8m tonnes.
As a major hub for re-exports, Dubai is planning for even bigger increases in passengers and cargo with expectations of not only maintaining its status as a major re-export hub but also as an attractive location for manufacturing and international businesses. Its newest airport, Al Maktoum, is located in Jebel Ali and is a part of Dubai World Central, which the government launched as a free economic zone. While still under construction, it opened its passenger terminal in late October and has been accepting cargo since 2010. It is expected that once complete, Emirates will relocate its operations to this airport due to capacity constraints and limited prospects for expansions at the Dubai International airport. With a tentative completion date of 2027, Al Maktoum is expected to be the world’s largest airport.Middle East carriers have benefited from government investments in infrastructure and thanks in part to these carriers, they are leading the global airfreight market into a recovery. However, some industry insiders question the ability of carriers from other regions to compete fairly against state-run carriers such as Etihad and Emirates.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)