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The UAE announced that the country will invest AED 500 billion (US$136.12bn) in the aviation industry over the next decade to diversify the economy and make the country a global transport hub. Economy minister, Sultan al Mansouri said the UAE intended to capitalise on its transport and communications infrastructure. The backing includes new aircraft for the five flag carriers in the UAE, huge investments for new airport capacity throughout the seven emirates, and plans for Abu Dhabi to become a regional centre for aircraft maintenance, manufacturing and flight training.

 

Mr al Mansouri said air traffic increased 11.5 percent in the UAE in the first half of the year compared with the same period last year.

 

In addition to Emirates and Etihad, UAE flag carriers include the budget airlines Flydubai and Air Arabia, while RAK Airways recently re-launched operations and flies to five regional destinations.

 

To cater for the strong passenger growth, both Abu Dhabi and Dubai's international airports are spending billions of dollars on new terminals and infrastructure.

 

In a report carried by The National in Abu Dhabi, there was an average of 1,888 aircraft flight movements each day in the UAE, a two-year high, the Federal General Civil Aviation Authority (GCAA) said. The movements are an increase of 6.9 percent compared with the same month a year before. In total, there were 56,654 take-offs, landings and overflights in the UAE last month.

 

The country's industrial plans for aviation are being spearheaded by Mubadala Development, one of the major Abu Dhabi-owned sovereign wealth funds. The company is overseeing plans to develop maintenance facilities for civilian and commercial aircraft, flight training, high-technology manufacturing for aircraft parts and research and development work.

 

December 23, 2010

 

 

Analysis and Forecast: Decreasing Risk


 

The announcement by the UAE government is a positive move on two fronts:

 

Firstly, it is a concrete example of expanding an already highly successful industry that has seen the emergence of two UAE-carriers, Emirates and Etihad, as world leading airlines. Secondly, it points to the fact that Abu Dhabi and Dubai appear to want to join forces on the aviation front. So far, competition between Dubai-based Emirates and Abu-Dhabi-based Etihad was seen as a threat to ensuring the UAE’s regional dominance in the airline industry. Although both airlines are highly unlikely to merge, the UAE could become home to one of the largest airline industries in the world.

 

Collaborating between both airlines has increased ever since Canada, Germany and other Western countries expressed reservations about the un-competitiveness of Gulf carriers. The UAE felt such increasing opposition from the West could undermine the country’s desire to become a world travel hub and economic diversification plans. With greater spending on the aviation industry, the UAE will strengthen its regional position as well as its prospects for making the UAE a major international travel hub. The planned expansions of both Dubai and Abu Dhabi airports will only contribute to this position.

 

In addition, with industrial and maintenance aviation plans in Abu Dhabi, there will even be a greater contribution to the economic diversification, as the country strengthens its industrial position, as well as in the travel sector.

 

The figure below shows the projected passenger capacity of the major GCC airports.

(* 2009 projection, subject to delays)