UAE’s USD 272 Billion Investment Towards Upgrading Its Aviation Sector

Posted by MarketsandMarkets on Jan 3, 2019 6:18:06 PM
MarketsandMarkets

The Middle East is the world’s dynamic region when it comes to the rapid development of its resources, infrastructure, and growing its demand to the world. Once entirely dependent on the oil & gas sector, it is now home for the world’s third busiest airport with no signs of slowing down.  As per IATA, the Middle East is expected to experience robust growth at 5% with an increase in 322 million passengers a year on routes to, from, and within the region by 2036. To cater this exponential demand, the Middle East needs to overcome the fragmented airspace structure and with efficient infrastructure.

At present, countries are facing challenges in maintaining an edge through sound long-term strategies to build the best infrastructure in the world. Airspace congestion in the Middle East region offers long-term challenges, as growth in airport capacity is not able to keep pace with the surging demand for air travel. It is extremely important to implement effective cooperation on Air Traffic Management (ATM) between countries.

In 2017, the Middle East represented 9% of world air traffic. The UAE accounts for around 45% of the Middle East aviation sector. The UAE aviation sector is experiencing rapid growth, propelled by the growing middle class and low airfares. Growth in air transport activities in the UAE is causing significant airspace congestion. The overall efficiency of the ATM system appropriate with the level of predicted traffic growth should be increased through improved airspace design and organization.

Middle East New Aircraft DeliveriesAs per the General Civil Aviation Authority (GCAA), the number of flights within the country’s airspace reached around 882,600 in 2017. The Abu Dhabi International Airport processed 24 million travelers, while Sharjah Airport processed 9.76 million, Al Maktoum Airport 899,000, Ras Al Khaimah Airport 427,600, and Al Ain Airport 74,800, among others.

Till 2018, UAE has invested USD 272 billion, and is planning to invest more than USD 23.6 billion in aviation infrastructure. These investments include USD 8 billion in developing the Al Maktoum International Airport, USD 7.6 billion expansion of the Phase IV of Dubai International Airport, and USD 6.8 billion for the re-development of the Abu Dhabi International Airport, among others. Such investments are expected to have a positive impact on the aviation sector, as it will reduce airline fuel cost, airspace congestion, passenger and aircraft handling, and aircraft delays which eventually help the commercial airlines, logistics airline, 3rd party ground handler, and airport operator, among others.

In January 2019, Dubai is hosting a three-day “Global Investment in Aviation Summit (GIAS)”. This summit will have the participation of 500 delegates from 40 countries.

The UAE government plans 7 strategic objectives and 41 supporting initiatives for Air Traffic Management (ATM).

A few of the strategic objectives are as follows:

  • Development and enforcement of safety and security regulations to international standards and best practices.
  • Continuous improvements of safety and service standards in air navigation services provisions.
  • Continuous improvements in bi-lateral relations.
  • Develop and implement contemporary resource management strategies to address business environment challenges.
  • Ensure GCAA services are provided to quality, efficiency, and transparency standards.
  • Innovation culture within the corporate working environment.

UAE Air Traffic Forecast

MarketsandMarkets™ View Point:

According to the View Point of Vaibhav Dixit - Associate Vice President : Aerospace & Defense, at MarketsandMarkets™, Air Traffic Management (ATM) market in Middle East is projected to reach USD 10.66 billion in 2022 at a CAGR of 12.79%. As of 2018, UAE has invested billion dollars in the aviation sector and is expected to invest more in its aviation sector. This significant investment is expected to help in upgrading their current airport traffic management equipment and solutions, aircraft procurement, and airport development (new airport and expansion), among others. This huge investment is also expected to improve airport safety and security, airport capacity & utilization and aircraft handling, and reduce airspace congestion.

Additionally, in the investment summit, UAE is expected to majorly focus on investment opportunities in the aviation sector in the region and try to attract more foreign investment, as the aviation industry accounted for 14-15% of the country’s GDP, in 2017. The investment of billion dollars will help airport operators and airlines, aviation logistics suppliers, aircraft lessors in On-Time-Performance (OTP), passenger handling, aircraft handling, and airport utilization, among others. Such investment not only will have positive impact in commercial aviation sector but also provide boost to nation logistics capacity

Since the Middle East holds a 9% market share in world air traffic, this investment will strengthen its presence in the global aviation market.

UAE authorities are focusing on re-planning internal routes to extend to neighboring countries, with the aim of increasing their airspace capacity, as well as introducing a new navigation management system by 2020.

Topics: Aerospace and Defence, air traffic management market, FIGURE 2 UAE AIR TRAFFIC FORECAST

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