Dubai International To Expand

BMI believes that a planned expansion and modernisation of Dubai International Airport has the potential to significantly boost air freight volumes passing through the country, already projected by BMI to enjoy strong growth over the medium term. The plans also hold significant potential for Emirates SkyCargo, the cargo wing of Dubai's flag carrier, and underline the emergence of Dubai as a premier air freight hub.

Dubai International is set to see its air cargo-handling capacity grow to 3.2mn tonnes by 2018. The facility is currently capable of handling 2.5mn tonnes per annum, after the opening of the Mega Cargo Terminal in 2008 augmented capacity by 1.2mn tonnes. Now the terminal's capacity is set to be increased to 1.5mn tonnes per annum through the addition of 30,000 square metres and a refurbishment of the existing Hall A and Freight Gate 1. Further to this, a new transhipment facility is under construction. Once completed this new 400,000 tonnes per annum capacity facility will handle around 60% of the cargo transferred between Dubai International and the new Al Maktoum International, also known as Dubai World Central.

Senior Vice President of Dubai Airports, Chris Garton, said of the developments: 'The continued growth in cargo volumes as well as the size of the airport meant that cargo facilities could no longer be clustered into one area. The new infrastructure will not only increase our capacity but go a long way to simplifying what has become an increasing complex cargo operation as the airport has grown.'

A Role To Play In UAE Air Freight
Dubai International Throughput, 2007-2016 ('000 tonnes)

BMI notes that Dubai International has enjoyed strong expansion in air freight volumes in recent years. Growth from 2007 to 2010 averaged 12.7% per annum, and although volumes dropped by 3.5% in 2011, we forecast a return to growth of 2.8% this year, which would take the handling figure to 2.25mn tonnes if realised. This is predicated on H1 results, which showed the same rise in year-on-year volumes for the first half of the year. Over the medium term, to 2016, we project that annual growth will average 4.4%.

This might have been higher were it not for the fact that it is as yet uncertain how much in the way of cargo operations Dubai International is to cede to Al Maktoum. The latest development plans, however, highlight that Dubai International still has an important role to play in the UAE's air freight transport sector, and so risks to our forecast are to the upside.

The air freight sector in the GCC, and in the UAE and Dubai in particular, is to enjoy strong growth in the years to come, just as it has over the past five. This is being fed by strong government investment in new facilities, and strong growth of domestic airlines. The newly expanded Mega Cargo Terminal at Dubai International is to be dedicated once completed for the sole use of Emirates, underscoring how these two trends have been symbiotic.

This growth in both airlines and facilities make use of a number of advantages of the Gulf region; it is located at the meeting point of three continents, providing it with easy hub status, and there is physical space, funding and political will to develop the air freight sector, three factors lacking in Western Europe. These dynamics, along with a growing middle and business class demanding air travel, combine to make the Middle East the fastest-growing region in the world in terms of both freight and passenger growth according to IATA data.

Dubai Airports believes that this growth will continue over the long term; air freight volumes across the two Dubai air facilities are projected to grow from last year's 2.19mn tonnes to 4.1mn tonnes by 2020. Barring any serious global downturn once again impacting upon air freight volumes, this projection appears entirely reasonable given past and present performance.


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