Dubai Airports: Fuelling a Nation’s Development

April 9, 2013 in Transport

If transportation is a catalyst for economic growth and prosperity, then Dubai Airports is truly one of the major sources of lifeblood for the ever-growing city of Dubai. In many ways the airport company’s growth has matched that of the region it serves, yet, contrary to the beliefs of some, its success is anything but merely bankrolled by the Government.

DubaiAirport01True, the airport is Government owned and receives tremendous support as it strives to keep up with the demands of constantly growing infrastructure, however Dubai Airports still has to keep a watchful eye on the balance sheet and report performance, as Paul Griffiths, CEO, explains:

It is often suggested that we are subsidised by the Government, but people are very much mistaken; there is great difference between being Government owned and Government subsidised – which we are not. We have to be accountable and at the same time we do not receive big Government handouts, the onus is on us, to make ends meet and the Department of Finance looks upon us as any normal business,” he asserts.

Griffiths has been with Dubai Airports since 2007, overseeing extraordinary growth in passenger and cargo volumes, meticulously planning the next phase of infrastructure development to ensure that growth is sustainable.

At the time of joining, Griffiths was Dubai Airports first CEO and within 12 months had successfully launched Dubai International’s enormous Terminal 3 building, while a little over 18 months later, he opened the emirate’s second airport Dubai World Central. The latest addition to the portfolio of projects was the opening of Concourse A earlier this year, the world’s first purpose-built A380 facility.

DubaiAirport02When I joined the statistics showed that 32 million passengers were passing through the airport annually, that figure will have risen to 66 million by the end of this year,” he states. “The growth of the aviation industry in Dubai has been a main engine for the economic growth and success of the entire emirate,” he continues.

Griffiths says that the emirate has had the considerable advantage of uncompromising support from the Government, which was quick to realise the economic benefits of a world class aerospace sector:

His Highness Sheikh Mohamed bin Rashid Al Maktoum, adopted an open economic policy based on world trade at the highest levels and the prosperity of the region has direct linkage to the skills necessary to develop and grow the aviation sector.

Whilst other airports around the world may struggle to overcome political or environmental challenges that inhibit growth and stop development, the contribution that aviation makes to a society is massive and has perhaps been recognised and nurtured more in Dubai than in the Western world.”

Dubai International was opened in 1960, at the request of Sheikh Rashid, who felt that Dubai would have more control over its destiny with the introduction of its own airport. Since then, both the aviation sector and the growth of Dubai have been meteoric, as Griffiths recalls:

There have been a number of seminal moments but certainly the opening (in 2000) of the new terminal created huge growth in capacity and by 2007 (when I arrived) we had 32 million passengers a year.

Then in 2008 we opened Terminal 3 which increased the capacity to 60 million a year. With Concourse A, which is part of Terminal 3, opening on January 2nd of this year that capacity has again risen to 75 million.”

Dubai Airports currently operates two separate airports, Dubai International, a two-runway venture located to the north of the city, and the new Dubai World Central, a development located approximately 35 kilometres south.

Griffiths says that work on the Dubai World Central site is very much ongoing, but the airport is already fully operational for cargo traffic, with 36 different airlines operating there, ahead of the imminent arrival of the new passenger terminal.

When completed, Dubai International World will be the world’s largest international airport, with 160 million passengers a year and 100 million transfer passengers,” he affirms.

DubaiAirport03We are first of all very fortunate to have a very enlightened Government who has been very supportive of aviation for many decades. The decision-making process in Dubai is incredibly effective and efficient compared to other parts of the world, for example the Terminal 5 building at London Heathrow Airport, took 16 years to complete, whilst our Terminal 3 building – the world’s largest by floor space took just 6 years.

Our ability to provide infrastructure that will enable us to grow is probably our biggest single, most powerful aspect and the growth has resulted in aviation supporting around US $22 billion of annual GDP, which is approximately 28 per cent of the nation’s total. We confidently believe that this figure will increase to 32 per cent in the next 6 to 7 years.”

Such significant numbers are further swelled by Griffiths’ report that the airports indirectly account for some 250,000 jobs – a figure amounting to roughly 19 per cent of total employment in the emirate. Unsurprisingly, Dubai International is one of the world’s largest international airports, currently third in fact, behind Paris and Heathrow, although Griffiths predicts that Dubai will see 66 million international passengers during 2013, putting it right on the tailcoat of Heathrow.

Overall Dubai International welcomes over 140 different airlines flying to 260 destinations, as well as being home to the world-renowned Emirates airline and saw a 14.6 per cent increase in passenger traffic in 2012 and now handles up to 60 aircraft movements per hour.

Passenger demographics are of course an important consideration for any ambitious airport. At Dubai International, the split between tourism and business travellers is less obvious, but Griffiths indicates that the origin and destination market is as strong as the transfer market, with 40 per cent of passengers beginning or ending their journey in Dubai.

The overlying fact however, is the sheer volume of passengers. The airport in 1960 bears very little resemblance to the remarkable 21st Century entity, which has seen an average annual growth in passenger numbers of 15.5 per cent since its opening. There has been an increase of 12.4 per cent in aircraft movements over the same period of time, whilst 2012 saw the business operate with some 190 passengers per movement – one of the highest ratios of any airport in the world.

Such volumes require an efficient and effective system for safe coordination and Griffiths’ team relies on close coordination with Dubai Air Navigation Services (DANS) and local regulators manage flight operations and ensure all activities happen in a smooth and timely manner.

DubaiAirport04Equally Dubai Airports relies heavily on its meticulous advanced planning when it comes to adding further infrastructure – so as not to cause disruption to the already hectic day to day running of the airport. Technology plays a vital role in planning and the company has invested heavily over the last 5 years to improve passenger flow rates.

With the Concourse A project, we were able to minimise disruption by ring fencing every aspect of our operations and by moving things to create temporary aircraft stands. As we get busier of course the logistics of planning operations will become more of a challenge but so far everything has worked well,” Griffiths states.

Investment will help to ensure that the business continues to cope with escalating demand and the recently opened Concourse A was constructed at a budget of roughly US $3.3 billion. The key part of the funding equation remains the need to run a profitable business however and Griffiths feels that at present, Dubai Airports is achieving its goals:

My main idea is not to constrain the growth of the enterprise. We need to provide enough capacity to ensure that the Emirates hub in particular, is able to continue to grow without restriction. At Dubai International we can continue to grow to an annual capacity of up to 100 million passengers a year but at some stage we may have to then look to the new airport.

Our business model is fairly stable and we are fairly content with it at present. The new airport will cost in the region of US $50 billion and by 2025 we may look to move Emirates airline to that site if business continues to grow at the same rate.

At present, our aeronautical and non-aeronautical revenue streams generate enough income to sustain the depreciation and newly created assets and our challenge going forwards will be to grow the revenue in the non-aeronautical side through property and retail.

Travel retail has continued to grow and is far more economically resilient than say traditional high street retail and we are proud of what we have achieved thus far, with nearly 2 million square metres of retail floor space and the world’s second largest duty free turnover.”

Griffiths has overseen a remarkable growth in Dubai International’s business but is far from finished in his quest to convert operations into the world’s largest airport:

We are training local people in customer service, maintenance and all manner of operations to ensure that the aviation industry is locally sustainable. Training is a top priority for Dubai International and will create a legacy of skills.

The next year will see an increase in the proliferation of the A380 and 777 aircraft as the predominate craft serving Dubai Airports. Concourse A was designed for the exclusive use of Emirates airline and has increased the airport’s total capacity from 60 million passengers to 75 million passengers per annum. We expect to oversee growth in the size of the fleet and the types of aircraft and I am confident that investment and innovation will keep us ahead,” he concludes.