Dubai Airport sees tougher 2017 as growth slows again

[DUBAI] Dubai International Airport predicted passenger growth will slow for a second year in 2017, underscoring the challenges facing the aviation industry in the region after years of aggressive expansion.

The Persian Gulf hub expects to lure 89 million travelers in 2017, it said Tuesday, a 6.4 per cent gain that would be the weakest in 10 years, excluding 2014, when runway repairs limited takeoffs and landings for 2 1/2 months. While demand is slowing as global economies falter and lower oil prices clip Middle Eastern travel, the airport is also constrained by its own success, with many of the most prized peak-time operating slots already occupied.

Passenger numbers at Dubai International last year rose 7.2 per cent to 83.6 million, slowing from a 10.7 per cent gain in 2015. The airport still outperformed many rival bases in Europe, where a spate of terrorist attacks weighed heavily on numbers, and Chief Executive Officer Paul Griffiths said he remains confident of overtaking Atlanta Hartsfield-Jackson and Beijing Capital to become the world's busiest hub in coming years.

"The growth is very, very significant compared to other airports around the world, about three times the average rate of growth for our competitors," Mr Griffiths said in an interview with Bloomberg Television. "Our aircraft movements aren't growing quite so quickly mainly because of capacity constrictions and slot constraints." Flagship carrier Emirates, which operates the majority of flights in Dubai, told Bloomberg last month that 2016 was "not a good year" as oil executives and bankers reined in travel, terrorism dented demand and regions including sub-Saharan Africa saw travel slump, adding that 2017 "could be even flatter." Dubai already attracts almost 8 million more passengers than chock-full London Heathrow, which it overtook in 2014 to become the world's busiest international hub, even though both sites have only two runways apiece. Peak hours are crowded with aircraft movements, and it's tougher to attract carriers to operate services during the troughs in between.

In 2015, Dubai International climbed to the third spot in the world rankings, behind Atlanta, the main base for Delta Air Lines Inc, and Beijing. The Chinese hub added 5 per cent more passengers in 2016, for a total of 94.3 million, while Atlanta, which lured 101 million people in 2015, has yet to report figures.

Capacity at Dubai International is scheduled to reach 118 million travelers annually by 2023, with the expansion to be funded mainly from retail concessions so that user fees are kept down. Improvements to travel flows and the quality of service are regarded as vital since almost 50 per cent of the people who change planes at the airport could use another hub, Mr Griffiths said.

Anticipating future constraints, the sheikhdom is spending US$36 billion on a completely new facility where flagship carrier Emirates is due to shift flights. India remains Dubai International's largest market, accounting for flights involving 11 million passengers last year, while Saudi Arabia moved into second spot with 6.09 million, edging out the UK on 6.06 million. At the same time, London snatched the top spot among destination cities, with 3.75 million travelers, displacing Doha in nearby Qatar, where the tally was 3 million.

The average number of passengers per flight at the airport increased 4 per cent to 209, the highest in the industry, swelled by the more than 90-strong Airbus Group SE A380 superjumbo fleet at Emirates.

Dubai's new airport, Al Maktoum International, will expand capacity to 26 million passengers by the end of the third quarter of this year, from 7 million now, Mr Griffiths said. The next phase of growth will see that jump to 120 million by 2025, when Emirates will move its operations. Ultimately, total capacity is slated to reach 240 million passengers.

BLOOMBERG