Securing a sustainable aviation sector is one of the principal aims of the Abu Dhabi Plan and the Abu Dhabi Economic Vision 2030 long-term development strategy. This inclusion in such a holistic, integrated plan demonstrates the leadership’s understanding that aviation can hold the key to growth in a series of other interconnected industries.
An advanced air transport sector can help achieve expansion in important areas such as tourism by providing connections to more destinations, a greater capacity to receive visitors, as well as more targeted marketing in source destinations. A high-quality maintenance, repair and overhaul (MRO) subsector for aircraft also boosts industrial diversification, as does the development of locally based original equipment manufacturers.
Both of these trades are high value-added, significantly boosting the emirate’s non-oil GDP. They are also an ideal conduit for the commercialisation of the advanced research and development coming out of the emirate’s science and technology parks. Built out capacity in aviation also improves logistics, which requires integrated warehousing, cold chain and rapid transport facilities.
Central to Abu Dhabi’s aviation development is its main air gateway, Abu Dhabi International Airport (AUH), which lies around 30 km east of Abu Dhabi City on 3400 ha. AUH’s history goes back to the early 1980s, when it took over from the previous gateway, Al Bateen Airport. Al Bateen, located close to Abu Dhabi city centre, is now Al Bateen Executive Airport, which caters exclusively to general and business aviation.
AUH currently has three terminals and is the base for the UAE’s flag carrier, Etihad Airways. To cater to growing passenger traffic, a new terminal is currently under construction, the Midfield Terminal Complex (MTC), which is due to come on-line in 2019. The main component of the MTC, the Midfield Terminal Building (MTB), will be the largest building in Abu Dhabi, visible from a distance of 1.5 km. The building will include a 319-metre roof span at its widest point, held up by 18 arches, the biggest of which is 180 metres wide and 52 metres high. It is located between the two existing runways and will significantly boost AUH’s passenger-handling capacity. The MTB will be able to process 30m passengers per year, or 8500 per hour, via 65 gates, boosting the overall capacity of AUH to 45m passengers per year.
Connection times will be reduced to a maximum of 45 minutes, including baggage transfer, highlighting the airport’s increasing role as an international and regional hub. The decrease in connection times is partly due to a new baggage-handling system that spans 27 km and will have a capacity of 19,000 bags per hour. Some 156 check-in counters and 48 self-service kiosks, 30,000 sq metres of airline lounge, and 35,000 sq metres of retail, duty free and food and beverage space are among the new terminal’s statistics.
In terms of security, the project also includes the installation of 4300 CCTV cameras. The MTB is being built by a consortium consisting of Dubai-listed construction firm Arabtec, Middle Eastern builder Consolidated Contractors Company, and Turkey-based firm TAV, which specialises in the construction and operation of airports around the world.
Significant progress was made throughout 2016, starting in May of that year when Abu Dhabi Airports (ADAC) announced that the steel structure of MTB’s central processor roof was completed. By June, the final de-propping work of the last arch was completed, signifying that the huge structure was now self-supporting. At the last stage the roof weighed a total of 21,000 tonnes.
By May 2017 the contract for the Midfield Terminal Complex Car Park was awarded, which will accommodate 3400 vehicles in short-term lots and 1500 vehicles in long-term lots. The contract was awarded on a five-year design, supply, installation, operation and maintenance basis to Zone Parking Solutions. Also in 2016, four companies – Emirates Leisure Retail, HMSH ost International, Lagardere Capital and SSP – were selected for concessionaire contracts from more than 80 bidders to manage all food and beverage options at the MTB. The MTB is set to become operational at a key moment, as the number of arrivals has been rapidly increasing in recent years. Throughout 2016 AUH saw more than 24m passengers, up 5.1% from 2015. Most of this traffic came through terminal 3, which itself saw over 15m passengers, a 12.6% increase. Etihad Airways carried 76% of total passengers visiting AUH in 2016. ADAC expects total AUH arrivals to surpass 45m by 2025, making the addition of the new terminal a key requirement if the airport is not to outstretch its current capacity. In January 2017 the airport handled more than 2.2m passengers, which represented a 2.6% year-on-year (y-o-y) increase. Aircraft movements also grew y-o-y in the same month, by 1% to 14,666. During the first month of 2017 the top five destinations were London, Bangkok, Bombay, Doha and Jeddah.
In March 2016 AUH introduced its Smart Travel system, under which passengers with registered passports can pass from check-in to aircraft boarding interacting only with cutting-edge technology. Registration for this became compulsory for travellers mid-year, with the system expected to cut the time it takes for passengers to clear airport security checks by up to 70%. The airport is the first in the region to introduce this system, which was launched in partnership with the Abu Dhabi Police and the Ministry of Interior. The system is based on a simple five-step process by which travellers can check-in, drop off luggage board flights without assistance from airport staff, as well as access special e-border gates that cut passport control wait time to seven seconds.
Cargo & Free Zone
AUH is also an important cargo terminal, with cargo up by 1.3% month-onmonth in November 2016 to 71,193 tonnes. The year-to-November volume was down, however, by 3.5%, to 733,742 tonnes, with the overall economic slowdown likely a factor. Year-to-November aircraft movements were down by 0.5% to 157,582.
AUH has an associated business park and free zone complex managed by Abu Dhabi Airports Free Zone (ADAFZ) which has jurisdiction over 10.6 sq km around the airport. ADAFZ includes a logistics park, a business park, Al Falah Free Zone, Airport City and Destination Village. All operate in a free zone environment, giving them benefits such as 100% repatriation of profits, exemption from various income and import taxes, and one-stop shop assistance from the free zone authorities. The area has thus proved particularly popular with companies from the electronics, engineering, logistics, pharmaceuticals and aerospace sectors. ADAFZ also forms part of a long-term plan to develop an aerotropolis around the airport, integrating the free zone areas with other local projects.
ADAC owns the free zone, as well as AUH. ADAC is a public joint-stock company, itself owned by the emirate’s government, and was created in 2006. It also owns and operates Al Bateen, Al Ain International Airport (AAN), Delma Island Airport and Sir Bani Yas Island Airport (XSB). Free zones are also in operation at Al Bateen Executive Airport and Al Ain International Airport. Delma and Sir Bani Yas are on offshore islands, both lying some 250 km southwest of the capital. Small aircraft serve the local populations, as well as a growing tourism business and workers on the islands, with the latter home to the Arabian Peninsula’s largest wildlife reserve.
AAN is 18 km north-west of Abu Dhabi’s second-largest city, and has been in operation since 1994. It has been expanding its portfolio of international flights in recent times, and July 2016 saw Egypt’s Nile Air start four weekly flights to Cairo. The airport is also now at the heart of an aviation sector cluster, Nibras Al Ain Aerospace Park. Covering five sq km, the park brings together an aviation academy, MRO businesses, manufacturers, administrative units and residential complexes for aerospace company employees, adding to Al Ain’s importance in the air transport segment (see Industry chapter).
Etihad Airways has seen major expansion since it began operations in November 2003. Its fleet is now around six times the size it was in 2006, with 119 aircraft now serving 112 destinations worldwide. In 2016 the airline carried 18.5m passengers, up 6% from 2015, across 109,000 scheduled passenger and cargo flights. The company transported 592,700 tonnes of cargo. Etihad’s fleet includes five Airbus A380s, and with the addition of codeshares the airline can now serve some 600 destinations worldwide, bringing in 5.5m additional passengers. It also employs over 26,000 people, 3000 of which are Emirati, and won the Air Transport World “Airline of the Year” award in 2016.
Etihad is still expanding, too, taking delivery of 10 aircraft in 2016, with 12 more expected in 2017. Deliveries in 2016 included three Airbus A380s, five Boeing 787s and two Boeing 777-200 cargo freighters. The 2017 deliveries are to include nine Boeing 787s, two Airbus A380s and one A330-200 freighter. Venice, Italy, Rabat, Morocco and Istanbul were all announced as new destinations in 2016, with the Airbus A380 being incorporated into Etihad’s Mumbai and Melbourne routes.
However, the aviation market is fiercely competitive. Several other major airlines, such as Dubaibased Emirates Airlines, have a strong presence in the region, while the global economic downturn, a rise in protectionism, and reduced government revenues due to lower hydrocarbons prices have had an impact on the sector. Etihad may seek to trim its costs and boost efficiency in the years ahead, with job cuts announced in December 2016, and a number of announcements around company restructuring taking place over the last year. Etihad Airways is now a part of Etihad Aviation Group – formed in May 2016 but as part of a steady evolution that has been ongoing since 2014 – which includes the likes of Etihad Airways Engineering, Etihad Global Cargo Management Company, the Global Loyalty Company, Hala Abu Dhabi and Etihad Airport Services. Notably, in early 2017 the company publicised the departure of its long-time CEO James Hogan. Ray Gammell, the group’s chief people and performance officer, took over as acting CEO in early May 2017.
The emirate is also home to a number of private chartered aircraft occupying various niches in the region, but primarily serving corporate clients and high-net-worth individuals. These includes the likes of Falcon Aviation, Rotana Jet, Royal Jet, and the newest addition to Abu Dhabi’s aviation scene, GI Aviation. Rotana Jet is based at Al Bateen, where it operated executive jets only until 2012, before entering into commercial flights to Sir Bani Yas Island. It now also operates flights to Delma Island and Dubai, along with international flights to Lebanon, Sri Lanka and Oman. Its fleet consists of two Airbus A319s and three Embraer ERJ 145MPs. In 2014 the airline moved its headquarters to AUH, maintaining private jet services only from Al Bateen.
Royal Jet, meanwhile, serves as back-up capacity to the UAE Presidential Flight through 13 aircraft, seven of which are Boeing 737 business jets. The operator flies 8000-10,000 chartered hours a year, and was a recipient of a Dh60m ($16.3m) deal in early 2017 at the biennial International Defence Exhibition and Conference to provide private air transport to VIPs in the UAE. In addition, Abu Dhabi-based GI Aviation launched in early 2017, offering a lower-cost chartered service to corporate and leisure travellers, operating 30-40% below the average cost of private aircraft. The company’s fleet consists of one Pilatus PC12-NG, the first to operate commercially in the region, with another expected to join in 2017.
On The Up
With the MTB moving towards completion in 2019, Etihad Airways continuing to expand its global reach and a host of private players continuing to operate regionally, the emirate’s aviation industry is set to rise dramatically.
While the expansion of passenger and cargo numbers also depends on global and regional economic conditions – both of which involve an element of uncertainty – with Abu Dhabi now so amply connected internationally, it is well placed to adapt to and take advantage of global trends. The emirate is focused on ensuring a holistic and integrated approach that will have positive knock-on effects for related industry. As such, the goal for the aviation sector is sustainable and long-term growth.
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