Economic Update

Published 22 Jul 2016

Officials in Kuwait have made significant progress on long-awaited upgrades to Kuwait’s International Airport (KIA) by signing a $4.4bn contract to kick-start construction on a new terminal.

Industry stakeholders are optimistic over the KIA expansion, with the recently signed contract indicating the government’s intention to deliver new aviation facilities to meet rising demand, as part of the broader goals outlined in the Kuwait Development Plan (KDP) 2015-20.

New terminal moves ahead

In late May Ali Al Omair, minister of public works, announced the government had signed a contract for KIA’s new terminal with Limak Construction, part of Turkey’s Limak Group.

The announcement brought an end to the political gridlock that had postponed progress on the new terminal, which had also seen a re-tender process in 2015 after initially being awarded in 2014.

The terminal is expected to increase passenger capacity from the current 7m per year to 25m by 2022. Kuwait’s Directorate General of Civil Aviation (DGCA) estimates that future development could eventually bring total passenger capacity at KIA to 50m.

Slated for completion in 2022, the new terminal will accommodate all types of aircraft at 51 gates, an increase from the airport’s current 21 gates, and will also be able to serve 21 Airbus A380 jumbo jets at the same time, according to Al Omair.

The new terminal will have five levels – one below ground and four above ground – with 120 check-in counters and a baggage system capable of handling 2930 pieces of luggage per hour.

The expansion is expected to offer significant benefits for the industrial sector, with more than 1m cu metres of concrete and over 100,000 tonnes of steel required for the terminal’s construction.

To facilitate access to the new terminal, a new road will be constructed connecting to the King Faisal Motorway 51 and the 7th Ring Road. Additional plans are under way for a new metro line connecting Kuwait City Centre with the airport, which is located 15 km outside of town.

Kuwait’s low-cost airline Jazeera Airways’ plans to build a terminal were put on hold in 2014, with limited development on the project reported until recently.

However, in mid-July the carrier was granted approval by the Kuwait Council of Ministers for the land needed to build the dedicated terminal as well as parking lots at KIA. The investment is valued at KD14m ($46m) with an expected construction phase of 15 months, according to press reports.

Rising volumes

To accommodate increasing passenger and air traffic, Kuwait’s DGCA has signed a raft of aviation deals recently, including air transport agreements with the UAE and Turkey.

New routes are also servicing the country. In 2014 Philippine air carrier Cebu Pacific Air launched a Manila-Kuwait route, and in 2013 Kuwait resumed flight services with Iraq for the first time since 1990.

The number of scheduled aircraft movements at KIA rose from 37,166 in 2004 to 83,443 in 2014, while passenger volumes increased from 4.8m in 2004 to 10.1m in 2014, according to the Kuwait Central Statistical Bureau (KCSB).

Since 2013 high air traffic volume has made it necessary for some passenger flights to divert to the Sheikh Saad Al Abdallah General Aviation Terminal near KIA, which is generally reserved for private aircraft, as well as flydubai flights, the only commercial airline to exclusively use the terminal.

A broader programme

The KIA expansion project falls under the KDP framework, which aims to direct major investments into transport and logistics infrastructure with the goal of establishing Kuwait as a regional trade and financial centre.

Enhancing air and sea links to improve connectivity with the region and further afield is a major priority of the state as a mechanism to drive non-oil economic growth.

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