The expansion of the logistics and tourism industries is central to the government’s economic development strategy, and both sectors have received sizeable investment in recent years. A significant milestone for both sectors was the 2021 opening of a new terminal at Bahrain International Airport (BIA) – operated by Bahrain Airport Company (BAC) – which at 210,000 sq metres has four times the physical footprint of the old airport, the capacity to process 14m passengers per year and a significant amount of space for commercial operations.

The government aims to attract 14.1m visitors per year to the country and boost tourism’s contribution to GDP from approximately 7% in 2021 to 11.4% by 2026. Alongside these goals, officials are cognisant of the fact that the quality of experience offered by an airport can influence lasting impressions of a country for both tourists and businesses – a fact made more pertinent by the events of the Covid-19 pandemic and subsequent increased demand for efficient and hygienic transport facilities.

New Infrastructure

BIA’s new terminal features a fuel farm, providing airlines with modern refuelling infrastructure and increasing the efficiency of both freight and passenger services. Additionally, following the Bahrain International Air Show in November 2022, BAC announced that it had signed contracts with a cumulative value of $167m for the upgrade of physical and digital infrastructure at BIA. National airline Gulf Air will construct a new hangar, while international ICT firm SITA will install advanced biometrics and security technologies to expedite passenger processing.

Since the launch of the new terminal BIA has been awarded a number of international aviation industry accolades. In 2022 it was named the world’s best new airport at the World Airport Awards organised by international aviation standards body Skytrax, and in both 2021 and 2022 it was awarded a five-star rating by Skytrax. BIA was also recognised at the Airport Accessibility Awards 2022 for its level of service for passengers with reduced mobility.

The post-pandemic reopening of international borders, alongside Bahrain’s strategic focus on establishing itself as a globally competitive aviation transit and tourism centre, saw a resurge in passenger numbers. Total passenger throughput at BIA increased by 127.5% in 2022, reaching 6.9m, 29% lower than the 2019 total of 9.6m. Meanwhile, aircraft traffic movement rose by approximately 61% from 51,000 in 2021 to 82,000 in 2022. BIA’s growing reputation as an internationally competitive aviation centre, coupled with the announcement that a range of big-ticket tourism infrastructure projects will begin operation in 2024, signal that the kingdom is set to make further advances in aviation in the coming years (see Tourism chapter).

Gulf Air accounts for 60% of passenger traffic at BIA. The airline has moved to expand its network of global destinations since the opening of the new terminal. Indeed, such expansion is a key feature of the government’s tourism strategy. In 2022 the carrier announced that it would begin servicing Nice, in France, and Manchester, in the UK. The latter affords the airport access to a market of over 28,000 residents who travel to Bahrain each year, and a further 2m people from across northern England who use Manchester Airport to reach other destinations in Asia serviced by BIA and Gulf Air.

Logistics Capacity

Raising annual airfreight capacity to 1m tonnes is a core goal of the government’s plan to increase the contribution to GDP of logistics activities from 6.4% in 2021 to 10% by 2030. German multinational logistics company DHL has operated out of BIA since 1976 and now has a fleet of 15 aircraft at the airport. Bahrain is one of DHL’s four global centres, and in November 2022 the company signed an agreement with BAC that will see it expand its operations at BIA. Moving forwards, the pair aim to collaborate more closely in harnessing Bahrain’s business environment and DHL’s globally competitive position in the logistics space to achieve both corporate and national goals.

BAC’s 25,000-sq-metre Express Cargo Village project was opened to bidding in 2018, with French engineering company Egis securing design and construction supervision rights in November of that year. Cebarco Bahrain was selected as the main contractor for the construction of warehouses, aircraft aprons and the project’s other features. The project broke ground in June 2022. Individual cargo operators will each have a designated zone within the village, with global logistics specialist FedEx signing an agreement with BAC to base itself in the new facility. FedEx will occupy a 9000-sq-metre zone, constituted of a 5000-sq-metre warehouse and 4000 sq metres of open space. BAC stated in 2022 that it expects FedEx to assume occupancy in the Express Cargo Village in the third quarter of 2023.

The Express Cargo Village is composed of three zones: one for express cargo handling, which is intended to enable growth in areas such as e-commerce; a bonded logistics zone complete with dedicated Customs infrastructure and 19 separate warehouses totalling over 9800 sq metres; and an administrative zone. Office space will be spread across the three zones. The development is designed to facilitate increased efficiency through implementation of advanced technologies and align BIA cargo-handling procedures with those of the world’s top airports. It is also intended to attract private investment and facilitate job creation.

The modern facilities at BIA are being harnessed as part of the Bahrain Sea-to-Air Logistics Hub (see overview). The airport lies 27.5 km east of the King Fahd Causeway, which connects Bahrain with Saudi Arabia, the GCC’s largest consumer market, which is also prioritising the tourism industry as part of its economic diversification agenda.

Expanding Services

In early 2022 BAC announced intentions to broaden its business and commercial activities beyond traditional aviation services, with plans to convert a section of the old BIA building into a private aviation terminal in alignment with the country’s overall aim to establish itself as an international business and convention destination. Awal Private Terminal, as it is to be named, will feature infrastructure such as meetings and office space, private parking and a duty-free outlet.

While the resurgence in tourism numbers and expansion of serviced routes and logistics capacities are vital to the success of the government’s sector-specific development strategies, the pandemic subjected the aviation industry and broader transport sector to unprecedented economic shocks. The prolonged curtailment of all but essential transport of goods and people and the sealing of international borders saw the revenue of airports, airlines and other aviation-related enterprises undergo pronounced contraction, resulting in widespread suspension of employment contracts and subsequent loss of earnings for the industry’s workforce.

Those events have forced the aviation industry to reevaluate its approach. Emphasis is now being placed on diversification of revenue streams in an attempt to reduce bottom-line dependence on traditional aviation services, with economic and environmental sustainability and pre-emptive crisis mitigation measures central to future plans.

Innovative Models

In recent years the concept of the airport city has emerged, in which the airport serves as the nucleus of a larger, more expansive commercial operation. Both air- and land-side office space, conference centres, hospitality and retail activities are seeing increased investment from airports as they expand beyond the idea of a transit facility and attempt to remodel themselves as business and leisure destinations and attractions.

An existing example of an airport city is Singapore Changi Airport’s Jewel development. Jewel is a $1.25bn, 136,000-sq-metre commercial attraction that opened in 2019. Designed to reflect the character of its host city, Jewel offers interactive technological experiences and high-end retail, entertainment and hospitality establishments to both airport passengers and non-passengers. Changi Airport’s total revenue grew by 3% to SG3.1bn ($2.3bn) in 2019/20. The opening of Jewel, which attracted 50m visitors in its first six months of operation, is credited with helping to drive that increase.

Singapore Changi Airport, as one of the world’s largest aviation centres, operates on a different scale than BIA. However, its success in stimulating alternative revenue streams and integrating the airport into its broader surroundings suggests that the model could be applied elsewhere, particularly by countries such as Bahrain with modern airport infrastructure and a conducive business environment.