Originally commissioned early 2015 for Invest In Group
Preface: The continued expansion of Dubai’s aviation sector is seen as a key policy tool for pushing forward with the thus-far successful diversification of Dubai’s economy away from over-reliance on hydrocarbons.
The aviation sector is undeniably one of the bedrocks of Dubai’s economy, accounting for approximately 30% of GDP. The sector is predicted to account for 37.5% of the Emirate’s GDP, and will contribute $53.1 billion to Dubai’s economy in 2020. The total economic impact of the aviation industry is projected to grow to $88 billion and will support 1,194,700 jobs by 2030.
The government’s aim has been to make an air travel hub of Dubai. With infrastructure conveniently close, and other industries that could profit also at hand, the hub strategy allows the aviation sector’s growth to feed into that of others. This strategy has been effective, as the growth in aviation has been a powerful catalyst for other sectors, especially retail and tourism. For every 100 jobs that are created in the aviation sector, 116 jobs are added in other sectors. It has been predicted that for every $100 of activity in the aviation sector, $72 is added elsewhere. Duty free alone is a significant income provider, with sales amounting to $1.8 billion annually as of the beginning of 2014. Thus, it is clear that the aviation sector’s success is vital to the economic health of Dubai.
Dubai International Airport (DXB) is currently the world’s busiest in terms of international passenger traffic. DXB received 70.4 million passengers in 2014, and it is expected to receive 120 million passengers by 2020. Flights from DXB now go to 270 destinations across the world. DXB hosts 140 airlines, and the total number of flights reached 357,339 in 2014. Emirates launched its 10th US destination, Orlando, in 2015 and last year carried 2.3 million passengers to and from the US. This range of destinations holds obvious potential in terms of reaching export markets and, indeed, cargo tonnage has shown a marked increase, growing on average 13.5% a year from 1990 to 2013, more than double the world average for the same period. In 2014, 2.3 million tons of freight were handled in DXB. Cargo tonnage is expected to further increase, being predicted to double by 2020 from 2.3 to 4.1 million tons.
Dubai’s soaring growth finds its infrastructure racing to catch up, with large expansion projects underway to meet the ever-increasing demand. The current capacity of DXB, 90 million passengers annually, will be increased to 120 million by 2020 with the completion of the second phase of its expansion plan. Around $7.84 billion was invested in an expansion to DXB in 2013.
On top of this, Dubai World Central Airport (DWC), which opened in June 2010 for cargo operations followed by passenger flights in October 2013, is rapidly being developed to supplement Dubai’s main airport. $32 billion will be invested for the first phase of DWC’s expansion over the next six to eight years. While its capacity is still dwarfed by that of its nearby bigger cousin, it has shown steady growth, and this year it was announced that its total annual capacity will be increased from its current 6 million to 26 million. DWC will also serve as a logistic hub for 12 million tons of freight.
The growth of the sector, the number of lines and passengers, and the expansion of aviation infrastructure show no signs of slowing down. Indeed, the government’s plan could be summarized as “the bigger, the better”. The task is to keep the country competitive and practical as a transport hub, further linking up aviation and maritime cargo facilities, for example, as well as other related industries.