Middle East holds ‘highest potential’ for airport investments, says GALF survey

- Dubai, UAE

A survey of aviation industry professionals, carried out by the Airport Show ahead of the next month’s inaugural Global Airport Leaders’ Forum (GALF), has rated the Middle East as the world’s region with the ‘highest potential’ for airport investment and expansion in the next five years.

An overwhelming 64.4 per cent of respondents voted online for the Middle East region, followed by the Asia Pacific with 16.7 per cent, Central Asia and Africa regions with 5.2 per cent each and Europe with 3.4 per cent.

An investment of US$90 billion is projected to go into aviation industry in the Middle East by the year 2020. The Middle East region is project to handle 400 million air passengers by 2020, including 98 million by Dubai airport, now ranked the world’s second busiest airport.

IATA predicts that the Middle East will see the strongest passenger growth until 2016. The Middle East is expected to have the third fastest growth rate at 6.6%. In 2012, the region saw a whopping 15.4 per cent growth, while the world’s average was 5.3 per cent.

 “Senior executives from across the international aviation industry have contributed to the survey”, said Daniyal Qureshi, event director of the Airport Show, “and we are very grateful that they have shared their insights with us. We believe the survey results will contribute significantly to the important discussions at the Global Airport Leaders’ Forum and help highlight the key challenges and opportunities industry leaders face today”.

The survey, based on responses from 273 senior executives, also underlined their thoughts on airport growth sustainability, non-aeronautical revenues creation, human resources development, areas of improvement for enhanced airport passenger experience and the importance of airport technology investments.

Over 88 per cent of survey participants agreed that satisfactory sustainable airport growth could be achieved if leadership and stakeholders work together to develop a collaborative aviation policy. Airports are increasingly recognising the impact stakeholders can have upon the viability of future developments and as a result are moving towards greater levels of stakeholder participation. The close cooperation could lead to remarkable results in terms of performance and profitability as the airports’ business models are being transformed.

About 63.4 per cent of respondents highlighted the importance of development of human capital as one the biggest challenges that the airport CEOs face due to massive growth in airports expansion and increase in the estimated air traffic volumes until 2020 and beyond. Air transport supports 2.7 million jobs and US$129 billion in GDP in the Middle East. In the UAE, it supports 224,000 jobs and will provide over 400,000 new jobs until 2023.

Duty Free topped the preference list, with 53.4 per cent of respondents considering this non-aeronautical revenue stream having the highest growth potential, followed by advertising with 33.3 per cent and food and beverage 32.8 per cent. 

Spa services got the lowest response rate from the respondents, followed by Beauty concessions at 28.7 per cent. Other high potential revenue streams include Short Stay Terminal Hotels (21.3 percent), VIP Lounges (21.8 percent) and Fashion Stores (24.7 per cent).

Dubai Duty Free is currently the world’s top airport retailer with US$1.6 billion turnover last year, while the duty free operations at Abu Dhabi, Doha, Bahrain, Oman and Kuwait airports also record impressive performances. These facilities are being expanded to accommodate growth and keep the cash registers tilling.

Regarding the enhancement of airport passenger experience, the survey revealed that the main areas of focus are security checkpoint systems and procedures (33.9 per cent), followed by check-in and baggage drop (29.3 per cent), and baggage collection and customs clearance (20.7 per cent).

Other areas that were identified as needing improvement are in-terminal communication of any changes (16.1 per cent), services available in the airport terminal (17.8 per cent), in-terminal signage (20.7 per cent), transfer between flights and in-terminal transportation (19.5 per cent) and immigration check points (17.2 per cent).  

According to Airports Council International (ACI), about 60 per cent of the airport operations cost goes into the facility’s safety and security technology and services.   About 86.2 per cent of survey respondents agreed that investment in new airport technology will improve operations performance, thereby contributing for the airport’s profitability.

The findings are due to be discussed by experts and thought-leaders from across the world at the Global Airport Leaders’ Forum, at the 13th Airport Show, which will take place in Dubai from May 6 to 8.

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