Middle East growth to continue: global and regional aviation experts still upbeat about industry
Aviation experts in the Middle East believe that the regional airline industry will continue its impressive growth over the next five years, indicating a bullish and confident attitude among the doom and gloom that engulfs the world.
According to a survey of 400 top executives from the aviation industry from around the world and the Middle East by conference organiser Terrapinn, some 90% of the respondents are still upbeat about the Middle East aviation industry.
Fifty per cent of the respondents stated that growth will continue due to government support, followed by geographic location (43.5%) the strength of regional economies (3.5%) and consumer’s purchasing power 37%.
This month, the Kingdom of Saudi Arabia announced that it is going ahead with its commitments to develop the mega-projects already announced. These are estimated at $400 billion for the next five years, according to analysts.
The UAE officially announced that the budget for 2009 will be the largest in almost four decades despite the global economic crisis. The government announced back in October it had adopted a budget of Dh 42.2 billion (about U$ 11.5 billion dollars) for 2009, and the UAE President said that the country would not scale back government spending on infrastructure and public projects. Dubai confirmed that its 2009 budget will certainly witness an increase over the record budget of 2008 of Dh135 billion. Officials in the Emirate said that the new budget will focus on capital expenditure and that there will be an increase in spending on infrastructure projects, including expansion of the airport and construction of a new airport.
According to these experts, Saudi Arabia, Qatar, and the UAE are likely to continue with a large proportion of their investment plans. These include mega-aviation infrastructure projects, airport expansions and new airports. Dubai is a case in point. The emirate has just awarded a Dhs 4.9 billion ($1.3 billion) contract to build a new concourse at its international airport, the busiest hub in the Middle East. Work is to commence immediately with its completion scheduled by the end of April 2011.
Hifazat Ahmad, General Manager, Terrapinn Middle East said: “There will be challenges ahead and the industry is already forecasting risks and opportunities in one of the most distressed global financial environments in decades.”
The Majority of respondents in the survey thought the biggest obstacle to M.E aviation growth in the next 12 months was volatile fuel prices 65%, followed by operational efficiency 25.4%, government policy 23.8% and recruitment of pilots 20.6%. About 53% of them felt that the biggest opportunity for airlines is passenger growth from Middle Eastern countries followed by the Subcontinent, Asia and then Europe, which is in line with the demographic make up of the region and in line with recent regulatory and route development efforts of regional players.
The Terrapinn survey also showed that 60% of the respondents were of the opinion that the regional legacy carriers will face their stiffest competition from Low Cost Carriers, both regional and international. 64% of them agreed that the Middle East needs more airport capacity.