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Gulf airports rally to new challenges.

Despite somewhat pessimistic forecasts to the contrary, Gulf airports have rallied to the challenge of replacing traditional transit traffic with some long-term alternatives.

The arrival of ultra long range jets has impacted few other regions to quite the same extent as it has the Gulf. Only Alaska, serving Trans-Pacific traffic, had become as reliant on transit traffic as had the Gulf.

With the advent of the ultra long range jets - in the shape of the Boeing 747-400 - both areas suddenly found themselves facing the loss of a sizeable portion of their business, and with airports configured to serve an evaporating passenger market. In both cases, the fight for survival has focused heavily on cargo and maintenance, but Gulf airports have also been resourceful - and successful - in stimulating growth in passenger traffic.

The Hong Kong-based carrier Cathay Pacific Airways pioneered the trend towards nonstop services, turning the heat on its Rolls-Royce RB211-524 engines to enable its fleet of Boeing 747-200s to make the journey between Hong Kong and London without a technical stop in the Gulf. Cathay Pacific had traditionally used Bahrain as its transit point, but other airlines used Dubai and more latterly Sharjah as their mid-point stop en-route between Europe, Southeast Asia, and Australia. And in the absence of any commercial East-West air routes across the then-Soviet Union, the southern route via the Gulf also played a key role in connecting more central and northern parts of Asia with the West.

The increasing switch to nonstop services was largely in response to demand from the high-yield business travel sector. Stopovers provided an opportunity for passengers sandwiched into the cramped economy class environment for as long as 16 hours to stretch their legs, but, as these stops were often in the middle of the night, they were also a disturbance to passengers trying to utilise their idle air time for sleep.

In addition, en-route stops by their very nature are also a potential source of delay. A technical problem, bad weather, delayed, lost, or late-joining passengers, security alerts, or other airport emergencies have the potential to delay an aircraft's departure once it is on the ground.

However, the early nonstop aircraft were payload limited, which meant they could only make the journey without stopping to refuel if they carried less weight and therefore burned fuel more slowly. As a result, passenger numbers were limited and only minimal amounts of cargo could be carried, while fuel tanks were topped up to capacity. When headwinds were really strong, it was not always possible to make the journey non-stop, even with a limited payload and when a technical stop had to be added to the flight plan. The aircraft also had little flexibility in the event of bad weather at their destination, unable to hold for long before having to eat into the mandatory emergency reserves to fuel which every aircraft has to carry.

The phase-out of transit traffic from the Gulf airports was therefore a relatively gradual process. Airport operators in the region were alerted at an early stage to the need to find alternative revenue sources. The transit door finally closed with the entry into service of the ultra long-range Boeing 747-400 which was able to fly nonstop between Europe and the main Asian Pacific Rim airports without incurring payload penalties. When it came, the end of the transit era was swift and conclusive.

It also coincided almost exactly with the build up to the Gulf crisis which was to throw the region's commercial air transport system into complete disarray. The loss of the region's bread and butter air transport market was therefore followed swiftly by a substantial loss of commercial traffic caused by the Gulf crisis, which then plunged swiftly into global recession.

Through it all, however, the region's airlines survived and proved a high degree of resourcefulness in the face of adversity. Bahrain-based Gulf Air, for example, was forced to relocate its mainline operations to Muscat - a feat perhaps only mirrored by the determination with which its regional counterpart, Beirut-based Middle East Airlines (MEA), has doggedly survived against all the odds in exile from its home-base airport (and indeed country) during the long years of conflict in Lebanon. Sustaining operations throughout the Gulf crisis, Gulf Air eventually relocated back to its home-base hub in Bahrain and has played a key role in establishing a new role for the airport.

Undoubtedly a change in business attitudes, which began long before this compounded downturn in the market, has played a major role in the survival and even resurgence of the Gulf airports and airlines. The arrival of real open-market competition in the region in the 1980s had already begun to shape more finely turned commercial awareness and skills which have since enabled the air transport sector to react positively to the challenges which it faces.

It was Dubai that initiated the competition skirmish by rebelliously rejecting Gulf Air's protected monopoly status in the region. The emirate had already declared its intention to compete in the airport stakes by reinforcing its open skies policy in a bid to attract additional traffic, and by ensuring that its duty free outlets were among the most attractively priced and highly acclaimed in the world.

Dubai then established its own air carrier - Emirates - in direct competition with Gulf Air and set in motion an irrevocable change in the way the Gulf air transport sector did business. Competition suddenly had a key role to play - both between airports and airlines - and commercial accountability began to take the place of more traditional government subsidy.

Today, the Gulf's key airports have adopted a much higher international profile to attract traffic and have targeted specific niche traffic segments. Today, the Gulf's key airports have adopted a much higher international profile to attract traffic and have targeted specific niche traffic segments.

Abu Dhabi has emerged as a much more forceful player and, with the establishment of the Gulf Aircraft Maintenance Company (GAMCO) on site, has opted to position itself as the region's maintenance hub. Sheikh Hamdan bin Mubarak Al Nahyan, the chairman of the Abu Dubai Department of Civil Aviation (DCA), admits: "In the past, the DCA has been a relatively low profile body - one which always had to struggle just to ensure that its facilities were able to keep pace with the ever-spiralling growth of passengers and cargo traffic. Now, the position has changed. The DCA has made its mark on the local, regional, and international scene in line with the larger achievements of the national infrastructure, by modernising and improving its services and facilities to match the highest standards of the aeronautical industry."

Abu Dhabi is the only one of the seven United Arab Emirates to boast two international airports - Abu Dhabi and Al Ain. Abu Dhabi is served by more than 50 international airlines and has recorded some of the healthiest traffic growth in the region over the last two years. In 1993, passenger traffic was up 20% over the previous year, and recorded a further 10% increase in 1994 to more than three million passengers. This takes it over the original design capacity for the existing terminal which was built in 1982 to handle up to three million passengers a year.

The existing terminal building is therefore being completely refurbished to help relieve congestion in the short term. Landside waiting areas, food and beverage outlets, and shops have already been completed and refurbishment of departure facilities such as check-in counters, immigration counters, and so forth will be completed in about 18 months time.

In the meantime, further expansion is underway to cater for an expected doubling of traffic by the turn of the century. This includes a new departure terminal with 11 new aircraft stands, which will increase passenger capacity to seven million passengers a year by the year 2000. A new runway is also planned as part of this expansion project.

Like neighbouring Bahrain, Abu Dhabi is positioning itself as a prime regional hub for passenger traffic connecting to Saudi Arabia, other Gulf destinations, North Africa and Iran. Transfer passengers currently account for about one-third of its total passenger throughput and upmarket facilities targeted at this market are specifically aimed to attract more of this business. In 1994, a nine-room transit hotel was opened at the airport and an additional 11 rooms will be completed this year.

"The airport will also feature the first recreation facilities of any airport in the Gulf," says Mohammed Mounib, the commercial development and marketing manager. "The new facilities will include gymnasium, jacuzzi, and sauna rooms." A Business Traveller Club, consisting of two lounges and a five-star continental restaurant has also been opened at the airport.

Al Ain International Airport opened in March 1994 and is the newest of the Gulf airports. Work on the site began in July 1983, but entailed considerable infrastructure development in a remote region which is nevertheless growing in commercial importance. The city is home to the Emirates University, is an influential agricultural area, and in 1993 attracted 10,000 overseas tourists.

The airport is served by eight international airlines and handled some quarter of a million passengers in 1994. Passenger traffic is expected to double - to half a million - by 1996 and the airport also expects to play an active role in the cargo sector.

Bahrain and Dubai have consistently been the major players in the region and competition between the two has at times been fierce. However, both seem to have found diverging niches in terms of passenger markets.

Bahrain, like Abu Dhabi, is positioning itself strongly as a regional hub. In September last year, it opened a $100m terminal - essentially a complete rebuild of the ageing terminal which had originally stood on the site. This followed the opening of an all-new terminal extension in late 1991 which made it possible to start work on the new building without disrupting traffic flow.

However, the work required was more extensive than had originally been anticipated and took approximately a year and a half longer than scheduled. The two buildings are now totally integrated and give the airport an overall handling capacity of 10m passengers a year which should meet demand well into the next century.

Last year Bahrain equalled its 1989 passenger peak of 3.3m, recorded during its transit traffic heydays, and is expected to exceed that with 3.6m-3.7m this year. Initial forecasts envisage Bahrain handling some 6m passengers by the turn of the century. However, further expansion is on the drawing board which will include three additional parking stands and a satellite gate building equipped with two air bridges and linked to the main terminal.

"Our biggest problem here is exaggerated traffic peaks," explains David Ryan, chief of marketing and commercial affairs at Bahrain Airport. He believes that the development of high frequency intra-Gulf regional feeder services could help to spread the peaks, but there remains little movement on this front to date.

The stand-off between Gulf Air and Dubai-based Emirates - which means there are no regular or frequent services between the two commercial centres - is also constraining a key market area. But Bahrain has benefitted rather than suffered from the opening of the causeway linking the island to the Eastern Province of Saudi Arabia. With a higher concentration of international connections than Saudi's Dhahran airport, Bahrain has become the dominant hub for the area, with passengers to and from Saudi Arabia using the causeway to connect through Bahrain airport.

Ryan is confident that this trend will increase following the proposed closure of the existing Dhahran airport in favour of a brand new facility under construction 60kms out of town at Jubail. With the opening of the new terminal, Bahrain now claims to have some of the region's most competitive airport facilities. It is challenging Dubai in the area of duty free shopping and has recently won several awards for it facilities which include both departures and arrivals outlets.

For transfer passengers, the airport has a 19-room hotel in the terminal building which, according to Ryan, is full almost every night of the week. The terminal now boasts a five-star restaurant, a rash of upmarket CIP lounge facilities, and a new business centre opening imminently.

The airport also lays claim to the first automated baggage handling system in the Middle East. Supplied by the Dutch company, Vanderlande, it was due to enter service on 26 April and is expected to enhance service to transfer as well as O&D (originating and departing) traffic.

Bahrain, Dubai, Abu Dhabi and Sharjah are all vying for regional cargo hub status and are upgrading their freight facilities accordingly. DHL, the express mail carrier, has set up its regional headquarters in Bahrain and has built a distribution facility there which is as large as the airport's main cargo centre. The carrier has its own fleet of aircraft based out of the hub, as well as a fleet of trucks which serve Saudi Arabia across the causeway. DHL is now in the process of developing a $4m secondary distribution centre in Dubai.

Bahrain saw a 20% increase in cargo traffic in 1994 and is anticipating a further 12-15% this year. Meanwhile, Dubai handled 200,000 tonnes of cargo in 1994 and is planning to increase the capacity of its Cargo Village from the current 250,000 tonnes a year to 350,000 tonnes a year within two years.

With some 6.3m passengers using the airport in 1994, Dubai handles almost double the passenger traffic handled by Bahrain. In the last few years, the airport has benefitted from the UAE's decision to open its doors to international tourism - a trend which is still relatively embryonic, but one on which Dubai Airport seems set to capitalise.

Bahrain's capacity for tourism is strictly limited. It is a small island and has inevitably attracted some of the sensitivities involved in being so closely land-linked to Saudi Arabia. The UAE meanwhile has extensive tourist potential and it seems likely that tourist traffic will continue to increase.

Another airport which is likely to benefit from this market sector is Dubai's smaller neighbour, Sharjah, which has been an aggressive competitor ever since it opened in 1977. It fought hard to overcome its "white elephant" reputation and was able to attract a respectable amount of the traditional transit traffic. To Sharjah's benefit, much of that was traffic from developing countries, many of whom continue to operate older generation aircraft and still have to make midpoint technical stops.

Britain's largest independent charter operator, Britannia, also remains loyal to the Emirate on its routes to Australia. Situated 13kms east of the emirate's capital, Sharjah was the first Category II Gulf airport and can handle up to 2.5m passengers a year. Ghanem al Hajri, the general manager of the Sharjah Airport Authority, says: "Sharjah operates an open-skies, open-ground policy. We are the only airport in the Middle East to allow airlines to do their own handling. There is no government organisation with a monopoly."

The three domed buildings offer a wide range of facilities, including 24-hour restaurants, banking, car hire, express check-in and duty free. There is also an airport hotel nearby. Expansion plans include the addition of three aircraft parking stands and an extension to the existing terminal building which will house four more holding lounges, making a total of seven. Other improvements include a new VIP lounge and a new prayer room.

When the airport opened in 1977, it catered for just 10 scheduled airlines and handled 60,351 passengers and 8,402 tonnes of cargo. Today, 36 scheduled passenger airlines, 12 scheduled cargo airlines, and 20 non-scheduled cargo airlines operate out of Sharjah International. In 1994, it handled 23,111 aircraft movements, 923,277 passengers, and 209,021.25 tonnes of cargo. Recently released figures suggest that cargo growth in 1994 over 1993 was as high as 44.38%.

Al Hajri is looking for a 10% growth in passenger traffic to push figures over the one million mark this year. In a bid to attract those additional passengers, the airport is openly adopting airline-style competitive techniques. In late March this year, for example, a raffle was launched in which there will be a monthly draw, with a top prize of a car and additional prizes of airline tickets donated by carriers operating at Sharjah.

Further down the Gulf, the sultanate of Oman is taking a more cautious approach to the advent of international tourism, but recognises the increasing importance of aviation in providing both domestic and international transport links. The country's national gateway airport - Muscat/Seeb International - opened in 1973 and has undergone significant improvements and upgrades since then.

The original terminal building could only process 400 departing and arriving passengers an hour. Expansion work undertaken between 1982 and 1985 increased handling capacity to approximately 1,000 passenger per hour. Further expansion was initiated last year, which increased terminal capacity to 3,000 passengers per hour. The building itself can accommodate up to 7,000 passengers and well-wishers at any one time.

In addition, duty free shopping facilities and concessions have been improved and expanded, and high-tech baggage processing and flight information display systems have been installed. A VIP passenger terminal was constructed in 1991.

In 1976, the main runway was extended by 500 metres to 3,586 metres and the number of aircraft parking stands has been increased. The number of heavy/widebodied aircraft bays have grown from the original six to 18, and a further six bays are planned over the next five years. Twenty-four general aviation aircraft parking bays were added in 1985.

Car parking facilities have also been expanded from just 144 bays in 1973 to 800 today. Like other regional airports anxious to optimise their commercial potential, Seeb will be switching to a paid parking system when an extension of 400 additional bays has been completed.

In 1993, Seeb handled 2,058,699 passengers and 33,810 tonnes of cargo. In 1994, a healthy improvement in both sectors saw the airport handling 2,095,549 passengers and 36,792 tonnes of cargo. A total of 27 international scheduled airlines serve the airport, and the numbers of destinations connected to Seeb increased from 65 in 1993 to 71 in 1994.

In 1992, a 30,000 square metre cargo area was established, with capacity to handle up to 100,000 tonnes of freight a year. Short-term development plans include automation of facilities and the construction of a freight forwarding facility.

Oman's second international airport at Salalah has yet to realise its full international potential. A master plan and conceptual designs for a new international terminal have been prepared, but no timescale has yet been determined for their implementation. It is, however, anticipated that the existing terminal, which was opened in 1986, will become a dedicated domestic facility.

The number of aircraft parking bays has been increased from three to six, and more are anticipated if plans for a VIP and expanded cargo terminals be implemented. In addition, the national airports master plan has identified the need to establish aerodromes at Buraimi and Sur, to complement the existing facilities at Bayah, Khasab, and Masirah.

Ahmed bin Said bin Salim al Rawahi, the director-general of Civil Aviation and Meteorology in Oman, says: "These plans are being reviewed to assess their economic feasibility in the light of increased air travel awareness among the population and the increasing tourism programmes."

In short, far from the gloom that was generally predicted after the loss of the transit market, the Gulf conflict, and then global recession, the Gulf's airports are proving to be extremely resilient to adversity and resourceful in adapting to new market conditions. Although full commercialisation or indeed privatisation still seem a long way off for most, there has been an almost unanimous swing towards more commercial awareness and practices which will ensure the airports can more effectively react to change.
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Title Annotation:Special Survey
Author:Paylor, Anne
Publication:The Middle East
Date:May 1, 1995
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