MIDDLE EAST: Dubai has effective aviation model: Oxford report

A recent report by Oxford Economics dismisses the voice of critics around the world and says Dubai has an effective aviation model and is set for significant growth in the coming years, despite a slight down-tick this year. The 60- page report titled, ‘Explaining Dubai's Aviation Model,' further concludes that

Dubai's success is not evidence of unfair competition or government support but the result of an effective aviation model. Dubai International handled 187,905 tonnes of cargo in May, which represents a 0.5 per cent year-on-year decline with the airport's year-to-May tonnage totalling 874,584 tonnes – a 0.3 per cent year-on-year drop. But where cargo is very slightly slumping, passenger movements have taken off. Passenger totals were up 8.8 per cent in May compared to the same month in 2010, with the year-to-May passenger numbers up 8.6 per cent.

"Passenger volumes are on course to top 51 million by year-end, which should put us hot on the trail of Hong Kong International as the world's third busiest airport for international passenger traffic," Paul Griffiths, CEO of DA, said. "By 2015, we expect to overtake London Heathrow for the No. 1 spot when passenger numbers surpass 75 million," which of course also benefits the air cargo sector.

Among the findings in the report was Dubai Airports' role as an economic driver in the Middle East with the airport supporting 250,000 jobs and contributing more than US$22 billion to the local economy.

"Air travelers and shippers using Dubai and Emirates Airline make an important contribution to many national economies," Adrian Cooper , CEO of Oxford Economics, said when commenting about his firm's findings.

This economic prosperity is important to the region's future growth. Aviation now comprises about 28 per cent of Dubai's GDP with Oxford analysts expecting that number to rise to 32 per cent by 2020. The report also noted that Emirates will see substantial capacity growth in the coming years and that it will outpace predictions recently published by Boeing and Airbus.

Crucially the report dismisses accusations by carriers from North America and Europe that Dubai's carrier and airport are not playing on a level playing field because of government ownership and support. "In some quarters this success is viewed with suspicion, being seen as evidence of government support and unfair competition," added Cooper. "We looked at this in depth and conclude this view is incorrect."

Oxford Economics notes that the sector's success stems from government awareness of aviation's economic importance, a consensus-based approach to investment, open competition, a focus on growth and linking underserved markets with efficient operations; plus Dubai's favourable location at the intersection of Europe, Asia and Africa placing Dubai within eight hours flight of two-thirds of the world's population.

"Aviation is one of the main engines driving Dubai's emergence as a global center for trade, commerce and tourism," Ahmed Bin Saeed Al Maktoum, chairman and chief executive of Emirates, said in a statement. "That is why we have created a business and regulatory environment that supports its growth by encouraging open competition between all airlines, efficient operations and customer satisfaction. There is no magic here. It's just good business."

Aviation's importance to Dubai is expected to grow further over the next decade with Oxford projecting the economic contribution of the aviation sector to rise to US$44.5 billion or 32 per cent of Dubai's GDP and 372,900 jobs representing approximately 22 per cent of its employment by 2020.