x Abu Dhabi, UAETuesday 16 January 2018

Dubai Airports ready to sign for terminal

Dubai Airports will finalise contracts to complete the first passenger terminal but is pushing back completion dates for the US$8 billion project.

Al Maktoum International Airport is scheduled for completion in the 2020s. Dubai International Airport, pictured, is one of the busiest in the world.
Al Maktoum International Airport is scheduled for completion in the 2020s. Dubai International Airport, pictured, is one of the busiest in the world.

Dubai Airports will finalise contracts to complete the first passenger terminal at the planned Al Maktoum International Airport in Jebel Ali, but is pushing back completion dates for later stages of the enormous US$8 billion (Dh29.38bn) project, the company said. The final completion date for the giant airport, one of the most important infrastructure projects being undertaken by the Dubai Government, has been extended by several years to the 2020s.

Paul Griffiths, the chief executive of Dubai Airports, said the changes were being made to spend more time on building a world-class airport, as well as more accurately matching capacity with demand. The project, with a size that helped ignite a debate about airport overcapacity in the region, may also benefit from falling commodity and labour costs in the global economic slowdown. "If you take a little longer you can phase in stages more in tune with the extent of growth that we expect to experience," said Mr Griffiths. "What is now happening is the scope is changing, the time scale is changing and obviously commodity costs are changing as well."

Mr Griffiths was speaking at an event announcing the Future Airports conference at the Airport Expo exhibition hall in Dubai from May 19 to 21, with local airport operators and international suppliers expected to participate. Contracts worth more than Dh500 million could be signed at the show, organisers said. The first phase of Al Maktoum International is due to open in the middle of next year, more than a year late. It involves a terminal capable of handling 9 million passengers a year; the control tower; the first runway; and road infrastructure, including a customs-controlled motorway to Jebel Ali port to allow duty-free transfer of sea-air cargo.

Dubai Airports recently refinanced a $1bn loan to pay for infrastructure projects and also plans to use proceeds from duty-free sales. Dubai's airports and its flag carrier, Emirates Airline, are crucial to Dubai's success as a tourism and trading centre. Mr Griffiths said Dubai International would again record positive growth in the second quarter. As the fourth busiest international airport in the world, Dubai International was one of only two to record positive growth in the first quarter, according to Airports Council International.

The airport operator is looking for a range of contractors to help complete the final fit-out of the first passenger terminal at Al Maktoum, including technology and systems for freight integration, departures and control, and fuel management, and an overarching airport operation system, Mr Griffiths said. The final development at Al Maktoum and the surrounding 140 sq km area, known as Dubai World Central, includes residences, golf courses, office space and logistics free zones.

It will eventually have five runways (reduced from an original six) for a capacity of 160 million passengers a year, which would make it the world's largest airport. Currently, Hartsfield-Jackson Atlanta International Airport is the biggest, with some 89 million passengers a year. Al Maktoum International is one of several multibillion-dollar airport projects in the Gulf as countries and their flag carriers invest heavily to create world-class centres for long-haul travel between east and west.

The frenzied pace of development in recent years brought a warning from the International Air Transport Association (IATA), which cautioned that airlines could be saddled with paying off the heavy debts of airport operators. Upgrades on existing airports and building new airports could cost more than $38bn in the coming years, it said. "There is essentially a doubling of capacity in the region," IATA wrote in one of its regular reports in 2006. "The critical question is, how do we make sure your emerging success story has a happy ending?"

The report concluded: "We do see revenue growth slowing and we've got the extra capacity arriving, which is going to mean that it is going to be harder to maintain that profitability." But Andreas Schimm, the director of economics and programme development at Airports Council International, put his support behind the "build it and they will come" mantra so often ascribed to Gulf planners. "I don't believe in the theory of overcapacity," Mr Schimm said. "If we look at growth rates of those airports, it is easy to calculate when current infrastructure will reach capacity. The geographic location and the demographics in the wider region, for example India, are key factors."