Dubai Airport sees toughest year in a decade as demand slows

Dubai International Airport predicted passenger growth this year will be the slowest in a decade, underscoring the challenges facing the aviation industry in the region after years of aggressive expansion.

The Persian Gulf hub expects to lure 89 million travelers, 6.4 percent fewer than in 2016, it said in a statement yesterday. That’s the weakest pace in 10 years, excluding 2014, when runway repairs limited takeoffs and landings for more than two months. Traffic gains last year slowed to 7.2 percent from 10.7 percent in 2015, giving a total of 83.6 million customers, as global economies faltered and lower oil prices clipped Middle Eastern travel.

Dubai International still outperformed many rival hubs in Europe, where a spate of terrorist attacks weighed heavily on numbers. Anticipating future capacity constraints, the sheikhdom is spending USD36 billion on a new hub where flagship carrier Emirates is due to shift flights. Chief Executive Officer Paul Griffiths said he remains confident of overtaking Atlanta Hartfield-Jackson and Beijing Capital to become the world’s busiest airport in coming years.

“The growth is very, very significant compared to other airports around the world, about three times the average rate of growth for our competitors,” Griffiths said in an interview with Bloomberg Television. “Our aircraft movements aren’t growing quite so quickly mainly because of capacity constrictions and slot constraints.”

Emirates, which operates the majority of flights in Dubai,  told Bloomberg last month that 2016 was “not a good year” as oil executives and bankers reined in travel, terrorism dented demand and regions including sub-Saharan Africa saw travel slump, adding that 2017 “could be even flatter.”

In 2015, Dubai International climbed to the third spot in the world rankings, behind Atlanta, the main base for Delta Air Lines Inc., and Beijing. The Chinese hub added 5 percent more passengers in 2016, for a total of 94.3 million, while Atlanta, which lured 101 million people in 2015, has yet to report figures.

Capacity at Dubai International is scheduled to reach 118 million travelers annually by 2023, with the expansion to be funded mainly from retail concessions so that user fees are kept down. Improvements to travel flows and the quality of service are regarded as vital since almost 50 percent of the people who change planes at the airport could use another hub, Griffiths said.

Dubai’s new airport, Al Maktoum International, will expand capacity to 26 million passengers by the end of the third quarter of this year, from 7 million now, Griffiths said. The next phase of growth will see that jump to 120 million by 2025, when Emirates will move its operations. Ultimately, total capacity is slated to reach 240 million passengers. Deena Kamel Yousef, Bloomberg