Airports and airlines gear up for Middle East air freight boom

The Middle East’s strategic position half-way between Europe and Asia has made it a fast-growing global hub for air transport.

Last year, the Middle East was again the fastest growing region for cargo traffic in terms of freight tonne kilometres (FTKs), recording full-year growth of 16.1%, according to IATA. And at Middle East airports, freight is expected to grow more strongly than passenger traffic, rising 7.9% annually to 2010, according to Airports Council International (ACI) forecasts.

So it’s no surprise to see a strong presence from the region’s ambitious cargo airlines and airport operators at Asian Aerospace 2007, targeting new business from the Far East.

The boom in air freight is good news for aircraft manufacturers, as Middle Eastern airlines are growing extensive fleets of dedicated freighters.

In the past 12 months, Emirates, Etihad and Qatar have all placed orders for dedicated widebody freighters, while Gulf Air has said it is considering similar purchases.

Emirates Skycargo has ordered 10 next-generation Boeing 747-8F freighters in a $3.3 billion deal. The aircraft will be delivered from 2010, joining a mixed fleet of nine dedicated cargo widebodies: four Boeing 747-400Fs, two 747-200Fs and three Airbus A310Fs. Eight Boeing 777Fs are also on order.

Last year, Emirates SkyCargo, which accounts for 20% of the airline's transport revenue, carried 1.2m tonnes of cargo, generating revenue of $1.5 billion.

The airline’s chairman and CEO, Sheikh Ahmed bin Saeed Al-Maktoum says: “Worldwide air cargo traffic is projected to grow by over 6% annually for the next two decades, tripling current traffic levels. The 747-8 freighters will put Emirates in a strong position to tap into the growth of cargo traffic and reinforce Dubai’s standing as a growing international hub for air cargo and logistics.”

Crucial to this development will be the massive new airport being built as part of the Dubai Logistics City development.  To be known as Dubai World Central International Airport, the new airport will be built at Jebel Ali, south of the city. The site covers a staggering 140km2 – ten times the size of Dubai International Airport. It will cost in excess of $33bn to build, and will be able to handle 120m passengers and 12m tonnes of cargo per year.

The project has been brought forward by several years as a result of the rapid growth of Dubai, but is still expected to take some ten years to complete.  UAE Prime Minister Sheikh Mohammed bin Rashid Al Maktoum said the ambitious programme would support Dubai’s aviation, tourism, commercial and logistics demands until 2050.

Dubai World Central will include an integrated, multi-modal logistics zone covering 25km². It will include up to 16 air freight terminals and include a specialised aviation centre for industry suppliers featuring a dedicated village development accommodating up to 40,000 workers.

The new Dubai development will overtake Sharjah International Airport as the largest cargo hub in the UAE. The airport handles more than 24,000t of freight a month through five cargo terminals with a total floor area of 32,000m². Lufthansa operates its largest cargo hub outside Germany from Sharjah, handling 5,000t of freight per month. Up to 10 widebodied freighters can be parked at Sharjah, and the 23,000m² of on-site warehousing includes specialised facilities for chilled goods and livestock.

Competition for business in the region is intense. Etihad of Abu Dhabi is another airline that has moved into dedicated cargo operations, launching Etihad Crystal Cargo in September 2004 with a dedicated service between Abu Dhabi and Frankfurt. The division currently operates a fleet of three Airbus A300-600Fs, with a payload of 44 tonnes. These currently serve ten destinations: Frankfurt and Milan in Europe; Bangalore, Chennai, Kolkata, Mumbai and New Delhi in India; Addis Ababa, and Khartoum in North Africa and Zhengzhou in China.

Etihad Crystal Cargo is growing rapidly, doubling its 2005 turnover of $98.5 million in 2005 to more than $200m in 2006. At this year’s Paris Air Show it ordered three Airbus A330-200F freighters with a 69 tonne capacity, for delivery in 2009.

Etihad has been the driver for massive growth at Abu Dhabi airport. In the first half of 2007, the airport handled 149,210 tonnes of cargo, up 34% on the same period last year. To cope with this growth, Etihad is adding a new cargo new facility at Abu Dhabi airport, which will be able to handle more than 500,000t of cargo each year.

Qatar Airways has ordered two Boeing 777 freighters, the first of which will be delivered to coincide with the opening of Doha’s new international airport in 2009. In 2006 Qatar Airways is converted a pair of passenger Airbus A300-600s to freight configuration, giving it a fleet of three A300-600Fs.

Qatar Airways CEO Akbar Al-Baker ordered a complete review of the airline’s freight operations in late 2005. At the time he said: “As of today only 13% of our total revenue is from cargo. We are looking to grow this to around 27% over the next two years.”

Qatar added 11 widebody passenger aircraft to its fleet in 2006, and this boosted the belly capacity available for freight by around 50%. But Al-Baker says the biggest problem remains cargo capacity at Doha, which will not be solved until the new airport opens. “The only problem restricting us is the congestion at Doha. We are trying to find space to cater for our cargo operation.”

Saudi Arabian Airlines is taking a different route to growth for its cargo division. It has earmarked the division for privatisation as part of a wide-ranging restructure of its operations.

In April 2007, the Saudi national carrier invited potential investors to submit proposals to acquire a maximum 49% share in the cargo unit, according to Saud Arab, Saudi Arabian Airlines’ general manager of cargo and airmail. Saudi Arabian Cargo is one of the three largest cargo airlines in the Middle East. It turned over $400m in 2006, an increase of 5% on 2005. It employs 1,100 people and operates a fleet of six dedicated freighters – four MD-11s and two Boeing 747-200Fs, one of which is leased.

The privatisation, which has been approved by the Saudi Government and could be completed by the end of the year, will transform Saudi Arabian into a holding company with different operating subsidiaries, each of which can have different minority investors. It will result in new orders for more freighters, said Arab. “We are confident Saudi Cargo will maintain our leading role in cargo business in this region. The decision to privatise will help in increasing efficiency, improving operations, reducing costs and improving profitability.”

Source: Flight Daily News