The UAE's aviation industry has soared to great heights since the country welcomed its first travellers in the 1960s, developing over the decades into a global powerhouse for air connectivity and standing in the post-Covid era at the cusp of a changing landscape with plans for sustainable and technology-driven future growth.
The local aviation industry's development over the decades, starting with a sand-compacted runway in Dubai International Airport in 1960 and the first flights of Emirates airline with two wet-leased aircraft in 1985, has transformed the nation from a fishing and pearl-diving spot into a global centre for air transport.
"The development of the UAE as a global aviation powerhouse started with a bold vision in the 1960s Collaboration. Careful planning and open competition have played a key role in the rise as a global aviation hub over the past few decades," said Linus Bauer, founder and managing director of Bauer Aviation Advisory.
The UAE's rise as a modern centre connecting East and West is a story of globalisation and an ambitious bet on the future of air travel as the nation celebrates its Golden Jubilee on December 2.
Over a series of milestones, Dubai transformed from a little-known desert airfield to a global airport connecting far-flung corners of the globe. Driving its success is the UAE's strategic location between Europe and Asia within an eight-hour flight radius of two thirds of the world’s population, operating a pre-pandemic network of 240 destinations and home to the world’s largest long-haul airline Emirates.
Enabling the ease of decision-making and mapping out the larger picture, Sheikh Ahmed bin Saeed Al Maktoum is the airline's chairman and also runs the airport operator, as well as the aviation regulator.
In its aggressive pursuit for growth, Dubai International has retained its title of the world’s busiest airport by international passengers for seven years, as the emirate developed into a centre for transcontinental traffic between America and Europe with Asia.
The aviation industry has been a key pillar of the UAE's economy and a driver of business activity, contributing about 13 per cent to the national gross domestic product, while boosting related sectors from hospitality to trade. It is now home to six national airlines ranging from low-cost to full-service operators.
"The aviation sector has been an essential factor behind the transformation of the UAE economy since the 1980s and its development into a regional and then global service hub," said Monica Malik, chief economist at Abu Dhabi Commercial Bank. "This is not only the direct contribution of the sector but also its role in developing areas such as tourism, hospitality, logistics and trade and finance."
Dubai took a long-term strategic decision to diversify its economy in the 1980s, focusing on developing its aerospace sector as part of a push to boost its non-oil revenue, transform the city into a business centre, create jobs and attract tourists. Open skies policies, large investment in infrastructure and a foreign, investor-friendly business environment have spurred the development of the aviation industry.
Hand in hand with the development of the sector, Dubai has spent billions of dirhams on new attractions and eased visa rules to enable the arrival of more tourists, remote workers and high-skilled talent.
In a forward-looking strategy, the UAE sought to become part of the aerospace supply chain, rather than only a customer of billion-dollar aircraft orders placed with the world's biggest plane makers.
Strata. based in Al Ain, Mubadala Investment Company’s aerospace manufacturing unit, became the Arabian Gulf's first producer of composite aircraft parts and is a key part of the UAE's economic diversification and local industrialisation plan. It started operations in 2010 and now makes components for jet wings from the Boeing 777X empennage ribs to the Airbus A350 flap support fairings.
"The UAE government created a well-articulated strategy that included various strategic projects that were implemented right across the full aviation-related value chain," said Andre Martins, partner in the Middle East and Africa transport and services practice at Oliver Wyman.
The UAE has also invested more widely into smart transport. For example, the DP World-backed Virgin Hyperloop high-tech travel system will carry passengers and freight via floating pods in vacuum tubes at speeds of more than 1,000kph.
The UAE's dynamic aviation sector will help accelerate the country's continuing economic recovery from the Covid-19 pandemic as it brings in more tourists, investors, workers and expatriates to the leisure and business centre of the region.
"The airlines and sector will be central to the ongoing recovery of the UAE from the pandemic. We are seeing more routes returning and more planes," Ms Malik said. "Going forward, the focus will likely be on working with their partners towards a greener and more fuel-efficient aviation sector."
Environmental sustainability has been a top priority for local airlines such as Abu Dhabi's Etihad Airways, that announced its target of net-zero carbon by 2050 nearly two years ago.
Etihad, which has been focused on its fleet of GEnX-powered Boeing 787’s under its Greenliner sustainability programme, will now include the Rolls-Royce XWB-powered Airbus A350 fleet. The first of Etihad’s A350s, launched at the air show as the “Sustainability50”, marks the airline’s commitment to the 2050 target of net-zero carbon emissions.
Local airlines have adopted the latest technology to restart travel safely, cut queues and minimise human contact through the use of face-recognition, biometrics and touchless points at airports.
"Embracing open competition and focusing on reopening and connecting markets through efficient operations in a safe way are keys for Abu Dhabi and Dubai to emerge stronger as global aviation hubs in the post pandemic era," Mr Bauer said.
While the face of the UAE's aviation industry has changed dramatically over the past 50 years, the coming decades promise more developments in sustainability, technology and business models to keep up with the changes in air travel.
"In 50 years from now, the aviation industry will be very different," Mr Martins said.
"There will be many new technologies, innovative business models will emerge; airports and ground handling will be fully automated; travel will be seamless and more enjoyable; aircraft will be green, with completely different seat configurations and experiences; new emerging start-ups will appear to control travel end-to-end with hyper-customisation of offers using the power of predictive analytics," he said.
"People will have different lifestyles living and commuting more often between different places, faster, easier and cheaper than today."
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
The Word for Woman is Wilderness
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Emergency
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Rating: 2/5
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Profile
Co-founders of the company: Vilhelm Hedberg and Ravi Bhusari
Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.
Number of employees: Over 50
Financing stage: Series B currently being finalised
Investors: Series A - Audacia Capital
Sector of operation: Transport