Travel and Tourism

Record year as Dubai airport soars

Passenger traffic through Dubai International airport, one of the fastest growing global hubs, increased by 8 per cent last year to reach a record of almost 51 million passengers.

Rebecca Bundhun

January 25, 2012

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Passenger traffic through Dubai International Airport, one of the fastest-growing global hubs, rose 8 per cent last year to a record of almost 51 million passengers.

"In a year that was characterised by economic uncertainty, political instability and high oil prices, passenger growth continued unabated driven by new routes and additional frequencies as airlines capitalised on Dubai's attractiveness as a business and tourism destination and efficiency as a transfer hub," said Paul Griffiths, the chief executive of Dubai Airports.

"That trend will continue in 2012 with our two largest airlines - Emirates and flydubai - set to receive additional aircraft throughout the year."

The number of passengers at the airport was 50.98 million last year compared with 47.2 million in 2010, Dubai Airports said yesterday.

Passenger numbers reached 4.69 million last month, up 10.2 per cent from 4.26 million a year earlier.

"Aviation is big business in Dubai supporting 250,000 jobs and US$22 billion [Dh80.81bn] in economic activity or 28 per cent of GDP," said Mr Griffiths.

Passenger traffic on routes linking Dubai to eastern Europe grew 81 per cent last year, the figures showed. The UK and Saudi Arabia were among the strongest markets in terms of total passenger numbers.

To accommodate this growth, Dubai Airports is investing $7.8bn in an airport expansion programme for Dubai International as it aims to boost its capacity from 60 million passengers a year to 90 million by 2018.

The next major step in these plans would be the completion of Concourse 3, described as the "world's largest dedicated A380 facility", scheduled for the end of this year, Dubai Airports said.

Air freight traffic was up slightly last month to 189,593 tonnes, an increase of 0.8 per cent compared with December 2010.

But cargo traffic last year was hit by economic uncertainty in Europe and the US, with a decline in consumer confidence leading to a drop in exports, from Asia in particular, Dubai Airports said.

Cargo volumes totalled 2.19 million tonnes last year, down 1.5 per cent from the previous year.

Air Arabia, a low-cost airline based in Sharjah, yesterday announced it had carried 4.7 million passengers last year, up 6 per cent on 2010, as it added new routes to cities in Russia, Ukraine and Saudi Arabia.

Meanwhile, RAK Airways announced it would start flights to Kathmandu three times a week from February 15.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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