James Halstead explains why China may prove to be more resilient during the economic downturn than many other regions.

What a difference a year makes.

This time last year the main concerns revolved around a slowing world economy and rising commodity prices and, particularly for aviation, the soaring fuel price.

Now with the deepening financial crisis there are fears of a prolonged world recession.

There is one region, however, (ironically, partly to blame for the increase in commodity prices), which appears more resilient than most – China.

The airline industry is – like most others – is subject to the economic laws of supply and demand.

On a global basis, the level of industry supply is determined by the number of aircraft available, the number of airlines to fly them and the availability of route rights, airports and landing slots.

Demand on the other hand is directly related to growth in GDP. In the more developed aviation markets – for example, the US – there appears to be a fairly static proportion of GDP available to be spent on air travel, while historically there has been a fairly direct correlation between passenger traffic growth and real economic performance.

As a result of the burst of the banking bubble, the developed world seems to be heading into one of the deepest recessions since the 1930s.

It is important to remember that all cyclical downturns are different and this time the globalisation of the past 20 years ensures that all nations are included in the misery.

But this misery can be relative. China had been enjoying a strong period of economic performance with double-digit annual growth.

This rate is certainly slowing, but as recent forecasts show (the ones here are from the World Bank) the economy is still expected to expand 7–8% a year for the next two years.

One reason is the break that the People’s Republic of China (PRC) put on credit in 2007 to offset rising inflation.

Another is the stimulus package put in place in December to spend CNY4 trillion (about $600 billion) on infrastructure.

In 2008, the PRC announced plans to build 200 new airports by 2020, along with construction and disaster relief following last year's earthquake.

Meanwhile, as the rest of the world's consumers suffer as a result of the downturn, Chinese consumers continue to spend, taking advantage of high savings rates.

However, the fortunes of the Chinese domestic airline industry remain mixed.

The industry is still heavily centrally regulated with the ‘big three’ (Air China, China Southern and China Eastern) highly competitive, but under government control.

There have been increasing calls for deregulation and consolidation; a merger of the three would create one of the world’s largest airlines.

Indeed, the deal between Air China/Cathay/Dragonair/Citic in 2006 has already provided a base for a strong ‘national’ carrier.

Meanwhile, SIA's attempts to take a stake in China Eastern seem now to have been thwarted.

The finances of all the ‘big three’ appear a little precarious (mainly as a result of forced acquisitions) and the limitations on foreign shareholdings and split capital structures make access to capital more difficult even in normal times.

China Eastern – financially possibly the weakest of the three – is currently in the process of receiving an injection of state cash, as no doubt will others.

The recent performance of the domestic market in China is in contrast to the experience of the rest of the world.

Passenger demand started showing declines in the early part of 2008 in the run up to the Beijing Olympic Games, affected by the event’s increased security, travel and visa restrictions.

At the same time, other airlines in the region, exemplified by AAPA members, continued to see reasonable growth. China’s poor performance was exacerbated by the earthquake in May 2008.

As a result, domestic traffic numbers did not start to improve until October.

However, by January 2009 things had improved as China recorded one of the busiest ever Spring Festival travel periods. This may not be enough to help the profitability of the ‘big three’ in the short run.

In this command economy, domestic fuel prices are set centrally and were not adjusted to the increase market prices until late in 2008.

And decline in the price of black gold since the summer of 2008 meant that, despite the best intentions, their fuel hedging efforts have only served to create market-to-market losses.

Indeed the situation threatens to generate severe net losses for all (see graph).

The government is trying to help and has ‘requested’ that the domestic airlines refrain from ordering new foreign aircraft to mitigate an oversupply of capacity. It has also put a ban on private new entrants until 2010.

In 2007, China accounted for 6% of world GDP at market exchange rates and 12% at PPP.

There is no doubt that in the long run, it will be a major force in world aviation.

While the country has been underserved in the past, there is now a plethora of new airports in the pipeline and a still dynamic economy, even in these restrictive times.

The make-up of the domestic players in the industry may change but China will still be an increasingly important source of global airline traffic.

Asia-Pacific Airports 2009 Issue 2

Nuance-Watson’s Alessandra Piovesana provides her thoughts on why Asia-Pacific’s travel retail industry continues to thrive during the current global downturn.

Home to some 20% of the world’s population – including many under 30s – plus a wealth of exotic tourist spots, Asia-Pacific enjoys unique strengths as both a business and leisure travel destination.

As brands worldwide are desperate to build market share among young, increasingly affluent consumers, Asia remains a magnet for business travellers.

And with airlines and hotels tempting customers with ever more affordable deals, the region also continues to appeal to leisure travellers of all income groups.

A heightened flow of capital, steady rise in trade volume, and robust economic development have all further enhanced Asia’s healthy inbound and outbound travel growth.

While the last couple of years have seen major global economies languish in the economic doldrums, China and other Asian countries have continued to register impressive GDP growth.

In 2006, the region already generated over 30% of global GDP.

While growth slowed from 8% to 5% last year, countries like China actually managed to surpass their 8% government-set targets.

Asia’s booming inbound travel market In January 2010’s ‘Index of Economic Freedom’, the top four countries/territories were all Asian, with Hong Kong ranked first, Singapore second, Australia third and New Zealand fourth.

Such resilient economic liberalism is continuing to attract phenomenal investment.

In addition to mega casino projects in Macau and the 2008 Beijing Olympics, major developments include this year’s launch of Shanghai Expo 2010 and Singapore’s Sentosa and Marina Bay Sands projects.

In 2014, Shanghai Disneyland and the Universal Studios Korea Resort will further contribute to the robust growth of Asia’s tourist industry.

Asia’s buoyant outbound travel market Growing income levels ensure the region’s outbound tourism and business travel sectors both remain healthy with China leading the way.

China National Tourism Administration’s most recent figures show that over 50 million Chinese nationals travelled overseas in 2009.

With this figure set to double by 2020, the World Tourism Organization (WTO) forecasts China will soon be the world’s fourth largest source of travellers.

Increasing exponentially in cities like Beijing, Guangzhou and Shanghai, China’s increasingly affluent middle-class remains a primary driver of this trend.

Indeed, experts believe that China will have 100 million middle-class households by 2016 – almost three times as many as the 35 million it was thought to boast in 2006.



With increased access to low-cost travel options, it’s probable that Chinese travellers will significantly shape global travel trends for years to come.

The net result of these changes is a measurable surge in intra-regional air movements and new airport construction and upgrade projects.

According to the Air Transport Action Group (ATAG), eight of the world’s top 10 ‘large aircraft’ airports will be Asian and some 90% of large aircraft routes will fly to and from the region by 2020.

Benefits for Hong Kong Less than four hours by air from roughly half the world’s population, Hong Kong is uniquely placed to maximise this potential.

Opened in 1998, Hong Kong International Airport (HKIA) is an ultramodern facility that perfectly encapsulates the region’s increasing mobility and dynamism.

With Asian visitors accounting for approximately 70% of all passengers, HKIA ensures ‘Asia’s World City’ remains a top three regional travel destination.

Let’s pinpoint a few of the fastest growing nationalities by comparing their share of HKIA passenger numbers between 2004 and 2009.

According to Hong Kong Tourism Board’s reported air visitor arrivals by markets (excluding Hong Kong), South and South East Asia has risen from a 17.5% to 18.3% passenger market share.

The area, of course, includes India’s billion-strong population which, although expanding from a fairly small existing base – rising from just 10% of total South East Asia in 2004 to 15% in 2009 – offers huge potential.

Before the current financial crisis, South Korea had grown from 4.6% to 5.7%.

Increasing from 4.8% to 5.5% by 2009, Australia, New Zealand and other South Pacific arrivals also experienced noticeable growth.

If there is one nationality that surpasses all others, it is inevitably the Mainland Chinese, with 2.1 million total visitor arrivals by air in 2009 which represented 25% share, compared with 21% in 2004.

All of which is not to say everything in Hong Kong’s garden is rosy.

Continually hindered by an uncertain political climate and stagnant GDP growth of under 1%, high spending Japanese arrivals at HKIA have continuously declined from 10% in 2004 to 7.7% last year.

And with the introduction of direct flight services to 21 Mainland Chinese cities, arrivals from Taiwan have also decreased from 16% to 13% in 2009 and largely affecting revenues.

So what exactly does Asia’s ever-expanding travel sector expect from their regional airports? Given the average Asian’s growing wealth and love of ‘retail therapy’, it is hardly surprising that shopping continues to be popular with both business and leisure travellers.

Luxury goods, new electronic gadgets, beauty products and jewellery all remain must haves in this area.

Yet if we scratch the surface, we will discover high-level purchasing diversity that mirrors each nationality’s unique culture and travelling profile.

Understanding your customer is vital In South Korea, for example, the rise of the so-called ‘Gold Miss’ segment means younger, predominantly female consumers dominate the outbound travel market.

As most South Koreans travel on vacation, contemporary fashions, perfumes and cosmetics are all popular purchases.

In Japan, younger and ‘Dankai’ seniors make up the largest group.

Japan’s gifting culture means local delicacies remain must buys.

The Japanese spend more on classic fashions and leather goods than any other nationality.

Taiwanese travellers are different again.

They are also becoming more health conscious and have more than doubled their spending on health and medicines since 2004.

Broadly speaking, most other South East Asian nationalities travel in young families.

Well known for being ‘food-lovers’, their top travel retail purchase is confectionery, followed by small electronic items and accessories.

While such consumers are eager to spend, they insist every purchase offers outstanding value.

Fascinated by eastern cultures, more mature Australians and New Zealanders remain amongst the biggest buyers of destination souvenirs, while their younger counterparts are yearning for cutting-edge technologies.

While both countries now contribute just 5.5% of total visitors, they generate 8% of HKIA’s electronics sales.

Last but not least, we come to the Chinese.

Instantly identifiable by high-end goods such as Omega watches, Hugo Boss apparel and Bally accessories, Chinese travellers are extremely brand conscious and love displaying symbols of their social status.

China’s ‘gifting’ tradition also means luxury goods of obvious high value also ‘give face’ to both their giver and the receiver – be they male or female.

Consequently, while many international brands already have operations in their homeland, the Mainland Chinese love to shop overseas because of factors such as price advantages, brand integrity and product authenticity.

Such consumers are also amongst the most determined purchasers of specially priced items, added value promotional offers such as gift-withpurchase, purchase-with-purchase and exclusive/limited editions.

How to succeed at travel retailing What advice would we offer those determined to improve their existing travel retail operations? Ultimately, a diversified portfolio with a significant breath and depth of choice remains key to capturing, maximising and maintaining passengers’ loyalty levels.

As HKIA’s largest travel retail operator, Nuance-Watson has expanded its portfolio every year since beginning operations in 1998.

As a result, our stores now offer everything from fashion, leather goods, luggage and watches and jewellery, to perfumes and cosmetics, electronics, confectionery and souvenirs.

In doing so, we have been careful to broaden our offerings in-line with the changing needs of passengers.

As we’ve seen earlier, this is especially true of free-spending and discerning Mainland Chinese passengers.

Despite transaction numbers growing by just 11%, this group now spends over four times more with us than they did six years ago – far ahead of any other nationality.

One of the best ways of ‘knowing your customers’ and fine-tuning your merchandise offerings to match, is to carry out extensive daily sales tracking research.

At HKIA, watches are the product sector that has benefited most from this process.

In 2009, our watch sales from Mainland Chinese were fully five times those in 2004 and average transactions around 60% higher.

Spotting the growing popularity of watches early, in 2006, we launched a standalone multi-brand luxury boutique called ‘Master of Time’ hosting IWC, Jaeger-LeCoultre, Piaget and Franck Muller timepieces.

As prices at HKIA are lower because of generous tax savings compared to China, perfumes and cosmetics are another must have for Mainland Chinese passengers at HKIA.

To leverage potential sales in this sector, we launched Asia’s flagship La Prairie travel retail corner, the world’s first standalone Giorgio Armani Cosmetics and Kiehl’s boutiques at an airport.

Other new brands introduced at the airport include Amala, Bobbi Brown, Bulgari, Clé de Peau, Laneige, Origins, The Body Shop, Revive and Sulwhasoo, which have all contributed to our sevenfold sales increase among Mainland Chinese passengers since 2004.

To further enhance our luxury selection Nuance-Watson recently added the world’s first ever Giorgio Armani and Pal Zileri travel retail fashion boutiques to a line up that already included Mainland Chinese’s popular luxury icons such as Bally, Hugo Boss and Omega.

My final word of advice to other travel retail professionals would be to never assume that you know it all! Profiles and purchasing habits change constantly and this is especially true of Asia’s predominantly young, but highly brand-aware and seasoned overseas travellers.

Ultimately, only by thoroughly understanding people and the markets they come from can we, as a business, provide customers with exactly what they want.

Asia-Pacific Airports 2010 Issue 1

Olaf van Tol reports on proposals to maximise the economic potential of the region around Shenzhen Bao’an International Airport.

China is like nowhere else on earth, recording economic growth of 8.7% last year while most other countries suffered due to the global financial crisis.

Indeed, such has been its growth that China has already overtaken Germany as the world’s largest exporter and looks set to become the world’s second largest economy, after the US, in 2010 if its phenomenal growth rate continues as expected.

And the Pearl River Delta (PRD) region – the economic powerhouse known as ‘the world’s workshop’ – and, specifically the Special Economic Zone (SEZ) of Shenzhen, has certainly played its part in the country’s emergence as a force to be reckoned with over the last decade.

The PRD accounts for almost 16% of the national GDP and is the world’s largest manufacturer of consumer electronics, which are invariably exported to Europe and the US through Shenzhen port, the fourth largest container port in the world.

As a result of its new found importance, Shenzhen, once a small fishing village with a population of a few thousand, now boasts 12 million inhabitants and the airport is surrounded by commercial, residential and industrial developments.

In its first full year of operations in 1992, Shenzhen Bao’an International Airport handled 1.6 million passengers.

That now seems like a very long time ago as over 23 million passengers passed through the gateway in 2009.

However, in some ways the airport has become a victim of its own success because the city has developed at such a pace over the past 20 years that it now surrounds Shenzhen Bao’an and is in danger of restricting its development options.

Indeed, the surrounding Bao’an district has turned into an enormous production and manufacturing centre with over two million people living and working within a short distance of the perimeter fence.

Ironically though, most of these companies gain no benefit from their location next to the airport and Shenzhen Bao’an has certainly been done no favours by their presence.

For the airport to grow, this situation really needs to change, and in recognition of this fact, Netherlands Airport Consultants (NACO), together with InterVISTAS Consulting Group, have been commissioned to consider the possible development of an airport city on the Shenzhen Bao’an site.

And in a separate project, they were asked to look at the potential development of an airport city ‘off-site’, the project being drawn up in conjunction with an airport master plan update.

It is worth noting that the first project was initiated by the airport authority and focused on the airport perspective, while the second project was initiated by the Shenzhen local government and considered the views of both the region and airport.

Remarkably, it took the second project for the airport and the local government to recognise that the airport does, and could have an even greater, economic impact on the region.

This realisation meant that at the end of 2008, the Bureau of Communication and Transportation of the Shenzhen government commissioned NACO, in co-operation with InterVISTAS Consulting Group, to study and propose an ‘Industry Distribution Plan’ for the area surrounding Shenzhen Bao’an international Airport.

It was the first time in China that an aviation strategy consultant and master planning company worked together to create a cohesive plan for the airport (master plan review of expansion, new runway, infrastructure etc) and the region (industry distribution plan).

And as a result, it fully supports and harmonises the development strategies of both the airport and local government.

In other words, the gateway’s desire to have an airport capable of accommodating up to 60mppa and the region’s wish to gain maximum benefit from this expansion.

The plan confirms that the airport is instrumental to the region’s development and should, therefore, be allowed to grow.

It also suggests that it is vital that a strategic commercial plan is developed for the zones directly surrounding the airport.

In addition, it notes that factors that need to be taken into account are the location of cargo facilities, access roads, bonded zones, noise contours, passenger flows, and commercial facilities.

The Industry Distribution Plan also recognises the need for China and the Shenzhen region to move away from concentrating almost entirely on low-cost manufacturing, despite the success it has brought the national economy, and consider more sustainable high-tech activity.

China, after all, has vast potential in other industries and sectors courtesy of its sizeable and highly educated workforce, many of whom are waiting to be offered major opportunities in the tertiary sector industries.

The government’s 11th five-year plan outlines proposals for a new economic system based on innovation and high-tech research and development, and Shenzhen has very actively adopted this philosophy in its own development programme.

Shenzhen’s plan is based on four main industry pillars – high and new technologies in advanced manufacturing and innovation; modern logistics; modern finance; and modern culture.

And in recognition of the strong national and regional influence in economic development in China, these four pillars will form the basis for the strategic development around the airport.

Central to this transformation strategy is the question: why do companies select the airport area as the place to establish their business? In the current economic climate in Shenzhen (and the entire PRD), technology, manufacturing and production are the dominant sectors and the challenge for the airport is to encourage these industries to export more shipments by air.

From the airport’s perspective, it wants to know how it can accommodate an optimal airfreight market that acts as a catalyst for an increase in cargo volumes.

To answer this question, we took a closer look at the product, supply and innovation chain.

A product value chain in technology products, for example, generally follows four key processes – discover, develop, manufacture and distribute.

At each activity value is added to the product or service.

In the product value chain, technology is typically ‘discovered’ in a R&D centre, ‘developed’ in a high-tech industry, ‘produced’ in a technology manufacturing cluster and finally ‘distributed’ by air or sea.

The Bao’an region is traditionally strong in the last phase of the value chain (manufacturing and distribution by sea), however, the goal in-line with government objectives is to stimulate economic activity involving the first two phases of the value chain around the airport.

In the short-term, the airport economic catchment area is likely to continue its strength in the manufacture and assembly of toys and electronics without extensive R&D.

In the medium and longterm however, the Bao’an district needs to focus on attracting R&D facilities geared to the established core activities of the region.

Indeed, the development strategy for the airport economic region envisions more high-value and high-tech production that will act as a catalyst for an increase in cargo shipments.

Research has certainly indicated that airports can facilitate in the development of high-tech clusters.

In fact new industries specialising in technology, biochemistry, communication and automotive industry are typically (high-tech) users of air transport services.

Given the strong industrial manufacturing base already present in the immediate area surrounding of Shenzhen Bao’an, then, the high-tech R&D sector would create beneficial synergies.

In fact the R&D sector could build on the economies of scale of the current manufacturing industry and on the shared services and shared infrastructure already in place.

In addition, the value creation among high-tech manufacturing companies in the region will significantly increase with the presence of an innovation platform.

While the high-tech ‘turnaround’ takes place, new professional workers are attracted to areas where the nucleus of their development is a concentration of R&D and innovative activities.

Tenants of these ‘core zones’ are typically small to medium sized enterprises.

New residential areas and commercial facilities would be required to accommodate and attract these new workers.

In terms of Shenzen Bao’an International Airport’s future development, a new replacement terminal is being built on reclaimed land opposite the existing passenger facility.

When the new terminal opens, the current passenger complex is to be transformed into a commercial building that will comprise restaurants, a conference centre and hotel.

While most airport city developments are taking place at greenfield sites, the property around Shenzen Bao’an is almost completely developed.

Indeed, large industrial sites have been operational around the gateway for some time and there are lessons to be learned here by the airport as all future developments need to be well-phased, fine-tuned and meticulously executed to adhere to the overall strategic plan.

The creation of clusters will enhance the overall performance and innovative character of the area.

Companies currently established in the area are expected to be the first engines of development, however, the central and local governments are dedicated to supporting a transition from low-value, high-pollution industries to sustainable high-value, high-tech activities.

To this end government policies are creating incentives for Foreign Direct Investment (FDI) companies to establish ‘sustainable’ industries close to the airport and the factories that don’t fit the strategic plan will be systematically transplanted elsewhere.

The challenge for the regional government and airport authority will be to guide the development with a mix of incentives and choices in a phased, methodical way.

Some sectors such as R&D and support service industries will be catalysts and early adapters, while other sectors will follow, once industries or residential concentrations have clustered and developed

Some low-value manufacturing companies will be able to make the transition into to a green and more sustainable future and others will not. That’s life.

Recognising the strategic importance of the product value chain set out above will be paramount to the success and sustainability of the industry distribution plan and consequently the region surrounding Shenzhen Bao’an.

It is estimated that it will take about five to ten years to complete the Shenzhen’s economic transformation from a reliance on low-value, high-pollution industries to more innovative, high-tech activities.

Although this time seems swift compared to western standards, it is fully in-line with the amazing historical and current growth of China, the city of Shenzhen and Bao’an International Airport.

Asia-Pacific Airports 2010 Issue 1

Louise Driscoll and Joe Bates discover that airport development continues at a pace across the Middle East despite the global economic slowdown.

With an estimated $86 billion being spent on expansion projects, there is no denying that the Middle East region is one of the hottest places on earth for airport development. According to the latest research by Frost & Sullivan, 90% of the big spend will be concentrated on the expansion or creation of new airports at 12 destinations across the region – Abu Dhabi (UAE), Amman (Jordan), Bahrain (Bahrain), Beirut (Lebanon), Cairo (Egypt), Doha (Muscat), Dubai (UAE), Jeddah (Saudi Arabia), Kuwait (Kuwait), Muscat (Oman), Riyadh (Saudi Arabia) and Sharjah (UAE).

“The current economic slowdown will not impact on the Middle East commercial aviation industry and airport development activities will persist, despite the slowdown as most expansion activities are funded by governments in these countries,” notes Frost & Sullivan’s research analyst Gautam Ratan Kanal.

And in many cases the ambitious expansion plans go hand-in-hand with the rapid growth of the airport’s home carriers with Etihad (Abu Dhabi), Emirates (Dubai) and Qatar Airways (Doha) being among the fastest growing airlines in the world.

Dubai’s new $8.1 billion Al Maktoum International Airport – the centrepiece of Dubai World Central, a planned ‘urban aviation community’ spread across a huge 140 square kilometre site – will officially open for cargo operations on June 27.

Although yet to set a date for the launch of passenger operations, a 7mppa capacity terminal is currently under construction.

When complete, it is expected to handle low-cost, regional and charter flights, providing some relief for Dubai International Airport, which handled 40.9 million (+9.2%) passengers last year and predicts 13.6% growth in 2010.

Both airports will eventually be linked by high-speed rail and, in the long-term, Al Maktoum is set to boast two mega terminals, six runways and six concourses capable of handling more than 120mppa.

Elsewhere in the UAE, the nation’s second largest gateway, Abu Dhabi International Airport, is constructing a new Midfield Terminal as part of its $6.8 billion expansion programme.

The new Midfield Terminal, which will effectively replace today’s existing facilities, will raise the gateway’s capacity to 20mppa when it opens in 2015.

The massive project is in-line with the Abu Dhabi government’s ‘Plan 2030’ to diversify the Emirate’s economy to decrease its dependence on oil and gas.

Abu Dhabi Airport Company’s vice president of corporate marketing and communications, George Karamanos, says: “We already have 45 airlines here and the number is growing.

This growth, coupled with Etihad’s fast expanding network and frequencies, means that we have simply outgrown our existing facilities.

We anticipate steady passenger growth for the next five years and beyond.

” The airport has more than doubled its passenger numbers in the six years since Etihad Airways has been operational.

Perhaps central to this rapid growth, the Middle East is geographically well positioned to develop as a primary logistics and transfer hub, feeding passenger traffic and trade between Europe and Asia.

As the Gulf airports transform themselves into ultra-modern new gateways, mega terminals are springing up to serve the world’s biggest passenger aircraft.

One will be in Qatar, where the government is funding the construction of a new $14 billion gateway for capital city, Doha, which is claimed will be one of the first gateways in the world designed to accommodate the A380.

Due to open in July 2011, the New Doha International Airport will initially be capable of handling 24 million passengers and 1.3 million tonnes of cargo per annum.

Its multi-level 350,000sqm passenger terminal – an area equivalent in size to 50 football pitches – will boast 40 gates, a distinctive wave shaped roof to reflect Qatar’s seafaring past and its own 100-room transit hotel and public mosque.

Also aligning airport development with the needs of its airline customers, Oman’s largest gateway, Muscat International Airport, has begun the first phase of its modernisation programme designed to raise its capacity to 12mppa by 2012.

And further expansion is planned in three phases in a bid to boost the airport’s capacity to 48 million passengers by 2050.

Building market share continues to fuel yet more airport expansion.

Elsewhere in the Gulf, state-owned Bahrain Airport Company (BAC) plans to triple its handling capacity to 27mppa and become a ‘mega airport’ for the region through multi-billion dollar investments.

Major construction is due to start this year and includes the addition of two new terminals: Terminal 1A – (adjacent to the existing facility) and demolishing and rebuilding the present terminal with a new Terminal 1B.

BAC is now tendering a design contract for the overall development and has started receiving bids from HOK Architects, Naco, Aéroports de Paris Ingenierie, Mott Macdonald, Jacobs Gibb and Dar al Handasah.

In Amman, Jordan, Airport International Group’s 25 year concession (awarded in 2007) to redevelop and expand Queen Alia International Airport (QAIA) includes overseeing a $750m redevelopment and expansion project, as well as the construction of a state-of-the-art 100,000sqm passenger terminal in readiness for a spring 2012 opening.

The long-term objective is to transform QAIA into a key regional hub, while raising capacity from 3.5 to 9mppa.

“We are continuing to experience strong traffic growth despite the dire global economic conditions of the past year,” says AIG’s CEO, Curtis Grad, who notes that passenger throughput increased by 6.5% to 4.7mppa in 2009 while aircraft movements soared by 12.6%.

In Saudi Arabia, major new facilities are planned in Jeddah, Riyadh and Dammam and the General Authority of Civil Aviation (GACA) has unveiled plans to invest up to $5 billion on five new gateways, including a possible fourth airport designed to serve the Muslim holy city of Medina.

GACA estimates that in excess of $13 billion needs to be invested on modernising and expanding Saudi Arabia’s airports, with Jeddah– King Abdulaziz being the main beneficiary of the largely government funded upgrade.

In addition to a new 400,000sqm crescent-shaped passenger terminal in Jeddah, the gateway’s $1.5 billion upgrade includes new runways, a state-of-the-art 450,000 tonnes per annum capacity cargo complex, new ATC tower and railway station in readiness for a rail link to both downtown Jeddah and the holy cities of Mecca and Medina.

A planned Automated People Mover (APM) will provide the ground transportation links between the new 42-gate terminal and the Hajj Terminal, which is being expanded and redeveloped by the Hajj and Umrah Terminals Construction and Development Co (HTDC) on behalf of concessionaire SBG.

In addition to King Abdulaziz, a master plan currently being drawn up by NACO will involve increasing the capacity of Riyadh–King Khaled International Airport from 14mppa to 40mppa by 2038.

“We are also conducting studies at King Fahd International Airport (Dammam) and 13 other regional gateways which we believe are most in need of extra capacity.

Of these, Abha is our top priority as it is the fifth busiest airport in the Kingdom,” says HH Prince Turki Faisal Al-Saud, GACA’s vice president of international organisation affairs and ACI Asia-Pacific’s acting first vice president.

Meanwhile Kuwait International Airport is planning to upgrade its airfield and construct a 90,000sqm second terminal that will treble its capacity to in excess of 20 million passengers per annum by 2013.

Additional expansion plans include a two million square metre cargo and logistics complex that when complete will be capable of simultaneously accommodating up to 70 A380s and around six million tonnes of freight annually.

The hugely ambitious development programme, being drawn up by the airport as it prepares its master plan for the next 30 years, would create an impressive new ‘front door’ to Kuwait that will help the airport cope with rising demand of up to 17% per annum.

In the short and medium-term, the greater need for capacity and the drive towards airport infrastructure development will continue as the home carriers in the Middle East continue their growth paths across pan-Arabian and Intercontinental networks.

Asia-Pacific Airports 2010 Issue 1