Long the richest but one of the most conservative of the UAE states, Abu Dhabi has until recently seemed to disdain the example of its enthusiastic northern neighbour Dubai, with its massive investment in infrastructure, freighttransport and tourism.
One reason was the emirate’s huge oil wealth. Abu Dhabi has estimated reserves of 92.2 billion barrels, the fourth largest in the world, and enough for it to pump two million barrels a day well into the next century. It also has the world’s third largest gas reserves. With all that income, the emirate didn’t feel the need to try too hardto earn more.
But since 2004, when Sheikh Khalifa succeeded as ruler on the death of his father Sheikh Zayed, Abu Dhabi has embarked on a determined effort to diversify away from a dependency on oil. The new Sheikh has brought younger heads into top management positions, and now plans a massive $200bn infrastructure, tourism, manufacturing andservices over the next nine years.
The island of Saadiyat, for example, once planned to be a $3.5bn commercial zone with commodity exchanges, fi nancial centres and an IT park, is now being re-developed as a tourist destination, with investments estimated at $27bn. Among the daring moves to attract leisure visitors have been deals with the Louvre museum in France and the Guggenheim in New York to stage permanent exhibitions of their leadingart treasures.
The island will also include 29 hotels, two golf courses, a marina, a wetlands area. In addition, three more islands in the west of the emirate have been set aside for a wildlife reserve, and – taking a leaf out of Bahrain’s book – Abu Dhabi has also signed a seven year deal to host Formula One Grand Prix races beginning in 2009, in a custom-built complex that will also house aFerrari theme park.
Clearly to attract the tourists to fi ll these attractions, the emirate needs a world class airport and a world class airline. The government’s decision in 2005 to divest its stake in Gulf Air and instead build up Etihad Airways was one plank in that strategy. The other is a gleaming airport upgrade, costing $8.6bn, which is intended to bring Abu Dhabi InternationalAirport into the 21st century.
The upgraded airport will double the existing airport’s area to 34 square kilometres and boost its capacity from the current theoretical design limits– 3.5 million passengers and 150,000tonnes of cargo, both of which havealready been exceeded – to 20 millionpassengers and 750,000 tonnes in thefi rst phase, and as much as 50 million passengers and 2.5 million tonneseventually.
But despite details of the passenger and runway upgrades having been announced in May 2005, details of the cargo facilities still remain sketchy. Both Abu Dhabi Airport Services, the airport’s current sole cargo handler, and Etihad Airways refer questions on the topic to the Abu Dhabi Airports Company (ADAC), a public joint-stock company which formally took control of the operation and management of the airport in October last year.
Adil Ibrahim, senior public relations executive for ADAC, confi rms that a fi rst phase cargo facility – terminal E1 – is due to open in 2010 (a year later than the 2009 originally stated), with a capacity of 750,000 tonnes initially, rising to one million tonnes by 2017, and will initially operate as a common-user terminal, with both Etihad and other airlinesusing the same facility.
The terminal is due to be equipped with the latest automatic cargo sorting equipment and storage systems, and, according to Ibrahim, will also be designed as a paper-free environment to provide the best service to cargo carriersand freight forwarders.
By 2022, a separate common-user terminal will open with a capacity of 250,000 tonnes initially, ultimately rising to 500,000, and Etihad will then have E1 to itself. There is also space on the cargo master plan for E2, a second1m tonne capacity terminal.
Exactly where that space is has not yet been decided, however. One rumour is that the preferred site, near the new midfi eld passenger terminal that will be the centre of the revamped airport, suffers from problems with fl ooding from a seasonal lake, and contractors have yet to fi nd a solution. Sources also suggest that a much less convenient site, near the current cargo facilities which will be on the far southern edge of the newairport, is being considered instead.
Ibrahim confi rms that there are two alternative locations being considered for the cargo facilities, but denies reports that the preferred one has been hit by problems with a seasonal lake, or that the other site would be a good distance from the passenger terminals. “Site analysis with respect to cost-effectiveness of capital investment and operational cost will be fi nalised soon,” he insists, though Abu Dhabi airport offi cials have been saying thisfor some time.
Another suspicion is that the delay in deciding on the location of the cargo facilities is in fact because the passenger development takes priority. The work here started in 2005, when both existing terminals were upgraded to a capacity of 7 million passengersa year.
Work is now underway on terminal three, a gleaming new passenger terminal for Etihad with a capacity of up to 4 million passengers a year, and a new 4100 metres runway 2km to the north of the existing one. These are due to open in April and March 2008respectively.
The real centrepiece of the airport, however, will be a new passenger terminal midway between the two runways, which will add capacity of 12 million passengers a year when it opens in 2010. This is currently in the design phase, and it is perhaps the fi nal details of this facility that is holding up a decision onthe cargo terminal.
The new airport will also have fi ve forwarder warehouse complexes and in late March, ADAC announced the creation of a 390 hectare free zone at the airport, with a built area of over seven million square metres. The zone will feature four main zones – one for light industry, another with warehouses, another for offi ces, and a hotel/residential andretail area.
“The creation of a free zone marks a milestone in Abu Dhabi’s plans to establish itself as a dynamic business centre,” says Ibrahim. “It is an important part of the development and expansion of the airport, and will ensure that Abu Dhabi International Airport will become a thriving cargo and business hub.” He also reveals that part of the idea of the Free Zone is to help increase non-aviation revenues, however.
While it is waiting for the new cargo facilities, the airport’s cargo community having to make the best of its existing terminal, which is run by Abu Dhabi Airport Services. ADAS has been investing for over a year now to improve the throughput of this existing facility, and its efforts are expected to enable it to process up to 300,000 tonnes a yearthrough the 150,000 tonne facility.
Measures include the installation of an ETV system, which started in February, and extra racking. Some sources say that fi nding the skilled staff to make use of this extra equipment is provingto be a challenge, however.
On the plus side, the dry climate in Abu Dhabi means that tarmac space can be used for transit cargo, which forms a high percentage of Etihad’s throughput, and the carrier also does a lot of tail to tail transfers. This relieves a lot of pressure on the cargoterminal itself.
Whether all these measures will be enough for the predicted growth at Abu Dhabi is an open question, however. Ibrahim says growth in tonnage last year was 13.5 percent, but fi gures fi led with the Airports Council International show the airport clocking up 20.1 per-milecentgrowth to 258,633 tonnes.
Meanwhile Etihad is expanding at a fearsome rate. After a pause in 2005 while it waited for more aircraft to be delivered, it took delivery of 15 aircraft in 2006, including fi ve 777s, six A330s and three A340-500s, and started 16 new passenger routes, including New York, Paris, Manchester, Casablanca, Jakarta, Manila, Tehran, Islamabadand Lahore.
That enabled the carrier to nearly double its cargo volumes during the year to 134,818 tonnes, and the target is to boost that to at least 200,000 tonnes of cargo in 2007, which will once againsee an aggressive fl eet expansion.
Nine aircraft will arrive during the year including three A330-200s to be delivered between June and August, four A340-600s which start arriving in August, and a further two A330s later in the year. This will bring Etihad’s fl eet up to 31 aircraft, and boost capacity by50 percent.
New routes already started in 2007 include Kuala Lumpur in January and a thrice weekly service to Sydney on 26 March, using A340-500s with a cargo capacity of 15 tonnes. This service will be raised to daily from 29 June, and a new bilateral between the UAE and Australia allows Etihad to increase frequencies to 28 a week by 2010, includingstarting fl ights to Melbourne.
Other changes on the summer schedule include splitting the carrier’s current thrice weekly A330-200 Brussels- Toronto route into two, with the latter segment to be fl own non-stopby A340-500s.
Nearly all other regions will get increased passenger frequencies, with India getting two new routes (Trivandrum and Cochin) to add to the existing four, and Delhi being increased from three times a week todaily in June.
July will also see 15 new frequencies to such Middle Eastern and North African destinations as Cairo, Khartoum, Beirut, Damascus and Bahrain, and along with extra frequencies to Jakarta, Johannesburg and Paris, this will increase total passenger frequencies to 258 weekly. Meanwhile in August, Etihad will start four times a week fl ights to Dublin, followed in September by three fl ightsa week to Milan Malpensa.
Unless Etihad pulls some new aircraft orders out of the bag, expansion will pause there for a bit: the only remaining aircraft still on order are four A380s, originally due to come in 2007 but not now expected till 2009 or even 2010. Rumours say that the carrier is looking closely at both A350s and 787s as part of its ten year fl eet plan, however, and with its target of reaching 70 destinations worldwide– nearly double the current total – itwould be surprising if it did not ordermore aircraft soon.
On the cargo front, with Des Vertannes– lately cargo boss at Gulf Air– just about to take over as cargo managerat time of writing, it was hard toelicit concrete plans from Etihad, butthe expectation is that the carrier willfocus on fi lling its new belly capacityover the current year.
It also wetleases three A300-600 freighters from Air Altanta, which fl y to Frankfurt, Milan, Mumbai, Chennai, Kolkata and Khartoum, but plans to order either 777 or A330 freighters, seem to have been shelved for now. Sandra Taglieber, spokesperson for Etihad Crystal Cargo, said in February that such orders “are not a priority right now” and would go hand in hand with the plans for the new cargo facilities.“We will only add capacity if we havethe facilities to handle it,” she said.
Apart from Etihad, Ibrahim at ADAC insists there is an active programme to attract other cargo carriers to Abu Dhabi, but is vague about details or specifi c targets. One success for the company came in December when China Southern started a B747-400F service to Abu Dhabi, and China Airlines made the airport a stop in both directions on its new twice weekly service to Luxembourg and Stockholm, launched on 6 December.
With its abundant oil, Abu Dhabi has always been popular as a re-fuelling stop for Asia to Europe freighter operators, of course, but Ibrahim says CAL, Air France and Cargolux all load or unload cargo at the airport, as do local charter operators Maximus and Midex. In addition the airport has seen new passenger fl ights from such carriers as Singapore Airlines.
Balanced against this was the loss of longhaul fl ights from Gulf Air when the carrier ceased using Abu Dhabi as one of its hubs in March 2006, but the airport’s growth fi gures suggest Etihad’s expansion more than took up the slack. Other signifi cant belly operators through Abu Dhabi include Lufthansa, British Airways, Singapore Airlines, Saudi Arabian Airlines, Gulf Air and Qatar Airways.
In competing for cargo traffi c, Abu Dhabi stresses its lack of congestion compared to Dubai, which is just a 45 minute drive to the north, and which increasingly suffers from traffi c standstills.
Abu Dhabi can also claim to be ideally placed for trucking to other GCC countries, a market that is growing rapidly. In 2006, ADAS even installed a $1m portable scanner able to security- clear a whole truck, as a way of boosting such feeder services, which already extend to various destinations in the UAE.
The problem for Abu Dhabi, however, is that its proximity to Dubai is a double edged sword. With the new Dubai World Central airport and its Dubai Logistics City due to open next year, Abu Dhabi will have a formidable new competitor with space galore, the facilities of several large global forwarders within its perimeter, and attractions for airlines such as a liberalised market for cargo handling.
While Dubai says it will allow selfhandling if airlines desire, Abu Dhabi looks set to remain a handling duopoly between Etihad and ADAS. Ibrahim’s comment is only that the airport “is aiming at providing world class handling arrangements that will be value for money with very competitive service and price levels.”
On the other hand, as Sharjah has proved, it is possible to be close to Dubai and still carve out an important cargo niche.
With Etihad and its connections in the region and worldwide, Abu Dhabi could still be an attractive opportunity for freighter operators.
First, however, it needs to fi nalise the plans for those cargo facilities.