Middle East Airfreight Ascent: Mecca or Mirage?
It wasn't long ago that media and markets alike were ready to anoint the Middle East as the world's next airfreight hub. Gulf carriers and airports, once the exclusive backdrop for oil business, have experienced their own boom over the past several years thanks to continued investment in assets and infrastructure, and industry differentiation. Dubai World Central, "the world's first purpose-built aerotropolis," is symbolic of the Middle East's ascent. Dubai, Doha, and Abu Dhabi all feature among the world's top 30 airports in cargo tonnage.
By contrast, established European hubs have encountered inertia, underscored by recession and sluggish economic recovery, as well as regulatory constraints including night flight restrictions, labor laws, and environmental mandates. Middle East airports are ideally positioned along the Asia-Europe trade routes, with few constraints to growth. Night flights, cheaper fuel, and preferential landing and parking fees have quickly eroded total landed costs and long-held affinities for European hubs. This consensus has been building for some time.
But Middle East interests are faced with some sobering news. Hyper investment and growth is creating congestion in Persian Gulf airspace. Long-term success is dependent on alleviating this looming concern, according to a recent Wall Street Journal (WSJ) article. No less important, as war in Iraq smolders, and tensions in Israel and elsewhere remain unsettled, airspace security is similarly compromised.
In 2013, the United Arab Emirates commissioned Airbus to study the problem, according to the WSJ. The French airplane manufacturer reported that within two years the region's major airlines would regularly see delays if countries and airlines did not work toward a regional solution.
The ramifications for high-value, time-sensitive air freight are considerable. And while European airports may be constrained by capacity, quality and service remain intact. For shippers paying a premium on transportation, timeliness is paramount.
Airbus made several recommendations in its report, according to the WSJ. Introducing air traffic flow management technology to manage lead times between flights, as well as regional Gulf air-traffic management governance, similar to Europe's Eurhttp://www.inboundlogistics.com/cms/article/global-logistics-november-2014/#mecca
ocontrol, are top priorities.
Part of the problem is the control Gulf governments have over airports and airlines, which creates inherent bureaucratic obstacles when trying to find areas for collaboration and compromise. Equally important, as airlines such as Emirates, Etihad, and Qatar Airways make huge investments in new aircraft, airport infrastructure development needs to keep pace.