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Abu Dhabi’s airport development is the physical manifestation of two economic issues: One being the tourism booming Etihad Airways brings to the region and the second being the city’s efforts to diversify its economic depend on oil.
Abu Dhabi plans to more than triple passenger capacity with a new airport terminal, in a wager that luxury travel and growth of the flag carrier will let the hub hold its ground against the bigger airfields of Dubai and Doha.
The so-called Midfield Terminal under construction at Abu Dhabi International Airport, with a total floor area exceeding the Pentagon and maximum capacity of 40 million passengers, is due to open in late 2017. The facility, among the world’s biggest single-capacity buildings, will be home to Etihad Airways PJSC and its partner airlines.
The terminus will join an increasingly crowded space of regional airports, with both Dubai and Doha in Qatar expanding capacity, and Istanbul building a aerodrome that will be among the world’s largest. Abu Dhabi’s airport remains a fraction of the size of Dubai’s airfield, situated less than two hours south by car, with 14.7 million passengers in 2012, compared with almost 58 million in Dubai.
“Am I concerned that when we open this we’ll see tumbleweed blowing along the runways, empty departure halls and an aircraft control tower with everyone reading the newspaper? No, no and no,” Abu Dhabi Airport Chief Executive Officer Tony Douglas said in a July 30 interview at the construction site. “We can’t get it open a minute soon enough.”
Designed by Kohn Pedersen Fox Associates, the terminal will include a hotel and museum as well as shops, restaurants and airline lounges. Douglas, who used to run Heathrow airport in London, Europe’s busiest, said the building’s luxurious style will emulate the five-star Emirates Palace Hotel in Abu Dhabi or the sail-shaped Burj Al Arab hotel in Dubai.
Abu Dhabi is home to about 6 percent of the world’s proven oil reserves and one of the best-endowed sovereign wealth funds. Its economy, which is more than twice the size of Dubai’s, expanded 5.6 percent last year compared with 4.4 percent in Dubai, according to government data.
The richest of the seven emirates and the national capital, Abu Dhabi said in January it would to spend 330 billion dirhams ($90 billion) to fund development projects over five years. The emirate is seeking to diversify its domestic product away from oil, with the aim to have a more sustainable economy by 2030.
Much of the airport’s growth is linked to expansion of Etihad, which aims to grow into a fleet of 159 aircraft by 2020, more than twice as many as now. Etihad is the third-largest Middle East airline behind Emirates and Qatar Airways. The trio has used their location at the crossroads of international flight paths to pull in travelers, with transit making up 70 percent of Etihad’s total passengers.
“The airlines are growing so quickly we can hardly keep up with the infrastructure,” Douglas said. “It’s the type of problem that every airport operator dreams of.”
Etihad’s network of equity partners includes Air Berlin Plc, Virgin Australia Holdings Ltd., Air Seychelles Ltd. and Aer Lingus Group Plc. The airline also said it will take a 49 percent stake in Serbia’s Jat Airways and is awaiting to complete a deal for a 24 percent holding in India’s Jet Airways.
Douglas took his post in March, after a three-year stint as CEO at Abu Dhabi Ports Company. Hiring U.K.-born Douglas continues a tradition among Middle East aviation companies to rely on Anglo-Saxon executives to lead an expansion. Emirates is run by President Tim Clark, and Etihad CEO is James Hogan, while Dubai’s airport is run by Paul Griffiths, the former CEO of Gatwick Airport, London’s second-busiest hub.
The airport is preparing to put out a tender for the mechanical and electrical package of the terminal building within two to three weeks, Douglas said. The airfield has also provisioned for a metro connection in the future.
The airport, which is owned by the government and funded by the department of finance, will not be looking at bond or sukuk issues to finance the project, Douglas said. Last year, it awarded a 10.8 billion dirham contract for the construction of the terminal building to a joint venture of Arabtec Holding Co. TAV Construction and Consolidated Contractors Co.
Douglas said he is not concerned that there was too much capacity in the region, as Abu Dhabi, Dubai and Doha expand.
“All three locations are six hours away from two-thirds of world’s population,” said Douglas. “There are 100 capital cities within six hours of where we are.”
Editors: Benedikt Kammel and Sara Marley.
To contact the reporters on this story: Deena Kamel Yousef in Dubai at email@example.com; Dana El Baltaji in Dubai at firstname.lastname@example.org. To contact the editor responsible for this story: Benedikt Kammel at email@example.com.