UAE aviation returns to growth

12 October 2023

More news from the UAEs transport sector: 

Contractors start building Abu Dhabi light rail
Sharjah airport award expected by the end of 2023
Turkish firm wins $187.5m Dubai road upgrade

Emirates and Shell Aviation sign sustainable fuel deal
Abu Dhabi tenders Mid Island Parkway packages
Abu Dhabi to open Midfield Terminal in November


Three years after their operations stopped during the Covid-19 pandemic, the UAE’s airports are again in expansionary mode.

Globally, aviation is returning to pre-pandemic levels. The International Air Transport Association (Iata) reported that traffic during August stood at 95.7 per cent of pre-Covid-19 levels based on revenue passenger kilometres.

Middle Eastern airlines performed particularly well. They posted a 27.3 per cent increase in August traffic compared to a year ago.

With Dubai International, Abu Dhabi International and Sharjah International airports serving as hubs for Emirates, Etihad and Air Arabia, the rebound in international travel has positively impacted passenger statistics. 

At Dubai International airport, the world’s busiest international hub, passenger traffic for the first half of the year surpassed 2019 levels. It handled 41.6 million passengers in the first six months of the year, slightly more than the figure recorded during the first half of 2019.

Dubai International’s top city destination was London with 1.7 million passengers, followed by Mumbai and Riyadh, with 1.2 million each. 

The strong performance during the first half of the year means Dubai Airports, which operates Dubai International, now expects 85 million passengers to be handled by the airport by the end of this year – just 1.6 per cent lower than its annual traffic in 2019.

Like Dubai International, Abu Dhabi International airport reported solid figures for the first half of this year. Passenger traffic grew to 10.2 million travellers, an increase of 67 per cent on the 6.1 million passengers handled during the same period last year.  

The cities with the highest passenger traffic included Mumbai with 461,081 customers, London with 374,017, Delhi with 331,722, Kochi with 316,460 and Doha with 261,117.

Sharjah International airport’s passenger numbers also increased during the first half of 2023. It received over 7 million passengers in the first half of the year, an increase of 24 per cent compared to the same period last year.

Airport projects

The rebound in air travel supports the business case for airport projects in the UAE after several years of relative inactivity.

According to regional projects tracker MEED Projects, there have been $340m of airport-related construction projects over the past five years, a significant drop from the more than $2bn registered for the previous five-year period.

In Dubai, plans are being considered for restarting the AED120bn ($33bn) expansion of Al-Maktoum International airport.

Located in the Jebel Ali area close to the Abu Dhabi border, the facility is Dubai’s second airport. It began operations in 2010 and has long been planned to ultimately replace Dubai International as the emirate’s primary airport. 

The expansion of Al-Maktoum International airport, also known as Dubai World Central (DWC), was officially launched in 2014. It involves building the biggest airport in the world by 2050, with the capacity to handle 255 million passengers a year.

An initial phase, which was due to be completed in 2030, will take the airport’s capacity to 130 million passengers a year. Altogether, the development will cover an area of 56 square kilometres.

Progress on the project slipped as the region grappled with the impact of lower oil prices and Dubai focused on developing the Expo 2020 site. Tendering for work on the project then stalled with the onset of the Covid-19 pandemic in early 2020.

Al-Maktoum airport is needed because Dubai International is unable to be expanded significantly. One of the key future challenges is runway capacity. It only has two runways, and with built-up urban areas on either side of the airport, there is no available land to build new runways on. 

Another driver for the project is regional competition. Dubai International is the region’s largest airport, and Emirates is the region’s largest airline. Plans in Saudi Arabia now challenge that position.

At the end of last year, the kingdom launched the masterplan for King Salman International airport in Riyadh, which aims to accommodate up to 120 million passengers by 2030 and 185 million by 2050. Earlier this year, it launched a new airline known as Riyadh Air.

Midfield terminal

Abu Dhabi International airport is at a different stage of development. In August, Abu Dhabi Airports announced that the Midfield Terminal building would begin operations in early November 2023.

Now known as Terminal A, the project will transform operations at the airport. It has 742,000 square metres of built-up area and can handle 45 million passengers a year, process 11,000 travellers an hour and operate 79 aircraft at any given time. 

The project has been under construction for over a decade and has faced multiple delays.

In 2021, Abu Dhabi Airports terminated its contract with the joint venture of Turkey’s TAV, Lebanon’s Consolidated Contractors Company (CCC) and the local Arabtec Construction for the construction.

The joint venture was awarded the AED10.55bn contract to build the Midfield Terminal building in June 2012, and sources in the market say the final contract value is closer to AED20bn.

Local contractor Trojan managed the remainder of the works for the project.

An expansion of Sharjah International airport, meanwhile, is planned to increase its capacity from eight to 20 million passengers a year. Sharjah Civil Aviation Authority is expected to award the estimated AED2.5bn main construction works package by the end of this year.

The investments planned for the UAE’s airports and rising traffic volumes mean the country will remain an important aviation hub in the future.
Colin Foreman
Related Articles
  • Facility E nears 25 July bid deadline

    19 July 2024


    The tender closing date of 25 July remains unchanged for the contract to develop and operate Qatar’s Facility E independent water and power producer (IWPP) project.

    At least one developer team is highly likely to submit a proposal to develop the gas-fired plant, sources close to the project tell MEED.

    Qatar state utility General Electricity & Water Corporation (Kahramaa) had previously extended the tender closing date for the contract in response to developers’ requests, as MEED reported.

    The Facility E IWPP scheme will have a power generation capacity of 2,300MW and a water desalination capacity of 100 million imperial gallons a day (MIGD).

    “We hear that at least one consortium is being formed … others are preparing proposals, but appear unsure if they will ultimately submit them or not,” a source close to the project told MEED in November last year. 

    Kahramaa initially expected to receive bids on 14 December 2023.

    The contract to develop the Facility E IWPP was first tendered in 2019. The three teams that submitted bids for the contract in August 2020 were:   

    • Engie (France) / Mitsui (Japan) / Yonden (Shikoku Electric, Japan)
    • Sumitomo / Kansai Electric (Japan)
    • Marubeni / Kyushu Electric (Japan)

    The original plan was for the Facility E IWPP to have a power generation capacity of about 2,300MW and a desalination component of 100MIGD once fully operational.

    However, the project owner revised the power plant’s design capacity to 2,600MW and sought alternative prices from bidders. 

    Kahramaa eventually cancelled and reissued the tender in September 2023. The current tender entails a power generation plant with the same capacity as initially tendered in 2019.

    MEED understands that the new target commercial operation date for the Facility E IWPP project has been moved to 2027. 

    The state utility’s transaction advisory team includes UK-headquartered PwC and Clyde & Co as financial and legal advisers, respectively, led by Belgrade-headquartered Energoprojekt as technical adviser.

    Facility E is Qatar’s fifth IWPP scheme. Completed and operational IWPPs include three projects in Ras Laffan – known as Facilities A, B and C – and Facility D in Umm Al-Houl.

    Awarded in 2015 and completed in 2018, Facility D was developed by a Japanese consortium of Mitsubishi Corporation and Tokyo Electric Power Company (Tepco). South Korea's Samsung C&T was the engineering, procurement and construction contractor.
    Jennifer Aguinaldo
  • Masdar’s second bond issue raises $1bn

    19 July 2024

    Abu Dhabi Future Energy Company (Masdar) has raised $1bn through its second bond issuance under its Green Finance Framework.

    The announcement comes one year after the company’s first successful issuance of $750m on the International Securities Market of the London Stock Exchange.

    Masdar said the issuance comprises dual tranches of $500m each, with tenors of five and 10 years and coupons of 4.875% and 5.25%, respectively.

    It said there was strong appetite from regional and international investors, with the order book peaking at $4.6bn – 4.6 times oversubscribed.

    The company finalised the allocation with an average split of 70% to international investors and 30% to Middle East and North Africa investors.

    The $1bn proceeds from the issuance will be deployed to fund Masdar’s equity commitments on new greenfield projects, including several in developing economies, as the company pursues a target portfolio capacity of 100GW by 2030.

    In line with Masdar’s corporate credit ratings, the second issuance was rated AA- by Fitch and A2 by Moody’s.

    First Abu Dhabi Bank, Abu Dhabi Commercial Bank, Citibank, HSBC, Standard Chartered, Credit Agricole CIB, Natixis and MUFG were the lead managers and bookrunners on the issuance.
    Jennifer Aguinaldo
  • Firms seek to prequalify for 12 Saudi water projects

    18 July 2024


    Local and international utility developers have submitted their statements of qualifications (SOQs) for the contracts to develop and operate 12 water public-private partnership (PPP) projects in Saudi Arabia. 

    State-backed offtaker Saudi Water Partnership Company (SWPC) received separate responses from companies for five independent water projects (IWPs) and seven independent sewage treatment plant (ISTP) projects by 4 July, industry sources tell MEED.

    Local and regional companies, in addition to Japanese, Spanish, French and Chinese utility developers, are understood to have sought to prequalify to bid for the contracts, which are set to be tendered in 2024-26. 

    SWPC's shift from a single-project to a multiple-project prequalification process saves time and resources, according to one of the companies that submitted an SOQ.

    "This is particularly true for international developers, which need to allocate resources across various geographies," the source said.

    Another source said he believes SWPC will prequalify companies for lead and technical roles, among others, and then allow these companies to form teams at a later stage.  

    The client previously said that the programme "will provide the opportunity to local and international developers to obtain pre-qualification approval and receive the request for proposal documents for its future projects … without the need to submit a separate qualification application for each project".

    The five IWP schemes have a total combined capacity of 1.7 million cubic metres a day (cm/d). The seven ISTP projects have a total combined capacity of 700,000 cm/d.

    The kingdom's water sector has been undergoing a restructuring programme, with the capacity procurement process linked to the National Water Strategy being undertaken by three other clients: Saline Water Conversion Company, which has been renamed Saudi Water Authority; Water Transmission & Technologies Company; and the National Water Company.
    Jennifer Aguinaldo
  • Nama appoints 2027-29 procurement advisers

    18 July 2024


    Oman's Nama Power & Water Procurement (Nama PWP) has appointed a transaction advisory team to support its 2027-29 power and water procurement strategy.

    According to an industry source, the team comprises UK-headquartered Deloitte as lead transaction and financial adviser, Canada-based engineering consultancy WSP as technical adviser, and US firm CMS as legal adviser.

    The scope of work won by the advisory team includes preparing the overall procurement strategy, extending existing contracts expiring between 2027 and 2029, and undertaking procurement for new-build plants.

    The contracts for three independent power projects (IPPs) in Oman with a total combined capacity of 3,518MW are expiring between 2028 and 2029, according to the state offtaker's latest Seven-Year Planning Statement, which covers the years 2023 to 2029.

    These gas-fired plants and their power generation capacities are:

    • Barka 3 IPP: 750MW (2028)
    • Sohar 3 IPP: 750MW (2028)
    • Sur IPP: 2,018MW (2029)

    Phoenix Power Company, the project company for the 2,018MW Sur IPP, comprises Japan's Marubeni Corporation and Jera and Qatar's Nebras Power. 

    Shinas Generating Company – owned by Saudi Arabia's Acwa Power, Japan's Mitsui and China's Didic – is the project company for Sohar 3.

    Al-Suwaidi Power is the project company for Barka 3. It comprises France's Engie, Japan's Shikoku Electric and the local Suhail Bahwan Group.
    Jennifer Aguinaldo
  • UAE keen to start next nuclear plant phase

    18 July 2024

    The UAE government could start the tendering process this year for the state's next nuclear power plant, located in Abu Dhabi, according to a Reuters report citing a senior UAE government official.

    According to the report, Hamad Alkaabi, the UAE's permanent representative to the Austria-based International Atomic Energy Agency, said: "The government is looking at this option. No final decision has been made in terms of the tender process but I can tell you that the government is actively exploring this option."

    The government has yet to budget for a second power plant or decide on the size or location of such a project, but Alkaabi said it is possible a tender could be issued this year, the report added.

    A significant increase in electricity use over the next decade, driven by population growth and an expanding industrial sector, underpins the plan to proceed with the next phase of the state's civilian nuclear power programme.

    Any new power plant would likely consist of two or four reactors, said Alkaabi, who also serves as the deputy chairman of the board of management of the UAE's Federal Authority for Nuclear Regulation.

    The next phase of the Barakah power plant, comprising reactors five to eight, has been in the planning stage since 2019, according to regional projects tracker MEED Projects.

    The UAE became the first Arab state to operate a nuclear power plant when the first of the four reactors at Abu Dhabi’s Barakah nuclear power plant became operational in 2021.

    Each of the four reactors at the Barakah nuclear power plant can produce 1,400MW of electricity.

    Three of the plant’s four reactors are operational. Emirates Nuclear Energy Corporation's operating and maintenance subsidiary, Nawah Energy Company, completed the loading of fuel assemblies into Unit 4 in December 2023. 

    Unit 4 will raise the Barakah plant’s total clean electricity generation capacity to 5,600MW, equivalent to 25% of the UAE’s electricity needs.

    Korea Power Corporation is the prime contractor for the $24.4bn first phase of the Barakah nuclear power plant.

    GlobalData expects nuclear power capacity in the Middle East and North Africa region to grow from zero in 2020 to an estimated 7.1GW by 2030, mainly thanks to Abu Dhabi’s Barakah nuclear energy plant and the first reactors of Egypt’s El-Dabaa nuclear power plant.

    The UAE is one of more than 20 countries that committed to tripling global nuclear energy capacity by 2050 at the UN climate change summit Cop28, which was held in Dubai in late 2023.
    Jennifer Aguinaldo