$172b Investments Likely in ME Airports

“The ongoing investment programmes with the outlay of $86 billion are likely to continue till 2015, and they will be followed up with further investments because of the anticipated rise in demand for expansion in the aviation sector,” Gautam Ratan Kanal, research analyst at Frost and Sullivan told Khaleej Times here. “The current economic slowdown will not impact the Middle East commercial aviation industry and airport development activities as most of the expansion activities are funded by the governments in these countries,” said Ratan Kanal who has authored the Frost and Sullivan study titled ‘Middle East Airports Infrastructure Market.’

According to him, major airports in the Middle East are expected to record a compound annual growth rate of 8.7 per cent in passenger traffic, 8.5 per cent in cargo traffic, and 4.8 per cent in aircraft movements between 2008 
and 2015.

“The Middle East is the only region which is projected to witness increase in air traffic in the coming few years.”

However, the 12 major airports in the region are not able to cope with the rising demand, and that is why they have launched the expansion plans.

“These airports are now able to cater only to 70 per cent of the potential traffic through them. There will be continued gap between the demand and available capacity in the aviation sector in the coming years in the region, justifying the massive investments that have been planned here,” said Balaji Srimoolanathan, Program Manager, Aerospace & Defence, Frost & Sullivan and Team Manager for the study project.

“The region offers good potential for private infrastructural investors as 57 per cent on the ongoing investments are being allocated for construction and terminal expansion,” said Srimoolanathan. “However, one of the main concerns for the market is scarcity of land. The political heterogeneity of the region might also make the implementation of the expansion plans little complicated,” said Ratan Kanal

According to the Frost and Sullivan researchers adoption of the build-operate-transfer models with the grant of concessions to the private sector would be the best route for the expansion of the aviation infrastructure in the region. “Private investors that have government backing will be in a better position to smoothly execute expansion and operation plans,” Srimoolanathan said.

ramavarman@khaleejtimes.ae