Standing to benefit from cancelled flights

There is some peculiar trait about Dubai which makes things just happen. Whether it is the pick-up in the recovery of its real estate market, improvement in the economic situation, or even the consolidation of its hub status, Dubai always seems to benefit from a certain positive energy in the elements.

In no way does this mean undermining the importance of the stability packages of the government, painstaking debt restructuring initiatives and the graduated programme for the revival of the economy on various fronts. But having said that, the part played by favourable external factors in achieving this position of strength remains irrefutable.

It seems very much like Japan and the oil shocks of the 1970s. By a strange coincidence, oil shocks had been followed by periods of accelerated economic expansion in the Japanese economy, which for all practical purposes meant that the setback brought in greater prosperity rather than the reverse being true. Who knows if it’s not another shock that the Japanese economy needs to reverse its current growth retardation?

Dubai has traditionally benefitted from trouble in the region and beyond. Heightened uncertainty in its hinterland has always enhanced the emirate’s safe haven appeal. The Lebanese civil wars, the Gulf Wars and the Iran crisis have all borne this out in the past.

The extent to which the Arab Spring helped the emirate in dealing with the devastating effects of the property market crash and the impact of the global financial crisis is well-documented. All that Dubai had to do was to channelise the flows.

Adverse developments

Something very similar has recently happened in terms of Dubai’s status as an aviation hub: another clear case of how the emirate benefits from adverse developments in its neighbourhood. Germany’s Frankfurt airport, the third busiest European air transit hub, has for over a year enforced a night flight ban, following complaints of noise pollution from densely populated areas near the airport.

Germany’s other major airports, including Munich and Dusseldorf, have also disallowed flights by large passenger planes past midnight. During the ban — which begins at 11pm and ends at 5am — no aircraft is allowed to land or take off from the airports, causing major inconvenience to passengers flying on long-haul flights. London’s Heathrow airport has also restricted the time zones for allowing landings and take-offs, limiting night operations, although the airport has not imposed Germany-like blanket bans.

It turns out that Dubai is a major beneficiary of these restrictions. More and more long-haul passengers are said to prefer transiting through Dubai to avoid being stranded in airports like Frankfurt. This partly explains how Dubai has become the fastest growing airport in the world as measured by annual seat capacity growth and is closing in on Heathrow as the busiest airport in the world.

This has also helped Emirates improve its performance as a long-haul carrier. A large number of passengers using Dubai International Airport are transit passengers and, with Emirates constantly expanding connections with new centres, interlinking Asian as well as European and American cities, this has developed into one of the most important revenue earners for Dubai’s premier airlines.

In this respect, Abu Dhabi and Doha airports have also earned significant additional traffic. According to a recent Amadeus report, Dubai, Abu Dhabi and Doha together have grabbed a 15 per cent share of air traffic from Europe to Asia-Pacific last year, with Europe-Asia traffic routed via the Middle East growing at about 20 per cent per year.

Tourist arrivals

The story is not very different in terms of tourist arrivals as well. With a number of leading Middle Eastern destinations caught up in political turmoil, the options for region-bound tourists are getting limited and Dubai, with its myriad attractions and world-class tourism assets, becomes a natural choice.

The Dubai tourism sector has already witnessed a remarkable boom in business, which has had a spillover effect on related sectors such as retail and hospitality.

The windfalls are not small, but the important point is that these are going to the most deserved. Fortune, after all, favours the brave.

— The writer is a UAE-based journalist.