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It may be just an hour-and-a-half drive from the Dubai airport, West Asia's undisputed aviation hub, Abu Dhabi is still expanding the capacity of its international airport from 12.5 million passengers per annum now to 40 million by 2018 and 60 million subsequently. The airport will need passengers to justify the billions of dollars that are being invested. Last week, Abu Dhabi took a significant step in that direction when it signed a new bilateral traffic agreement with India to increase the capacity on the sector from 13,000 seats a week to 50,000 in the next three years. The announcement came just a few hours after Abu Dhabi's national carrier, Etihad, picked up 26 per cent in Jet Airways. Etihad wants to funnel passengers from 23 Indian cities to Abu Dhabi and onwards to Europe, Africa and the US. "The deal is a game changer for Etihad," says Kapil Kaul, who heads the Centre for Asia Pacific Aviation in India.
Abu Dhabi and Etihad aren't the only ones who are discovering the importance of India to feed their hubs. Other West Asian carriers as well as airports and some new European destinations are also expanding their capacities furiously. According to CAPA, foreign carriers Qatar Airways, Emirates, Air Arabia, Turkish Airlines, Singapore Airlines and Cathay Pacific have together demanded over 160,000 additional seats per week from the Indian government. For over two years the government had closed the doors on bilateral traffic rights, saying it has to protect Air India. The Abu Dhabi deal, most experts say, shows this consideration no longer weighs on the government's mind and it will open the Indian skies further in the days to come.
Dubai's rivals
There are other places, too, apart from Abu Dhabi, which are challenging Dubai's dominance in West Asia. In Doha, the home of Qatar Airways, the new international airport, which is expected to open by the end of this year, will handle 24 million additional passengers in a year - it will go up to 50 million passengers by the end of this decade. To feed this capacity, Qatar Airways, which is also expanding its fleet size, wants to triple its seat entitlements to 72,000 a week from 24,000 at present. Sharjah, from where low-cost carrier Air Arabia operates, has announced that it will also expand its airport as the capacity of 7 million passengers is almost fully utilised. So, even though it is a small player compared to the other West Asian giants, it has now asked for additional 11,500 seats a week, which will nearly double its capacity to India.
The battle for Indian passengers is not limited to West Asian carriers. In Europe, Turkish Airlines, leveraging Istanbul's location to address travel from South Asia to Europe and the US, has asked the Indian government to expand its weekly seat entitlement nearly five-fold, from 4,000 a week to 20,000. It wants to increase it frequency of flights from both Mumbai and Delhi and fly to new destinations like Chennai, Kolkata, Hyderabad, Bangalore, Amritsar and Ahmedabad. Istanbul is challenging the supremacy of hubs like Frankfurt and Amsterdam, and even London, by offering value-for-money fares. That's because the Turkish capital is putting up up a third airport which will initially have a capacity to handle 90 million passengers going up to 150 million when it is fully completed.
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The rush for India is not without reason. According to CAPA, international travellers from India will more than double from 44 million a year to over 100 million in the next 10 years. On the other hand, the four airports of Abu Dhabi, Dubai, Doha, and Istanbul are together creating an additional capacity in their airports of over 100 million additional passengers. Capacity of another 300 million passengers would be added in the next 10 years. The capacity being built in Dubai, Abu Dhabi and Doha in the next five to six years will be greater than Frankfurt, Heathrow (London) and Charles de Gaulle (Paris) airports put together. To keep pace with the huge expansion in the airport capacity, airlines operating from these hubs are also spending billions of dollars to substantially increase their fleet. Kaul says that in West Asia, the three big operators, Emirates, Qatar and Etihad, have together ordered over 500 new airplanes, out of which over 300 are wide-bodied and as many as 90 of them are the large Airbus A-380s. There is no doubt that a substantial part of this fleet will be deployed on the routes to India.
The traditional players are of course not keeping quiet. Emirates, the national carrier of Dubai, for instance, exhausted its bilateral rights over two years ago (it has been aggressively pushing with India to allow it to fly the A-380, but the government has been sitting on the proposal for a while). It is the king among foreign carriers in India - it controls over 12.2 per cent of the international travel from India which is more than the 7.41 per cent share of Etihad, Qatar and Air Arabia put together. But with 54,000 seats a week as its entitlement, it has to expand quickly. Or else it could lose market share to Etihad and Qatar Airways. This is why Dubai has asked the government for additional 20,000 seats a week immediately. Experts estimate that this demand will go up to at least 50,000 seats in the next three years. This doubling of its entitlement, if cleared, could ensure Dubai's position as the preferred hub for Indian passengers going to the US or Europe. And it will have nearly double the seats to Abu Dhabi or Doha. Also, in combination with flydubai, its low-cost carrier, Emirates has sought permission to fly to more cities like Jaipur, Amritsar, Pune, Nagpur, Varanasi and Mangalore.
This strategy makes sense because Dubai airport is also expanding its capacity to stay ahead: from 60 million passengers a year to 90 million by 2018. More important, Dubai is planning a new airport, the Dubai World Central, which will be the biggest airport in the world with capacity to handle a staggering 160 million passengers a year when it is completed by 2028.
The challenge from West Asia and Turkey has reverberations on other markets. Lufthansa, for instance, which uses 49 frequencies a week, has been pushing for introducing the A-380 to expand its capacity. Singapore increased its seat entitlements by 10 per cent last year. But analysts say it will need to do more, otherwise it will lose out on the traffic to the US. Indian passengers are important for Singapore's Changhi airport from which they go onwards to Australia, north Asia and the west coast of the US. And the airport is also expanding capacity from 73 million passengers per year to 85 million passengers by 2017. After all, India is the seventh largest market for the airport based on current seat capacity. But Singapore Airlines has faced some major roadblocks: its request to fly to new cities like Pune and Madurai and press the A-380 into service, for instance, has been rejected. No doubt global airlines and their home airports are working in tandem to ensure that they can woo customers from India.
