Dubai poses a serious threat to Indian airports and airlines

Dubai poses a serious threat to Indian airports and airlines

Mumbai: The emergence of Dubai as a hub for the global aviation industry will pose a serious threat to Indian airports and airlines, which are struggling with underdeveloped infrastructure and lack of incentives to attract international airlines to use the nation’s airports.

“Dubai is emerging as an aviation hub as a result of clear strategy to create an inclusive and comprehensive growth for aviation industry," said Kapil Arora, partner (aviation practice) at consultant Ernst and Young. “Sadly, India is yet to have a comprehensive policy in creating such a development."

Even as India harbours aspirations to emerge as an Asian aviation hub, neighbouring Dubai has become an international hub for airlines, carrying passengers from different parts of the world to that country for redistribution to other points and positioning it as a gateway to other West Asian countries, Arora said.

The aviation sector directly employs 58,000 people and contributes $6.2 billion to Dubai’s gross domestic product (GDP), according to a survey, released on Thursday by researcher Oxford Economics and Dubai-based Emirates airlines. West Asia is building bigger airports and airlines of that region are becoming larger, posing a serious challenge to India, said a senior executive from a private airline, who declined to be named.

“Many West Asian carriers are operating (in) nearly a dozen cities in India like a national carrier. They are dumping capacity in India and taking away the transit passengers," he said. “As a country, India has not set out long-term policy for aviation. For example, there is no concept of night travel due to lack of connectivity by rail and road. A passenger (who) lands in Bangalore in midnight has no option but to hire a cab."

Unlike Dubai, there is no structured plan for tourism development in India in partnership with the airline industry, the executive said.

In Dubai, the aviation industry, in addition to the direct jobs created, indirectly supports 43,000 people and contributes $3.5 billion to Dubai’s economy, through purchases of goods and services from local businesses, the report said.

Aviation’s importance in Dubai is expected to increase over the next decade. Oxford Economics expects the economic contribution of the aviation sector to rise to $44.5 billion, or 32% of Dubai’s economy, and create 372,900 jobs, representing about 22% of its employment by 2020.

Dubai International airport handled 47 million passengers in 2010, according to the report. In comparison, India expects to reach 50 million international passengers across all its airports by 2015, according to the aviation ministry.

Dubai’s success may hold valuable lessons for India. “The success of Dubai’s aviation industry is because of strategic decisions taken by the government and the industry in the past, including an awareness of aviation’s economic importance on the part of the government of Dubai; openness; a consensus-based approach to investment; a focus on growth and linking undeserved markets and efficient operations," the report said.

More than 150 airlines operate out of Dubai International, benefiting from its investment in aviation infrastructure and competitive landing charges.

Moreover, Dubai’s Civil Aviation Authority has pushed for greater freedom for all airlines to enable them to operate without undue restrictions on their commercial decisions.

Dubai’s favourable location at the intersection of Europe, Asia and Africa, placing Dubai within eight hours flight of two-thirds of the world’s population, has also contributed to its success.

“Travel and tourism, whether for business or leisure, make a large contribution to the Dubai economy. The overwhelming majority of foreign visitors who travel to Dubai by air, and we calculate that their spendings supports nearly 134,000 jobs and contributes $7.9 billion to Dubai’s GDP," the report said.

The report said that the connections created between cities and markets represent an important infrastructure asset that generates benefits through attracting foreign direct investment and talent, enabling business clusters, specialization and other spillover impacts on the economy’s productive capacity.

“We calculate that these connectivity benefits contribute $2.5 billion to Dubai’s GDP," the report said.

“These benefits extend beyond Dubai’s borders to the global economy through enhanced global tourism and trade via the provision of efficient and high quality air services," said Adrian Cooper, chief executive of Oxford Economics.