Abu Dhabi’s aviation ambitions up in the air

The Midfield Terminal Abu Dhabi International Airport. Completion of the new building, which will increase capacity to 45 million per year, has been delayed until 2019. Courtesy, ADAC
Updated 23 April 2018
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Abu Dhabi’s aviation ambitions up in the air

  • Passenger traffic at Abu Dhabi International Airport fell 11 percent in the first quarter
  • Etihad Airways this month cut routes to Edinburgh and Perth

LONDON: The inaugural non-stop Qantas flight between Perth and London last month may have been hailed as the future of aviation by the airline industry, but it’s unlikely to have prompted much celebrating in Abu Dhabi.

The prospect of ultra-long haul flights, which reduce journey times by cutting out the need for stopovers, strikes at the heart of the business model of the likes of Dubai and Abu Dhabi, which have risen to prominence in recent years as major transit centers for global air travel.

“The Gulf airports burst onto the scene as the airframe technology changed and the long-haul hubbing model was created,” Andrew Charlton, the managing director of consulting firm Aviation Advocacy.

“The Qantas flights from Perth show that the technology is again changing; in the end, the technology always wins.”

Mr. Charlton cautioned that the impact in the short-term on Abu Dhabi and other hubs would be minimal, noting that ultra-long haul would not be available to most passengers.

What’s more, “the market demographics and the economics of hubbing (still) make airports in the Gulf very attractive,” he said.

But ultra-long haul travel is just the latest in a series of issues impacting Abu Dhabi’s aviation strategy, with progress slowing in the wake of lower oil prices and operational issues at Etihad, the emirate’s flag-carrier.

The high-profile Midfield Terminal at Abu Dhabi International Airport, designed to expand capacity to 45 million passengers per year, has faced numerous delays, with its expected opening date pushed back from late-2017 until the end of 2019.

The increase in capacity, designed to coincide with the growth of Etihad Airways, no longer seems as urgent a priority, as the emirate cuts back on spending in the wake of lower oil revenues. Meanwhile, Etihad’s international expansion strategy, launched in 2011, is now very much on hold.

Etihad’s strategy of acquiring a series of stakes in global airlines, in a bid to transform itself into a global rival to the likes of Dubai’s Emirates, hit the buffers last year, with the bankruptcy of Alitalia and Air Berlin, two of its largest interests. Etihad subsequently sold its stake in European regional carrier Darwin Airline, with rumors earlier this month that it may also look to offload its stake in Virgin Australia, after the latter canceled its last route to Abu Dhabi earlier last year.

Etihad did not respond to a request for comment.

The loss of some of Etihad’s international operations has taken its toll on Abu Dhabi’s passenger traffic. Abu Dhabi Airports has not released traffic figures for 2017, but passenger numbers for the 11 months to the end of November fell 3.7 percent year on year to 21.5 million.

That trend appears to have deepened so far this year; Abu Dhabi Airports last week announced an 11 percent drop in passenger traffic for the first quarter of the year, falling to 5.5 million, with aircraft movements dropping 15 percent to 35,788.

The drop in cargo was even more pronounced, falling 25 percent year on year to 142,492 metric tons.

Traffic through the emirate is “likely to see further reductions,” said John Strickland, director of JLS Consultancy.

Earlier this month, Etihad announced it was cutting flights to Edinburgh and Perth in Australia, as part “of several adjustments that we are making to our network in 2018 in order to improve system profitability,” according to an Etihad spokesman. This followed the axing of its Dallas route late last year.

Mr. Charlton said that Abu Dhabi’s hub strategy remains solid for the moment, but that the loss of Alitalia and Air Berlin “certainly slows things down.”

Abu Dhabi Airports did not respond to a request for comment.

“We are continuously working toward fortifying Abu Dhabi International Airport’s presence as a key airport hub within the region, by enhancing our existing network and connecting with new and wider markets globally,” said Saoud Al Shamsi, the acting chief commercial officer of Abu Dhabi Airports, in a statement coinciding with the Arabian Travel Market exhibition in Dubai.

“We are optimistic about the sector’s performance in the coming years that will continue to be key in our efforts to implement enhancements to our services.”


BP and SOCAR sign new Azeri oil deal

Updated 19 April 2019
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BP and SOCAR sign new Azeri oil deal

  • The Azeri Central East (ACE) platform, the latest phase of Azerbaijan’s giant Azeri-Chirag-Guneshli (ACG) oilfields extension program, is expected to produce 100,000 barrels of oil a day
  • BP and the government of Azerbaijan extended their agreement to continue developing the ACG fields until 2050 in a major deal in 2017

BAKU: Oil major BP and Azerbaijan’s state energy company SOCAR signed an agreement on Friday to build a new exploration platform for the South Caucasus nation’s three major oilfields, BP-Azerbaijan said in a statement.
The Azeri Central East (ACE) platform, the latest phase of Azerbaijan’s giant Azeri-Chirag-Guneshli (ACG) oilfields extension program, is expected to produce 100,000 barrels of oil a day and cost $6 billion to build, the company said.
The project is one of the biggest upstream investment decisions to have been signed in Azerbaijan so far this year.
The ACG fields, which to date have produced around 3.5 billion barrels of oil, are estimated to have the potential to yield another 3 billion barrels.
BP’s main aim now would be to maximize the extraction of remaining reserves, Robert Morris, senior analyst at Wood Mackenzie, said in a statement.
“ACE is central to those plans, adding 100,000 barrels per day of production at peak in the mid-2020s,” he said.
BP and the government of Azerbaijan extended their agreement to continue developing the ACG fields until 2050 in a major deal in 2017.
Separately, SOCAR and its partners at the BP-led ACG consortium plan to participate in a tender to acquire stakes being sold by two of its members, ExxonMobil and Chevron.
SOCAR President Rovnag Abdullayev made the announcement to reporters following a meeting of senior SOCAR figures on Friday.