Customers to shoulder rising cost of airport expansion, IATA chief warns

Singapore’s plans for its hub airport include a new development due to open next year featuring a 40-meter high indoor waterfall, and a fifth terminal slated for 2030. Above, the newly-opened Terminal 4 of Changi Airport. (AFP)
Updated 05 February 2018

Customers to shoulder rising cost of airport expansion, IATA chief warns

SINGAPORE: The “skyrocketing” costs of expanding airport infrastructure must be controlled to keep flight tickets affordable, the boss of airline industry group IATA warned Monday.
Alexandre de Juniac called for more modest developments to keep construction costs down and avoid landing customers with higher prices, which would hit demand.
De Juniac cited the proposed £14 billion cost of a third runway at London’s Heathrow Airport and the construction of a fifth terminal at Changi Airport in Singapore as prime examples of vastly expensive projects.
“The cost of infrastructure is skyrocketing,” he told reporters ahead of the Singapore Airshow this week.
“When we look at the numbers of Heathrow for the third runway, we are very, very, very worried. Even the numbers for T5 in Singapore are very high,” he added, without disclosing a figure for Changi Airport’s expansion.
The city-state’s plans for its hub airport include a new development due to open next year featuring a 40-meter high indoor waterfall, and a fifth terminal slated for 2030.
“We would like for instance to avoid big projects in which we see overruns because the architecture is fantastic, wonderful but it’s very costly... we have to be more modest,” De Juniac said without naming any airport.
Airport construction costs are rising to levels, which are too much for airlines to bear, he added.
“Someone will have to pay for that... They will have to put that on the tickets, and then if it’s too high it could harm the level of demand,” he said.
IATA is working with authorities at Heathrow and Changi to manage costs and called on governments to involve airlines from the beginning of projects.
Heathrow has proposed trimming expansion costs by £2.5 billion with measures such as building a sloping runway and staging construction.
De Juniac said 7.8 billion people are forecast to fly worldwide by 2036 — with nearly half of passengers flying to, from, or within Asia Pacific — up from an expected four billion in 2018.
Passenger growth will far outpace development of infrastructure like airports and air traffic control systems, he said.
“I believe that... we are headed for a crisis. Infrastructure in general is not being built fast enough to meet growing demand,” he said.
“All the great plane deals that will be done at this air show will mean nothing if we don’t have the capacity to manage the traffic in the air and the airports at each end of the journey.”


S&P downgrades trio of Dubai developers as pandemic hits property and retail

Updated 49 min 21 sec ago

S&P downgrades trio of Dubai developers as pandemic hits property and retail

  • Gulf states are being hit hard by the coronavirus pandemic that has come at a time of weak oil prices

RIYADH: The credit ratings of three Dubai property companies were downgraded by S&P as the coronavirus pandemic hits confidence in the retail and real estate sectors.
S&P Global Ratings reduced the credit ratings for the real estate developer Emaar Properties as well as Emaar Malls to +BB from -BBB with a negative forward outlook, adding that it sees a “weakening across all its business segments” in 2020. S&P also cut its rating for DIFC Investments to +BB from -BBB, while keeping a stable outlook.
Gulf states are being hit hard by the coronavirus pandemic that has come at a time of weak oil prices, heaping pressure on governments, companies and employees.
The ratings agency expects the emirate’s economy to shrink by 11 percent this year
“The supply-demand imbalance in the realty sector appears to have been exacerbated by the pandemic. We now expect to see international demand for Dubai’s property to be subdued, and the fall in residential prices to be steeper than we had expected, lingering well into 2021” S&P reported.
Despite easing restrictions and the opening of the economy, S&P said that overall macroeconomic conditions remained challenging.
Global travel restrictions and social distancing constraints “significantly weigh on Dubai’s tourism and hospitality sectors” the rating agency reported.
Still, Dubai’s tourism chief was upbeat on the emirate’s prospects when international tourism resumes.
“Once we do get to the other side, as we start to talk about next year and later on, we see very much a quick uptick. Because once things normalize, people will go back to travel again,” Helal Al-Marri, director general of Dubai’s Department of Tourism and Commerce Marketing told AFP in an interview.