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The future of flight: growth and challenges for the Middle East aviation market

A new study has revealed that the Middle East is set to become one of the fastest-growing aviation markets in the world.

According to the Global Fleet and MRO Market Forecast 2023-2033 report released by global consultancy Oliver Wyman, the regional fleet is set to expand 5.1% annually over the next decade. The report also predicts that the global fleet will grow from 4.9% in 2023 to 6% in 2033.

While this is welcome news for an aviation market still recovering from the impact of COVID-19, the development is not without its challenges.

Historically, the Middle East has been heavily dependent on international travel. And while the region benefitted from Qatar’s World Cup, the recovery of international travel is still sluggish.

There’s also the question of restoring passenger confidence. As we head towards a post-pandemic future, improving passenger safety and overall travel experience is vital for the industry’s recovery and growth.

Most critical of all is the environmental impact of flying. The global aviation industry is under immense pressure to find sustainable solutions in line with the International Air Transport Association’s (IATA) ‘Net Zero by 2050’ commitment.

Let’s look at how the Middle East is addressing these challenges while ensuring the future growth of the aviation market.

Saudi’s new airline in line with Vision 2030

Saudi Arabia has ambitious plans to transform the kingdom into a global hub for aviation and a top tourist destination in line with its Vision 2030 goals. The Vision 2030 strategy aims to boost tourism, develop new industries, and attract foreign capital by moving away from the country’s reliance on oil.

At the forefront of helping to achieve this vision is the launch of a new national airline: Riyadh Air.

With its first flights expected to be in operation by early 2025, Riyadh Air aims to become a world-leading domestic, regional, and international carrier, connecting the Saudi capital to 100 global destinations by 2030.

In line with Vision 2030’s net zero emissions goal, the airline will focus on digital technology and sustainability. The fleet will predominantly consist of wide-bodied Boeing 787-9 Dreamliner planes, which promise more fuel efficiency, lower CO2 emissions, and less noise pollution.

Once it takes to the air, Riyadh Air is predicted to add $20 billion to Saudi Arabia’s non-oil GDP growth, generating over 200,000 jobs in the Kingdom.

Rise of low-cost carriers (LCCs)

While Riyadh Air is focusing on wide-bodied expansion, the Wyman report predicts that growth in the Middle East will be primarily driven by narrow-bodied aircraft – notably, fleets operated by low-cost carriers (LCCs).

A booming demand for more affordable travel means that LCCs are enjoying exceptional growth in the post-pandemic period.  This dispels initial concerns that budget carriers would not succeed in the GCC region because passengers would equate ‘low-cost’ with poor quality.

Once considered a luxury destination reserved for the super-rich, the Middle East is now targeting those searching for an ‘affordable luxury’ experience. LCCs reflect the region’s ambitious plans to become one of the world’s most popular tourist destinations.

The concept is simple: travel cheaply, holiday in luxury. And it seems to be working.

Figures show that 2022 was a fantastic year for the region’s most rapidly growing LCCs:

  • Saudi Arabia’s LCC Flynas recorded an incredible 91% increase in passenger numbers to 8.7 million and a 43% growth in the number of flights to 66,000.
  • In the UAE, Flydubai reported an 89% increase in passenger numbers compared to 2021. 2022 also saw the LCC’s biggest-ever recruitment drive, with 1,300 new employees hired.
  • The MENA’s largest LCC, Air Arabia, reported a net profit increase of 70% to AED 1.2 billion. The UAE-based carrier served more than 12.8 million passengers – an increase of 90% compared to 2021.
  • Wizz Air Abu Dhabi, which boasts one of the most modern and sustainable aircraft fleets, enjoyed a record-breaking year operating more than 6,000 flights and carrying more than 1.2 million passengers to 36 destinations and 25 countries.

It’s clear that LCCs will continue to play a major role in the GCC’s tourism growth strategies over the next decade.

By 2030:

  • The UAE expects a 25% growth in the tourism sector with visitors predicted to reach 40 million annually.
  • Saudi Arabia plans to surpass this figure, targeting 100 million annual visitors by the end of the decade.
  • On the back of its successful hosting of the 2022 FIFA World Cup, Qatar aims to attract over 6 million international visitors a year. 

And while international visitors will have a major impact on aviation growth in the Middle East, we shouldn’t overlook the GCC population. Set to reach 65 million by 2030, 50% are under 25 years of age. Many of this young, educated, tech-savvy population have a desire to travel and explore beyond the Middle East region.

This desire is facilitated by the popularity of social media and the growing use of online travel services offered by LCCs and travel brands in the region.

Airports of the future

The GCC region is home to some of the world’s most advanced airports – not only in terms of post-COVID health and safety, but also in offering a seamless and exceptional passenger experience.

Biometric, contactless technology is the way forward in a post-pandemic future.

Dubai International Airport has been using biometric facial recognition technology since 2020. The Emirates ‘biometric path’ allows passengers to check in, complete immigration and board their flights without having to interact with a member of staff.

Biometric technology will also be used in the new Midfield Terminal Building at Abu Dhabi International Airport. The USD$3 billion mega expansion is being developed as part of the UAE’s Vision 2030 to increase tourism. The state-of-the-art terminal, due to be opened later this year, is also being built with sustainability in mind. The 700,000 sqm terminal uses recycled materials and cutting-edge, energy-efficient design elements to reduce its environmental impact.

In Saudi Arabia, plans have recently been announced to transform Riyadh’s International Airport into a six-runway mega-airport with a capacity for up to 185 million passengers annually by 2050. The new King Salman Airport, which will be the home of Riyadh Air, is part of the Kingdom’s Vision 2030 plan to drive tourism growth in the region.

SAF development

On 30 January 2023, Emirates Airlines conducted a demo flight using 100% Sustainable Aviation Fuel (SAF) to power one of its engines – a first in the MENA region.

The milestone flight from Dubai International Airport is especially significant for the UAE, which has declared 2023 as the ‘Year of Sustainability’.

If aviation in the Middle East is set to grow as predicted, then SAF research, development and production are crucial.  

To address this requirement, UAE companies and industry giants have set up a new agreement to explore the feasibility of SAF production in the Emirates.  

The main challenge is that the Middle East has very little to offer in terms of feedstock crops and other biological materials needed to produce SAFs. With water scarcity and almost no arable land, the region is heavily reliant on imported foodstuffs.

However, a report published by the World Economic Forum in collaboration with the UAE Ministry of Energy and Infrastructure suggests power-to-liquid as a feasible SAF alternative.

PtL, a synthetically produced liquid hydrocarbon, uses electricity to produce green hydrogen. Thanks to a climate of intense sunshine and sustained winds, the UAE is strategically positioned to produce low-cost, low-carbon aviation fuel from renewable electricity sources.

According to the report, the UAE could feasibly produce up to 11 million tonnes of PtL SAF by 2050 – around 70% of national jet fuel consumption. The domestic development of an alternative SAF could play a vital role in diversifying oil and gas reliance while contributing to GDP growth, generating over one million jobs across the UAE by 2050.

The UAE is heavily dependent on the aviation industry, which contributes over 13% to the GDP. However, emissions from jet fuel consumption are projected to double by 2050. The country has no choice but to find a decarbonising solution.

Forward-thinking government strategies and increasing demands from airlines, together with ever-advancing technologies, mean the SAF industry is set to soar. SAF technology startups are the most popular and heavily funded areas of aviation investment today.

With plentiful access to the world’s cheapest renewable energy – sunshine – and its position as a world-leading tech hub, the UAE has the opportunity to become a pioneer in PtL SAF development. This will create exciting opportunities for startups and investors in the Green Aero Tech space, while supporting the country’s commitment to diversification and decarbonisation.

While the future of aviation in the Middle East is set to fly high, sustainability must be at the forefront of every airline’s growth strategy. With the right investment, commitment and innovation, aviation could help GCC countries achieve their vision of diverse and sustainable economic growth.

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