The GCC Aviation Infrastructure Market is anticipated to grow at a CAGR of over 4% during the forecast period.
- The strategic geographical location of the GCC countries has rendered it accessible by the airlines catering to around two-thirds of the global population as the region acts as a key link between the Eastern and Western economies.
- Between 2012 and 2032 growth in air passenger and cargo traffic in the Middle-East is expected to outperform all other regions in the world. The geographic location combined with the fleet expansion and the expanding airport infrastructure are some of the key growth drivers. The UAE and Saudi Arabia are the two key aviation markets in the region, together constituting approximately 73% of the total fleet size in the GCC aviation sector.
Key Market Trends
Rising Passenger Traffic Fostering Infrastructure Modernization
The aviation industry in the GCC and wider Middle-East region supports USD 130 billion in economic activity, equivalent to 4.4% of the region’s gross domestic product (GDP). The GCC region has become a global tourist hub. Tourism contributes about 7% of the region’s economy. As per the IATA, in 2019, the Middle East region accounted for around 10% of the global scheduled passenger and freight traffic. To support a rapid increase in passenger movement, the governments of the Gulf nations are investing resources towards enhancing and expanding the current capabilities of the existing aviation infrastructure. The capacity utilization of the major airports in the region is nearly at their threshold, hence, a potential investment of USD 100 billion is anticipated to make to cope with the YoY passenger growth of around 10%. As of May 2018, there were around 95 ongoing aviation infrastructure construction projects in the region. The total worth of the ongoing projects is estimated at USD 49 billion, wherein, USD 45 billion was directed towards the airport terminal projects and more than USD 3 billion was meant for the construction and development of the hangar, runway, and ancillary facilities.
Saudi Arabia and the UAE are Anticipated to Dominate the Market
Currently, the major airports in the UAE and Saudi Arabia account for nearly 80% of the regional passenger traffic. Also, the airport infrastructure in both countries constitutes an estimated 81% of the existent aviation infrastructure amongst the GCC countries. Among the six GCC countries, the UAE is the leading investor, with nearly USD 136.1 billion of investment planned for the aviation industry during 2011-2021. The ongoing COVID-19 pandemic has temporarily halted investments, and the airports are focused on bolstering the critical global supply chains and facilitating the shipment of humanitarian aid to 24 different countries impacted by the COVID-19 pandemic. Besides the expansion of the international airports in both countries, some new airport projects are also underway. For instance, in Saudi Arabia, a new airport is also being built in Abha to accommodate five million passengers per year while another new airport has been planned for Jizan. Such developments are anticipated to drive the share of Saudi Arabia and the UAE during the forecast period.
The GCC Aviation Infrastructure Market is marked by the presence of several regional players who compete based on their capabilities and specialization to secure new contracts for both construction and expansion of the aviation infrastructure in the region. Several new contracts have been awarded to support the new upcoming projects. For instance, in 2016, a joint venture of Arabtec Construction LLC (Arabtec) and TAV Tepe Akfen Investment Construction and Operation Co. (TAV) was awarded a USD 1.1 billion contract to modernize the passenger terminal building at the Bahrain International Airport. In February 2020, Matar Construction awarded five contracts to initiate the multi-phased expansion plan at the Hamad International Airport. Also, in April 2018, Dubai Aviation Engineering Projects awarded the contract to construct bus stands at the Dubai International Airport to ASGC Construction LLC. Several new airports and modernization programs are scheduled to be initiated within the forecast period, driving the business opportunities for the market players.
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