In the midst of the current economic recession, few countries can afford to maintain investment in domestic development projects. The oil-rich countries of the Arabian Gulf are noteworthy exceptions. Steady revenues from hydrocarbon resources continue to fund development in the Gulf.
Looking to diversify their economies away from oil-dependency, Gulf countries including Saudi Arabia, Qatar, and the United Arab Emirates are channeling billions of dollars to the air travel sector to promote the region as more than merely a layover stop for travelers en route to their final destinations.
Situated between Europe and Asia, and between Asia and the east coast of the United States, the Arabian Gulf is a natural stop for trips between the continents. Capitalizing on this geographic fortune, the Gulf’s three major airline competitors, Emirates Airlines, Qatar Airways and Etihad Airways, have expanded their fleets and flight paths to bring passengers through the emerging travel hub.
Etihad Airways, based out of Abu Dhabi, is increasing its fleet of Boeing 777 jet airliners from 10 to 18 over the coming months with each costing almost $300 million. Doha based Qatar Airways, half owned by the Qatar Investment Authority, is set to add an additional 60 aircraft to its fleet over the next year including five Boeing 787s.
The additional aircraft available to Gulf airlines are being used to add new flight destinations and offer direct trips to popular cities. Etihad, for example, is planning to offer daily, nonstop flights from Abu Dhabi to Washington, DC starting in spring 2013. Beginning in January 2013, Emirates Airlines will offer additional flights to Paris in response to high demand for the Paris-Dubai route.
A 2011 Amadeus report on travel and tourism in the Middle East, projected that the number of tourists to the region will increase from 54 million in 2008 to about 136 million in 2020. Betting on the expectation of increasing travel to the region, Gulf airports are being upgraded to accommodate not only growing jetliner fleets but also the increase in passengers. The Dubai International Airport is set to open a new Dh 12 billion (USD 3.3 billion) terminal in 2013 which will have a 19 million passenger annual capacity.
Saudi Arabia’s busiest airport, the King Abdulaziz International Airport in Jeddah, is undergoing a massive expansion project to transform it into an “international hub” for travel according to the General Authority of Civil Aviation. By its completion in 2035, the expansive 670,000 square meter airport has an 80 million passenger capacity and 82 domestic, international, and VIP passenger lounges. The facility will also feature a plant nursery and garden center.
While a far-reaching airline service is necessary to bring travelers to the Gulf region, airports and planes simply are not enough to transform the region into a global travel hub. Additional supporting travel and tourism infrastructure is essential for encouraging travelers to step out of the airports and enjoy the country.
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Hotels, resorts, spas and other hospitality facilities will entice tourists to spend time in the Arabian Gulf. Easily navigable, tourist-friendly transportation systems will alleviate the stress of touring a foreign country and a wide array of well maintained tourist sites and activities will give vacationers additional reasons to visit.
Investment necessary to elevate the Arabian Gulf to the status of regional travel hub has numerous accompanying benefits for the region. Economic diversification for the oil-dependent states is chief among them. A robust travel and tourism sector would provide a buffer for countries reliant upon their hydrocarbon revenues in case of fluctuations in the energy market. Already the substantial investments in the tourism, airline and hospitality industries are paying off. The World Travel and Tourism Council estimated that the travel and tourism sector would contribute USD 44 billion in 2012 to the gross domestic product of Gulf Cooperation Council countries, an increase of 27% from 2009.
The growing travel and tourism sectors also create new jobs in the developing economies. A skilled labor market is required to fill the increasing number of tourism and travel related positions, encouraging higher levels of education within the domestic work force.
There are, however, a number of challenges facing the region before it can truly be considered a travel hub. A principle concern is the state of the global airline industry. Rising fuel costs, concerns over negative environmental effects and a difficult economic climate are a few of the factors that make air travel less attractive. The Gulf countries are betting their investments not only on the continued survival of the airline industry but also on its future growth.
Political and social conditions in the Middle East, particularly in light of the Arab Spring, have discouraged travelers from venturing to the Gulf. This apprehension is compounded by misconceptions regarding cultural differences and the treatment of tourists in the region.
Travel standards for airline regulation and immigration issues need to be standardized across the region to make the Arabian Gulf a smooth and streamlined travel center. As the Amadeus report points out, the operation of multiple airline authorities in a single region produces inefficiency where close cooperation is necessary. Varying visa and passport requirements make travel within the region intimidating to outside visitors.
Finally, the Gulf region must be integrated into standard global routing and air traffic patterns to advance it to travel hub status. Larger, more active Gulf airlines will assist in overcoming this obstacle. However, it is similarly important for foreign airlines to view the Gulf as a lucrative option for both final stop and transit destinations.
The ambitions of the Arab Gulf to become an international travel hub are being driven by heavy investment in the regional travel and tourism industries. However, there remain a number of roadblocks to the realization of this economic aspiration. Regional development and cooperation will be important in meeting the challenges and propelling the region to global travel hub standing. The coming years will indicate whether the billions of dollars of investment have paid off or have only managed to build empty airport terminals and vacant resorts and hotels.