United Arab Emirates - Commercial Guide
Aviation

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-09-12

Overview

  • A vital contributor to the UAE’s economy. Supported nearly 800,000 jobs, contributing US$47.4 billion to the economy, roughly 13.3% of the UAE's GDP.
  • Ranked number one globally for air trade facilitation.
  • Tops the Middle East region and home to two major airlines – Emirates and Etihad Airways.

UAE Government Initiatives

UAE government initiatives and investment in the aerospace industry have driven robust demand for business partnerships and helped the UAE outpace other regional markets. These initiatives include the Emirates Offset Program, Strategic tenant ownership, Land Lease Subsidization, Dubai Industrial Aerospace Cluster, 3D Printing Proliferation Strategy, Global MRO Championing, Aerospace University Programs, etc., Such initiatives boosted the signing of major contracts for new original equipment manufacturing (OEM) and maintenance, repair and overhaul (MRO) projects in the UAE in support of the country’s long-term strategy for transformation into a knowledge-based economy.

Impact of COVID-19

The COVID-19 pandemic has altered the entire landscape of the UAE’s aviation sector, bringing about the biggest disruption in the history of the nation’s aerospace industry which will have a huge impact on airline operations and profitability.

Not only have flights been suspended, the entire travel and tourism industry took a big hit from the sudden drop in traffic and lockdowns across the world. Despite efforts to cut costs and stimulate demand, aviation leaders in the UEA predict a recovery to pre-pandemic levels will not arrive before 2023. .

During the COVID-19 pandemic early period, the UAE airlines including Emirates and Etihad Airways, flew only outbound repatriation and cargo flights. However, with the easing of lockdowns and restrictions on international travel, UAE airlines, including Emirates, Etihad, flydubai, and Air Arabia have announced that they will expand operations.

The Pre-COVID Scenario

Before the COVID-19 pandemic, the UAE aviation industry was a leading sector and the industry showed remarkable growth in terms of the total number of flights taking off and landing at UAE airports, and the number of passengers.

The four major UAE carriers expanded their operations and investments anticipating increased passenger demand globally and higher traffic domestically for the World Expo, including Dubai-based Emirates Airline (full service carrier since 1985), flydubai (low-cost carrier since 2009), Abu Dhabi-based Etihad Airways (full service carrier since 2004), and Sharjah-based Air Arabia (low-cost carrier since 2003). The UAE has seven international airports including Dubai International Airport, the world’s largest international airport, and Abu Dhabi International Airport, which will add the state-of-the-art Midfield Terminal in 2020.

Airports in the UAE continue to leverage new technologies to enhance the passenger experience and their role as a gateway. The UAE government invested heavily in airport development and expansion projects such as $8.17 billion in Al Maktoum International Airport, $7.6 billion for the Dubai International Airport expansion Phase 4, $6.8 billion for Abu Dhabi Airports development and expansion plans, and around $400 million in Sharjah’s International Airport terminal expansion.  Given the unprecedented slowdown in passenger aviation, airports are under pressure to reduce costs and delay large capital expenditures, leading to cancellations and delays in new projects.

In terms of aircraft fleets, Emirates Airlines is the largest operator of the super jumbo Airbus 380 as well as the Boeing 777, with a fleet of approximately 270 aircraft as of March 2020. Etihad Airways has 113 aircraft, while the fleet size of Air Arabia and flydubai are 53 and 64, respectively. Emirates and Etihad have been in discussions with Boeing and Airbus about delaying delivery of new aircraft and modifying orders to better align their fleet mix with anticipated demand.

Air cargo volume in the UAE showed strong growth in 2019 (Abu Dhabi 5.6% and Dubai 3.3%), indicating UAE’s growing importance as a global freight and logistics hub. Also, a dramatic fall in jet fuel prices brought down the total operating costs by 10% during the financial year and the airline’s fuel bill declined by 15% over last year to $7.2 billion.

Outlook

The COVID-19 pandemic continues to challenge airlines and the travel industry. As the COVID-19 situation normalizes and travel restrictions are removed, UAE airlines seek to lead in the region, keeping pace with rising demand while redefining strategies and increasing the focus on bringing more visitors to the UAE.

Airlines will have to reexamine their network routes and identify strategies, whether to continue hub-and-spoke aviation strategies or to shift to multiple-hub strategies. Also, the UAE airlines will need to identify aircraft that best suit future trends. Emirates and Etihad have operated large widebody Airbus 380s and Boeing 777s, but may now need to move to smaller aircraft or defer or cancel existing aircraft orders. The General Civil Aviation Authority (GCAA) is also considering the return of Boeing 737 Max aircraft to UAE airspace depending on FAA and Boeing ongoing trials – flight testing, design, crew training, and other aircraft licensing requirements.

The UAE Government may delay investments in increasing airspace capacity, and infrastructure development in response to the decline in demand for air travel.

Local Manufacturing

The UAE’s strategy to establish itself as a next-generation hub for aerospace manufacturing to address future needs is already showing results.

In Abu Dhabi, the two largest players in the aviation and defense sectors are the EDGE Group and Mubadala Investment Company. Over the past few years these groups have formed partnerships with international companies such as Boeing, Airbus, Lockheed Martin, BAE Systems, Northrop Grumman, Rolls-Royce, the National Aeronautics and Space Administration (NASA), and Piaggio Aerospace, among others.

Mubadala Aerospace, owned by Mubadala Investment Company, oversees the development of maintenance facilities for civilian and commercial aircraft, flight training, high-technology manufacturing of aircraft parts, and research and development work. Mubadala and Boeing have signed four agreements for the supply of advanced composites and machine metals to be used in the new Boeing 787 Dreamliner and the 777X.

Strata Manufacturing PJSC (Strata), located in Nibras Al Ain Aerospace Park, is a Mubadala owned company. The company was formed to forge partnerships with aircraft OEMs and incorporate leading-edge technology and best practice manufacturing. It has already formed partnerships with major aircraft manufacturers, such as EADS/Airbus (Tier 1 supplier), Finmeccanica/AleniaAeronautica, SABCA and FACC. Strata is now a Tier 1 supplier to Boeing on major components used in empennage ribs for the 777, vertical fin ribs for the 787 Dreamliner, and composite empennage ribs for Boeing’s new 777X aircraft.

Nibras Al Ain Aerospace Park, created jointly by Mubadala Aerospace and Abu Dhabi Airport Company (ADAC), is a mix of public and private investment projects created as a dedicated aerospace and aviation cluster. This aerospace park spans 25 square kilometers and consists of projects, businesses, offices, and mixed-use residential zones, the majority of which are allocated specifically to the aerospace industry.

Sanad Aerotech and Turbine Services & Solution Aerospace, a wholly-owned subsidiaries of Mubadala, provides maintenance, repair and overhaul services for engines for aircraft such as the Boeing 747 and 787, Airbus A300, A320, A330, and other light aircraft through technical support and partnership with OEMs including GE, Rolls Royce, Siemens, and IAE.

Global Aerospace Logistics LLC (GAL) is a joint venture between EDGE and International Golden Group, Abu Dhabi. The company offers a range of aviation maintenance services for rotary-wing aircraft for integrated lifecycle solutions. Services include routine inspections, repairs, and aircraft system overhauling.

GAL Air Navigation Services (GAL ANS) is certified by the General Civil Aviation Authority (GCAA), the UAE’s national regulatory authority, as the only private Air Navigation Service provider in the country. The company has an ICAO and GCAA certified training facility where it provides extensive air traffic management training to local and international customers including: air traffic services, tower services, approach services, air transport information services, ATM system & operations engineering, maintenance services, navigation and surveillance, control and monitoring, air traffic management consultancy services, etc.

Other major Local Companies:

In Dubai, the Emirates Engine Maintenance Center (EEMC) is the leading service provider for aircraft maintenance, tests, repairs, modification and overhaul of a range of components, and engine service. The company has been working closely with Engine Alliance (EA), GE Aviation and Rolls-Royce to develop a better understanding of the technology involved in the maintenance of aircraft engines.

GE Aviation has operated its support center with Emirates Engineering since 2013. The company recently opened its own support center in Dubai South to provide maintenance and repair solutions for all GE and CFM engines on the Emirates fleet and other UAE carriers such as flydubai, Etihad Airways, and Air Arabia.

In addition, the Emirates Engine Maintenance Centre (EEMC) partnered with Engine Alliance (EA), a GE/P&W group, for repair and service of 90 GP7200 Airbus A380 engines on aircraft operated by Emirates.

Rolls-Royce provided Trent 900 engines to Emirates Engineering to help with hands-on training before installation, including fan blade installation and component removal, etc.

Other major local companies:

Major Airports in the UAE:

Abu Dhabi International Airport

Abu Dhabi Airports is focusing on increasing passenger traffic and visitors to the UAE as part of the emirate's wider plan to boost tourism. It is targeting an additional 1.4 million passengers by 2021 to complement its current 7.7 million passengers. The aviation industry is an important pillar supporting the objectives of economic diversification outlined in the Abu Dhabi Plan 2030. The development of the industry is being led by Etihad Airways and Abu Dhabi Airports Company (ADAC).

Abu Dhabi Airport Authorities continues to introduce innovative technologies. The airport’s smart travel system consists of self-check-in and baggage drop facilities, automated passport control gates equipped with biometric verification functions and facial recognition technology, and smart boarding gates, allowing passengers to check-in and move through immigration and security at ease. Abu Dhabi became the first airport in the region to be awarded ISO 22301 certification.

Abu Dhabi’s anticipated new 742,000 square meter Midfield Terminal Building (MTB) is being tested for operational readiness. The new facility, located between the airport’s two runways, will have a capacity of 45 million passengers annually when completed. In addition, 8 million square meters are dedicated to aviation district space, located at Al Falah, which is being developed for lease next to the Midfield Terminal Building.

Dubai Airports

Dubai has two airports – Dubai International Airport and Al Maktoum International Airport.

Despite the 45-day closure for the refurbishment of the airport’s southern runway, and grounding of Boeing 737 Max aircraft, Dubai International Airport (DXB) retained its position as the No. 1 hub for international passengers in the world for the sixth consecutive year, with annual traffic reaching 86.4 million in 2019, 6 million more passengers than London’s Heathrow Airport.

DXB has three passenger terminal buildings: Terminal 1 for major international airlines, Terminal 2 for low-cost airways (including flydubai) and Terminal 3 exclusive for Emirates airlines passengers. In addition, the airport has a separate mega-cargo terminal and a new VIP Terminal or DIA “Royal Wing”.

Located 25 miles from Dubai International Airport, Al Maktoum International Airport at Dubai World Central (DWC) registered a surge of 81.5% in customers in 2019 with annual traffic exceeding 1.6 million, mainly due to the relocation of operations by carriers during the 45-day closure of Dubai International Airport.

The Al Maktoum International Airport is part of the Dubai World Central project (DWC). DWC is Dubai’s single largest urban land development project at an estimated cost of $33 billion for multiple phases scheduled over the next several decades. The mega project includes the Al Maktoum International Airport, Dubai Logistics City (DLC), DWC Commercial City, DWC Residential City, DWC Aviation City, and DWC Golf City. When completed, DWC is set to become the world’s largest airport with an annual capacity of over 160 million passengers and 12 million tons of cargo. The airport expansion project has been repeatedly delayed given Dubai’s financial difficulties, slower than expected growth in passenger traffic in recent years, and the steep drop in demand for air travel caused by the pandemic.

Sharjah International Airport

Owned by the Sharjah Airport Authority, Sharjah International Airport (SHJ) serves Sharjah and other northern emirates since 1977. It is located ten kilometers from Sharjah City Centre and 15 kilometers away from Dubai. The airport, which includes a 4,000 meter Category III runway, currently serves as the hub for Air Arabia, Sharjah’s low-cost carrier. In 2019, Sharjah Airport handled 13.6 million passengers, a year-on-year increase of 13% in the number of passengers. The airport has a cargo handling capacity of 500,000 tons of cargo per year. Since 1995, the airport has hosted a free zone, Sharjah Airport International Free (SAIF) Zone, now a major business hub with over 5,500 companies registered.

Opportunities - Leading Sub-Sectors

Ground Services – Ground Handling, Catering and Fixed Based Operations (FBO): Local airport authorities have shown interest and have partnered with companies to bring the latest technological innovations for passenger attraction and satisfaction, including duty free services, hospitality, ground handling, catering, and Fixed Based Operations (FBO). The current business aviation landscape indicates that new catering and FBO facilities need to be developed for expanding ground handling and catering.

Maintenance, Repair, and Overhaul (MRO): With 46 GCAA-registered MRO companies in the UAE, the country possesses excellent capability in aircraft MRO despite sandy, hot, and dry challenging conditions. 11 companies are working in Dubai in aircraft maintenance and repair and two in simulation manufacturing.

Infrastructure Development and Aircraft Hangar Services: While the UAE’s airports are undergoing infrastructure development to accommodate increased fleets, and airport expansion is taking place to grow capacity, there will be demand for airport hangar services and airport infrastructural development.

Aircraft Recycling/Decommissioning: The region is currently underserved with regards to decommissioning and recycling of aircraft body parts, frames, and engines. According to sector specialists, approximately 12,000 aircraft globally are to retire within the next two decades, meaning that this category could fetch a lucrative margin through recycling of airframes and parts.

Training and Development: The Middle East region is short of skilled manpower. In order to keep up with the growing need across the aviation system value chain for pilots, crew, technical, mechanical, and operational manpower, there is a need for both academic and practical training centers and flight simulators. Based on current orders, it is estimated that the UAE alone would require around 22,000 pilots and crewmembers by 2033. To cater to such demand and provide a high standard of service, training and development will become critically important. In addition, in view of the high net wealth of citizens in the region and the increased need for mid-size, on-demand flights, technical training facilities will become a major support for the growing aero taxi sector.

3-D Printing

The UAE 3D printing market size has grown over the last few years. Both Emirates Engineering and Etihad have been actively exploring 3D printing for aircraft cabin parts as a transformational technology to print components quickly, accurately, and possibly more than one at a time. This has resulted in increased efficiency and productivity by allowing quicker per-part production times and less wastage of raw materials used for production.

Emirates has worked with 3D Systems (USA) and UUDS (France) to manufacture components for its aircraft cabins by using Selective Laser Sintering (SLS) technology to produce video monitor shrouds. With UUDS, Emirates has worked to develop EASA-certified 3D printed aircraft cabin air vent grills since October 2017.

Etihad Engineering’s laboratory, in partnership with 3D printing technology providers, has used powder-bed fusion technology system for faster production and reduced weight of cabin parts. The facility has received design and production approval from the European Aviation Safety Agency (EASA).

3D printing continues to provide opportunities for new companies to expand and collaborate, especially in line with UAE’s initiatives to control the emissions of the aviation sector and reduce its environmental impact. The aviation regulatory authorities of the UAE have promulgated policies pertaining to engine emissions, imposing challenges for the airline companies operating in the country. The know-how and technological advantage of the U.S. in the field of fuel emissions and clean energy could help American companies expand in the region. Other areas of opportunity for foreign companies include 3D printing and certification services, infrastructure planning, and airspace management.  

Drones and Unmanned Aerial Vehicles (UAVs)

Dubai’s recent introduction of the ‘Sky Dome’ project aims to develop an integrated business system for drone transport services, airfreight, and logistics services by positioning Dubai as a center for the manufacturing of drones and smart transportation.

Dubai Air Navigation Services is responsible for streamlining the activity of drones, providing air navigation services and air traffic movement and meteorological information to drone operators, and determining the air routes in which drones may fly.

The new drone law may provide opportunities for foreign companies catering to the sector: from licensing and issuing certificates, permits, inspection services, etc., to manufacturing and supply of aerial delivery of goods, transport of passengers and freight, surveying, and imaging.

Resources

Trade Shows and Exhibitions

Global Aerospace Summit

Date: September 28-29, 2020

Venue: Abu Dhabi, UAE

 

Airport Show Middle East

Date: October 26-28, 2020

Venue: DICEC Dubai, UAE

 

Dubai Helishow

Date: November 10-12, 2020

Venue: Royal Pavilion at E2 Dubai South Event & Exhibition Center, Dubai, UAE

 

MEBAA, Dubai

Date: December 8-10, 2020

Venereal Maktoum International Airport DWC, Dubai Airshow Site

 

MRO Middle East

Date: March 2-3, 2021

Venue: Dubai, UAE

 

Aircraft Interiors Middle East

Date: March 2-3, 2021

Venue: Dubai World Trade Centre, Dubai, UAE

 

Dubai Airshow

Date: November 14-18, 2021

Venue: Al Maktoum International Airport DWC, Dubai Airshow Site

 

Abu Dhabi Air Expo

Date: Feb-Mar (TBD) 2022

Venue: Al Bateen Executive Airport, Abu Dhabi, UAE

Key Websites

Air Arabia Airline

Dubai Airports Company

Dubai South Free Zone

Emirates Airlines

Etihad Airways

flydubai

General Civil Aviation Authority

Mubadala

Nibras Al Ain Aerospace Park

Strata

Turbine Services & Solutions

UAE Space Agency