‘Mideast aviation growth to outperform other regions’

Growth in air passenger and cargo traffic in the Middle East, up to 2032, is likely to outperform all other regions, Alpen Capital has said in a report.

Air passenger traffic in the Middle East, in terms of revenue passenger kilometres (RPK), is expected to expand at a compounded annual growth rate (CAGR) of 6.7%, while air cargo traffic, in terms of freight tonne kilometres (FTK), is expected to grow at a 7.2% CAGR, it said.

Air passenger traffic on outbound routes from the Middle East is expected to outpace traditional routes such as Europe and North America. Within the Middle East, air passenger traffic in the UAE, Saudi Arabia, and Oman is expected to grow at a 6.6%, 6.9%, and 7.5% CAGR, respectively, between 2012 and 2017.

Middle East aviation market is expected to receive the delivery of 2,610 aircraft between 2012 and 2032, valued at $550bn. As a result, the total fleet size in the region is expected to increase at a 4.7% CAGR during the period to reach 2850 aircraft in 2032. Business jet fleet size in the region is projected to grow to 1420 from 400 between 2012 and 2032. The Middle East maintenance, repair, and overhaul (MRO) market is expected to grow at an 8.6% CAGR between 2013 and 2022 to be valued at $8bn, Alen Capital said in the report.

Being strategically located at approximately an eight-hour flying distance from two-third of the world’s population, the Gulf acts as an aviation hub and a key link between the eastern and the western worlds. Abundant oil reserves in the region ensure stable fuel supply for the region’s carriers.

An expanding population base in the Gulf, particularly foreign nationals who travel to their native countries frequently, is likely to propel the growth of the airline operators. Growing urbanisation in the region is also expected to drive the demand for aviation services.

The demand for business and leisure travel by air is slated to rise in the wake of higher income levels across the GCC (Gulf Co-operation Council). Further, an increasing number of wealthy individuals in the region is likely to trigger the demand for air charter services.

The Gulf countries have embarked upon ambitious drive to develop tourism across segments such as medical, adventure, sports, religion, and business. This is likely to draw more tourists into the region, increasing air travel across the GCC, the report said.

Alpen Capital managing director Sameena Ahmad said, “Having grown steadily over the last two decades, the GCC aviation industry has outperformed most of the other regional markets. This growth is attributed to the region’s rising population with high disposable income, strong presence of expatriates who travel frequently to their native countries, favourable geographic location; a burgeoning tourism sector, and an underdeveloped railway network in the region. The sector is also enjoying the dual benefits of the liberalisation measures adopted by most of the member-nation governments, on one hand, and the opening up of the global aviation market on the other.”

“The GCC aviation industry is emerging as an important benchmark in the global aviation market as the balance of global aviation gradually shifts away from the traditional markets such as Europe and the US. The region with its sophisticated airports and fastest growing carriers has carved a niche for themselves, globally, through their excellent hospitality and competitive ticket prices. This will go a long way in promoting the overall growth of the aviation sector in the GCC. The growth is also being fuelled by strategic development across sectors like infrastructure, tourism, healthcare, education and sports facilities,” says Sanjay Bhatia, Managing Director, Alpen Capital.

Opec to cut exports as Asia demand slows

The Organisation of Petroleum Exporting Countries will reduce crude exports this month as refiners in Asia prepare for seasonal maintenance, according to tanker-tracker Oil Movements, Bloomberg reported.

Opec, responsible for 40% of global oil supplies, will decrease shipments by 400,000 bpd, or 1.6%, to 24.2mn barrels in the four weeks to March 22, Oil Movements said in an e-mailed note.

The figures exclude two of Opec’s 12 members, Angola and Ecuador.

Exports had climbed from January through early March on winter demand in the northern hemisphere and stockpile-building in China, according to the consultant.

“There’s a reduction in eastbound sailings from both the Middle East and West Africa,” Oil Movements founder Roy Mason said by phone from Halifax, England. “It’s certainly a normal seasonal change. Refiners aren’t yet in the maintenance period, but it’s coming up and they’ve past the seasonal peak” in demand, he said.

Global oil consumption typically ebbs at the end of the first quarter as demand for heating fuel tapers off and refiners start to perform routine overhauls. Brent crude slipped 2.7% this year.

Middle Eastern exports will average 17.74mn bpd in the month to March 22, compared with 18.11mn in the period to February 22, Oil Movements said. These figures include non-Opec nations Oman and Yemen. Crude on board tankers will drop by 1.7% to 493.88mn barrels through March 22, from 502.59mn in the previous period, data from Oil Movements show. The researcher calculates volumes by tallying tanker bookings and excludes crude held on vessels for storage.