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Business

Middle East, Asia airports jockeying for status of global hub

LONDON -- Airports in the Middle East and Asia are increasing their presence with a large and growing number of international passengers and massive facility capacities, signaling a major shift in the gateway to the world from the West to the East.

     In the January-March quarter of 2014, the number of passengers on international flights at Dubai International Airport in the United Arab Emirates totaled 18.36 million, bumping London's Heathrow into second place. The number at the U.K. airport came to 16.03 million.

     Heathrow's Achilles' heel is a shortage of runways. The two runways at the airport are operating at full capacity. A plane takes off or lands there every 45 seconds. The airport has been working on the problem such as by expanding capacity, including the Terminal 2, but it is still a long way from finding a fundamental solution. John Holland-Kaye, Heathrow Airport's development director, said the airport would be more efficient if there were a third runway. The government will decide on whether to go ahead with the expansion scheme but it will not be decided until next year at the earliest, partly because of opposition from local residents.

     The competition for global hubs is becoming increasingly tough. And the bottleneck is not the only reason for the setback for Heathrow. That is, a power balance in the airport industry is beginning to shift from the West to the East, spurred by growth in emerging economies.

     James Hogan, chief executive officer of Etihad Airways, said that Abu Dhabi International Airport, on which the company is based, is right in the middle of the world, emphasizing the geographical advantage of being along the Persian Gulf, the point that connects Asia, Europe and Africa. The number of passengers in the Middle East rose by 11% last year, the highest growth by region, according to the International Air Transport Association.

     Three international airports are located within a 200km radius in the Middle East -- Abu Dhabi and Dubai, both in the UAE, and Doha, the capital of Qatar -- and fighting to become a major hub airport. Their competition has intensified further due to fierce rivalry among three airlines based at these airports.

     Competition for capital investment is also heating up. In Doha, a new airport with capacity of 50 million people a year began operations in earnest in May. Dubai is building its second international airport, with the aim of expanding the facility to handle a total of 160 million passengers a year, the world's largest airport capacity. Abu Dhabi plans to open a new terminal in 2017.

     Airport expansion has been making progress in Southeast Asia. The world's largest terminal for low-cost carriers, capable of handling 45 million passengers annually, opened at Kuala Lumpur International Airport in May. It is threatening to overtake Singapore Changi Airport, the current regional top. In the Philippines, San Miguel, a major infrastructure company, made a proposal to build a new large international airport along Manila Bay.

     In Northeast Asia, where Hong Kong and Incheon international airports are fighting to become global hubs, competition will also likely intensify further. Industry insiders are paying close attention to China's plan to build the second airport in its capital with an estimated cost of about 1.35 trillion yen ($13.1 billion). The new airport is expected to go onstream as early as 2017.

     International airports in China have until now served mainly as transit hubs connecting with domestic flights. In contrast, the second international airport in Beijing is aimed at becoming an international hub by connecting to all Asian regions, Europe and North America. Given that a flight from Bangkok to New York via Beijing is about 1,000km shorter than it is via Narita Airport near Tokyo, it raises concern that trans-Pacific flights, Narita's cash cow, might all shift to the new Beijing airport.

     Will Tokyo be able to keep up with its rivals by expanding international flights at Tokyo's Haneda Airport? Amid the increased competition, a strategy to boost its presence will be put to the test.

(Nikkei)

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