Consolidation to spur region's airport services

The regional fleet is set to grow to 1,206 aircraft and 708 business jets, increasing traffic by 10% in 2015. (EB FILE)

Current revenues from airside services earned by airports in the Middle East are estimated at $1.92 billion (Dh7.04bn) and are projected to increase to $2.83bn in 2015, revealed a new study by Frost & Sullivan.

According to the report received by Emirates Business, aircraft fleets are slated to increase in the region due to airport expansion plans as well as order backlogs of commercial aircraft and business jets.

The Frost & Sullivan analytic report titled Middle East Airport Airside Service Market Assessment thoroughly examines the overall regional airports' airside service market in terms of revenues, with a specific break-up of revenue contributions of commercial aircraft and business jets towards ground-handling and maintenance services.

The report says: "The market for airside services across airports in the Middle East is predominantly monopolistic with challenges relating to imbalances in future demand and supply. Large-scale market consolidation and sub-contracting will shape the industry and drive overall revenues.

"Since the average cost of maintenance of business jets is greater than that of commercial aircraft, they hold great potential for the future. Market revenues from airside services in the Middle East are currently valued at $1.92bn.

"With a surge in the fleet size coupled with an anticipated diminishing impact of the global economic slowdown, service providers are expected to witness market revenues scaling to $2.83bn by the year 2015."

According to the report, revenues in 2009 stood above the 2008 figure but are expected to grow steadily over the next five years.

Y S Shashidhar, Frost & Sullivan's Vice-President and Country Director for South Asia, Middle East and North Africa, and the report's author, said the regional market for airside services comprising ground-handling and maintenance was expected to experience robust growth because of the order backlogs from the region coupled with the minimal impact of the global economic slowdown on the Middle East's passenger and air traffic.

"The region's fleet is projected to grow to 1,206 aircraft and 708 business jets. This will see traffic growing by about 10 per cent within the Middle East," said Shashidhar in the report.

About traffic movement in the region, he said it was anticipated to grow at a compounded annual growth rate (CAGR) of 4.8 per cent between 2008 and 2015. He also said the market for ground-handling and maintenance services correlated to aircraft movement, spurred by the increase in passenger traffic.

"The increase in aircraft movement directly translates to revenues for ground-handling and maintenance companies. The focus for many companies wanting to enter the market will be on enhancing their capabilities in order to cater to business jets that have a greater average cost of ground-handling and maintenance. However, a major challenge lies in maintaining the quality of services while adhering to environmental policies," the report said.

"It is important for existing service providers to understand that a large number of deliveries are anticipated to increase aircraft movement in the region," said Shashidhar.

 

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