Friday, July 8, 2011

Dubai The Brand

Dubai has been in the news again. A couple days back Dudai Airports announced a massive investment in Dubai International Airport (around 7.8 billion USD) to build Concourse 4 (Concourse 3 is currently under construction), upgrade Terminal 2 and increase cargo capacity by almost 30%. This will bring the airport capacity to 90 million passengers by 2018 from the current 60 million passengers.

Great news! well yes but what about Dubai World Central Airport at Jebel Ali. This was supposed to be a six runways (now 5 runways planned) airport able to handle 180 million passengers annually. The airport has one runway operational and a low cost terminal built. Cargo operation has started but operators prefer the International Airport. Passenger operation has been delayed  till 2012. No airline wants to use the airport it is very far from Dubai or Abu Dhabi.

The other Bad news is the cancellation of Dubai Aerospace Enterprises of all its Airbus orders (45 aircraft. 11 A350-900 and 34 A320, worth 5.8 billion USD) and is in discussion with Boeing about the possibility of canceling their orders 56 aircraft. DAE has never risen to become a strategic business for Dubai. DAE owns Standard Aero.

How do these events affect the Dubai brand?   Positively.

Financially it looks great Dubai just reduced 5.8 Billion USD of liability and is looking to reduce it further when they cancel the Boeing orders.

The expansion of Dubai Airport was associated with increased jobs in the aviation sector and a greater contribution to the GDP.  As for DWC it will slowly be buried until they figure out what to do with it.

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