Dubai as Aviation Hub

Aviation hubs or hub airports are used by one or more airlines to concentrate passenger traffic and flight operations at a given airport. They serve as transfer (or stop-over) points to get passengers to their final destination. It is part of the hub-and-spoke system. An airline operates flights from several non-hub (spoke) cities to the hub airport, and passengers traveling between spoke cities need to connect through the hub. This paradigm creates economies of scale that allow an airline to serve (via an intermediate connection) city-pairs that could otherwise not be economically served on a non-stop basis. This system contrasts with the point-to-point model, in which there are no hubs and nonstop flights are instead offered between spoke cities. Hub airports also serve origin and destination (O&D) traffic.

The hub-and-spoke system allows an airline to serve fewer routes, so fewer aircraft are needed. The system also increases passenger loads; a flight from a hub to a spoke carries not just passengers originating at the hub, but also passengers originating at multiple spoke cities. However, the system is costly. Additional employees and facilities are needed to cater to connecting passengers. To serve spoke cities of varying populations and demand, an airline requires several aircraft types, and specific training and equipment are necessary for each type. In addition, airlines may experience capacity constraints as they expand at their hub airports.

For the passenger, the hub-and-spoke system offers one-stop air service to a wide array of destinations. However, it requires having to regularly make connections en route to their final destination, which increases travel time. Additionally, airlines can come to monopolise their hubs (fortress hubs), allowing them to freely increase fares as passengers have no alternative.

In 1974, the governments of Bahrain, Oman, Qatar and the United Arab Emirates took control of Gulf Air from the British Overseas Airways Corporation (BOAC). Gulf Air became the flag carrier of the four Middle Eastern nations. It linked Oman, Qatar and the UAE to its Bahrain hub, from which it offered flights to destinations throughout Europe and Asia. In the UAE, Gulf Air focused on Abu Dhabi rather than Dubai, contrary to the aspirations of UAE Prime Minister Mohammed bin Rashid Al Maktoum to transform the latter into a world-class metropolis. Sheikh Mohammed proceeded to establish a new airline based in Dubai, Emirates, which launched operations in 1985.

Emirates, Qatar Airways and Etihad Airways have since established large hubs at their respective home airports. The hubs, which benefit from their proximity to large population centres, have become popular stopover points on trips between Europe and Asia, for example. Their rapid growth has impacted the development of traditional hubs, such as London, Paris, and New York City.

DUBAI, as a global aviation HUB

Dubai’s airport has recently overtaken Heathrow Airport in London as the world’s busiest international air travel hub.

Its capacity could reach 200 million by the middle of the century,

Growth

Dubai’s government planners expect traffic to hit 100 million passengers in 2019, at which point the current airport will reach its maximum capacity. By then Dubai will be tackling a much bigger project, a second airport with five parallel runways, and an annual capacity of 120 million passengers.

“In terms of charter traffic, 25% of Australia-to-Europe traffic has shifted from Hong Kong and Singapore to Dubai in the last couple of years,”

In the last ten years in aviation global business has shifted from being transatlantic to stretching toward Asia,”

Reasons for growth of Dubai as an aviation hub

1. Geographical Advantages

• Dubai is situated within eight flying hours of two-thirds of the world’s population, Dubai has set up a global hub that can connect virtually any two cities in the world with just one stop.“Dubai lies at the heart of a global travel nexus, linking Asia-Pacific to Europe and Africa,”
• Dubai doesn’t encounter a problem of snow to shovel off runways and there are no unions to strike, and that’s allowed government-owned Emirates Airlines, along with other Gulf carriers such as Qatar and Etihad, to shave off huge amounts of traffic from Singapore Airlines and Cathay Pacific.
• Dubai had a great inertia as a refuelling stop for travellers
• Expansion is much easier in Dubai than in the dense, hemmed-in cities it competes with. Compared with the major hub airports around the world–Frankfurt, Hong Kong, Seoul–here Dubai’s task is easy to reclaim deserts. The environmental impact assessment work required for London Heathrow to look at additional runway capacity is obviously much more higher.

2. Dubai has become a new tourist attraction.

• Dubai has inserted many gimmicks to attract attention and passengers —a $1 million raffle, a chance to win a Porsche 911, or a month long shopping festival
• Dubai acts as a major tourist destination, Dubai’s biggest developments include two of the world’s largest shopping malls — one with a huge aquarium, another with an indoor ski slope — the world’s tallest tower, BurjKhalifa, and artificial palm-shaped islands that can be seen from outer space.
• To attract tourists, Dubai created a month long shopping festival offering discounts and deals on global brands and cheaper fares and hotel rooms.

3. Globalised reach and market. Dubai’s rise as a modern crossroads connecting East and West — with the name of its hometown airline, Emirates, adorning the jerseys of the world’s best soccer teams and sponsoring Formula One car racing and the United States Open — is a tale of globalization and ambition, and an audacious bet on the future of air travel.
4. Expansion Plans as part of Government policy

• Dubai is going ahead with its grand plans to build a second airport that will eventually dwarf its existing one in the next decade.
• Dubai’s growth was “inexorable,” thanks to its aggressive airline expansion, few restrictions on international flights and large public investments.

5. Dubai created Emirates as cornerstone of the strategy and building an aviation infrastructure around it to support its growth. The airline is the linchpin of Dubai’s success. Air travel can make or break Dubai, and its economy is wholly dependent on it. Emirates was set up in 1985 with a $10 million grant from the government of Dubai and a pair of Boeing 727 planes. But the carrier grew rapidly thanks to open skies policies that favoured the development of the aviation sector and a business-friendly environment for foreigners.
6. Role of DNATA

• Dubai in the form of DNATA, (Dubai National Air Travel Agency), is one of the world’s largest providers of airport services such as supplying onboard meals, handling cargo and staffing check-in counters. Emirates and DNATA learned from Singapore, basing their relationship on Singapore Airlines’ partnership with Singapore Airport Terminal Services.
• Business diversity-Just more than 40% of DNATA revenue now comes from Australasia, thanks in part to a carnivorous series of acquisitions–three in the last year. Its first international deal was a decade ago, when it bought Singapore ground-handling company CIAS. DNATA Singapore now gets a slice of the baggage-handling business at Changi Airport and also provides ground services at Guangzhou Baiyun International Airport. Another big chunk of Dnata’s Asia business comes from a joint venture that handles ground services at Xi’an Xianyang International Airport and ten smaller airports in western China.

7. Expansion ease– Expansion is much easier in Dubai than in the dense, hemmed-in cities it competes with. Compared with the major hub airports around the world–Frankfurt, Hong Kong, Seoul–Dubai is into reclaiming desert.

Problems

1. There are few natural resources, barely any oil of its own,
2. Average temperatures exceed 40⁰C from May to September,

Impact

Dubai’s success has rattled its rivals, particularly airlines in Europe and the United States, which have complained that traffic was being siphoned from their hubs.

Emirates has also spawned a pair of rivals in the Gulf region, Etihad Airways in neighbouring Abu Dhabi and Qatar Airways, which have mimicked its strategy and threaten to take away some of its traffic.

The success is Dubai’s location–it’s Europe’s most easterly hub and Asia’s most westerly hub,

Why Indian cities have not been aviation hubs like Dubai?

The basic reason is because of the negligence from the National carrier Air India which is  not promoting hubs other than Delhi in the country.  Ours being a vast country, the metro cities can be good hubs for the Indian carriers.  But what has happened in the past is that Air India and Jet Airways had concentrated in Mumbai and thus developed that city as their international hub ignoring other cities.

Instead of developing Mumbai, Chennai, Bangalore, Hyderabad and Calcutta as national hubs for the carriers in India, Jet Airways remained at Mumbai and AI at Delhi thus depriving Indian passengers their chance to fly by these carriers for their trips to Europe, US and the Far East.

During the last decade international traffic has grown unprecedentedly and passengers’ requirement of traveling with less stops to the cities in  US, Europe, Australia etc were taken care by the Gulf carriers through their hubs in Dubai, Abu Dhabi and Doha and Singapore Airlines via their Hub in Singapore by providing very convenient one stop flights from various Indian cities to the above countries.  Even after renewal of fleet by latest Boeing aircraft Dreamliner Air India has not started non-stop flights to  any of the European, US or Far Eastern destinations from Chennai, Bangalore or Hyderabad in spite of having enough number of passengers from South India.  No wonder Gulf airlines are making hay while the sun shines.