- The Middle East is outpacing the world in terms of international traffic growth, witnessing growth in demand and expansion of capacity at rates never seen in any other market.
- Rising population with high disposable income; favourable geographic location; growing tourism sector; strong presence of expatriates who travel frequently to their native nations and an underdeveloped railway network are driving this aviation boom.
- However, despite the strong growth in the air traffic as well as the fleet size, the lack of skilled aviation professionals is acting as roadblock in Middle East’s thriving aviation industry.
- Though it seems to a big problem, it is a BIG opportunity for the players who can leverage it by pursuing aviation training centers/academies as a profitable business proposition.
The Middle East is the fastest growing aviation market across the world in terms of international traffic growth. According to IATA, in 2013, the growth in passenger traffic for airlines in the Middle East was 12.1% – more than double the global average and in both business and leisure travel. Between 2012 and 2032, air passenger traffic in the Middle East is expected to expand at a CAGR of 6.7% in terms of Revenue Passenger Kilometers (RPK), while air cargo traffic is expected to grow at a 7.2% CAGR in terms of Freight Tonne Kilometers (FTK). To add to this, air passenger traffic on outbound routes from the Middle East is expected to outpace the traffic on traditional routes such as Europe – North America, Europe – Europe, and North America – North America over the coming two decades.
Expanding population base (especially of foreign nationals), urbanization, higher income levels, underdeveloped railway network and burgeoning numbers of tourists are driving the Middle East aviation sector. With a growing young population base, increasing propensity to travel and ongoing regional liberalization, regional traffic growth is acting as an important contributor to the Middle East’s expansion as long-haul routes are. Regional governments are prioritizing aviation, recognizing the industry as a catalyst for local development, diversification, delivering trade, tourism, and economic growth.
|Aviation Traffic Growth – Middle East vs. World||Middle East Aviation Market Value = USD 550 Billion|
Long-term expansion is clearly visible as Middle East airlines are expected to receive delivery of 2,610 new passenger and cargo aircraft (worth $550 billion) over the span of next 20 years. Nearly 960 aircraft are on order, including more than 600 widebodies, accounting for 25% of the global backlog, or twice as many as on order in North America. Increasingly, the traditional hubs (London, Paris, Singapore) and their carriers (Lufthansa, British Airways, Cathay Pacific and Singapore Airlines) and their hubs are being superseded by Dubai, Doha and Abu Dhabi and their home carriers (Emirates, Qatar Airways and Etihad Airways). If one looks at the rapidity of the shift, it has been breathtaking. In the past five years, London Heathrow, Paris, Frankfurt and Amsterdam added a total of 11.7 million new passengers, growth of just 5%. In contrast, the three upstart Middle East hubs have added 35 million passengers, an increase of a whopping 60%.
However, despite the strong growth in the air traffic as well as the fleet size, the lack of skilled aviation professionals has been acting as a deterrent in the path of Middle East’s thriving aviation industry. According to industry experts, quality pilots will become an increasingly limited commodity over the coming years, driven by the rapid fleet growth of Gulf airlines. The region is facing an unusual situation where the jobs created by the aviation boom will not be able to fill up soon due to lack of skilled professionals. This is further aggravated by the fact that U.S. pilots staffed in the Middle East are heading back home to fill the positions left vacant by the retiring U.S. aircraft pilots. According to a recent report by Boeing, there will be a need of more than 37,000 pilots in the Middle East to fly the aircrafts due for delivery there over the next 20 years. But there is a serious lack of adequate training facilities.
Though it sounds as a big problem, it is a BIG opportunity for the small players who can leverage it and evaluate aviation training centers/academies as a profitable business proposition. Dedicated aviation academies are going to play an important role in solving the pilot shortage in the Middle East, and ensuring that people receive the training they need for being certified as skilled airline professionals. The existing training centers are struggling to keep up with the demand and point towards a market ready to welcome new entrants. Two training centers in the UAE have 1,300 full time and 500 part time student pilots and engineers. Another Jordan-based air school churns out 130 pilots a year and wants to increase the number to nearly 200 while expanding to a second training centre in Iran.
Airlines too are not behind and are starting pilot training centers to ensure an adequate supply of workforce for the aircrafts they have in their ordered delivery pipeline. Emirates Flight Academy is expected to address the need for 40,000 pilots in the Middle East over the coming two decades. Emirates Airlines operates a Pilot and National Cadet Pilot Program, and is planning to open a flight academy for pilots in 2015. The academy will be able to take up to 600 pilots and will be situated in Dubai. Air Arabia has already established a flight academy, which is up and running in Sharjah. A few weeks back, Etihad Airways announced that it is establishing the Etihad Flight College, a world-class flight training facility in the UAE for Emirati and international cadet pilots. Such steps by the players, in addition to solving the pilot crunch, will create more job opportunities for the local talent available in the region.
Among the aviation training institutes operating in the region, Emirates-CAE Flight Training is an outstanding example of a successful aviation joint-venture, as highlighted in the case study below.
|Case Study: Emirates-CAE Flight Training – 12 Successful Years of Imparting Aviation Training|
Emirates-CAE Flight Training
Founded: 2002| Joint Venture: Emirates and CAE
Emirates-CAE Flight Training (ECFT) is jointly operated by Emirates and CAE, a global leader in modeling, simulation and training for civil aviation and defence. Located in the Emirates Aviation College campus, ECFT provides aviation-related courses for commercial and business carriers in the Middle East, Europe, Africa, Asia and Oceania, and South America, aimed primarily at flight-deck crew and maintenance personnel.
Over the past 12 years, Emirates and CAE have consistently invested in the management and expansion of their joint venture. This has helped in growing the business substantially as well as earning ECFT its strong reputation as a centre of training excellence.
It was the first training facility of its kind in the Middle East that was approved by aviation authorities in Europe, the U.S. and the UAE. According to Camille Mariamo, Managing Director, commercial training and simulation, Middle East & India Region, “ECFT works in close collaboration with more than 20 different national aviation authorities to ensure that their specific requirements are fulfilled”.
Locations/Facilities: ECFT operates 2 training facilities in Dubai:
CAE was unable to provide figures for its market share in the Middle East. “I can say we are the dominant player with a very strong leadership position,” according to Mariamo. As per CAT magazine’s 2011 civil full flight simulator census, CAE supplied all of the simulators in the UAE, including seven units for Emirates and three for Etihad.
Source: The Emirates Group