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Mon 18 Feb 2008 07:51 PM

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Dubai on par with Singapore as air hub

IATA chief says the emirate looks set to become world's largest commercial air base.

Dubai now handles nearly as much traffic as Singapore, the International Air Transport Association's (IATA's) director general and CEO, Giovanni Bisignani, said today in his keynote address at the inaugural Singapore Airshow Aviation Leadership Summit.

The emirate also connects to 37% more destinations than Singapore, he revealed, while the new "super airport" at Jebel Ali will be the world's biggest, handling up to 140 million passengers a year.

But Bisignani warned that competition would be fierce on routes between the Middle East and other regions - particularly Asia - as "everyone wants a piece of the [Middle East's] growth pie".

The region overall, he told delegates, was spending US $38 billion on infrastructure to position itself as a global air hub.

Bisignani also stressed that Asia contained more than 50% of the world's population and would be the airline industry's "largest single market" by 2010.

"Asia needs to be part of the race to lead the industry with sound policies and innovation, along with the commercial race for market share," he said.

With the growth of the Asian market in mind, Bisignani also warned that finding skilled personnel would be a challenge and that 17,000 new pilots needed to be trained each year in order to operate the 16,000 new aircraft needed by 2020.

"That is 40,000 more than current capacity," he noted.

He also highlighted the declining profitability of Asian carriers, which had plummeted from US $1.7 billion in 2002 to $700 million last year.

"The 40% capacity expansion over the same period has seen yields decline, as well as profit margins - from 4% to less than 1%. In addition, Asian capacity is set to expand by 8.8% in 2008, and demand is expected to grow by only 6.4%. This is not a recipe for long-term health," said Bisignani.

He identified three opportunities for Asian leadership to effect industry change - campaigning for liberalisation, improving security and achieving carbon neutral growth.

"Asia is our industry's present and its future.  Running an airline is tough business, and Asia has done well.  The race for market share and growth has been won.  Now we need a unique race for leadership that involves key players from the region from fast developing China and India, to more traditional players like Japan, Singapore or Australia, and everyone in between.  The leadership vision is needed to build an industry that is even safer, more secure, and delivering an industry that is financially sound and efficient," Bisignani concluded.

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