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Tue 1 May 2007 12:06 PM

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Freight finances

Sheikha Lubna explains how the cargo industry has successfully boosted the nation's international standing.

Sheikha Lubna Al Qasimi can safely be considered a historical figure in the modern Arab world. As minister of economy in the United Arab Emirates, Sheikha Lubna became the first woman in the country's history to reach the status of government minister, outranking a limited number of female counterparts in other Middle Eastern countries, including Bahrain, Oman and Qatar.

Labelled "gregarious" and "approachable" by the international media, Sheikha Lubna has spearheaded a number of prominent initiatives since assuming her position as minister of economy in 2004. In particular, she remains committed to further developing the aviation and airfreight markets in the UAE. Indeed, as a prominent speaker at events such as the International Civil Aviation Organisation (ICAO) Global Symposium and the Middle East Business Aviation (MEBA) exhibition, Sheikha Lubna has regularly stressed the importance of developing and liberalising the aviation industry.

These grand aspirations almost seem hereditary from previous generations of the United Arab Emirates government. Even back in the 1960s, when the country initially dipped its toes into the aviation and airfreight sectors, the beginnings were humble and the ambitions large.

"We started small," admits Sheikha Lubna. "But we had a vision for the future that involved pursuing massive development in the aviation sector. It is significant that, even then, the country realised the crucial role that the aviation and air cargo industry would play in the development of the economy, in addition to the development of the population's wealth and well being."

The government's pioneering spirit back in the 1960s certainly paid dividends. Passenger and cargo traffic has experienced unprecedented growth over the years and the United Arab Emirates has established an enviable position as a leading international hub for the aviation and air cargo industry.

"From an economic perspective, one of the things I find so interesting about the evolution of the aviation and air cargo sectors is the way that innovation has played a role and enabled a wider base of people to enjoy air travel and allowed for a bigger scale of import and export activities," says Sheikha Lubna.

"This growth in passenger and cargo traffic has positively impacted the economy, making it healthier and more stable. It has made the United Arab Emirates a major player in the global economy and allowed us to interact with other economic blocs," she adds. "Another logistical side effect and something very critical has been the creation of new jobs as a result of the country's developing economy. Air cargo has also encouraged inward investment because multinational companies need regional headquarters with strong air links and services."

The success of Middle East airlines, such as Emirates and Etihad, has clearly benefited the region's cargo industry. The international recognition of these carriers, with constantly expanding fleets and cargo routes, has showcased the high standards of service currently being offered by regional enterprises.

"Emirates and Etihad are great standard bearers for the United Arab Emirates. They have achieved international standards in a very short period of time and offer a good representation of the country's business spirit," explains Sheikha Lubna. "In observing this progress, I can say proudly that the United Arab Emirates is a big success story itself, with the government being the main force behind our success."

It's hard to disagree with Sheikha Lubna's assertions - the figures speak for themselves. IATA has publicly recognised that Middle Eastern carriers have topped the industry in cargo growth, with global cargo growing by 2.6%, while Middle East carriers haved posted a 14.1% gain. In addition, air cargo operations at Dubai International Airport have witnessed remarkable growth from around 250,000 tonnes in 1991 to one million tonnes in 2005, which translates into a little over 10% growth per annum.

"If this trend continues, then by 2040 our air cargo facilities will be handling, every day, what is currently being handled in a month," says Sheikha Lubna.

"With the country's burgeoning manufacturing and logistics sectors, I believe there are more opportunities for cargo traffic to increase as a result of a deregulated market. The government has always believed that opening markets to competition, rather than stifling it, ensures the continued and exponential growth, particularly in infrastructure," she adds.

The government's policy on ‘open skies' has resulted in over 100 airlines connecting through airports in the United Arab Emirates. This provides a more flexible foundation for air cargo activities, which has unsurprisingly been welcomed with open arms by the industry. "The government has always had an open skies policy. More airlines fly into Dubai than virtually anywhere else in the world," says Sheikha Lubna. "We will welcome the further benefits that may come through greater liberalisation in the air transport sector in general, and the future growth in air cargo sectors over the coming years."

With factors such as market liberalisation leading to growing volumes of passengers and cargo traffic, the UAE is currently developing its portfolio of cargo hubs and considering a number of new projects too. "The current range of cargo hubs are being managed very well, which is quantified by the exponential growth being experienced in this sector in the UAE," says Sheikha Lubna. "Their strengths are that they continually try to improve their services, remove impediments to doing business and improve their facilities. The drive towards achieving world's best practice in everything they do is consistent with the UAE government's objectives and they are succeeding or at times improving on the government's expectations."

The forthcoming Dubai World Central International Airport (JXB) in Jebel Ali is expected to further boost the emirate's ability to handle increasing volumes of cargo. The ambitious facility, which is scheduled to commence operations next year, will be capable of handling 12 million tonnes of freight per annum.

"When you think that Dubai International Airport handled a little over one million tonnes of cargo in 2005, the capability to handle 12 million tonnes per annum at Dubai World Central Airport shows our expectations for the industry over the next few years," says Sheikha Lubna. "Upon completion, Dubai World Central International Airport will become the world's largest aviation hub by physical size. It will initially service cargo airlines and the facilities will make the industry even more dynamic. I believe it will expand the economy of the country extensively."

The new airport is a symbol of the government's ambitions to encourage further success in the cargo market. According to Sheikha Lubna, a range of other initiatives is also underway and other projects will be launched in the future. "Airlines based in the UAE have a purchase order book of over US$55 billion, of which Emirates airline alone accounts for $30 billion. In addition, Dubai is investing $8.1 billion in Dubai World Central Airport and $4.1 billion in the expansion of the present airport, which is currently underway," she concludes. "Dubai's air cargo operation is viewed as the model upon which most countries in the region base their cargo development. Dubai has always wanted to provide cutting edge solutions and the government's expansion strategy will be one to watch during the next few years."

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