This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/15/2016

Overview

Aviation

The United Arab Emirates (U.A.E.) is leveraging its geographic location and proximity to international trading routes to play a central role in the global travel and aviation markets. According to the U.A.E. Civil Aviation Authority, the U.A.E. aviation sector is valued at $80 billion, employs over 250,000 direct hires and approximately 225,000 indirect jobs, and accounts for nearly 15 percent of the country’s GDP.

On the commercial aviation front, the U.A.E. is home to eight international airports.  Dubai International Airport is the world’s busiest airport based on number of international passengers – handling 78 million passengers and 2.5 million tons of cargo in 2015.  The new Al Maktoum International Airport in Dubai (also known as Dubai World Central or DWC), with a planned annual capacity of 12 million tons of cargo and 160 to 220 million passengers, is expected to be the largest airport in the world when completed in 2030.  Abu Dhabi is also expanding its airport with the state-of-the-art Midfield Terminal which is due to open in July 2017 and will boast an overall airport capacity 45 million passengers.

The U.A.E. is the hub for two world-class airlines, Emirates (since 1985) and Etihad (since 2004), and for two budget airlines, Fly Dubai (since 2009) and Air Arabia (since 2003). In terms of fleet size, Emirates Airlines is the largest operator of the super jumbo Airbus 380 and the Boeing 777.  Etihad holds the largest order for the 787 Dreamliner. While Emirates has grown organically, Etihad has aggressively expanded through codeshare agreements and acquisition of shares in other airlines like Air Berlin, Virgin Australia, Alitalia, Jet Airways, AirSerbia, and Air Seychelles. Etihad currently has 198 inter-airline relationships and 49 codeshare partnerships, giving it a combined passenger and cargo network of nearly 600 destinations.

The U.A.E. airlines are major purchasers of U.S. aircraft and engines. Since 2000, these U.S. orders and deliveries have exceeded $200 billion – including the world’s largest commercial aircraft order in 2013 for 300-plus Boeing aircraft, which also included a substantial purchase of General Electric engines and services.

According to the U.S.-U.A.E. Business Council, in 2015 there were over 250 flights between the U.A.E. and the U.S. weekly, carrying more than 3 million passengers. In 2014, it was estimated that the U.A.E. Aviation sector supported over 400,000 U.S. jobs and that the U.A.E. Commercial and Military subsectors combined were worth nearly $4.9 billion to the U.S. economy.

U.A.E. Space Program

The U.A.E. is committed to establishing itself as a regional hub for civil and commercial space activities, having created the U.A.E. Space Agency (UAESA) in 2014, headquartered in Abu Dhabi, and the Mohammed bin Rashid Space Centre (MBRSC) in 2015 in Dubai.  There is currently an initiative underway by the UAESA and the MBRSC to build an unmanned probe spacecraft that will orbit Mars and study its climate and atmosphere. The intent is to launch this spacecraft in 2020, and have it arrive in Mars orbit by 2021 in time to mark the 50th anniversary of the U.A.E. federation.
 
The UAESA – which directs U.A.E. national space programs, creates space policy and regulation, and supports the development of U.A.E. engineers and scientists – is expected to generate significant benefits to the country’s economy and human capital. In October 2014, the agency gained membership in the International Space Exploration Coordination Group, making the U.A.E. the first Arab country to join. It also signed collaboration agreements with NASA, Japan, and China, and memoranda of understanding with the U.K., Italy, and Russia.
 
The Mohammed bin Rashid Space Centre (MBRSC) was founded by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, in 2015 when it was integrated with the existing Emirates Institution for Advanced Science & Technology (EIAST). According to the editor of Space Alert, Dr. Rajeswari Pillai Rajagopalan, in addition to the Mars Mission, the center is focused on building remote-sensing satellites with the objective of creating a fully autonomous and indigenous capability to design and manufacture satellites in the U.A.E. The center has scientific laboratories and research facilities based in Dubai.
 
In March 2016, the UAESA and MBRSC announced that they would use a Mitsubishi Heavy Industries rocket for the Mars mission.  Mitsubishi will launch the U.A.E.’s unmanned probe “Hope” into orbit from the Tanegashima Space Centre in July 2020.  The Japanese company was chosen from 10 possible launch service providers across the globe. 
 
Abu Dhabi-based Khalifa University opened its new Spacecraft Platform for Astronautic and Celestial Emulation (SPACE) laboratory in 2015.  The SPACE lab is equipped with special Unmanned Aerial Vehicles (UAV’s), robots and sensing systems that help to mimic actual conditions in space. The lab provides students with an opportunity to conduct mission-oriented research, and get hands on experience in conducting experiments for sensing, guidance, dynamics, and control of aerospace and space operations in a suitable environment. 
 
In May 2015, the UAESA announced its plans to open the Middle East’s first space research center in Al Ain. The $27 million center – funded by the university and the Telecommunications Regulatory Authority (represented by the ICT Fund) – will be incubator for development and innovation at the federal level.  UAESA will also coordinate with a number of organizations on the project, including the Emirates Mobile Observatory. The center will serve university students as well as space operators, and will be open to people from outside the university as well. According to the U.A.E. newspaper “Gulf News”, the center will serve as the main headquarters to support U.A.E.’s unmanned Hope Probe for the 2020 Mars mission.  One of the goals for the center is to attract and produce homegrown Emirati men and women space scientists.  It is expected that the new facility will create an estimated 150 jobs for Emirati scientists and engineers who will be needed to work on the Mars mission.

Satellites

The U.A.E. has already launched and is controlling a number of satellites. 

  • Yahsat, a subsidiary of the U.A.E. government-owned Mubadala Development, offers a range of communication services including voice, internet and television. Yahsat currently has two satellites in orbit and will launch a third in 2016, the Al Yah 3 satellite.  Al Yah 3 will extend Yahsat’s broadband services to 19 countries across Brazil and Africa.

  • The MBRSC operates several satellites:

    • DubaiSat-1 was the first fully U.A.E.-owned satellite. It was launched in 2009 by EIAST, which, as noted above, was rolled into MBRSC in 2015.  

    • DubaiSat-2 blasted off in 2013.

    • KhalifaSat, expected to enter orbit in 2018, is the U.A.E.’s most technologically advanced imaging satellite, will be 100 percent developed by Emirati engineers as part of the MBRSC’s strategic initiative to inspire innovation and technological advancement, and to increase sustainable development in the U.A.E.

  • U.A.E.’s Thuraya, private company with investors from the U.S., U.K., and the Middle East, launched its first mobile telecommunication satellite, Thuraya-1, in 2000.

2016 NASA and UAESA Framework Agreement

  • In June 2016, NASA and UAESA signed a framework agreement to cooperate on aeronautics research and the exploration and use of airspace and outer space for peaceful purposes. The scope of the agreement covers space science, operational Earth observation and Earth science, aeronautics, space operations and exploration, education, technology, and safety and mission assurance. 

  • Under the framework, the agencies also signed an Implementing Arrangement to formalize cooperation in the exploration of Mars. The arrangement establishes a joint steering group to guide discussions about potential future projects that contribute to the exploration of Mars.

  • Additionally, the two agencies plan to collaborate on education and public outreach programs and joint workshops, with the goal of facilitating the exchange of scientific data, scientists, engineers, and views and experiences on relevant regulatory frameworks and standards.

  • Future areas of collaboration could include the joint use of aircraft; scientific instruments aboard spacecraft; ground-based research facilities; spacecraft and space research platforms; and ground-based antennas for tracking, telemetry, and data acquisition.

Other Partnerships

  • Sir Richard Branson has been in partnership with Abu Dhabi investors since 2009, when Aabar Investments, the Abu Dhabi government-backed investment company, took a stake in Virgin Galactic, his space venture. According Branson, Aabar has a 35 percent stake in the business, valued at about $300 million. In 2014, Branson and Abu Dhabi investors had initiated discussions regarding the possible opening of a spaceport in Abu Dhabi; however, there have been no announcements to date. 

  • According to the U.A.E. newspaper The National, the UAESA and Boeing have partnered on an initiative called “The National Space Programme”.  The program features two competitions:  Genes in Space, in which students from across the U.A.E. will compete for the opportunity to have their experiments launched into space and conducted by scientists on board the International Space Station; and the Satellite Launch project.


Sub-Sector Best Prospects

  • Al Maktoum International Airport (AMIA): AMIA is currently undergoing a major expansion project to accommodate 160 million passengers and 16 million tons of cargo annually by 2017. The airport is actively recruiting airlines/operators to fill its five runways.  AMIA’s location near Jebel Ali Port is ideal for cargo companies.

  • Maintenance, Repair, & Overhaul (MRO): the U.A.E. MRO markets are currently underserved. The long distance to the nearest heavy MRO facilities (located in Singapore and Italy) causes many airlines to perform light MRO functions in-house, creating opportunities for MRO companies to partner with airlines or establish independent MRO facilities. U.A.E. airlines are also in need of local component sources. The Dubai MRO market is set to grow from $4.2 billion in 2013 to $8.8 billion by 2023.

  • Manufacturing:  The U.A.E. has expanded into manufacturing and servicing aviation components, forging partnerships with the world’s biggest aviation players. Mubadala, the investment arm of the Abu Dhabi government, has focused on building and nurturing partnerships with world-class companies in order to support the development of these important sectors. For example, Strata, a Mubadala company that was established in 2010, is an advanced manufacturer of aerostructures components that supplies original equipment manufacturers (OEM) such as Boeing and Airbus. There is strong potential for U.S. companies that are willing to partner with the U.A.E. on such OEM and knowledge-transfer manufacturing initiatives.

  • Training & Education: It is estimated that U.A.E. airlines will require over 24,000 more pilots and 20,000 more technicians by 2030, creating a large need for local training centers to train local talent. Independent training companies could find success by partnering with the Ministry of Higher Education or established airlines to develop training centers.

  • Ground Services: Regional competition with Hamad International Airport in Doha and rising Turkish Airlines has created a large market for elite ground services, including duty free, passenger, and hospitality services and fixed-base operators (especially luxury & VIP services). Increases in private jet and charter traffic (12 percent growth in flight hours predicted by 2017) ensure an open market for high-end airport services.

  • Cargo & Logistics: Cargo traffic through Dubai increased by 46 percent between 2007 and 2013 as the emirate positions itself as a regional link between Europe, Africa, and Asia.  Abu Dhabi Airport handled 827,456 metric tons of cargo, a 3.9 percent increase over 2014.  Specialized cargo services for unique goods are needed, including traditional cargo and handling companies. Successful companies will have strategies to manage high temperatures.  The free zones near Dubai International Airport – as well as Al Maktoum International Airport's proximity to Jebel Ali Port, the largest in MENA – ensure large volumes of cargo.

  • Aircraft Decommissioning & Recycling: The closest aircraft decommissioning facility to the U.A.E. is located in Spain, creating a large opportunity for decommissioning and recycling companies. Rapidly-aging fleets and access to African, Indian, and Middle Eastern markets will ensure profitability for successful companies.  Many airlines are currently seeking partnerships with decommissioning companies in the region.  The decommissioning and recycling market in Dubai alone is expected to increase to $500 million per year over the next decade, with potential for 100-150 percent profit margins.

  • Private Jet & Charter Services: There is significant demand in Dubai for charter jet options at moderate price points. Current charter options are at the high-end of the price spectrum, creating opportunities for medium-priced companies comparable to Net Jets. Growing availability of MRO services for small/medium planes, available hangar space, and top-of-the-line VIP services available at Dubai International Airport and Al Maktoum have lowered overhead investment costs and increased chances of success for qualified companies.


Opportunities

As the U.A.E. continues to focus on becoming the gateway to global markets, particularly in the Middle East, North Africa and South Asia (MENASA) region, there is unlimited potential for U.S. companies across all aerospace subsectors and particularly in the following areas:

  • Airspace Management:  The crowded airspace in the GCC region has become a significant challenge for the growing industry, described by the International Air Transport Association (IATA) as one of the most serious problems threatening the growth of the aviation in the region.

  • Digitization:  There is strong demand for aircraft manufacturers and OEMs that offer digital applications to improve efficiency, e.g., embedded sensors combined with mobility applications that reduce the amount of paper required for flight operating manuals, navigation charts, reference handbooks and flight checklists.

  • Business Aviation:  The Middle East’s business aviation market is expected to reach $1 billion by 2018 and, according to the Middle East Business Aviation Association (MEBAA), there is expected to be over 1,375 registered business jets by 2020.

  • Dubai World Central Aerotropolis: Covering an area of 145 square kilometers, Dubai World Central (DWC) is around twice the size of Hong Kong Island and is designed to be a self-sustained economic zone upon completion.

    • Centered on Al Maktoum International, DWC comprises eight districts including residential, logistics, aviation, commercial, humanitarian, exhibition, golf and the airport itself. 

    • An integral part of DWC is the aviation district. Designed to meet the needs of the industry, from design and development to the operation and use of aircraft, the district caters to the practical requirements of MROs, FBOs, light industries, R&D and educational facilities. 

    • Catering to contract logistics, integrators, freight forwarders and agents, the logistics district is a free-zone environment that offers storage and distribution facilities, serving the needs of the global supply chain industry. The logistics corridor enables seamless connectivity between Al Maktoum International and the Jebel Ali seaport, the sixth largest container terminal in the world. Direct access to road networks and a planned Etihad rail link which is due to be completed in 2018 create a fully multimodal logistics platform.


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United Arab Emirates Aerospace and Defense Trade Development and Promotion