Abu Dhabi aviation seeing strong growth

The UAE’s airports continue to post very strong growth in passenger traffic this year even as post-pandemic reopening gains have been long-since won and global air traffic growth has slowed dramatically. This increase in passengers has been driven not only by Dubai International, the country’s largest facility, but also Abu Dhabi airports, where the new terminal at Zayed International is helping boost traffic through the capital. While growth will inevitably moderate from these levels over the coming years, the ongoing expansion of the local economy, and the authorities’ focus on developing air transport as a key component of that, will mean that the local aviation sector will likely continue to outpace the global trend.

Strong passenger growth at Abu Dhabi Airports

Source: Abu Dhabi Airports, Emirates NBD Research

Passenger traffic through Abu Dhabi airports hit 14.0mn in the first half of the year, representing y/y growth of 33.5%. The bulk of this traffic is through the Zayed International Airport (AUH), which accounted for 98.2% of the total, with other facilities including Al Ain International and Al Bateen Executive Airport. The 33.5% expansion over the first half of the year follows the 40.9% expansion logged in 2023 and cements the ongoing recovery in passenger numbers through the emirate. Volumes in Abu Dhabi peaked at 24.5mn in 2016 before declining over the following years as national carrier Etihad had a difficult few years of restructuring. This was exacerbated by a sharp fall in passengers in 2020 as Covid-19 brought aviation to a standstill for several months. The outlook is now much improved, however, and a strong H2 performance could see record passenger volumes reached this year. AUH has also seen strong freight volumes, handling 254,300 tonnes of cargo over the first half of the year.

There are 29 airlines operating at AUH, but the fortunes of Etihad are the key determinant of traffic at Abu Dhabi airports, and the airline has been performing more strongly post the pandemic. The airline carried 8.7mn passengers over H1 of this year, up nearly 40% on the corresponding period in 2023, and it has plans to expand further. There are currently 92 aircraft in the fleet, up from 76 a year ago, and the airline is looking to build this up to 150 planes by 2030, and to double its annual passengers to 30mn through initiating new connections between travelers in East and South Asia and Europe and the US. There were 10 new passenger destinations added over the past year. Top destinations for passengers at AUH include London, Mumbai, Kochi, Delhi, and Doha.

Growth has turned positive

Source: Haver Analytics, Emirates NBD Research

The recovery in the sector is reflected in national accounts data, with the Transport & storage component of GDP having registered robust growth coming out of the pandemic, following the six consecutive years of decline over 2015 to 2020. The expansion has averaged 21.1% y/y over 2021 to 2023, and while some of this is attributable to reopening gains, the expansion last year was 17.1%, outpacing the global trend.

Abu Dhabi’s aviation expansion plans will be supported by the new Terminal A at AUH, which became operational in November last year. The new facility can handle 79 aircraft at once and 11,000 passengers per hour, with a final capacity of 45mn passengers annually. Etihad operates the bulk of flights through Terminal A, but Wizz Abu Dhabi, IndiGo, and Middle East Airlines, among many others, also now use the terminal.