Growth at DXB fueling Dubai economy

Dubai International Airport saw record passenger throughput of 68.6mn over the first three quarters of 2024, y/y growth of 6.3%. The momentum has been strong throughout the year, with 23.7mn passengers seen in the third quarter and 23.2mn passengers forecast for Q4. The fourth quarter is traditionally a good one for direct traffic of passengers whose final destination is Dubai, and this has been expanding as the tourism sector continues to grow – there were a record 13.3mn overnight visitors over January to September this year, y/y growth of 7.2%. Dubai Airports CEO Paul Griffiths noted in the press release that there has been a shift from the dominance of transit traffic to direct traffic playing an increasingly important role. The growth of the population will also be supportive of throughput growth.

Dubai International passengers

Source: Dubai Airports, Emirates NBD Research

If realised, the fourth quarter projection would take the total passengers for the year at DXB to a record 91.9mn, which would be up 5.8% on last year. The strong momentum at the airport bodes well for Dubai’s headline GDP growth figure this year as the transportation & storage sector has been the primary growth driver coming out of the pandemic, both immediately after and even after most of the reopening gains had already been realised. Targeted investment in the sector, alongside the development of Dubai’s domestic tourism industry, has continued to fuel growth to new records. In Q2 the sector, the second largest in Dubai and accounting for 13.6% of output, expanded 7.8% y/y, thereby contributing nearly a third of the total 3.3% y/y growth (see Dubai: GDP growth rises to 3.3% y/y in Q2).

Passengers from India and Saudi Arabia continue to dominate traffic at the airport, with India accounting for 8.9mn passengers in the first nine months of the year (13.0%) and Saudi Arabia 5.6mn (8.2%). This was followed by the UK on 4.6mn arrivals. There is a potential challenge to some of this traffic in the coming years as both India and Saudi Arabia are developing their own domestic airlines and airport sectors. Heavy investment in Air India including the purchase of new wide-body aircraft will likely remove the need for some passengers to transit through Middle Eastern hubs such as DXB when traveling to Europe and the US. Saudi Arabia, meanwhile, is seeking not only to facilitate travel for its own inhabitants but also to become a transport hub in its own right (see Saudi Arabia: Aviation sector a key growth target).

Given these potential regional challenges to transit travel, the ongoing growth of Dubai’s tourism sector will become an increasingly important draw of passengers through DXB. Notably, India and Saudi Arabia are also traditionally the two largest source markets of visitors to Dubai, usually accounting for around 12% and 10% of the total. As such even as the two countries develop their domestic air travel sectors, there will likely still be significant numbers of travelers from them passing through DXB.

Dubai tourism hitting new records

Source: DTCM, Emirates NBD Research

The transport & storage sector, and specifically air travel, will remain a key growth pillar for Dubai over the next decade. Dubai has an early mover advantage over other potential air transport hubs in the region, and the development of the Al-Maktoum airport will further underpin this. The targeted growth of the population to 5.8mn inhabitants, the bulk of whom will be moving from overseas countries to which they would likely fly home for visits, would further support growth, as will the ongoing development of the domestic tourism sector. With new hotel and event launches ongoing, the prospect for more overnight guests is buoyant.