1. Air Transport Director Ministry of Transport and Telecommunications
The Impact of Aviation Regulations on Airports Infrastructure Requirement
Ebtesam Al Shamlan
Air Transport Director
Ministry of Transport and Telecommunications
5 – 6 May 2015

2. INTRODUCTION
Airports provide access to international business opportunities and an important element of infrastructure.
Transport infrastructure is essential for economic growth. To allow the national economy to grow, an adequate airport capacity is needed.
Aviation requires economic regulations.

3. Air services agreements are playing essential role in regulations and operations of airlines through the airport.
Liberalization of aviation markets has contributed to accelerating globalization.
Liberalization of aviation market has resulted in tremendous air traffic growth at ME area in the past 10 years.
Strong need to build airport infrastructure to meet the passenger and cargo demand expected within the next 20 years.

4. Air Transport Regulations

5. Air Transport Regulations1
Chicago Convention 1944 (94 Articles):
Part One: Air Navigation
Part Two: ICAO
Part Three: International Air Transport
Part Four: Final Provisions 2
Bilateral Agreements:
Regulation System
De-regulation System
Re-Regulation System 3
National Law and Regulations

6. Regulated and De-Regulated Air Transport System

7. STRICTLY REGULATED AIR TRANSPORT SYSTEM
Fundamental Principles:
Single designation.
Equal share of capacity and frequency between both states.
Capacity increase occur when load factors exceed 65%.
Fares require to be approved before being offered in the market (double approval).
Governments monitor fare levels and numbers of passenger carried.
Imposition of penalties can be made if fare levels are violated or number of agreed passengers carried is exceeded
5th freedom rights are limited.
STRICTLY REGULATED AIR TRANSPORT SYSTEM

8. DISADVANTAGES Full dependency on governments to provide air services.
Full dependency on national carriers to service the market.
Direct government intervention in the market.
Direct/indirect government support (subsidies, grants, discounts, etc.).
Encourages dominance by national carrier.
Restriction on market access.
Lack of competition.
No product differentiation.
Lack of consumer protection.

9. First occurred in USA in 1978: Fundamental Principles:
Open market access..
Market forces predominate (Supply/Demand).
No monopoly.
No pricing controls (Double disapproval).
No capacity control.
Multiple designation.
DEREGULATION AND ITS EFFECTS

10. Advantages Encouraged integration and alliances of airline companies.
No government support to carriers.

11. DISADVANTAGES
Focus on most productive routes, some ‘essential’ services may not be operated.
Fares/capacity could be ‘dumped’ in particular markets by large carriers, providing initial benefits to consumer but designed to drive out other carriers.
Emergence of ‘monopolies’ through market share dominance.
Loss of jobs due to bankruptcy of some carriers or through forcing carriers to reduce operating costs.

12. REGULATION OF DEREGULATION
Fundamental Principles:
To prevent monopoly.
To prevent carriers using artificially low fares and/or over capacity to drive out other carriers from the market.
To prevent use of subsidies by any carriers.
To protect consumers and other airlines rights.
Ensure compliance with international safety standards and security.
REGULATION OF DEREGULATION

13. PROGRESS TOWARDS LIBERALIZATION
2003: ICAO 5th Conference on Air Transport
Reiterated the path towards liberalization through a gradual phased approach based on bilateral, regional or multilateral agreements.
2012: ICAO 6th worldwide A.T conference
Ensure the implementation of liberalization.
Lead to
Air Connectivity

14. Air connectivity between GCC and the world has created tremendous benefits
Air Connectivity benefits
Increase Consumer choice
Export industries in all aviation sector
Increase Tourism
Lead to Investments growth
Job creation
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15. Overall benefits: We must focus on maximizing benefits for the travelling public
Aviation industry (including Airports Airlines)
Wider Economic Benefits

16. Aviation and Economic Benefit

17. Economic Benefit: Summary of impacts evaluated in recent studies
There is considerable evidence that liberalization of international markets has led to substantial benefits for both passengers and the wider economy
Liberalization drives wider economic growth, competition, affordable airfares, greater choice, connectivity growth, tourism, investment stimulation and job creation
Traffic growth subsequent to liberalization of air services averages between 12-35%.

18. Tax and duties to government
Daily international long haul flight generates (IATA)
$ 97 millions income / year
Tax and duties to government
$ 22 millions paid in salaries
840 Jobs

19. Develop/replace existing airport infrastructure
Global Rise in Traffic (IATA)
Demand is increasing
Global economic impact US$ 2.3 trillion
3.91 billion passengers
by 2017
Average aircraft movements growth 7.6% per annum
31% increase in passengers between 2012 and 2017
International tourists average growth 3.3% per year between 2010 to 2030
Develop/replace existing airport infrastructure

20. Aviation Multiplier Effect (IATA)
Air transport industry serves 70 other industries.
Employment
Multiplier
Income
Multiplier
Air traffic
Multiplier
US $1 invested results in US $3.25 benefit to economy.
1 job creates
6 other jobs.
1% increase in
GDP lead to 2%
increase
in air traffic.

21. Global Region Market Share
Africa 3%
Asia & Pacific 31%
Europe 27%
Latin America & The Caribbean5%
Middle East 9%
North America25%

22. Kingdom of Bahrain Air Transport Industry

23. Air Services Agreements & MOUs with other states
Number of utilized
Air services
agreements 20
Number of open
skies agreements 51
Number of restricted
agreements 43

24. Air Services Agreement with other States 94
Eastern and Southern Africa 15
European and North Atlantic 37
Middle East 14
North America and
Central America 3
South America 2
Western and
Central Africa 2
Asia 21

25. Bahrain International Airport Movements Statistics and Forecast

26. Bahrain

27. Passengers (Medium Term Forecast) Over the Period 2015 - 2020
Actual
Forecast

28. Aircraft (Medium Term Forecast) Over the Period 2015 - 2020
Actual
Forecast

29. Flight Information Region (F. I. R
Flight Information Region (F.I.R.) (Medium Term Forecast) Over the Period
Actual
Forecast

30. Impact of Liberalization in GCC & Middle East Countries

31. GCC National Carriers Share to International Airports Worldwide 226 Airports
Middle East &
Africa 63
Indian Sub Continent 29
North & South
America 15
Far East &
Australia 27
Russia &
East Europe 11
Europe 53

32. Middle East is the fastest growing region in the world (ATAG)
Demand is increasing
M.E. employments contributes 3.4% (1.5m) of total global aviation
Air Transport GDP in M.E. contributes 2.1% of total global GDP & will increase to 4% by 2025
Average annual passengers growth rate is 5%
Average load factor in M.E. 75%
Intra-Middle East route average growth 11.4%
Develop/replace existing airport infrastructure

33. GCC Aviation Infrastructure Investment
Rapid expansion in infrastructure and dramatic traffic growth.
GCC airports are becoming major hubs between Asia and Europe.
GCC carriers are becoming Global carriers.
Increased contribution of air transport sector to GDP.

34. Higher growth is expected in all emerging regions*
Global Rise in Passenger Traffic (Airbus)
Higher growth is expected in all emerging regions* ?

35. Expanding extra airport capacity
Opportunities
Challenges
Expanding extra airport capacity
Infrastructures constraints & intensive competitive
Efficient private sector investment
Continuance aviation industry growth and increase demand
Increase direct and indirect employment
Update existing air transport rules and regulations
No tax regime
Shift to other modes of transport
Offering high tech product with higher yield
Infrastructure has to develop in parallel with the rapid growth of technology

36. CONCLUSION
There is tough competition between airports in the region.
Rapid expansion of infrastructure and dramatic traffic growth.
Adequate airport capacity is required to accommodate the growth of traffic and to compete with other airports.
Air service agreements are the legal tools to expand connectivity.

37. CONCLUSION
Aviation is an engine for the national economy.
GCC airports are becoming major hubs.
Encourage participation of private sector.
Adopt rules and regulations to safeguard liberalization (subsidies, consumer rights, competition, market access, fair competition).
Recruit and develop qualified manpower is required.
Massive investment and development in airports infrastructure is needed.

38. Thank You