Dubai gives green light to $32 billion expansion of 2nd airport aiming to be world's biggest

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DUBAI, United Arab Emirates — Dubai's ruler has endorsed a $32 billion expansion plan for the city's second airport that aims to make it the world's biggest, the emirate's airport operator said Monday in the latest sign that the Middle East's brash commercial hub is determined to move on from its 2009 financial crisis.

The approval sets in motion a vast building project that will boost capacity exponentially at the airport known as Al Maktoum International at Dubai World Central. Backers envision it will eventually handle more than 200 million passengers per year.

The first phase of the expansion alone aims to build enough runway and terminal space to handle 120 million passengers a year and 100 mammoth Airbus A380 double-decker jets at any given time.

The world's busiest airport, Hartsfield-Jackson Atlanta International Airport, handled 94.4 million people last year.

Paul Griffiths, chief executive of state-backed airport operator Dubai Airports, said he aims to have the first phase of the expansion complete in six to eight years. That part of the project includes adding two new runways and two large concourses housing dozens of aircraft gates each.

"It's a very aggressive time scale ... but I think that we have a track record here of doing remarkable things in a remarkably challenging time frame," Griffiths said in his office at the city's main airport, Dubai International.

As later phases are completed, the new airport will eventually boast five parallel runways spaced far enough apart so they can all be used at the same time, and have enough gates for hundreds of wide-body planes.

Dubai World Central opened for cargo flights in 2010 with a single runway in the desert south of central Dubai. It received its first passengers in October at a single terminal that is mainly used by smaller airlines and low-cost carriers.

The currently larger Dubai International ranked as the world's seventh busiest airport last year, handling 66.4 million passengers. It too is being expanded, with a new concourse expected to open next year.

Griffiths says Dubai needs to expand to keep pace with the rapid growth of airline traffic into the emirate. Much of the increase comes from hometown airline Emirates, the region's largest carrier and the world's biggest user of both the A380 and Boeing 777 long-haul jets.

Emirates is expected to move its hub to the new airport shortly after the first expansion phase is complete, freeing up space in the older airport for the well over 100 other airlines that already operate from it.

Griffiths is confident Dubai will be able to generate the funding needed to complete the project given the importance of aviation to Dubai's economy. Officials say the industry contributes $22 billion annually to the local economy and supports some 250,000 jobs.

"The aviation sector has demonstrated that there is a very compelling economic case to suggest creation of further capacity is a very sensible thing to do," Griffiths said. "I'm sure that the government will come up with the appropriate funding to make the project a reality."

Dubai is still recovering from the effects of its financial crisis, which sent property prices plunging and forced it to accept a multibillion-dollar bailout from neighboring Abu Dhabi.

The local economy has bounced back strongly since, though Dubai and its state-linked companies still carry tens of billions of dollars in debt. The International Monetary Fund has warned of the possibility of another property bubble forming, and analysts question how Dubai can make good on the debt it still owes.

"There are still plenty of reasons to think that the emirate's debt problems are far from over," Jason Tuvey, an analyst at London-based Capital Economics, wrote in a research note last week.

That has not stopped officials from announcing plans for headline-grabbing projects reminiscent of the pre-crisis boom.

On Sunday, a property development company controlled by Dubai ruler Sheik Mohammed bin Rashid Al Maktoum laid out plans for a $2.7 billion theme park and resort complex near the new airport and the site of the World Expo that Dubai is due to host in 2020.

The expansion of the new airport is unlikely to be ready by the time the Expo kicks off, Griffiths said.


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