The Gulf A hyperconnected hub

Cameron Dunn

The Gulf: a hyperconnected hub

Geographical position•The Persian Gulf is ideally positioned to be a hub, or bridge, between the

established economic cores of Europe and eastern North America and rapidly

developing Asia.

•It has become a ‘stop over’ focussing on luxury hotels, high-end shopping malls and

exclusive ‘island’ residences. Sunshine is virtually guaranteed:

Flight durations to the UAE

2 billion people live

within 4 hours flying time of the Gulf, and 4

billion within 7 hours.

The Gulf: a hyperconnected hub

Making connections

Internet population penetration, 2009

Bahrain 88%

Kuwait 39%

Oman 42%

Qatar 52%

UAE 76%

Middle east average 30%

World average 27%

Internet World Stats, 2009 http://www.internetworldstats.com/stats.htm

The Gulf states have rapidly connected tothe internet. In some countries, internet penetration is similar to levels in the developed world.

The Gulf: a hyperconnected hub

Connecting people

•A common feature of the Gulf states is

that they have made significant

investment in education.

•The countries may be oil- and gas-rich

today, but they know that in the future

they will have to rely on the skills of

their people to generate wealth when

the oil and gas dry up.

•As the table shows, huge

improvements were made in adult

literacy rates between 1990 and 2009.

Adult literacy

1990(%)

2009(%)

Increase(%)

Bahrain 82 89 +7

Kuwait 77 95 +18

Oman 55 81 +26

Qatar 77 93 +16

UAE 71 90 +19

The Gulf: a hyperconnected hub

Super-connectors •One of the keys to the Gulf’s

success is its airlines.

•Air travel is the only practical

way in and out of the Gulf.

•Government-sponsored

national flag-carriers have

grown at startling speed.

•These airlines are referred to

as ‘super-connectors’ because

they carry a lot of transit

passengers on their way to

other destinations.

Airline Emirates Etihad Qatar

Based in Dubai (UAE)

Abu Dhabi(UAE)

Qatar

Number of aircraft, 2010

138 54 82

Number of aircraft on order, 2010

140 105 180

Destinations, 2010 95 65 91

Hub passenger traffic, 2009

37 million

9 million

16 million

The Gulf: a hyperconnected hub

The bigger, the better

•All of the Gulf’s airlines are planning major expansions.

•This means their airport hubs have to expand to cope with the passenger demand:

Airport Current annual

passenger capacity

Terminals/runways

Expansion plans

Abu Dhabi 12 million 3 / 2 Fourth terminal planned for 2012 to increase capacity to 20 million

Dubai 60 million 3 / 2 New concourse opening in 2011 to increase capacity to 75 million; brand new Al Maktoum Airport opened 2010 with three runways and planned capacity of up to 120 million

Doha 12 million 2 / 1 To be replaced by New Doha International Airport in 2011/12, planned to handle up to50 million passengers per year

By comparison, Heathrow’s

two runways and five

terminals handled

66 million passengers

in 2009.

The Gulf: a hyperconnected hub

In they flows….•The Gulf has developed into a true

global hub partly due to its lucky

geography and partly due to

deliberate transport, development

and education policies.

•Tourists, migrants and foreign

direct investment have flowed into

the Gulf at breakneck speed

•TNCs have invested in the Gulf as

Qatar, Bahrain and the UAE have built

business parks, universities and

financial centres to cash in on the

global knowledge economy.

Under construction in 2008, the Burj Khalifa is the

world’s tallest building

The Gulf: a hyperconnected hub

Risks•Can the rapid transformation of the Gulf into a global hub be sustained?

•The Gulf suffered from the global financial crisis in 2008–10 but there are also longer term

risks that might damage its prospects:

Political risks

The Gulf region is politically unstable, and has been marred by war and terrorism. Iran, Iraq, Yemen and Palestine all experience conflict

Physical risks

Running out of water: the region is already suffering water stress and relies on desalinisation

Economic risks

Rapid growth leads to asset bubbles which are prone to burst, as with the UAE property bubble in 2008–09

Environmental risks

Coastalisation, reef and sabkha destruction plus inland tourism in the desert all threaten irreversible damage to the Gulf’s ecosystems

Cultural risks

Western and Arab cultural norms (and laws) are very different, and this has led to some high-profile clashes on culture

Social risks

The Gulf’s reliance of cheap immigrant labour from south Asia is seen by many as exploitative