Report: New Abu Dhabi Airport Terminal Contract Canceled

Report: New Abu Dhabi Airport Terminal Contract Canceled

13

This doesn’t sound good…

Abu Dhabi Airport Midfield Terminal $3 billion contract canceled

I’ve written extensively about Abu Dhabi International Airport’s new Midfield Terminal, which is 700,000 square meters (~7.5 million square foot). It has been under construction for nearly a decade, and was initially supposed to open in 2017, but the project has endured endless delays.

Now Reuters is reporting that the operator of Abu Dhabi Airport has canceled its contract with the consortium that’s supposed to be building the nearly $3 billion terminal. The contract was assigned in 2012, and includes companies from Greece, Turkey, and the United Arab Emirates.

The contract has allegedly been canceled as construction of the terminal has gone way over budget. In 2019 construction of the terminal was nearly 98% complete, so you’d think this project would be nearing completion two years later. Then again, Berlin’s new Brandenburg Airport was almost completely finished about a decade ago, but only recently opened.

It’s reported that a new Abu Dhabi-based company has now been awarded the contract to finish the terminal’s construction. It remains to be seen when the new terminal actually opens.

It’s not known what exactly the holdup is here, or why the contract is being canceled so late — is the government just fed up with going over budget and is yanking the contract on principle, is there a serious issue with the new terminal, or what?

It’s anyone’s guess when the new Abu Dhabi Airport Midfield Terminal opens

The bigger problem with the new terminal

Regardless of what company is awarded the contract, there’s one even bigger issue with Abu Dhabi’s impressive new terminal — it’s not actually needed in the foreseeable future.

The idea for the new Midfield Terminal was developed at a time when Etihad wanted to become a major global airline, and compete with both Emirates and Qatar. At the time Etihad had hundreds of planes on order, and was going to get bigger year-after-year, and as a result needed a bigger airport.

Starting about five years ago, the government of Abu Dhabi had a change of heart, and wasn’t willing to pour endless money into the airline anymore. Since then, Etihad has become more of a boutique airline, and the pandemic has only increased the pace at which Etihad is shrinking. The airline is now retiring its entire A380 and 777 fleets, and is also decreasing its future aircraft orders.

Etihad is prematurely retiring its A380 fleet

Abu Dhabi is now trying to become a low cost carrier hub, though I’m skeptical that the strategy will be successful, since you can only artificially create so much demand for a destination that not that many people actually travel to (at least on a global scale).

Capacity-wise there’s no need for the new Midfield Terminal. The way I see it, this could play out in one of a few ways:

  • Will the old terminal be closed altogether, and all operations will be moved to the new terminal?
  • Will both terminals be operational, and just be underutilized?
  • Will the opening of the new terminal be delayed for several years, as a cost saving measure?
  • While perhaps unlikely, could the new terminal project be canceled altogether, even though it’s so close to completion, given that there’s no real need for it?

This is going to be an interesting situation to watch…

Bottom line

The contract for Abu Dhabi International Airport’s new Midfield Terminal has allegedly been canceled, despite the airport having been nearly 98% complete a couple of years ago. The project is now being handed over to a local company, though it remains to be seen what happens.

There’s not really a need for the new terminal anymore, given that Abu Dhabi won’t become the major global aviation hub that was planned a decade ago.

Here’s to hoping that the new terminal isn’t just ditched altogether, though frankly it wouldn’t surprise me…

How do you see the situation with Abu Dhabi International Airport’s new Midfield Terminal playing out?

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  1. Apsø Eyot

    The architecture of the new Abu Dhabi terminal looks really stunning, and I hope that space can still open in the near future. It's almost completely done anyways. Just please, do not turn it into another Berlin Brandenburg situation. Especially when this one looks significantly more impressive and exciting than Brandenburg. I would think that given how much Etihad has been shrinking since this terminal was planned, having the new terminal co-exist with all three...

    The architecture of the new Abu Dhabi terminal looks really stunning, and I hope that space can still open in the near future. It's almost completely done anyways. Just please, do not turn it into another Berlin Brandenburg situation. Especially when this one looks significantly more impressive and exciting than Brandenburg. I would think that given how much Etihad has been shrinking since this terminal was planned, having the new terminal co-exist with all three existing terminals would lead to severe underutilization. They might as well just migrate all scheduled commercial flights into that one new terminal and close the existing three terminals. Even the new terminal alone seems too big for just Etihad plus all the full service carriers that fly to Abu Dhabi right now. If traffic really picks up they can reopen some of the existing terminals and base Wizz there (Terminal 1 is best since it already has primarily narrowbody gates).

    Just curious about a few things. Does Eithad have new premium lounges planned out for the new terminal? Will they open a new US preclearance facility there?

  2. Tom Smith

    USA domestic travel is back to close to 100% of pre-COVID levels, several months, if not years, ahead of estimates. There is no reason to think international leisure travel will not also return very quickly to pre-COVID levels as countries vaccinate. The ME3 were never focused on costs/profits before COVID. If they turn to a realistic business model there is no reason they cannot grow quickly.

  3. Chris JACK

    An interesting position that other airports will also find themselves considering!!

  4. DenB

    If United returned to profitability weeks ago and has placed the biggest aircraft order in industry history, we can confidently say there are at least two schools of thought on this: pandemic has ":changed everything just like 9/11 and things will never return to 2019 numbers" or "aviation's brightest day is approaching soon". If those two extremes are on a scale of 1 - 10, I'd say the truth is around a 7 (more optimistic...

    If United returned to profitability weeks ago and has placed the biggest aircraft order in industry history, we can confidently say there are at least two schools of thought on this: pandemic has ":changed everything just like 9/11 and things will never return to 2019 numbers" or "aviation's brightest day is approaching soon". If those two extremes are on a scale of 1 - 10, I'd say the truth is around a 7 (more optimistic than pessimistic). Flights are full Internationally, not just in USA. Emirates started using A380 on daily Toronto service, for Pete's sake. "If you build it, they will come." - P.T. Barnum

  5. bruh

    My take on this : The midfield terminal could open by 2025 (this is a major IF, considering we were expecting the terminal to open in 2019, back in 2017). IF the airport opens up, we can perhaps expect it to function the way the new MCT terminal functions for Oman Air/Salam Air. Similarly, the new midfield terminal can act as a hub for Etihad Airways, Air Arabia AbuDhabi and WizzAir Abu Dhabi. It will...

    My take on this : The midfield terminal could open by 2025 (this is a major IF, considering we were expecting the terminal to open in 2019, back in 2017). IF the airport opens up, we can perhaps expect it to function the way the new MCT terminal functions for Oman Air/Salam Air. Similarly, the new midfield terminal can act as a hub for Etihad Airways, Air Arabia AbuDhabi and WizzAir Abu Dhabi. It will also act as a great cargo hub.

    As for DWC, well, I have no clue as to how DWC will move forward, and its presence in the post-pandemic world. It can act as a cargo hub, but for passengers, I believe DXB is the way to go. Achieving 2019 passenger levels again is going to be a really hard accomplishment for Emirates because,
    1) Air travel demand has fallen down due to obvious reasons and would take years to achieve 2019-levels of leisure travel
    2) Business travel market would also be down, as virtual meetings would be time and cost-efficient. It would take a considerable amount of time, (mostly after quarantine rules are lifted across the world), until businesses feel comfortable to send their employees on business trips/meetings.
    3) Point-to-Point travel would be more common as passengers wouldn't like a lot of public exposure, especially post-pandemic.

    1. Apsø Eyot

      @bruh

      The difference is that the Abu Dhabi terminal looks so complete, it looks like it could open within a week. DWC is probably a dead project for the foreseeable future given that the project looks super ambitious and they will have to start almost all of that from scratch. If DXB faces capacity issues in the future, it would be more practical to just use the AUH terminal to accommodate the extra demand and...

      @bruh

      The difference is that the Abu Dhabi terminal looks so complete, it looks like it could open within a week. DWC is probably a dead project for the foreseeable future given that the project looks super ambitious and they will have to start almost all of that from scratch. If DXB faces capacity issues in the future, it would be more practical to just use the AUH terminal to accommodate the extra demand and run a high speed rail system between Dubai and Abu Dhabi instead of using so much time and money to build this whole new mega-airport from the ground up between the two cities, which is kind of in the middle of nowhere right now. The two-airport system between DXB and AUH would probably be healthier for collecting the largest amount of traffic from the two respective metro areas than DWC.

  6. STEFFL

    @Frederik

    VERY true, when this airport was planned there were so many more airline flying there and planning to even add more flights.
    Just think of Alitalia, 2 flights A-330 a day, airberlin 5 flights A-330 fom Munich, Berlin, Duesseldorf + 1 flight on A-320 from Stuttgart.
    KLM every day from Amsterdam and the huge route network of ETIHAD, . . . back then!
    times change and it would just make sense...

    @Frederik

    VERY true, when this airport was planned there were so many more airline flying there and planning to even add more flights.
    Just think of Alitalia, 2 flights A-330 a day, airberlin 5 flights A-330 fom Munich, Berlin, Duesseldorf + 1 flight on A-320 from Stuttgart.
    KLM every day from Amsterdam and the huge route network of ETIHAD, . . . back then!
    times change and it would just make sense to get back to the old "old" size for fomer Abu Dhabi Airport from the 1990's when Gulf Air, Bahrain and LTU, Germany were the 2 biggest carriers there.
    Not only that, but the competition within a 100 mile range is just too big of international Airports. Sharjah, Dubai International, Dubai Al Maktoum, Ras Al Khaimah, Mascat, Doha, Bahrain.
    Too much is too much!
    The investment would rather be more interesting in more touristy stuff, to get those Tourist $$$ in the country and offer something while there, rather then investing in a not needed airport, especially in that size!

  7. Frederik

    This was designed for a very different world. While the pandemic will fade, just as post 9/11 things will not be the same as they were before pre Covid eg no health checks at most international borders.

    They would likely better focusing on becoming a huge Cargo hub like the Giant Saudi Airport (forgotten its name). As Air Freight is likely to continue its rapid growth in this world of online home delivery.

    They will...

    This was designed for a very different world. While the pandemic will fade, just as post 9/11 things will not be the same as they were before pre Covid eg no health checks at most international borders.

    They would likely better focusing on becoming a huge Cargo hub like the Giant Saudi Airport (forgotten its name). As Air Freight is likely to continue its rapid growth in this world of online home delivery.

    They will never compete with the other 2 local international carriers now for route network and things like lounge and amenities at destination airports. And the Western carriers are finally becoming much more competitive, and post pandemic many of the more anxious passengers may pay the premium for Point to point flying and avoiding extra borders.

  8. MetsNomad

    I think I read somewhere that the U.S. Preclearance Facility wouldn't move to the new terminal, so I imagine Etihad will stay in the old terminals, at least for flights to the United States.

  9. Sean M.

    Abu Dhabi may have de-emphasised their investment in Etihad as a vehicle of aviation expansion, but they are positioning themselves to compete with DWC as the next low cost gateway to the region since Sharjah is already at capacity. The terminal may not be needed immediately but there is still a business case for it in due course.

    1. John

      DWC? What's DWC?? I was expecting dozens of abstruse acronyms but only got one!

    2. Ryan

      It's the airport code for Al Maktoum, which is the 2nd airport in the Dubai region (aka Dubai World Central).

  10. Yreal

    Etihad gets the new terminal, the old ones go to the likes of wizzair abu dabi?

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Apsø Eyot

@bruh The difference is that the Abu Dhabi terminal looks so complete, it looks like it could open within a week. DWC is probably a dead project for the foreseeable future given that the project looks super ambitious and they will have to start almost all of that from scratch. If DXB faces capacity issues in the future, it would be more practical to just use the AUH terminal to accommodate the extra demand and run a high speed rail system between Dubai and Abu Dhabi instead of using so much time and money to build this whole new mega-airport from the ground up between the two cities, which is kind of in the middle of nowhere right now. The two-airport system between DXB and AUH would probably be healthier for collecting the largest amount of traffic from the two respective metro areas than DWC.

Apsø Eyot

The architecture of the new Abu Dhabi terminal looks really stunning, and I hope that space can still open in the near future. It's almost completely done anyways. Just please, do not turn it into another Berlin Brandenburg situation. Especially when this one looks significantly more impressive and exciting than Brandenburg. I would think that given how much Etihad has been shrinking since this terminal was planned, having the new terminal co-exist with all three existing terminals would lead to severe underutilization. They might as well just migrate all scheduled commercial flights into that one new terminal and close the existing three terminals. Even the new terminal alone seems too big for just Etihad plus all the full service carriers that fly to Abu Dhabi right now. If traffic really picks up they can reopen some of the existing terminals and base Wizz there (Terminal 1 is best since it already has primarily narrowbody gates). Just curious about a few things. Does Eithad have new premium lounges planned out for the new terminal? Will they open a new US preclearance facility there?

Tom Smith

USA domestic travel is back to close to 100% of pre-COVID levels, several months, if not years, ahead of estimates. There is no reason to think international leisure travel will not also return very quickly to pre-COVID levels as countries vaccinate. The ME3 were never focused on costs/profits before COVID. If they turn to a realistic business model there is no reason they cannot grow quickly.

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