Capacity the key to Government’s new free trade agreement deal with UAE

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Edited by Travel Weekly


Increased flight capacity has emerged as a key bargaining chip in the Australian Government’s talks with United Arab Emirates (UAE) for a new Free Trade Agreement (FTA) between the two countries.

The announcement comes as Flight Centre Corporate reveals a 38 per cent increase in business travel into the UAE from Australia in the six months to date (01 September 2023 – 23 February 2024), compared to the same period in 2022-23.

Flight Centre Global Corporate COO Melissa Elf said the agreement would see significant investment into Australia’s critical minerals and clean energy technology, but there was a missing piece of the puzzle.

“There is an incredible opportunity in this new agreement for Australian businesses should it come to fruition, but there is a critical component that needs to be addressed to ensure the agreement can be successfully leveraged, and that is sufficient travel capacity,” Elf said.

“Data from our flagship corporate brands, FCM Travel and Corporate Traveller, shows demand for travel into the UAE has grown by 38 per cent year on year, but capacity is lagging – meaning we’re behind where we need to be should the FTA go ahead.

“Flights into the UAE from Australia is at 77 per cent of what it was pre-pandemic – that’s among the lowest outbound capacity figures we’re seeing, and far below Australia’s average international outbound rate of 98 per cent.

“We have seen some recent announcements of added capacity from airlines such as Emirates, which will add 100,000 additional aircraft seats annually between Brisbane and Dubai from October this year, and a further 250,000 seats annually between Perth and Dubai from December.

“It’s an excellent step and strong commitment from Emirates, who recognise the demand, but we need to see other airlines build on this capacity to get us back to 100 per cent and beyond.

“Additional capacity is necessary for the Free Trade Agreement, but other travellers – particularly those travelling through the Middle East to get to Europe – will see the flow-on effects of lower airfares, should more capacity come online.

“Interestingly, we’ve seen a shift in the industries travelling between our two countries. In 2022-23 it was heavily led by education and sport, but in 2023-24, we’re seeing a significant rate of travel from the mining, oil, gas and services industries.

“It’s positive news that our governments have recognised the value in trade with the UAE, particularly in the extraction and processing of critical minerals in Australia, along with the developments in our world-leading clean energy technology.”

UAE will receive preferential access to Australian critical minerals, and a deal is expected to be sealed
by the end of the year, as ministerial discussions kick off in Abu Dhabi this weekend.

The UAE is Australia’s largest trade and investment partner in the Middle East, and the 19th largest
trading partner globally, with $9.3 billion in two-way goods and services trade in 2022. UAE
investment in Australia totalled $12.6 billion in 2022.

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