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Over the years, there were two large increases in the air passenger growth
rates: in the mid-1980s and after 2001. Several factors stimulated the first
increase in the growth rate: government funds were provided to establish a
flag carrier and to develop aviation infrastructure. In addition, liberal aviation
regulatory framework established by the government helped the carrier grow
its international network. The changes in the regulatory framework and
aviation infrastructure investment reflected the governments overall goal to
move the economy away from oil-exporting activities toward development of
the service-based industries. 5
Air transportation development was also supported by the growing air travel
and freight need of Dubai as the economy moved away from the oilexporting activities. To promote this diversification of demand and global
integration of Dubais economy, the government in the 1980s began
sponsoring the development of supporting business and tourism
infrastructure and established a regulatory framework based on free-market
principles which encouraged foreign investment. In the recent years, some of
these infrastructure projects have been completed boosting the economys
international profile and encouraging the inflow of labor and capital.
The second growth phase was stimulated by the demand from the
economys growing services sector and the rapidly expanding long-haul
carrier Emirates Airline. To support Emirates expansion strategy, the
government continuously upgraded and expanded the local aviation
infrastructure in anticipation of future demand. In addition to increasing the
capacity of Dubai International Airport, the government invested into
construction of a new major airport as part of the Dubai World Central
development. 6
Since the early 1980s, 1982 was the only year when the UAEs airlines
registered a negative growth rate in air passenger traffic. While the countrys
recent economic growth has been strong, the countrys GDP was on average
decreasing through the 1980s and reached its 1981 levels only in 1994. This
decrease in the countrys GDP growth rates coincided with the decline in the
worlds oil prices after their peak in 1980. In other words, the United Arab
Emirates had positive air passenger growth behavior while the economys
GDP had a negative rate of growth. The governments strategy, which
focused on the development of the air transportation sector as part of overall
5 https://www.gcaa.gov.ae/en/szc/pages/dst.aspx
6 http://www.dubaiairports.ae/corporate/media-centre/fact-sheets/detail/daoxford-report-2013-2014
7 http://www.dec.org.ae/about/secretariat/economic-policy-researchcenter.aspx