Bahrain Airport Company (BAC) is going full steam ahead with a series of major infrastructure investments at the Gulf archipelago’s main hub, with an Express Cargo Village at the centre of plans to support Bahrain’s lofty ambitions to become a key logistics hub for the region.
“One of the key lessons learned from the pandemic is that we need to first be cost-efficient from an operating business model point of view, but also diversified in terms of revenues,” explained Mohamed Yousif AlBinfalah, Chief Executive Officer of BAC, which operates Bahrain’s international airport. “Our aeronautical revenues were hit badly because of Covid and looking into new streams of cargo and logistics revenues not only supports our own strategy but is also in line with the national strategy on logistics,” he added.
The growth of Bahrain’s logistics industry is seen as a vital tool in enhancing its regional competitiveness and ability to attract investment, and is one of the high-priority sectors outlined in Bahrain’s Economic Vision 2030.
In June, the foundation stone for the Express Cargo Village was laid, kicking off construction for a 25,000 sq m hub that includes buildings dedicated to serve each cargo operator. BAC has signed a 10-year agreement with FedEx Express to operate 9,000 sq m of warehouse and ramp area to be handed over in the third quarter of 2023.
Another major express cargo operator at Bahrain is DHL, which has been there since the 1980s and will be accommodated with extra space at the Village, said AlBinfalah. BAC is also hoping to cement a deal with DHL to develop an aircraft maintenance centre at the airport to cater for some of its increasing number of freighters registered in Bahrain, he added.
“Logistics is not new to Bahrain. We sit in the middle of the Arabian Gulf, geographically very near to all markets in the region,” said AlBinfalah. For instance, the eastern province of Saudi Arabia is a short drive across the King Fahd Causeway that connects the two countries.
Bahrain International Airport has other advantages, including a 24/7 cargo operation, existing robust infrastructure, a highly efficient operation and a good road network. Plus, it is a free zone meaning companies do not require a local partner, said AlBinfalah. “We are a good place to do business,” he noted.
BAC’s strategy is to take logistics revenues above the 50% level they represent today, said AlBinfalah. However, it continues to invest heavily using its own financial strength in its airport infrastructure as the post-pandemic passenger traffic recovery kicks in.
At its peak in 2019, Bahrain handled 9.7 million passengers, a figure that fell back by 76% in 2020. By the end of this year, it will return to 6.5 million passengers and be profitable at the net level, said AlBinfalah. It has enhanced the airport during the pandemic with a new car park, fuel farm and premium lounge, as well as renovating the airport’s original terminal into a VIP facility.
“With our new terminal in place and all of these regenerations we are well positioned to be very optimistic as the industry recovers,” said AlBinfalah. The new US$1.1 billion terminal was opened in early 2021 and has a capacity of 14 million passengers.
