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Cablegate: Dube Tradeport Project Aims to Increase Kwazulu-Natal's

VZCZCXRO4070
RR RUEHBZ RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHDU #0119/01 3571341
ZNR UUUUU ZZH
R 231341Z DEC 09
FM AMCONSUL DURBAN
TO RUEHC/SECSTATE WASHDC 1533
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE
RUEHDU/AMCONSUL DURBAN 0915

UNCLAS SECTION 01 OF 02 DURBAN 000119

SENSITIVE
SIPDIS

FOR AF/S, INR

E.O. 12958: N/A
TAGS: ETRD EIND EINV EAIR PGOV SF
SUBJECT: DUBE TRADEPORT PROJECT AIMS TO INCREASE KWAZULU-NATAL'S
INTERNATIONAL STANDING

REF: 08 DURBAN 23

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This cable is a collaboration between Consulate General Durban
and Embassy Pretoria. It is part of a series of reporting on
regional transport infrastructure developments.

1. (SBU) Summary. Post visited Durban's Dube TradePort project
to receive an update on construction progress and success at
attracting international investors. The first phase of the
project to create a new international airport and trade zone in
KwaZulu-Natal (KZN) Province is 85 percent complete. Several
international carriers have expressed an interest in launching
service to the new international airport, which is located in
close proximity to Durban, Richards Bay, and all of KZN, South
Africa's number one domestic tourism destination. The tradeport
aims to increase economic growth through the creation of
thousands of additional jobs at the traQ port and expected
tourism and retail offshoots. The province faces competition
from other regional tourism destinations such as Mozambique, and
is not as well promoted internationally as Cape Town. However,
this project and other tourism promotion initiatives should help
KZN leverage expected tourism growth during the 2010 FIFA World
Cup. End Summary.


DUBE TRADEPORT HOPES TO LEVERAGE PROXIMITY TO SEAPORTS

2. (U) Post visited the Dube TradePort project on October 20, to
receive an update on construction progress and success with
attracting international investors. The Dube Tradeport is
located in close proximity to two of Africa's busiest and
largest seaports, the Port of Durban and the Port of Richards
Bay. It combines a new international airport with an onsite
trade zone to promote tourism and trade in KZN (reftel), which
has the second-largest provincial gross domestic product in the
country. The current Durban airport provides only limited
international flights within the Southern Africa region. The
total project cost is estimated at R6.8 billion ($932 million)
and the first phase of the project is 85 percent complete. The
targeted completion date for the first phase is May 2, 2010.

3. (U) The new airport is being built approximately 50
kilometers northeast of downtown Durban. (Note: The official
name of the airport is still being debated, with "King Shaka
International Airport" cited as the leading choice. End Note.)
According to Dube Tradeport officials, the new airport will have
a few comparative advantages over OR Tambo International Airport
(ORTIA) in Johannesburg. ORTIA is currently the busiest airport
in Africa, but is costly to service due to its high altitude
(5,500 feet above sea level). In contrast the new Durban
airport will be at sea level, requiring less fuel for long-haul
flights. Cargo security has historically been a concern at
ORTIA and international carriers are looking at developing
alternative hubs.

4. (U) Logistics costs to transport high-value international air
cargo destined for other Southern African countries via the Dube
Tradeport would also be lower due to its proximity to the Port
of Durban. Currently, most high-value/time sensitive products
destined for the Southern African market (such as pharmaceutical
products) are transported via air cargo to ORTIA and then
transported by road to either the Port of Durban for further
transport via ship or directly to neighboring countries, which
significantly increases overall delivery time and costs.

5. (U) Approximately 800,000 Durban bound/based passengers fly
via connections at ORTIA per year due to a lack of direct
international flights from Durban. According to the Center for
Development and Enterprise, KZN is already the number one
domestic tourism market in South Africa and the KZN provincial
government is beginning to market it more aggressively in
international settings (reftel). The new airport will be able
to accommodate two wide-bodied Airbus A380 aircraft at a time.
Passenger capacity after the completion of the first phase is
projected at 7.5 million passengers per year. Plans also allow
for further phased expansions to reach the eventual capacity to
accommodate 45 million passengers per year by 2060.

INTERNATIONAL CARRIERS SHOW INTEREST IN NEW AIRPORT

6. (SBU) According to Dube Tradeport officials, an ideal
commercial aviation strategy for South Africa would direct
flights from the East to Durban international airport, flights
from Europe to ORTIA, and flights from Latin America to Cape
Town International Airport. They noted that the SAG has started
to encourage airlines to follow this unofficial strategy.
Emirates Airlines has already started a daily direct service

DURBAN 00000119 002.2 OF 002


between Dubai and Durban, which is already sold out until
February 2010.

7. (SBU) Project organizers are also reaching out to other major
international carriers with some success. Dube Tradeport
officials said four other international carriers have shown
strong interest thus far. Jet Airlines would like to launch
daily direct flights between Chennai, India and Durban. Jet
Airlines is currently negotiating a code-share agreement with
South African Airways to receive approval for this new service.
British Airways has agreed to launch direct flights also, but
was waiting for the 2010 FIFA World Cup schedule to be finalized
in December before announcing flight expansions. KLM and
Lufthana have expressed interest because of potential cargo
business.

8. (SBU) Etihad Airlines has also expressed interest, but
officials noted that there were some competition concerns with
Emirates, which signed on first. Project organizers would also
like to see Delta Airlines extend service to Durban. Delta
currently has direct flights from the U.S. to ORTIA and has
direct seasonal service to Cape Town. Dube Tradeport officials
expressed the view that there would be good demand to launch a
service from Kenya to Durban and asked post to encourage Delta
Airlines to consider launching a route to Durban via Kenya.
(Note: The U.S.-Kenya Open Skies agreement would not permit
fifth freedom local traffic rights between points in Kenya and
other points in Africa other than Senegal until April 1, 2011.
End note.)

CARGO POTENTIAL

9. (U) The Trade Zone will include a cargo processing terminal,
which will have direct air-side access for the rapid transport
of time-sensitive products. It will be capable of managing
about 100,000 tons of cargo per year with the ability to expand
capacity to 400,000 tons per year. Dube Tradeport has appointed
WFS as the cargo terminal operator and is developing an adjacent
facility to accommodate most of the current airfreight service
providers in KwaZulu-Natal. Officials mentioned they are in
contact with UPS about cargo service, and at their request post
also provided contact information for FedEx.

TRADEPORT TO SPUR PROVINCIAL ECONOMIC GROWTH

10. (SBU) The Dube Tradeport aims to increase economic growth in
KZN through the creation of thousands of additional jobs at the
trade port and expected tourism and retail offshoots.
Approximately 3,000 employees work at the existing Durban
airport, and the new airport would require at least 8,000
employees. Local low-cost carriers have expressed an interest
in converting the existing airport into a hub for low-cost
carriers in Southern Africa. International hotel chains have
expressed an interest in developing hotels at the Dube Tradeport
to serve the new international airport. Plans for at least two
hotels are being finalized for phase two of the project.

11. (SBU) The SAG also hopes to develop a maintenance and repair
hub for Africa as a part of the Dube Tradeport project. Dube
Tradeport officials said eighty percent of the African market is
served by Boeing aircraft, yet there is no Boeing maintenance
facility on the continent. Dube Tradeport officials have
identified South African Airways Technical to provide the
technical expertise required to operate a potential maintenance
and repair facility and are pursuing the initiative with Boeing.


COMMENT

12. (U) KwaZulu-Natal Province boasts some of the cleanest and
well-managed beaches in the Southern African region and has
attracted international investments to further develop its
tourism and resort infrastructure (reftel). The province faces
competition from other regional destinations such as Mozambique,
and is not as well promoted internationally as Cape Town.
Future phases of the Dube Tradeport project may face delays and
financial constraints as the SAG grapples with a budget deficit.
However, the completion of the first phase and other tourism
promotion initiatives already underway will help expand KZN's
international tourism base and grow the provincial economy. The
tradeport's proximity to existing seaports and the altitude of
the new airport will provide it with a regional competitive
advantage. The project will also receive a boost if it is
completed on time to leverage tourism growth during the upcoming
2010 FIFA World Cup.
DERDERIANJ

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