Unlocking aviation’s economic value vital for global prosperity
October 16 2019 10:15 PM
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Passengers wait at a boarding gate at Changsha Huanghua International Airport in Changsha, Hunan, China. If the global aviation sector were a country, its total contribution (direct, indirect, induced and catalytic) of $2.7tn to the GDP, and the 65.5mn jobs it supports, would be comparable to the UK’s economic size and population, notes the Air Transport Action Group.

By Pratap John

Approximately 1.4bn tourists globally are crossing their borders every year, over half of whom travel to their destinations by air.
Obviously, one industry that relies most heavily on aviation is tourism. By facilitating tourism, air transport helps generate economic growth and alleviate poverty.
Aviation is an essential element of tourism, providing the vital link between the tourist generating areas and destinations.
Some three years ago, aviation supported almost 37mn jobs within the tourism sector, contributing roughly $897bn a year to global GDP, according to the recently launched ‘Aviation Benefits Report’ jointly produced by ICAO and IATA with some global partners.
Currently, forecasts indicate that air traffic volumes will more than double in the next 20 years. The industries directly supported by aviation will grow in tandem, increasing business-to-business and consumer benefits and choices, improving efficiency, spurring job creation, and sparking local and national development. 
This includes for the aviation sector itself: increased connectivity leads to further re-investment in aviation, creating a positive cycle of aviation development and economic prosperity in those countries and regions that set out suitable planning and investment commitments. 
Aviation’s global stature as an economic engine is evident in the statistics. If the global aviation sector were a country, its total contribution (direct, indirect, induced and catalytic) of $2.7tn to the gross domestic product (GDP), and the 65.5mn jobs it supports, would be comparable to the United Kingdom’s economic size and population, notes the cross-industry Air Transport Action Group (ATAG).
Air transport is a driver of global trade and e-commerce, allowing globalisation of production. The small volumes of air cargo amount to big values in world trade. 
In 2018, $6.8tn worth of goods were expected to be transported internationally by air, representing 35% of world trade by value, despite representing less than 1% by volume.
Aviation’s advantage over other modes of transport in terms of speed and reliability has contributed to the market for “same-day” and “next-day” delivery services and transportation of urgent or time-sensitive goods.
The report shows that around 90% of business-to-consumer (B2C) e-commerce parcels are currently carried by air. The e-commerce share of scheduled international mail tonne kilometres (MTKs) grew from 16% to 88% between 2010 and 2018 and is estimated to grow to 96% by 2025.
Industry experts say both air passenger traffic and air freight traffic are expected to more than double in the next two decades. By 2045, passenger traffic will reach over 22tn Revenue Passenger Kilometres (RPKs) with a growth of 4.1% a year and freight will expand by 3.6% annually over the same time period, to 573bn Freight in tonne kilometers (FTKs).
“This growth holds tremendous economic potential, which will support all countries in achieving the UN’s 2030 Agenda for Sustainable Development,” says the ‘Aviation Benefits Report’.
In 2036, aviation is estimated to provide 98mn jobs and generate $5.7tn in GDP, a 110% increase from 2016.
But, analysts say the future growth of air transport will likely depend on sustainable world economic and trade growth, as well as declining airline costs and ticket prices.  Other factors, including regulatory regimes (such as liberalisation of air transport), technological improvements and fuel costs will also impact future growth.
If growth were to slow due to restrictive trade, immigration, political factors and increasing fuel price, the total number of jobs supported by the air transport sector (including air transport supported tourism) could be 12mn lower by 2036 than the base forecasts, analysts point out.  
In this scenario, they say the contribution of the air transport sector to world GDP would be $820bn (2016 prices) lower, with an additional $390bn lost through lower tourism activity.
To encourage this projected growth in a sustainable manner and produce inclusive and productive development and employment, the report noted that aviation must continue to develop coherent policies with tourism, trade and other transport sectors. 
A national or regional policy framework consistent with ICAO’s standards and policies, and with globally accepted good regulatory practices, can unlock the full value of aviation.
New technologies and procedures should also be adopted to further improve connectivity and modernise infrastructure while minimising any possible adverse impacts of this growth on the environment. 
Undoubtedly, aviation is an increasingly important mode of transport for tourism markets. While geography has meant that, in modern times, air travel has always been the dominant mode for long distance travel, notably international tourism, moves towards deregulation, and in particular the emergence of the low cost carriers, have also increased aviation’s significance for short and medium haul tourism trips.
Thus developments in aviation can have very significant implications for many leisure and business tourism markets globally.


Pratap John is Business Editor
 at Gulf Times.



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