The airline industry is under pressure from many sectors – such as President Trump’s trade wars and Boeing’s problems with the 737 Max. This makes it worth looking at the contribution aviation makes to the global economy. We will therefore run a short series of articles that describe the contribution of the air transport industry, first globally, then to Africa and finally to South Africa.
In a 2016 report for IATA, Oxford Economics analysed the economic and social benefits of aviation at a national level in over 50 countries and used the results of that assessment to create a comprehensive global picture of air transport’s many benefits.
The Air Transport Action Group (ATAG) expanded the analysis to build a unique view of how the air transport system provides jobs, trade, connectivity, tourism, vital lifelines for many remote communities and rapid disaster response.
Aviation is one of the most global industries: connecting people, cultures and businesses across continents. Aviation has continued to expand. It has weathered crises and demonstrated long-term resilience, becoming an indispensable means of transport. Historically, air transport has doubled in size every 15 years and has grown faster than most other industries. In 2016, airlines worldwide carried around 3.8 billion passengers annually with 7.1 trillion revenue passenger kilometres (RPKs). Fifty three million tonnes of freight were transported by air, reaching 205 billion freight tonne kilometres (FTKs).
According to the Global Sustainable Aviation Summit report, the global air transport sector supports 65.5 million jobs and $2.7 trillion in global economic activity, according to new research released by the Air Transport Action Group (ATAG). The report, titled: Aviation: Benefits beyond borders, explores the fundamental role civil aviation plays in today’s society and addresses the economic, social and environmental impacts of this global industry.
ATAG’s Executive Director, Michael Gill, said: “There are over 10 million women and men working within the industry to make sure 120,000 flights and 12 million passengers a day are guided safely through their journeys. The wider supply chain, flow-on impacts and jobs in tourism made possible by air transport show that at least 65.5 million jobs and 3.6 percent of global economic activity are supported by our industry.”
The report also looks at two future scenarios for growth in air traffic and related jobs and economic benefits. With an open, free-trade approach, the growth in air transport will support some 97.8 million jobs and $5.7 trillion in economic activity in 2036. However, if governments create a more fragmented world with isolationism and protectionist policies, over 12 million fewer jobs and $1.2 trillion less in economic activity would be supported by air transport.
“By working with one another, learning from each other’s cultures and trading openly, we not only create a stronger economic outlook, but we also continue the conditions for peaceful interaction across the globe. Aviation is the key driver for this positive connectivity.”
The Airports Council International Director-General, Angela Gittens, said: “Airports are crucial links in the air transport value chain that drive economic and social benefits for the local, regional and national communities they serve.’’
Airports act as catalysts for employment, innovation, and improved global connectivity and trade. In responding to the growing global demand for air services, airports – in partnership with the wider aviation community – are also taking a lead role in minimising and mitigating the environmental effects of aviation and pursuing sustainable development”.
A remarkable metric is that every day, around 120,000 flights transport over 12 million passengers and around USD18 billion worth of goods.
Aviation provides the only rapid worldwide transportation network, which makes it essential for global business. It generates economic growth, creates jobs and facilitates international trade and tourism. According to recent estimates by the cross-industry Air Transport Action Group (ATAG), the total economic impact (direct, indirect, induced and tourism-connected) of the global aviation industry reached USD2.7 trillion, some 3.5 percent of world’s gross domestic product (GDP) in 2014.
The air transport industry also supported a total of 62.7 million jobs globally. It provided 9.9 million direct jobs. Airlines, air navigation service providers and airports directly employed over three million people. The civil aerospace sector (the manufacture of aircraft, systems and engines) employed 1.1 million people. A further 5.5 million worked in other on-airport positions. 52.8 million indirect, induced and tourism-related jobs were supported by aviation.
These estimates do not include other economic benefits of aviation, such as the jobs or economic activity that occur when companies or industries exist because air travel makes them possible, the intrinsic value that the speed and connectivity of air travel provides, or domestic tourism and trade. Including these would increase the employment and global economic impact numbers several-fold.
These are some of the key points from these two seminal analyses:
Air transport provides the only rapid worldwide transportation network, which makes it essential for global business and tourism.
It plays a vital role in facilitating economic growth, particularly in developing countries. Airlines transport over three billion passengers annually with revenue passenger kilometres (RPK) totalling over six trillion in 2014.
Over 50 million tonnes of freight were carried by air in 2014, amounting to just under 786 billion freight tonne kilometres (FTK).
Air transport facilitates world trade, helping countries contribute to the global economy by increasing access to international markets and allowing globalisation of production. The total value of goods transported by air represents 35% of all international trade.
Air connectivity contributes to improved productivity by encouraging investment and innovation; improving business operations and efficiency; and allowing companies to attract high quality employees.
Aviation’s global economic impact (direct, indirect, induced and tourism catalytic) is estimated at $2.7 trillion, equivalent to 3.5% of world gross domestic product (GDP). These figures do not include other economic benefits of aviation, such as the jobs or economic activity that occur when companies or industries exist because air travel makes them possible. Neither does it include the intrinsic value that the speed and connectivity of air travel provides, or domestic tourism and trade. Including these would increase the employment and global economic impact numbers several-fold.
Around 1,400 airlines operate a total fleet of over 26,000 aircraft. They serve almost 4,000 airports through a route network of several million kilometres managed by 173 air navigation service providers.
Aviation job creation
Air transport is a major global employer. The air transport industry supports a total of 62.7 million jobs globally.
It provides 9.9 million direct jobs: airlines, air navigation service providers and airports directly employ over three million people and the civil aerospace sector (the manufacture of aircraft systems, frames and engines) employs 1.1 million people. A further 5.5 million work in other on-airport positions.
There are 11.2 million indirect jobs generated through purchases of goods and services from companies in its supply chain. Industry employees support 5.2 million induced jobs through spending of wages.
Tourism and social benefits
Aviation is indispensable for tourism, a major engine of economic growth, particularly in developing economies. Globally, 54% of international tourists travel by air. Aviation-enabled tourism generates around 36.3 million jobs globally.
Air transport invests substantially in vital infrastructure. Unlike other transport modes, the air transport industry pays for a vast majority of its own infrastructure costs (runways, airport terminals, air traffic control), rather than being financed through taxation and public investment or subsidy (as is typically the case for road and railways).
In 2014, airports invested $37 billion in construction projects, creating jobs and building new infrastructure. The benefits to society of research and development spending by the aerospace industry are estimated to be much higher than in manufacturing as a whole. Every $100 million of spending on research eventually generates additional GDP benefits of $70 million, year after year.
Air transport provides significant social benefits. Air transport contributes to sustainable development. By facilitating tourism and trade, it generates economic growth, provides jobs, improves living standards, alleviates poverty and increases revenues from taxes.
The increase in cross-border travel is a reflection of the closer relationships developing between countries, both between individuals and at state level. In the same way, eased restrictions on the movement of goods and people across borders facilitates the development of social and economic networks that will have long-lasting effects.
This improved flow of people and goods benefits both the host and the originating countries, encouraging increased social and economic integration.
Air transport offers a vital lifeline to communities that lack adequate road or rail networks. In many remote communities and small islands, access to the rest of the world and to essential services such as health care is often only possible by air.
Aviation’s speed and reliability are perhaps most immediately apparent in the delivery of urgently needed assistance during emergencies caused by natural disaster, famine and war. Air services are particularly important in situations where physical access is problematic.
Aviation and Climate Change
Air transport is working to mitigate its environmental impact: Airline operations produced 739 million tonnes of carbon dioxide (CO2) in 2014 (and 781 million tonnes in 2015), just under 2% of the total human carbon emissions of over 36 billion tonnes.
The aviation industry agreed in 2008 to the world’s first set of sector-specific climate change targets. The industry is already delivering on the first target to continue to improve fleet fuel efficiency by 1.5% per year until 2020. From 2020, aviation will cap its net carbon emissions while continuing to grow to meet the needs of passengers and economies.
By 2050, the industry has committed to reduce its net carbon footprint to half of what it was in 2005.
Companies across the sector are collaborating to reduce emissions using a four-pillar strategy of new technology, efficient operations, improved infrastructure and a global market-based measure to fill the remaining emissions gap.
Modern jet aircraft are 75% quieter than the models that first entered into service and each new generation of aircraft continues this improvement.
Over 2,200 passenger flights operating partially on sustainable biofuels have taken place so far. It is expected that shifting to alternative aviation fuels could reduce CO2 by as much as 80%, compared with traditional jet fuel.
Air transport will continue to provide jobs. Forecasts suggest that, in 2034, there will be over 5.8 billion passengers and aviation will support 99 million jobs and $5.9 trillion in economic activity (a 122% increase on 2014 figures).
However, if growth were to slow by just 1%, the total number of jobs supported by the air transport sector (including air transport supported tourism) would be more than 10.5 million lower than the base forecasts and the contribution of the air transport sector to world GDP would be $690 billion (2014 prices) lower, with an additional $350 billion lost through lower tourism activity.