World’s Economic Progress Needs Thriving Aviation Industry
50 million jobs and US$3.6 trillion of the world’s GDP will depend on aviation by 2026.
Limiting aviation’s growth even to 1% below its current trend rate would cost 6 million aviation related jobs and reduce the industry’s GDP contribution by US$600 billion.
These are among the findings of a study by Oxford Economics, a world leader in quantitative analysis and economic forecasting, commissioned by Airbus Industrie. Its new report on the economic and social impact of aviation entitled “Aviation: The Real World Wide Web” was launched in London today.
The study’s conclusions closely support predictions earlier this week by the International Air Transport Association (IATA) and confirm the spread of impact on related industries unless aviation and governments jointly develop effective strategies to support this economically critical industry.
IATA) called for a major resizing and reshaping of the entire air transport value chain as airlines battle the ongoing global economic crisis. Airlines are expected to post losses of US$9 billion this year with an unprecedented 15% revenue drop that will see industry revenues shrink by US$80 billion to US$448 billion.
“I am a realist and I don’t see facts to support optimism. The industry is in survival mode. Whether this crisis is long or short, the world is changing. Travel budgets have been slashed and consumers will need to reduce their debt. It will not be business as usual in the post-crisis world. Governments, partners and airlines must use this crisis as an opportunity to build a stronger industry. That means resizing and reshaping,” said Giovanni Bisignani, IATA’s Director General and CEO in his State of the Industry address to 500 of the industry’s top leaders gathered in Kuala Lumpur for the 65th IATA Annual General Meeting and World Air Transport Summit.
Regional Impact – Asia Pacific
Among the Oxford Economics report’s conclusions are:
· Close to 20 million jobs could be supported by the Asia Pacific region’s air transport sector in the next 20 years.
· Currently air transport contributes about $170 billion to the Asia Pacific region’s GDP.
The report provides an in-depth look at the aviation industry’s contribution to global economic development and social prosperity, while considering what that really means for individual countries, regions, towns, families and species.
Among other things, the report finds:
Air Transport directly employs over 5.5 million people and contributes US$425 billion to global GDP, which is more than the contributions of several members of the G20.
Aviation’s GDP contribution is around one and a half times the size of the pharmaceutical industry (US$270 billion GDP) or the textile industry (US$286 billion GDP) and a third bigger than the motor production industry (US$322 billion GDP).
When combined with its supply chain and dependent industries, including its contribution to tourism, aviation supports over 33 million jobs and US$1.5 trillion GDP. As a country this would rank aviation in eighth position, between Italy and Spain.
An estimated 35% of all trade (by value) in manufactured goods travel by air. This is worth some US$3.5 trillion.
Aviation currently generates US$10 billion of African GDP, with the industry forecast to support 5 million jobs in the region in the next 20 years.
Of the 6 million jobs that would be lost if aviation grows by 1% below the current trend, 2 million would be lost in the Asia-Pacific region, 1.5 million each in Europe and North America, 400-500 thousand each in Africa and Latin America and over 200,000 in the Middle East.
Aviation provides significant additional economic benefits by encouraging trade and international investment.
Substantial employment and economic activity is generated by small businesses and agricultural smallholders in the developing world that are dependent upon aviation for an examination of the ‘food miles’ issue and the impact on people like the Kinangop growers group in Kenya)
For every US$100 million invested in aerospace R&D, an additional US$70 million of GDP is generated year-after-year.
Aviation currently contributes 2% of worldwide man-made CO2 emissions and will be no more than 3% by 2050. Journeys of over 1,500 kilometres, for which no practical alternatives exist, account for 80% of aviation’s green house gas emissions.
While reduced growth in aviation would have considerably impacts on global employment, economic output and social development, it would not necessarily imply lower emissions when the impact of replacement activities and alternative transport are taken into account.
Adrian Cooper, Managing Director of Oxford Economics, spoke for Oxford Economics after completing the report and analysing its findings:
“The more deeply our analysis went on the role of aviation in different industries and regions around the world, the more we understood the central role it played. The growth of many business sectors in the developed and developing worlds, and of many different industries, has for some time been intertwined with the growth of aviation itself. It does appear that global economic growth is correlated with and dependent on growth in aviation.”
“While sophisticated econometric modelling produces the facts that support this view, there are many additional advantages that are more difficult to quantify precisely, but which the world now takes for granted, such as the benefits of being able to travel quickly from one continent to the other. We have reached the conclusion that aviation has a special role in raising living standards.”
These additional benefits are addressed in the report by considering that:
Global travel by air is more accessible to more of the Earth’s population than at any other time in history: over 2.5 billion passengers and approximately 50 million tonnes of freight are flown worldwide annually.
Beyond multiple economic benefits, air transport has radically changed how economies and societies operate and interact by opening trade opportunities that benefit poorer countries; making it easier to share knowledge gained through research, development and innovation; giving workers in developing countries access to higher, more stable incomes while maintaining ties to their homelands and helping to increase awareness of preservation initiatives and sustainable ecotourism in emerging economies.
The report acknowledges that aviation has an impact on the environment, but seeks to balance the debate about its future by highlighting the benefits it brings to so many people worldwide. Case studies are used to illustrate the true cost of constraining the continued growth of the air transport industry, in the wider context of the alternatives available and the economic prospects of those impacted. The solution, says Oxford Economics, is policy that supports a sustainable balance between the positive contribution of aviation and the impact of future growth.
The report was commissioned by Airbus with support from British Airways and EasyJet, but the results are independent and unbiased says Adrian Cooper, Managing Director of Oxford Economics: “The conclusions and data in the report are a result of widely accepted economic modelling and Oxford Economics’ extensive knowledge of the aviation industry. We examined areas such as efficiency, productivity, trade, connectivity, investment, tourism and standard of living. Most importantly, the numbers have been combined with a series of case studies to illustrate what the theory actually means for the lives of real people around the world. We’ve put faces behind the numbers.”
To read the report in full, go to: www.oxfordeconomics.com/free/pdfs/oeaviationweb09.pdf
It seems someone understands aviation – now airport owners and Governments need to understand how important aviation is to the GDP. Somehow Australia has lost the plot as to the significance of aviation to the overall economy.