POWERING GLOBAL ECONOMIC GROWTH, EMPLOYMENT, TRADE LINKS, TOURISM AND SUPPORT FOR SUSTAINABLE DEVELOPMENT THROUGH AIR TRANSPORT - Aviation: ...
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POWERING GLOBAL ECONOMIC GROWTH, EMPLOYMENT, TRADE LINKS, TOURISM AND SUPPORT FOR SUSTAINABLE DEVELOPMENT THROUGH AIR TRANSPORT JULY 2016
The air transport industry is the global network of commercial aircraft operators, airports, air navigation service providers and the manufacturers of aircraft and their components. It is responsible for connecting the global economy, providing millions of jobs and making the modern globally-connected quality of life possible. The Air Transport Action Group (ATAG), based in Geneva, Switzerland, represents the full spectrum of this global business. ATAG brings the industry together to form a strategic perspective on commercial aviation’s sustainable development and the role that air transport can play in supporting the sustainability of other sectors of the economy. ATAG’s Funding Members include: Airports Council International (ACI), Airbus, ATR, Boeing, Bombardier, Civil Air Navigation Services Organisation (CANSO), CFM International, Embraer, GE Aviation, Honeywell Aerospace, International Air Transport Association (IATA), Pratt & Whitney, Rolls-Royce and Safran. www.atag.org This publication is for information purposes only. Whilst every effort has been made to ensure the quality and accuracy of information in this publication, it is made available without any warranty of any kind. All currency is in United States Dollars at 2014 prices, unless otherwise stated. Forecasts and forward-looking statements in this publication are attributed to those organisations referenced, or the Air Transport Action Group.
CONTENTS
Introduction 2
Executive summary and key facts 3
A global industry:
Aviation’s economic, social and
environmental impacts in 2014 11
Regional and group analysis 39
Africa 40
Asia-Pacific 42
Europe 44
Latin America and the Caribbean 46
Middle East 48
North America 50
APEC economies 52
European Union 53
Small island states 54
Developing countries 55
OECD countries 56
Special case study:
Making it in India: How the commercial aerospace
sector is helping invigorate the Indian economy 57
National analysis:
A country-by-country look at aviation’s benefits 61
A growth industry:
An assessment of the next 20 years of aviation 65
Essay:
Shaping the millennials. How access to democratised
air transport has shaped a generation by Peter Jordan 69
References 72
Methodology 76
INTRODUCTION
Finding our balance
Michael Gill
Executive Director, ATAG
Geneva, July 2016
The year 2015 was momentous for multilateral issue of our time: balance. We must balance
policymaking in the sustainable development the need to grow the service we provide,
field. Two international agreements — one on connecting more people and more places,
sustainable development and the other on more often — particularly in emerging and
climate change — were debated, negotiated developing economies — with the need to
and adopted. Both agreements provide a reduce our environmental impact. It’s a
long-term vision of how the world can unite challenging task, but history has shown that it
to solve some of its greatest challenges: is a task to which our colleagues throughout
poverty, health, education and environmental the industry are committed… and they are
considerations all taking a positive and, in already achieving a great deal.
many cases, interdependent path.
If 2015 was for the Sustainable Development
Sometimes it is hard to see how these lofty Goals and the Paris Agreement, 2016 is ‘our’
and all-encompassing frameworks truly year for multilateral action. Two significant
influence individual citizens’ lives or how decisions at the International Civil Aviation
we can each contribute to their success. In Organization (ICAO) will help drive our
this 2016 edition of Aviation: Benefits Beyond climate plan forward and prove that
Borders, we look at the role that can be collaborative action, done with respect for the
played by a sector such as aviation, which is differences inherent in the global community,
such a vital conduit for bringing the citizens does pay off.
and businesses of the world together. This
report explores the role modern air transport It is noteworthy that the aviation industry
plays in supporting the global economy has played a major role in making the CO2
and connectivity through the prism of the Standard and the global market-based
sustainable development goals. measure at ICAO a reality. We are a sector that
likes to think long-term and work together
It is a role that the women and men across on challenges. We provide a responsible and
the industry play in helping to achieve some balanced outlook and the ten million people
of the objectives that governments have set who work in aviation can be proud of what
out through these United Nations processes. we achieve, daily, annually, and what we will
In doing so, we are always mindful of the key achieve for decades to come.
2 AVIATION BENEFITS BEYOND BORDERS
Executive
Summary
Key facts and figures from
the world of air transport
3 AVIATION BENEFITS BEYOND BORDERS
EXECUTIVE SUMMARY
Key facts and figures from the world of air transport
All figures are for 2014, unless otherwise
stated, to give a single set of data for one Beyond the industry
year. Where available, the latest figures are Aviation’s global employment and GDP impact, 20142
also noted. These should be viewed as a
snapshot of the aviation sector in 2014 and
not as part of a trend. Although previous 62.7 million $2.7 trillion
Aviation: Benefits Beyond Borders reports
have used the same economic impact 36.3 million $892.4 billion
technique, differences in data sources Tourism
available between years mean many of the catalytic
annual reports are not directly comparable.
5.2 million $355 billion Induced
62.7
11.2 million $761.4 billion Indirect
9.9 million $664.4 billion Aviation direct
MILLION
JOBS GDP
Jobs supported by aviation
worldwide1
DIRECT JOBS
450,000
$2.7 TRILLION
Aviation’s global economic impact
3.5%
of global GDP supported
Airport operators3 (including direct, indirect, induced and by aviation9
(work for the airport operator)
tourism catalytic)8
5.5 MILLION
21st
Other on-airport4 These figures represent a snapshot of the
(retail, car rental, government
benefits that aviation activities deliver to the
agencies such as customs and
global economy. They do not include other
immigration, freight forwarders
economic benefits of aviation, such as the
and some catering) If aviation were a country, it would rank jobs or economic activity generated when
2.7 MILLION 21st in size by GDP (similar in size to companies or whole industries exist because
Sweden or Switzerland)11 air travel makes them possible. Neither do
Airlines5 they include the intrinsic value that the speed
(flight and cabin crews, executives, and connectivity of air travel provides, nor
3.8x
ground services, check-in, training, domestic tourism and trade. Including these
maintenance staff ) would increase the employment and global
economic impact numbers several-fold10.
1.1 MILLION
Civil aerospace6 Aviation jobs are, on average, 3.8 times
(engineers and designers of civil
more productive than other jobs12. By
aircraft, engines and components)
opening markets, enabling knowledge
220,000 transfer and other catalytic effects,
aviation also makes jobs in other sectors
Air navigation more productive
service providers7
(air traffic controllers, executives)
4 AVIATION BENEFITS BEYOND BORDERS
51,554
Routes served globally in 201413
5,500+
Number of commercial flights
(in 2015 the number was 52,964). made using sustainable alternative fuel
Of these, 17,370 unique city-pairs expected by the end of 2016
are served
3.3 BILLION
Passengers carried by airlines 14
6.2 TRILLION
Kilometres flown by passengers
69.2 MILLION
Hours flown by all operations in
(in 2015, 3.57 billion passengers (in 2015, it was 6.7 trillion) 17 201418
were carried)
32.8 MILLION
Scheduled commercial flights
Going places
Global passenger split,
international / domestic, millions19
Asia-Pacific in front
Regional passenger traffic split20
worldwide15 5% 3%
(in 2015, there were 34.8 million flights). 8%
Including non-scheduled and business 40% Asia-Pacific
33%
operations, there were 38 million aircraft Europe
International North America
movements in 201416 Latin America
Domestic 25% & Caribbean
60%
Middle East
Africa
26%
This report provides a global view of a Air transport is a major contributor value of goods transported by air, $6.4 trillion,
truly global industry. Oxford Economics to global economic prosperity represents 35% of all international trade.
analysed the economic and social benefits
of aviation at a national level in 60 countries Aviation provides the only rapid worldwide Aviation is indispensable for tourism, a major
and used the results of that assessment transportation network, which makes it engine of economic growth, particularly
to build the most comprehensive global essential for global business and tourism. in developing economies. Globally, 54% of
picture of air transport’s many benefits. It plays a vital role in facilitating economic international tourists travel by air44.
Working with partners across the industry, growth, particularly in developing countries.
the Air Transport Action Group (ATAG) has Connectivity contributes to improved
expanded the analysis to build a unique view Airlines transport around three and a half billion productivity by encouraging investment and
of the air transport system that provides passengers annually with revenue passenger innovation; improving business operations
jobs, trade, connectivity, tourism, vital kilometres totalling over six trillion in 2014. and efficiency; and allowing companies to
lifelines for many remote communities and attract high quality employees.
rapid disaster response. Over 50 million tonnes of freight were carried
by air in 2014, amounting to just under 786 Aviation’s global economic impact (direct,
Every day... billion freight tonne kilometres. indirect, induced and tourism catalytic) is
estimated at $2.7 trillion, equivalent to 3.5% of
•» 9.8 million passengers Air transport facilitates world trade, helping world gross domestic product (GDP)45.
•» 104,000 flights countries contribute to the global economy by
•» $17.5 billion worth of goods carried43 increasing access to international markets and These figures do not include other
allowing globalisation of production. The total economic benefits of aviation, such as the
5 AVIATION BENEFITS BEYOND BORDERS
EXECUTIVE SUMMARY
1,402
Commercial airlines 21
173
Air navigation service providers24
3,883
Airports with scheduled
Jetting-off
Aircraft in commercial
service, by type 201426
commercial flights22
(there are 41,788 airfields in the world,
including military and general aviation23) 17%
Turboprops
Jets
26,065 83%
Commercial aircraft in service25
jobs or economic activity that occur when 1.1 million people. A further 5.5 million work in The benefits to society of research and
companies or industries exist because air other on-airport positions. development spending by the aerospace
travel makes them possible, the intrinsic industry are estimated to be much higher
value that the speed and connectivity of air There are 11.2 million indirect jobs generated than in manufacturing as a whole. Every $100
travel provides, or domestic tourism and through purchases of goods and services from million of spending on research eventually
trade. Including these would increase the companies in its supply chain. generates additional GDP benefits of $70
employment and global economic impact million, year after year.
numbers several-fold. Industry employees support 5.2 million
induced jobs through spending of wages.
Around 1,400 airlines operate a total fleet Aviation-enabled tourism generates around Air transport provides
of over 26,000 aircraft. They serve almost 36.3 million jobs globally. significant social benefits
4,000 airports through a route network of
several million kilometres managed by 173 air Air transport contributes to sustainable
navigation service providers. Air transport invests substantially development. By facilitating tourism and
in vital infrastructure trade, it generates economic growth, provides
jobs, improves living standards, alleviates
Air transport is a major Unlike other transport modes, the air poverty and increases revenues from taxes.
global employer transport industry pays for a vast majority of
its own infrastructure costs (runways, airport The increase in cross-border travel is
The air transport industry supports a total of terminals, air traffic control), rather than a reflection of the closer relationships
62.7 million jobs globally46. being financed through taxation and public developing between countries, both between
investment or subsidy (as is typically the case individuals and at state level. In the same
It provides 9.9 million direct jobs: airlines, for road and railways). way, eased restrictions on the movement of
air navigation service providers and airports goods and people across borders facilitate
directly employ over three million people and In 2014, airports invested $37 billion in the development of social and economic
the civil aerospace sector (the manufacture of construction projects, creating jobs and networks that will have long-lasting effects.
aircraft systems, frames and engines) employs building new infrastructure.
6 AVIATION BENEFITS BEYOND BORDERS
739 MILLION
Tonnes of carbon dioxide (CO2) emitted by airlines
(in 2015, it was 781 million tonnes29. This is 2% of the global human emissions of
36 billion tonnes. Around 80% of aviation CO2 is emitted from flights over 1,500
kilometres in length, for which there is no practical alternative form of transport
$226 BILLION
Amount the world’s airlines
CLIMATE TARGETS
Improve 1.5%
30%
Percentage of global airspace
Aviation will improve its fleet fuel
paid for fuel covered by automatic dependence
efficiency by an average of 1.5% per
(in 2015, it was $181 billion)28 annum between 2009 and 2020, a figure surveillance – broadcast (ADS-B),
the industry is currently exceeding which is a satellite-based navigation
278
system allowing tracking of aircraft using
Stabilise a network of stations on the ground,
From 2020, net carbon emissions from working in conjunction with orbiting
BILLION aviation will be capped through carbon- satellites. Coverage continues to grow
Litres of jet fuel used by neutral growth and the technology fosters increased
commercial operators efficiency of aircraft operations32
This equates to 73.4 billion gallons, or
Reduce 50%
By 2050, net aviation carbon emissions
around 222.4 million tonnes of Jet A-127
will be half of what they were in 2005
(in 2015, 294 billion litres was used)
This improved flow of people and goods the total human carbon emissions of over 36 By the end of 2016, it is expected that 5,500
benefits both the host and the originating billion tonnes. passenger flights operating partially on
countries, encouraging increased social and sustainable aviation biofuels will have taken
economic integration. The aviation industry agreed in 2008 to the place. It is also expected that shifting to
world’s first set of sector-specific climate alternative aviation fuels could reduce CO2 by
Air transport offers a vital lifeline to change targets. The industry is already as much as 80%, compared with traditional
communities that lack adequate road or rail delivering on the first target to continue to jet fuel.
networks. In many remote communities and improve fleet fuel efficiency by 1.5% per year
small islands, access to the rest of the world until 2020. From 2020, aviation will cap its net
and to essential services such as health care is carbon emissions while continuing to grow to Air transport will continue
often only possible by air. meet the needs of passengers and economies. to provide jobs
Aviation’s speed and reliability are perhaps By 2050, the industry has committed to Forecasts suggest that, in 2034, there will be
most immediately apparent in the delivery of reduce its net carbon footprint to half of what over 5.8 billion passengers47 and aviation will
urgently needed assistance during emergencies it was in 2005. support 99 million jobs and $5.9 trillion in
caused by natural disaster, famine and war. Air economic activity (a 122% increase on 2014
services are particularly important in situations Companies across the sector are collaborating figures)48.
where physical access is problematic. to reduce emissions using a four-pillar
strategy of new technology, efficient However, if growth were to slow by just 1%,
operations, improved infrastructure and the total number of jobs supported by the
Air transport is working to mitigate a global market-based measure to fill the air transport sector (including air transport
its environmental impact remaining emissions gap. supported tourism) would be more than 10.5
million lower than the base forecasts and
Airline operations produced 739 million Modern jet aircraft are 75% quieter than the the contribution of the air transport sector
tonnes of carbon dioxide (CO2) in 2014 (and models that first entered into service and to world GDP would be $690 billion (2014
781 million tonnes in 2015), just under 2% of each new generation of aircraft continues this prices) lower, with an additional $350 billion
downward trend. lost through lower tourism activity.
7 AVIATION BENEFITS BEYOND BORDERS
EXECUTIVE SUMMARY
ENVIRONMENTAL
PROGRESS 80%
Average aircraft occupancy33,
The air transport industry has made
much higher than other forms of
significant progress in reducing its
transport
environmental impact:
CO2 emissions per seat kilometre
▼ 80%+ since first jet aircraft
Perceived noise
▼ 75%+ since first jets
High occupancy
• » Currently surpassing the first Airlines utilise more of their seats
goal, with an average annual fuel than other modes34
efficiency of 2.4% achieved across
80%
the fleet between 2009 and 2014
80
• » Over nine billion tonnes of CO2
60%
avoided since 1990 through a 60
combination of new technology,
40%
operational efficiencies and 40
30%
infrastructural improvements,
including airlines spending $3 20
trillion on over 25,000 new aircraft30
• » The industry has invested in new
0
technology, better operations and
Aircraft
Train
Coach
Car
infrastructure improvements
• » Civil aerospace spends $15 billion
per year on efficiency-related R&D
• » Sustainable aviation fuels could
reduce the sector’s CO2 footprint by as
much as 80%. It is expected that 5,500
commercial flights will have taken Landing zone
place using a blend of alternative fuel
Top 10 airports by passenger movements, millions, 201441
by the end of 201631
• » Air traffic management RANK AIRPORT PASSENGERS CHANGE
modernisation could save millions
of tonnes of CO2 1 Hartsfield-Jackson Atlanta International Airport 96.2 1.9%
2 Beijing Capital International Airport 86.1 2.9%
3 Heathrow Airport 73.4 1.4%
4 Haneda Airport 72.8 5.7%
5 Los Angeles International Airport 70.6 6.0%
6 Dubai International Airport 70.4 6.1%
7 O’Hare International Airport 69.9 4.5%
8 Charles de Gaulle Airport 63.8 2.8%
9 Dallas Fort Worth International Airport 63.5 5.1%
10 Hong Kong International Airport 63.1 5.9%
8 AVIATION BENEFITS BEYOND BORDERS35%
Air transport carries around
35% of world trade by value
and less than 1% by volume35
$6.4 TRILLION
Value of cargo handled by air
786 BILLION
Scheduled freight tonne
,
High value time sensitive
Proportion of global trade
transported by air36
in 201438 kilometres39
34.6%
54% 50.4
By value
MILLION
of international tourists Tonnes of freight handled
travel by air40 by air in 2014
(in 2015, it was 51.2 million tonnes)37
0.5%
By volume
Long haulage
Top 10 airports by cargo tonnes, 201442
RANK AIRPORT TOTAL CARGO CHANGE
1 Hong Kong International Airport 4,415,983 6.0%
2 Memphis International Airport 4,258,531 2.9%
3 Shanghai Pudong International Airport 3,181,654 8.6%
4 Incheon International Airport 2,557,681 3.8%
5 Ted Stevens Anchorage International Airport 2,492.754 3.0%
6 Dubai International Airport 2,367,574 -3.1%
7 Louisville International Airport 2,293,231 3.5%
8 Narita Airport 2,133,542 5.6%
9 Frankfurt Airport 2,131,976 1.8%
10 Taoyuan International Airport (Taipei) 2,088,727 6.2%
9 AVIATION BENEFITS BEYOND BORDERSEXECUTIVE SUMMARY
Aviation and the Sustainable Development Goals
Some of the ways in which aviation helps achieve the Sustainable Development Goals
Aviation is one of the most innovative industries in
Aviation directly creates jobs in the industry, as the world. The manufacturing sector is continually
well as other sectors indirectly, providing 62.7 developing new technology and creates significant
million people worldwide with their livelihoods. urban infrastructure through the building of airports,
as well as navigational infrastructure. In 2014, airports
invested $37 billion in construction projects, creating
jobs and building new infrastructure.
Aviation supports the delivery of vital
humanitarian aid to areas devastated by natural
disasters and war, both through the World Food
The connectivity provided by air transport reduces
Programme and other charities. In 2014, more
inequality by creating trade links and providing access to
than 70,000 tonnes of food and commodities were
goods and services for those in remote communities. The
delivered by air to relieve victims of floods, conflict
democratision of air travel has also meant air services are
and disease.
available to more people than ever. Since 1970, the real
cost of air travel has been reduced by over 60%.
Aviation assists with providing vital medical care
through the use of air ambulances in remote Aviation-related infrastructure is a major part
communities and transporting time-sensitive of urban and rural communities worldwide and
medical supplies, such as vaccines. Aviation also contributes to the connectivity of populations
plays a major role in disaster relief. through integrated transport links. More work is
needed on multimodal transport development.
Aviation enables the movement of students
worldwide, providing access to educational
opportunities. The industry itself also champions Airlines and manufacturers work closely together
quality education for its own employees in areas to dispose of aircraft at their end-of-life responsibly.
such as engineering, air traffic management In recent years, the industry has also been working
and pilot training. The manufacturing sector, in to develop sustainable alternative fuel feedstocks
particular is also working hard to promote education that avoid some of the issues present in previous
in science, technology, engineering and maths. bioenergy projects.
Aviation is working to achieve gender balance in all All sectors of the aviation industry have agreed on a
sectors. In Europe, aviation is the most gender- four-pillar strategy for reducing CO2 emissions and
balanced of all transport sectors. Work is still are making excellent progress working towards three
needed to encourage balance in technical areas global climate goals.
such as engineering and flight crew.
Aviation is working with partners in government
The aviation industry is working to develop cleaner and conservation organisations to combat the illegal
sustainable alternative fuels, as well as deploying wildlife trade.
renewable energy at airports. By the end of 2016, it
is expected that 5,500 flights will have taken place
using sustainable alternative fuels.
Partnerships between all sectors of the aviation
industry enable the global air transport industry to
operate: airports, airlines, air traffic management,
As well as providing employment opportunities,
manufacturers and suppliers. The industry also
aviation contributes $2.7 trillion to global GDP, 3.5%
partners with the United Nations (mainly through
of the global total. In 2014, $6.4 trillion worth of
the International Civil Aviation Organization) and
cargo was transported by air.
governments to cooperate on climate action.
To find out more about the Sustainable Development Goals, visit: sustainabledevelopment.un.org
The SDGs listed above are those that are pertinent to aviation.
10 AVIATION BENEFITS BEYOND BORDERSA global industry,
supporting the Sustainable
Development Goals
Aviation’s global economic, social
and environmental profile in 2014
11 AVIATION BENEFITS BEYOND BORDERSA GLOBAL INDUSTRY
Aviation’s global economic, social and
environmental profile in 2014
THE GLOBAL AIR TRANSPORT INDUSTRY SUPPORTS NEARLY 63 MILLION
JOBS WORLDWIDE AND CONTRIBUTES $2.7 TRILLION (3.5%) TO GLOBAL GDP
In September 2015, world leaders gathered at Throughout this document you will see a
the United Nations to adopt the 2030 Agenda number of icons which relate to the SDGs
for Sustainable Development. This Agenda shown here. This shows how aviation can help
set a number of goals that the world should achieve the goals.
aim to achieve by 2030. These Sustainable
Development Goals (SDGs) supersede the
Millennium Development Goals and are
intended to address the root causes of poverty
and the universal need for development. A
number of the 17 SDGs are based on improving
the living conditions and economic prosperity
of people all over the globe. The SDGs are
backed up by around 170 statistical indicators.
To realise these ambitious goals, the
international community must work towards
shared economic growth, creating jobs
and boosting economic activity worldwide.
Aviation, as a global transport sector, can play
an instrumental role in supporting this task.
ENABLING ECONOMIC
GROWTH
Direct impacts
The industry itself is a source of In 2014, the air transport industry supported •» Air navigation service providers
considerable economic activity, creating an estimated 9.9 million jobs worldwide: employed an additional 220,000
jobs that directly serve passengers people (2%).
at airlines, airports and air navigation service • » 2.7 million of these jobs (27% of the total)
providers (ANSPs). These include check-in, were provided by airlines (for example, Growth in traffic at airports also brings
baggage handling, on-site retail, cargo and flight crew, check-in staff, maintenance growth in the direct jobs generated. It has long
catering facilities. However, aviation also directly crew, reservations and head office staff ). been estimated that each million passenger
enables jobs in the manufacturing sector, those movements at an airport generate around
companies that produce aircraft, engines and • » The airport sector accounted for 5.95 1,000 jobs and recent analysis seems to
other vital technologies. million jobs (60% of the total). Of these, support this theory. In Europe, the direct
450,000 positions were with airport employment generated by increased traffic
The world’s 1,402 airlines collectively operators (such as airport management, was studied in different bands of airport
transported 3.3 billion passengers to maintenance and operations). On-site size and found that, for airports with fewer
destinations all over the globe in 2014 and employment (for example at retail than one million passengers, each increase
carried 50.4 million tonnes worth of freight. outlets, restaurants, hotels, government of 1,000 passenger movements increases
To enable this activity, the industry generated agencies) created an extra 5.5 million direct employment by 1.2 jobs51. This impact
9.9 million direct jobs and added $664.4 jobs or 55% of the total. reduces slightly as airports grow (presumably
trillion to global gross domestic product due to efficiencies of scale). It is important to
(GDP) (3.4% of the total). This is larger than the • » In the manufacturing sector, 1.1 million note that this only relates to direct jobs at an
automotive industry, which accounts for 1.2% jobs (11%) were supported, employing airport and not the wider employment and
of global GDP and chemicals manufacturing people in the building of civil aircraft and economic benefits of connectivity growth
(2.1%). It is more than half the size of the global their associated parts, such as engines, across the economy (or even in indirect and
financial services industry, which accounts for electronic systems or components. induced employment).
6.2% of GDP49.
12 AVIATION BENEFITS BEYOND BORDERSMexican waves
Beyond the industry
Aviation’s global employment and GDP impact, 20142
62.7 million $2.7 trillion
36.3 million $892.4 billion
Tourism
catalytic
5.2 million $355 billion Induced
11.2 million $761.4 billion Indirect
9.9 million $664.4 billion Aviation direct
JOBS GDP
French aerospace manufacturer,
What we do Where we work Safran, has been operating in Mexico
for over 20 years. Historically, the
Direct employment by air Direct employment by air aim of its operations in the country
transport by segment, 201450 transport by region, millions, has been to provide local support
201454 for customers in the region and
to engage in the market. Today,
Safran has ten industrial facilities
2% 5% 4%
11% in Mexico, with close to 6,000
25% employees, making it the country’s
Asia-Pacific leading aerospace employer. Over
Airports
Europe the last decade, Safran has invested
Other on-airport 33%
Airlines North America more than $1 billion in Mexico.
Aerospace 4% Latin America
27% & Caribbean To accommodate its manufacturing
Air navigation 55%
service providers Middle East activities through CFM
8%
Africa International, a joint undertaking
of the French company (via
26%
its subsidiary Safran Aircraft
Engines) alongside the American
GE Aviation, Safran announced
in February 2016 the creation of
a new facility in Querétaro. This
The economic impact of the aviation industry facility will employ nearly 500
does, however, go further than just its direct Growing in tandem people and be dedicated to the
production of composite parts for
impacts. The consequential economic benefits
of both additional jobs and GDP should also How a growth in passenger the LEAP engine, which will power
be considered. These benefits demonstrate numbers helps support a growth the Boeing 737MAX, the Airbus
at least partially the breadth of air transport’s in direct employment52 A320neo and the Comac C919.
economic reach. At the plant, Safran employees will
Each 1,000 passenger begin producing fan blades made of
Airport size movements generates 3D woven composites towards the
end of 2017. Production volumes are
0 – 1 million passengers +1.2 jobs forecast to rise sharply the following
1 – 10 million passengers +0.95 jobs year, reaching an annual rate of over
20,000 blades in 2021.
Over 10 million passengers +0.85 jobs
13 AVIATION BENEFITS BEYOND BORDERSA GLOBAL INDUSTRY
Investing in
R&D in Canada
On the ground
A quick look at the types of jobs at a typical European airport53
Airlines Retail & other Airport Security Customs,
In-Terminal & Passenger Immigration
28% Services Screening & other Govt
6% 6% 5%
Ground Transport
5%
Pratt & Whitney, the US-based Food & Beverage
technology company specialising in
jet engine manufacturing, has been
Ground Handling Airport / ATC 8%
branching out its operations abroad, 14% 14%
bringing with it significant investment Engineering Other
and job creation benefits. As well as
ventures in India and Singapore, Pratt & 6% 7%
Whitney has recently made a substantial
investment in Canada.
An arm of the United Technologies
Corporation, Pratt & Whitney is known
for innovation. Its recent jet engine,
the Geared Turbofan, uses a novel gear
system design and contains state-of-the-
art composite materials.
At the end of 2014, Pratt & Whitney
announced a major investment of $1
billion in research and development at
its Longueuil (Quebec) and Mississauga
(Ontario) facilities over four and a half
years, which will be mainly directed
towards work on the company’s next
generation ‘PurePower’ engine family, to Indirect impacts Induced impacts
which the Geared Turbofan belongs.
The Canadian government saw the value These include employment and activities of The spending of those directly or indirectly
in scaling up Pratt & Whitney’s R&D suppliers to the air transport industry – for employed in the air transport sector supports
activities in the country and committed example, aviation fuel suppliers; construction additional jobs in industries such as retail
to supplement its investment with a companies that build airport facilities; outlets, companies producing consumer
$300 million repayable contribution. suppliers of sub-components used in aircraft; goods and a range of service industries (such
Not only will the deal result in 6,000
manufacturers of goods sold in airport retail as banks, telecommunication providers and
high-quality direct jobs, but it will also
outlets; and a wide variety of activities in the restaurants). Worldwide, over five million
have consequential economic benefits
for the areas surrounding the R&D sites.
business services sector (such as call centres, induced jobs globally are supported through
information technology and accountancy). employees in the air transport industry
Pratt & Whitney’s Canada branch also (whether direct or indirect) using their
focuses on developing skills through
Over 11 million indirect jobs globally are income to purchase goods and services for
its partnership with 20 Canadian
supported through the purchase of goods and their own consumption.
universities, which funds over 200
research projects. services by companies in the air transport
industry. These indirect jobs contributed The induced contribution to global economic
This investment is a prime example of approximately $761 billion to global economic activity is estimated at $355 billion in 2014.
the global nature of the aviation industry,
activity in 2014.
and shows why increased investment is a
crucial aspect of the SDGs.
14 AVIATION BENEFITS BEYOND BORDERSSupporting wider
economic development •» World trade in a vast range of speeding fresh produce from agricultural
commodities and services is facilitated communities in developing economies
Whilst this report has explored the by air travel, increasing countries’ access to markets in the industrialised world.
direct, indirect and induced impacts to international markets and allowing
of the global aviation industry, there globalisation of production. The exact economic impact of these wider
is far more to air transport’s economic impact. benefits is difficult to define, considering the
Many other industries rely on effective air • » In the modern globalised world, complexity of the global economy. However,
links to function. countries need connectivity to fully tourism effects are more easily assessed.
participate in the worldwide economy,
• » One of the industries that relies most encouraging higher productivity, Since reliable data exists, the flow-on impacts
heavily on aviation is tourism. Without investment and innovation. It helps and these economic links between the two
the connectivity provided by flight, many businesses operate more efficiently and industries are explored overleaf.
countries that rely on a steady influx of attract high-quality employees.
tourists (particularly developing countries
in regions remote from their source • » Air transport plays an especially
tourism markets) would not be able to pivotal role in ‘just-in-time’ global
enjoy the same level of economic growth. manufacturing production and in
15 AVIATION BENEFITS BEYOND BORDERSA GLOBAL INDUSTRY
Onwards and upwards Getting you there
Projected growth in tourism facilitated by aviation, contribution to global The travel modes of international
GDP, 2014-202558 tourists, 201461
Percent of 5%
global GDP 2%
1.5%
Air
Road
1.4%
39% Rail 54%
Water
1.3%
1.2%
1.1%
1%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Aviation supports tourism supported by the steady influx of overseas •» Induced: these direct and indirect
visitors, most of whom arrive in the region tourism jobs supported by air transport
Tourism represents a significant contribution by air, and contributed $46 billion to GDP in generate a further seven million jobs
to the worldwide economy, providing African economies in 201460. in other parts of the economy, through
employment and boosting global economic employees spending their earnings on
activity. In 2014, tourism supported 277 million For small island states, the economic other goods and services.
jobs and made up 9.8% of world GDP, a total of input provided by international tourists is
$7.6 trillion55. For example, these employment invaluable. These countries, many of which When these factors are viewed together, air
figures include the people who work for the are in remote parts of the world, enjoy transport supports over 36 million jobs within
world’s 90,000 accredited travel agencies56. tourism-induced economic boosts which the tourism sector, contributing roughly $892
would not be available without air links. billion a year to global GDP 62.
According to the World Travel & Tourism
Council, the sector’s recent strong short-term The contribution of air transport to tourism
growth will continue into the future, with employment and GDP: A driver of global trade
an average annual 3.7% growth expected
up until 202557. If these predictions prove •» Direct: an estimated 15.9 million direct The international trade of goods and
correct, by 2025 tourism should account for jobs in tourism globally are supported services is one of the key drivers
$11.3 trillion in global GDP and provide 355 by the spending of foreign visitors of global economic growth and
million jobs globally. arriving by air. This includes jobs in development. The ability of people and
industries such as hotels, restaurants, businesses to trade with others all over the
Tourism’s growth, which is above the visitor attractions, local transport and world is one of the key features of our modern,
average of wider economic growth, car rental, but it excludes air transport globalised society. Alongside the internet and
is dependent on travel, particularly industry jobs. other transport modes, air transport is a vital
air transport. In 2014, 54% of international enabler of the global economy.
tourists travelled to their destination by •» Indirect: a further 13.4 million indirect
air. For developing countries in particular, jobs in industries supplying the tourism While the last three years has seen an unusual
air links provide a vital economic lifeline industry are supported by visitors slowing in the growth of world merchandise
to communities. In Africa, an estimated arriving by air. trade volume (since 2012, there has been an
5.8 million people are employed in areas average growth in trade volume of 2.4%)63,
16 AVIATION BENEFITS BEYOND BORDERSRe-balance
Shift in geographic centre of gravity for economy
and air transport118
1965
2010 2030
2050 $6.4 TRILLION
1971
WORTH OF
GOODS WERE
1981 2011
1991 2021
2031
TRANSPORTED
2001
Economic activity
Air traffic INTERNATIONALLY
BY AIR IN 2014
the longer-term picture of global trade has In December 2015, Qatar Airways
been markedly positive. Forecasts suggest Small volumes, big values opened a new route between Durban
that the volume of global trade will increase and Doha, flying between the cities
with greater, more widespread prosperity, as Air freight, as a proportion of global four times a week. As one of South Africa’s
new markets open in the rapidly-developing trade, by volume and by value, 201472 largest trading partners, Qatar’s move
economies of the world. makes commercial sense for both countries.
According to Qatar Airways, trade between
So-called ‘south-south’ connections South Africa and Qatar stands at around $500
in migration and trade are becoming 34.6% million per year and the airline transports
increasingly important. In 2013, south- more than 5,000 tonnes of air cargo from
south migration made up 37% of the global South Africa each year.
movement of people, higher than south-north By value
migration, which stood at 35%64. The World Trade Organization (WTO) has,
since 2005, been working towards the goals
Air transport facilitates south-south trade. of the SDGs through supporting trade links
China-Africa, for example, is one of the in developing countries via the ‘Aid for
world’s fastest growing markets. China now Trade’ initiative. This programme, which
represents roughly a quarter of Sub-Saharan works along the ‘teach a man to fish’ strategy
Africa’s trade, up from only 2.3% in 198565. of international development, has made
This potential is recognised by Ethiopian good progress over the last decade. A joint
Airlines, which has, in the last few years, been OECD-WTO study indicated that $1 invested
increasing traffic between its Addis Ababa 0.5% in aid for trade is, on average, associated
hub and its four Chinese destinations and with an increase of nearly $8 in exports from
other Asian cities66. The east African airline, By volume developing countries68. To truly realise the
by opening these routes, is well-placed to potential of this initiative, research suggests
facilitate the growing investment partnerships that recipients and donor countries need to
between the two continents, based on the ease often restrictive regulatory arrangements
sharing of Asian agricultural expertise and in air transport69.
Africa’s untapped mineral resources67.
17 AVIATION BENEFITS BEYOND BORDERSA GLOBAL INDUSTRY
Sustaining growth AFRICA 5.4%
Projected average annual growth rate
for international traffic by region, ASIA-PACIFIC 5.1%
2014-203473
EUROPE 3.6%
LATIN AMERICA & CARIBBEAN 4.7%
MIDDLE EAST 6.0%
NORTH AMERICA
2.7%
APEC 3.9%
EUROPEAN UNION 3.6%
SMALL ISLANDS STATES 4.9%
DEVELOPING COUNTRIES 5.0%
OECD
3.5%
WORLD 4.3%
Air transport is, of course, not the only means The pharmaceutical industry is conferences are almost impossible without
of transporting goods over long distances, one sector that relies heavily on air physically gathering in one place.
with shipping and road making up a larger transport to move drugs and vaccines
proportion. The advantage of air freight is across long distances under strictly regulated The personal relationships built up between
that it is fast and reliable, although it can be a storage conditions. In some cases, it is the representatives of companies are often
more costly mode of transport, meaning that perishable nature of the goods that requires considered to be an important part of
the majority of goods transported by air are swift transportation. In other situations, such business ties. A 2014 survey of 609 business
light, compact, perishable and have a high unit as vaccines, it is the necessity of getting the leaders found that 56% of respondents were
value (see the case study on ‘fast fashion’, page products to the people who need them as taking the same number of business trips as
21, for one of the exceptions to this rule). quickly as possible71. they had done five years previously74. Another
survey of 2,000 business people worldwide
For time-sensitive global industries, such as The specialist nature of air freight is in 201375 found that nearly half of those who
those that require components produced in highlighted by comparison to other modes of took part felt that they had lost a contract
multiple parts of the world, air freight is the transport. While air freight accounts for less or client due to not having enough face-to-
best way to ensure that their production lines than 1% of the tonnage, it makes up around face meetings. It also found that 81% said
run smoothly and efficiently. 35% of the value of international trade. face-to-face meetings are better for building
long-term trust and ensuring strong client
In the last few years, driven by advances relationships76.
in internet commerce, a whole new sector Bringing business partners together
of rapid delivery ‘e-commerce’ businesses This overwhelming preference was attributed to
have been established and have thrived, The sharp increase in the level of a number of factors, such as the perception that
entirely based on the ability to move goods to telecommunication technology they built longer, more meaningful relationships
consumers safely and quickly. Cargo carriers, available has made meetings between and the ability to ‘read’ another person.
such as DHL, UPS and FedEx, have benefited business partners easier to undertake without
from the rise of e-commerce and the value travelling long distances in person. However,
of air transport in this sector was once again while these types of virtual meeting are useful
highlighted in 2016, when online retailer, in some situations, in many cases professionals
Amazon, branched out its business by leasing feel that face-to-face meetings are far more
20 Boeing 767 freighters70. productive. And of course, larger-scale
18 AVIATION BENEFITS BEYOND BORDERSBoeing partners in
the Middle East
The United Arab Emirates’ aerospace
sector has enjoyed significant growth
in the past decade due to its favourable
geographic location and, recently,
through partnerships with leading
aircraft manufacturers.
Strata is one such UAE-based company
that has built partnerships in the
aerospace sector. In the past two years,
Strata has begun delivering advanced
composite components for the Boeing 777
and Boeing 787 Dreamliner. In June 2015,
Boeing delivered the first 787 Dreamliner
that had incorporated advanced
composite parts made by Strata.
Strata was the first major company to
or subsidies. This is in stark contrast to other open in the Nibras Al Ain Aerospace
Building the future modes of transport, such as rail and road. Park, a joint venture between Mubadala
Development Company and Abu Dhabi
Airport infrastructure investment The investments made by the industry in Airports Company. The aerospace hub,
by region (billions), 201478 developing its infrastructure, particularly which covers an area of five square
on-airport, lead to further benefits for local kilometres, was developed in line with
communities, often providing the skilled the Abu Dhabi Economic Vision 2030
0.8
labour for construction. Nearly $37 billion (a plan by the UAE government to work
towards diversification) to support
10.1 was invested in airport infrastructure in 2014,
sustainable aviation and aerospace
Asia-Pacific with most of the investment taking place in
sectors. Nibras has helped to increase
Europe Asia-Pacific77. industrial and economic activity in Al
North America 13.6
Latin America Ain, and by 2030 business in Nibras is
& Caribbean Operational costs in aviation are funded expected to create 10,000 new jobs.
2.6 through user charges (passengers and airlines)
Middle East
To help local Emiratis develop skills in
Africa and airport commercial revenue. User charges
1.8 aerospace and attract untapped talent,
are generally included in the price of the Strata set up the Learning, Training,
10.2 airline ticket or paid by passengers. and Development Department. This
initiative has an open-door policy for
One criticism sometimes levelled at aviation is all Emiratis seeking employment in
that it does not pay tax on international jet fuel the aerospace industry and provides
Fronting up the cash and that this equates to a ‘subsidy’. However, technical training for all Emiratis,
when you consider the costs of airport and regardless of their age. Strata, in
When you look at the array of air air traffic management infrastructure, paid conjunction with Boeing, has also set up
transport infrastructure around the for by the industry, this is not a representative a specialised training programme for
world, such as airport terminals, comparison with other modes of transport. In Emirati engineers.
runways and air traffic control, it is easy fact, when you consider the very real subsidies Strata aims to achieve ‘Emiratisation’ by
to forget that the vast majority is financed that other transport modes receive, often helping the local population to develop
through its users. The aviation industry, on coupled with high fares, air transport is a cost- skills that benefit not only Strata itself,
the whole, pays for this infrastructure itself, effective sector. but the wider community as a whole.
rather than relying on government investment
19 AVIATION BENEFITS BEYOND BORDERSA GLOBAL INDUSTRY
Working connections
Connectivity and labour productivity
(excludes Cyprus, Hong Kong, Malta,
Singapore), 201283
Labour productivity - GDP/hour
Developed Asia
North America and Western Europe
Developing Asia and Africa
Emerging Europe
Transitioning Asia and South America
Connectivity per $billion of GDP
The road sector enjoys a high level of public market; and the freer movement of investment up over cost that firms charge their
investment in its infrastructure, even though capital and workers between countries. customers, especially where domestic
road users in many locations pay fuel duties, firms have hitherto enjoyed some shelter
vehicle excise charges and, in some cases, Improved connectivity: from competition.
congestion charges and tolls. The rail sector,
too, is often a beneficiary of high levels of •» opens up new markets, boosts exports and Improved connectivity can further enhance
public investment by national or regional at the same time increases competition an economy’s performance by making it easier
governments. In Europe, for example, rail is and choice in the home market from for firms to invest outside their home country,
heavily subsidised. According to the European foreign-based producers, encouraging which is known as foreign direct investment.
Commission, rail subsidies in Europe firms to specialise in areas where they This necessarily entails some movement
totalled roughly $30.5 (€25) billion in 201479. possess a comparative advantage; of staff: whether for technical know-how,
Meanwhile, aviation subsidies (primarily for management oversight, or servicing and
public service obligation routes to remote •» can drive down costs and prices meeting customers. Increased connectivity
communities and small islands) were in the for firms that have a comparative also allows firms to exploit the speed and
order of $556.5 (€455) million in the EU80. advantage (such as innovative products reliability of air transport to ship components
and services), benefiting domestic between plants in distant locations, without
consumers in the process; the need to hold expensive stocks of inventory
Stimulus for greater productivity as a buffer.
•» opens domestic markets to foreign
Arguably, the largest economic benefit competitors, which can also be Less tangibly, but just as important, improved
of increased connectivity comes an important driver for reducing connectivity increases passenger traffic
through its impact on the long-term unit production costs, either by and trade. This, in turn, can lead to a more
performance of the wider economy by forcing domestic firms to adopt best favourable environment in which foreign
enhancing the overall level of productivity. international practices in production firms can operate — greater links to the
A rise in productivity in firms outside the and management methods or by outside world often drive a more conducive
aviation sector comes through two main encouraging innovation; global business environment.
channels: the effects on domestic firms of
increased access to foreign markets and •» can benefit domestic customers through
increased foreign competition in the home competition by reducing the mark-
20 AVIATION BENEFITS BEYOND BORDERSFast fashion
Who’s travelling?
The global propensity to travel, 201292
10
Cyprus
New Zealand Singapore
Belize
Hong Kong
Seychelles Bahrain
Spain United Kingdom United States
Barbados Portugal France Canada
1 Malaysia Italy Austria
Thailand Saudi Arabia Germany Netherlands
Russia Israel Kuwait Finland
Indonesia
Trips per capita
China
Brazil
0.1
Estonia In the world of fashion, trends can
move quickly. More quickly than some
Slovenia
India World average
people can keep up with! In such a
competitive industry, having a high
turnover of stock is essential. In the
0.01 last few years, a new business model
has developed in the fashion world,
Niger
known as ‘fast fashion’.
For most non-time-sensitive goods
0.001 like fabric, transporting by air is often
0 10,000 20,000 30,000 40,000 50,000 not economical. Typically, air freight
is 4-5 times more expensive than road
GDP per capita (US$) transport, and 12-16 times more than
sea transport.
However, high street brands like H&M,
How aviation affects productivity Analysis shows a strong positive relationship
Gap and Topshop are increasingly
between higher connectivity to the global
opting for air freight to ensure that
Quantifying the impact that improved air links network — as a proportion of GDP — and
they have the right items available on
have on a country’s GDP is a difficult task. labour productivity. Developing and
the shelves at the right time. In general,
There are many factors to this calculation transitional economies typically have low fast-fashion brands aim to renew their
and the complexity makes any assertion, at connectivity relative to their GDP and also collections almost every week, making
best, an estimate. However, there are some relatively low labour productivity. At the other forms of freight impossible.
broad indicators that can be used to make an top right of the chart opposite (page 20) are Crucially for the brands in question,
informed determination. the developed Asian, North American and the garments also arrive at stores in
European economies with high levels of better condition than they otherwise
The International Air Transport Association connectivity and labour productivity82. would, and delivery using air cargo is
has developed a connectivity indicator, which far more reliable.
measures the degree of integration a nation
The ability to have a high turnover of
has within the global air transport network. A driver of innovation stock allows retailers to gather data
Using this, IATA has linked connectivity on what particular trend is in mode
to economic performance to make a Since the dawn of air travel, aviation has and use that information to inform
conservative estimate as to the value of the been at the forefront of technological decisions as to what style to buy the
sector to national economies. innovation, researching and developing next time.
disruptive, ground-breaking technology
Some freight forwarders have now
The most recent research suggests with each new generation of aircraft. There
begun to specialise in fashion delivery.
that a 10% improvement in global are many motivations for this drive in
Companies such as Logwin provide
connectivity (relative to GDP) results technological advancement. Not only do more
retailers with services and even
in a 0.5% increase in long-run GDP per capita. efficient aircraft and engines have a positive
packaging solutions tailored for the
Oxford Economics estimates that rapidly environmental impact through reduced fuel fashion industry. This way, big retailers
rising global connectivity over the past two burn and associated emissions, but they also can design, manufacture and get
decades boosted global GDP by $200 billion in lower fuel costs for airlines in the long term, clothing onto store shelves in a month.
2014, a number that continues to grow81. making air travel more affordable. If they decide to go for sea freight, the
whole process would last two or three
weeks more.
21 AVIATION BENEFITS BEYOND BORDERSA GLOBAL INDUSTRY
A good deal
Evolution of average price of air travel ($ per RTK), in real terms90
7.0
Jet enters service
$ per tonne kilometre (in 2013 dollars)
6.0
1973 oil crisis
5.0
4.0 US deregulation
3.0
EU deregulation
2.0
1.0
-
1950 1960 1970 1980 1990 2000 2010
Aviation’s focus on technological In the United States, total civil aerospace at least once in their lives88, with around half
innovation has other consequential exports amounted to a $111 billion flying at least once per year. Statistics in the
benefits on wider society. This contribution to the national economy86. United Kingdom show similar results89. But
encourages research capacity at universities flying is also becoming increasingly accessible
and also results in a highly skilled section of a For an example of how valuable aerospace in the developing world, with low cost carriers
country’s workforce. The benefits to society manufacturers can be to a national economy, opening up business and leisure travel to
of research and development spending by see page 57 on the contribution of the sector more and more citizens.
the aerospace industry are estimated to be to the ‘Make in India’ campaign.
much higher than in manufacturing as a
whole — every $100 million of investment into
research eventually generates an additional
$70 million in GDP year after year 84.
Affordability of air travel SUPPORTING SOCIAL
A key driver in the growth of DEVELOPMENT
Aerospace also drives the development of passenger traffic has been the steady
technologies that can be used in other sectors. decrease in the real cost of air travel. Sustainable development is not just about
The aviation sector was one of the pioneers in Since 1970, the real cost of air travel has been working towards economic progress in an
the use of additive layer manufacturing (also reduced by over 60%, through deregulation environmentally sustainable way. A significant
known as 3D printing). Many components of of the aviation market in the 1980s, the aspect of this concept is improving the
next generation aircraft will be made using development of more fuel-efficient aerospace lives of people in ways other than financial
this technique. Composite materials, such as technologies and the introduction of low cost prosperity. These socially-based ambitions
carbon fibre and ceramic composites, also carriers. It is now more affordable for more of are an important part of the Sustainable
owe much of their development to aviation the population to travel by air. Development Goals and are in many ways
research and development — and make up supported by civil aviation.
significant proportions of the finished product In the United States, for example, the cost of a
of modern lightweight aircraft such as the return flight from Boston to Los Angeles fell by For many people all over the globe, the
Boeing 787 and Airbus’ A350 XWB. 89% between 1941 and 2012, whilst the flight ability to travel to any other country is an
time is nine hours (and 11 stops) shorter87. invaluable asset, relied on to visit friends
In terms of economic impact, the aerospace and relatives, move abroad for work and
sector plays a substantial role in the regions This decrease in cost has led to an study or, of course, go on holiday. Without
where it is based. According to the Aerospace increase in accessibility of air travel — the air transport, being able to travel and
and Defence Industries Association of Europe, democratisation away from a pursuit of the experience new countries and cultures
civil aeronautics in Europe created a $104.2 wealthy to a part of normal middle-class would be far more difficult — and certainly
(€85.2) billion turnover, with $7.5 (€6.1) billion lives, especially in the developed world. It is impossible in as short a time.
invested directly by the industry in 201485. estimated that 81% of Americans have flown
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