Aviation provides the sole worldwide transportation network that makes it essential for international business and tourism. It plays a significant role in facilitating economic growth, notably in developing countries. Flying transports close to two billion travelers per annum and four-hundredth of interregional fares of merchandise (by worth), four-hundredth of international tourists currently travel by air. The air transportation industry generates a total of twenty nine million jobs globally (through direct, indirect, induced and catalytic impacts). Aviation’s international economic impact (direct, indirect, induced and catalytic) is calculable at US$ 2,960 billion, comparable to 8 may 1945 of world Gross Domestic Product (GDP)
Aviation boasts high occupancy rates of sixty five to seventieth – that is more than double those of road and rail transportation. Air transportation entirely covers its infrastructure prices. In contrast to road and rail, it is a net contributor to national treasuries through taxation. Modern craft achieve fuel efficiencies of three.5 liters per one hundred passenger-km or sixty seven passenger-miles per US gallon. The next generation craft (A380 & B787) are targeting a potency of less than three liters per one hundred passenger-km or seventy eight passenger-miles per US gallon5, which exceeds the efficiency of any modern automobile on the market.
The air transportation industry includes those activities that are directly captivated with
The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).
The sector employs more than 3 million people. Prior to the 1990’s, the air transport industry in Europe had been traditionally highly regulated and dominated by national carriers and state owned airports. Since then a single market for aviation has been created. The single market has seen the removal of all commercial restrictions for airlines flying within Europe. These include restrictions on routes, number of flights and the setting of prices.
The airline industry has been a major factor in the globalization of the world economy. It connects the sellers and the buyers as well as transports goods across countries. It also breaks the time and distance barriers. In the past, air travel was considered a luxury but it is now a common necessity.
In today’s business industry, the globalization process has become an important aspect and fundamental force. The elements that contribute to globalization is the environment, culture, regulation and technology and production. While the advancements globalization has increased greatly, so has the advancements in airline industry with their aircraft (Shevell, 1999). Globalization also provides a great amount of potential profits to nations and their corporations (Button, 2008). Air transportation has evolved into a major industry (Kroo, 1999). The airline industry’s continuously grows and is facilitated through its international investment, tourism, world trade and economic growth (Kroo, 1999).
Rising fuel prices has a huge impact on the airline industry. In an article published by the New York Times in 2007, oil prices were hovering ‘near $100 a barrel’ which caused the International Air Transport Association (IATA) to ‘slash’ their predicted profits for 2008 from ‘$7.8 billion to $5 billion’ (Clark, 2007). In 2008 high fuel prices were ‘dominant factor’ in the losses that faced the industry, and continued to same effect in 2009 (Dunn, 2009). Diagram 2 shows how fuel price has increased and fallen over the last 5 years.
American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.
The aviation industry of any nation acts as a contributor to its economic growth, helps in globalisation and creating an international image. It is the best in terms of the fastest, safest and convenient mode of travel. Even though it is an expensive one, it is expanding its markets across the middle-class who are ready to spent money on leisure trips. Thus it is truly stated that aviation forms a vital core infrastructure area without which a country economy is handicapped.
The airline industry has seen drastic changes since September 11, 2001. The government ordered a complete shutdown for three days of not only all commercial aircraft but such carriers as domestic flights and emergency aircraft. For days after September 11th, all aircraft stayed on the ground. Even military aircraft had to receive special clearance to fly. In a ripple effect, the entire economy of the United States and the world was put on hold. The New York Stock Exchange shut its doors because of the attacks on the towers of the World Trade Center.
Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and
Since the airline industry is a direct product of market conditions, it is greatly affected by all externalities. Many people noticed a decline in travel after the September 11th tragedy occurred due to safety concerns. When there is a huge increase in fares that definitely interferes with the demand for travel; it causes the price of tickets to continue to rise since a clear correlation between supply and demand exists. When the economy is doing well in terms of the employment rate, and when the dollar is strong people have the tendency to travel more (Jerram,1998).
This explosion provides research of how the UK Economy contributes to the Aviation industry in various way with the standard points and innovation – have impacted on UK economic growth through the Aviation industry. By this report, contribution to UK economy has explained such as trade, tourism, employment and government tax. This report will pay particular attention in trade contribution current status, value added contribution details of Tourism impact, direct and
The implications of this analysis are that the focus on the Chinese market is justified. The Chinese air travel industry is booming, and indeed this is fueled by that country's rapid growth and the increased demand for
The growth of airline industry in any country is directly proportional to its GDP growth; the greater the business activity, the more air travel and the higher the GDP of the country. The demand
Aviation contributes approximately 2 percent of total greenhouse gas emissions, a figure which is projected to grow through 2050. Although fuel efficiency has improved by nearly 16 percent since the 1990s, future technologies—including better flight patterns, more-efficient engines, and alternative fuels—have promise for further emissions reductions. The profitability challenges of the early twenty-first century, however, affect the industry's ability to invest in new technology. (Hill, 2010 17-22)
Literature reveals that the globalisation of the airline industry has resulted in easier accessibility across international borders. This has greatly benefited the tourism industries economic sector with a rise of foreign tourists and an increase in global competition (Dwyer, 2015). However the negative effects on the environment are vast with climate change has become a global problem. A swish study proved that out of the countries examined, 50-85% of tourism based emissions are as a result of air transport and therefore if the tourism industry is to reduce emissions, it can only be achieved through a major decrease in these environmentally destructive emissions caused by aviation (Perch-Nielsen et al, 2010).