The Economic Benefits of Aviation and Performance in the Travel & Tourism Competitiveness Index

JULIE PEROVIC International Air Transport Association (IATA) The aviation industry supports tourism and international business by providing the world’s only rapid worldwide transportation network. Airlines transported 2.8 billion passengers and 47.6 million metric tonnes of air cargo in 2011, connecting the world’s cities with 36,000 routes.1 By providing these services, the aviation industry plays an important role in enabling economic growth and providing various economic and social benefits. The International Air Transport Association (IATA) commissioned Oxford Economics to estimate the economic and social benefits of aviation in over 80 countries worldwide over the last three years. The analysis includes the traditional economic footprint of the industry, measured by aviation’s contribution to gross domestic product (GDP), jobs, and the tax revenues generated by the sector and its supply chain. However, the economic value created by the industry goes beyond the value captured by these measures. Therefore the study also investigates the positive impacts of the connectivity provided by air transport services. The connections made between cities and markets produce an important infrastructure asset that facilitates activities that enhance a nation’s productivity. More specifically, air transport enables foreign direct investment (FDI), business cluster development, specialization, and other spillover effects. The analysis produced by Oxford Economics is one of the first attempts to estimate these benefits of connectivity. The objective of this chapter is twofold. First, the following sections will present some of the results of the Oxford Economics studies on the benefits of aviation, primarily in regard to aviation’s economic footprint and connectivity benefits. Second, the chapter will explore whether there are any relationships between the performance of particular components of the Travel & Tourism Competitiveness Index (TTCI) and the outputs of the benefits of aviation studies.