Global Industry Assignment Help

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Posted on Jun 17, 2016

Global Industry Assignment Help

Global Industry Assignment Help

Abstract: This thesis paper aims to provide a broad view on the social as well as economic benefits of air transport as a global industry. By understanding and analyzing the air transport related benefits for different countries, I have tried to present a comprehensive global picture concerning with the topic. Through the analysis presented, I have presented a unique view on the industry of air transport that provides employment to a lot of people; connects all the corners of the world; helps blending and creating a fusion of cultures; promotes tourism and nurtures numerous small scale industries & giant corporations. I have also presented the perspective of this industry coming to rescue during disaster management using a few examples.

12/23/2013

Contents
Introduction

The air transport or the aviation industry boasts to be the only global transportation network with a reach to almost all the corners of the world. This fact makes this industry a matter of utmost importance when we talk about the global economy considering the impact that this industry has on it. It has played significant roles in boosting the economic growth of a lot of countries. The social connectivity that this industry brings is also unparalleled.

In 2010, this industry transported around 2.6 billion global passengers to different places of the world witha remarkable RPK (Revenue Passenger Kilometers) of more than 5 trillion. This RPK grew to around 4% in 2011 and around 5.3% in 2012. The USA has been consistently topping the RPK chart over years followed by China and with the UK as the third big player.  The industry directly employs over 8.36 million people around the world presently and supports 57 million livelihoods. More than 50 million tonnes of freight is carried every year by air transport with an RPK of almost 200 billion FTK (Freight Tonne Kilometers). The biggest player in freight air transport is again the USA followed by China and Germany as the second and third biggest players respectively. (IATA Annual Review, 2013)

Air transport increases the accessibility to different markets for countries giving them an opportunity to participate in the global market place. This further allows the globalization of the country’s local specialty products and services. Quite a few multinational companies have globalized their production also. The quantity of freight or goods transported by air amounts to around 35 per cent of the complete international trade. Over the years, various developing countries have used tourism to boost their economies and this has been made possible just by the air transport industry. The only alternative that international tourists generally have to air transport is water transport which is significantly slow when compared to air transport and then there are connectivity issues too. A few countries are connected via roads also but road transport also has larger connectivity issues. These reasons amount to more than 51 per cent of the global travelers opting for air transport as the medium and this figure has been ever increasing. It is estimated to increase further as the air transport industry moves towards sustainability. Moving towards sustainable flying, according to the Vision 2050 Meeting held in Singapore in February 2011, IATA (International Air Transport Agency) aims to reduce the net carbon emission by 50 per cent by 2050 in comparison to the same in 2005. (IATA Annual General Meeting Report, 2011)

The air transport industry brings along an unparalleled connectivity which contributes to augmented productivity. It encourages international business, innovation, market reach and allows companies to get high quality talent from across different countries. The total global impact on the world economy of the aviation industry is estimated to be around 2.2 trillion dollars which is equivalent to 3.5 per cent of the total Gross Domestic Product (GDP) of the world. (ATAG, 2012)

We can very well estimate the giant nature of this industry by all these figures. Today, there are over 1500 airlines in the world with a total fleet of more than 24,000 aircrafts. Following a properly routed network, these fleets operate in around 4000 airports and there are around 190 different air navigation networks that manage this routed network of thousands of kilometers.

Air transport industry is one of the largest global employers providing around 57 million jobs directly or indirectly. Unlike the other transport industries, this industry pays on building suitable infrastructure on its own. More than 30 billion dollars are invested every year just in building capacity and required infrastructure. Further, for every $100 million invested in Research & Development in this industry is known to generate GDP profits of $70 million year on year. Such year on year return on investment ensures long term economic growth for any country.(ATAG, 2012)

In 2013 itself, the air transport industry has transported an estimate of more than 3.1 billion people worldwide. In a survey conducted by the IATA of 2200 people, over 52 per cent of them claimed that they would have serious bad effects on their business if the connectivity of air transport is reduced. Further research and studies conducted in the US air transport industry revealed that for every 1 Dollar invested in the country into aviation leads economic benefits of more than 1.5 to 3 Dollars. (ATAG, 2013)

The aviation industry further boasts of being the most efficient transport system leaving behind the water, rail and road transport systems by a huge margin. According to the 2010 figures of the industry load factor, the air transport system worldwide runs with an occupancy of almost 78 per cent which is way higher than the other transport systems.

The air transport industry has a lot of social benefits as well. From an individual as well as a country perspective, the aviation industry nurtures closer relationships. There is a long-lasting social goodwill created between nations when they can freely transport their freight and people to the other country. This subsequently encourages the social as well as economic integration between the people and governments of the two participating nations.

Furthermore, the air transport network provides basic amenities to developing and under-developed states by building proper road and rail networks there. In the most remote corners of the world or islands which are not properly integrated with the rest of the world are connected only through air transport network. Only this network provides them with basic health assistance and medical care. The speed of this network has helped a lot over years in various cases of emergency and immediate delivery. There have been numerous instances where air transport network has helped in emergency situations of flood, famine, earthquake, etc.  This network plays a vital role in situations where physical access is restricted or non-existent. This way the aviation industry promotes social inclusion.

The forecast done by various experts and agencies involved in this industry estimate the social and economic benefits through this industry to be ever-growing. These forecasts suggest that by 2030, there will be more than 6 billion annual passengers flying worldwide; the industry shall be supporting more than 82 million jobs and generating around 7 trillion dollars in the world economy. Even a 1 per cent slower growth rate would mean a major impact this way.(IATA Annual General Meeting Report, 2011)

The air transport industry has become a significant part of our modern lives. A small disruption in this industry is known to cause major economic and social effects in the affected region or countries or neighboring countries or even the whole world. One such example is the volcanic eruption in Iceland in 2010. The Eyjafjallajokull volcano eruption caused disruption of the whole aviation industry in the Europe. More than 10 million passengers were affected and the world economy had to face a deficit of 5 billion dollars. The whole supply chain was affected in a bad way and this led to slowing down of production in the automotive industry of Europe. It also had far-fetched effects on the economies of Africa which lost over 65 million dollars in the exports of time-bound perishable products and goods. (ATAG, 2012)

SECTION 1. Economic Benefits of Air Transport
1.     Role in Economic Development

Since the world has seen a major increase in the air traffic, simultaneously it has made our lives easier and has governed or shaped a lot of economies. Air traffic increase has been a direct facilitator for economic growth. Air transport industry has a quintessential input in the overall fast growing world economy. A boost or growth in the air transport industry over years has reciprocated in the growth of the economy of the world. In this section, we have discussed in detail all the possible benefits to countries in economic development through the air transport industry by discussing its impact on providing better links and access to the existing markets while simultaneously also leading to creation of newer markets by better access to resources and ease of movability.

1.1.                       Economic Rate of Return of Investment in Aviation Industry:

 

In its 2007 report on economic benefits of the air transport industry, IATA estimated the economic rate of return. This estimation takes into consideration the additional benefits that this industry has on the investors and users apart from the direct returns. This rate is estimated to be quite high for almost all the countries that were studied. For example, one of the air transport investment under study was the investment of 1805 million Canadian Dollars invested at the Vancouver Airport. This has brought along an increase in the overall connectivity of Canada by 5.4 per cent. Subsequently it led to the growth of the productivity of Canada in a long term by 0.04 per cent. Now if we keep the man hours constant, this means an increase in the inflow of Canadian economy by 348 million Canadian Dollars. This in turn means that the economic rate of return on the Vancouver airport was 19.3 per cent which further implies a complete economic payback within a short time span of five years and huge profits for the economy thereafter.

A few examples of developing countries were also taken and the rate or return was estimated for air transport industry investment in these countries which also provided amazing results. Kenya for example enjoys an economic rate of return as high as 59 per cent. A few other examples of developing countries are given in the table below:

Table 1: Economic Rates of Return from Aviation Investment

             Kenya       Cambodia             Jordan     El Salvador     Jamaica
Investment US $ million 351 538 360 488 168
Increase in national connectivity / GDP 59% 46% 55% 35% 28%
Impact on GDP (%) 0.42% 0.32% 0.39% 0.25% 0.20%
Impact on GDP (US$ million) 209 100 100 85 26
Annual Economic Rate of Return % 59% 19% 28% 16% 16%

 

For all the developing countries, we see that the economic rate of return on any aviation related investment in very high as a general trend. This trend follows the developed countries as well but not with such high returns. However, as a generic worldwide trend, aviation investment is always considered to be invariably fruitful for any economy.

1.2.                       Connectivity and Productivity Growth:

IATA researchers ran an econometric analysis on how connectivity affects the labor productivity of a state or nation. While considering external influential factors like education background, regulations, etc. they found out a direct relation between connectivity and productivity growth. Relative to the GDP of the country, if the connectivity rises by 10 per cent, then the overall labor productivity increases by 0.07 per cent as per the econometric model used. This is further quite high for developing countries. This relation does not follow a linear pattern but increases in a logarithmic way. This is the reason that for developing countries investment in air transport leads to exponential growth of their economy.

1.3.                       Connectivity and Competitiveness

Higher connectivity makes a country more competitive as per various studies. The World Economic Forum (WEF) assigns ranking to countries for an index called competitiveness index. Connectivity plays a very important role in deciding this index for countries. This index takes into consideration various factors for assigning the ranks and one of the important considerations is the connectivity of the country. The economic and other benefits that could be induced into the country through the air transport industry would help the country improve its ranking on the Global Competitiveness Index.

1.4.                     Wider Economic Benefits of Connectivity:

Throughout its supply chain, the air transport industry leads to huge economic benefits for everyone, even the industries very remotely related to it. There are a lot of direct as well as indirect benefits to the other support industries like the benefits to the hotel industry through better connectivity. Especially in developing countries, a lot of industries would completely perish in absence of the aviation industry.

Better connectivity makes available value-added raw materials for industries and creates economies of scale & scope for everyone. It takes business to different places and businessmen to the best possible markets to sell their products. It makes people travel and find new business, meet new customers and thereby expand market.

Further far-fetched economic benefits of the air transport industry through improved connectivity are enlisted in the figure below.

2.     Direct, Indirect, Induced & Catalytic Economic Benefits of Air Transport

Airlines

Passenger carriers

Air cargo carriers

Aviation Sector                                Airport & services

Civil airports

General aviation airports

Handling & catering Freight services

Aircraft maintenance

Air transport

 IndustryFuelling on-site Retail

Air navigation

Service providers

Civil Aerospace Sector

Civil aerospace

Airframes

Engines Equipment

Off-site maintenance

Figure 2: Major impact of the air transport industry.

 Source: OEF, 2005

The air transport industry indeed has a significant impact on the economy of a country by being one of the most growing global industries on its own and also by flourishing different enabled industries. It contributes through various direct, indirect and induced catalytic ways. The civil aerospace sector in itself employs over 800,000 individuals. (IATA, 2013)

2.1.                       Direct Economic Impacts

This includes relatively smaller but thriving industries catering to the air transport industry. Direct employment within the industry is the most important direct economic impact of the air transport industry. It further has major direct impacts on airline operations, air traffic control, passenger services, catering facilities, air traffic regulation, fleet maintenance, retail & catering facilities, etc. The manufacturing and maintenance of aircrafts is also rising to be a major separate industry on its own.

Direct employment by sector in the air transport industry

Other on-site airport jobs

38%
Airport 7%
operators
14%
41%
Civil

aerospace

Airlines

Figure 3:  Direct employment by sector in the air transport industry

Source: ATAG, 2012

As shown in the above figure, if we segregate sectors within the reach of direct economic impacts of the air transport industry, the airline industry employs maximum percentage of the total employees (41 per cent) working directly in the air transport industry. Another 38 per cent are employed for other on-site airport related jobs, 14 per cent are employed in the civil aerospace sector whereas the remaining 7 per cent are employed as airport operators.

2.2.                       Indirect Economic Impacts

The indirect economic impacts mainly include the suppliers of the air transport industry. With this industry thrives the fuel supply industry, goods manufacturers for the retail outlets of the airports, various value-added services as well as the construction companies building specialized facilities for the air transport industry. This industry supports the growth of the energy industry that provides fuel to the aircrafts, employs people in the IT industry to construct computing systems and models for this industry as well as provides livelihood to the workers in goods manufacturing industries which support the airport retail businesses.

2.3.                       Induced Economic Impacts

The induced catalytic impacts include the spending by the people employed (directly or indirectly) in the aviation industry who further support the prospering of other industries like retail outlets, banks, consumer goods industries, restaurants, etc. These impacts are generated when the aviation related employees spend in purchasing good and services for personal consumption promoting other industries simultaneously. More than 4 million induced jobs are nurtured by the aviation industry. Various retail jobs as well as service industries fall under this.

The direct, indirect and induced economic impacts concern the economy of the air transport industry itself whereas there are other induced catalytic or ‘spin-off’ impacts which are much wider and impact a lot of other industries. The major catalytic economic benefits are described below:

2.4.                       Wider Catalytic Economic Benefits

The major benefit from the air transport industry comes through its economic contribution to the other industries acting as a catalyst for the growth of a lot of other industries. Across the huge spectrum of various economic activities of the world, in more than one ways the air transport industry boosts and affects the overall performance of the world’s GDP and economy.

2.4.1.      Faclitating World Trade:

Air Transport helps countries improve the reach of their products and services by allowing them to participate in the global market place. Air transport boosts the specialty products of the country in which it has a competitive advantage over the rest and makes it a global product creating sudden demand for the product in unexpected parts of the world thereby facilitating the trade of the supplying country as well as the receiving country. World has really become one small place in terms of trade owing to the air transport industry.

2.4.2.      Promoting Tourism:

Tourism is the main income for a lot of countries like Thailand, Netherland, lot more remote destinations and especially islands. Air transport industry acts as the only facilitator for tourism in all such places. The tourism and the aviation industries are inter-mingled and closely connected with each other. Air transport supports a lot of economies of the world just by promoting tourism.

2.4.3.      Boosting Productivity:

Aviation industry directly opens newer transport routes in a country. This creates better transport links for the market place through which companies can exploit the economies of scale which in turn makes the production cheaper and helps gain competitive advantage. The very low transportation time has also helped in opening up a global market place for perishable products and food products.

2.4.4.      Promoting Competition:

By opening more markets for the same product, air transport also promotes competition which encourages companies to employ better processes for more efficient products. Competitive market also results in the betterment of the consumers and hence the society. It ultimately leads to an augmented standard of living for the world populace.

2.4.5.      Improving the Supply Chain:

Industries and products with very short delivery time thrive only on the air transport industry. These products would perish or not find any demand if there wasn’t the support of the aviation industry. All the just in time delivery industries across the world also sustain on the air transport industry for reduces costs and reliability purposes too.

2.4.6.      Enabling Investment:

International Companies choose to invest in a country only if it is well connected through air transport. It would not make sense for them to invest if there were no viable air transport systems connected to that part of the world. Over years, developing countries have attracted investors by portraying themselves as the new opportunistic lands with very good air transport connectivity. The UAE and India are best examples of the same.

2.4.7.      Promoting Synergy:

Air transport promotes synergies between corporations and countries. A lot of countries tie up with their counterparts for trade and a lot of companies have collaborated internationally and reduced costs or generated new global partnership ventures. The thriving IT and BPO (Business Process Outsourcing) business in India is a very good example of this. Companies in the western countries have traveled and established links and companies in India through which they manage global operations with a highly reduced cost to company.

2.4.8.      Spurring Innovation:

Air transport makes it very easy for R&D labs to bring together the best talent pool from across the world to work together. This has also indirectly led to improvement of Science and Technology over years. Best people in various individual fields have collaborated over years and produced numerous innovative products for the world.  The corporations have been able to spend more on research because the fixed cost of the research is sublimed by the potential spread of the product resulting in huge worldwide sales.

2.4.9.      Providing consumer welfare benefits:

By increased movability, people are also expanding their personal networks. Air transport has made sure that the end consumer also gets the best possible service or product in the best possible price and quickest possible way. This has ultimately empowered the customer also to reach out to various markets for the same product or service and has subsequently increased the disposable income of the spender.

2.4.10.  Serving larger markets:

A very small product can now serve the huge worldwide markets. A very good example of this is the rising market of Chinese goods all across the world. They provide the cheapest small goods to the whole world and due to that advantage; it has penetrated the market places of almost the whole world. Convenient and cheaper trade & transport has led to the opening up of distant markets which once seemed impossible to reach out to.

2.4.11.  Impacting the labor market:

Air transport has made it convenient for the companies to find the best suitable employees from across the world. Countries have no more remained a barrier for work. The best companies worldwide have been able to attract the best and deserving employees. High quality employees have also been staying in 2-3 locations at a time and managing the company operations in all these countries or regions. This has led to the further development of skilled labor getting the right opportunity. And also the company gets to select from a wider pool of talent. A top quality employee in a top quality company can lead to some serious economic and business development. Dubai is a very good example of a marketplace which has attracted employees from around the world.

Recent reports by the Oxford Economic Forecasting (OEF) shows the far-fetched economic benefits of the catalytic impacts that the air transport industry induces on the other industries. This in turn increases the country’s overall productivity as well as investment potential. It has over years successfully led a lot of countries to economic progress.

Section 2. Social Benefits of Air Transport
1.     Role in Social Development

The air transport industry does not have an impact on the economy of the country alone. It contributes to the social well-being and an improved quality of life in various ways. Its impact on the sustainable development of a country for example cannot be measured in an economic way but it is development of the country after all. Some more benefits like supporting emergency transport situations, helping the people of remote communities or helping the customer have better choices are in a way intangible benefits which are not measured by the standard economic indicators used.

2.     Wider Social benefits of the air transport industry

The air transport industry has further huge benefits on the society and I have tried to analyze each and every small impact that it has on the society in the points to follow.

2.1.                      Contributing to sustainable development:

Boosting tourism augments sustainable development of a society too. Tourism promotes the conservation of heritage areas which attract more tourists and generate economic growth. This inclusive growth helps reducing poverty which boosts a country towards sustainable development for the future.

2.2.                      enefitting the nature:

Tourism is regarded to improve or preserve the natural habitat of a country which attracts more and more tourists. Nature induced tourism is very well known to boost the nature and environment of the country. Such kind of tourism is further a boost for the countries in various world forums and unions. It also increases the sense of ownership within the locals for the nature and heritage.

2.3.                      Providing access to neglected regions:

Air transport opens up connectivity to the places of the world which do not enjoy any other form of transport networks. This way it makes the neglected regions and communities of the world accessible to top quality health & hygiene, food, education, hospitals, clean water, energy sources, postal services, etc. The aviation industry acts like a lifeline for them.

2.4.                      Delivering humanitarian aid:

Air transport over the years has been known to provide help in case of emergency situations like natural disasters or during warfare. There have been numerous instances of floods, famine, earthquake and war where air transport has come to the rescue of the suffering people just at the right time. This connectivity has been particularly very much helpful in conditions where access was a problem. Natural disasters lead to a complete cut off of a certain community and to provide humanitarian aid to such communities could be done only by the air transport network. The concept of ‘air drops’ have been largely used in a lot of disasters where accessibility to even the nearest airport is not possible. For people to survive in such conditions, air drops have come really handy. This has been the first response for the disaster induced cut off communities. Among other humanitarian assistance, air transport also provides with rapid organ supply from worldwide for urgent transplantation needs. It can provide rapid medical supplies and assistance also wherever and whenever required.

 

2.5.                      Contributing to consumer welfare:

Along with manifold economic benefits, tourism also provides substantial social benefits by empowering the end consumer in more than one ways. A consumer starts developing better ideas and conceptions about different products from different parts of the world. Customer’s demand for the best possible product is fulfilled by the air transport industry thereby facilitating improved standard of living. It helps countries in better social integration and improved social exchange relations. Tourism also gives a boost to the cultural and leisure activities in the country.

2.6.                      Better understanding of cultures:

 

In the earlier years, there was very less acceptance of people from different cultures and backgrounds. But this has changed now over the last few decades since people have started developing a learning and acceptance of different cultures, traditions and religions. In fact, air transport has ultimately brought people of different regions closer in a lot of sense.

2.7.                      Connecting countries & establishing links:

Among everything else, air transport has always connected countries, brought them closer in terms of cultural exchange, social exchange, trade, etc. It has also over the years helped the developing countries establish strong links with the developed countries and thereby foster growth. Air transport has made the international culture and the countries all the more inclusive.

2.8.                      Promoting affordable travelling:

Air transport industry promotes travelling for the people who wish to have different cultural and social experiences. It enhances the overall cultural and leisure experience that a person can have. It promotes traveling more among the frequent travellers by schemes like measuring the air miles one has traveled.

2.9.                      Alleviating poverty and misery:

It is a stated fact that tourism helps a country reduce the poverty and hence narrows down the rich-poor divide. This helps people reduce their misery in life and makes people more employable and increases the social acceptability of the neglected class of the society who now has found work through tourism.

2.10.                 Promoting sharing of ideas:

Air transport has made it easier to people to share their ideas and work on them in a collaborative way. In the earlier days, this was very difficult. It was very difficult for Einstein in Switzerland and Eddington in England to communicate and share ideas swiftly which would’ve made Einstein’s work quite quicker. There was a major social divide also between them which did not allow or encourage sharing of ideas and collaborative development. This is very much possible in today’s world. Terence Mckenna, one of the world’s best psychonauts, makes it a point that he travels around the globe and shares all his experience with a lot of people and through this he himself keeps learning a lot, he has confessed. The air transport industry has made such kind of sharing of ideas and resources possible to a very good extent that it has united the world in the front of Science & Technology too.

2.11.                 Leading the world towards sustainable transport:

The air transport industry is hugely supported and regulated by agencies like IATA (International Air Transport Agency), ATAG (Air Transport Action Group), ABBB (Aviation Benefits Beyond Borders), etc. These agencies and the other airlines under the leadership of IATA have been shifting towards a sustainable future of the transport industry. They have laid down the 2050 vision of the aviation industry and are determined to work towards the same. The foundation has been laid and it has received support from all its member countries. The most important outcome of the first meeting of the Vision 2050 which was held in February 2011 in Singapore was that the industry would reduce carbon emission by 50 per cent till 2050. The agency has further charted out small term plans in order to achieve this long term plan and as per the same, there would be a 25 per cent reduction in net carbon emission of the industry by 2030. The fleet fuel efficiency would have already improved by 1.5 per cent by 2020 if everything goes as per plans. Such initiatives could make this transport system far more environmentally efficient than the water, road or rail transport systems. This move towards environmental sustainability would benefit the society a lot and simultaneously inspire the other transport systems towards moving to a sustainable future too.

2.12.                 Encouraging Networking:

The air transport industry lets you meet new people and increase your business as well as social networks. It is very common for people to have foreign friends these days whom they meet once in a year or couple of years. Look one century back and this was almost impossible and the people were restricted to their own culture, country and society.

2.13.                 Shedding Superstitions:

The air transport industry has brought along a better social and cultural understanding among the people broadening their horizons. It has shed quite a few blind beliefs among people about the other cultures and their superstitions too. For example, in India it was considered a sin to cross a sea and visit a foreign land just a century back. And now India is one of the major countries in the current air transport scene of the world.

2.14.                 Endorsing Efficiency in transportation industry:

The transport industry before the aviation revolution was never considered to be an efficiently operating industry. With a consistent occupancy of over 70 per cent over the years, the air transport industry has set a very good example for the rest of the transport industries to move towards better efficiency rates. The rail and road transport systems also have since undergone an overhaul especially in the developed countries and metro trains in cities like Tokyo run very efficiently nowadays. The following chart shows the efficiency in terms of occupancy of aircrafts in comparison to the other more conventional modes of transport.

Figure 4: Occupancy efficiency in various modes of transport

2.15.                 Nurturing Road & Rail Transport:

The air transport industry provides a lot of support to the existing rail and road networks of a country. Not all the parts of a given country would be well connected through the air transport. So to commute further within the country, the nation also has to develop efficient connecting road and rail networks. The road and rail transport in the vicinity of airports and air transport establishment are directly funded and taken care of by the aviation industry itself. This provides better commuting facilities to the countrymen and hence contributes to inclusive social development of a nation.

2.16.                 Improving National Security:

Air transport industry provides multiple benefits to the national security. Firstly, it provides a quicker transport network for the armed forces which enhances the military security of a country. Secondly, it improves sustainable and inclusive social development improving the social security of a country. Transportation of energy resources to all the corners of the country and world is carried out effectively by the air transport industry and hence boosting the energy security of the country. Through tourism, the country preserves its natural resources and uses them to attract tourists from around the world. This improves the natural resources security for the country. The inclusive economic growth that is attained by the country boosts the economic and political security of the country. Hence, overall it improves the national security of the country in various ways.

2.17.                 Providing better infrastructure to the country:

Air transport is known to bear all the infrastructure costs related to its operations on its own. The industry has built thousands of airports and other vital infrastructure required for the economic as well as social growth of a country and its populace. The under developed countries which hardly have any infrastructure to boast about now has a lot of modern facilities like airports, connecting roads and other infrastructure induced through the growth in the air transport industry.

2.18.                 Earning respect for a country:

We have already understood how the air transport industry hugely benefits the economy of a nation. This better economy translates into better economic security for the nation which subsequently gives them a power and a say in the global scenario and earns the country a respectable position in the global networks.

2.19.                 Removing Restrictions:

Air transport removes a lot of restrictions for goods as well as people. Goods and people can now be freely transported to any part of the world. There have now opened up newer markets even for perishable goods which can be easily transported using the fast and convenient air transport. There is a newfangled sense of freedom too that the aviation industry has developed within individuals, communities and societies. This movement of people and goods encourages social integration too.

2.20.                 Driving the society towards better education:

The air transport industry has promoted global education in more than one ways. Students from any countries can come to the globally best schools to study. The aviation industry made it possible for such kind of a global system to exist in the education industry. The universities are also global in the true sense now preparing even more global students.

2.21.                 Augmenting Globalization:

The air transport industry has indeed made the world a really small and local place. As discussed above, air transport has globalized education, societies, cultures, communities, nations, tourism, research, science, technology and even armies. All of these have transpired the humans into globally acceptable beings.

2.22.                   Protecting Societies and Armies:

Like the US provides protection to South Korea against North Korea, the military troops can travel anywhere within a matter of hours and be present for any operation or protection. Or like in Mumbai blasts in India in 2011, the air control police was there with commandos before the situation got any worse and they shot out the hiding terrorists. The air transport industry has always considered this as a responsibility and provided all the possible support to the armies and societies.

We could very well take the example of the African continent while understanding the social benefits of the air transport industry. The continent that was long isolated is home to over 15 per cent of the world’s total natural resources. Due to this, it has developed a comparative advantage in tourism over the other countries and have subsequently preserved the natural resources for tourism purposes in a very well maintained manner. This gave the continent a major boost in tourism which shaped up the economies of a lot of African countries. For more than half of the African countries, tourism is still the major sources of income and economic as well as social progress.

The economic as well as social progress of any nation goes hand in hand. Hence, any kind of economic benefits will lead to a lot of social benefits as well. We have very well understood this with the perspective of the air transport industry.

The Air Transport Action Group (ATAG) has shown the social impact of the aviation industry by producing the following infographic in 2013 which describes with facts and figures what happens in the aviation industry within a very short span of 60 seconds.

Figure 5: 60 seconds in Aviation.

Source: ATAG, 2013.

Air Transport: Vision 2050, The Game Changer

The International Air Transport Agency (IATA) has been serving and leading the air transport industry in a brilliant way and in the recent times driving it towards sustainable future of transport and the whole industry. Through the Vision 2050 initiative, it has identified the long term challenges and threats to the industries by analyzing its current weaknesses.

The industry has been constantly growing in the recent times and is poised to grow even further. At times like this, it is very important to address the issues of increased capacity, environmental concerns, guiding the industry towards better safety & security and also simultaneously moving towards financial sustainability. To make the industry ready for the future needs as well as developments, IATA formed a task force which met in Singapore to discuss on the Vision 2050 on February 2011.

The strategy that has been developed for Vision 2050 is based on four pillars on which IATA will guide and drive the whole industry. Following is the four pillar approach that the industry plans to undertake in the coming future:

  • Structuring the industry for increased profitability: There have been some serious local issues in local airlines mostly which has questioned the profitability model of the aviation industry. The task force plans to address the same for a sustainable financial future of the industry.
  • Moving towards adequate and proficient infrastructure: Air transport industry leads to a lot of infrastructure development as we know. This development has to be sustainable for the future and hence it becomes very important that it happens in a planned and structured way. There should be a broader vision associated with each and every single development in the infrastructure. It should also keep in mind the future needs and growth and how the planned infrastructure would cater to the same. IATA plans to address this issue to by regulating it even more.
  • Shifting towards using sustainable technology to fuel the industry: One of the main agendas of the Vision 2050 is environmental sustainability by reducing the carbon emissions by over 50 per cent. This is possible only if the industry finds newer ways of developing the aircrafts and using alternative technologies which could provide more efficient power and fuel for the industry.
  • Building capacity to meet the future customer needs: The air transport industry has been witnessing an unparalleled growth recently which is estimated to grow further in the coming years. By shifting towards sustainable transport, the industry would attract even more passengers. More customers would make it necessary for the industry to develop enough capacity from right now that it can sustain the customer needs through the existing facilities as it keeps growing. The IATA task force for Vision 2050 aims to regulate this also among all its member countries, airlines and fuel as well as aircraft suppliers of the industry like Airbus and Boeing.

The February 2011 meeting in Singapore for the Vision 2050 was attended by 35 strategic personnel from across the world. These people formed the task force as representatives of the industry from various facets of the industry. It included people from different stakeholder groups, government representatives, technologists, regulators, financiers, airlines manufacturers, industry laborers, airport authorities, air navigation service providers as well as the end consumers. All of them together have pledged to work towards the sustainable future of the industry by putting in some cohesive efforts towards the same.

Airbus has already started working towards the sustainable future agreed at the Singapore meeting. It has come up with an initiative called ‘Smarter Skies’ and have developed sustainable and fuel efficient fleets promoting the same. This new range of fleets developed by Airbus takes the aircraft technology to a completely new level and brings along new sustainable developments in the following aspects:

  • Eco-Climb take-off: The new range of aircrafts would make use of renewable energy to propel the take-off process. It would not make use of the conventional fuel and hence reduce carbon emission and noise pollution to a great extent. This would also provide a steeper and better climb. The land usage also could be decreased as the runway would be decreased by the use of renewable energy.
  • Free Flight and creating express sky-ways: The smart aircraft would organize its route on its own depending on the sky and weather conditions. It would automatically select the best possible route reducing energy consumption and providing better safety & security to the passengers. Airbus also aims to create express sky-ways just like express highways on the land. This would allow the aircrafts to fly in a bird like free and steady formation guiding all the fleets simultaneously and hence needing less energy and focus on each and every single fleet.
  • Low noise and freely gliding fleets: These aircrafts would make landing also energy efficient by using renewable energy sources for landing process too. The energy efficient take-off as well as landing process would decrease noise pollution to a major extent. The aircrafts would be gliding freely in the air as well as during take-off and landing processes.
  • Ground operations with low emissions: Apart from optimizing the energy use in take-off and landing processes, the new Airbus fleets also plan to optimize the energy usage on ground by shorter and more efficient runways and quicker transportability of aircrafts on lands too which would make it easier for them to be transported for repairing or dismantling purposes.
  • Powering infrastructure and the future aircraft: The future aircraft would make use of locally available biofuels such as hydrogen, electricity, solar power, etc. This would lead to a development in the energy infrastructure of the countries and hence would guide the countries and other transport systems as well towards the use of efficient energy sources reducing the environmental footprints by a major magnitude.

These new developments and technologies would definitely drive the rest of the world too and we can very well foresee a sustainable future of the air transport industry. Aircrafts running on biofuels and Express Sky-ways could be the next big leap for this industry. These developments would further yield consummate economic as well as social benefits to the countries. The vision of new aircrafts and ‘Smarter Skies’ by Airbus has been showed in the following figure:

Figure 6: Airbus Smarter Skies Concept

Source: Airbus Media Gallery, 2013

Conclusion & Recommendations

Over the years, the air transport industry has transpired to become an environment friendly industry. It has been constantly driven by innovation and progress. And it has in return driven a lot of economies to growth and success contributing in a really major way to the overall world economy too. This industry has further always been an attraction to people. People have always dreamt to fly and the modern day society just loves air commutation that the air transport industry has made available to them at a very reasonable cost. The aviation industry has also become one of the most important contributors to the advancement of the world, especially through Science & Technology.

The industry has responded to the ever growing demand in an efficient way and has been constantly evolving towards better ways. There are international agencies like IATA who are guiding this industry towards a noble global vision. As discussed in the report, there is a great synergy between all the stakeholders of this industry which has been driven by IATA. They have come together and shaped up a Vision 2050 also towards a sustainable future of this industry.

This report has confirmed in detail the benefits of air transport industry for the society and economy at both regional as well as global levels. Analyzing all the facts, figures and benefits discussed in this report, it would be fair to say that this industry has had tremendous effect on the growth of the mankind and that a growth in this industry would mean a parallel exponential growth for the mankind.

However, it will be of prime importance that the governments and the industry maintain their vision for this industry and strive towards a responsible & sustainable future, all working in perfect synchronization and constructive partnerships.

Till now, the industry has responded well to various challenges and the growing demand. It has always kept progressing by bringing in newer technologies, constantly improvising on safety & security, producing better aircrafts, moving towards efficient fuels, envisioning biofuels, etc. It has also modernized itself wherever required and provided adept infrastructure to societies. It also achieved business simplification by deregulating the industry but yet keeping it under check through IATA. For customers also, the industry has kept evolving and now caters to them a wide range of goods and in-flight services as well.

Overall, the industry has done quite well. And it is under the able leadership of IATA. But there could yet be some possible diplomatic and political challenges that the industry might face. The IATA has to somehow keep the governments also regulated or at least involved in the processes of the industry. And a way has to be found out by which the government also works in harmony with the interests of the global air transport industry. It must be realized to them that this industry is one of the most globally powerful industries. It goes without saying that the efforts of the air transport industry has to match with the action of the government.

The government should also consider this industry of prime importance and liberalize their aviation markets and not get into the micro management of this industry in particular. A lot of government have been realizing this lately and are ever since expanding their economies. The industry should be allowed to thrive and not be over burdened by tax. This would make it prosper and attractive also for investors.

The governments should also deploy a proper framework for the mass transport system within the country without harming national interests yet working in congruence with the global interests.

Lastly, the government should support the infrastructure development that this industry needs by not imposing arbitrary regulations or conditions and not restrict the sustainable growth that this industry always strives for. Stay true to the statistics that suggest an exponential growth for the countries that play fair with the air transport industry.

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