Singapore - The International Air Transport Association (IATA) urged policy-makers to use aviation as a strategic asset. “When the relationship between industry and government works, the results are brilliant. Policies that support aviation’s competitiveness deliver wide-ranging benefits across economies by connecting business to markets,” said Tony Tyler, IATA’s Director General and CEO.
Aviation is a key economic contributor. In Singapore, for example, where the government has supported aviation as a strategic industry, it contributes 119,000 quality jobs and 5.4% of GDP. This is according to Oxford Economics studies commissioned by IATA to demonstrate to governments the catalytic impact of a healthy aviation sector on national economies. “The connectivity that aviation provides to Singapore has enabled it to develop as a successful regional hub for sectors as diverse as finance, healthcare, culture and education,” said Tyler in a keynote address to the Singapore Airshow Aviation Leadership Summit.
Not all governments have the same positive approach. India is one market that is missing out on aviation’s potential as a result of a policy framework that does not support aviation’s competitiveness. For example, high taxes, a lack of capacity in Mumbai and increasing infrastructure costs in Delhi are holding back Indian aviation’s potential. “The stunted growth of Indian aviation comes with an economic cost. India’s population is about 240 times the size of Singapore’s. But the number of aviation jobs is just about 14 times larger at 1.7 million. And the economic contribution of aviation is still only 0.5% of the Indian economy. It is an important 0.5%. But even considering the differential in GDP/capita between Singapore and India, these numbers tell us that there is tremendous unrealized potential in India,” said Tyler.
Asia is driving growth and shifting aviation’s center of gravity eastward. In 2010 about 33% of passengers traveled on routes to, from or within Asia-Pacific. For North America and Europe the equivalent number was 31%. By 2015 IATA’s passenger forecast anticipates that Asia-Pacific will represent 37%, while traffic associated with Europe and North America will fall to 29%. Over that same 2010-2015 period, total passengers worldwide are expected to rise to 3.55 billion. Of the 877 million additional passengers that will be generated, 212 million are expected to fly on routes associated with China.
Looked at in terms of propensity to travel, Asia has tremendous potential for future growth. The average person in the US travels by air 1.8 times per year, while in Germany the equivalent is one trip annually. For China the average is 0.2 air trips per person per year and for India it is just 0.1. “Within the next decade China is expected to reach the $15,000 per capita income level at which point annual air travel becomes possible. Achieving that in China will generate an extra billion annual travelers,” said Tyler.
CEO Tony Tyler cites four areas where policy efforts are needed to ensure aviation’s financial sustainability
Industry shift away from the U.S. and Europe to higher-growth countries.