Air Transport Industry (Contribution in world Economy)

Presented by

Noman Khan57154

Course: Macro Economics

MBA / MS (Aviation Mgt.)

PAF KIET

A brief on

Air Transport Industry (Contribution in Macroeconomics Stability)

Introduction

Aviation / air transport:

as an economic Engine

as Contributor to the global GDP

as a generator of employment

as a tourism facilitator

Threat to aviation industry

Background / history

Pakistan CAA / air transport industry

Sequence

Aviation is the practical aspect or art of aeronautics,

including:

design, development, production, operation and use of aircraft,

especially heavier-than-air aircraft

What is Aviation

Ref: Wikipedia.com

◦Military Aviation

◦ Civil Aviation

What is Aviation

Civil Aviation :

Scheduled Air Transport:◦ including all passenger and cargo flights operating on

regularly scheduled routes; and

General Aviation:◦ includes all non-scheduled civil flying,

both private and commercial.

◦ may include business flights, air charter, private aviation, flight training, ballooning, parachuting, gliding, hang gliding, aerial photography, air ambulance, crop dusting, police air patrols and forest fire fighting.

Civil Aviation

Ref: Wikipedia.com

http://en.wikipedia.org/wiki/File:Cessna.120.g-btbw.arp.jpg

Air transport industry a major contributor in global GDP

Air Transport vs. Employment

Direct impacts:

The world’s airlines carry:

over03 Billion Pax. / year &

50 Million tones of freight.

Causing:

8.7 million Direct jobs generating within the air transport industry

$606 BillionContributing to global economy

Air transport system that provides jobs, trade, connectivity, tourism, vital lifelines to many remote communities and rapid disaster response.

Ref: www.atag.org (aviation benefits beyond borders April 2014 report)

http://www.atag.org/

Other contributor to World GDP

Pharmaceuticals $451 billion

Textiles: $223 billion

Automobile $555 billion

chemicals: $1,282 billion

Ref: www.atag.org

(aviation benefits beyond borders April 2014 report)



Passenger Traffic is outperforming GDP Growth:

Ref: int’l air traffic association (IATA)

Passenger Traffic Growth Various by Regions

Ref: int’l air traffic association (IATA)

Employments:

The aviation industry itself is a major direct generator of employment andeconomic activity in:

airline and airport operations,

aircraft maintenance,

ATM / ANS providers

head offices and activities directly serving air passengers,

civil aerospace manufacturers, selling aircraft andcomponents to airlines and related businesses


Ref: www.atag.org

(aviation benefits beyond borders April 2014 report)



Civil Aviation & the World Economic

Airlines or GHAs: 2.3 million people (26% of the total)

(flight crew, check-in staff, maintenance crew, reservations and head office staff)

Airport Operators: 470,000 people (5% of the total)

(airport management, maintenance and operations)

Other non- aviation groups: 4.6 million jobs (53%)

(at retail outlets, restaurants, hotels, government agencies, etc.)

Manufacturer: 1.2 million jobs (14%) of civil aircraft

ANS providers: 195,000 people (2%)

Air transport industry worldwide directly generated 8.7 million Direct jobs generating within the air transport industry





Indirect impacts on employment:

Air transport Industry indirectly employment and activitiesof suppliers to the air transport industry — for example,

Aviation fuel suppliers

construction companies that build airport facilities

suppliers of sub-components used in aircraft

manufacturers of goods sold in airport retail outlets

are supported through the purchase of G&Sby companies in the air transport industry..

over

9.8 MillionIndirect Jobs globally

Approx.

$697 Billionto global GDP in 2012-13



Air transport stimulates tourism

Economic

Tourism makes a major contribution tothe global economy. It directlycontributed

$2 trillion to world GDP in 2012-13

and provided

over 101 million jobs globally,

3.4% of total employment.

Ref: World Travel & Tourism Council

Air transport stimulates tourism

Economic Aviation plays a central role in supporting tourism. Over

52% of international tourists travel by air.

Tourism is particularly important in many developingcountries, Island states:

In Africa, 2.5 million people (approx.) directly employed intourism are supported by overseas visitors arriving by air,representing 30% of all tourism jobs in Africa.

In island states, 25.9 % of economy & ¼ of its Jobs relayon Tourism

Ref: World Travel & Tourism Council

Contribution to world trade:

Indirect impacts: Contribution to world trade

Air transport is a vital component of many industries global supply chain forits fast & reliable over great distance

for the transfer of time sensitive goods.

.Rapid & urgent delivery of spare parts for machinery andequipment

.High value, lightweight and sensitive electricalcomponents.

Exporters of perishable products


South of Southern China’s

Ref: www.aviationbenefitsbeyondborders.org

Threats to air transport industry viability

(what means to world economy)

Threats to air transport – Selected Cases

The most safest mode of transportation has Few big threatare:

Aviation security / terrorism etc..

Aviation safety / Flight Failure etc..

Natural disaster (volcano ashes)

Threats to air transport

MH17 shout down in east Ukraine:

Eastern Ukraine airspace over almost shut off

Bearing loss of $20 million /year(on account of overflying aeronautical revenue)

Ukraine shares gain for Rumania, Bulgaria , Poland& turkey etc.

Malaysian airlines loses of third quarter

reached to $167.4 million (Sept. 2014)

Ref: http://worldairlinenews.com/2014/12/02


Icelandic Volcano Ashs 2010: On 14 April 2010, Iceland’s Eyjafjallajokull volcanoerupted with an ash plume that rose over 3km and, with the help of winds,

blew across much of Europe’s airspace. It provides a useful study of howmodern life might be impacted without aviation. A week-long disruptions of ATS inEU

over 100,000 flights cancelled

10 million passengers affected,

cost of $5 billion lost to global GDP

(15 April and 24 May 2010)


Icelandic Volcano Ashes 2010

Social Benefits of air Transport

Contributes to sustainable development by:

Facilitating tourism and trade

Generating economic growth

Creating jobs

Increasing tax revenues

Facilitates the delivery of emergency and humanitarian aidrelief

Swift delivery of medical supplies, organs for transplantation

Pakistan Civil Aviation / air transport industry Aviation Growth contribution to the country GDP

Pakistan aviation industry started when Orient Airways merged with PIAC to become the national flag carrier called PIA

PIA remained the only operator for many years,

Pakistan Civil Aviation starts

Early 90s: Major growth in Pakistan aviation industry & 4 new private

airlines launching operations

Competition started with Govt. controlled PIA

UN Economics Sanctions: ◦ adversely affected local aviation mkt.

◦ 2 of 4 airlines closed their operation


Early 2000s: Entrance of M/s. Airblue with new state of art aircrafts.


Pakistan Air Transport Industry is regulated by Pakistan CAA, three main functions of the authority are:

Regulatory

Air Navigation Services

Airport Services

Pakistan Civil Aviation Authority

Pakistan CAA – Airports & Installations

Kohat

Parachinar

Muzaffarabad

Rawalakot

Mangla

Sibi

Bhagtanwala

Bahawalpur

Jacobabad

Khuzdar

Mirpurkhas

Talhar

Dalbandin

Mianwali

ChitralGilgit

SkarduSaidu Sharif

Bannu

D. I. Khan

R.Y. Khan

Sukkur

Moenjodaro

Nawabshah

Hyderabad

Panjgur

Ormara

Jiwani

Peshawar

Islamabad

Lahore

Faisalabad

Multan

Karachi

Quetta

Turbat

Gawadar

Pasni

Zhob

D.G.Khan

Sehwan Sharif

Walton

Total Airports : 44

Total Operational : 27

International : 15

Domestic : 12Scaled down : 06

Closed : 10

Under Const. : 01

A R A B I A N S E A

I R A N

C H I N A

Sialkot

Thar

List of Pakistan registered airlines

As on April 2005:

Airline Call sign Hubs DestinationsFleet Size

Current Orders

Airblue Airblue JIAP Karachi 11 9 0

Air Indus Air Indus JIAP Karachi 8 3 0

Pakistan International Airlines

Pakistan

InternationalJIAP Karachi 66 49 29

Shaheen Air Shaheen Air JIAP Karachi 23 21 4

Pakistan Economy Overview 2012-13

Economic crises in the country recent history.

Economy grew to only 3.6% as compared to 4.4%in the previous FY2012 (-0.8 % downfall inFY2013-14)

Power shortage become so severe that it wiped

out 2% from out GDP,

Agriculture, Manufacturing, Servicesector performed below their capacity.

Despite the difficult economic conditions,

Key Financial highlights: Pak. CAA

Authority revenue grew by 46% to Rs 39.7 billion(highest ever) (Rs 27.1 Billion in FY2012)

Surplus before tax. 2012-13 Rs 18.4 billion as

compared to Rs 11.7 Billion on 2011-12 (due to rev. of aeronauticalcharges)

Key Financial highlights: Pak. CAA

Liquidity position:

Authority enjoying Rs. 4.97 Billion of liquid assets.

(vital to external borrowing to finance the several megaprojects for its growth in the years to come)

Pak. Civil Aviation Vs. Country Economy

0

5000

10000

15000

20000

25000

30000

35000

40000

2009 2010 2011 2012 2013

11139 12794 13863

22117

34548

31

08

30

32

33

33

35

87

40

94

16007 17733 18897

27178

39716Pak CAA - 5 year at a glance

aeronautical revenue non aeronautical revenue totla income

millio

ns

Passenger Flow in Pakistan

FY 2013-14:

Int’l Traffic increased by 11% to 10.87 million pax.

Domestic pax. increased up to 3.5% as 7 million,over the previous year.

Fastest growth in passenger traffic in the last 3years.

Aircraft & Pax. Movements FY 2012-13

0

5000

10000

15000

20000

25000

30000

JIAP BBIAP AIIAP BKIP QIAP otherAirports

25520

14953 15440

5648

2745

11676

23870

14384 15444

5431

1649

8997

Aircraft Movements (Dom & Int'l) to & from Pak

2012 2013

0

0.5

1

1.5

2

2.5

3

3.5

JIAP BBIAP AIIAP BKIP QIAP otherAirports

3.078742

1.8886871.983082

0.587057

0.149398

0.421201

3.071217

2.0017582.163126

0.6476220.153717

0.357424

Mill

ion

s Passenger movements (Dom & Int'l)

2012 2013

Pax Mov 2012 2013

Int’l 4,962,357 5,150,864

Dom. 3,145,810 3,244,000

total 8,108,167 8,394,864

A/C. Mov 2012 2013

Int’l 33034 31613

Dom. 42948 38162

Total 75,982 69,775

Air transport market share in Pakistan

Pakistan has strategic locationfor traffic overflying betweenFar-East and Europe/America.

The growth in aviation industryduring last decade also

witnessed by Pakistan.

Air Transport growth in Pakistan (2002-2012)

2002: 62276 flights,

2012: 200,000 flights

More than 200% Increased in

Traffic overflying PakistanRef: Pakistan CAA Data

Projected Transit Traffic Growth in Pak. (2013-2022)

Ref: Pakistan CAA Data

Passenger Traffic is outperforming GDP Growth:

Ref: World Bank Data

Passenger Traffic flow in Pakistan

Pakistan GDP Billions of US Dollars

Comparison with neighboring country

Comparison with neighboring country

Research, Compiled & presented by

Noman KhanMBA / MS (Aviation Mgt.)

Cell; 92-333-3274654

Air Transport Industry (Contribution in Macroeconomics Stability)