Study Attests to Air Transport's Economic Value

 - June 18, 2012, 12:40 PM
The U.S. air transport industry represented 3.7 percent of GDP in 2010 and supported 6.6 million jobs, according to an IATA-funded study. (Photo: Newark Liberty International Airport)

The U.S. air transport industry in 2010 represented 3.7 percent of the nation’s GDP—or 4.9 percent when considering so-called spillover benefits—and supported 6.6 million jobs, according to a new study commissioned by the International Air Transport Association (IATA).

IATA executives and representatives of the U.S. trade organization Airlines for America (A4A) reviewed findings of the “Economic Benefits from Air Transport in the U.S.” study, one of a number conducted by UK-based Oxford Economics, during a recent briefing in Washington, D.C. They said the studies support their efforts to convince world governments of the economic importance of aviation and to discourage counterproductive tax and regulatory policies—the thrust of A4A’s call for a national airline policy in the U.S.“The aim of these particular studies is to talk to the finance ministries, the treasuries, to make sure they understand the role this industry plays in supporting economic growth and tax revenues,” said Brian Pearce, IATA chief economist. “It’s those economic decision-makers in government we’re seeking to convince.”

The U.S. industry, including airlines, airports and ground-based services and aerospace manufacturers, paid $57 billion in taxes and social-security payments in 2010, according to the study. Airline and passenger-related taxes raised another $16 billion. Among all transportation sectors, the airline industry accounted for 55 percent of the tourist arrivals into the U.S. The air cargo segment shipped just 0.4 percent of the tonnage of U.S. international trade, but 25 percent of its overall value.

Air transport jobs in the U.S. also produce 6 percent more than other jobs (or $105,000 annually per employee) in terms of gross value added, a measure of productivity, the study found. “Basically that says to me that not all U.S. jobs are created equal,” said John Heimlich, A4A chief economist. “Some jobs have a greater payoff for the U.S. economy than others.”

The study measured the industry’s economic impact in both traditional and novel ways. For example, it ranked 50 countries based on a “connectivity” index, described as “a measure of the quality of a country’s air transport network that reflects both the volume of passenger traffic and the importance of destinations served.” The U.S. ranked 10th in connectivity per billion dollars of GDP, trailing Hong Kong, Jordan, Mauritius, Singapore, New Zealand, Switzerland, Lebanon, Ireland and Australia.

Executives described the connectivity ranking as impressive considering the size of the U.S. relative to a nation such as Singapore that relies heavily on air transport. “So we are this great enabler,” observed Heimlich. “In some respects we’re small unto ourselves, but we allow other business sectors to thrive, using us as a tool to achieve their ultimate ends. We’re proud of that.”