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International Air Transportation

How airline and airport capability impacts tourism and international business

Research Paper (postgraduate) 2012 11 Pages

Business economics - Supply, Production, Logistics

Excerpt

International Air Transportation

Air transportation is a key factor in long-term economic development, growth, and overall success. Like other forms of transportation, air travel simply provides a link between two or more different locations; though, air travel separates itself by offering a very quick alternative to travel vast distances. The unique nature of air transport has proved its significance in developed nations and the increased connectivity has recently demonstrated an even greater impact for developing economies. There are, however, substantial challenges in producing respectable air transport infrastructure in developing nations. In fact, there are also many difficulties involving air travel that affect developed nations as well. Infrastructure, costs, regulation, and sustainability are some of the more noteworthy concerns of international air transportation. Understanding the problem is the first step to creating a solution and, with tangible collaborative efforts, more efficient air transportation networks can begin to benefit the international community.

Many people likely suspect air travel as mostly serving tourists and international business professionals – and their suspicions are based on real figures. In 2005, 40% of all international tourists traveled by air – contributing to the nearly two billion passengers who travel by air each year (ATAG, 2005). In addition to leisure travel, providing access to virtually anywhere facilitates international trade and can benefit all economies involved. For example, a pineapple company based in Hawaii might not have any more arable land to expand their plantation. The company could look to foreign direct investment to purchase land in another country such as the Philippines. If the Hawaiian business people have no quick access to the Philippines, trading would not be feasible. The Hawaiian company can fly to the Philippines to purchase the land, coordinate logistics operations, and complete the transaction. Travelling by a water carrier might be possible, but the time it would take to complete a journey would deter businesses from trading. It is no wonder the Air Transport Action Group cites 70% of businesses report “serving a bigger market is a key benefit of using air services” (ATAG, 2005). It is apparent that providing access and connectivity is the foundation of the economic benefits offered by air transportation.

In addition to connectivity, air transport allows certain items to support remote operations that can benefit a developing nation with little other transportation infrastructure. For instance, there is high demand in developed nations for raw materials found in Africa. Gold and uranium mining in the landlocked states of Mali and Niger account for over seventy percent of their gross national income respectively (Bastke, 2008). The mines are in remote locations in the countries and aviation is used extensively to bring perishable supplies and fly the resources to larger hubs (Bastke, 2008). Like the African mines, other developing nations could benefit from receiving support through air transport. Workers in remote locations might depend on aircraft to bring fresh fruits and vegetables and important medical supplies.

The delivery of medical and other perishable supplies can serve an indirect economic purpose by supporting remote trading operations; furthermore, similar shipments can create social benefits in developing regions as well. The speedy nature of air transport allows social benefits by delivering medical supplies, emergency relief, and humanitarian aid. Additionally, having more variety can improve the quality of life for citizens in developing nations.

Developing economies are aware of the potential and significant air transportation growth is transpiring around the world. Passenger air travel grew 8.9% in the Middle East and 10.2% in Latin America in 2011 (Raytheon, 2012), adding to a global growth trend that boasted over 45% between 1980 and 2005 (ATAG, 2005). Deregulation is a major reason for the massive growth in the industry. Allowing airlines to compete in the free market is commonly considered a major impetus for the airline industry to increase efficiency and lower prices, thus facilitating an increase in passengers. The reduction of price is a direct result of deregulation. After adjusting for inflation, the cheapest round-trip New York-Los Angeles flight that the government would allow was $1,442 in 1974 (“Airline deregulation”, 2011). The same route – again, adjusted for inflation – could cost as little as $268 (“Airline deregulation”, 2011). Such a disparity in ticket costs is a clear reason for an increase in passenger travel.

Despite the apparent successes of deregulation, many officials around the world are reluctant to hand over their airline industry to the private sector. The sentiment is particularly present in developing nations, where corruption in politics is often a major problem. Air transportation in the least developed nations is at risk even with government regulation. Many of the world’s least developed nations have authoritarian governments that are at constant risk of strikes, coups, impermeable bureaucracy, and high crime rates (Bastke, 2008). The self-serving nature of totalitarian regimes creates a barrier for those wanting to privatize the industry to allow for growth and better service.

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Details

Pages
11
Year
2012
ISBN (eBook)
9783656583950
ISBN (Book)
9783656583943
File size
446 KB
Language
English
Catalog Number
v267126
Grade
96.0
Tags
international transportation

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Title: International Air Transportation