Airline Industry as a Cash Cow
Subscribe today for Free Enterprise Updates
- Latest business trends and best practices
- News about legislation and regulation impacting business
- Business how-to articles from industry experts
- Commentary and interviews with newsmakers in business and politics
The aviation sector contributes $670 billion in value added to the U.S. economy, equivalent to roughly 5% of GDP, and supports 9.3 million jobs, according to a recent report prepared by Oxford Economics on behalf from of the International Air Transport Association. AINonline reported that the report supports IATA’s efforts to convince governments “of the economic importance of aviation and to discourage counterproductive tax and regulatory policies.”
Brian Pearce, IATA chief economist, told reporters,
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. It’s those economic decision-makers in government we’re seeking to convince.
In the U.S. alone, the aviation sector pays over $57.4 billion in taxes, a further $16.6 billion in passenger fees, and an estimated additional $49.6 billion of government revenue via the sector’s supply chain. “We need government to stop looking at us as a cash cow and look at us as an economic engine,” said Doug Lavin, the group’s IATA’s regional vice president for North America.
The report’s findings also point to a deeper contribution of consumer benefits and spill-over impacts on an economy’s productivity capacity. From visiting family and friends to shipping high value products, 787 million passengers and 23 million tons of freight travelled to, from, and within the U.S in 2010. Air freight accounts for less than one percent of total tonnage of international trade, but comprises 25 percent of total value.
The aviation sector’s significance is highlighted by Dell’s computer manufacturing plant in Austin, TX, which relies on parts from Mexico, France, China, Japan, Taiwan, Singapore, Malaysia, and Hong Kong. “The way these companies are set up with a global supply chain depends entirely on a well-functioning air transport system,” Pearce says said.