A STUDY ON THE TRANSFORMATION OF UAE’S AIR TRANSPORT INDUSTRY FOCUSING ON ITS CONTRIBUTION TO UAE’S ECONOMY

Abstract

INTRODUCTION:Aviation industry has been instrumental in globalisation by connecting the global countries through its fast transport network. By providing quick access to global markets it has helped in easing the international travel, international trade, foreign investments and tourism. Impact of aviation sector on the global economy is massive. According to Oxford Economics (as cited in Aviation Beyond Borders, 2016) in 2014 it generated $ 2.7 trillion, which is 3.5 per cent of global GDP. Had aviation been a country, it would have ranked 21st largest economy in terms of GDP, similar in size to Sweden or Switzerland (Oxford Economics as cited in Aviation Beyond Borders,2016). In the same year Air transport generated employment for 62.7 million people in the world (Oxford Economics as cited in Aviation Beyond Borders,2016). Total direct employment in the sector was 9.9 million (Aviation Beyond Borders, 2016). Another noteworthy fact is that the jobs in this sector are 3.8 times more productive than other jobs (Oxford Economics as cited in Aviation Beyond Borders, 2016). In 2014 3.3 billion passengers took the services of the world airlines and in 2015 the number rose to 3.57 billion (ICAO and IATA as cited in Aviation Beyond Borders, 2016). Air transport is widely used in the transportations of very high valued and also time sensitive items like perishable products. In terms of the volume of trade shipments its share is less than one per cent; but it is around 35 per cent by value (Aviation Beyond Borders, 2016).On January 1st 1914 the first ever scheduled flight with a paying passenger was launched. It was a historic moment as it marked an event that changed the way the world travelled. In the last 20 years the global connectivity city -pairs have now almost doubled and_exceeded 16,600 in 2015, 350 more than in 2014(IATA's Annual Review, 2016). Over that same period, average airfares have more than halved (after adjusting for inflation), which has been a major stimulus for trade, tourism, and Foreign Direct Investment associated with global supply chains. There is massive increase not only in terms of the number of passengers but also in terms of the profits of the airlines. 2014 was the fifth successive year of profitability it registered an aggregate net profit of $16.4 billion. The year 2015 generated $35.3 billion net ,after tax profit, which was more than double of what was generated in 2014(IATA's Annual Review, 2016). As can be seen from the table 1, strong growth is forecasted in the aviation industry 20 years from 2014. Forecast for the year 2034 expects an increase of more than 100 per cent for many of the indicators of the aviation industry.RESEARCH OBJECTIVES:The study has been conducted aiming to achieve the following objectives:* To show the contribution of aviation industry on employment generation and GDP of the global economy.* To discuss the major infrastructural developments that took place in the air transport sector in the various Emirates of the UAE.* To analyse the direct, indirect, induced and catalytic (tourism) impact of the aviation sector on the job creation and GDP generation in the economy of the UAE.* To discuss the scope of the aviation sector in future in the economy of UAE.RESEARCH METHODOLOGY:This study is descriptive in nature. Secondary data has been used to project the overall contribution of aviation industry on the global economy in general and on the economy of the UAE in particular; and to highlight the major development done and achievements made in this sector. Data for this study has been taken from the official websites of General Civil Aviation Authority (GCAA), Various airport authorities such as Abu Dhabi Airports Company (ADAC) and Dubai Airports Company (DAC), airlines like Etihad Airways, Emirates Airlines etc., various reports such as Air Transport Action Group's (ATAG) Aviation Benefits beyond Borders April 2016, various reports of International Air Transport Association (IATA), UAE's leading newspapers and other sources on the internet. …