Tuesday, February 14, 2012

Government Policy and the Airlines

Mr. Tony Tyler, IATA's DG and CEO, in an address in Singapore urged governments to use airlines as strategic assets (read full story here). He cited two examples of how government policy towards their airlines affects their contribution to the country's overall economy, Singapore and India. Singapore support of aviation as a strategic industry contributed 119,000 jobs and a 5.4% contribution to GDP. While India's policy of high taxes, blind support for Air India is driving the airline industry towards a potential meltdown and a contribution to GDP of no more than 0.5%. Another example is Emirates in Dubai where the airline contributes 22% to GDP and 19% of the total employment (around 250,000 jobs) and is profitable.

Airlines have always been an instrument of government economic policy and national security especially in smaller countries. Government owned airlines were allowed operational losses because their contribution to the GDP in terms of employment, investment and tourism related businesses far outweighed any losses they may have incurred. The other issue is the ability to stay connected when so called bad times hit and most international airlines stopped operating; something countries like Egypt, Tunis and Jordan experienced and are still experiencing during the Arab Spring, regardless of how good or bad the security situation was.

Of course, aviation policy is not about state owned airlines only. It is about a policy framework for aviation that includes an open sky regime that promotes and facilitates bilateral and multilateral traffic rights similar to what Singapore, UAE and Jordan have and does not institute protectionist policies. It also includes a tax regime that does not view aviation as a luxury product and tax it accordingly, but as a vital component of the economy. There are several countries that have imposed taxes and fees that are rendering their industry uncompetitive like Germany, India and Canada.




No comments:

Post a Comment

Labels

1 Goal 2010 2012 2013 9/11 AA Abu Dhabi ADAC Air Arabia Air Canada Air India Airberlin aircraft airlines airports ambitions American Airlines Amman aviation AVOD AWST B707-300C B767 B777 B787 BA Bahrain Bahrain Air BangaloreAviation Boeing branding British Airways Business Aviation Cabin Crew Canada change chapter 11 CO Commercials communication community compliance contingency continuity Continuous Improvement cost effective creativity Culture curricula Customer Service Delta Detroit Metro DFW Doha DTW Dubai Dubai Air Show DWC efficiency emergency Emergency Response Emirates employees environment ET409 Etihad ETS EU FA FAA family Flight Attendants flight(s) Flightglobal flydubai GACA Galaxy Tablet GAMCO GCC globalisation GOL Greece Green Gulf Air Hala Hamburg happy health home Hopenhagen Human Resources IFE India Iran Iraq Iraqi Airways Jaffa Jazeera Airways Jet Airways Jordan Just Culture Kuwait Airways LA LCC leadership low cost maintenance management manpower MEA MEBAA MENA Michigan motivation MRO MROAM Oneworld Palestine passengers passion people Philadelphia planet earth Privatization professional QAIA Qantas Qatar Qatar Airways Quality Quick Service Restaurant Radio Repair Stations Risk road roots ROTANAJET Royal Jordanian Safety Sanctions. Sao Jose Dos campos SAT Saudi Arabia Saudi Arabian Airlines Security Sharjah Airport SimliFlying Simplicity SKYTEAM SMS social media Southern California Southwest Airlines Star Alliance Sudan Airways support target teachers Technology terrorism tolerance Toulouse tourism traffic Training transition travel TSA Turkey Twitter UA UAE UBM US Airways VIA Rail Violin Vision volcanic ash Wataniya Airways
 
Top Blogs
Powered By Invesp