How Does Air Transportation Affect The Global Economy

The relationship between air transportation and economic activity is complex. Over the last several decades, both air transportation usage and economic activity have been growing around the world. Between 1970 and 2005 the total number of air passengers carried by the world’s airlines increased 6.5 times from 310 million to 2 billion passengers. During the same time period, the world’s Gross Domestic Product (GDP) tripled from 12 to 36 trillion US$. As the air transportation usage grew, it came to play an important role in the global economy: in 2004, 40% of international tourists traveled by air while air cargo accounted for 40% of inter-regional goods exports. Air transportation is the only feasible long-distance transportation mode for high-value
Several factors stimulated the first increase in the growth rate: government funds were provided to establish a flag carrier and to develop aviation infrastructure. In addition, liberal aviation regulatory framework established by the government helped the carrier grow its international network. The changes in the regulatory framework and aviation infrastructure investment reflected the government’s overall goal to move the economy away from oil-exporting activities toward development of the service-based industries. Air transportation development was also supported by the growing air travel and freight need of Dubai as the economy moved away from the oil-exporting activities. To promote this diversification of demand and global integration of Dubai’s economy, the government in the 1980s began sponsoring the development of supporting business and tourism infrastructure and established a regulatory framework based on free-market principles which encouraged foreign investment. In the recent years, some of these infrastructure projects have been completed boosting the economy’s international profile and encouraging the inflow of labor and