Reform and opening up: Way to the sustainable and harmonious development of air transport in China

The global air transport has been undergoing wings of change in the past 30 years as a result of deregulation and liberalisation. During this period, the air transport in China has also been undergoing significant transformation and rapid growth following the reform and opening up policy of China since 1978, the same year when the USA enacted the Airline Deregulation Act. Although China has become the world's second largest air transport system since 2006, few studies have analyzed the growth pattern and policy evolution of this important market. This paper critically reviews the development of the air transport policy of China and examines the challenges in the 21st Century. Such an investigation leads to the following conclusions: (A) the reform of China's civil aviation has been based on the national policy in socialist market economy as well as the liberalisation of air transport; (B) the substantial growth in the last three decades has been driven by economic growth as well as the transformation of China's transport industry. (C) In order to sustain the rapid and continuous development in civil aviation, China should continue to implement scientific management and development, deepen the reform and opening up and continue liberalisation.     

The economic impact of aviation: A review on the role of market access

In recent decades, advancements in telecommunications and (air) transportation have driven globalisation processes. Consequently, policymakers and scholars view access to transportation as an essential prerequisite for economic development. For aviation, existing empirical studies have attempted to estimate the wider economic impacts from regional, country-level and global perspectives. However, no theoretical framework has yet been presented that comprehensively captures the full set of mechanisms by which aviation can contribute to economic development. Such a framework would cover both positive and negative regional impacts, as well as the mechanisms and spatial distribution behind them. In this paper, we use a New Economic Geography approach to comprehensively describe the impact mechanisms. We then apply this theoretical framework to an empirical study of metrics of air transport supply, which policymakers and researchers can use to assess how well airports and their surrounding regions are connected by means of the air transport network. The results of our analysis can inform scholars and policymakers on how air transport can shape economic geography and the productivity of economic systems. The results might also provide guidance for future empirical work on the wider economic impacts of air transportation.     

Economic appraisal in Norwegian aviation

The Norwegian Civil Aviation Administration (NCAA) is responsible for investments and operations regarding the Norwegian airport system, and the air traffic management systems. This paper presents methods for economic appraisal in the aviation sector, proposed for use within the NCAA's jurisdiction. Methodological problems will be addressed, such as the handling of project risk and uncertainty, projects with mutual dependency, and projects influencing accident risks. The cost–benefit analysis methodology proposed here may give conflicting recommendations compared with financial analyses. This raises decision-making problems for public agencies like the NCAA.     

The development of air transportation in Nigeria

This paper examines the development of the Nigerian civil aviation industry since its inception in the 1920s, but particularly since 1980, examining the institutional framework, partial deregulation, infrastructural provision and passenger traffic. The current crisis in Nigeria's civil aviation industry, following the decline and near collapse of Nigeria Airways, is blamed on the absence of a coherent air transport policy, excessive bureaucracy, bad management and a failure to adhere to business principles. Full deregulation might be a solution.     

The role of regional airports and air services in the United Kingdom

This paper deals with the implications of the 1998 UK transport White Paper for regional airports and air services within the wider context of the promotion of an integrated and sustainable transport system. More specifically, the discussion initially addresses the political and business context of the development of air transport in the UK regions. Secondly, the recent trends defining that development are isolated, particular attention being paid to the increasing importance of supplier-led strategies in air transport and the segmented markets served by regional airports. Finally, the three, not easily reconciled, strands, which can be identified in the White Paper’s analysis of aviation are considered. These are: air transport's relationship with sustainable development; the integration of air transport with surface modes; and the contribution of air transport to regional economic growth.     

Regional aviation and economic growth: cointegration and causality analysis in Australia

Air transport is a critical link to regional, rural and remote communities in Australia. Air services provide important economic and social benefits but very little research has been done on assessing the value of regional aviation. This research provides the first empirical evidence that there is short and long run causality between regional aviation and economic growth. The authors analysed 88 regional airports in Australia over a period of 1985–86 to 2010–11 to determine the catalytic impacts of regional air transport on regional economic growth. The analysis was conducted using annual data related to total airport passenger movements – for the level of airport activity, and real aggregate taxable income – to represent economic growth. A significant bi-directional relationship was established: airports have an impact on regional economic growth and the economy directly impacts regional air transport. The economic significance of regional air transport confirms the importance of the airport as infrastructure for regional councils and the need for them to maintain and develop local airports. Funding should be targeted at airports directly to support regional development.     

Ethical and moral considerations of airline management

Air transport is a relatively new industry. It has expanded rapidly and now is an exceptionally safe way to travel. But all may not be well. Despite all this achievement, the human face of commercial aviation has been somewhat tarnished by the very prolific growth of carriage by air, and the monotonous regularity with which it is executed. Aviation business management needs to go back to basics, where the formula “everyone needs to know and feel that he is needed; and everyone wants to be treated as an individual” has to be revisited in the face of modern exigencies experienced by the passenger. The issue is likely to gain in importance in the future as economic, political and social trends affect the types of people who wish to use air transport. Airline managers have to be aware of the need to identify passengers in need and offer tangible support and assistance. This article addresses issues relating to the human face of aviation management and looks at some of the proposals to improve current practices.     

The role of air transport in employment creation and inclusive growth in the Global South: The case of South Africa

This paper investigates the claim that air transport development may be an engine for inclusive economic growth and poverty reduction in developing and emerging countries, using the example of South Africa, a country with high income inequality and rising air traffic volume. A social accounting matrix (SAM) model is adopted to assess the strengths of backward and forward linkages between the air transport sector and the local economy, and a computable general equilibrium (CGE) model is used to estimate the economy-wide impact of air transport expansion in South Africa. The results show that air transport has a significant effect on output, incomes and employment, and that its importance lies in its considerable backward linkage effects. Income and employment effects are found to be unevenly distributed in the economy, the biggest winners being households in the highest expenditure decile, as well as highly skilled labour. It is concluded that unless accompanied by improvements in education and training for low-skilled workers, air transport expansion may lead to a widening of income inequality in South Africa.     

To bargain or not to bargain: Airlines,legitimacy and nonmarket strategy in a COVID-19 world

Nonmarket strategy – strategic actions directed at influencing the governmental, legalregulatory, and societal environment of business – is a key factor in an airlines' competitive position yet remains relatively under-analyzed in aviation research. The COVID-19 crisis has created a heightened role for nonmarket strategy and our paper argues that in deciding how to respond to a variety of policy measures introduced by governments, airline executives need to take into account the perceived legitimacy from the flying public of their response to governments. Our paper presents an integrative framework to analyze airlines' nonmarket response to COVID-19 governmental policy measures. Using a two-by-two matrix, we identify key conceptual links between industry's nonmarket response, the health impacts of a given policy measure as well as its economic costs for the airlines. Our study concludes that, unless economic stakes in a given policy measure are high, airlines do not risk active bargaining with governments over the content of that measure. Such bargaining could trigger a delegitimation cascade: a self-reinforcing process in which key stakeholders reassess their view of airlines' conduct and the industry's broader societal impact. Bargaining is pursued when economic impacts of policy measures are high, and in that case, the choice between cooperative and adversarial posture towards the government depends on the health impact of a given policy.     

The development of the Gulf region’s air transport networks – The first century

This paper employs the concepts of centrality, intermediacy and proximity to explain the evolution of air transport networks in Asia and applies them to the region surrounding the Arabian Gulf. In doing so the paper provides a structured, historical account of the development of air transport in a region that occupied a central place for important trade routes for thousands of years. The paper argues that there has been a “principal axis shift” so that the role of the region is no longer defined as an intermediate section of the east-west routes. Indeed, the region has come to re-occupy a central place in trade and travel flows serving a fundamentally changed global aviation network building upon the economic and social development within the region.     

The growing influence of low-cost carriers in Northeast Asia and its implications for a regional single aviation market

This paper provides an overview of the development of the low-cost carrier (LCC) sector in China, Japan, and South Korea. It is the first paper that documents LCC contributions to the passenger traffic and cheaper fares in Northeast Asia (NEA)'s intra-markets. We argue that a single aviation market can facilitate the growth of the LCC sector, which in turn will make a significant contribution to the NEA connectivity, mobility, and integration. In addition, with a single aviation market, NEA countries can adopt a proactive, unified approach in negotiating air transport agreements with the major aviation partners to maximize the interests of this region as a whole, which will further provide valuable growth opportunities for the LCCs.     

Airport airside safety index

Rapidly growing air traffic and increasingly unstable climatic conditions have brought great pressure to bear on airport and airline Safety Management Systems (SMSs). Each item of airport infrastructure is designed to certain environmental specifications, which defines the pilot's perception of the risk of air accidents or incidents. This paper presents a fuzzy-logic methodology for measuring aviation accident risks at airports, based on the perceptions of a sample of pilots operating at the airport in question. The methodology is applied to two airports in the city of Rio de Janeiro. The results show the pilots' perceptions related to the most likely types of accident and the risks that should be prioritised in airport and airline SMSs.     

Unintended trajectories: liberalization and the geographies of private business flight

The global commercial aviation industry has undergone significant regulatory reform during the last 30 years. This paper explores something of the relationship between air transport liberalization and the growth of private business aviation and suggests that the sector’s development is largely an unintended consequence of the increasingly deregulated operating environment in that it has developed to overcome some of liberalization’s negative impacts, including delays, congestion, and perceptions of poor customer service. We argue that liberalization has created innovative market opportunities for private business aviation and illustrate how the sector’s operating models are facilitating new, as yet largely undocumented, forms of aerial mobility. The paper examines: the advantages of private business aviation over scheduled services; business strategies in the sector, especially the idea of fractional jets; the impact of new technologies, particularly the Very Light Jet (VLJ); and, finally, employs Europe as an example of the spatialities of private business aviation.     

Air transport demand and economic development in sub-Saharan Africa: Direction of causality

Air transport may be a key tool to advance economic development. However, it is uncertain whether air transport boosts economic development, or vice versa. Both views have theoretical and empirical support. In some countries and regions, air transport is important for initiating development, for example by attracting foreign direct investment or granting access to lifelines. Elsewhere, economic development drives air transport demand. Establishing the direction of causality for regions/countries segmented by income level may inform pragmatic policy. This study analyzes the causal relationship between air transport demand and economic development for six sub-Saharan African countries for the period 1981–2018. Vector error correction and vector autoregression models are employed to identify long- and short-run causalities. The results reveal heterogeneous, context-specific causal relationships. In the long-run, for South Africa, Nigeria and Kenya, the direction of causality runs from economic development to air transport demand; for Ethiopia, causality runs in the opposite direction, with increased demand for air transport promoting economic development; and for Senegal and Angola, the relationship is too weak to infer causal directions. Possible explanations for this heterogeneity include differences in per capita income, low-cost carriers' share of national aviation markets, the presence of large home-based airlines, and comparative geographical advantage as a natural hub.     

The Northeast Asian air transport network: is there a possibility of creating Open Skies in the region?

Unlike in the US and the European Union aviation markets, the Northeast Asian markets are still very fragmented. As a result, the passenger and air freight collection/distribution systems in the region are very inefficiently organized. The primary reason for the inefficient and inconvenient air carrier networks in the region is the restrictive bilateral air services agreements between Asian countries. This paper documents the nature and extent of the restrictive bilateral agreements among China, Japan and Korea, evaluates several bilateral or trilateral approaches for liberalizing the regional air transport markets, and makes a proposal which would increase substantially the probability of achieving an Open Skies market in the region. In particular, the current approach to liberalize the bilateral air services agreements among China, Korea and Japan has limitations even in the medium term because of China's and, to a less extent, Japan's reluctance to remove price and capacity restrictions. Therefore, as an institutional solution we propose to create bi-national (for bilateral negotiations) or tri-national (for trilateral negotiations) ‘Trade and Transport Facilitation Committees’, that can pursue a practical avenue to tie air transport negotiations with those of other goods and services trade.     

Risk factors associated with flying in adverse weather: From the passengers' point of view

Risk factors on the demand side of aviation safety are rarely addressed as the focus of research is most often placed on the supply side of aviation service. Even though airlines have the prerogative to cancel flights in the face of adverse weather, stranded passengers have to be reckoned with in the event of cancellation. Passengers' awareness of the risks associated with flying in adverse weather may help mitigate the confrontation as well as induce passengers to take the lead in adopting preventive measures. The aim of this article is to study the attitudes air travelers say they have towards flying in adverse weather, as well as risk factors regarding cancellation of trips in adverse weather. A conceptual framework is presented which outlines the links between risk factors and preventive measures. Data generated from a quantitative survey of 1145 air travelers, conducted in July 2015 at Taiwan's Kaohsiung International Airport, is used to examine this framework using correlation analysis and one-way analysis of variance (one-way ANOVA). The factors of trust, risk perception and domestic destination are found to be positively related to passengers' stated attitude toward taking preventive measures. Income, purpose of the trip and direct experience generate ambiguous results. The outcome also suggests the following paradox: while pilots make the final decision regarding aviation safety in adverse weather, they appear to enjoy the lowest level of passenger trust.     

Government support to airlines in the aftermath of the COVID-19 pandemic

This paper assesses government support measures to the air transport sector following the outbreak of the coronavirus disease (COVID-19) pandemic from two points of view. First, it explores the factors that shape governments’ willingness to support airlines. This is followed by a discussion on the various types of support that may be provided and how country-specific parameters influence the choice of measures. Second, it analyses the implications of government support in three dimensions relevant to air transport policy: competition and liberalisation, airline ownership and control, and environmental sustainability. The analysis suggests that most governments give a high priority to maintaining air transport connectivity in order to protect economic activity and jobs, in aviation itself and in related sectors such as tourism. The trade-off between ensuring connectivity and maintaining competition after the COVID-19 pandemic is a challenge with several political and economic dimensions. The re-orientation of public policy in the aftermath of the pandemic may limit the relative importance of the policy priorities that shaped the evolution of the air transport sector before the crisis, especially those related to climate change and the environment. The role of government and public authorities at all levels – especially the type and duration of measures affecting transport operations – will be crucial for the future development of the aviation industry.     

“Open skies” or open clubs? New issues for Asia Pacific Economic Cooperation

Air transport continues to lie outside the rules of the world trading system. Yet pressures for changes in the management of trade in air transport services are emerging within the bilateral system of regulation, particularly through United States efforts to negotiate so-called “Open Skies” arrangements, but also through new regional arrangements. A new method is outlined of exploiting the trends in regional cooperation and the pressures induced by the United States strategy to facilitate the liberalisation of air transport markets. This method applies the principles of what have been called “open clubs”. The principles include transparency and openness to new members as well as the absence of an intention to discriminate against outsiders. These principles are consistent with APEC's strategy of open regionalism. The paper suggests that APEC is a suitable process within which to develop the application of the open club idea and it outlines the manner in which its principles might be applied to air transport.     

Martin Kunz Memorial Lecture. Tourism benefits and aviation policy

Many tourists now travel by air, and aviation liberalisation has greatly contributed to the boom in international tourism. The relevance of tourism economic benefits in aviation policy decisions is becoming established, though there has been little by of analysis of these, of how they can be measured. Here, the nature of tourism's economic benefits is discussed, and ways of measuring them are suggested. These rely on the use of computable general equilibrium models of economies. The measures of tourism benefits obtained from these are positive, though they smaller than more ad-hoc measures which are sometimes used, such as total tourism expenditure. The role of tourism benefits in aviation policy making is considered in several case studies. These indicate that while the tourism benefits to a country from aviation liberalisation are not likely to be as large as benefits to home country travellers or the costs to home country airlines, they are sufficiently large to tilt the balance of benefits and costs of liberalisation in many cases.     

A case study: The impact of low-cost carriers on inbound tourism of Saudi Arabia

This study investigates the impact of low-cost carriers (LCCs) on Saudi Arabia's tourism demand. It also provides an understanding of the relationship between air transport development and tourism development in the Gulf region. The Box–Jenkins SARIMA-X models were employed to model and forecast international tourist arrivals to Saudi Arabia, using monthly international tourist arrivals to Saudi Arabia from July 2010 to December 2015. The forecasting models were significantly accurate, with lower values of MAPE, MAP, and RMSE. The findings suggest that an increase in airline capacity, religious travel, and airline competition are associated with the increasing international tourist arrivals to Saudi Arabia. This also indicates that there is a positive relationship between air transport development and tourism development. Further aviation liberalisation in the Gulf region is discussed to give opportunities for the region's LCCs to increase their share of the increasing air travel demand, thereby enhancing tourism development.