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Benefits of Air Transport Benefits of Air Transport Impacts of Aviation in the Brazilian States EMPLOYMENT . INCOME . TOURISM . ECONOMIC DEVELOPMENT Benefits of Air Transport 1st edition – Originally published in Portuguese in October 2016 MASTHEAD RESEARCH AND ANALYSIS Mauricio Emboaba ABEAR Technical Consultant GO Associados EDITING Adrian Alexandri ABEAR Director of Communications David Maziteli ABEAR Press Officer PRODUCTION Daniela Sarmento ABEAR Project Coordinator Ana Dragonetti ABEAR Communications Assistant Alberto Komatsu, Fernanda Sobreira and Helena Capraro Máquina Cohn & Wolfe CREATIVE DIRECTION AND COPY-EDITING PiU Comunica Founded in August 2012 with the mission to encourage the habit of flying in Brazil, ABEAR supports actions and programs in the country that promote the growth of civil aviation in a consistent and sustainable way, in the transport of both passengers and cargo. Over 99% of the Brazilian domestic aviation market is represented by the founding airlines (AVIANCA Brasil, AZUL, GOL and LATAM). The organization also has BOEING, BOMBARDIER, LATAM Cargo and TAP as members. FOUNDING AIRLINES MEMBERS Summary 7. INTRODUCTION st Building Brazilian Aviation in the 21 Century _Eduardo Sanovicz - President of ABEAR 8. METHODOLOGY Beyond Aviation: the Socio-Economic Importance of the Airline Industry in Each Federated Unit _Gesner Oliveira and Andréa Zaitune Curi - GO Associados 10. Understanding the Numbers on the Impact of Air Transport in Brazil _Mauricio Emboaba - ABEAR 12. READING GUIDE A tutorial for consulting the contents of this publication 14. THE IMPACT OF AVIATION ON THE ECONOMY 16. Brazil 18. Federated units 72. Comparison charts 76. Notes 78. REFERENCES Introduction Building Brazilian Aviation in the 21st Century n 2002 Brazil moved to deregulate The studies and research we pro- airfares, which allowed for an in- duced have multiplied since then. In I crease in air transport’s contribution communicating with the public through- to national development. In the following out the country, however, we still needed 10 years, air travel became commonplace to go more in depth, moving from the for many people: the number of passengers large numbers to the reality of each Bra- each year in Brazil went from 30 million to zilian state. 100 million, and the average cost of do- At the end of 2015 we gave to GO Asso- mestic tickets fell by half. ciados consultants the responsibility to ac- It was precisely in 2012 that ABEAR curately obtain such data. Once this data was founded to strengthen the industry was identified, our technical team worked and present this immense amount of con- extensively to explain the circumstances tributions to Brazil – a pioneering that led to the results found. country in world aviation and founding This knowledge is gathered here, member of the International Civil Avia- showing the country we have been building tion Organization (1944). through aviation. We have considered not Seeking the best references for the only what airlines produce directly, but also task, we found in previous works of Oxford the activities of suppliers, airports, service Economics for IATA and ATAG a method- providers and employees of each of the ological model for investigation and data many organizations that make up the indus- analysis. Publications about the benefits try chain. In addition, we have contributed of aviation in the world (and also for many to gauge the impact of the activity in indus- individual countries) identified the tries that benefit from air transport or that numbers of the activity, scaling the size are only made possible through it. and weight of the industry and its supply This original information can help chain, as well as other less direct effects. public and private managers better un- EDUARDO SANOVICZ In crossing this with other sources, we derstand the aviation business and its President of ABEAR developed the publication Agenda 2020 enormous impact on other businesses. (published in 2013). It brought to light the For us, this is an important step in our economic importance of the industry in journey. Our goal is to show society and Brazil and showed the path to democratize its representatives that when the basis of national aviation, pointing out barriers to Brazilian aviation is aligned with the in- its development and indicating the actions ternational context, the country benefits, required to overcome them. This was the because Brazilian consumers benefit. pillar on which ABEAR consolidated. We want to see Brazil fly more and more. The Brazilian Airlines Association 7 Benefits of Air Transport Beyond Aviation: the Socio-Economic Importance of the Airline Industry in each Federated Unit The research and In order to measure the socio-economic importance of the Brazilian airline indus- try at national and state levels, ABEAR commissioned GO Associados to replicate analysis methodology the work carried out by the British institution Oxford Economics1. For this purpose, helps show the scale 2015 industry data made available by the Agência Nacional de Aviação Civil – ANAC (the Brazilian civil aviation authority) was used. Other sources consulted and used of the activity’s impact are also public, which makes the final results fully transparent and verifiable. – from the most This unprecedented and comprehensive study of GO Associados used the in- evident to the put-output tables (or IOTs) of the Instituto Brasileiro de Geografia e Estatística – IBGE (Brazilian Institute of Geography and Statistics) to measure the impact of the less obvious. aviation industry on the economy in terms of product, employment, wages and taxes The results portrayed for each of the 27 Brazilian federated units. The figures were estimated considering up to four different impacts (or economic spending effects): direct, indirect, induced a country with (income effect) and catalytic effects on other industries. significant differences IOTs regard the economy as an integrated system of several interdependent indus- tries. The impacts suffered by an industry influence other industries to a greater or lesser and support strategic degree, depending on the relative importance of their relations in the economy. Different planning by companies industries buy and sell to each other, and generally a given industry interacts with some and authorities others. Thus, IOTs show how the different activities are interconnected, directly or indi- rectly, characterizing the balance between supply and demand in the economy. GESNER OLIVEIRA To regionalize IOTs, a locational coefficient was used. It compares the relative and ANDRÉA ZAITUNE CURI importance of an industry to the economy of a region – in this case, of the air travel GO Associados and tourism industries. • The direct impact corresponds to the initial effort applied, i.e., the impact on the final demand for one or more industries. • Indirect impacts include the chain reaction in industries that provide inputs to the industries directly affected, representing the impact on intermediate consumption. • The induced impact (or income effect), in turn, stems from impacts of the initial shock on labor income and, therefore, on families’ spending. • The catalyzed impacts consider the effects favored by air travel in the tourism industry and, consequently, in other industries related to it. 8 The Brazilian Airlines Association Methodology Aviation is a global industry that brings together various activities: design engineer- ing; manufacturing; sales; airline operations; customer service; maintenance; finance; OUTPUT, GDP AND IOTS leasing; insurance; publicity, advertising and media; among others. The results from the The economic output of a company is 2015 data, considering more than one million takeoffs, show the industry’s size. the monetary value resulting from the sup- ply of goods or services to society. According to estimates, air travel plus the catalyzed industry account for 3.1% of Brazil’s Domes- tic output is the sum of the output of all Economic Output (more than R$ 310 billion in production value), with the potential to companies in a country in a given period. generate more than 6.4 million jobs, almost R$ 60 billion in wages and more than R$ 25 To sell goods or services, each compa- billion in taxes. ny needs to acquire third-party inputs (raw materials, services and intermediate goods). To reach these figures, revenues from air transport of passengers and cargo were That is, for the functioning of the economy, calculated. companies from various branches of activi- Revenues from air transport of passengers on domestic flights were shared between ty interact, either as suppliers or as buyers. the states of origin and destination; for international flights, only the revenue at the na- The net amount of wealth that a com- pany adds to the economy corresponds, tional level (50% of total) was considered. then, to the proceeds, minus all it spent The air cargo revenue, however, was attributed in full to the place of departure of the flight. on inputs. This measure is called the gross Finally, to calculate the state’s tourism revenue from air travel, the number of passen- value added (GVA). The sum of gross value gers who deplaned in each place was multiplied by the average spending per passenger added of all companies is one way to calcu- late the gross domestic product (GDP) of a during the land portion of the trip2. country for a given period. Based on the values obtained, and considering the multiplier effects of the industries Comparatively, the numerical value of analyzed, the final impact on economic indicators was calculated. the domestic output is always greater than GDP, since it does not consider the “dis- Comparing the federated units, it was found, on the one hand, that the impact of air counts” of the intermediate consumption. transportation on Economic Output of the Southern Region states is less than 2%, which The input-output tables (IOTs) make it is lower than the national average. On the other, the impact is considerably higher than possible to identify the interdependence of the national average in some Northeastern states, like Ceará, Pernambuco and Alagoas, the productive activities of a country or re- gion in a given period.
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