Strategic Plan to Support Air Transport in the SAM Region Connectivity Module DRAFT Table of Contents 1. Executive Summary 2. Definition of connectivity 2.1. What is Connectivity? 2.2. How can it be measured? 2.3. Importance of connectivity development and its socio‐economic impact 2.4. What factors determine a country’s degree of connectivity? 3. Socio‐economic conditions and situation of the aviation industry in the SAM Region 3.1. General description 3.2. Industry and air connectivity 3.3. SWOT analysis of air connectivity in the SAM Region 4. Socio‐economic conditions and situation of the aviation industry, by State 4.1. General description 4.2. Industry and air connectivity 4.3. SWOT analysis of air connectivity, by State 5. Vision of Aviation Industry connectivity development at 2035 5.1. SAM Region air connectivity optimization approach 5.2. Main figures and characteristics of air traffic in the SAM Region 5.3. The SAM Region’s current connectivity level 5.4. Projected passenger and cargo traffic at 2035 5.5. Development strategies 5.6. Link between the United Nations SDGs and ICAO SOs 6. Tactical measures to optimize SAM Region connectivity 6.1. General framework 6.2. Objectives to be achieved 6.3. Principal measures, specific activities and compliance metrics 7. Annexes A – Historical data on total passengers in the SAM Region, by State B – Direct non‐stop internationaDRAFTl routes from airports registered with ICAO C – Airlines that operate direct flights ‐ SAM Region D – Detailed explanation of the calculation of passenger and cargo connectivity indices E ‐ Total passenger projection for the period 2016‐2035, by State 8. Bibliography 2 1. Executive Summary 1.1. What is air connectivity? The ability to link‐up the world’s cities and countries for the purpose of transporting resources (passengers, cargo and mail) from one territory to another. It allows for the operation of a competitive global market. The more liberalized and integrated the global air connectivity network, the greater the long‐term benefits for all of the world’s inhabitants. By ICAO’s definition, “connectivity is is a characteristic of the networks and can be defined in such a way as to constitute an indicator of a network’s concentration.” 1.2. How can it be measured? While there is no specific way to measure connectivity, air connectivity can be gauged in terms of two network characteristics: (i) Size and concentration: The more routes and frequencies that exist, the greater the possibilities for a State’s connection. Even so, it is the use of that capacity for connection (passengers, cargo and mail) that will determine a nation’s true degree of connectivity. (ii) Seamlessness: More direct routes with the smallest possible number of connections facilitate air traffic. Embarkation, disembarkation, immigration and security controls and airport connection times all play a part in the quality of connectivity. Existing literature on aviation advocates a variety of indices or metrics1 that account for different connectivity characteristics that can be used individually and/or in combination to provide a better understanding of each country’s/region’s connectivity. Inasmuch as measuring connectivity is a complex process that incorporates both quantitative and qualitative factors, any individual measurement will serve for reference purposes only for it fails to fully incorporate all relevant aspects. 1.3. Importance of connectivity development and its socio‐economic impact According to the ATAG (Air Transport Action Group), in 2015, a total of 3.6 billion passengers (40% international and 60% domestic) and 51.2 million tonnes of cargo were transported. There is a network of almost 53,000 routes operated by over 1,400 airlines through close to 4,000 airports. Socio‐economic benefits: In the current context of globalization and commercial openness, a country with no policy for developing adequate connectivity reduces its opportunities for economic growth and development. While it is difficult to gauge the true impact of the aviation DRAFT industry on the global economy, its benefits go beyond the direct consumers to impact the strengths of each national economy. The main benefits of aviation are: It enhances GDP and creates more employment 1 “Air Connectivity: Why it matters and how to support growth” – PwC, Hayley Mophet and Claudia Bottini (2014) Charts 1.3.1: Global impact of the aviation industry on GDP and the creation of employment Spheres of impact ( GDP and employmen Direct: Airlines and airport services Indirect: Aviation industry‐ related providers and services Induced: Local businesses benefited by the purchasing power of direct and indirect employees Catalysts: Tourism, international air trade and any other business that exists thanks to the presence of the aviation industry Source: ATAG ‐Direct; ‐Indirect; ‐Induced; ‐Catalysts (tourism) Employment (millions of jobs): 62.8 million Jobs GDP (in US$ trillions): US$ 2.7 trillion It promotes infrastructure investment and development Airports invested US$ 37 billion in project construction in 2014. Each US$ 100 million invested in air navigation technology research and development is estimated to produce an additional US$ 70 million in GDP per year. Because of its catalytic effect on different economic sectors, the industry also boosts the three branches of State investment (foreign and public and private domestic investment). It raises productivity Companies operate in a global market, specialize in activities in which they are most efficient, accede to economies of scale, and benefit consumers with a variety of products and more competitive prices. The aviation industry facilitates the operation of transnational enterprises that locate their facilities, personnel and distribution logistics where they can be most productive. It creates employment in the economies in which it operates. It promotes technological innovation and sustainable development Highly technological activity; requires continuing investment in innovation, promotes university research and development departments and fosters the training of highly qualified technicians. Active commitment to invest in new technology to fight climate change and at 2050 to reduce the aviation industry’s carbon footprint by 50% of net emission levels in 2005. DRAFT It facilitates labour mobility (boosts remittances) Individuals can seek better job opportunities in economic and qualitative terms. They send part of their income earned abroad to maintain their families in their countries of origin. 4 Tax collection The income of workers in the aviation industry and other related sectors, company social security and income tax payments and, in some countries, VAT charged on airfare tickets, etc. contribute to tax collection. It connects remote towns and villages Best or only transport alternative for towns that are remote or difficult to reach. A city without communications or connectivity would fail to share in the progress or socio‐economic development of the country or region or would not enjoy sufficient access to basic education and health services. It allows for humanitarian emergency aid In cases of natural disasters or wars requiring urgent assistance, air transport has proven to be the best alternative for the rapid and effective transfer of medical and rescue workers, evacuation of the wounded and transfers of donated medicines, clothing, foods and other priority needs. 1.4. What elements determine a country’s degree of connectivity? Air‐ground safety Without safety, there can be no air connectivity; airlines and governments attribute priority to flight safety control for strengthening the industry and connectivity in the long term. Tourist attractions and potential The greater the potential for tourism and its development, the greater the interest and benefit in establishing direct routes to such destinations. Business potential Greater connectivity will depend upon potential and existing trading relations between the local economy and the world’s other cities. The more diversified and prosperous the local economy is seen to be, the greater the interest in creating a wide‐reaching connectivity network within the region and with other continents or more developed economies. Airport infrastructure The development of a city’s connectivity cannot be boosted without the existence of appropriate infrastructure for sustaining the additional flow. The technology that is applied and the complexity of the processes (check‐in, customs, immigration and security) can also affect the network’s seamlessness and the opportunity to make use of some airports as regional hubs. Geographic situation Each State’s DRAFT individual geographic characteristics can influence its decision and need to create a more or less concentrated internal and external air transport network. A city or country’s strategic positioning in terms of the world’s other economies is capable of promoting the use of its territory as a hub for other destinations. Technological innovation 5 Continuous development of technology in air navigation systems and innovations in aircraft design enhances safety levels, makes it possible to reduce operating costs, and expands flight offerings in longer‐haul (distances) and larger capacity (passengers) aircraft. Airline business model Low‐cost carriers have boosted greater connectivity on short‐haul routes and increased access by lower‐income population segments. Loyalty and frequent flyer programmes promote greater