Flying in the Face oF jobs and growth - British Chambers of Commerce

40
chaPter 3:
designing aViation Policy to helP
bUsiness deliVer jobs and growth
governMent AviAtion Policy AFFects
Air trAvel’s connectivity And
AFFordABility
60. oxera (2009), op. cit.
For aviation to play its full part in
helping businesses to stimulate
jobs and growth, general talk
of increasing connectivity and
competitive pricing has to be
translated into real activity. Boosting
connectivity and business travel has
three broad levers:
increasing the range and frequency
of flights;
ensuring sufficient airport and
airspace capacity; and
Keeping ticket and air freight
transport prices competitive.
the range, frequency and pricing of
routes are all determined by airline
economics. For an airline or freight
integrator considering the viability of
a flight; or whether to start up a new
route, the factors it considers are:
the efficiency of its own
operations;
other commercial factors (such
as airport charges, exchange
rates or fuel prices), which it must
negotiate, accept, or hedge; and
Political and regulatory factors, such
as overall long term policy choices,
the planning and tax regimes, and
the burden of red tape.
Businesses can act, and are acting, in
the first two of these areas. But it is
the government and regulators who
must act in the third. this chapter
deals with the aviation policy choices
that now face the government; what
it must do, and what it must avoid, if
it is to pursue its goal of boosting the
economy and putting the uK on a
path to sustained recovery.
to inform the recommendations
made in this report, the Bcc asked
economic consultants oxera to
carry out analysis on how a range
of aviation policy options would
affect the wider economy in terms
of jobs and growth. this analysis
uses a methodology developed and
explained in detail by oxera in its
previous work on the value of the
aviation sector to the uK economy 60 .
the methodology uses three separate,
but complementary relationships,
derived by economic analysts. it
estimates the effect of changes in the
amount, or price of, air travel on gross
domestic Product (gdP) – measured
as gross value Added (gvA). it then
uses data about the productivity of
aviation employees, and those working
elsewhere in the economy, to estimate
effects on employment figures.