The Economic Benefits of Civil Aviation for the US Economy

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Introduction

Civil aviation has become a multi-billion industry over the last decade following the growing demand for air transport. According to a report released by the Federal Aviation Administration, civil aviation impacts were $1.8 trillion in economic activities and over 10 million jobs created, resulting in $488.2 billion in earnings (FAA, 2020, p. 14). These activities accounted for the 5.2% growth in the US GDP, and the figures keep growing (FAA, 2020, p. 15). Most travelers prefer civil aviation, considering the fact that commercial airlines provide high standards of security, a natural route without traffic, high speed: and a fascinating experience. These deliverables promote utility maximization justifying the booming economic experience in this industry. Therefore, civil aviation promotes the creation of employment, international trade, tourism, and sustainable development goals that support economic growth by bolstering tax revenue.

Employment and Economic Growth

Aviation is a significant contributor to the US economic prosperity since many people are absorbed into its workforce. Civil aviation has created 11 million job opportunities for US nationals adding significant value to the country’s economy (FAA, 2020, p. 18). Furthermore, civil aviation is considered four times more productive than any other employment industry (FAA, 2020). Therefore, the specific measures which evaluate a country’s capacity to create enough jobs for its citizens might provide helpful information about the economy’s developmental process (Abate & Christidis, 2020). Some of these metrics are the rate of unemployment, employment-to-population ratios, workforce participation rates, and employment intensity. Additionally, the final metric determines how much job growth corresponds to one percent growth of the economy.

The civil aviation employment system has superseded these set metrics considering that they have the most significant number of workers compared to other industries, ranking them the best employers. Furthermore, this employment growth has reduced the unemployment rate in the country, courtesy of this industry’s commitment to promoting expansion. Creating jobs and income is a crucial economic growth strategy since the total income earned is taxed into the economy’s growth. This tax revenue enables the government to finance social projects such as infrastructure, promoting business growth. Additionally, the 11 million workers employed in this industry are off government benefit, which also eases the burden on the unemployment benefit fund (FAA, 2020, p. 18). These funds are then used for the economy’s growth purposes, such as providing enough resources in terms of aid to reduce the poverty level in the country.

This industry also provides secure job opportunities with fair pay, considered an integral development pillar. The income generated by these employees gives them the purchasing power to boost the demand among local traders. This system creates a sustainable cycle that promotes the economy by promoting the money supply. When employees are paid, they spend on goods and services, promoting the Gross Domestic Product (GDP). Money circulation prevents inflation by lowering interest rates in an economy (IATA, 2019). This factor results in more investments which stimulates spending. Businesses respond to this system by buying bulk materials and thus increasing production. When goods and services are available, spending is stimulated, and profitability is maximized, facilitating economic growth and sustainability.

Increased income tax through value-added taxes, among others, helps governments avoid borrowing. This debt-free system enables the government to support employment and eradicate social crises such as crime (Dimitrios & Maria, 2018). This factor indicates that employment and economic stability are intertwined, considering the fact that when one is affected, the other one also declines. When a country experiences full employment, social problems such as crime and corruption are limited, promoting successful business operations (Dimitrios & Maria, 2018). This commitment avoids the financial crisis, enabling businesses and industries to flourish financially and influencing economic growth and stability.

Employment enhances decision-making by giving citizens a voice to criticize social issues when they detect unethical patterns. It also gives employees the right to oppose poor governance since employees can participate in reform processes to fix issues when they arise (Abate & Christidis, 2020, p. 1). They can negotiate for better wages, a better work environment, and equity through such privileges, which streamlines back to their economic freedom. When their needs are provided for, they can influence change at every level of their engagement. Such actions may prevent financial misappropriation and corruption, destabilizing a country’s economy (IATA, 2019). The civil aviation movement was the reform-making group that changed this industry in US history. Initially, the military aviation system was the only flight system but operated only for military purposes and independent of the US post office.

Several reform makers decided to fight for freedom for travel by air, which facilitated a policy change, including the implementation of the Air Mail Act of 1925 that allowed the creation of the commercial airline industry (Abate & Christidis, 2020, p. 1). Such reforms were pushed by people who had a solid economic standpoint and wanted the freedom to explore this new travel design (Abate & Christidis, 2020, p. 1). As a result, the civil aviation industry is currently responsible for running half the country’s economy by generating unmatched annual revenue, which has made the country stand as an economic superpower.

Avenues of employment in Civil Aviation.
Fig 1. Avenues of employment in Civil Aviation.

There are various opportunities for employment within the civil aviation industry. Support activities involving all the legal and administrative posts which provide a wide opportunity for experts such as lawyers and managers to be employed in the sector. The employment rate stands at 16% indicating that it also offers a wide job opportunity (FAA, 2020). Another sector within the system is the aerospace products parts and manufacturing (FAA, 2020). Many companies dealing with spare parts may find opportunities to work since they can supply all the products needed for the industry. This manufacturing is wide since it also captures companies that supply electricity, gas, foodstuffs, seats, among other products and they account for 40% of employment margin (FAA, 2020). Scheduled air transport ensures that job opportunities are available including the flight attendants, product suppliers and coordination team which stand at 44% providing one of the largest sources of employment.

How Civil Aviation Supports Tourism and Economic Stability

Aviation and tourism are linked, considering the fact that they complement each other. It is estimated that half of all international travel is done by air. This factor indicates that air transport promotes international tourism since it is a fast and efficient mode of transportation (IATA, 2019). Tourism also relies on transportation to attract travelers, while transportation relies on tourism to create demand for its services (IATA, 2019). The expansion of the tourism industry directly impacts air travel since it expands their growth opportunities. This connection indicates that aviation promotes tourism which directly improves economic stability by creating job opportunities, promoting travel and hospitality business and networking, which improves the economy.

When tourists arrive in a particular country, they invest in that economy by buying goods and services provided in their specific destination. Their expenditures improve the small-medium enterprises by strengthening the retail base (IATA, 2019). For instance, tourists visiting any foreign countries have to spend when visiting the amusement park, renting any machinery to aid their movement, tour and food. Communities that sell to the tourist have a greater retain establishment considering the diverse mix and services which attracts the tourists. For instance, a small shop with various street food choices may attract visitors who want to understand the culture of the people. They may make significant profits from such business engagements considering the outside dollar stimulates the local economy. Furthermore, the products and services are taxed, meaning that the economy also benefits directly from everything they purchase (IATA, 2019). They may also invest their money into this economy by identifying potential business opportunities and growing that idea, which improves the economy by opening sources of revenue.

Tourism activities encourage governments to invest in infrastructure and communication to maintain a competitive edge as the perfect destination. The reason is that the positioning of commercial destinations relies on accessibility, attraction and organization. Therefore, investors pressure the government to improve infrastructure and invest in amenities such as malls and hotels since they are attractive destinations for tourists (FAA, 2020). A critical examination of the opportunities created indicates that this is a win-win situation. As the investors enjoy having many tourists visit their places, the economy benefits from every activity they engage in due to taxation (FAA, 2020). For example, the statue of liberty is an example of an iconic symbol of freedom that serves as a tourist attraction. Although it was not specifically to support tourism, it has become one of the monumental statues that attract attention when tourists visit. In addition, a small fee is charged at the entrance, which acts as a source of revenue for the government considering the fact that thousands of natives and tourists visit the place regularly.

Tourism is the driving force behind the success of hospitality and business growth. The reason is that when visitors land at the airport, they have already booked the rooms (FAA, 2020). Therefore, businesses like restaurants continue to profit as long as they are still around. Moreover, when businesses experience sustainable cash flow, they buy goods and services, improving the economy by supporting money circulation. Furthermore, most tourists prefer using civil aviation services since they are reliable and can customize their travel options to fit their needs. In addition, being the safest international travel medium makes the industry maintain a balanced competitive edge which promotes expansion.

Air transport facilitates or promotes cultural tourism whereby individuals are motivated to explore other cultures across the globe. The civil aviation system plays an integral role in ensuring the tourist arrives at their destination at the right time and safely. Cultural motivation promotes study tours and other cultural events and festivals that allow natives to showcase their talent and access new opportunities (FAA, 2020). These events also provide tourists opportunities to learn about the culture of the people and learn interesting things about this culture. This interaction serves as a networking opportunity whereby members can interact and make new friends who may provide them with growth opportunities (FAA, 2020). Captivated tourists may even decide to stay behind and start a new life in the country, and this may help develop a skilled workforce to support the growing demand for a specific profession.

With assimilation, new trends emerge, creating opportunities for creativity and new business ideas that present opportunities for economic expansion. For example, different trends in fashion, food or health present a new venture for people to tap into it and make profits (IATA, 2019). For instance, when a tourist arrives putting on jeans in a conservative area, some people may be captivated, creating a demand for that specific designer cloth. Demand is what drives the success of a business because it enables the entrepreneur to fill the gap by providing the products and services needed in a particular area (IATA, 2019). Some business requires less capital to start than others, which means that it can be built to facilitate the needs of the consumer. With the will and demand, the jeans business can grow from just an inspiration from a foreigner visiting the area. This idea may flourish into a multi-billion industry if the demand and supply rise, which may open opportunities for economic growth through employment, access to better living standards and profitability.

Growth of International Trade

Most industries’ using the global supply chains rely on air transportation, which is predominantly integral in the transfer of different time-dependent goods. Businesses that provide faster production processes or rely on urgent supply equipment require rapid delivery (Abate & Christidis, 2020). Therefore, air transport is the best alternative used by manufacturing companies across the globe to deliver high-value, fragile, and hazardous electrical components. Civil aviation companies provide air freights and passenger air service, promoting businesses that depend on such transport means which helps sustain international trade in the process through fast delivery.

Most air cargo also transport manufactured freights used in the production of mass goods. Bulk production helps facilitate business at local and international levels to sustain demand and supply (Lutte, 2019). Most companies outsource materials from overseas, and they are then assembled or rebranded to fit the market’s needs. For instance, mobile manufacturing companies outsource products such as baseband processors, trackers, and mobile software assembled and sold at the local and international markets (Abate & Christidis, 2020). Outsourcing of different components supports international trade by improving sales which support economic growth. Outsourced goods are usually sold at a rate below the market price. When companies buy in bulk, they profit, significantly supporting their economic growth. When manufacturing companies profit, the economy is boosted by the increased revenue collected.

Aviation also promotes international trade by supporting passenger air services. Through such provisions, trading opportunities are created since this transportation enables companies to meet their partners and clients (Abate & Christidis, 2020). Better personal contact and effective communication contribute to new sales and customer base expansion, promoting economic growth. In addition, air transport facilitates international business deals by ensuring that prospective partners or investors can get to their destination to inspect the business. Such processes ensure that money is not lost from fake investments, preventing money laundering and fraud, affecting economic growth (Abate & Christidis, 2020). Through civil aviation, companies such as Apple have made significant steps in maintaining a competitive edge by ensuring deals are sealed at the appropriate time, and raw materials needed arrive at the expected time to ensure products reach the market upon request. For this reason, they have made profits making the US an economic superpower.

Civil Aviation and GDP Impact: History and Forecast.
Fig. 2 Civil Aviation and GDP Impact: History and Forecast.

The civil aviation industry has promoted economic growth by enhancing the GDP and promoting employment. The industry promotes economic growth by providing $65,300 in economic benefits annually. Within 20 years, the industry will have approximately supported the economy with over 1 million dollars which is a significant booster to the economy (IATA, 2019). The industry also employs over 78,360 employees (IATA, 2019). With the growing demand of their services, civil aviation will have created over 1.5 million jobs by 2040 a projection showing that this industry is the backbone of the US economy. The growth is progressive indicating that citizens and the government will benefit from its provisions.

How Civil Aviation Supports Sustainable Development Goals and Economic Growth

The United Nations developed Sustainable Development Goals (SDGs) are created to bring prosperity and universal peace. These goals include supporting equality and eradicating poverty to support a greater sense of liberty by 2030 (IATA, 2019). Civil Aviation has taken this call as its responsibility by supporting various SDG initiatives to elevate people’s living standards. Decent work and economic growth are also among the SDG goals that Civil Aviation also supports. Civil aviation is a non-discriminatory industry that ensures equal balance across all genders to enable the US to acquire gender balance. Approximately 10% of total active airmen certificates are held by women (Lutte, 2019, p. 5). This factor is a significant improvement considering the fact that aviation was initially considered a male-dominated profession.

These growing numbers indicate the women in service under a payroll also contribute to the economy’s growth through direct expenditure. Achieving equal balance in employment has become a priority in most aviation companies, and they have reported tremendous growth in the absorption of women into this employment space (Lutte, 2019). The reason is that women’s access to employment opportunities reduces the likelihood of poverty in their homes, and resources given to women have a range of positive outcomes for human capital and opportunities within the household.

This industry is also concerned with eradicating poverty, and they have committed to supporting this plan by promoting local businesses to grow and expand by buying from them (Lutte, 2019). Airline expenditures are the second-largest share of economic impact through resources required in various sectors such as airport operations, general aviation, avionics manufacturing and FFA spending. Airline expenditure includes all the operational expenditures on transportation and freight on a commercial passenger airline. The economy benefits from these expenses through direct taxation imposed on all domestic air tickets.

Civil aviation champions education by promoting lifelong learning opportunities to ensure equal and inclusive opportunities are granted to students. Students from across the globe and even the US chose to study abroad to expand their horizons (IATA, 2019). By providing fast, affordable and efficient airline services, students can access better opportunities to expand their careers and skills, benefiting their economy (IATA, 2019). When a student graduates from a specific university and is absorbed into the job market, they provide skilled services which promote productivity. Furthermore, the revenue is boosted by doubling production, indicating that the economy benefits from this expansion.

Another support provided by this industry is networking and connecting people with businesses. For example, the US commercial aviation safety standards ensure that perishable goods or medical supplies arrive faster to their destination to sustain the market (IATA, 2019). A relatable experience is how this industry has supported the transportation of vaccines to different parts of the world to curb the pandemic. This action has decongested many hospitals putting less pressure on the system and enabling people to continue their work even during this crisis. Imagine if everyone would be bedridden for lack of vaccines that curb the spread of the virus. The economy would stop functioning, and the world would experience the most significant economic depression (IATA, 2019). Therefore, since the aviation industry has been on the frontline to ensure goods arrive at the required timeline, they have positively impacted the US economy by ensuring business carries on as usual.

Civil Aviation and SDG goals.
Fig 3, Civil Aviation and SDG goals.

Since its inception, civil aviation has been on the forefront in supporting SDG. As from 2017, the industry has made significant steps in promoting women employment, education, gender equity, innovation and infrastructure, and sustainable cities (IATA, 2019). Although this is not the entire list of the SDG, they have significantly influenced the mentioned areas. Employment of women has increased by 6% in the last four years indicating great improvement (IATA, 2019). It has also supported education by 15%, equity by20% and creating sustainable cities by 27% (IATA, 2019). All these improvements indicate significant influence of this industry in promoting SDG.

The civil aviation industry is a major global employer with an above-average occupancy rate. The reason is that they provide global transportation, which supports international trade. Therefore, it is a significant contributor to the national treasury through taxation. In addition, it creates different opportunities for economic growth by providing sustainable employment opportunities, supporting tourism, sponsoring the SDG goals and promoting international trade. All these activities directly affect the country’s GDP by providing everyone with sources of income and giving them purchase power. A stronger GDP indicates that the exchange value is high and sustainable, reflecting a growing economy. The US has significantly benefited from the aviation industry since the pillars of economic growth, human capital and infrastructure, have been strengthened.

References

Abate, M., & Christidis, P. (2020). The impact of air transport market liberalization: Evidence from EU’s external aviation policy. Economics of Transportation, 22, 164-165. Web.

Dimitrios, D., & Maria, S. (2018). Assessing air transport socio-economic footprint. International Journal of Transportation Science and Technology, 7(4), 283-290. Web.

Federal Aviation Administration (FAA). (2020). The economic impact of civil aviation on the US economy. Web.

International Air Transport Association (IATA). (2019). The value of air transport in the United States. Web.

Lutte, R. K. (2019). Women in aviation: A workforce report. (Report No. 5-2019). Aviation Institute Publications. Web.

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BusinessEssay. (2023) 'The Economic Benefits of Civil Aviation for the US Economy'. 11 January.

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BusinessEssay. 2023. "The Economic Benefits of Civil Aviation for the US Economy." January 11, 2023. https://business-essay.com/the-economic-benefits-of-civil-aviation-for-the-us-economy/.

1. BusinessEssay. "The Economic Benefits of Civil Aviation for the US Economy." January 11, 2023. https://business-essay.com/the-economic-benefits-of-civil-aviation-for-the-us-economy/.


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BusinessEssay. "The Economic Benefits of Civil Aviation for the US Economy." January 11, 2023. https://business-essay.com/the-economic-benefits-of-civil-aviation-for-the-us-economy/.