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The global airline industry provides service to virtually every corner of the
globe, and has been an integral part of a global economy. The airline
industry itself is a major economic force, both in terms of its own
operations and its impacts on related industries such as aircraft
manufacturing and tourism, to name, Few other industries generate
intensity of attention given to airlines, not only among its participants but
from government policy makers, the media, and almost anyone who has
an story about a particular air travel experience.
Today, the global airline industry consists of over 2000 airlines operating
more than 23,000 aircraft, providing service to over 3700 airports. In
2006, the worlds airlines flew almost 28 million scheduled flight
departures and carried over 2 billion passengers. The growth of world air
travel has averaged approximately 5% per year over the past 30 years,
with substantial yearly variations due to changing economic conditions
and differences in economic growth in different regions of the world.
Historically, the annual growth in air travel has been twice more than the
annual growth in GDP. Even with relatively expectations of economic
growth over the next 10-15 years, a continued 4-5% annual growth in
global air travel will lead to a doubling of total air travel during this time.
Emirates airline has grown by widening its reach and expanding into six
continents to become the fastest growing airline in the world, based on
passengers carried.
Thats an impressive feat, considering Emirates airline was only founded
25 years ago. Now, its the dominant player in the Middle East.
Government owned and based in Dubai, (with backing from Dubais royal
family), it has grown by investing heavily into the business. It doesnt
have the constraints of being a public company.
For example, bought 130 aircraft in 2007 and have doubled in size every
four years. Despite all that spending, Emirates airline has been profitable
for 22 years with growth being at least by 20% each year.
The overall total economic impact of the aviation sector on the Dubai
economy in 2013 can be put at $26.7 billion1, comprising a core impact
of $16.5 billion and benefits from tourism of $10.2 billion. This is
equivalent to 26.7% of Dubais total GDP, and was sufficient to support
416,500 jobs or 21% of Dubais total employment.
The total core impact on employment of 259,400 jobs compares with a
direct impact alone, of 120,300 jobs, meaning that for every 100 jobs,
created in the aviation sector an additional 116 jobs are created
elsewhere in the Dubai economy as a result of the supply chain and
employee, spending effects.
The airline industry crisis was most certainly exacerbated, by the events
of 9/11, which resulted in immediate layoffs and cutbacks of almost 20%
in total system capacity, in anticipation of the inevitable decline in
passenger traffic due to concerns about the safety of the airports,
However, the airlines were in serious trouble, well before 9/11 as the start
of an economic downturn already had negatively affected the volume of
business travel and average fares. At the same time, airline labour costs
and fuel prices were increasing yearly. To make matters worse, airlines
were faced with deteriorating labour/management relations. Aviation
infrastructure constraints that led to increasing congestion, flight delays
and dissatisfied customers due to bad service, in general.