Air transport and tourism: industry potentiaI to be denied?

by Dr Gunter ESER

“ Now, here you sce, it takes all the running you can do, to keep in the s~e place. If you want to get somewhere else, you must run at least twice as fast as that! “

Lewis Carroll

The Red Queents observation has long been an accepted truism of managing an economy. If keeping in the same place consists of merely maintaining the value of certain benchmarks - real per capita incomes, employment rates, infant survival rates, literacy levels, etc., then it should be evident to anyone that such a task demands the annual commitment of considerable resources - capital and human.

This will be true, even without population growth - as capital goods have to be replaced and the age structure of a population changes. Add in the effect of population growth and the commitment to run fast is that much larger. Even such running may prove difficult. The list of countries who have actually become poorer in the past decade is depressingly long.

If the notion is commonly accepted at the level of an economy why does it sometimes seem to be ignored at the level of industries - such as air transport and tourism?

At least part of the reason has its origin in the very success of these sectors of the world economy. Far from running to stand still, they have been among the world’s fastest growing activities during four decades of development. Both consumers and governments have been glad to accept the employment, revenue generation and recreational aspects of what, for many, are glamorous activities. Concentrating on the visible, they have come to take for granted - or simply been unaware of - the invisible, the air transport infrastructure for tourism.

That infrastructure consists of airports. When a journey is going smoothly, a traveller’s awareness of airports consists of an ability to relax, browse, shop. The traveller, very conscious of the superb new aircrawhich speeds the actual journey, tends to be unaware of the very large commitment of capital tied up in the airport.

Air Traffic Control services are the other main element of infrastructure. A smooth journey entails no awareness whatsoever of such services on the part of the traveller. But awareness has arrived - in Europe and in other parts of the world - in a wholly negative way.

A combination of insufficiently optimistic forecasting, during past years, of nationalistic attitudes towards airspace, of an understandable but disastrous yielding to local pressure groups (“yes, I want a new airport, but not in my backyard”), and of political reluctance to commit public funds - all these things have created a crisis. That crisis has become manifest only during the past two years - as delays have grown exponentially. But unless it is solved, Europe’s air transport system, for example, will actually slide back. The option of merely doing enough to keop in the same place does not exist.

We are looking at very large activities. Excluding passenger fares, international world travel and tourism primary receipts in 1989 were US$ 209 000 million. To put that figure in perspective, it was equivalent in size to 4.1 % of the entire Gross National Product of the United States, 8.7% of that of Japan, 16% of that of the Federal Republic of Germany and 117.2% of that Switzerland. Travel and tourism (albeit “ invisible”, according to national accounting methods) is bigger than any single item of international trade except crude oil.

Large scale also characterises air transport. It is probable that more than 320 million people (on both scheduled and charter services) travelled internationally by air in 1989. Another 870 million did so domestically. Many of those journeys, of course, were undertaken by frequent flyers.

There is also a heavy concentration of air travel in Europe, in the United States and in East Asia. But again, to put the total of air travellers in perspective - it is equivalent to I in every 4.2 of the world’s population travelling by air once, during the year.

Another measure of the success of tourism and aviation is their growth. International tourist numbers and expenditures have both more than doubled during the past decade. Unfortunately, from the point of view of less developed countries, the expenditure has continued to be concentrated. The world’s major tourist destinations consist of the United States and seven Western European nations (of which five are European Community members). In 1980, those eight countries received 53.6% of world international travel and tourist expenditures. In 1988, the proportion was 54.9%.

Most of those receipts were from other nations within the eight. That situation suggests a rather cosy, inwardlooking “ club “. There are, however, some indications that world travel and tourism is becoming less of a process of exchanging money between already rich nations.

The first indication arises out of a statistical quirk. The United States Travel and Tourism Administration has changed the basis upon which it estimates foreign visitor expenditure. This has the effect of increasing their officially estimated receipts in the one year between 1987 and 1988 by 50%. If the traditional methods had been used, then the “club of 8” ‘s share of world travel and tourism receipts would have been 51.2% rather than 54.9%. Thus, magically, the decade would have witnessed less, rather than greater, concentration of receipts among the richer nations!

But there are more solid indications than this. In the Caribbean, for example, visitor arrivals have increased 33.1% during the latest four years of available data. Receipts have grown by 55.8 % to US$ 6 700 million. Following a decline, visitor arrivals in Africa increased by 8.9 % in 1987 to 10.1 million. In Kenya alone, 662 000 visitors brought in US$ 343.5 million. Tanzania, after years of official disapproval, is building up its visitor infrastructure.

These are only a few straws in the tourism development wind. For most of the less developed countries that wind will not become a gale during the next few years - but it will at least continue to blow. Take Europe as a benchmark. The IATA airlines expect average annual scheduled international passenger traffic growth of 6.4% in all traffic flows involving Europe, during the period 1989 - 93.

Some other equivalent figures are: for Upper South America, 5.8 %; for Lower South America, 7.9 %; for North - Eastern Africa, 2.6 %; for North - Western Africa7 4.1%; for Eastern Africa, 5.6 %; for Central and West Africa, 4.8%; for the Indian subcontinent, 5.2 %. By contrast, the figure for North - East Asia is 10.8% and for South - East Asia, 8.5% the new decade is confidently expectod to be the time of the Pacific Rim.

To those who recall air traffic growth rates of previous decades, these figures - even those for the Pacific Rim - might not appear spectacular. One must remember, however, that to double any number in a decade requires an annual compound growth rate of only 7.2%. And, if a doubling of tourist numbers to a particular destination represents twice as much income for the hosts, it can also imply the need for twice as much infrastructure.

The air transport industry does not have the luxury of a decade in which to get its infrastructure in shape. The Single Market in Europe will be in place by 1993. What an irony if, two years later, Europets airspace was utilised to its full capacity under current and newly - envisaged operating procedures. What an irony if, in that same year of 1995, half Europe’s major airports were obliged to put up “No Vacancy” signs to fledgeling carriers who had been given the theoretical ability to Qy anywhere but found that they had the practical ability to fly nowhere.

This would affect not only Europe but the world, as airlines and national governments quarrelled over the means of rationing such finite resources as overQights and take - off/landing slots.

It would damage Europe’s economy - again, with results which could not be limited to Europe. The current annual cost of air traffic delays in Europe is US$ 5 000 million - including the value of lost passenger time. IATA’s congestion report completed recently by Stanford Research International (SRI) shows that the cost of doing nothing to Europe’s air transport infrastructure - beyond implementing current plans - will be US$9 500 million by the year 2000, not including the value of lost time.

The airlines are making capital investments of US$ 5 000 million annually, to acquire new aircra European government spending on supporting infrastructure is only US$ 1 500 million a year. This is inadequate to support even natural growth - without any boost from the Single Market.

Remedial action, to allow for unconstrained natural growth up to the year 2010, would cost US$ 5 000 million to 8 000 million in total. It would also, without impinging on national sovereignty, imply the ceding of upperairspace control to a truly supranational authority.

The airlines have an action plan - involving Eurocontrol, the European Communities, European Civil Aviation Conference (ECAC), International Civil Aviation Organisation (ICAO) and national governments - to make sure that these things happen.

The airlines want to “ get somewhere else”. They are conscious of being in a race. The benefits of the Single European Market are held out as a trophy upon completion of the race. Their fear is that the racetrack - Europe’s aviation infrastructure - might collapse. Not before the race is completed, but before it has even startod.

G. E.