Study shows aviation sector contributes $20.6B to GDP

Aug 11, 2017 News

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A study done by Oxford Economics Limited has found that the aviation sector in Guyana contributes $20.6B to the country’s Gross Domestic Product. This represents 3.2 per cent of GDP.
The firm was contracted by the Guyana Civil Aviation Authority (GCAA) to assess the impact of the sector on the country’s economy.
The findings of the report were presented to the media yesterday at the High Street, Kingston office of the GCAA. According to the Director, Air Transport Management, GCAA, Saheed Sulaman, the objective of the study was to describe both quantitatively and qualitatively, the impact of civil aviation on the economy of Guyana.
He said that the economic impact as it relates to the GDP has to do with jobs and labour income of air operations and the spending by foreign tourists. He said that the amount of tourists that arrived by air was calculated using a standard input output economic impact framework.
Sulaman said that the input output table was provided by the Bureau of Statistics to arrive at the calculation. He said that the model structure used is a very standard one used to assess impact.
“They assess first the direct impact of the sector; that has to do with direct employment and spending by the industry’s business operations. They look at the indirect impact; that is, the supply chain effect stemming from industries operations. For example, as a result of investing in the airport (Cheddi Jagan International), GPL will benefit because they provide electricity. The telephone company will benefit because they provide communication.”
Further, Sulaman said that there is induced impact, which has to do with the impact resulting from employees when they would have earned money working in the aviation sector and later go and spend in the retail sector. In quantifying the direct, indirect and induced impact of aviation operations, the study revealed that $1.6B, $3.8B and $1.3B respectively is contributed towards the nation’s GDP. This totals $6.8B.
Further, Sulaman explained that the investment operations that were considered during the study were all domestic investments that were made in the sector.
“It didn’t look at foreign investments, because GDP has to do with nationals of Guyana, what are the investments made in Guyana.”

Regarding employment, Sulaman said that the study showed that directly, in areas of trade, transport and communication, approximately 900 jobs are created by the sector. In terms of indirect jobs, in the areas of agriculture, manufacturing, trade, transport, communication, hotel and restaurant, finance, real estate, education, health and personal services, about 2,010 jobs are supported by the aviation sector.
Moreover, for jobs created due to induced impact of the sector, 570 jobs are supported in the aforementioned areas including utilities. Therefore, combining the findings, the aviation sector is responsible for creating 3,490 jobs in the local economy. This was determined from information provided by the local airports and operators.
Meanwhile, quantifying the value of labour in the sector, the study revealed that the direct impact on the sector is $1.6B; the indirect impact, $1.2B and the induced impact, $437,200 which totals $3.3B.
Further, Sulaman said that a substantial number of foreigners visiting Guyana do so by air. This is estimated above 80 per cent of the total. He said that every foreigner spends money in the economy, and this was captured in the study.
According to Sulaman, the study also quantified the impact of tax revenue provided by the sector which is estimated to be $2B annually. Further, he explained that it was estimated by the firm that a foreigner spends roughly US$25 per night after arriving in the country.
“What they did to come up with that figure was to find an average of all the travellers. Now, some people when they travel, they come for business, and that spending may be US$160 per night, but then you have a large percentage of visitors coming back for friends and family, at Christmas, at Easter, at Mash, and other selective periods within the area such as the July-August period.”
He said that using the average of US$25 per night, works out to $23B being spent by foreigners and visitors in the economy on an annual basis.
“It tells you how important the aviation sector is right away, because without the sector providing connectivity, you could not have had those visitors coming, or at least the impact would not have been so significant.”
According to Sulaman, of the $23B, $13B goes towards the country’s GDP. Together with the $6.8B from aviation operations, the sector holistically contributes $20.6B to GDP.
As it relates to the tourism sector, the study showed that some 8,500 are created in the tourism sector or are impacted by the aviation sector. This brings total employment to approximately 12,000 jobs.
The cost of the study was US$50,000. Despite receiving information conduct the study, information was not used from the aerodromes in the interior locations due to the lack of proper records being available. However, it is hoped by the GCAA that the necessary information can be provided in the future when another study will be done.

 

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