Benefits of Air Transport

Transcription

1 Benefits of Air Transport Impacts of in the Brazilian States EMPLOYMENT. INCOME. TOURISM. ECONOMIC DEVELOPMENT

2 Benefits of Air Transport 1 st edition Originally published in Portuguese in October 2016

3 MASTHEAD RESEARCH AND ANALYSIS Mauricio Emboaba ABEAR Technical Consultant GO Associados EDITING Adrian Alexandri ABEAR Director of Communications David Maziteli ABEAR Press Officer PRODUCTION Daniela Sarmento ABEAR Project Coordinator Ana Dragonetti ABEAR Communications Assistant Alberto Komatsu, Fernanda Sobreira and Helena Capraro Máquina Cohn & Wolfe CREATIVE DIRECTION AND COPY-EDITING PiU Comunica Founded in August 2012 with the mission to encourage the habit of flying in Brazil, ABEAR supports actions and programs in the country that promote the growth of civil aviation in a consistent and sustainable way, in the transport of both passengers and cargo. Over 99% of the Brazilian domestic aviation market is represented by the founding airlines (AVIANCA Brasil, AZUL, GOL and LATAM). The organization also has BOEING, BOMBARDIER, LATAM Cargo and TAP as members. FOUNDING AIRLINES MEMBERS

4 Summary 7. INTRODUCTION Building Brazilian in the 21 st Century _Eduardo Sanovicz - President of ABEAR 8. METHODOLOGY Beyond : the Socio-Economic Importance of the Airline Industry in Each Federated Unit _Gesner Oliveira and Andréa Zaitune Curi - GO Associados 10. Understanding the Numbers on the Impact of Air Transport in Brazil _Mauricio Emboaba - ABEAR 12. READING GUIDE A tutorial for consulting the contents of this publication 14. THE IMPACT OF AVIATION ON THE ECONOMY 16. Brazil 18. Federated units 72. Comparison charts 76. Notes 78. REFERENCES

5 Introduction Building Brazilian in the 21 st Century EDUARDO SANOVICZ President of ABEAR I n 2002 Brazil moved to deregulate airfares, which allowed for an increase in air transport s contribution to national development. In the following 10 years, air travel became commonplace for many people: the number of passengers each year in Brazil went from 30 million to 100 million, and the average cost of domestic tickets fell by half. It was precisely in 2012 that ABEAR was founded to strengthen the industry and present this immense amount of contributions to Brazil a pioneering country in world aviation and founding member of the International Civil Organization (1944). Seeking the best references for the task, we found in previous works of Oxford Economics for IATA and ATAG a methodological model for investigation and data analysis. Publications about the benefits of aviation in the world (and also for many individual countries) identified the numbers of the activity, scaling the size and weight of the industry and its supply chain, as well as other less effects. In crossing this with other sources, we developed the publication Agenda 2020 (published in 2013). It brought to light the economic importance of the industry in Brazil and showed the path to democratize national aviation, pointing out barriers to its development and indicating the actions required to overcome them. This was the pillar on which ABEAR consolidated. The studies and research we produced have multiplied since then. In communicating with the public throughout the country, however, we still needed to go more in depth, moving from the large numbers to the reality of each Brazilian state. At the end of 2015 we gave to GO Associados consultants the responsibility to accurately obtain such data. Once this data was identified, our technical team worked extensively to explain the circumstances that led to the results found. This knowledge is gathered here, showing the country we have been building through aviation. We have considered not only what airlines produce ly, but also the activities of suppliers, airports, service providers and employees of each of the many organizations that make up the industry chain. In addition, we have contributed to gauge the impact of the activity in industries that benefit from air transport or that are only made possible through it. This original information can help public and private managers better understand the aviation business and its enormous impact on other businesses. For us, this is an important step in our journey. Our goal is to show society and its representatives that when the basis of Brazilian aviation is aligned with the international context, the country benefits, because Brazilian consumers benefit. We want to see Brazil fly more and more. The Brazilian Airlines Association 7

6 Benefits of Air Transport Beyond : the Socio-Economic Importance of the Airline Industry in each Federated Unit The research and analysis methodology helps show the scale of the activity s impact from the most evident to the less obvious. The results portrayed a country with significant differences and support strategic planning by companies and authorities GESNER OLIVEIRA and ANDRÉA ZAITUNE CURI GO Associados In order to measure the socio-economic importance of the Brazilian airline industry at national and state levels, ABEAR commissioned GO Associados to replicate the work carried out by the British institution Oxford Economics 1. For this purpose, 2015 industry data made available by the Agência Nacional de Aviação Civil ANAC (the Brazilian civil aviation authority) was used. Other sources consulted and used are also public, which makes the final results fully transparent and verifiable. This unprecedented and comprehensive study of GO Associados used the input-output tables (or IOTs) of the Instituto Brasileiro de Geografia e Estatística IBGE (Brazilian Institute of Geography and Statistics) to measure the impact of the aviation industry on the economy in terms of product, employment, wages and taxes for each of the 27 Brazilian federated units. The figures were estimated considering up to four different impacts (or economic spending effects):, in, induced (income effect) and catalytic effects on other industries. IOTs regard the economy as an integrated system of several interdependent industries. The impacts suffered by an industry influence other industries to a greater or lesser degree, depending on the relative importance of their relations in the economy. Different industries buy and sell to each other, and generally a given industry interacts with some others. Thus, IOTs show how the different activities are interconnected, ly or inly, characterizing the balance between supply and demand in the economy. To regionalize IOTs, a locational coefficient was used. It compares the relative importance of an industry to the economy of a region in this case, of the air travel and tourism industries. The impact corresponds to the initial effort applied, i.e., the impact on the final demand for one or more industries. In impacts include the chain reaction in industries that provide inputs to the industries ly affected, representing the impact on intermediate consumption. The induced impact (or income effect), in turn, stems from impacts of the initial shock on labor income and, therefore, on families spending. The catalyzed impacts consider the effects favored by air travel in the tourism industry and, consequently, in other industries related to it. 8 The Brazilian Airlines Association

7 Methodology is a global industry that brings together various activities: design engineering; manufacturing; sales; airline operations; customer service; maintenance; finance; leasing; insurance; publicity, advertising and media; among others. The results from the 2015 data, considering more than one million takeoffs, show the industry s size. According to estimates, air travel plus the catalyzed industry account for 3.1% of Brazil s Economic Output (more than R$ 310 billion in production value), with the potential to generate more than 6.4 million jobs, almost R$ 60 billion in wages and more than R$ 25 billion in taxes. To reach these figures, revenues from air transport of passengers and cargo were calculated. Revenues from air transport of passengers on domestic flights were shared between the states of origin and destination; for international flights, only the revenue at the national level (50% of total) was considered. The air cargo revenue, however, was attributed in full to the place of departure of the flight. Finally, to calculate the state s tourism revenue from air travel, the number of passengers who deplaned in each place was multiplied by the average spending per passenger during the land portion of the trip 2. Based on the values obtained, and considering the multiplier effects of the industries analyzed, the final impact on economic indicators was calculated. Comparing the federated units, it was found, on the one hand, that the impact of air transportation on Economic Output of the Southern Region states is less than 2%, which is lower than the national average. On the other, the impact is considerably higher than the national average in some Northeastern states, like Ceará, Pernambuco and Alagoas, and in the Southeast, such as in São Paulo and Rio de Janeiro. The Distrito Federal* stands out for being the area with the largest air transport impact on the local output, at about 11%. This is explained by two factors. On the one hand, the Brazilian capital receives a large influx of business passengers the Brasília airport is the third busiest in the country, after Guarulhos and Congonhas airports, both in the state of São Paulo. In contrast, Brasília s production has a low value, which contributes to increasing the estimated relative impact. In addition to the information contained in this publication, the study allows ABEAR to have several other approaches; thus, it favors the strategic planning process of its members. It is also a valuable tool to assist in decision-making and the establishment of public policies specific to each federated state in order to boost the industry. This contribution is of utmost importance for the formulation of national economic policy and the development of Brazil. OUTPUT, GDP AND IOTS The economic output of a company is the monetary value resulting from the supply of goods or services to society. Domestic output is the sum of the output of all companies in a country in a given period. To sell goods or services, each company needs to acquire third-party inputs (raw materials, services and intermediate goods). That is, for the functioning of the economy, companies from various branches of activity interact, either as suppliers or as buyers. The net amount of wealth that a company adds to the economy corresponds, then, to the proceeds, minus all it spent on inputs. This measure is called the gross value added (GVA). The sum of gross value added of all companies is one way to calculate the gross domestic product (GDP) of a country for a given period. Comparatively, the numerical value of the domestic output is always greater than GDP, since it does not consider the discounts of the intermediate consumption. The input-output tables (IOTs) make it possible to identify the interdependence of the productive activities of a country or region in a given period. In practice, based on provided data (values) of the output or input of an economic segment, the IOTs provide a breakdown of resulting impacts (economic output, jobs created, wages paid, tax revenues) in the related segments. That is, from the value of the economic production of commercial air transport, it becomes possible to calculate, for example, the impact on various industry suppliers. For the type of analysis that this study carries out, the necessary basis for implementation of IOTs is the economic output, rather than GDP. Gesner Oliveira, a GO Associados partner, is Professor of Economics at FGV-SP and former Chairman of the Conselho Administrativo de Defesa Econômica CADE (Administrative Council for Economic Defense) Andréa Zaitune Curi, GO Associados Project Coordinator, holds a PhD in Economics from FGV-SP * The Distrito Federal ( Federal District ) encompasses the territory of the Brazilian capital, Brasília. It has the same self-ruling rights as the Brazilian states. 1 With Brazilian data from 2009, Oxford Economics quantified the national impact of air transport on GDP, job creation, wages and tax revenues. Oxford Economics, Economic Benefits from Air Transport in Brazil, 2011, available at: 2 Ministério do Turismo, Caracterização e dimensionamento do turismo doméstico no Brasil 2010/2011, available at: Banco Central, Receita e despesa cambial turística, e superávit ou déficit, segundo os meses janeiro 1990-janeiro 2016, available at: The Brazilian Airlines Association 9

8 Benefits of Air Transport Understanding the Numbers on the Impact of Air Transport in Brazil Some general concepts and the combination of social and economic indicators support the interpretation of the impacts of aviation in the country. Taking the results in context, one can understand them and seek ways to optimize the benefits of the activity in each federated unit MAURICIO EMBOABA ABEAR Air transport is one of those industries in which the demand has greater correlation with the behavior of the economy as a whole. However, it is also itself an inducer of economic activity in a city, state or country. This interdependence arouses curiosity and requires consulting different sources of information to be thoroughly understood. Although previous reports of international entities already considered Brazilian aviation, integrating global and regional perspectives, we were very pleased to receive at ABEAR the results of the specially commissioned econometric study on the impacts of aviation in our country. This is because those studies were limited to the national level and, therefore, did not reflect the differences in territorial and population size as well as the profound economic and social heterogeneity in the country. Thus, GO Associados observation allowed us to move forward in identifying the specific impacts of air transport. For the first time we can quantify, with consistency and accuracy, the effects of the industry in its various dimensions in each federated unit. Also, it was good to see that the magnitude of aviation s economic impact on the rest of the economy is very similar to that in many other countries with analogous studies, which reinforces the idea of an industry with global characteristics. However, to share the study with a wide audience, it was necessary to delve more into its rationale and explain the assumptions, in order to allow full understanding of the phenomenon. For this reason, we decided to add interpretation and contextualization to the identified facts. This publication resulted from it. Dimensions of analysis Aspects studied to explain the impact of air transport in each federated unit s economy: 1. Population density 2. Total economic output 3. Composition of output by economic sector 4. Existence or not of leisure tourist attractions 5. Average distances traveled by tourists between places of residence and destination 6. Existence and quality of supply of competing modes of transport 7. Income distribution (only in some cases) 8. Participation in international trade chain (the sum of imports and exports) 10 The Brazilian Airlines Association

9 Methodology Population density, which is the initial part of the analysis, is positively related to the demand for air transport, because it indicates inly how close the population is to the place where air services are offered (accessibility to the airport). Thus, the greater the population density, the greater tends to be the number of passengers boarding. The total output of the federated state indicates the level of economic activity and, thus, the propensity of the population to travel for business or pleasure. FLYING FOR BUSINESS OR PLEASURE? Learning how the public of the aviation industry behaves is vital to understanding what determines the supply volume of a company in different locations. Greater or lesser regularity in if an economic upturn in the location in which services are offered occurs. From the airlines point of view, marketing incentives to gain corporate passengers tend to be ineffective. travel and greater or lesser sensitivity Other passengers, under to ticket prices are two a general denomination of of the aspects to be considered. In Brazil, about half of domestic non-business, travel for reasons such as leisure tourism, visits to passengers and just friends and relatives, religious over a quarter of international passengers travel on business. Therefore, during periods of sustained economic development, they represent a very significant share of total demand and travel very frequently. Because of opportunities or needs related to their professional activities meetings, events, customer service, etc. these passengers need to travel at very specific dates and times. In these cases, the trip is not optional and the transportation costs are inevitable. As it is clear, the amount of travel of this nature increases motives or for medical treatment. Except for the last group, the trips only occur when families have disposable income, which also relates to the level of economic activity. The fundamental difference between the growing segment of non-business and the others is that the former is considerably sensitive to price. This element is capable of stimulating competition in the air transport industry. Cargo transport, for its part, is clearly connected to the activity level of the industry the sector of the economy that is its main customer. The composition of output by economic sector (according to the official denomination: agriculture and livestock production, industry, non-government services and government services) also indicates the propensity to use air transport. This is because the population density of a region is also related to the nature of the population s economic activity. The predominance of agriculture, for example, is usually associated with a low population density. On the other hand, places with strong industrial activity or intense service provision often have high population densities. Besides, cargo services are predominantly used by the industrial sector. That is, the greater the manufacturing participation in the output composition, the greater the use of air cargo transportation services. The tourist flows influence the intensity of air transportation use, as does the trip distance (air transport tends to be less competitive at distances below 400 kilometers). In addition, there are attractive regions for leisure trips in which the total output per capita is relatively low. In these cases, the use of air transportation tends to be greater than the local economy size would suggest. The quality of infrastructure and supply of transport modes that compete with air transport also influence the choice of transport mode. In some cases, income distribution impacts air transport. Finally, the availability of air transport has an impact on the value chain of an economy. Air transport is preferred for high-value or perishable goods. It is important to stress that air transportation s share in the transport of imported or exported goods does not depend on the availability of international air services in the region. The criterion to consider that a certain good is imported (or exported) relates to the place where it was produced (or consumed). So it is not surprising that Brazilian states without international air services have exports and imports via air transport. Mauricio Emboaba, ABEAR Technical Consultant, is a civil engineer at the Escola Politécnica of USP, and holds a Masters and a PhD in Administration from FGV-SP The Brazilian Airlines Association 11

10 Benefits of Air Transport Reading guide To take better advantage of this publication s content, see below how the data, analyses and proposals related to the airline industry in Brazil are organized and presented INTRODUCTORY TEXTS These texts, developed by GO Associados and by ABEAR, explain the data gathering methods and the contextualization and interpretation of these findings. THE IMPACT OF AVIATION ON THE ECONOMY In this section, graphs and a text present information about each federated unit (and also on the country as a whole), analyzing the impacts of aviation on the regional economy. See on next page how the information was organized. COMPARATIVE TABLES Data from all of the states and the Distrito Federal, gathered by indicator (output, employment, wages and taxes) and broken down into absolute values for each level of effect studied: impact, in impact, induced impact (income effect) and the impact on the catalyzed industry/tourism. REFERENCES The numerous and varied sources consulted are listed at the end of the publication. All figures presented in this publication are based on the year 2015, unless otherwise indicated. Even if the numbers of the economic impacts of aviation in Brazil are somehow related to approaches of other studies done internationally, the differences in the data sources, in the temporal bases referred to and in the methods employed prevent comparisons between the results. 12 The Brazilian Airlines Association

11 Reading guide The subtitle highlights the wealth and jobs generated by aviation in the federated unit The texts analyze the air transport situation in the federated unit, crossing social, demographic, geographic and economic indicators with industry statistics. This allows an understanding of factors that influence supply and demand for air services for passengers and cargo in each location. 4 5 The second part reveals the dynamics of the industry in the federated state and how it fits into the general reality of the country. The graphs show absolute and cumulative values of the different effects of air transport, divided into two sets: output value/amount paid in taxes and jobs generated/amount paid in wages The center of the graph presents only the data on the impact of aviation. Each ring from the center outwards adds to the previous values of the level indicated. The publication contains no data on other catalyzed industries besides tourism; therefore, it should be considered that the impact of aviation is greater than what the graph expresses. 3 The first part of this table presents socioeconomic and demographic information for the federated unit. These elements help explain the propensity to use passenger and cargo air transport. 6 This table shows the relative share of air transport in local economic output, according to the different levels of impact. The Brazilian Airlines Association 13

12 Benefits of Air Transport The impact of aviation on the economy Photo: Acervo BH Airport The Brazilian Airlines Association

13 BRAZIL FEDERATED UNITS Acre Alagoas Amapá Amazonas Bahia Ceará Distrito Federal Espírito Santo Goiás Maranhão Mato Grosso Mato Grosso do Sul Minas Gerais Pará Paraíba Paraná Pernambuco Piauí Rio de Janeiro Rio Grande do Norte Rio Grande do Sul Rondônia Roraima Santa Catarina São Paulo Sergipe Tocantins COMPARISON CHARTS The Brazilian Airlines Association

14 Benefits of Air Transport Brazil Air transport generates 6.4 million jobs and R$ 312 billion in economic output in the country GENERAL DATA 1 From the geographical and demographic perspectives, the country that best compares to Brazil is the United States. Analyses from this perspective are useful to better understand the economic and operational statistics of national air transport. Brazil s size is 8.5 million square kilometers, with an estimated population of million inhabitants and a population density of 24 inhabitants per square kilometer 2. The territorial dimensions are comparable to those of the United States 9.8 million square kilometers. Although smaller, the population of Brazil is at the magnitude of the US, estimated at 321 million, resulting in a population density of 33 inhabitants per square kilometer 3. In 2013, output in Brazil had the following composition: agriculture and livestock production, 5%; industry, 25%; and services, 70% (54% produced by the private sector and 16% by the government sector) 4. In parallel, the estimated participation of sectors of the economy in the US GDP for 2015 had the following configuration: agriculture, 2%; industry, 21%; and services, 78% 5. The prevalence of the service sector in the output composition, the larger population density, as well as higher per capita income, help to explain the more intense use of domestic and international air transportation among the American people. In turn, there is significant heterogeneity in the output composition of the sector among the various Brazilian federated units. Thus, the participation of agriculture and livestock production ranges from 0% (RJ) to 23% (MT), while the portion of the industry ranges from 6% (DF) to 41% (ES). The contribution of the output of private services ranges from 35% (PA) to 65% (SP), while the share of government services varies from 10% (SP) to 48% (RR) 6. The average penetration of domestic air transport in Brazil was 0.47 flights per capita in This indicator also varies according to the federated unit, reflecting the heterogeneity of the population density, the output composition by sector, and total output per capita. Thus, the annual rates for domestic passengers transported per inhabitant ranged from 0.14 (MA) to 3.2 (DF) 7. In the international air segment, 10.5 million passengers boarded in Brazil 8. Of these, 4.3 million were foreign tourists who had arrived by plane or 68% of all foreign visitors who went to Brazil 9. The utilization of aircraft cargo holds for cargo transport on domestic flights was only 382 kilograms per takeoff. The average availability was estimated to be ten times greater than what was actually Country capital Brasília Estimated population 204,338,473 Area (km 2 ) 8,516,000 Population density (pop/km²) Number of municipalities 5,570 Output (R$ trillion) Output per capita (R$) 48,941 INDUSTRY DATA 1 Penetration of domestic air transport (flights per capita per annum) 0.47 Total passengers 106,697,877 Total cargo (kg) 635,428,129 Airports with commercial flights 126 Total domestic passengers 96,191,412 Total international passengers 10,506,465 Total domestic cargo 357,129,447 Total international cargo 278,298, The Brazilian Airlines Association

15 Brazil PARTICIPATION OF THE AIRLINE INDUSTRY IN THE NATIONAL ECONOMY Production Revenue specific to air transport ( impact) 0.4% 25.4 Taxes Air transport output ( impact + in impact + induced impact) 1.2% Wages Jobs (million) Tourism output by air travel (catalyzed industry) 1.9% Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 3.1% used. On international flights, air cargo performance was much more expressive, at about 4 tons per takeoff. Despite the modest numbers for air cargo transport in Brazil, its participation in the international trade chain (the sum of imports and exports) represented, in 2015, 12% of the total value of goods transported, but only 0.1% of the weight 10. in Brazil has repercussions that go far beyond the effects quantified in this publication and is now undeniably a means of mass transport. The situations described, more or less favorable to its development in the Brazilian federated states, are associated with the dynamics of the economy and society over time. One can safely attest that, in 2015, air transport contributed considering impact, in impact, plus the ones resulting from the consumption of the workers and the impact on the catalyzed tourism industry R$ 312 billion to national output, which is 3.1% of the total. The sector also provided more than 6.4 million jobs, with the payment of R$ 59.2 billion in wages. It also generated the collection of R$ 25.4 billion in taxes. The Brazilian Airlines Association 17

16 Benefits of Air Transport GENERAL DATA 11 Acre Air transport generates 7,800 jobs and R$ 412 million in output in the state State abbreviation and capital AC - Rio Branco Estimated population 803,513 Area (km 2 ) 164,123 Population density (pop/km²) 4.90 Number of municipalities 22 Output 17,300 % of Brazilian output 0.17 Output per capita (R$) 21,530 % of Brazilian output per capita Acre s overall picture is typical of a border region that was integrated later to the country, with modest output and strong connections to the national capital city. The statistics of demand and the economic and operational data in the airline industry are in accordance with this scenario. Incorporated into the Brazilian territory only in 1904, the state has a population density of about 5 people per square kilometer 12. The output per capita is low, at less than half the national average 13. Agriculture and livestock production account for 11% of the state s output (compared to 5% for the national average). The industrial sector, with another 11% (the national average is 25% 14 ), is based on the extraction of rubber, wood and Brazil nuts, and food and wood furniture production 15. The participation of private services is 40%. The biggest discrepancy in relation to the national average is in government services, which represent 38% of the wealth generated in the state, compared to 16% of the Brazilian national average. The number of tourists entering and leaving the state is not very significant in the Brazilian domestic flow 16. The proportion of transported passengers on domestic flights in relation to the total of the country is 0.23% 17, similar to the participation of the state in Brazilian production, which is 0.17% 18. There is no regular international air operation in Acre. The domestic air transport market penetration is 0.28 passengers transported per capita, as compared to the Brazilian average of The use of air transport is in fact higher than the economic profile of Acre would suggest. The small paved road network (1,344 kilometers), with precarious operating conditions 20, is one of the likely reasons. Another possible factor to stimulate the use of the air transport is the distance between Rio Branco and Brasília (2,266 kilometers). INDUSTRY DATA 11 Penetration of domestic air transport (flights per capita per annum) 0.28 Total passengers 221,806 Total cargo (kg) 365,425 Airports with commercial flights 2 % of national total of passengers 0.21 % of national total of domestic passengers 0.23 % of national total of international passengers 0.00 % of the national total of cargo 0.06 % of the national total of domestic cargo 0.10 % of the national total of international cargo The Brazilian Airlines Association

17 Acre Output PARTICIPATION OF THE AIRLINE INDUSTRY IN THE STATE ECONOMY Taxes Revenue specific to air transport ( impact) 0.4% Wages Jobs (thousand) Air transport output ( impact + in impact + induced impact) 0.7% Tourism output by air travel (catalyzed industry) 1.6% The largest regional flow occurs between Rio Branco and Cruzeiro do Sul in order, Acre s largest cities, separated by 592 kilometers. Much of the air travel between the state and the rest of the country involved precisely Rio Branco, Cruzeiro do Sul and Brasília. There are secondary flows to Manaus and Porto Velho. The average load factor of flights in the state is only 68%, while the national average is 74% for domestic flights 21. Air cargo flows are not relevant; in 2015, 1,094 tons were unloaded and 365 tons shipped in the state. The participation of the airline industry ( impact, in impact, induced impact and on catalyzed industry) in total output of Acre was 2.4% (R$ 412 million) and accounted for the generation of 7,800 jobs, the payment of R$ 71 million in salaries and R$ 29.5 million in taxes. Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 2.4% The Brazilian Airlines Association 19

18 Benefits of Air Transport GENERAL DATA 22 State abbreviation and capital AL - Maceió Estimated population 3,340,932 Alagoas Air transport generates 42,700 jobs and R$ 2.2 billion in output in the state Alagoas has a population density of 120 inhabitants per square kilometer 23, which is considered high for the national average. In comparing the participation of every sector of the Alagoas economy with the national profile, agriculture and livestock production (10%) and government services (28%) stand out. In contrast, industrial production (18%) and private services (44%) are proportionally lower. Total state output per capita is well below the national average (one of the lowest among the states) 24. These indicators are typical of a quite modest economy. The market penetration of the domestic air transport of passengers ( passengers transported per inhabitant), however, is higher than the Alagoas economic characteristics would lead one to expect. The state is predominantly a tourism destination, accounting for 2.3% of the movement among states (in all modes of transport). The outbound tourism flow (1.4% of the country s total 26 ) is relatively high, since the state represents only 0.61% of Brazilian output 27. The size of aircraft used on flights operated in Alagoas, as well as the corresponding passenger load factors, indicate the predominance of leisure tourism as motivation for the travel. On average, the aircraft that took off from Alagoas in 2015 had 158 seats, while in Brazil as a whole the figure was 140 seats 28. The load factor of flights departing from that Area (km 2 ) 27,774 Population density (pop/km²) Number of municipalities 102 Output 61,200 % of Brazilian output 0.61 Output per capita (R$) 18,318 % of Brazilian output per capita INDUSTRY DATA 22 Penetration of domestic air transport (flights per capita per annum) 0.29 Total passengers 961,062 Total cargo (kg) 457,114 Airports with commercial flights 1 % of national total of passengers 0.90 % of national total of domestic passengers 1.00 % of national total of international passengers 0.01 % of the national total of cargo 0.07 % of the national total of domestic cargo 0.13 % of the national total of international cargo The Brazilian Airlines Association

19 Alagoas Taxes Output PARTICIPATION OF THE AIRLINE INDUSTRY IN THE STATE ECONOMY Revenue specific to air transport ( impact) 0.5% Air transport output ( impact + in impact + induced impact) 1.4% Jobs (thousand) Tourism output by air travel (catalyzed industry) 2.2% 395 state was 81%, against the national average of 74% 29. In other words, the airline industry has offered flights on large aircraft (with a lower unit cost) and practiced lower prices to generate demand to fill them. Air cargo transport in the state is very small: the average shipment is 61 kilograms Wages per departure and 81 kilograms per arrival 30. The participation of the airline industry ( impact, in impact, induced impact and on catalyzed industry) in total output of Alagoas was 3.7% (R$ 2,2 billion) and generated 42,800 jobs, the payment of R$ 395 million in wages and R$ million in taxes. Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 3.7% The Brazilian Airlines Association 21

20 Benefits of Air Transport GENERAL DATA 31 State abbreviation and capital AP - Macapá Estimated population 766,679 Amapá Air transport generates 12,700 jobs and R$ 577 million in output in the state Area (km 2 ) 142,828 Population density (pop/km²) 5.37 Number of municipalities 16 Output 18,200 % of Brazilian output 0.18 Output per capita (R$) 23,739 % of Brazilian output per capita INDUSTRY DATA 31 Amapá is not very much integrated into the Brazilian economy. This appears in the population density of just over 5 people per square kilometer, which is one of the lowest in the country 32. Furthermore, the output per inhabitant is about half the Brazilian average 33. The output composition of the economy is similar to other former federal territories, with a high proportion of service sector in relation to the total. Thus, private services account for 40% of the total output of Amapá. The government services sector constitutes 44% of total output (the average in Brazil is 16%). Agriculture and livestock production account for another 2% 34 and industry, 13% 35. The domestic outbound tourism (all transportation modes) of Amapá is 0.2% 36 of the national tourist flow, proportional to the participation of the state in Brazilian output (0.18%) 37. Of domestic passengers carried from Macapá airport (the only one that operates regular flights), 69% went to Belém, 20% to Brasília and 5% to Fortaleza 38. Despite the relatively short distance between Macapá and Belém (329 kilometers), the option for air transportation is justified by the lack of road connection (in addition to air transport mode, it is only possible to go from one capital to the other by ferry) 39 and by existing connections from Belém airport to other regions of Brazil. The penetration of domestic air transport in Amapá was 0.42 passengers per inhabitant in 2015 (as compared to the Brazilian average of ). Given Penetration of domestic air transport (flights per capita per annum) 0.42 Total passengers 324,735 Total cargo (kg) 396,716 Airports with commercial flights 1 % of national total of passengers 0.30 % of national total of domestic passengers 0.34 % of national total of international passengers 0.00 % of the national total of cargo 0.06 % of the national total of domestic cargo 0.11 % of the national total of international cargo The Brazilian Airlines Association

21 Amapá Taxes Output PARTICIPATION OF THE AIRLINE INDUSTRY IN THE STATE ECONOMY Revenue specific to air transport ( impact) 0.2% Air transport output ( impact + in impact + induced impact) 0.5% Jobs (thousand) Tourism output by air travel (catalyzed industry) 2.7% the socioeconomic indicators of the state, it is a fairly high rate. The air cargo shipment in the state is small in amount, but of high value added, with a large presence of semi-manufactured gold. This can be seen in the statistics of international trade: 59% of the total value of Amapá s exports was transported by air, although this represents Wages only an insignificant portion of the weight transported 41. The airline industry ( impact, in impact, induced impact and on catalyzed industry) accounted for 3.2% of the total output of Amapá (R$ 577 million). in the state generated almost 13,000 jobs, with the payment of R$ 111 million in salaries and R$ 46 million in taxes. Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 3.2% The Brazilian Airlines Association 23

22 Benefits of Air Transport GENERAL DATA 42 State abbreviation and capital AM - Manaus Estimated population 3,938,336 Amazonas Air transport generates 75,300 jobs and R$ 4.6 billion in output in the state Area (km 2 ) 1,559,149 Population density (pop/km²) 2.53 Number of municipalities 62 Output 186,000 % of Brazilian output 1.86 Output per capita (R$) 47,228 % of Brazilian output per capita Amazonas is the largest Brazilian state: 1.56 million square kilometers, or 18.3% of the national territory. However, its population is small, estimated at 3.9 million for Thus, its population density is only 2.5 inhabitants per square kilometer, one of the lowest in the country. The creation of the Manaus Free Trade Zone in 1967 changed the participation of economic sectors in a peculiar way. The industry accounts for 37% of the state product (compared to 25% of the national average), the second highest proportion among the states 43. Highlights include the manufacture of mobile phones, audio and video equipment, motorcycles and concentrates for soft drinks. The output of the state per inhabitant is only slightly below the Brazilian average 44. Although Amazonas has a rich and diverse patrimony, its participation in domestic tourism is small. There is also a striking imbalance between outbound and inbound tourism; the former is 1.4% and the latter, 0.7% of the Brazilian total 45. On the other hand, the penetration of domestic air transport of passengers is 0.43 trips per year, slightly below the Brazilian average 46. The importance of the industrial sector (which makes extensive use of air transport) in this state helps explain this result, as does the lack of road and healthcare infrastructure (which is the reason for 5.2% of air travel in the North Region of Brazil, against 2.4% for the country as a whole 47 ). Still, the state accounted for less than 2% of domestic enplanements 48. Although 84% of the state s international tourists arrive by air transport 49, this movement is not significant in absolute numbers. INDUSTRY DATA 42 Penetration of domestic air transport (flights per capita per annum) 0.43 Total passengers 1,789,752 Total cargo (kg) 43,346,992 Airports with commercial flights 17 % of national total of passengers 1.68 % of national total of domestic passengers 1.76 % of national total of international passengers 0.99 % of the national total of cargo 6.82 % of the national total of domestic cargo % of the national total of international cargo The Brazilian Airlines Association

23 Amazonas Output PARTICIPATION OF THE AIRLINE INDUSTRY IN THE STATE ECONOMY Taxes Revenue specific to air transport ( impact) 0.5% Wages Jobs (thousand) Air transport output ( impact + in impact + induced impact) 1.3% Tourism output by air travel (catalyzed industry) 1.1% In addition to stimulating the flow of passengers, the Free Zone is mainly responsible for the large movement of domestic air cargo in the state. In 2015, it was 40,000 tons, or 11.3% of total air shipments in Brazil 50. In the trade chain (sum of exports and imports) of Amazonas, air transportation represented 1.8% by weight and 32% in value of the total shipped 51, which shows the high aggregate value of transported items. Even though its relative importance is below the national average, aviation has a significant impact on the Amazonian reality. The participation of the airline industry ( impact, in impact, induced impact and on catalyzed industry) in state total output was 2.5% (R$ 4.6 billion), which generated 75,000 jobs, the payment of R$ 728 million in wages and R$ 322 million in taxes. Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 2.5% The Brazilian Airlines Association 25

24 Benefits of Air Transport GENERAL DATA 52 State abbreviation and capital BA - Salvador Estimated population 15,203,934 Bahia Air transport generates 286,700 jobs and R$ 14.1 billion in output in the state Area (km 2 ) 564,733 Population density (pop/km²) Number of municipalities 417 Output 432,300 % of Brazilian output 4.32 Output per capita (R$) 28,433 % of Brazilian output per capita Bahia is the sixth largest state economy in Brazil, with an output corresponding to 4.3% of the Brazilian total. It has a population density of almost 27 inhabitants per square kilometer 53 and output per capita of a little over half the value for Brazil as a whole. Large economic contrasts are present in the state. Of its 32 micro-regions, only two (Metropolitana de Salvador greater Salvador e Barreiras) have income standards similar to the national average. The others have per capita incomes well below this 54. Because of the small output in relation to the total population and the unbalanced geographical concentration of Bahia, demand for passenger air transport is also small and very concentrated in a few cities. Thus, the market penetration corresponds to only 0.37 domestic boardings per inhabitant per year 55 (below the Brazilian national average). In Salvador and Porto Seguro occur, respectively, 77% and 13% 56 of domestic boardings in this state. Of the 11 Bahia airports with regular operations, only the Aeroporto Deputado Luís Eduardo Magalhães in Salvador transported passengers on scheduled international flights. The demand for domestic passenger air transport is largely supported by the tourism potential of the state. Bahia receives 8.6% of the Brazilian interstate tourist flow (all modes of transport), but sends to other locations only 3.6% of the total 57. In 2015, 3.3% of all foreign visitors to Brazil entered through the state 58, which is a relatively small portion. The participation of domestic and international air cargo shipments in the state, in relation to the total for Brazil, was only 2.9% and 2.1%, respectively 59. These amounts are small compared with the participation of the state in the Brazilian economy, and this is explained by the INDUSTRY DATA 52 Penetration of domestic air transport (flights per capita per annum) 0.37 Total passengers 5,781,403 Total cargo (kg) 16,008,250 Airports with commercial flights 11 % of national total of passengers 5.42 % of national total of domestic passengers 5.81 % of national total of international passengers 1.80 % of the national total of cargo 2.52 % of the national total of domestic cargo 2.86 % of the national total of international cargo The Brazilian Airlines Association

25 Bahia Output PARTICIPATION OF THE AIRLINE INDUSTRY IN THE STATE ECONOMY Taxes Revenue specific to air transport ( impact) 0.4% Wages Jobs (thousand) Air transport output ( impact + in impact + induced impact) 1.1% Tourism output by air travel (catalyzed industry) 2.2% modest performance of its manufacturing industry in recent years 60. Thus, the share of air transport in Bahia s international trade (exports plus imports) is small, corresponding, in 2015, to 23,000 tons and US$ 453 million. This is equivalent to 0.1% by weight and 2.8% of the value of cargo handled by Bahian foreign trade 61. Despite these modest numbers, the airline industry was responsible in 2015 for 3.3% of the state output (R$ 14.1 billion), which is higher than the Brazilian national average share. Between impact, in impact, induced impact and on catalyzed industry, aviation generated nearly 287,000 jobs in the state, contributing R$ 1.1 billion in taxes and R$ 2.6 billion in wages. Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 3.3% The Brazilian Airlines Association 27

26 Benefits of Air Transport GENERAL DATA 62 Ceará Air transport generates 217,000 jobs and R$ 10.2 billion in output in the state State abbreviation and capital CE - Fortaleza Estimated population 8,904,459 Area (km 2 ) 148,886 Population density (pop/km²) Number of municipalities 184 Output 181,300 % of Brazilian output 1.81 Ceará has a population density of almost 60 inhabitants per square kilometer, which is high if compared to the figure for all of Brazil (24 inhabitants per square kilometer) and average for the Northeast Region states 63. Its output accounts for 1.8% of Brazil s total. The participation of industrial sector in the output (20%) of Ceará is lower than the national average (25%). The public service sector, which participates with 16% in the output of the country, in Ceará represents 23%. The total output of the state per capita is less than half of the Brazilian 64. Ceará is an important domestic tourism destination, capturing 5.6% of the national inbound flow (all modes of transport). But the domestic outbound flow is only 2% of the total, which is proportional to the state s participation in the Brazilian economy 65. São Paulo and Rio de Janeiro are the largest sources of tourists to Ceará. However, 44% of tourists leave from states whose capitals are about 500 kilometers away: Maranhão, Pernambuco, Piauí, Rio Grande do Norte and Paraíba 66. At these distances, air travel suffers competition from road transport. Domestic passenger boarding in the state in 2015 represented 3.3% of the national total 67 that is, it is a rate higher than Ceará s participation in the Brazilian economy. The setting of social and economic indicators and the proximity of most major sources of visitors make the penetration of the domestic air transport low: 0.36 trips per inhabitant (below the national average of 0.47). Domestic air cargo transport is more expressive than that of domestic passengers and represented, in 2015, 5.9% of the total weight shipped in Brazil: on average 789 kilograms per takeoff (against 382 kilograms of the national average) 68 were loaded. Two reasons may explain the apparent paradox between, on the one hand, low Output per capita (R$) 20,361 % of Brazilian output per capita INDUSTRY DATA 62 Penetration of domestic air transport (flights per capita per annum) 0.36 Total passengers 3,315,142 Total cargo (kg) 24,116,488 Airports with commercial flights 2 % of national total of passengers 3.11 % of national total of domestic passengers 3.33 % of national total of international passengers 1.11 % of the national total of cargo 3.80 % of the national total of domestic cargo 5.88 % of the national total of international cargo The Brazilian Airlines Association

27 Ceará Output PARTICIPATION OF THE AIRLINE INDUSTRY IN THE STATE ECONOMY Taxes Revenue specific to air transport ( impact) 0.7% Wages Jobs (thousand) Air transport output ( impact + in impact + induced impact) 2.1% Tourism output by air travel (catalyzed industry) 3.5% total output and industry participation in the economy, and, on the other, the high share of domestic air cargo transportation. First, Ceará has important factories from industries that use air transport: industrial fabrics, leather goods and footwear. Second, because of the importance of leisure passenger flow, the airfares are low if we consider the flight distances. Thus, as low frequency flights with high capacity aircraft predominate (lower cost per seat-kilometer), the cargo shipment per takeoff is high. The main export products of Ceará, however, are not usually transported by plane because of the low value added. Thus, the share of air transport in Ceará exports was only 4.1% in value and 3.6% in weight 69 of goods handled. The participation of the airline industry ( impact, in impact, induced impact and on catalyzed industry) in the total output of Ceará was 5.6% (R$ 10.2 billion) and generated more than 217,000 jobs, the payment of almost R$ 2 billion in wages and R$ 849 million in taxes. Total output related to air transport ( impact + in impact + induced impact + catalyzed industry) 5.6% The Brazilian Airlines Association 29