An Analysis of Intra-Regional Air Travel in SAARC Region

Transcription

1 An Analysis of Intra-Regional Air Travel in SAARC Region Prof. Amal S Kumarage, Ms D Piyathilaka, Ms K C S Ekanayake Department of Transport & Logistics Management University of Moratuwa Annual Sessions Chartered Institute of Logistics & Transport Sri Lanka 11 th August 2007

2 The Study Examines the present status of Air Travel in the SAARC region Emerging Trends and Patterns Using Past 5-6 years Statistical data Source: Civil Aviation Authority of Sri Lanka SAARC Regional Multimodal Transport Study (SRMTS) Final Report, December 2005

3 SAARC in Perspective Nearly 1/4th of the total world population, but only 2.1% of world GNP and 1.2% of world trade. One of the fastest economic growth rates (avg % p.a.) South East Asia - 2% per annum East Asia - 5.8% per annum (the fastest growing) Total intra-regional export trade in SAARC to total global exports - only around 5.0% Lack of integrated transport systems.

4 Significance of an Integrated Transport network in SAARC region and Present concerns Essential to promote land locked countries; Nepal and Bhutan. Essential to enhance connectivity of Island states; Maldives and Sri Lanka with the rest of SAARC (Maritime and air transport). Concerns Very low connectivity in terms of direct flights. High cost of travel Deficiency of investment in relation to the provision of modern terminals and additional runway capacity. Regulatory barriers Lack of strong hub operations for efficient regional transfers.

5 Comparison of Regional Aviation in SAARC with other Regions Region Intra Regional Passengers Carried (million) Regional Trips Per 1000 Capita Africa Asia/Pacific Europe Middle East North America South America & Caribbean TOTAL SAARC (given within Asia/Pacific) Comment regarding travel within SAARC region Only 0.5% ; 1 in 200 of World wide regional traffic Lowest aviation use in the world, lower than sub-saharan Africa. Even though Air transport is correlated with increase in income, the extremely low indicators of use shows that aviation within SAARC is one of the least developed modes of transport particularly for intra-regional mobility.

6 Air Services Agreements in the SAARC region-2004 Country B desh Bhutan India Maldives Nepal Pakistan Sri Lanka Bangladesh 2 60 X n/a n/a 3 Bhutan 0 49 X 7 X X India *5 (metros) others unlimited Maldives X X 4 X X unlimited Nepal X n/a X Pakistan 4 X 14 X 2 unlimited Sri Lanka 0 X X 5 Weekly number of flights in operation at present The number of flights per week allowed in the present ASAs Maximum possible ASAs between the 7 countries; 21Total implemented; 14

7 The sixteen SAARC Gateways 16.Colombo 15.Lahore 14.Karachi 13.Kathmandu 12.Male 11.Hyderabad 10.Cochin 9.Trichy 8.Bangalore 7.Trivandrum 6.Kolkata 5.Chennai 4.Mumbai 3.Delhi 2.Paro 1.Dhaka 1.Dhaka 35,910 16, ,092 31,109 65,098 2.Paro 9,606 9,840 8,474 3.Delhi ,346 62,750 34,780 81,406 4.Mumbai 2 1,693 16,269 77,476 75,225 5.Chennai 6.Kolkata 7.Trivandrum 8.Bangalore 9.Trichy 10.Cochin 11.Hyderabad 12.Male 13.Kathmandu 14.Karachi 15.Lahore 16.Colombo 453, ,886 80, ,683 13,841 92,889 84,876 48,345 26, , , , The 28 direct flight connections out of 83 at present, between the 16 aviation corridors.

8 Observations Only 15 direct flights out of 28, among the top 8 of the corridors (Colombo, Delhi, Chennai, Mumbai, Male, Dhaka, Karachi and Kathmandu) (Directness Index 54%) Only within the top 4 aviation corridors (Colombo, Delhi, Chennai and Mumbai) there are direct flights between all of them. (Directness Index 100%) Only 9 connections between the 7 SAARC capitals, of a possible 21 direct connections are operative. (Directness Index 43%). The direct connectivity between the capitals in particular is extremely deficient.

9 Passenger Movements in selected Corridors From Dhaka Paro Delhi Mumbai Colombo Kathmandu To Flights per week (One way) % Increase of passengers Distance (km) Aircraft kms operated 2004 Passenger kms Carried 2004 Delhi ,496 31,852,170 Mumbai , ,568 19,786,387 Kolkata ,232 24,395,359 Kathmandu ,120 12,910,235 Karachi 4-5 1, ,024 95,303,472 Delhi , ,328 12,910,464 Kolkata ,000 5,411,725 Kathmandu ,256 4,135,312 Kathmandu ,879, ,060,978 Karachi , ,968 66,766,000 Lahore ,168 15,894,232 Colombo ,444 1,779, ,956,264 Male 1 Kathmandu 2-25 Karachi ,400 67,404,120 Colombo ,530 1,113, ,093,485 Chennai ,500, ,045,882 Trivandrum ,280 38,765,700 Bangalore ,768 74,868,534 Trichy ,600 37,345,220 Cochin ,288 24,268,939 Hyderabad 7 1, ,480 30,493,500 Male ,327, ,486,342 Karachi ,403 1,249,560 86,550,053 Kolkata ,616 23,704,838 Bangalore 2-5 Karachi 2 Trivandrum Male ,352 53,773,605

10 Air Travel within the SAARC

11 Table Summery 236 out of 251(94%) weekly return flights operated within SAARC are made between the 16 corridors. The four routes carry over 40% of the entire demand for intra-regional air travel within SAARC; Socio-cultural linkages - Colombo to Chennai 453,662 passengers, Dhaka to Kolkata 167,092 passengers. Tourism & Trade Colombo to Male 271,998 passengers, Delhi to Kathmandu 264,346 passengers

12 Summary cont. Passengers choose to fly to destinations that are cheapest to reach the end destination Colombo - Trivandrum 107,683 passengers (i.e. instead of flying to Chennai) and thereafter taking cheaper surface transport. Commercial and business travel within SAARC has still not grown to its full potential. Intra-regional corridors connecting the major commercial centres such as Mumbai Colombo, are still of moderate traffic levels, ranging between 15,000 to 80,000 passengers per year.

13 Cargo movements in selected Corridors From To Growth rate % Distance (Km) Tonne kms 2004 Total Cost US$ per ton Freight Rate US$ per Ton km Dhaka Delhi ,273, Mumbai (8) 1,171 1,090, Kolkata (36) , Kathmandu (27) , Karachi (49) 1,464 2,029, Paro Delhi 13 1,344 12,096 2, Kolkata ,975 1, Kathmandu ,712 1, Delhi Kathmandu ,448, Karachi , Lahore 171 2,444 1,250, Mumbai Male - - 1,990 Kathmandu Karachi ,348, Colombo Chennai 40 1,530 9,342, Trivandrum (15) 140 Bangalore , Trichy (29) , Cochin , Hyderabad , Delhi 80 1,160 1,526, Mumbai ,145 Male ,138, Karachi 37 2,403 5,489,654 1, Kathmandu Kolkata (44) , Bangalore Karachi Trivandrum Male , TOTAL of the 16 Selected Corridors 25 36,101,715 TOTAL of all Corridors 26 36,171,784

14 Table summary Very low utilization of aviation for freight Freight tonnes to be carried on all international routes - 23,000 million tonnes; the movements within SAARC 36.6 million tonnes (0.15%). The heaviest freight flows centered on Colombo (> 50%) of the intra-regional freight movements. Colombo - Male corridor, Colombo Chennai - flows between 50 to 100 tons per week (both ways) per week. Average freight load is 2 tonnes per aircraft movement. Carried 36,602 tons of freight and produced 36.6 million freight tonne kms.

15 Conclusion Air travel in SAARC in comparison to other regions is lagging Identified possible reasons; Lack of integrated transport network High cost in travel

16 Fares and Rates between the selected corridors Flights per week Distance Return Economy Fare per From To (km) Fare($) km US$ Delhi $ $0.26 Mumbai 2 1,171 $ $0.22 Kolkata $ $0.28 Kathmandu $ $0.27 Dhaka Karachi 4 1,464 $ $0.19 Delhi 3 1,344 $ $0.23 Kolkata $ $0.35 Paro Kathmandu $ $0.39 Kathmandu $ $0.17 Karachi 3 1,064 $ $0.12 Lahore $ $0.18 Delhi Colombo 7 2,444 $ $0.12 Male 1 Kathmandu 2 Karachi $ $0.11 Mumbai Colombo 7 1,530 $ $0.13 Chennai $ $0.13 Trivandrum $ $0.18 Bangalore $ $0.11 Trichy $ $0.16 Cochin $ $0.16 Hyderabad 7 1,160 $ $0.13 Male $ $0.13 Colombo Karachi 5 2,403 $ $0.07 Kolkata $ $0.20 Bangalore 2 Kathmandu Karachi 2 Trivandrum Male $ $0.15 Cost of travel is relatively high when compared to other regions

17 Model : Economy Fares Vs Distance 700 US$ Observed 100 Linear Distance (Km)

18 Multiple Regression Analysis To identify the best fit regression line based on Least squares method to explain the past trend in air fare. Linear relation-ship is assumed Use of Dummy variables to qualitative country specific factors Use of binary code scheme Backward Stepwise Regression Analysis Indicator variables are considered together and not individually Significance of the overall model was done using the F test.

19 Model 1 Variables Entered/Removed b Variables Entered NEPAL, BANGLAD E, MALDIVES BHUTAN, DISNEW, PAKISTAN INDIA a Variables Removed Method. Enter Model 1 Model Summary Adjusted Std. Error of R R Square R Square the Estimate.934 a a. Predictors: (Constant), NEPAL, BANGLADE, MALDIVES, BHUTAN, DISNEW, PAKISTAN, IND a. All requested variables entered. b. Dependent Variable: Economy Rate Model 1 a. Regression Residual Total ANOVA b Sum of Squares df Mean Square F Sig a Predictors: (Constant), NEPAL, BANGLADE, MALDIVES, BHUTAN, DISNEW, PAKISTAN, INDIA b. Dependent Variable: Economy Rate

20 Model 1 Coefficients a Unstandardized Coefficients Standardi zed Coefficien ts B Std. Error Beta t Sig. (Constant) DISNEW BANGLADE BHUTAN INDIA MALDIVES PAKISTAN NEPAL a. Dependent Variable: Economy Rate Model Model Summary Adjusted Std. Error of R R Square R Square the Estimate.668 a b c a. Predictors: (Constant), DISNEW b. Predictors: (Constant), DISNEW, BHUTAN c. Predictors: (Constant), DISNEW, BHUTAN, BANGLA

21 Economy = D *BH *BA fare D= Distance (kms), BH = Bhutan, BA = Bangladesh Interpretation and conclusions To all 7 countries distance had been a significant factor in determining the rates. All connecting flights to Bhutan have had an additional avg. cost of 251 in determining the fares, when other dependent variables are held constant. All connecting flights to Bangladesh have had an additional avg. cost of 141 in determining the fares, when other dependent variables are held constant. No country has achieved a better advantage compared to another in relation to distance or country specific factors

22 Bangladesh and Bhutan Bangladesh High costs as a result of strict regulations Protection of National carrier Bhutan Due to the geographical location it is difficult to reach (Limited access) High operating costs associated

23 Sri Lanka and the Hub status What does it take to be a hub? A modern hub : A commercial center, a place to which goods and information are brought for distribution. Business information, news, connections, market intelligence, practical experience, relationship networks, business contacts. Uniqueness of a hub Being geographically placed (link regions with other locations of the world.) Have the right capabilities, expertise, technical and support services

24 Modern Concepts of Hubs Hubs pull resources (goods, financial resources, scientific excellence) from outside into them (if they do not possess them abundantly themselves) and use their own expertise and special environment to distribute them to the world economy and add an extra value to them. In the world economic geography the phenomenon of agglomeration is important. A hub should be a transport centre A high influence of foreign and multinational agents in these locations. Examples; London, New York and Tokyo as important international financial centers.