(MENAFN- Bangladesh Monitor) Dhaka : Bangladesh air transport is forecast to grow by 168 per cent in about two decades under the "current trend scenario".
This is according to an analytical report by International Air Transport Association (IATA). This, the IATA report said, would result in an additional 12.1 million passenger departures by 2038. If met, this increased demand would support approximately USD 2.1 billion of GDP and around 140,000 jobs.
According to the report, the most important benefits from air transport go to passengers and shippers and the spillover impacts on their businesses.
The value to passengers, shippers and the economy can be seen from the spending of foreign tourists and the value of exports.
A key economic flow, stimulated by good air transport connections, is foreign direct investment, creating productive assets that will generate a long-term flow of GDP, the report said.
There are different ways of measuring impact of air transport on the economy. The IATA looked at three: (1) the jobs and spending generated by airlines and their supply chain; (2) the flows of trade, tourism and investment resulting from users of all airlines serving the country and (3) city pair connections that make these flows possible.
IATA's analytical report provides illuminating perspective on the importance of air transport for economic development of Bangladesh.
Subject to measures
However, this projected growth is not going to happen automatically. It is subject to improvement of some facilities - visa openness and trade facilitation - of local air transportation industry and removal of impediment like retroactive VAT assessments.
Importance of air transport
Air transport connects Bangladesh to cities around the world. Air transport generates benefits to consumers and the wider economy by providing speedy connections between cities. These virtual bridges in the air enable the economic flows of goods, investments, people and ideas that are the fundamental drivers of economic growth.
Air transport facilitates flows of goods, investment and people. The most important benefits from air transportation go to passengers and shippers and the spillover impacts on their business. The value of passenger, shippers and the economy can be seen from the spending of foreign tourists and the value of exports (though note these figures include all mode of transport). A key economic flow, stimulated by good air transport connections, is foreign direct investment, creating productive assets that generate a long-term flow of GDP.
BD air transport industry
The air transport sector supports airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers, and air navigation service providers employ 17,000 people in Bangladesh. In addition, by buying goods and services from local suppliers the sector supported another 30,000 jobs.
On top of this, the sector is estimated to support a further 17,000 jobs through the wages it pays its employees, some or all of which are subsequently spent on consumer goods and services. Foreign tourists arriving by air to Bangladesh, who spend their money in the local economy, are estimated to support an additional 65,000 jobs. In total 129,000 jobs are supported by air transport and tourists arriving by air.
The air transport industry, including airlines and its supply chain, are estimated to support USD 449 millions of GDP in Bangladesh. Spending by foreign tourists supports a further USD 320 million of the country's GDP, totaling USD 769 million. In total, 0.3 per cent of the country's GDP is supported by inputs to air transport sector and foreign tourists arriving by air.
Asia-Pacific is the largest market for passenger flows to Bangladesh, followed by the Middle East and Europe. 4.2 million passengers arrived in Bangladesh from Asia-Pacific (61.3 per cent of total), 2.1 million passengers arrived from the Middle East (30.3 per cent of the total) and 357 thousand passengers arrived from Europe (5.2 per cent).
Improvement needed
To draw full benefit from air transportation, ease of travel, visa openness, and trade facilitation are virtually important.
If air transport's unique contribution is the bridges between cities, then the flows of goods, people, investment and ideas that stimulate economic development must flow unimpeded to maximise their contribution to consumers and the wider economy.
In the context of passenger facilitation and visa openness, position of Bangladesh is not that satisfactory.
Bangladesh's passenger facilitation (2.3/10) scores below the average of Asia-Pacific (4.4/10). On the World Economic Forum's Travel and Tourism Competitiveness Index, the country ranks 53rd out of 140 countries for visa openness. In all these scores, higher is better.
Air cargo facilitation
Bangladesh's facilitation of air cargo through its regulations ranks 117 out of 124 countries in terms of Air Trade Facilitation Index (ATFI) and last in terms of the eFreight Friendliness Index (EFFI) globally.
Removal needed
At the time when IATA published this report, the government of Bangladesh imposed retroactive Value Added Tax (VAT) assessment on airlines, operating international air transport services to and from the country.
According to IATA, these retroactive VAT assessments, dating back to 2009 and in contradiction with accepted taxation policies, cannot be reclaimed or credited and will result in a significant financial expense to airlines.
"To the extent this retroactive tax treatment is upheld, this will negatively impact the overall result of our analysis and lead to a reduction in overall benefit from air transport to the economy of Bangladesh in terms of lower GDP, jobs and investment", IATA opined.
MENAFN2602202001630000ID1099762571
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.