bdl report economic benefits of aviation

ifo Institute: Share of industrial enterprises in Germany for which air transport is very important or important

Value per tonne in German foreign trade which was airfreighted in 2012 (Road: €2,835, Sea: €1,896, Rail: €1,182 )

Value of goods in German foreign trade which were airfreighted in 2012

ifo Institute: Share of enterprises in Germany for which air transport is very important or important

56.2%

73.6%

€204 billion

€70,669

Share of trips from Germany to destinations abroad which were made by plane in 2012

Direct, indirect and induced employment in the German Air Transport Sector in 2012

report2013

Economic Benefits of Aviation

In cooperation with:

InstitutLeibniz-Institut für Wirtschaftsforschung

an der Universität München e.V.

49%

823,100

report2013


www.bdl.aero

Contents

Economic Benefits of Aviation 2

Part A – Importance of Air Transport for Germany as a Business Location (catalytic effects)

ifo Institute: method and approach 3

ifo Institute: importance of air transport for the German economy 4

ifo Institute: importance of air transport for selected sectors 7

Importance of air transport for foreign trade 10

Importance of air transport for tourism 12

Part B – Economic Data relating to the Air Transport Sector

Employment and value added in the air transport sector 14

Air transport sector’s contribution to the social insurance and tax take 16

Publication details 17

ifo Institute: Share of industrial enterprises in Germany for which air transport is very important or important

Value per tonne in German foreign trade which was airfreighted in 2012 (Road: €2,835, Sea: €1,896, Rail: €1,182 )

Value of goods in German foreign trade which were airfreighted in 2012

ifo Institute: Share of enterprises in Germany for which air transport is very important or important

56.2%

73.6%

€204 billion

€70,669

Share of trips from Germany to destinations abroad which were made by plane in 2012

Direct, indirect and induced employment in the German Air Transport Sector in 2012

report2013


In cooperation with:

InstitutLeibniz-Institut für Wirtschaftsforschung

an der Universität München e.V.

49%

823,100

2

Aviation as a driving force to the economy

Directeffects

Indirecteffects

Catalytic effects Aviation…

provides personal mobility to global destinations

enables the German economyto participate in the international division of labour

makes Germany a more attractive location to do business

Inducedeffects


Air transport connects people and cultures all over the world. It gives businesses access to new markets on all continents. In this way, flight routes create and secure jobs both in Germany and abroad. This report compiles data and facts on aviation’s immense importance for the economy.

Part A looks at the importance of air transport for Germany as a business location (known as catalytic effects). In its survey for the Business Climate Index, the ifo Institute asked more than 7,000 firms about the importance of air transport. The results are representative of the Germany economy. In addition, the report reveals the importance of air transport for foreign trade and tourism.

Part B of the report presents economic data relating to the air transport sector (known as direct, indirect and induced effects). The figures include the number of jobs provided by airports, airlines, air traffic control, aircraft manufacturers and service providers. This sec-tion also contains information about the tax revenue from the air transport sector and its employees as well as social insurance contributions.

Part A – Importance of Air Transport for Germany as a Business Location

3

ifo Institute: method and approach

To determine the importance of air transport for the German economy the ifo Institute surveyed thousands of firms. The results are representative of the German economy.

Every month the ifo Institute surveys more than 7,000 firms from industry, trade and the service sector in order to calculate the Business Climate Index. The Institute thus makes highly representative findings about the current situation and outlook of firms in Germany. The survey is all the more significant because the firms surveyed reflect the structure of the German economy. Responses from the largest multinational to the smallest microenterprise are factored into the Business Climate Index.

In March 2013, the ifo Institute added the following one-off question to the questionnaire: “How impor-tant to your firm are flight routes to (a) German, (b) European, (c) global destinations?” The firms had the option of answering “very important”, “important”, “less important” or “not important” to each of (a), (b) and (c). 6805 responses were received, which ena-bled the ifo Institute to make representative findings on the importance of air transport for the Germany economy, both overall and broken down by business sector. This is unique because of the size and make-up of the sample.

The ifo sample

40%Industry 35%

Services

25%

Trade

Source: ifo Institute


4

ifo Institute: importance of air transport for the German economy

The results of the ifo survey indicate that aviation is highly impor-tant for the German economy. 56.2 per cent of respondents – from the largest to the smallest firm – stated that flight routes to Ger-man, European or global destinations are very important or impor-tant.

The importance of air transport varies from sector to sector. The importance of air transport is particu-larly high for core sectors of German industry, i.e. mechanical engineering (89.6 per cent), automotive engineering (79.6 per cent) and the chemical indus-try (79.2 per cent).

However, the real importance of aviation is likely to be even higher than 56.2 per cent when the entire supply chain is taken into consideration. 28.5 per cent of all respondents stated that air transport is not important, in the retail sector, as many as one in two firms stated that air transport is not impor-tant for their particular business model. However, the exact opposite applies to the manufacturers of the goods sold in retail trade; for example, clothing (83.6 per cent very important or important) and elec-tronics (84.5 per cent very important or important). In their case, aviation is essential for getting seasonal goods and electronic products manufactured and delivered to the shops as quickly as possible. In other

Part A – Importance of Air Transport for Germany as a Business LocationPart A – Importance of Air Transport for Germany as a Business Location


Importance of air transport

Mechanical engineering

Automotive engineering

Chemical industry

57.8% 31.8%

58.1% 21.5%

48.3% 30.9%

ImportantVery important Not importantLess important

All sectors

How important is air transport to your firm?

Selected sectors

89.6%

79.6%

79.2%

56.2%

5

words, without air transport there would be no new summer collection or new smartphone; nor would retail revenue be generated.

Importance of flight routes to German destinations

According to the German Federal Statistical Office, almost a quarter (23 per cent) of all air passengers in 2012 flew from one German airport to another, travel-ling an average distance of 435 kilometres per flight.

40.3 per cent of all firms in Germany stated that flight routes to German airports are very important or im-portant. This applies above all to firms in the service sector, such as film and television (75.6 per cent), advertising and market research (68.3 per cent) and business consulting (65.8 per cent).

Importance of flight routes to European destinations

In 2012, almost two thirds (59 per cent) of all passengers flew from a German airport to a destination elsewhere in Europe, travelling an average distance of 1,265 kilo-metres per flight.

44.5 per cent of all firms in Germany stated that flight routes to European destinations are very important or important. This applies especially to industrial firms in the oil-refining industry (84.0 per cent), in the footwear and leather industry (80.0 per cent) and in the automo-tive engineering industry (73.2 per cent).



Importance of flight routes to German destinations

Film and Television

Advertising and market research

Business consulting

55.6% 20.0%

43.5% 24.8%

39.8% 26.0%

How important to your firm are flight routes to German destinations?

All sectors Selected sectors

75.6%

68.3%

65.8%

40.3%


6

Importance of flight routes to global destinations

In 2012, almost one fifth (18 per cent) of all pas-sengers flew from a German airport to a destination outside Europe, travelling an average distance of 6,569 kilometres per flight.

33.5 per cent of all firms in Germany stated that these flight routes are very important or important. This applies particularly to export-oriented firms in the me-chanical engineering (85.2 per cent), pharmaceutical (83.1 per cent) and electrical industry (74.6 per cent).



Importance of flight routes to global destinations

Mechanicalengineering

Pharmaceuticalindustry

Electrical industry

50.9% 34.3%

39.4% 43.7%

45.4% 29.2%

How important to your firm are flight routes to global destinations?

85.2%

83.1%

74.6%

33.5%




Importance of flight routes to European destinations

Oil-refiningindustry

Footwear andleather industry


44.0% 40.0%

17.5% 62.5%

46.4% 26.8%

How important to your firm are flight routes to European destinations?

84.0%

80.0%

73.2%

44.5%



7


ifo Institute: importance of air transport for selected sectors

After the economic collapse of 2008/2009, the Germany economy returned to growth relatively quickly. The country’s strong indus-trial base is regarded as a key reason: these are the very firms to which air transport is of particular importance.

For decades, German industry has been producing competitive products for clients worldwide. Firms in Germany benefit from excellent transport links as they enable them to develop business contacts on every continent and distribute their products. Good flight routes in particular are essential.

73.6 per cent of German industrial firms stated that this mode of transport is very important or impor-tant. The ifo Institute’s analysis reveals that business sectors to which air transport is very important have above-average growth rates.

Mechanical engineering

Since 2003, revenue in the German mechanical en-gineering sector has grown by 49 per cent (inflation-adjusted), considerably more than Gross Domestic Product (GDP), at 13 per cent. The firms employ a total of 971,000 people in Germany. According to the German Engineering Federation (VDMA), the German mechanical engineering industry exports three quarters of its products. This often goes hand in hand with services, to provide which engineers and specialists have to fly to the customers.


Importance of air transport by economic sector


Industry

Services

Trade

28.7% 23.1% 17.4% 30.8%

20.3% 22.5%

41.6% 32.0%

16.5% 40.7%

11.6% 14.8%73.6%

51.8%

42.8%


8

The top markets in 2012 were China and the United States. 89.6 per cent of the mechanical engineering firms surveyed by the ifo Institute stated that air transport is very important or important.


Since 2003, the automotive engineering industry has grown by 35 per cent, more than the economy as a whole. The German automotive industry employs 742,000 people in Germany. According to the Ger-man Association of the Automotive Industry (VDA), the export ratio in 2012 was 76.7 per cent.


Sources: ifo Institute, German Federal Statistical Office (Values adjusted for inflation, 2003 = 100)

Importance of air transport to Automotive engineering

2012201120102009200820072006200520042003

Revenue of the Automotive engineering industry

+13%

+35%

GDP Germany

Very important/important


79,6%


Importance of air transport to Mechanical engineering

2012201120102009200820072006200520042003

Revenue of the Mechanical engineering industry

+13%

+49%

GDP Germany



89,6%

9


Thus, of the 5.4 million cars the sector produced in Germany, 4.1 million were exported out of the country. 79.6 per cent of the automotive engineering firms surveyed by the ifo Institute stated that air transport is very important or important.

Pharmaceutical industry

Since 2003, the pharmaceutical industry has grown by 37 per cent, ahead of the economy as a whole. The sector currently provides 110,000 jobs in Ger-many. According to the German Chemical Industry Association (VCI), the industry’s exports were worth more than 54 billion euros in 2012. 85.9 per cent of the pharmaceutical firms surveyed by the ifo Insti-tute stated that air transport is very important or important.

Because it is so important to key sectors of German industry, air transport is also becoming very impor-tant to the suppliers and service providers within the individual industries, as well as their employees. Airlines and airports thus play a significant role in creating and securing value added and millions of jobs in export-oriented firms in Germany.


Importance of air transport to Pharmaceutical industry

2012201120102009200820072006200520042003

Revenue of the Pharmaceutical industry

+13%

+37%

GDP Germany



85,9%

10


Importance of air transport for foreign trade

In 2012, Germany’s combined imports and exports valued more than 2,000 billion euros, equivalent to three quarters of German Gross Domestic Product. Air freight plays an important role here, especially in foreign trade with countries outside Europe.

Firms and forwarders airfreight high-value goods in particular, such as high-tech products, machinery, vehicle parts, as well as time- and temperature-sensitive goods to and from Germany. According to the German Federal Statistical Of-fice, cargo and passenger aircraft transported imports and exports worth 204 billion euros in 2012, 10.2 per cent of the total figure for Germany.

The advantage of air freight – fast and safe transport over long dis-tances – comes to bear in particular when trading with countries over-

seas (America, Asia, Africa, Australia and Oceania). By value, exports transported by air freight accounted on average for 30.0 per cent of total exports to these regions between 2007 and 2012. For imports, the figure was 25.8 per cent.

These figures only take into account the declared value of the goods transported by air freight. The economic value may be considerably higher. For example, a microswitch may only cost a few euros, but if an entire production line had to stop if a replacement could not be rapidly delivered by air, the real value would soon run into millions.

Source: German Federal Statistical Office

Exports

By quantity(in tonnes)

By value(in euros)


By value(in euros)

2%

30%

1%

25%

Share of Air freight from overseas exports (2007–2012):

Source: German Federal Statistical Office

Imports


By value(in euros)


By value(in euros)

2%

30%

1%

25%

Share of Air freight from overseas imports (2007–2012):

11

In German foreign trade in 2012, by weight, aircraft transported the lowest amount of imports and exports of all modes of transports, at 0.3 per cent. However, on average valued at 70,669 euros, a tonne transported by aircraft was 25 times the value of a tonne transported by road (2,835 euros), 37 times the value of a tonne transported by sea (1,896 euros) and 60 times the value of a tonne transported by rail (1,182 euros).

By no means is air freight only transported in special cargo planes: half of air freight is transported in the holds of passenger aircraft. This is referred to as belly cargo. Thus major passenger hubs like Frankfurt am Main (48 per cent of the air freight volume in Ger-many) and Munich (seven per cent) are also major air cargo locations.

Express deliveries are handled at Leipzig/Halle (20 per cent of air freight volume in Germany) and Cologne/Bonn (17 per cent) airports in particular. This is largely done by night, as this is the only way to ensure that customers receive the consignments the next day.


Source: German Federal Statistical Office (figures for 2012)

Value per tonne in foreign trade (by mode of transport)

RoadSeaRail Air

€20,000/t

€0/t

€40,000/t

€60,000/t

€2,835€1,896€1,182 €70,669

12

Importance of air transport for tourism

The plane is the most used means of transport for travel from Germany to anywhere in the world (outgoing) and for travel from anywhere in the world to Germany (incoming). Air transport is thus crucial to personal mobility and secures jobs in the tourism industry.

The plane is the means of transport of first choice for those travelling abroad for personal or work reasons.

Outgoing tourism

According to the Society for Consumer Research (GfK), 49 per cent of all personal or business trips from Germany to European or global destinations in 2012 were made by plane, 37 per cent by car, seven per cent by bus and five per cent by train.

For extended holiday travel (five days or more), it was found that the plane is the most attractive means of transport in most cases. According to the FUR-Reise- analyse, German holidaymakers took 25.5 million flight trips in 2012 – in particular to Spain (8.0 million), Turkey (4.7 million) and USA (1.2 million). Four of the top 10 destinations are outside Europe.


Source: FUR-Reiseanalyse 2013 / Trip = Return flight

German holiday flight destinations 2012

1. Spain

2. Turkey

3. USA

4. Greece

5. Italy

6. Egypt

7. Portugal

8. Russia

9. Caribbean

10. North Africa

0% 5% 10% 15% 20% 25% 30%

31.3% 8.0 Mio.

4.7 Mio.

1.2 Mio.

1.1 Mio.

1.0 Mio.

1.0 Mio.

0.7 Mio.

0.6 Mio.

0.5 Mio.

0.5 Mio.

18.4%

4.5%

4.4%

4.3%

4.3%

2.7%

2.2%

2.1%

2.1%

Flight destinations abroad in per cent/in millions of trips

13

None of the six European destinations in the top 10 borders Germany.

Incoming tourism

The majority of foreign visitors also go to Germany by plane on their personal or business trip: 51 per cent of visitors stated this in a survey conducted by the German National Tourist Board (DZT) and Europäische Reiseversicherung (ERV) for 2011/2012. 42 per cent travelled by car, four per cent by train and three per cent by bus.

Impact of incoming tourism on employment

Spending by foreign visitors who travel to Germany by plane secures the jobs of 367,900 people in Ger-many, for instance, in the accommodation and food service industry. This figure for 2012 was calculated by Professor Dr. Richard Klophaus from the Centre for Aviation Law and Business (ZfL) for the German Avia-tion Association (BDL) using data from the United Nations World Tourism Organization (UNWTO) on how much foreign visitors spend in Germany (ex-cluding the cost of transport), surveys on the chosen means of transport and findings on the nature of foreign tourists’ spending.


Sources: DZT/ERV Qualitätsmonitor Deutschland-Tourismus 2011/2012, GfK Mobilitätsstudie 2012

Chosen means of transport

Outgoing Tourismus Incoming Tourismus

42%

3%4%

51%

5%

49%

37%

7%

14

Employment and value added in the air transport sector

Important growth sectors of German industry rely on air transport, as the ifo Institute’s survey shows in Part A. However, the air trans-port sector in and of itself is also important, providing hundreds of thousands of jobs and creating billions of value added in Germany.

In 2012, firms in the air trans-port industry provided em-ployment for 823,100 people in Germany – direct, indirect and induced. They contributed 57.2 billion euros to Gross Do-mestic Product (GDP), equiva-lent to 2.2 per cent of overall economic output in Germany.

324,500 people were em-ployed directly by airports, airlines, air traffic control and civil aircraft manufacturers.

Orders from the air transport sector secured 352,700 indi-rect jobs, that is with suppli-ers, such as construction and food businesses.

Consumer spending by direct and indirect employees – for instance, on food, clothing and durables – provided 145,900 people with jobs.

Part B – Economic Data relating to the Air Transport SectorPart B – Economic Data relating to the Air Transport Sector

Information on the methodology

The direct employment figure for Germany is based on surveys conducted by industry

associations among their members. The possibility of double counts is ruled out. Professor

Dr. Richard Klophaus (ZfL) calculated the indirect and induced effects using input-output

analysis and data from the Federal Statistical Office.

Source: Klophaus/ZfL based on ADV, BARIG, BDLI, DFS, IDRF

Impact on employment

+352,700

+145,900

Direct:

Indirect:

Induced:

= 823,100Jobs

324,500

15

The aviation labour market covers the whole quali-fication spectrum from an airport cleaning job to positions like pilot, air traffic controller and engineer. Munich airport is a good example of how important airports are for providing jobs in the region.

■■ Between 1994 and 2012, the number of people employed at the airport more than doubled from 15,455 to 32,250 (+109 per cent).

■■ In the same period, more jobs above the social insurance threshold were created (+129 per cent) than the state (+16 per cent) and national aver-age (+two per cent).

■■ Most of the employees come from administrative districts across the entire Free State of Bavaria, but some also live outside Bavaria.

■■ The average gross wage of 42,965 euros is higher than the national average for the service sector, which is 33,018 euros.

■■ At five per cent, the proportion of jobs under the threshold for social insurance is much lower than the national average of 15 per cent.


Compilation: Klophaus/ZfL

Direct employment in Germany

Employment in Germany provided by …

airlines includes jobs provided by domestic and foreign passenger and cargo airlines (source: BARIG)

international commercial airports includes jobs provided by the airport operators themselves and other businesses on the airport campus, e.g. forwarders and travel agents; but does not include jobs provided by airlines and manufacturers located there or air traffic control (source: ADV))

manufacturers includes jobs in civil aviation (source: BDLI)

regional airports and airfields includes jobs provided by the operators and businesses on the airport campus (source: IDRF)

air traffic control includes jobs provided by German air traffic control (DFS) in the control centres and airport towers (source: DFS)

Airlines 105,800

International airports (operators) 43,600

International airports (other) 86,500

Regional airports and airfields 12,000

Manufacturers 70,500

Air traffic control 6,100

Total 324,500

16

Air transport sector’s contribution to the social insurance and tax take

Firms of the air transport sector and their employees pay billions of euros in tax and social insurance. Municipalities, states, the federal government and the social insurance system in Germany all benefit.

In 2012, the air transport sector and the supply sec-tors accounted for 14.0 billion euros in tax revenue, and social insurance contributions of 9.1 billion euros.

The fiscal and regulatory framework is crucial to Germany’s competitiveness as an air transport location. Around 80 per cent of German air traffic is international. German airlines and airports are in stiff competition with airlines and airports abroad. Even the slightest differences in the fiscal and regulatory framework can have a strong influence on interna-tional competition, as the German Ticket Tax demon-strates: The decision to impose such a tax in Germany only, puts German airlines and airports at a competi-tive disadvantage.


Source: Klophaus/ ZfL

Tax and social insurance payments

PAYE and income tax (incl. solidarity surcharge) €4.3 billion

Value Added Tax €3.1 billion

Trade tax and corporation tax €1.3 billion

German Ticket Tax €1.0 billion

Tax on energy and electricity €1.0 billion

Other taxes €3.3 billion

Total (tax only) €14.0 billion

Social insurance €9.1 billion

Total €23.1 billion

Information on the methodology

The Centre for Aviation Law and Business (ZfL) calculated the fiscal contribution based

on air transport’s direct, indirect and induced effects as well as on data of the Federal

Statistical Office on the structure of taxes and social insurance contributions in Germany.

Publication details

Published by

German Aviation Association

(Bundesverband der Deutschen

Luftverkehrswirtschaft e. V., BDL)

Französische Straße 48

10117 Berlin

Phone: +49 (0)30 520077-0

[email protected]

www.bdl.aero

ViSdP (Responsible for the content as defined by German Press Law)

Matthias von Randow

Managing Director

Editorial board

Benedikt Langner

Head of Economics & Statistics

Date of publication December 2013

Implementation and design

Jens Köster

GDE | Kommunikation gestalten | www.GDE.de

© BDL 2013

For the sake of the environment

This product complies with the most stringent requirements of modern environmental protection.

100% Recycling

Benedikt Langner Head of Economics & Statistics

+49 (0)30 520077-130 [email protected]

Carola Scheffler Press Officer

+49 (0)30 520077-116 [email protected]

Contact

Recycled ResponsibleClimate-friendly Independent

bdl report economic benefits of aviation

Travel

german air transport

germany economy

german economy

air traffic control

ifo institute surveys

business locationifo

german foreign trade

approach3ifo institute