An Examination of the global air transport industry Air transport is one of the worlds most important industries.

Its development and its technical and service achievements make it one of the greatest contributors to the advancement of modern society. Usually people use air transport services to visit a place because of some combination of need, willingness and desire aided by the affordability, access and convenience of the air travel experience. In effect people use air transport services when there is a demand for such usage to meet another objective. Demand for air services increases the influence of air transport on the global economy, making possible the rapid movement of millions of people and billions of dollars worth of goods to markets around the world. The industry plays a decisive role in the work and leisure of millions of people. It promotes an improved quality of life and helps to improve living standards. By facilitating tourism, air transport also helps generate economic growth and alleviate poverty providing employment opportunities, increasing revenues from taxes and fostering the conservation of protected areas. The demand for air transport has increased steadily over the years. Passenger numbers have grown by 45% over the last decade and have more than doubled since the mid-1980s. Its rapid growth has been driven by a number of factors, including: Rising GDP, disposable income, and living standards increasing the demand for travel for both business and leisure purposes. Reduced air travel costs improvements in airline efficiency and increased competition have reduced world airfares by around 40% in real (i.e. inflation-adjusted) terms since the mid-1970s. Globalisation the average distance travelled tends to increase as people take long-haul holidays and do business in countries which now have more favourable political and social environments. Deregulation starting with the US domestic air market in the late 1970s, followed in the 1980s by the European Union, with other regions deregulating. The air transport industry includes those activities that are directly dependent on transporting people and goods by air. This includes: the aviation sector airports, airlines, general aviation, air navigation service providers and those activities directly serving passengers or providing airfreight services; and

 the civil aerospace sector, which comprises the manufacture and maintenance of aircraft systems, frames and engines. Together, these two sectors provide a measure of the total industry, termed the air transport industry. Throughout the years, there have been recent changes and developments in tourist air transport such as changes in airport security and air traffic control methods to reduce aviation carbon emissions in an attempt to achieve carbon-neutral growth. Since the terrorist attacks of September 11th, airport security has been forced to make major improvements over the past ten years to make sure visitors are safe. . People are no longer allowed to greet their family and friends right out of the gate like they used to be able to do. The reasoning behind this is by allowing people near the gate it creates too much commotion that airport security simply cannot handle and keep everyone safe at the same time. There has also been an increase in overall security in terms of the amount of people checking bags and having people go through security. Airport security is also permitted to "randomly" search any individual they see as acting or looking suspicious. New drug tests have been put in place to check carry-on bags by swiping the bag with a round cloth, which is then put into a machine. Also, people must now take off their shoes as they go through security because there have been threats of shoe bombs against airlines carrying American passengers. Finally, there are more and more limitations placed on what items people are permitted and what people are not permitted to bring with them when it comes to carry-on baggage. Travelers may only bring one zip-loc bag full of 3 oz bottles or less of liquid. Also, travelers are not allowed to bring anything on the plane that they did not buy from the airport in terms of liquids. The International Air Transport Association (IATA) announced that the airline industry is committed to achieving carbon-neutral growth by 2020 which would allow the sector to grow without increasing its carbon footprint. The commitment to carbon-neutral growth completes a set of three sequential goals for air transport: (1) a 1.5% average annual improvement in fuel efficiency from 2009 to 2020; (2) carbon-neutral growth from 2020 and (3) a 50% absolute reduction in carbon emissions by 2050. Although fuel efficient technology for aviation is being developed, better air traffic control procedures is likely to provide larger improvements, quicker. In recent years, aircraft manufacturers, airlines, airports and air traffic controllers have been actively involved in trying to reduce aviations impact on carbon emissions through the

development of more efficient technology and operating practices. The various components of the civil aviation system have each developed new methods and technologies to make flying more environmentally friendly. Airlines now plan their flight routes to be economically and environmentally friendly. Aircraft manufacturers are designing more aerodynamic aircraft which generate less drag through the air. Engine manufacturers are building more fuel efficient engines. Airports are providing airlines with alternative energy supply facilities for their aircraft. Even fuel suppliers are helping to develop low carbon jet fuel derived from biological sources such as palm oil. Whilst the development of new technology is likely to result in a more environmentally improved aviation industry, the time it takes for this technology to be in regular use can be decades. The process of designing, building, testing and selling new fuel efficient aircraft to airlines can take more than 15 years. Whilst biofuel technology may provide a large reduction in CO2 emissions, the process of getting aviation authorities to certify the technology as safe can take more than a decade.

The role of the airline industry in tourism development in the Caribbean

The role of international airlines in the total tourism business is to provide mass and quick transportation between countries under safe, standardized and economical conditions. Aviation provides the only worldwide transportation network, which makes it essential for global business and tourism. It provides a wider choice of holiday destinations around the world and an affordable means to visit distance friends and relatives. Air transport contributes to sustainable development not only by facilitating tourism and trade, it generates economic growth, provides jobs, increase revenues from taxes as well as facilitates the delivery of emergency humanitarian aid relief and swift delivery of medical supplies anywhere on the earth. Tourism and Air Transport industry complement each other. Tourism depends on transportation to bring visitors, while the transportation industry depends on tourism to generate demand for its services. The growth in tourism industry directly reflects onto the air transportation. Over the last 25 years, the number of international tourists has more than doubled. The expansion of international tourism has a large impact on the discipline of transport geography. Transport is the cause and the effect of the growth of tourism. To start with, the improved facilities have stimulated tourism, and the

expansion of tourism has stimulated transport. Accessibility is the main function behind the basics of tourism transport. In order to access the areas that are mainly aimed, tourists will use any transportation mode. However, air transport is the main mode for international tourism. Air transport plays a dominant role in inter-regional movements of tourists, which normally entails travel over long-distance. Growth rates of international air traffic are pegged with growth rates of international tourism. Attractive package tours, competitive airfare attract more and more tourist day by days, therefore both the industry is expanding rapidly. Air transport has revolutionized the geographical aspect of distances; the most remote areas can now be attained, any journey around the world can be measured in terms of hours of traveling. Tourism cannot thrive without travel. Transportation is an integral part of the tourism industry. The transportation system of a tourist destination has an impact on the tourism experience which explains how people travel and why they choose different forms of holiday, destination, and transport. The improvement in transportation modes plus low fares has increased the accessibility of remote areas. One of air transports most important economic benefits is its spin-off effect on other industries. Tourism is one such industry. Tourism depends on transportation to bring visitors, while the transport industry depends on tourism to generate demand for its services. Air transport has contributed to a huge expansion in the range of tourist destinations and thereby plays a major role in shaping the scale and diversity of tourism worldwide. Approximately 6.7 million direct jobs in tourism are supported by the spending of foreign visitors arriving by air, taking into account both the importance of overseas visitors for tourism spending and the importance of air travel for overseas visitors. A further 5.7 million indirect jobs in tourism (industries supplying the tourism industry) are supported by visitors arriving by air. These direct and indirect tourism jobs, supported by air transport, generate a further 3.1 million jobs in other parts of the economy, through employees spending their earnings on other goods and services. These direct, indirect and induced tourism jobs add up to a total of 15.5 million jobs globally that are supported by the spending of foreign visitors travelling by air, contributing an estimated US$ 300 billion a year to world GDP.

Challenges faced by regional airlines

The air transport industry is constantly faced with challenges such as weather, increased competition from other airlines, rise in fuel prices and labor costs. According to the Air

Transport association (ATA), labor is an airline's number one cost. Airlines must pay pilots, flight attendants, baggage handlers, dispatchers, customer service and others. Airlines have to spend 38 percent of their operating costs as labor costs. Most of the employees and passenger safety regulations staff are experts and highly professional. Most of them are also unionized, so it is highly difficult for the airlines to slash their labor budgets. According to the Air Transportation Association (ATA), fuel is an airline's second largest expense. Fuel makes up a significant portion of an airline's total costs, although efficiency among different carriers can vary widely. Short haul airlines typically get lower fuel efficiency because take-offs and landings consume high amounts of jet fuel. When oil prices and the operating environment are favorable, profits can be sizable, however during an economic slump, or when oil prices skyrocket, carriers are apt to record net losses. In response, carriers can take cost-cutting and revenue-boosting steps, such as tacking fuel surcharges onto fares, hedging fuel prices and furloughing employees to some extent. Bahamasair and Liat are two regional airlines facing challenges in the industry. In 2006 Bahamasair lost $20 million due to the already burdensome expenses with which the airline is saddled. The airline has seen its annual fuel bill increase from $9 million in 2001 to $21 million in 2006, an increase of over 130 percent with no matching increase in revenue. Since the 9/11 terror attacks in the United States the airline industry has been under tremendous pressure, particularly with the increase in the cost of security and fuel. There is also a cost factor involved in that it is very expensive having to go through so many stages of security; it requires personnel and it is a cost to the airline. One of the operational challenges for the airline is inevitable flight delays. They experience significant flight delays due to congestion on mid afternoon Sundays and early morning Fridays. When flight loads are heavy there is a backlog of passengers waiting to be processed. Bahamasair is also faced with problems of excess baggage and the airline is losing revenue because it has had to hire additional freighter planes to bring in excessive luggage. Liat was faced with the challenge of increased fuel prices. In 2003, in the wake of increasing fuel prices, LIAT introduced a US$5 fuel surcharge on all tickets. Since then, there have been various increases in the surcharge based on increases in fuel costs over the years. Based on lower prices for oil on the world market, LIATs management took a decision to implement a partial removal of the fuel surcharge. All airlines have implemented fuel surcharges, noting that in competitive markets, the surcharge has now been mostly eliminated but base fares have increased during the same time period to cover incremental costs in the industry. In

addition, fuel cost, though significant, was not the only cost element affecting LIATs operating costs. Between 2007 and present, LIAT has faced increases in many critical operating costs including aircraft engines, spare parts, ground handling contracts, airport fees and charges. Many of these operating costs are higher than a typical North American carrier due to the short haul distances between the islands and the frequency of landings for each aircraft. Liats operating costs are high, largely due to their complex route structure.

The way forward for the air transport industry in the Caribbean

Ascending competition and the growing need by travelers to reach multiple destinations has encouraged the formation of global alliances. Airline alliances are agreements formed by several airlines to establish cooperation in the global aviation industry. This cooperation helps the airlines better their performance with respect to air transport and customer service. Since the first airline alliance was formed involving U.S. airlines in 1993, there have been innumerable benefits to consumers and airline employees. Consumers benefit from stronger networks, seamless travel and the ability to book an international itinerary through a single network. Airline alliances provides the member airlines with a number of benefits. These include Code Sharing Agreements and cost reductions with respect to operations, maintenance, investments and purchases. Benefits that can be enjoyed by travelers include lower airfares, increase in the options of departure times, availability of flights to a greater number of destinations, reduced travel time and various special offers. Airline alliances create a global network that can be used by airlines as well as air travelers. With the help of these airline alliances, airlines can reach a large number of destinations and extend their services to passengers worldwide. The key motivation for airline alliances or mergers is to obtain network benefits or economies of scale, and therefore an increased market power. Airline industry has seen a tremendous change in trend in the 1990s when the low-cost carriers picked up pace in the market. This new type of air travel not only created a different passenger market across the U.S., Europe, and elsewhere, it also attracted the already in-line consumers like business travelers because of their attractive services and more importantly because of their much cheaper strategies to sell flight tickets. It is the low-cost carriers that hold so much promise for the future air travelers especially within a country or region. Although

major airlines have their own specific market, especially the long-haul routes such as crossborder reach and intercontinental approach, there is no doubt that the local or domestic market has been and will continue to be captured by these low-cost carriers. It is a very straightforward observation that if the low-cost carriers keep their customers happy with cheaper air tickets, their markets will grow from local to international airports. By no-frill, more seating capacity, they can beat major airlines.

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