Significant Economic Benefits from Air Transport in Iceland
The results of a study made by Oxford Economics were presented at a conference on the influence of Air Transport in Iceland last week. According to the study, aviation provides significant economic benefits to the Icelandic economy and its citizens, some of which are unique and essential to the operation of modern economies.
Icelandic based airlines carry 78% of the passengers
Air transport's ‘economic footprint’ is mostly supported by the activities of national airlines. Icelandic-based airlines were responsible for carrying 78% of passengers and freight. The wages, profits and tax revenues created by these airlines flows through the Icelandic economy, generating multiplier effects on Icelandic national income or GDP. The economic benefits for Iceland created by non-Icelandic airlines are to be found in customer welfare and in the part these airlines play in providing the connectivity infrastructure between Iceland and overseas cities and markets.
12.3% of the Icelandic workforce in 2010
Aviation has a significant footprint in Iceland economy, supporting 6.6% of Icelandic GDP and 9,200 jobs or 5.5% of the Icelandic workforce. Including the sector’s contribution to the tourism industry, these figures rise to 12.9% of Icelandic GDP and 20,600 jobs, or 12.3% of the workforce.
Also significant is the fact that these are high productivity jobs. The annual value added (or GVA) by each employee in air transport services in Iceland is ISK 16.0 million, approximately 1.7 times higher than the Icelandic average of ISK 9.2 million.
Substantial tax revenues
Tax revenues from aviation are substantial. Icelandic-based aviation companies paid ISK 10.1 billion annually in direct taxes and social security payments. It is estimated that an additional ISK 15.4 billion of government revenue is raised via the aviation sector’s supply chain and ISK 9.5 billion through taxation of the activities supported by the spending of employees of both the aviation sector and its supply chain.