Table of Contents
2a. Growth in Transportation Sector And Contribution to UAE’s Strategic Objectives. 4
2b. Growth in Transportation Sector And Contribution to UAE’s Strategic Objectives. 6
2c. Government policy and expenditure in the Transport Sector 6
2d. Economic Openness and Impact on the Transport Sector 8
1. Introduction
This project seeks to find the impacts of the air transport towards the economy of the UAEs. The sector through its activities creates job opportunities directly in the transport sectors and indirectly through other sectors which involve transportation, boosts tourism; it is a spender of various supplier commodities.
The aim of this project is to seek how the sector through its activities affects the UAE economy. The air transport has been able to employ different people in the hospitality and travel industry directly and indirectly. The sector also provides the government with revenue by the income it generates from its profits to its shareholders thus through this, it has been able to raise the gross domestic product of the country hence affecting the economy positively.
The UAE has been making strides in the air transport sector across the globe. The aviation industry started in the year 1985 with the establishment of the Emirates airline, which started with a small team of professionals and two aircrafts using the Dubai International Airport as their hub.
The air transport continued expanding in the 2003, which was marked by the formation of Etihad Airways with more 100 aircraft on order. The same year the Air Arabia was formed which is the world’s largest low cost carrier. The airline was the first to be listed in the Dubai financial market (JAIN, 2011).
The vision of the region’s aviation sector is to become a leader in the air transport industry in the 21stcentury in providing quality hospitality services. It aims to show to the world the pride of the UAEs as cultured, warm, generous, and considerate. Majority of the region’s airlines are based in Dubai and Abu Dhabi, which is the capital city of the UAEs.
Majority of airlines in the sector aim to expand their ports to be able to accommodate large numbers of flights and expand to different regions. The sector has improved its service provision than majority of foreign airlines. Through the effort and local competition in this sector, all the airlines have improved making the industry more competitive in the global market. The Etihad Airways in the years 2009, 2010, and 2011 have been awarded as the best airline offering premium services to its customers.
2. Findings, Evaluation and Discussion
2a. Growth in Transportation Sector And Contribution to UAE’s Strategic Objectives
The UAE 2021 vision calls for diversified and knowledge based economy. To achieve this, the government has to come up with development strategies in various sectors. The air transport sector is at the core of this vision as the government has aimed to create a sustainable infrastructure system that will boost growth of the economy.
The vision 2021 aims to strive, improve the quality of the air transport, and seek to be a global provider of quality air travel services. The sector aims to challenge other airlines, which have been in the industry for a long time by providing quality services to its customers. Citation
The air transport since its establishment as the first airline in the year 1985, has experienced dramatic growth in terms of the number of flights and increasing number of planes with estimated 244 planes both passenger and cargo planes.
The sector has also which started to offer like the holidays. The sector has some challenges it faces including volcanic ash and increasing oil prices. Establishment of more airways has been noted since the formation of the Ras Al Khaimah’s Rak Airways in the year 2006. Later the Fly Dubai that is Dubai’s second airline was formed in the year 2008.
Citation The geographical location of the region places it in a better position as a stopover destination for long flights across the continents. The sector is projected to contribute 44.5 billion dollars to the gross domestic product of Dubai in the year 2020. The current contribution is 22 billion dollars and is expected to cater 32% of the country’s GDP by 2020.
The sector has grown to accommodate 14% of jobs in areas such as cabin crew, pilots, flight attendants, air traffic controllers, avionic technicians among other jobs in the region, and this is expected to grow to 22% in the coming years. The sector has grown as the majority of the airlines are acquiring foreign airlines, which generates revenue in terms of return of equity to the airlines. Increased revenue to these airlines increases the amount of revenue collected by the government from the airlines. Citation
From its establishment, the sector has noted a great increase in the number of planes, which has boosted flights per day. The increased flights have increased the revenues of the sector as it has also improved its product portfolio. Majority of premium travelers visiting UAE prefers to use the domestic carriers since they provide luxurious services including a private flight attendant, a bar, and a private bathroom.
The other airlines are not willing to go an extra mile to provide these luxuries to its premium customers (Al-Ali & Ahmad, 2014). The sector’s major growth has been in the expansion and creation of new ports. The Emirates Airways plans to start building their second airport in the south of ‘new Dubai’, which will cover 140 square kilometers handling 16 million tons of cargo as well as 200 million passengers per year. 
This will make it the world’s largest airport ones complete. The other airlines too have not been left out in expanding their airports as the Etihad Airways port in the Abu Dhabi has also experienced expansion financed by the government, equipping it with state of the art equipments to boost its operations and make it stand out in a global level. Citation
The air transport sector has improved the economy of the UAE through its course of business. The sector has employed hundred of UAE citizens in the sector directly through hiring flight attendants, mechanics, air traffic controllers among others.
The sector has also employed citizens indirectly like for example hotel staff, drivers and retailers who operate different shops at the airports. It also boosts the tourism sector through bringing in tourists from different parts of the globe since it has flights to the majority of the parts in the world every day.
This benefits the hospitality industry in the UAE as it hosts majority of this tourist. The airlines are a consumer of various goods and services supplied to it by various suppliers in the economy.
The goods supplied include hygiene products, in flight textiles, in flight equipments and airline cosmetic products, and are offered by companies like Aviation Support Industries, Aviahelp Asia FZC, Al Rumaithi General Tradin EST, and Airserve FZCO among others.
They directly generate revenue to the government of UAE through taxation and equity ownership while they also provide revenues to equity holders. Through this, they have created revenue for the majority of people and other sectors in the UAE hence improving the gross domestic product of the nation. Citation
2b. Transport sectors contribution to UAE’s employment
- What types of employment were created?( LOW paid or high paid )
The sector is a source of employment to the people of the United Arab Emirates. It has created jobs both directly and indirectly. The sector is reported to have provided 14% of total jobs in the UAE, in its operations (Jones, 2012). It has employed the people of United Arab Emirates in the areas that need technical skills like cargo handling & catering, airport & operations, pilots & SFI, technical operations, cabin crew, and in corporate and commercial units of the firm.
Indirectly the airlines provides tourists support jobs to people in the hotel sector as they bring in majority of foreigners who come to UAE to tour the region. These tourists need the services of the UAE people to have a comfortable stay at their time in the UAE. Therefore, through their movement, accommodation and their leisure activities they create employment to the people.
Through bringing this tourist to the UAE, the sector creates employment indirectly. The Etihad airline was rewarded as a global employer as it has provided thousands of jobs globally through its subsidiaries.Citation
2c. Government policy and expenditure in the Transport Sector
- Find out the government policies that apply to your transport sector – what does the policies imply? How does the government policies support this sector
The government of the UAEs in collaboration with the airlines has developed a policy, which gives those who travel using the domestic airline for business or leisure activities a wide range of benefits and rewards.
This program is set to be enjoyed by all government civil servants who have registered to the program. The policy is known as the Abu Dhabi government employee travel programme and it aims at all the government employees who can join the programme and enjoy a government-subsidized cost in travelling with the domestic airlines.
The government through the emiratization policy requires each sector in the economy to employ a certain percentage of the UAEs citizens and a small portion to foreign workers. (factor that cheap employment) This program seeks to give preference to citizens before considering foreigners.
The airlines have to consider the country’s citizens when offering jobs before turning for foreign job applicants. They have to maintain a certain threshold of local employees in their firms (Jones, 2015).
Add the expository fiscal policy for bellow part
Government spending creates an exogenous variable that improves the growth of the economy. Government activities which lead it to spending more in the economy increases the demand of consumers, hence improving the economy through the multiplier effect, thus the government of the unite Arabs emirates has improved the economy of the UAE through its spending.
The government of the UAE has involved itself in financing the Etihad airline’s airport in Abu Dhabi. The government injected money in constructing modern airport, which the Etihad Airways use as its base.
The government spending on the airline has brought in a lot of controversy in the sector as they feel the government involvement in that one particular airline gives it an added advantage over the others, but the CEO of the airline maintains that it state owned hence the government is obliged to invest in it (The week, 2014).
The increased government expenditure on improving the air transport sector, hospitality, and real estate has led to the growth of the UAE economy through creation of employment to the people of UAE. This has raised the per capita income of the individuals employed in this sectors hence improving the country’s GDP. The government expenditure in those areas has improved tourism that brings in high revenue to the economy.
The consumers in the United Arab Emirates have a high purchasing power since majority of them are employed or engage in businesses, which generate them revenue. The government through its spending has improved the movement of goods and raw materials from the point of manufacturing to the final the final consumer. This has been made easy and efficient through a well-developed infrastructure throughout the country.
The majority of business owners have reported an improved growth in their operations due to the increased disposable income within the population. The air transport sector has benefitted the most when it comes to the increased government expenditure. The government has spent millions of cash in developing the air transport system in the UAE. Citation
This government spending has been in the construction of ports and expansion of the existing ones. It has improved roads to ease movement and accessibility of people, goods, and services within the majority of the regions, as the Dubai 2020 expo nears (Acuto, 2014).
Improved roads have facilitated efficient movement of people and goods to and from the ports without delays. The tourism sector has also received much expenditure from the government as it creates more avenues and structures to showcase the UAE culture during the Dubai expo, which will attract thousands of foreign visitors to the United Arab Emirates.
This will increase the demand and flights of the transport sector as majority of the visitors will be travelling to the country using the air transport sector. It will improve revenue collected by the airlines and the government (Sharpley, 2008).
2d. Economic Openness and Impact on the Transport Sector
The United Arab Emirates has an open market free from trade barriers and restrictions. The government has developed this situation to attract foreign investors and locals into conducting business in the region. The government of the United Arab Emirates does not impose heavy regulation and control of the private sector. The government does not collect corporate taxes or personal tax on individuals apart from oil companies and foreign banks.
It is easy to acquire visas to enable foreign workers travel to the region for work duties. The government through its 2030 aims to become a global economic hub and it has engaged in various activities to make sure it has made a step in improving the transport network through the region. For the economy to grow there has to be an efficient transport of both people and goods.
The United Arab Emirates in the next 10 years will pump an estimated 80 million dollars in the transport sector to improve its transport network to make all trade free zones are well connected to the outside world and ensure that the free economy thrives well with the improved transport to enable the region become a global economic hub.
Citation The government’s efforts on ensuring that the United Arab Emirates remains an open market for all to trade from free from barriers has had a boost in majority of transport sectors as goods have to be moved from one place to another. The transport sector has improved as more roads are constructed, ports enlarged, and more flights are being introduced in airlines to cater for the growing demand to visit and invest in the region.
The improved airports, roads, railway connections have motivated investors to move their businesses in the UAE (Fernandes & Rodrigues2011).
The Jebel Ali free port is one of the major free ports, which has contributed to the success in the UAE in terms of trade. The port has over 1600 companies registered in the free zone. The port has been improved to be one of the world’s largest man-made port housing manufacturing companies, offering distribution and trading services to the regions of Asian sub-continent, Eastern Europe, Africa, Soviet Union, amongst other regions in the world. Citation
The opening of the UAE economy by the government has been of much benefit to its airlines. The policy has seen the majority of people from various parts of the globe travel to the country in search of jobs and to state and run businesses in the free zones that the government has created.
The UAE has the majority number of flights in Africa and Asia, where majority of foreign employees comes from. The airlines have majority of its flights to the United States and European countries where majority of foreign investors originate.
The sector has benefited from the free trade in the UAEs as it offers travel services to these individuals. The cargo service division carried out by the sector has also benefitted from the free economy as it provides transport services for cargo moving to and from the region. Citation
3. Conclusion
The UAE’s aims to become a major global economy in the near future. To make this possible, it has come up with policies and a road map to follow. The government has pumped much of its revenues in developing the infrastructure of the nation. In the year 2003, it formed the national carrier, which is the Etihad airline and the Fly Dubai, which the government is the majority shareholder and major financier.
Majority of UAE airlines have recorded great success in the air travel industry in terms of recording high profits, buying of more planes to cater for the increasing demand of travelling to the UAEs, which has led to increased number of routes to different areas. Today the sector has witnessed an increase in the number of flights it attends to every year.
The UAE air transport sector is emerging as one of the exclusive air transport providers for the business class customers, due to the additional luxurious services it provides to its premium customers, which other airlines across the globe are not willing to provide.
The country’s air transport sector has the potential to conquer the air and dominate the air transport across the globe. .(How they acquire shares in other airlines? Why this is important? What is meaning for?How this help them? Tie the fortune to the global industry) Citation
4. Recommendations
The government of the UAEs has involved itself with the Etihad airline. It has continued to control and provide the direction for the airline. The government has involved in the airways through providing finance to cater for expansions, buying the majority of the airlines bonds to help it cater for its deficits. It has involved itself in improving the Abu Dhabi International airport, which the airline uses as its base.
The government improved the facility to an international level to enable it accommodate more flights to different regions across the globe and provide the state of art equipments for handling cargo. The government has also involved itself with the airline through the government employee travel programme, which gives benefits and other benefits to those government employees who travel to other countries for leisure or other reasons using the Etihad airways.
This policy has improved the number of flights and income of the airline since the majority of the people would like to travel using the Etihad Airways to gain from the government’s employee travel program. The government involvement in the air sector through its emiratization, creation of free trade zones, has had many benefits to the sector, since it can grant loans to any other airline apart from Etihad, hence making them able to source for the government support through financing.
The government employees travel programme has increased the demand for the airlines services as the majority of the government employees prefer to use the airlines to take advantage of the government benefits. This initiative not only profits the airlines, but also the citizens of the country as they enjoy the benefits the government provides.
5. References
Acuto, M. (2014). Dubai in the ‘Middle’. International Journal of Urban and Regional Research, 38(5), 1732-1748.
Al-Ali, H. A., & Ahmad, S. Z. (2014). Etihad Airlines: growth through successful strategic partnerships. Emerald Emerging Markets Case Studies, 4(5), 1-17.
Emirates. In First Middle East Conference on Global Business, Economics, Finance and Banking, Dubai.
Fernandes, C., & Rodrigues, G. (2011). Dubai’s potential as an integrated logistics hub. Journal of Applied Business Research (JABR), 25(3).
JAIN, S. (2011, November 7). UAE aviation: A story of takeoffs and landings | GulfNews.com. Retrieved from http://gulfnews.com/business/aviation/uae-aviation-a-story-of-takeoffs-and-landings-1.925143
Jones, N. (2015, May). Emiratisation: A Recap – Al Tamimi & Company. Retrieved from http://www.tamimi.com/en/magazine/law-update/section-11/april-8/emiratisation-a-recap.html
Sharpley, R. (2008). Planning for tourism: The case of Dubai. Tourism and Hospitality Planning & Development, 5(1), 13-30.
The week. (2014, February 15). Why do Keynesians prefer government spending over private spending? Retrieved from http://theweek.com/articles/450250/why-keynesians-prefer-government-spending-over-private-spending