THE IMPORTANCE OF

AIR TRANSPORT TO
THE PHILIPPINES

The air transport sector makes a major

contribution to the Philippines’ economy
There are different ways of measuring air transport’s impact on an economy. We look at three: the jobs and
spending generated by national airlines and their supply chain, the flows of trade, tourism and investment
resulting from users of all airlines serving the country, and the city pair connections that make these flows
possible. All provide a different but illuminating perspective on the importance of air transport.

1.2 M DIRECT SUPPLY EMPLOYEE TOURISM

JOBS
SUPPORTED BY THE
CHAIN SPENDING
AIR TRANSPORT
SECTOR

$10.4
BILLION
GROSS VALUE ADDED
CONTRIBUTION
TO GDP 45,000 127,000 37,000 954,000
JOBS JOBS JOBS JOBS

3.4%
GDP
SUPPORTED BY AIR
TRANSPORT & FOREIGN
TOURISTS ARRIVING US $1.4 US $0.9 US $0.3 US $7.7
BY AIR
Source: Oxford Economics 1 BILLION GROSS VALUE ADDED

The air transport sector which are subsequently spent on US $2.7 billion of GDP in the
supports jobs... consumer goods and services. Philippines. Spending by foreign
Foreign tourists arriving by air to tourists supports a further
Airlines, airport operators, airport the Philippines, who spend their US $7.7 billion of the country’s
on-site enterprises (restaurants money in the local economy, GDP, totaling to US $10.4 billion.
and retail), aircraft manufacturers, are estimated to support an In total, 3.4 percent of the
and air navigation service additional 954,000 jobs. In total country’s GDP is supported by
providers employ 45,000 people 1.2 million jobs are supported by inputs to the air transport sector
to the Philippines. In addition, air transport and tourists arriving and foreign tourists arriving by air.
by buying goods and services by air.
from local suppliers the sector
supported another 127,000 ...and spending
jobs. On top of this, the sector is
estimated to support a further The air transport industry, For forecasts of the industry’s
37,000 jobs through the wages it including airlines and its supply GDP and jobs contribution over
pays its employees, some or all of chain, are estimated to support the next 20 years see page 4
 The importance of air transport to the Philippines | 2

Air transport facilitates flows of goods,

investment and people 

US $7 bn US $78.8 bn US $95.8 bn
FOREIGN TOURIST
EXPENDITURE FDI EXPORTS

Note: Data relate to all modes of transport / Source: UNWTO, UNCTAD and World Bank 2

The most important benefits from and the economy can be seen economic flow, stimulated by
air transport go to passengers from the spending of foreign good air transport connections, is
and shippers and the spillover tourists and the value of exports foreign direct investment, creating
impacts on their businesses. The (though note these figures include productive assets that will
value to passengers, shippers all modes of transport). A key generate a long-term flow of GDP.

Top five international tourist Top five busiest direct flights Top five busiest air cargo
arrivals (all modes of transport) arrivals routes
by country of residence 3
1. Republic of Korea 1. Republic of Korea 1. Hong Kong (SAR), China
2. People’s Republic of China 2. Singapore 2. Republic of Korea
3. United States 3. Hong Kong 3. United Arab Emirates
4. Japan 4. Japan 4. Chinese Taipei
5. Australia 5. People’s Republic of China 5. Japan

Source: UNWTO and IATA 2

Annual passenger flows by region (origin-destination, ‘000s)

984

Asia-Pacific is the largest

market for passenger flows
1,721 1,733
to and from the Philippines,
followed by the Middle East
36,214
and North America. 36.2 million 89
passengers arrived to the
Philippines from Asia-Pacific
(88.8 percent of total), 1.7
million passengers arrived from
both the Middle East and North 42
America (each accounting for
4.2 percent of the total).
Source: IATA Direct Data Solutions

3
Arrivals of non-resident tourists at national borders or in all types of accommodation establishments, by country of residence.
3 | The importance of air transport to the Philippines

Air transport connects the Philippines

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.

Map of the Philippines’ air connectivity, by its largest markets (segment basis) 4

North
America
27%
Middle
East
103%

Asia
Legend 19%
0.8

0.4
2013

2018 0
Destination-Weighted Seats
Available Per '000 People 2

IATA’s measure of how well a country is connected connectivity at a regional level and how it has
to economically important cities around the world evolved. The Philippines’ connections to the Middle
is shown above. The map shows the Philippines’ East have grown the fastest over the last five years.

Number of international city pairs direct service

74
in the top ten countries by passenger numbers in
the world

5  United States
74 INTERNATIONAL
DESTINATIONS
INTERNATIONALSERVED
38  People’s Republic of China DESTINATIONS
10  Japan
57 SERVED

1
1
 United Kingdom
 India
57 NUMBER OF
572,444
CITY PAIRS
IN THE TOP 10 OPERATING
2  Indonesia NUMBER OF AIRLINES
572,444
CITY PAIRS

44
COUNTRIES BY
0  Spain IN THE TOP 10PASSENGER OPERATING LANDINGS AND
AIRLINES TAKEOFFS

44
COUNTRIES BYNUMBERS
0  Germany PASSENGER LANDINGS AND
NUMBERS TAKEOFFS
0  Brazil
0  France
Source: IATA, Aviation Benefits Beyond Borders 2018 report

4
 he air connectivity scores reported are total destination weighted seats per 1000 people. IATA developed the Air Connectivity Indicator calculated based on the total route
T
capacity (in terms of seats available) weighted by the destination airport’s relative capacity (calculated as the ratio of seats available at that airport relative to the capacity at
the airport with most available seats) divided by the population size of the country with a 0.15% of connectivity threshold in 2013.
 The importance of air transport to the Philippines | 4

Ease of travel, cost competitiveness,

and trade facilitation are vitally important
If air transport’s unique contribution is the bridges it creates 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. Here we measure how freely goods and people
flow across borders.

Passenger facilitation and cost competitiveness Measures of air cargo trade facilitation

The Philippines’ passenger facilitation (4.4/10) The Philippines’ facilitation of air cargo through its
scores slightly below the average of Asia-Pacific customs’ and borders’ regulations ranks 54th out of
(4.7/10). On the World Economic Forum’s Travel & 124 countries in terms of the Air Trade Facilitation
Tourism Competitiveness Index, the country ranks Index (ATFI) and 61th out of 135 countries in terms of
41st for visa openness and 53rd out of 136 countries the eFreight Friendliness Index (EFFI) globally 8. The
for cost competitiveness. In all these scores and Enabling Trade Index (ETI) 9 ranks the Philippines 82nd
ranks, higher is better. out of 136 countries globally for the facilitation of the
free flow of goods over borders and to its destination.

Passenger Facilitation Score 5 Air Trade Facilitation Index (ATFI) score

4.4/10 7.6/10

Visa Requirements score 6 eFreight Friendliness Index (EFFI)

4.7/10 0.03/10

Cost Competitiveness score 7 Enabling Trade Index (ETI) score

7.9/10 4.1/7

Forecast scenarios for passenger traffic,

jobs and GDP footprint 10 PASSENGERS US $ GDP JOBS

2017 39 m $10.4 bn 1.2 m

Air transport market in the Philippines is forecast
under the “current trends” scenario to grow by 171% Current
105.5 m $28.2 bn 1.8 m
Trends
in the next 20 years. This would result in an additional
2037

66.5 million passenger journeys by 2037. If met, this Upside 165.2 m $44.1 bn 2.9 m
increased demand would support approximately US
Downside 82.5 m $22 bn 1.4 m
$28.2 billion of GDP and around 1.8 million jobs.
1
 ource: Aviation Benefits Beyond Borders 2018 report (all currency is in United States dollars at 2016 prices).
S
2
Data relates to 2017.
5
Passenger facilitation, one of the Air Transport Regulatory Competitiveness Indicators developed by IATA in 2018, looks at the ease of people moving around the globe and
how the governments facilitate this process. It assesses the performance of economies on implementation of open skies agreements, advance passenger information and
automatic border control systems and visa requirements.
6
Entry visa requirements for a tourism visit from worldwide source markets (10 = no visa required for visitors from all source markets, 0 = traditional visa required for visitors from
every source market). Source: WEF, Travel & Tourism Competitiveness Report 2017.
7
Based on ticket taxes, airport charges and VAT (10=low cost, 0=high cost). Source: WEF, Travel & Tourism Competitiveness Report 2017.
8
The IATA Air Trade Facilitation index (ATFI) measures the extent to which a country facilitates air cargo through its customs and borders processes and regulations. The IATA
E-freight Friendliness Index (EFFI) assesses the actual penetration of electronic transactions and documents in air cargo shipments (Value of Air Cargo 2016 report).
9
The Enabling Trade Index (ETI), developed by the World Economic Forum, assesses the performance of 136 economies on domestic and foreign market access; border
administration; transport and digital infrastructure; transport services; and operating environment. The ETI is featured in The Global Enabling Trade Report 2016.
10
Passengers are counted as departures, including connections. The passenger forecasts are based on the IATA 20-year passenger forecast (October 2018). Data on GDP and
jobs 2017 are from Oxford Economics. GDP and jobs forecasts are from IATA Economics.
* All data relates to 2018 or most recent unless stated otherwise.

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