Economic impact of aviation in Dubai

The aviation sector in Dubai has been steadily developing over the years gaining a larger percentage of contribution to the transportation sector revenues. According to a report by KMPG, the aviation sector contributed $3.7 billion of the total GDP in 2013 a figure which has been on the rise since.

This article looks at how it has impacted the economy in the country.

• Direct impacts

The direct impacts are the results from its operations in the local landscape.

As of a report filed in 2013, the Dubai aviation sector employed more than 60 000 people and only about 6 000 of these were employed at the airports. The next year, this number was at 120 300 people showing a 2 percent increase within a span of twelve months. The sum number of people employed by the mining, utilities and finance sectors of Dubai at the time was not even up to half of this figure.

• Indirect effects

These are the effects of the activities that have come up to support aviation. It also covers the impacts of employed staff in the sector as they spend their wages in the locality.

According to a report on the Dubai Airport, 2013 saw it buy goods and services worth over $2.5 billion from entities that were based in Dubai. As a whole, the aviation sector bought more than $6.3 billion. That is when you account for purchases from other airlines and businesses in the sector.

The sector spends a lot on business services for example accounting and finance services, sales and marketing and office accommodation. In 2013, the figure was at $ 3.3 billion and it does not even account for the catering services in the flight, for example.

Out of the $6.3 billion in purchases for 2013, $ 2 billion supported the economy of Dubai because of importation into the supply chain. According to the report, this amount was more than enough to support more than 76 000 jobs based in Dubai.

The Dubai Airports contributed $ 0.2 billion which was enough to offer support for an additional 3300 indirect jobs.  If we also add the value created by other parts of the aviation sector rather than the airports, an estimate of $1.6 billion is raised which supports 28 300 jobs.

All the employees of the aviation sector in Dubai have been estimated to have earned a total of $4.6 billion in 2013 and $5.8 billion in the next year. If we account for their spending of the money earned from the aviation sector, an induced earnings figure of $2,7 billion is reached at which ideally could be enough to pay 63 000 employees.

The aviation sector in Dubai has far-reaching impacts in the supply chain of the services and consequently on the economy of the country. With the continued improvements and investments in the sector, this number is expected to go even higher exponentially increasing the importance of the aviation sector to the transport and logistics sector and consequently to the GDP.