Quotes from the two OEF reports:

1999 report by OEF

Taking these estimates together implies that total value-added by the UK aviation industry in 1998 was £9.4 billion in 1995 prices and £10.2 billion in 1998 prices. This is equivalent to 1.4% of GDP
Directly employed 180,000 people in the UK in 1998, 0.8% of the total.
“Taken together, these figures imply that the aviation industry contributed directly £2.5 billion to The Exchequer in 1998-99 (equivalent to around 1p on the basic rate of income tax)”
2006 report
The aviation industry directly contributed £11.4 billion to UK GDP in 2004 and
employed 186,000 people.
The aviation industry generated £11.4 billion value-added in 2004 – in other words, it
contributed £11.4 billion to GDP, 1.1% of the overall economy

• It directly employed 186,000 people (full-time equivalents) in 2004

On a conservative estimate, the industry contributed £3.55 billion to the Exchequer in



2.4 A 1999 aviation industry-sponsored report by Oxford Economic Forecasting
(‘OEF’) put the number of direct jobs in UK aviation at 180,000, equivalent to 1,132 jobs for every million passengers carried and, in a 2006 follow-up report, OEF updated this to 186,000 direct jobs, equivalent to 862 jobs per million passengers. This implies a remarkable 31% productivity improvement in the space of six years, albeit on the basis of the crude productivity measure of jobs per million passengers.
2.5 A third industry-sponsored report, this time by Oxford Economic Research Associates
(‘Oxera’) , published in November 2009, concluded that aviation directly provided 141,000 UK jobs in 2007. This is equivalent to 646 jobs per million passengers, which suggests an even more remarkable 75% improvement in productivity in the space of nine years.
2.6 For the UK aviation industry to achieve a 75% productivity improvement in the space of
nine years stretches credulity but it may actually be broadly correct. The period 1998-2009
coincides with rapid growth in the low cost carrier (‘LCC’) sector and one of the side effects of aggressive competition from the LCCs has been to force traditional full service airlines to address their cost base, particularly labour costs. British Airways, for example, shed 42% of its workforce between 1998/99 and 2009/10.








3 A major policy shortcoming of the 2003 ATWP was that it ignored the UK trade deficit on
international air travel. In fact the ATWP ignored outward tourism altogether but it was at pains to emphasise the benefits of inward tourism, for example:
‘Around 25 million foreign visitors a year contribute to a tourist industry that directly
supports more than two million jobs; two thirds of these visitors come by air. … The
aviation industry itself makes an important contribution to our economy. It directly
supports around 200,000 jobs, and indirectly up to three times as many. In a tough
competitive environment, UK airport operators and UK-based carriers of all types
are leaders in their fields, whose success brings significant economic benefits to this
country. An illustration of this is the fact that one fifth of all international air
passengers in the world are on flights to or from a UK airport.’

3.4 The first sentence of the above extract from the ATWP rightly highlighted the contribution
to the UK economy made by inward tourism with 25m foreign residents visiting the UK (in
2002) of whom 17m travelled by air. But the ATWP made no mention of the comparable
(2002) data for outward tourism showing 59m overseas visits by UK residents, 44m of whom travelled by air.

3.5 The final sentence of the above ATWP extract is also woefully incomplete because it
omits to point out that 72% of these international passengers were UK residents and the vast  majority were on overseas leisure trips.

The ONS reported at the time:
‘Travel expenditure by overseas residents in the UK accounts for around 16 per
cent of total exports of trade in services, while expenditure by UK residents
travelling abroad accounts for around 40 per cent of total imports. The travel
deficit has grown significantly since the late 1980s. The £13.9 billion deficit in
2002 was the highest on record, up from £13.3 billion in 2001. Exports of travel
services to overseas visitors to the UK increased by 6.8 per cent in 2002 to £14
billion while imports by UK residents travelling abroad grew by 5.6 per cent to
£27.8 billion.’

3.6 Just as surprisingly, the DfT 2011 Scoping Document makes no mention of the UK trade deficit on international air travel or of the economic impact of outward tourism.

3.7 There are those who argue that the air travel deficit in the UK Balance of Payments
Current Account is of no consequence and should be disregarded when considering aviation policy. We respectfully disagree. In the short term the trade deficit must somehow be financed and it must ultimately be addressed either by a lower Sterling exchange rate or
higher interest rates or a combination of the two. In short, there is no free lunch