Effects of Growth of Tourism in Air Transport Development - Example

Introduction Air transport has been a major sector in development of any country’s economy through performance of international business such as exporting and importing goods and services and tourism industry. One of the countries that have shown a significant development in this industry is China. The air transport in the People’s Republic of China has been rapidly increasing since 1980. Statistics show that tourism and travel has proved to be a strategic industry in development of China’s market economy. Air transport is said to be a high cost mode of transport and its growth in China is driven by the certain factors that are meant for services improvement and driving the prices down. These factors include government policies and growing affluence such as privatization, deregulation, and liberalization and encouragement for competition. The growth of air transport in the republic of China grew rapidly at a rate of 16 % all through 1980 to 1998. This growth was associated by fast growth in economy due to low base of air travels in the previous period and economic reforms. A more continued growth was due to privatization and deregulation in the Chinese airlines in early 90’s. This led to a drastic increase in air transport companies with a corresponding decrease in pricing of air tickets that was accredited by stiff competition (Jin, Wang & Yu 2004). In the year 2006, data on air transport indicated 66% on domestic air transport and 33% on international air transport. Out the total air transport, 69% were transportation of passengers both in international and domestic routes, 31% was on mail and cargo traffic both domestic and international. Survey showed that, 55% represented the air passengers that were travelling based on their own expense, 45% accounted for those at states expense, 50% for those on business, 40% for the ones travelling on tourism basis and 10% for the ones visit for their families. Evidence shows that tourism in China has grown to be one of the rapidly developing and promising industries in terms of international economy. For instance, there was an increase in the number of international tourists by 15% and earnings from the international tourism were also elevated to 18% for the period of 12 years between 1982 and 2000. During this period, the number of tourists increased by 46 times from a value of 2 million in 1982 to a value of 83 million in 2000. The foreign earnings generated by international tourism were elevated from a $ 263 million in 1982 to a value of $ 16 billion by 2000 (He 2002). China attraction for tourism has been caused by its tourism environment both locally and internationally. It is rich in terms of tourism resources such a diversity of cultures and landscape across the country such as crowded modern cities and old structures. Its sound growth of economy also supports tourism. It has increased openness to the entire world with recent reforms on economy. Strong economy will boost infrastructure for the development of tourism and foster more domestic and international tourism. The positive policies implemented by the government also advances tourism in this country. The government recognizes tourism as a pillar of its economic growth which underpins many sectors. Internationally, China is expanding its tourism through its entrance into the world trade organization that may provide different opportunities such as reduced barriers in cross border travelers, elimination of some of the protectionist policies, reduction of costs on travelling due to global competition and upgrading of financial, information and communication facilities. Its tourism development is also boosted by its international climate such as its location in what is said to be Asian pacific realm that is rapidly growing (Yang et al. 2008). This essay examines the significance of air transport to the Chinese growth of tourism. It also investigates the challenges that are faced by industry in china with consideration of varying demand of tourism. Finally, it assesses the effects of growth of tourism in the development of air transport. Significance of air transport in Chinese growth of tourism From the history of China air transportation, the initial growth in this industry was attributed to rapid growth of economy as a result of economic reforms and low base of passengers using air transportation means before these reforms. Increase in income also contributed to air transportation as more domestic tourists were willing to pay more to travel for shorter distances. Chinese introduction of privatization and deregulation in its airlines led to more growth as more airline companies were developed. Due to these factors air transportation in China have contributed much on the growth of tourism. This made china to specialize on tourism as one of the pillars of economic growth. Improved transportation has led to increased economic tariff and benefits for instance in year 2006, the industry earned 192 billion Yuan that was up by 21% as compared to the previous years. The profit earned from air transport during that year was 6.8 billion which was an increased by 4.2 billion as compared to previous years. The revenue on transport in that year was RMB 5.6 on domestic transportation while international transportation accounted for 4.1 that was an observed increase as compared to previous years. Main characteristics in the sector of air transport included an increase in number of passengers by 1.6 % that was higher in comparison to mail and cargo transport, a faster increase in international transportation that was higher as compared to domestic routes. During the same year, China recorded a growth rate of 9.8 percentages higher than the worlds mean. This made it to be ranked second in air traffic. These factors increased the China’s economy and led to the development of infrastructure in tourism industry (Fung et al. 1995). Tourism industry in China employs more than seven million employees who serve more than 100 million tourists. In addition, the country has also made expansion for reaching the international world serving various destinations for instance Beijing and Dubai. This has also be one of the main sources for the country’s GDP and the entire country’s growth. China’s growth of tourism has can also be evidenced in the hotel industry where there were approximately 9, 000 hotels by the end of year 2002 which were worth sales revenue of RBM 91.4 billion. In addition to the hotels in China, it has also established more that 600 hotel invested by foreigners. These foreign hotels take up to around 8% of the Chinese star hotels and they generate an approximately RBM 26.9 billion to China which is calculated as 29% of Chinese total income of this industry. China has also been able to attract a large number of the top multinational companies in the world for investment in hotel management (Kotler, Bowen & Makens 2006). Increase in air transportation has also led to development of more infrastructures. With a recorded high income from the industry, China has been able to invest in the industry by about RBM 26 billion per year. This includes construction and expansion of airports and communication networks. By the end of year 2006, China had had constructed 148 airports to enhance air transport all over the country and 142 airports to serve 140 cities throughout the world. This led to increasing number of passengers to a value of 330 million that corresponds to a percentage increase of 17% as compared to previous years. This led to increase in the Chinese economy with main boost from tourism industry (Wang & Jin 2007). Air transportation has made China to be classified as mega economy. With the largest growing domestic market in the world, China is also is the second in the world in economic growth recording an average rate of 10% annually since 1990. Due to significant improvement of air transport system, the country is making more expansion to cater for the increasing demands on economy. This is attributed to increasing number of tourists in the country and creation of more business opportunities (Button & Taylor 2000). Challenges in air transport Air traffic in Australia has been more concentrated in regions with hot tourism and provincial capitals. This means that there will be a lot of pressure on infrastructures on the airports that are heavily occupied leading to rising acute slot shortages, congestion and delaying of flights. This will be in contrast with those airports located in remote areas that will end up not being utilized. This will this challenge will leads to inconveniences in transportation with a corresponding decrease in the country’s income (Button & Vega 2008). Many of the Chinese airports end up receiving less than 0.1 million passengers annually. This has been observed that there were only 43 airports which were said to be profitable. Other airports that operated with less than 0.5 million passengers were said to be experiencing difficulties in operation. This means than more than 75% of the airports located away from hot tourism regions are unprofitable. This makes China’s overall performance in this industry to be unsatisfactory which a challenge to its economic development. Another challenge in Chinese airport sector is the experimenting financial losses that were persistent for various years. This was because more than 114 airports that experienced less than 1.2 million passengers were facing problems in their operation. This made the Chinese government to issue subsidies to the poor performing domestic airports. This shows that any income generated from the other operational airports were balanced with the poorly operated ones leading to overall challenges on the Chinese economy (Morrison 2001). The global crisis on economy also led to more negative effects on the Chinese airline sector. This was caused by a substantial fall in freight and air passenger’s volumes. Airport sector also faces challenges due to competition from other means of transportation. This is specifically use of electric trains that has also proved to be a faster mode of transportation. This has led to increased inequality in the overall air transportation sector. The biggest challenge to a rapid and sustained development in china’s air transport industry may be the continuous growth its economy. It may be too difficult to maintain a two-digit growth rate in future when the GDP value increases. Although China has made achievements in this industry, it is still exposed to severe challenges before it becomes fully modernized, this includes significant competition from other transportation means, its overall performance is poor and there is unequal development in airports (Kasarda & Green 2005). Effects of growth of tourism in air transport development Since 1980, there has been observed a remarkable growth and expansion in tourism industry for china. China has set several policies since 1980 that has resulted to substantial contributions to Chinese international tourism rapid development. The initial change resulted from setting up of policies that gained support and guidance by the agencies of Chinese government. The designer of the policy on reform greatly focused on Chinese tourism development. The policy came up with five guidelines directed to importance of tourism on Chinese economy, politics and reform. Chinese government devoted its effort from organizations, local and central government to build facilities and infrastructure on Chinese tourism using foreign investment and through self-independence. As the government defined its position on tourism, the Chinese international tourism grew significantly to a point of hitting a boom in early 90’s. This led to government recognition of tourism industry as a pillar for development of economy at all levels. This decision boosted air transportation sector (Button 1996). Another force that led to growth of tourism industry is the contribution of openness and policy reform. This led to a milestone in development of tourism and China’s economic growth. Through a period of 20 years, the country adopted a new pace in tourism development as trade relationships between china and foreign countries changed to be more liberal. The new policies that were implemented on trade gave the industries the power to be market oriented and more open towards international level. The new international relationship that was developed between China and foreign countries promoted activities of international tourism both directly and indirectly. This developed a new era on tourism industry on the ground of market mechanism. China later gradually strengthened structuring of its trade civilization while at the same time making advancements in tourism development. In addition, china maintained the orientation of three markets through determination of three policies that are; to develop inbound tourism in an active manner, to develop business in domestic tourism in a positive way and developing of business in outbound tourism in a proper way. The central government of china was focused in the new direction of developing tourism in relation to business activities and at the same time to promote trips meant for pleasure for international or domestic travelers. The changes made by Chinese government led to development of a very powerful base for expansion and growth of tourism industry in China. This also brought about very considerable impacts on economic development and market activities (Zhang& Chen 2003). Conclusion The drastic growth of the economy of China with a corresponding expansion in China’s international trade can be accredited to air transport industry which includes cargo and passengers sectors. Major contributors of the passengers sector are tourists which consist of both domestic and international tourism. The international tourism in China has been growing rapidly as compared to the country’s economy. The growth of air transport in the republic of China has been too rapid and at a higher rate since 1980. This growth was associated by fast growth in economy due to low base of air travels in the previous period and economic reforms. This rapid growth in air transport is attributed to a significant personal income and growth in the country’s GDP, airlines privatization and ticket prices deregulation, reduced restrictions in agreements on air services between China and other countries and increased issuance of visas to outbound tourists. However, although China has made several achievements in air transportation industry, it is still exposed to severe challenges before it becomes fully modernized; this includes significant competition from other transportation means, its overall poor performance and an unequal development in the airports. These factors are very essential to future of Chinese air transport sector. This calls for a need to address them as their persistence will lead to decline in its economic growth. 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