The Middle East is becoming an international aviation hub, with Dubai and Doha emerging as the most robust cities in terms of growth of air transport. In this study, the focus was to investigate the relationship between air transport development and economic growth, with special reference to the aviation sector in Saudi Arabia. Data used in this study was from both primary and secondary sources. Secondary data was obtained from journal articles and books.
Primary data came from a sample of participants who are currently working in the aviation sector. The researcher considered mixed method research as the most appropriate way of analyzing primary data. The findings show that the development of the air transport market has positive economic benefits especially on tourism development and use among citizens and expatriates. The aviation sector is one of the major foreign exchange earners in the country. Economic development of individual airlines is beneficial to the country, as these firms will pay more tax. The study also shows that the development of the sector increases employment in the country.
Other industries such as tourism and hospitality sectors directly depend on the aviation sector. The more tourists and business travelers fly into the country, the more these sectors experience an increase in the number of clients. The governmental initiatives to develop air transport services will assist the economic growth by providing greater access to the global market, increasing the competition, productivity, and accessibility. The paper recommends that the government should increase its expenditure on aviation sector as one of the strategies for diversifying the country’s economy.
I would like to express my appreciation to all those who played different roles in ensuring that I had a perfect environment to complete this report. I want to thank my family members for the emotional support they provided throughout my academic journey. Special gratitude also goes to my professor, Dr. Y who was always available in every stage in this project. I am indebted to the institutions and individuals who took part in primary data collection. Without your support, it would not have been easy to achieve success in this project.
The Kingdom of Saudi Arabia has one of the leading economies in the Middle East and North Africa (MENA) region. According to ElQuliti and Qadi (2018), despite the impressive economic growth that the country has registered over the past two decades, the government is concerned about the overreliance on oil and gas sector. Scientific studies show that the current oil reserves may be depleted in a few decades to come. It means that the economy cannot continue relying on this sector as the primary foreign exchange earner. Brears (2017) also notes that scientists and environmental conservationists are discouraging the use of fossil fuel because of its impact on the environment.
The use of renewable energy such as wind, sun, hydroelectric, and geothermal power is gaining popularity in Europe, North America, and parts of Asia. Emerging technologies and commitment of the stakeholders in the energy sector to promote the use of renewable energy has helped increase production of non-fossil fuel in most of the developed economies. It means that the demand for this important commodity is expected to drop significantly in the few decades to come. These developments are a legitimate concern for the country as it seeks to find ways of strengthening its economy. As Bielenia-Grajewska (2017) observes, the solution lies in diversifying the economy.
Air transport development offers a perfect opportunity for this country to diversify its economy and move away from its dependence on the petroleum sector. ElQuliti and Qadi (2018) define air transport as the movement of passengers and goods using aerial vehicles. Dubai is a perfect case study of a territory within the region that has diversified its economy beyond the exportation of oil and gas.
According to Colombo (2014), the aviation sector accounts for about 27% of the gross domestic product (GDP) of Dubai. In Saudi Arabia, the sector only accounts for 1.8% of the economy (Gross & Lück, 2016). The Saudi Vision 2030 is an ambitious plan that seeks to strengthen the country’s economy with the aim of reducing its reliance on the petrochemical sector (Grahame & Castro, 2018). However, achieving the vision will require an understanding of the sectors that can be strengthened based on their potential.
The service sector offers a wide opportunity, as evidenced in other regional countries such as the United Arab Emirates. The country needs to open up its economy for foreign direct investment in the service sector and other related industries. Such growth can only be achieved if there is easy movement of goods and passengers into and out of the country, as Castro, Delgado-Verde, Navas-López, and Cruz-González (2013) explain. Improvement of the aviation sector can also increase traffic into the country, especially for regional and international tourists. In this paper, the focus is to analyze the relationship between air transport development and economic growth, with special reference to aviation industry in Saudi Arabia.
Justification of the Study
The need to diversify the economy of Saudi Arabia is increasingly becoming evident as the oil market keeps fluctuating. Baghdadi and Kishk (2017) define economic growth as the increase in the amount of goods and services that is produced per individual in a country within a given period. The country has the largest economy in the Gulf Cooperation Council (GCC) (Ali & Park, 2016). However, its aviation sector is one of the weakest in the region.
Accounting for less than 2% of the country’s total GDP, the aviation industry plays a negligible role in the country’s economic growth. The country’s national carrier, Saudi Arabian Airline was created in in 1957 to help improve the country’s aviation sector (Khalawi, 1972). The Emirates Airline, Etihad Airways, and Qatar Airways are the dominant players in the region. Tourists and business travellers from various parts of the world do not know about the existence of the Saudi Arabian Airline because it is obscured by the other regional brands (Colombo, 2014). As such, it is common to find cases where these travelers use Emirates or Qatar Airways to travel to the country instead of the national courier or other local airlines. The profits that these airlines make benefit their countries.
The Kingdom of Saudi Arabia is home to Mecca and Medina, the two holy cities among Muslims. According to Abbaszadegana and Grau (2015), millions of people travel to the country from various parts of the world to visit these holy cities every year. It means that the country’s aviation industry has a huge potential that is yet to be tapped. It is unfortunate that the majority of those who travel for pilgrimage rarely use local airlines.
The national courier only has 80 destinations, compared with Emirates that has 180 (ElQuliti & Qadi, 2018). It means that in regions that Saudi Arabian Airline does not cover, Emirates Airline and other regional players take full advantage. The growth of these regional players limits opportunities for local airline firms. Baycan (2016) argues that if the local airlines can take full advantage of a large number of visitors coming to the country, then the aviation sector can become a major player in the country’s economy.
This study is specifically important because it explains why and how the country’s aviation sector can be used to promote various economic development plans. The Saudi Vision 2030, one of the most elaborate economic plans that the country has ever developed, is an ambitious program that is expected to catapult the economy to the next level of growth. However, the desired level of success cannot be realized if the aviation sector is ignored. It is important to note that the plan involves promoting foreign direct investment in various sectors of the economy, boosting tourism and banking sector, and empowering the local labor force (Baghdadi & Kishk, 2017). The plan is based on fact that people and goods will be moving into and out of the country on a regular basis.
The foreign direct investors, tourists, skilled human resource, and academicians will need an effective means of moving into and out of the country with ease. The country may rely on regional carriers such as Qatar Airways or Emirates. However, Evren, McSparren, and Olender (2017) warn that foreign airline companies often serve the interest of their countries. Moreover, they can boycott local destination if there is a political strain between this country and their country of origin.
Such boycotts can have a devastating impact on the local industries that largely depend on them. It means that the country needs an aviation sector that is loyal to the local interest. Local industries should be assured that regional political disagreements could not have a devastating impact on their growth. Moreover, Mahmood and Alkhateeb (2017) observe that local airlines can benefit a lot if they play a major role in the movement of people into and out of the country. Through this study, ways in which this industry can be strengthened will be discussed.
Aim and Objectives
The aviation industry is poised to be one of the most important sectors of the economy that will spur growth as Saudi Arabia strives to achieve its vision 2030. Other than directly contributing to the country’s GDP, it will also help in boosting other sectors if the government and private companies give it the attention it deserves. As such, a research that focuses on this industry should be very specific. It should be clear what such a study seeks to achieve within a given period. The primary aim of this study is to conduct an analytical study of the relationship between air transport development and economic growth in Saudi Arabia. The following are the specific objectives that should be achieved by the end of this study:
- To determine the relationship between the air transport market and economic growth in the Kingdom of Saudi Arabia;
- To determine if the air transport services will be improved by the strategic goals of Saudi 2030 vision;
- To ascertain whether the growth of the air transport industry has increased in numbers in terms of quality.
The study focused on determining the relationship between air transport development and economic growth in Saudi Arabia. As such, it was necessary to develop effective research questions that would help in collecting relevant data. The research question defined the nature of the information that should be collected from both primary and secondary data sources to ensure that the aim and objectives of the study are achieved. The following are the main research questions developed based on the research objectives above.
- Is there a relationship between the air transport market and economic growth in the Kingdom of Saudi Arabia?
- Will the air transport services be improved by the strategic goals of Saudi 2030 vision?
- Has the growth of the air transport industry increased in numbers in terms of quality?
Structure of the Paper
The paper has six chapters. The first chapter is the introduction. It provides the background of the study, justification, research objectives, and research question. It outlines the reason why it is important to conduct this research and what should be achieved by the end of it. The second chapter that follows is the literature review. In this section, the researcher reviews secondary sources related to this research. They include journal articles and books that help in shedding light on the research topic. In chapter 3, the paper focuses on hypotheses developed after the review of the literature. Hypotheses developed in this chapter would be accepted or rejected based on the outcome of the analysis of primary data.
Chapter 4 is the methodology. It explains the systematic method used to collect, analyze, and interpret data. The chapter also outlines major assumptions made when collecting and analyzing data. Ethical considerations are also discussed in this section. Chapter 5 is the analysis of primary data collected from primary sources. Primary data was analyzed as per the design explained in the methodology section. The final chapter is the conclusion. It provides a summary of findings made and recommendations that the relevant stakeholders should take to promote the growth of the aviation industry.
Review of Literature
The previous section has provided a detailed introduction of the topic, outlining goals and objectives that should be realized by the end of this project. In this section, the focus of the researcher will be to review the existing literature on this topic. The researcher will determine what other scholars have found out in relation to this topic. As Abbaszadegana and Grau (2015) explain, the literature review is important because it not only provides background information to the topic being investigated but it also helps in identifying literature gaps that should be addressed to enhance knowledge in a given field.
The Saudi Arabian aviation sector plays a crucial role in enhancing the country’s economic growth. According to Colombo (2014), the sector generates over 30.2 billion Saudi Riyals annually, which is about 1.8% of the country’s economy. It supports 152,000 jobs directly (workers employed in the local airports, those working in local airlines, and other industries that directly depend on the aviation sector) (Oxford Economics, 2011). As the government focuses on improving its expenditure on this sector, it is expected that air transport will play a leading role in the country’s economic growth. The following sectors within the aviation industry play different critical roles in boosting the economy.
According to Baghdadi and Kishk (2017), 45 million passengers go through Saudi Arabian airports annually using local and international airlines. A significant portion of these passengers includes tourists, business travelers, or individuals coming to visit family members for a given period. Another portion includes travelers on transit to other countries and has to pass through the country’s airport for various reasons. The higher the number of passengers handled in the local airports, the higher the number of people who have to be employed in this sector. That would translate to increased taxes for the government and reduced rate of unemployment in the country.
According to Mahmood and Alkhateeb (2017), 568,000 tons of freight passes through Saudi airports every year. A significant portion of that cargo is local products destined to the foreign market. The volume of cargo transported through the local airports in 2015 increased by 14.1% compared to that of the previous year (General Authority of Civil Aviation, 2015). The country currently relies on the petroleum sector as the main income earner. However, the government has been encouraging private sector players to consider exploring opportunities in other sectors of the economy. Improved air transport makes it easy for flower farmers and exporters of vegetables and fruits to deliver their products to the regional and international markets.
Maintenance and training
In the past, most of the airlines had to rely on foreign companies to help in repair and maintenance of their aircraft. However, local firms have emerged to help in offering these services locally. These firms not only create job opportunities for the locals in Saudi Arabia but they also pay tax to the government. Training institutions have also emerged in the country to equip the locals with skills needed to work in the aviation industry. They offer training for pilots, cabin crewmembers, aeronautic engineers, and other experts needed in this sector. It means that instead of a country having to spend a lot of money training aviation experts in foreign countries, the training can be done locally.
Relationship Between Aviation Industry and Other Sectors of Economy
The aviation sector in itself has a strong impact on the country’s economic growth. In Dubai, the sector accounts for almost 30% of the GDP and it is poised to contribute 35% of the emirates economy within the next decade (Darvish & Nazari, 2013). It means that it is poised to become the most important industry in the emirate. The same can be the case in Saudi Arabia if the stakeholders take the right steps to ensure that the industry is developed. The aviation sector also has a direct positive impact on almost every sector of the economy in the country. It is important to look at the relationship to understand the significance of this industry in the country.
The Kingdom of Saudi Arabia has the largest known oil reserves in the world (Mahmood & Alkhateeb, 2017). The sector remains the top income earner in the country. There is a direct and positive relationship between petroleum and aviation sector. Although petroleum products are often shipped by sea to the rest of the world, the sector relies on air transport to facilitate growth and development. Business executives from all over the world in the oil and gas sector rely on air transport to facilitate their movement into and out of the country.
According to Dawson and Andriopoulos (2014), trade fairs that have been organized in the past to boost the petroleum sector rely on air transport to ensure that those who are attending, especially the foreign investors from Europe and North America can visit the country with ease. It is important to note that the aviation industry is one of the major organizational buyers of petroleum products. If the local airline companies increase the number of their flight, then a significant amount of petroleum products (jet fuel) will be sold locally instead of incurring another cost of transportation.
Tourism and hospitality
The massive oil reserves in Saudi Arabia may be depleted in the coming years as per the current estimates. One of the areas of the economy that has the potential of supporting the country’s economy in the absence of oil and gas is the tourism sector. According to Eidizadeh, Salehzadeh, and Esfahani (2017), Saudi Arabia received over 18 million international tourists in 2016. It was a marginal increase from the previous year’s 17.9 million international tourists. It means that Saudi Arabia is one of the leading regional tourists’ hubs.
One factor that gives the country an edge over other regional countries is that it is home to the holy cities of Mecca and Medina (Mahmood & Alkhateeb, 2017). Muslims from all over the world often have a commitment to visit these cities at least once every year. Once they visit, they end up spending a lot within the country, boosting its growth. Gibson (2015) observes that over 95% of international tourists coming to Saudi Arabia use air transport. They come from Africa, Europe, North America, and parts of Asia. As such, the most convenient way of traveling to the country is by flight.
The national carrier, Saudi Arabian Airline (popularly known as Saudia) only has 89 destinations (Cnaan & Vinokur-Kaplan, 2014). It means that some of these visitors have to use other airlines such as Emirates, Qatar Airways, or Etihad Airways when traveling to the country. Some of these airlines take longer routes via other cities, making the trip more expensive and tedious. If the local airlines can increase their destinations, flying to Saudi Arabia will be less expensive and will take a shorter duration than it is currently the case. It will help in increasing the number of people visiting the country annually.
The increase in the number of tourists will have a direct positive impact on the country’s hospitality sector. Most of the local hotels will have full bookings, especially during the festive seasons. As Baghdadi and Kishk (2017) explain, when tourism and hospitality sectors experience a boom in business, they affect other industries positively. For instance, the agricultural sector will benefit from the boom because their products will be sold locally.
Construction and real estate
The construction and real estate sectors can also develop significantly if air transport in the country is developed beyond the current standards. According to James (2017), the city of Dubai has one of the most robust real estate sectors in the region. It is home to the world’s tallest building and other beautiful amenities, including the largest artificial Islands. Such growth in the construction and real estate sectors is attributed to the improved air transport in the city of Dubai.
The same can be replicated in major cities in Saudi Arabia, especially in Riyadh, Mecca, and Medina. Tourists and business travelers frequent these cities for various reasons. Improving air transport will open up the real estate sector to foreign investors. The desire to tap into the booming tourism industry will compel these investors to construct large hotels to cater for the needs of the increasing number of visitors. Pantouvakis and Bouranta (2017) explain that during Hajj, a number of visitors are forced to board motels away from major cities because of the congestion.
The opportunity that the large number presents to the hospitality sector is immense. However, the slow pace at which foreign investors are willing to get into the real estate sector is partly attributed to the less robust aviation sector in the country. These foreigners would like a scenario where they can move into and out of the country with ease. It is important to note that the current airlines operating in the country facilitate easy movement of people into and out of the country. However, having strong national brands that can compete with Emirates, Qatar Airlines, and Etihad Airways will open up the country to the international investors even to a greater extent.
The government of Saudi Arabia has invested many resources in the agricultural sector to reduce its reliance on imported food and other agricultural products. According to Claire, Duncan, and Niamh (2014), the country has reduced its reliance on imported food products significantly over the past three decades. Irrigation has made it possible to reclaim large portions of farmland, which were initially not arable because of the problem of inadequate rainfall.
One of the agricultural sectors that have gained popularity over the recent past is flower farming. The climatic condition in Saudi Arabia makes it perfect for flower farming if it is supported by irrigation. The country exports its flowers to Europe and parts of Asia. The flower is a highly perishable product. As soon as it is harvested, it has to reach the final consumer. As such, the only means of delivering it to the market is through air transport.
Development of air transport will have a positive impact on the country’s horticultural sector. Moving these products from the local to regional and international markets will not only be easy but also cost effective. Other farm produce such as fruits and vegetables also need to be transported through the air. Claire et al. (2014) note that improved air transport will also increase engagement between local farmed and those from foreign countries. Sharing of farm technologies and best practices will improve yields among local farmers. They will learn how to fight pests and different types of weeds. They will also know about the best breeds of cow and types of crops that can perform well in the country based on factors such as soil type and climate.
The Saudi Arabian banking industry is one of the most robust in the region. James (2017) argues that the country’s financial sector has taken lead in Islamic banking. Samba Financial Group, formally known as Saudi American Bank, is one of the regional banks that has embraced emerging banking concepts in line with Islamic culture, especially in countries dominated by Muslims, to ensure that they offer products that meet specific needs of the clients. One of the regions why the banking sector has registered impressive growth over the past three decades is the booming oil and gas business.
Tourism is also emerging as a major supporter of the local banking sector. With an average of 18 million foreigners visiting the country on a yearly basis, the country’s financial sector is becoming important for not only the locals but also the international community. When tourists and business travelers visit the country, they cannot carry large sums of money in cash. They have to use the local banking sector to avoid theft and to ensure that they are not charged with the crime of money laundering. The development of the aviation industry has a direct positive impact on the banking industry. When air transport is improved, a higher number of foreigners will be visiting the country (Kersten, Blecker, & Ringle, 2014). These visitors will be using products offered in the local banking sector.
The Saudi education system has gone through the transition over the past decades to meet the international standards. According to James (2017), the country still relies on foreign experts to support the development of the country’s infrastructure and other sectors of the economy. Some of the top local engineers had to travel to foreign countries, especially to Europe or the United States, to gain the knowledge needed for the development of the country’s economy.
However, that is set to change as the government increases its investment in this sector. New universities have been created while those that already existed have been expanded. The government has also ensured that the local institutions of higher learning are well equipped to international standards. One of the concerns that these local institutions of higher learning have is the inadequacy of the teaching staff.
King Saud University has come up with university exchange that allows foreign professors to teach in its local universities for a period. These foreign professors play an important role in boosting the country’s education programs. Their movement into and out of the country is facilitated by air transport. They need convenient and affordable means of transport whenever they have to travel into and out of the country. Improving air transport will make that happen.
It will also open up the country’s education sector to foreign investors. Currently, foreigners own some of the top private schools in the country. Most of them offer British curriculum while others offer the United States curriculum. It means that graduates from these private schools can easily enroll in some of the top global universities. When they come back to the country, they play crucial role in furthering the local standards of education.
Factors Affecting Growth of Air Transport
The aviation industry has a great potential of growing beyond its current capacity. The booming tourism industry, the petroleum sector, and other service industry that make it necessary for people and cargo to move into and out of the country offer opportunity for growth. However, it is important to appreciate that numerous threats exist that may affect the growth. Understanding these threats will help stakeholders in the sector to understand how to deal with them effectively. The following are some of the key issues that players in this industry should be ready to deal with as the sector strives to achieve greater growth in the market.
Insecurity is one of the greatest threats to the development of the aviation sector. The Kingdom of Saudi Arabia is one of the few countries in the MENA region that has remained politically stable despite the Arab Spring that affected many countries. The problem of extremism and emergence of terror outfits has been a major issue in the region (Jockenhofer, 2013). Some of these extremist groups are now targeting airports and airlines as soft targets. The September 11, 2001 terror attack in the United States was made possible because the terrorists were able to infiltrate the country’s aviation sector (Baycan, 2016). It was a perfect demonstration of the vulnerability of airline and airports all over the world. If it happened in the United States, it means that the Kingdom is not safe.
The instability in some of the neighboring countries and the growing influence of extremist groups is a major concern. Other than the potential threat of an attack, there is fear among potential tourists who may want to visit the country. Instead of coming to Saudi Arabia, they consider visiting other parts of the world considered safe. Maktoum (2017) says that the government is spending a lot to fight extremism and to enhance the safety of airports and airlines within the country. However, emerging security concerns such as cybercrime are posing new challenges. It will force the local stakeholders in the aviation sector to work closely with international counterparts to enhance security.
It is important to appreciate that the stiff competition in the regional aviation industry is a threat to the development of the local air transport. According to Mann, Watt, and Matthews (2013), the United Arab Emirates is currently leading the region in terms of the capacity of the aviation sector. The Dubai International Airport is the busiest in the world and Emirates is one of the top global airlines (Morpeth & Hongliang, 2015). The strength of these regional airports and airlines overshadow the local aviation sector. Some of these visitors prefer traveling through Dubai to other regional cities because of various reasons. Baycan (2016) argues that Dubai is a leading regional business and tourists hub.
The preference of international travelers to pass through Dubai means that they may end up spending more time in that city instead of the local cities. If that happens, then they end up spending more in these regional countries than in local cities. The popularity of Emirates and other regional airlines is another major problem. When a person plans to travel by air, one of the most important factors that they often consider is their safety.
As such, they prefer using large international airlines with well-established brands and good safety records. Emirates Airline comes top in that list in terms of the popularity of the brand. It means that even if a person wants to travel directly from London to Riyadh, he or she will prefer using Emirates instead of other airlines. The government may have to invest in promotional campaigns to promote local brands.
The previous section has provided a detailed review of literature. In this chapter, the focus is to develop a hypothesis based on the information obtained from secondary sources. It is important to note that the hypothesis is developed based on the research objectives and the topic of the research. As Baycan (2016) observes, hypotheses help in putting the research topic and objectives into perspective for ease of analysis. They are often used when planning to conduct a mathematical analysis. A researcher will use the findings made from the mathematical analysis to accept or reject the hypotheses. The following is the first hypothesis that was developed based on the preliminary findings made from the review of the literature:
- H1. The development of air transport market has positive economic benefits especially on tourism development and use among citizens, expatriates, and visitors.
The hypothesis was developed after determining, from the preliminary studies, that tourism and hospitality sectors largely rely on air transport. International tourists and business travelers from different parts of the world use air transport when coming to the country. It means that the growth of air transport will have a direct positive impact on these sectors of the economy. The claim will have to be confirmed through primary data analysis. The following is the second hypothesis:
- H2. The governmental initiatives to develop air transport services will assist the economic growth by providing greater access to the global market, increasing the competition, productivity, and accessibility.
The information from the secondary sources shows that competition is stiff in the regional aviation sector. Emirates, Etihad Airways, and Qatar Airways are some of the dominant players. However, if the government increases its expenditure on the development of the air transport, the local aviation sector will be capable of competing against its regional competitors. The competition will open up the country’s economy to foreign investors. Local exporters will also enjoy improved means of transport when delivering their products to the international market.
In the previous chapter, the focus was to look at the hypotheses based on the information gathered from secondary data, which refers to information from obtained from books, journal articles, and other reliable online sources (McNabb, 2015). In this section, the focus is to discuss in detail, the method that was used to collect and analyze the data from primary data, which refers to information obtained from individuals or other primary sources such as artifacts (Bernard, 2013).
The research onion in figure 1 below shows guiding concepts that were used in this project, from the research philosophy and research approach to strategy and sampling methods used. These concepts make it possible to understand assumptions made during the collection, analysis, and interpretation of primary data collected from participants.
When planning to conduct research, one of the factors that should be defined is the appropriate philosophy that should guide the process of data collection and analysis. Card (2016) defines research philosophy as “the belief about ways in which data about a phenomenon should be collected, analyzed, and used” (p. 78). A researcher must understand principal beliefs and assumptions that must be made to achieve the set objectives.
As shown in the research onion above, it is the first step that must be taken by a researcher before defining the appropriate strategy and data collection method for the study. The assumptions must be realistic and relevant in the context within which the study should be conducted. A researcher can opt to use realism, positivism, interpretivism, or pragmatism based on the goal that should be achieved. It is necessary to discuss each of the four philosophies before stating why one of them was selected as the most appropriate for the study.
Realism as a research philosophy holds that reality may not necessarily be in the human mind. What a person believes in may not be the truth. In many cases, people are influenced by their socio-economic background and stereotypes. As such, the philosophy holds that the truth can only be established through scientific methods. What a person thinks may not matter. When embracing this philosophy, an investigator is expected to set aside personal knowledge, belief, or any other factor that may influence the outcome of the study. Instead, emphasis should be placed on the outcome of a scientific investigation.
The philosophy is popular among pure scientists because of the assumption that knowledge can only be gained or developed through laboratory tests and investigations. The researcher is not planning to conduct a scientific analysis because it is not necessary based on the research aim and objectives. As such, it was considered an inappropriate philosophy for this project.
Positivism is a popular philosophy among both pure and social scientists. Like realism, it emphasizes the need to use scientific methods to develop knowledge. The main difference between these two philosophies is that while realism holds the belief that scientific method is the only way of developing a new concept, positivism is more flexible and accepts the fact that human mind can sometimes hold the truth. In this philosophy, the main belief is that knowledge can only be trustworthy if it is gained through observation (Information Resources Management Association, 2017). It strictly prohibits the idea of using popular beliefs and practices as a way of making conclusions. Instead, a researcher should be committed to conducting an original investigation over an issue of interest.
The outcome of such an investigation should be held to be the truth even if it goes against personal or popular beliefs. If a researcher feels that there is a major skew between the outcome of the study and popular/personal belief, the only course of action is to conduct a new study. The role of the researcher in the entire process is limited to collecting, analyzing, and interpreting data (McNabb, 2015). One is not allowed to influence subjects from which data is obtained. The philosophy is often used when one is conducting a quantitative research. These beliefs and assumptions were considered inappropriate for this project.
Interpretivism is often used among social scientists based on the set goals and objectives. It holds the view that access to reality is only through shared social construction (Prescott, 2016). As such, issues such as shared meaning are considered the basis of knowledge development. Different people interpret the world in different ways based on factors such as personal experience, knowledge, culture, personal interest, and family background (Pruzan, 2016). It is important for a researcher to be considerate of the cultural diversity that may exist in a given context. When investigating a given phenomenon, it is common to find cases where a researcher jumps to conclusion based on personal beliefs and prejudice.
This philosophy warns that such a strategy is wrong when developing knowledge. Instead, an investigator should be able to interpret a concept based on the belief and practices of the people being investigated. For instance, instead of using popular western culture to judge why Muslim women wear hijab, it may be necessary to interact with them and get to share their view. This way, an investigator will understand the genesis of such a dress code and why it has remained popular despite the emerging trends in the clothing industry. One unique factor about this philosophy is that it allows a researcher to be influenced to make it possible to have a shared knowledge. It is popular when conducting a qualitative study. The philosophy was not considered appropriate for this project.
Pragmatism is another popular philosophy in social science research. It holds the belief that a concept is relevant when it can support an action (Ratten, Braga, & Marques, 2017). One of the main principles of this philosophy is that there are many ways of interpreting the world. There is no single view that can be considered perfect or capable of providing a complete picture of a given issue. As such, a researcher should be flexible enough to accommodate different views on a given issue. The philosophy holds the view that at any given time, there can be multiple realities on a given issue.
The philosophy holds the view that the research question is the most important determinant when conducting research (Walliman, 2016). The primary goal of an investigator is to answer the research questions in the best way possible. According to Bernard (2013), when using pragmatism as a research philosophy, one can use both qualitative and quantitative research method. The philosophy is flexible enough to allow the use of both methods as long as they can facilitate answering research questions effectively. It was considered the most appropriate philosophy for the study. When investigating the relationship between air transport development and economic growth, it may be appropriate to use both qualitative and quantitative research.
The second step after selecting an appropriate research philosophy is to identify an appropriate approach. The research approach should be in line with the selected philosophy and it should make it possible to achieve the goal and objectives of the study. One can use inductive, abductive, or deductive reasoning as may be appropriate. It would be necessary briefly to talk about each of them before selecting the one that is most appropriate for the study.
Inductive reasoning approach is popular among social scientists because of the pattern it uses to develop knowledge. As shown below, the first step when using this approach is to see. The observation is done by collecting relevant data that responds to the research question. After collecting data, a pattern will be developed that is then used to develop a tentative hypothesis. The final step is to develop a theory based on the pattern observed. The approach is often suitable when one is conducting a qualitative analysis. The reasoning approach was considered inappropriate for this project.
In abductive reasoning, a researcher needs to take three steps when developing a new knowledge. The first step is to start with making an observation. For instance, one can observe that an increasing number of people using air transport boost the growth of the hospitality industry. The next step is the diagnosis. In this case, the goal is to find an explanation to the observations made. If it was observed that an increasing amount of air travelers boosts the growth of the hospitality industry, the researcher will need to determine why that is the case.
One is then expected to provide a detailed explanation of the outcome of the observation and diagnostic made. One of the unique characteristics of this reasoning approach is that a conclusion may be unnecessary. In this study, it is important to make a conclusion and recommendations based on the facts obtained through the investigations. As such, this approach was not appropriate.
Deductive research approach takes the opposite direction from that of inductive reasoning. In this case, the first step is to start with general or readily available knowledge about something. The information will then be used to develop a hypothesis. In this case, the researcher is expected to review relevant literature that talks about the relationship between air transport development and economic growth.
Facts collected from the review will then be used to develop relevant hypotheses. After developing a hypothesis, one is expected to make observation and conduct tests. The step involves collecting primary data from participants to understand the current trends and to ascertain whether the information collected from secondary sources is still factual. The last stage is the confirmation or rejection of the set hypotheses. The analysis of the primary data will determine whether the hypotheses are accepted or not. The pattern is shown in figure 3 below. It was considered the most appropriate approach for the study.
When the appropriate philosophy and approach have been selected, the next step is to define the strategy that will be used in data collection. The aim of the researcher is to develop a given field of knowledge by introducing new facts. As such, data must be collected from various sources. As shown in the research onion (figure 1 above), the research strategy is the third step. A researcher can opt to use various strategies of data collection. In this case, the researcher will only focus on the three strategies that were used in the data collection.
One of the rich sources of information, as Prescott (2016) observes, is secondary data. It is an important obligation for a researcher to ensure that before collecting primary data, there should be a thorough review of secondary sources. A researcher must appreciate that other scholars have already gathered some facts in that specific field. Reviewing secondary sources not only provides background information but also helps in identifying the existing knowledge gap in that field. As such, time will not be wasted duplicating already existing information. Desk research was an important strategy for collecting secondary data.
Using online platforms, the researcher was able to access books and journal articles needed for the study. This strategy proved more beneficial than visiting the physical library. Some of the online journal databases proved critical in providing the necessary articles and books relevant to this topic. It is important to note that the school library was equally important in accessing the relevant books for the study.
The interview was another important method of collecting data. According to McNabb (2015), the interview is the best way of collecting primary data from the respondents. It makes it possible to engage the participants directly and to gather information that directly responds to the research question. Interviews can take different approaches. One can engage participants in a face-to-face interview or phone interview.
Although the face-to-face interview is the most appropriate strategy, sometimes the availability of the interviewees or limited time that a researcher has to complete the study makes it appropriate to use phone interviews. One of the advantages of this strategy is that it increases the response rate because of the physical interaction between the interviewer and interviewees. The interviewer can also read facial expression, body language, and other non-verbal cues when interviewing the respondents. This strategy is discussed further in the data collection section below.
The survey is another important approach to collecting primary data. Prescott (2016) argues that this method is often used when collecting data from a large population within a limited time. Instead of engaging the respondents in a one-on-one interview, the researcher, in this case, sends questionnaires to the participants so that they can answer the questions during their free time. It was considered an appropriate strategy in this project because of the desire to collect primary data from a large number of respondents within a short time.
It was also necessary to have a case study to shed more light on this topic. The idea that air transport development can spur economic growth can be proven by looking at similar events in other countries. Having a case study of what happened in a neighboring country or in any other part of the world can help in determining if the same can happen in the Kingdom of Saudi Arabia. If a given country was able to register improved economic growth because of its robust economy, then the same can be realized in this country if the relevant stakeholders take the right steps.
Target Population and Sampling
The target population is individuals who have the capacity to provide the needed information based on their expert knowledge or experience. As Pruzan (2016) notes, they are individuals who work within a given industry or firm that is under investigation. They have the capacity to provide the most current information about the issue of interest. In this case, it was necessary to collect data from individuals who are currently working in Saudi Arabia’s aviation industry.
These individuals understand challenges that this sector is going through and its potential in promoting the country’s economy. The employees and senior managers at The General Authority of Civil Aviation of Saudi Arabia (GACA) would be capable of providing the information needed for this study. It was also necessary to collect data from employees and managers of various airline companies in the country. Workers in the hospitality and tourism sectors can also provide important information in this study because these industries are directly affected by air transport.
Sampling and sample size
The aviation, hospitality, and tourism sectors in Saudi Arabia employ millions of people directly or indirectly. The limited time available for this research made it impossible to collect data from the entire population. The study had to be completed within the time stated by the university, and as such, it was prudent to develop a manageable sample of respondents from who data would be collected. Pruzan (2016) notes that it is critical to define an appropriate sampling strategy that would ensure that the right individuals are selected to represent the entire population.
Stratified sampling was considered the most appropriate technique for identifying individuals who would take part in the process of data collection. In this technique, the researcher would classify the participants into two groups: junior employees and senior managers at the participating institutions. A sample of 100 participants was identified to take part in the primary data collection.
After identifying the participants, the next step was the actual data collection process. As explained above, secondary data was collected from books and journal articles available in the school library and online databases. Primary data was collected from the sampled participants. Primary data was collected using two strategies. The first strategy was the interview. Twenty participants were identified to take part in the data collection process.
They were identified based on their location and availability. They included senior managers in the institutions identified to take part in the study. The interview took place in the offices of these participants. The rest of the participants were engaged in the survey. A questionnaire was developed and e-mail to these participants. They were informed about it as soon as the questionnaires were e-mailed. They were requested to answer the specific questions and then send back the filled questionnaires through the same e-mail address.
Data analysis made it possible to transform the raw data into meaningful information. As explained above, the most appropriate method is mixed research. It means that data was analyzed both qualitatively and quantitatively. The questionnaire had both structured and unstructured questions. Structured questions were coded to facilitate mathematical analysis. It was possible to determine the magnitude of air transport development on economic growth using this method of data analysis.
The unstructured questions made it possible to analyze data qualitatively. It was possible to explain why this sector of the economy is important and how it affects other sectors of the economy. Mixed method research was considered effective in facilitating a comprehensive analysis of the research question. It was the best way of achieving the objective of the project.
Instrument of Data Collection
A questionnaire was developed to help in the data collection process. Pruzan (2016) advises that when planning to collect primary data from participants, it is prudent to develop questionnaires. Whether one is planning to use a survey or interview as the appropriate method of collecting data, having this instrument makes it easy to guide the process of gathering the needed information. First, it ensures that all respondents are asked similar questions.
Standardizing the questions and responses is particularly important when conducting a quantitative data analysis. Walliman (2016) also notes that the instrument eliminates cases where an interviewer ends up asking irrelevant questions. Without a proper guidance, one can easily lose focus of the investigation. Such challenges are eliminated when a questionnaire is developed prior to the data collection.
Structure of the questionnaire
The questionnaire used in the primary data collection had three parts. The first part of the questionnaire focused on the background and demographic information of the respondents. It focused on the age, gender, nationality, and employment status of the respondents. According to Pruzan (2016), sometimes the response given by participants may be biased along gender lines. In Saudi Arabia, women are yet to achieve economic freedom comparable to that of men (Colombo, 2014). Sometimes the response received from a female employee may be biased because of the desire to create greater economic space than what is currently the case.
Similarly, a Saudi national may respond differently from a foreign worker who recently immigrated into the country. Some of these new immigrants may not have a detailed understanding of the country’s economic status. As such, their response may be based on experience gained in another country. Determining these demographical differences makes it easy to identify the pattern of any bias in the response obtained from the participants.
The second part of the questionnaire focused on the academic qualifications and experience of the participants. According to Bernard (2013), the experience that an individual has on a given issue expands his or her knowledge on a given issue. Newly recruited workers within the General Authority of Civil Aviation of Saudi Arabia may not have a proper understanding of the benefits of air transport development to the country’s economy.
However, those who have been working within this government agency know about these benefits. As such, determining the experience of the respondents helps in knowing the level of authority that one has when answering specific questions in this study. Similarly, the academic qualifications of the respondent also define the authority within which a person can answer a given question (Card, 2016). A mid-manager at a local airline company with a master’s degree in aviation management or related course has a better understanding of the issue being investigated than a junior officer who has lower academic qualifications. As such, it was necessary to capture the academic background of the respondents.
The last part of the questionnaire focused on the specific questions regarding the relationship between air transport development and economic growth in the Kingdom of Saudi Arabia. Given that the chosen method was mixed research, it was necessary to use both structured and unstructured questions in this section of the questionnaire. The unstructured questions made it possible for the participants to use their own words to explain specific phenomenon or experiences related to the issue being investigated. On the other hand, the structured questions made it possible to use mathematical methods. A sample of the questionnaire used in this paper is attached in the appendix of this paper.
It is important to observe ethical concerns when conducting this research. According to McNabb (2015), one of the most important ethical concerns that a researcher should observe is the need to seek permission from the administration of the institutions whose employees would be interviewed. Some institutions have strict policies that prohibit their employees from engaging in research. As such, it was necessary to ensure that the top managers of all the selected entities were consulted before contacting their employees. In this project, data had to be collected from employees of various airlines and General Authority of Civil Aviation of Saudi Arabia.
The goal of the study was explained to these officers and the need for their employees to be part of the study explained. The employees were contacted only after getting the relevant authorization from the top managers.
Participation in this study was on a voluntary basis. Prescott (2016) explains that coercing people to take part in a research is unethical. Even if the top managers approve of the project, it is still necessary to consult employees of these firms and ensure that they are comfortable taking part in this research. They were informed that they could pull away from the study at any time without having to justify their actions or face any consequences.
Protecting the identity of the participants was another critical ethical factor that had to be observed (Ratten et al., 2017). Some issues may be controversial and opinions of an individual may expose them to criticism from colleagues who have different opinions.
In some extreme cases, one can be physically attacked or fired from work because of having a divergent opinion from that of the majority of those in the position of power. As such, the identity of all the participants was concealed to protect them from any extremism that they might face. Although the topic is not controversial and the participants are unlikely to face any danger irrespective of their opinion, it was still necessary to ensure that their identity is protected. Instead of using their actual names, the researcher assigned each participant coded identities as a way of protecting them.
It is ethically important to ensure that school rules and regulations about writing a thesis are observed. The school sets time within which a student is expected to complete a research project. This requirement was met. The document was prepared within the time set. The school also set clear and strict terms regarding the issue of plagiarism. The researcher ensured that any form of plagiarism is avoided in this project as much as possible. Information obtained from secondary sources was referenced appropriately using American Psychological Association (APA) format within the text. A list of references was provided.
It is necessary to appreciate that the study had some limitations worth noting in this section of the paper. One of the major limitations was time within which this study had to be completed. This project is very important because it directly addresses one of the key pillars of the country’s Vision 2013. The aviation will play a critical role in ensuring that the economy of Saudi Arabia is diversified. It would be appropriate to broaden the scope of the research to include numerous participants. However, that was not possible because the study had to be completed within the time set by the school.
The financial limitation was another issue. Given the fact that the study is not funded and that it is an academic project, the researcher had to undertake all the activities from data collection, analysis, report writing, and editing. It means that only a limited number of participants could be engaged directly as was desired. Despite these issues, the researcher was able to collect adequate data that responded to the research question.
Findings and Discussion
The previous chapter provided a detailed discussion of the method that was used to collect and analyze primary data. In this section, the focus is to analyze the collected data in order to respond to research questions and to confirm or reject the hypotheses that were developed in chapter 3. Air transport is poised to be one of the most important sectors of the Saudi economy as the country moves towards its Vision 2030 (Mirza, 2017). Given the importance of this topic to the country’s economy, it was necessary to conduct both qualitative and quantitative analysis. The mixed method provides an avenue of analyzing the questions comprehensively, as explained in the previous chapter.
Analysis of Research Questions
It was important to respond to each of the three primary questions set in this study before analyzing the hypotheses. The first question focused on determining the relationship between the air transport market and economic growth.
This was the first question to be analyzed because of its significance to the study. The researcher had to determine if indeed there is a relationship between air transport market and economic growth in the country based on the knowledge and experience of the respondents. In case there is no relationship, then the study would be meaningless. In case there is a relationship, then the study will proceed to determine the nature of the relationship. The response obtained from the respondents was analyzed mathematically and figure four below shows the outcome.
Is there a relationship between the air transport market and economic growth in the Kingdom of Saudi Arabia?
As shown in the figure above, an overwhelming majority (96%) of the respondents stated that there is a very close relationship between air transport market and economic growth. Another 3% agreed with the statement. It means that 99% of the respondents felt that there is a significant relationship between air transport market and the country’s economic growth. None of the sampled respondents had a contrary opinion. The confirmation that this relationship exists was crucial for the study because it opened the avenue of establishing the nature of this relationship. The next question focused on determining if air transport services will be improved by the strategic goals of Saudi’s Vision 2030.
Will air transport services be improved by the strategic goals of Saudi 2030 vision?
The Saudi Vision 2030 is one of the most ambitious economic initiatives that this country has developed since it gained independence (Murad & Kichan, 2016). The initiative is meant to transform the country’s economy from one that heavily relies on oil and gas exports to one that is diversified. The leadership of this country is focused on ensuring that the service and agricultural sectors are able to sustain the economic growth. It was necessary to get the expert opinion of these respondents about the impact of this initiative on the country’s aviation sector. The answers obtained from them were analyzed mathematically. Figure 5 below shows their response.
It is evident that majority of the respondents (80%) believe that the country’s vision 2030 is very likely or likely to improve air transport services. These respondents believe that the more other sectors of the economy such as tourism, hospitality, and banking continue to grow; the positive effect will directly affect the aviation sector. As shown above, 12% of the respondents felt that this ambitious economic initiative might not automatically translate to improved air transport services. They believe that this industry should be given special focus by the government and private investors to achieve the desired growth and to be capable of competing with regional rivals. The next question focused on determining quality improvement in the country’s air transport sector.
Has the growth of the air transport industry increased in numbers in terms of quality?
In a highly competitive business environment, quality is a very important factor that defines decisions made by customers. The aviation sector is one of the most sensitive industries in the world. Majority of the clients are the middle class and the rich. Obeidat, Masa’deh, and Abdallah (2014) say that the financially empowered members of the society are often sensitive when it comes to the quality of the products they consume.
When they want to travel by air, the factors they consider is safety, comfort, and customer care services. They want to use airlines that will offer them the best of what they need. If the local airlines cannot offer the quality of services customers’ desire, then it means that they cannot retain them within the firm. They will prefer to use regional airlines. As such, it was necessary to determine if these airlines are improving in terms of quality of services offered. Figure 6 below shows the outcome of the analysis of their response.
A significant majority of the respondents (63%) of the respondents agrees or strongly agrees with the statement that the quality of air transport in the country has improved over the years. They believe that the quality of services offered to travelers today is significantly different from that offered a decade ago. About 20% were non-committal, stating that they are not sure whether the quality has improved commensurately to the industry’s average.
Another 17% of the respondents felt that the quality of the local air transport has not improved if it were to be compared with that of other regional economies. It is expected that with the emerging technologies and changing tastes and preferences, quality of services offered in this industry would be different as time passes. However, real improvement, according to these respondents, is determined if what the local players offer is at the same level or better than the market average. They believe that a lot still needs to be done to ensure that the local players in the aviation sector can compete favorably against regional and international competitors.
Analysis of the Research Hypotheses
After analyzing the question, it is necessary to focus on the hypotheses developed after literature review. It is important to note that if the hypotheses are confirmed, then the primary data collected is in agreement with the secondary data. If they are rejected, then the emerging changes in the aviation sector are transforming and what was held as the truth in this industry is no longer the case. The first hypothesis focused on determining if the development of the air transport market has a positive economic impact on tourism development. The hypothesis directly responds to the research topic. Data obtained from the participants was analyzed mathematically and figure 7 below shows the outcome.
H1. The development of air transport market has positive economic benefits especially on tourism development and use among citizens, expatriates, and visitors.
The outcome of the analysis shows that 90% of the respondents strongly agree or agrees with the statement that there is a positive relationship between air transport development and economic growth. The aviation industry directly contributes to the growth of the economy by creating jobs and paying tax through individual companies operating in the country. The industry also has an immense impact on the tourism and hospitality sectors. These two sectors rely on the smooth flow of visitors from all over the world coming into the country as tourists, business travelers, or for any other reason. These visitors come to the country through air transport. If the aviation industry is paralyzed for one reason or another, these sectors will be negatively affected.
H2. The governmental initiatives to develop air transport services will assist the economic growth by providing greater access to the global market, increasing the competition, productivity, and accessibility.
The second hypothesis focused on the role of the government in improving air transport services as a way of promoting economic growth by opening up the local economy to global investors. According to Pantouvakis and Bouranta (2017), the economy of Dubai has been opened up to global investors because of the massive investment made by the government to improve the country’s air transport. The investment has made the economy more competitive, productive, and accessible than that of the regional rivals.
The ease with which people can move into and out of the country has had a massive benefit to various sectors of the economy in the country. It was necessary to determine if the same can be replicated in the Kingdom of Saudi Arabia. Figure 8 below shows the outcome of the analysis of the primary data collected from the participants.
It is evident that an overwhelming majority of the respondents (96%) agrees with the fact that opening up the country’s economy to foreign investors by investment in the aviation sector will improve the country’s economic growth. Only 3% of the respondents had a contrary opinion. Improving access to the global market for local investors will also improve their competitiveness and productivity. One of the respondents noted that Saudi Arabian farmers are developing an interest in flower farming.
The market for flowers has been expanding consistently in various European and Asian countries. For the local players to compete favorably against the regional and international rivals, it is necessary to ensure that air transport is improved. It will make it possible for these farmers to deliver their produce in the international market conveniently and at a reasonable cost. The reduced cost of delivering their products to the market will allow them to set competitive prices. It means that when the government invests in the aviation sector, it will positively affect all the other industries that rely on air transport in one way or the other.
The researcher was also interested in determining if the Saudi aviation sector has the capacity to compete against its regional rivals. The Qatari aviation sector and that of the United Arab Emirates are the dominant ones in the region. When asked if they believe the local air transport sector can compete favorably against its rivals, the participants responded as shown in the figure below:
Majority of the respondents (96%) believe that the local air transport industry has the capacity to compete against regional rivals, especially if the stakeholders invest enough resources. The fact that Saudi Arabia is home to the two holy cities of Mecca and Medina means that religious visitors will always come to the country. It means that the country has natural tourists’ attraction that is unique. The massive oil reserves also mean that the government has enough financial capacity to invest into this industry to promote growth.
Dubai has become the top regional aviation hub because of the massive investment made by the government. It means that if the leadership of this country provides the needed resources to expand major airports and to boost the local national carrier, the industry will grow. Instead of flying into the country through Dubai International Airport, the number of people flying directly into the country will increase. The benefit of having a robust air transport sector will be reflected in other sectors of the economy, especially in the tourism and hospitality industries.
When reviewing literature, it was evident that several factors may affect the ability of the local aviation sector to achieve the desired growth. It was necessary to ask the participants about their views on this issue based on their knowledge and experience working within this industry. The following was the question posed to the participants
What are some of the challenges that the organization/ industry faces as it struggles to achieve growth in this sector?
One of the issues that came out was insecurity. According to the respondents who were interviewed in this study, insecurity is one of the major concerns that the country has to deal with as it seeks to boost growth in the aviation sector. The respondents noted that the Arab Spring that started in North Africa and spread to the Middle East has had a significant impact on the regional security. It made it possible for extremist to expand its area of operation besides displacing millions of people who have to seek asylum in other countries.
Saudi Arabia is one of the countries that had to offer refuge to the displaced people from countries such as Yemen and Syria (Park, Song, Yoon, & Kim, 2013). The main problem with such immigration is that sometimes extremists hide among the innocent immigrants with a sinister motive of attacking civilians. Once they find their way into the country, they plan criminal activities that often target foreigners, especially tourists from western countries.
When European counties of the United States issue travel ban because of the local security concerns, the aviation, tourism, and hospitality sectors get affected as travelers consider visiting other countries considered safe. One of the respondents said, “The aviation sector in Saudi Arabia cannot achieve the desired level of growth if the issue of insecurity is not addressed. The government should start by not only assuring the visitors of their safety but also making concrete measures to defeat actions of criminal elements within the country.”
Limited exposure of the local brands in the global aviation sector was identified as another impediment to the rapid growth of the industry. One respondent stated, “Some of the local airlines are not known beyond the regional market. Most of the clients prefer using known international brands such as Emirates.” As stated above, quality is one of the most important factors that air travelers consider before choosing the appropriate airline to use.
Many often base their decision on the popularity of a brand. The local airlines are not widely known in Europe, North America, and Far East. As such, regional airlines perform better than they do. The respondents suggested that the local airlines should start investing in the promotion of their brands in the international market. Mass and social media advertisement will help in ensuring that international travelers know these local brands.
Some respondents felt that the government of Saudi Arabia is yet to inject enough resources into this sector of the economy. He said, “When I compare the investment that other regional governments have made in their aviation sector to that of our country, it is evident that a lot still needs to be done.” Many other participants shared this sentiment. Dubai International Airport is currently the busiest airport in the world. Such levels of success have been realized because of the massive investment made by the Dubai government.
The airport was expanded to accommodate more travelers from all over the world. The port has also been modernized by automating most of the operations. It means that processing passengers and goods takes a shorter time than airports that still rely on manual systems. The entire region is benefiting from the improved status of this airport. However, that should not mean the local airports should not be improved to rival such prestigious status. The government will need to inject more resources to expand and modernize major airports in the country. Security should be improved to ensure that it is impossible for criminals and extremists to smuggle dangerous weapons into and out of the airport.
Case Study: Impact of the Robust Dubai Aviation Sector on the Economy
Dubai is currently considered one of the top aviation hubs in the world. However, that was not the case about three decades ago, as Sayigh (2015) observes. When the United Arab Emirates gained independence, it did not have a national carrier. It relied on regional and international airlines to facilitate movement of tourists, business travelers, and the political class into and out of the country. However, that posed a serious problem because Dubai had developed an ambitious economic development plan that focused on diversifying the economy.
The leadership of this emirate was concerned about the overreliance on oil and gas to support the country’s economy. As such, the initiative focused on promoting the service industry. Shavinina (2013) observes that tourism was a perfect avenue for diversifying the economy. However, the country relied on Gulf Air to facilitate movement of tourists into and out of the country. When the Management of Gulf Air decides to reduce the number of flights into and out of Dubai for various reasons, it became evident that the country’s aviation sector was vulnerable. The leadership of this emirate realized that they had to find a permanent solution to ensure that they protect the blossoming tourism sector.
The government of the UAE created Emirates Airline on March 25, 1985 as a direct response to the reduced number of flights by Gulf Air (Sheehan, Garavan, & Carbery, 2014). Emirates started its operation using two aircraft that was leased by the Pakistani International Airline. According to Abbaszadegana and Grau (2015), the Pakistani International Airline also offered to train Emirates’ cabin crew. Starting up with a capital of $ 10 million under the leadership of Ahmed bin Saeed, the firm started an ambitious plan of growth in terms of a number of passengers carried and destination. Currently, Emirates is the largest airline in the MENA (Middle East and North Africa) region with over 3600 flights per week.
According to Wang and Ahmed (2016), the airline is currently ranked fourth in the world in terms of revenue generation and international passengers that it carries, and second in terms of freight tonnage flow. It has dominated the African and Asian markets. Dubai International Airport is currently the world’s busiest airport in terms of international passenger traffic and sixth busiest cargo airport (Yu, Dong, Shen, Khalifa, & Hao, 2013). The aviation sector in Dubai employs hundreds of thousands of people directly and indirectly.
The sector currently accounts for about 27% of the GDP of Dubai (Smyth & Pearce, 2007). Tourism, Hospitality, and Aviation sector are the leading sectors of the economy. It is important to note that the tourism and hospitality largely depend on the aviation sector to ensure that there is a smooth flow of customers from the rest of the world into the country. Other sectors such as real estate, banking, trade, and entertainment also rely on the aviation sector.
It means that if the sector is crippled, the economy of Dubai will be seriously affected. This case is clear proof that there is a close and positive relationship between air transport development and economic growth within a country. One of the best ways of diversifying a country’s economy is to strengthen its aviation sector. Such an initiative would not only increase employment and revenues generated from the sector but also support the growth of other sectors of the economy.
The previous chapter has provided a detailed analysis of primary data. It is clear that there is a positive relationship between air transport development and economic growth within the country. Data obtained from both primary and secondary sources show that the aviation sector plays a critical role in the development of a country’s economy. Besides the direct benefits, which come in the form of tax and creation of employment, it also has a direct impact on other industries.
The study reveals that tourism and hospitality sectors largely depend on air transport to boost their growth. These two industries rely on international tourists and business travelers to support their growth. Most of these visitors come into the country through air transport. As such, there is a direct relationship between the growth of the air transport sector and that of tourism and hospitality.
The findings made in this study shows that the ability of the Saudi’s air transport industry to grow depends on numerous factors. One of the most important drivers of growth is government investment. Development of the country’s aviation sector should start with the expansion of the major international airports in the country. The General Authority of Civil Aviation of Saudi Arabia needs to ensure that these airports can process passengers and goods quickly and effectively. It may be necessary to embrace some of the emerging technological concepts to enhance most of the operational activities.
The desired level of development can only be realized if the government the makes necessary investment in the sector. The government should also create avenues through which private players can collaborate with public entities to promote development. The goal should always be to match regional leaders in the aviation sector such as that of Dubai. Increasing national investment in the aviation sector will open up the country’s economy to foreign investors. The ease of movement into and out of the country will develop investor confidence in the country.
It is prudent to understand some of the challenges that the industry faces as it seeks to achieve growth. One of the major challenges that players in this industry should be ready to deal with is stiff market competition. The report shows that Saudi Arabian aviation industry faces stiff competition from that of the United Arab Emirates and Qatar. Within the region, Qatar Airways, Emirates, and Etihad Airways have a stronger brand in the international market than the Saudi national carrier.
It means that the local players will need to promote their brands internationally and improve the quality of services they offer to manage the stiff competition. The issue of insecurity also emerges as a major factor that can affect the development of air transport. The aviation sector is very sensitive and it cannot thrive in an environment that is prone to crime and acts of extremism. It is the responsibility of the government to ensure that the issue of security is maintained despite the political instability and the emergence of terror outfits in the region.
The economy of Saudi Arabia is poised to grow beyond its current level. However, the government and all stakeholders who are playing different roles in implementing the plan of Saudi Vision 2030 should remember that the aviation sector would play a critical role in enhancing the diversification of the economy. The following recommendations can help improve air transport in the country:
- The government should increase its investment in the aviation sector. The investment should focus on expanding major international airports to increase their capacity.
- The Saudi government should create avenues through which private investors van partner with government to improve the country air transport. They should be given incentives such as tax holidays whenever possible.
- The General Authority of Civil Aviation of Saudi Arabia should consider modernizing all airports within the country. Processing of cargo and security checks should be conducted using modern technology.
- The General Authority of Civil Aviation of Saudi Arabia should consider promoting local aviation brands in the international market. Saudi Arabian Airline should have a strong brand such as that of Emirates.
- The government should ensure that there is security in the country to help boost the growth of the aviation sector. Travelers should not be concerned about possible terrorist attacks or acts of crime when using when they are at the airport.
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[The primary focus of this project is to conduct an analytical study of the relationship between air transport development and economic growth with a special reference to aviation industry in Saudi Arabia. The aim is to determine how growth of the aviation sector can have a direct or indirect positive impact on the country’s economy. Your participation is needed to help in the collection of relevant data. Kindly answer questions below to the best of your knowledge. Participation is on a voluntary basis]
Section A: Respondents’ Background and Demographic Information
- Kindly state your age based on the groups below: Tick as appropriate
- Above 55 Years
- Kindly state your Nationality? Tick as appropriate
- Saudi Arabia
- Non-Saudi National
Section B: Respondents’ Academic Qualifications and Experience
- What is your highest academic qualification?
- High School Graduate
- College Diploma
- Bachelor’s Degree
- Master’s Degree
- Doctorate Degree
- How long have you been working in your current organization?
- Less than 2 Years
- 2-5 Years
- 6-9 Years
- 10-16 Years
- Over 16 Years
Section C: Relationship between Air Transport Development and Economic Growth
- Do you believe that there is a positive relationship between air transport development and economic growth? Tick as appropriate
- Strongly Agree
- Not Sure
- Strongly Disagree
- Do you agree with the statement that the Saudi Arabian aviation sector’s growth has stagnated in comparison with that of other countries in the region?
- Strongly Agree
- Not Sure
- Strongly Disagree
- Do you believe that the Saudi Arabian aviation sector has the capacity to compete favorably against regional rivals?
- Strongly Agree
- Not sure
- Strongly Disagree
- Do you believe that the country’s aviation sector has enough skilled human resource that can help promote its development?
- Strongly Agree
- Not sure
- Strongly Disagree
- How often does your firm take its workers through training to equip them with skills needed in the workplace?
- Very Often
- Not sure
- Do you believe that a significant number of your colleagues at work understand the significance of this industry on the country’s economic growth?
- Strongly Agree
- Not sure
- Strongly Disagree
- How often does your organization embrace emerging technologies in the field of aviation?
- Very often
- Not sure
- In case your answer is yes (Very often or often) to question 15 above, kindly explain some of the emerging trends that your organization has embraced over the recent past.
- What are some of the areas of weakness that your organization should observe to ensure that it achieves its strategic goals and objectives?
- Do you believe that a positive relationship exists between the relevant government agencies and your organization that can foster growth?
- Strongly Agree
- Not sure
- Strongly Disagree
- What are some of the challenges that the organization/ industry faces as it struggles to achieve growth in this sector?
- What do you think the government should do (that it is currently not doing) to ensure that it promotes development of air transport in the country?
Thank you very much for being part of this study. Information obtained from you is for academic purposes. Your identity will remain confidential as was initially promised.