I’m Dr Volodymyr Bilotkach, a Senior Lecturer in Economics at Newcastle University Business School and, during the summer, a Visiting Professor at Hiroshima University. My research focuses on economics of the aviation sector, in which I am internationally recognised. I’m an Associate Editor of the Journal of Air Transport Management. I also advises the European Commission and the US Department of Transportation on policy issues relating to competition and alliances on the transatlantic market.
How aviation connects the world and why this matters
The key to success in business is in exploring and exploiting opportunities. In the globalised world we live in, opportunities can be found anywhere in the world. To be able to explore and exploit them we need to be able to get to our destination as quickly and hassle-free as possible. Fortunately, thanks to aviation, the world has never been a more connected place and air travel has never been more affordable to the general public.
Air connectivity, or the ability to reach various destinations from the area airport(s), has been proven to promote regional development. Mutinational firms, especially those in high-technology, information, communication, and professional services industries, often choose the location of their regional headquarters based on how well-connected the airport is. My research, using US data, demonstrated that adding non-stop destinations from an area airport creates jobs and leads to increased business activity in the area. My colleagues, using data from Italy, established a link between aviation activity and regional exports. On the other hand, the UK Government’s delaying of the decision to expand London airport capacity hinders development of aviation services, leading to London losing its competitive advantage to other metropolitan areas that are better connected to the world.
What is responsible for recent increase in air connectivity?
Gradual liberalisation of the airline markets over the last several decades has truly unleashed the competitive forces in the industry, sometimes yielding unexpected results. Architects of the US airline market deregulation in the 1970s did not envision the creation of the hub-and-spoke networks, which now facilitate passenger flows across the globe.
Non-stop flights to Dubai, Amsterdam, Heathrow, and the summer service to Newark allow residents and business people from North East England to reach virtually any major metropolitan area in the world with only one reasonably short stop en-route. I am writing this on my way to Osaka airport, looking forward to seeing my family in Newcastle less than 24 hours from now.
Growth of the Gulf Carriers and Turkish Airlines over the last two decades has also come as a surprise to many; these airlines are playing a vital role in connecting Europe and North America with Asia and Australia, putting competitive pressure on the airlines that have traditionally dominated these market segments.
When the single European airline market was envisioned, few experts predicted explosive growth of point-to-point lower cost carriers, such as Ryanair and EasyJet. These airlines have made flying possible for millions of people who had not dreamt about stepping on board an aircraft. They have also connected tourist destinations with new markets, opening up new possibilities for both leisure and business travel, thereby creating opportunities and jobs.
As the UK prepares to redefine its relationship with the European Union, I believe it is imperative that unfettered competition on the airline market be preserved. This applies to both the EU and the transatlantic market. Removal of the United Kingdom from the current Transatlantic Open Aviation Area covering the EU-US routes has the potential to diminish competition, lead to lower connectivity, and result in losses to the traveling public.