The Economic Impact of Emirates Airline Flights on Greater Vienna/Austria

Commissioned by

con.os tourismus.consulting gmbh Altenbergerstraße 40

Hietzinger Hauptstraße 45

4040 Linz

1130 Wien

DISPOSITION TABLE OF FIGURES.........................................................................III  TABLE OF CHARTS.......................................................................... IV  EXECUTIVE SUMMARY...................................................................... V  1. 

CURRENT SITUATION AND SCOPE OF STUDY ............................... 1 

1.1  INITIAL POSITION ............................................................................... 1  1.2  AIM OF RESEARCH .............................................................................. 2  1.3  METHODOLOGY AND LIMITATIONS ............................................................ 2  1.4  CHAPTER OVERVIEW............................................................................ 3 

2. 

IMPACTS OF EMIRATES’ FLIGHTS ON VIENNA/ AUSTRIA ................ 4 

2.1  SOURCE MARKET ANALYSIS ................................................................... 4  2.2  POTENTIAL IMPACT OF ADDITIONAL EMIRATES FLIGHTS ON OTHER CARRIERS .......... 5  2.2.1 

Relevant International Services by Austrian Airlines .................................. 5 

2.2.2 

Market Shares ..................................................................................... 6 

2.2.3 

Stimulation of Markets.......................................................................... 9 

2.3  MIDDLE EAST- A GROWING HIGH POTENTIAL MARKET FOR AUSTRIAN TOURISM ..... 10  2.4  CONNECTIVITY BENEFITS FOR AUSTRIA ................................................... 11 

3. 

THE METHODOLOGY FOR ECONOMIC IMPACT ANALYSIS ...............12 

3.1  INTRODUCTION ................................................................................ 12  3.2  ECONOMIC MULTIPLIERS ..................................................................... 12  3.3  ECONOMIC IMPACTS OF EMIRATES’ OPERATIONS ......................................... 14 

4. 

ECONOMIC IMPACTS ASSOCIATED WITH EMIRATES AIRLINE

OPERATING IN AUSTRIA .................................................................15  4.1  INTRODUCTION ................................................................................ 15  4.2  OPERATION 7 TIMES WEEKLY, 2010/11, DUBAI-VIENNA .............................. 15  4.3  OPERATION 13 TIMES WEEKLY, 2011/12, DUBAI-VIENNA ............................. 16  4.4  OPERATION 21 TIMES WEEKLY, DUBAI-VIENNA .......................................... 17  4.5  INCREMENTAL AND TOTAL ECONOMIC IMPACTS ........................................... 18  4.6  INCREASED CARGO CAPACITY ............................................................... 20  4.6.1 

Export: Vienna – Dubai – 6th Freedom Destination ................................. 20 

4.6.2 

Import: 6th Freedom Destination – Dubai – Vienna................................. 21 i

5. 

ECONOMIC IMPACTS OF EMIRATES INCOMING PASSENGERS ON

AUSTRIA .......................................................................................22  5.1  INTRODUCTION ................................................................................ 22  5.2  OPERATION 7 TIMES WEEKLY, 2010/11, DUBAI-VIENNA .............................. 22  5.2.1 

Economic Impact of Stimulated Non-resident Visitor Spending in Austria ... 23 

5.3  OPERATION 13 TIMES WEEKLY, 2011/12, DUBAI-VIENNA ............................. 25  5.4  OPERATION 21 TIMES WEEKLY, DUBAI-VIENNA .......................................... 26  5.5  INCREMENTAL AND TOTAL ECONOMIC IMPACTS ........................................... 27 

6. 

ECONOMIC IMPACT SUMMARY...................................................29 

7. 

QUALITATIVE BENEFITS ...........................................................31 

7.1  IMPACTS ON AUSTRIAN MACRO- AND MICRO-ECONOMY ................................. 32  7.2  IMPACTS ON AUSTRIAN TOURISM ........................................................... 33 

BIBLIOGRAPHY  APPENDIX A  SUMMARY OF ECONOMIC IMPACT ASSOCIATED WITH EMIRATES AIRLINE OPERATING IN AUSTRIA  APPENDIX B  SUMMARY OF ECONOMIC IMPACT OF NON-RESIDENT VISITOR SPENDING IN AUSTRIA  APPENDIX C  GLOSSARY OF TERMS 

ii

TABLE OF FIGURES Figure 1: Rising demand between Dubai and Vienna ................................................. 1  Figure 2: Source market analysis of traffic between Dubai and Vienna based on 2010/11 data...................................................................................................... 5  Figure 3: Average market shares on Austrian Airlines/ Emirates common points 2010.... 6  Figure 4: Development of total economic impact of Emirates operations in Greater Vienna and Austria .......................................................................................... 19  Figure 5: By EK operations created full-time equivalent employment in Greater Vienna and Austria .......................................................................................... 19  Figure 6: Past and estimated annual export cargo volume on Vienna-Dubai-6th freedom route .................................................................................................. 20  Figure 7: Past and estimated annual export cargo volume on 6th freedom-Dubai-Vienna route .................................................................................................. 21  Figure 8: Development of total impact of non-resident visitors in Greater Vienna and Austria ................................................................................................ 28  Figure 9: By EK operations created full-time equivalent employment in Greater Vienna and Austria .......................................................................................... 28 

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TABLE OF CHARTS Chart 1:

Total Traffic on DXB-VIE-DXB route in numbers and percentiles in 2010/11 .. 4 

Chart 2:

Total number of Austrian Airlines passenger bookings between Dubai and Vienna 2010 ........................................................................................ 6 

Chart 3:

Share of common points of Austrian Airlines & Emirates out of Austrian Airlines’ transfer passengers between Dubai and Vienna in 2010.................. 8 

Chart 4:

Estimated new traffic from additional Emirates air services ......................... 9 

Chart 5:

Distribution of visitors from Middle East in 2010 ...................................... 10 

Chart 6:

Design of operation scenarios and economic impact data.......................... 14 

Chart 7:

Impact of 7 weekly services to Vienna, approx. in one year ...................... 16 

Chart 8:

Impact of 13 weekly services to Vienna, approx. in one year..................... 17 

Chart 9:

Impact of 21 weekly services to Vienna, approx. in one year..................... 17 

Chart 10: Summary of direct impacts for 7, 13 and 21 weekly services to Vienna, approx. in one year............................................................................. 18  Chart 11: Touristic impact of 7 weekly services to Vienna, approx. in one year .......... 23  Chart 12: Touristic impact of stimulated non-resident visitor spending, approx. in one year.................................................................................................. 24  Chart 13: Incremental touristic impact of 13 weekly services to Vienna additional to 7 weekly flights, approx. in one year ........................................................ 25  Chart 14: Estimated incremental touristic impact of 21 weekly services additional to 7 weekly flights, approx. in one year ........................................................ 26  Chart 15: Summary of touristic impacts of 7, 13 and 21 weekly services to Vienna, approx. in one year............................................................................. 27  Chart 16: Total economic impact summary ........................................................... 30  Chart 17: Information about Emirates' expenditure in Austria.................................. 35 

iv

EXECUTIVE SUMMARY Emirates Airline is one of the world’s largest independent airlines and operates to a global network of over 100 cities in 67 countries. In 2004, Emirates Airline started daily operations at Vienna International Airport and has carried more than 215,000 round trip passengers between Dubai and Vienna in the period of April 2010 – March 2011. Starting with the Summer 2011 schedule, Emirates commenced operation of 13 weekly flights between Dubai and Vienna, meaning additional 6 weekly flights – having started daily services in 2004. A 14th weekly frequency is already planned to be added in the near future, meaning one additional flight to the existing 13 operations. For the purposes of this study, a Emirates triple daily operation has also been modelled as a possible future scenario in terms of its economic impact. Emirates contracted the Austrian company con.os tourismus.consulting to examine the potential economic impact on Austria of additional flights as described above. Con.os tourismus.consulting is specialized in the field of consulting and support of organizations, projects and enterprises with a touristic focus. Con.os tourismus.consulting has its headquarters in Linz and Vienna, working with national and international clients from the tourism and leisure industry.

Aim of Research & Methodology The economic impact of Emirates’ flights to Austria from 2004/2005 onwards was analyzed on the basis of 7 weekly flights. A further analysis based on the Summer schedule 2011, including 13 weekly flights between Dubai and Vienna, was made and is supplemented by an additional 21 weekly flights scenario. As for this study the focus of the analysis was on following points:  

Economic Impacts associated with Emirates Airline operating in Austria Economic Impacts of Emirates incoming passengers on Austria

Within each of the two focuses following impacts were examined:     

Total economic activity associated with Emirates operating in Austria and nonresident visitor tourism spending in Austria Impact of generated income/wages Contribution to the Austrian National GDP Full-Time equivalent employees General taxation impact

The study comprises primary research based on secondary data, which was provided by Emirates and different other sources to con.os. Current data available from sources such as Statistics Austria or the Austrian National Tourist office served as an additional basis for the analyses conducted. v

Summary of Economic Impacts associated with Emirates and Tourism spending The study examines the economic impacts of Emirates expenditure and non-resident visitor spending in Austria for the past (7 flights per week), current (13 flights per week) and possible future operations (21 flights per week) of Emirates on the route between Dubai and Vienna. Using the input/output multipliers of Statistics Austria, con.os is able to estimate the economic impact of the above mentioned three operations.

7 flights per week to Vienna (2010) (total numbers equate to approximately one year)



107,444 existing passengers from Dubai to Vienna (and a total of 211,659 round trip passengers in 2010 between Dubai and Vienna)

Full-Time Jobs 

Total Vienna: 2,674 total full-time jobs



Total Austria: 3,303 total full-time jobs 1,161 direct full-time jobs & 661 indirect full-time jobs & 852 induced full-time jobs (Vienna) / 1,481 induced full-time jobs (Austria)

Economic activity Emirates flights: 

Total Vienna: € 44.8 million



Total Austria: € 55.1 million € 19.8 million direct, € 11.1 million indirect and € 13.9 million induced (Vienna) / € 24.2 million induced (Austria)

Tourism spending of non-resident visitors: 

Total Vienna: € 186.9 million



Total Austria: € 231.1 million € 81 million direct, € 46.2 million indirect, € 59.7 million induced (Vienna) / € 103.9 million induced (Austria)



€ 24.3 million of tourism spending in direct annual tax revenues for Government vi

13 flights per week to Vienna (2011/12 estimated) (total numbers equate to approximately one year)



156,232 passengers from Dubai to Vienna (and a total of 312,463 round trip passengers between Dubai and Vienna)

Full-Time Jobs 

Total Vienna: 4,110 total full-time jobs (representing a 54 % increase in comparison to 7 flights per week)



Total Austria: 5,076 total full-time jobs (representing a 54 % increase in comparison to 7 flights per week) 1,784 direct full-time jobs & 1,016 indirect full-time jobs & 1,310 induced full-time jobs (Vienna) / 2,276 induced full-time jobs (Austria)

Economic activity Emirates flights: 

Total Vienna: € 84.9 million (representing a 90 % increase in comparison to 7 flights per week)



Total Austria: € 104.4 million (representing a 90 % increase in comparison to 7 flights per week) € 37.5 million direct, € 21 million indirect and € 26.4 million induced (Vienna) / € 45.9 million induced (Austria)

Tourism spending of non-resident visitors: 

Total Vienna: € 272.8 million (representing a 46 % increase in comparison to 7 flights per week)



Total Austria: € 337 million (representing a 46 % increase in comparison to 7 flights per week) € 118.4 million direct, € 67.5 million indirect, € 86.8 million induced (Vienna) / € 151.1 million induced (Austria)



€ 35.5 million (of tourism spending) in direct annual tax revenues for Government (representing a 46 % increase in comparison to 7 flights per week) vii

21 flights per week to Vienna (hypothetical future scenario) (total numbers equate to approximately one year)



222,156 passengers from Dubai to Vienna (and a total of 444,311 round trip passengers between Dubai and Vienna)

Full-Time Jobs 

Total Vienna: 6,027 total full-time jobs (representing a 47 % increase in comparison to 13 flights per week)



Total Austria: 7,444 total full-time jobs (representing a 47 % increase in comparison to 13 flights per week) 2,618 direct full-time jobs & 1,488 indirect full-time jobs & 1,920 induced full-time jobs (Vienna) / 3,339 induced full-time jobs (Austria)

Economic activity Emirates flights: 

Total Vienna: € 137 million (representing a 61 % increase in comparison to 13 flights per week)



Total Austria: € 168.4 million(representing a 61 % increase in comparison to 13 flights per week) € 60.5 million direct, € 33.9 million indirect and € 42.5 million induced (Vienna) / € 74 million induced (Austria)

Tourism spending of non-resident visitors: 

Total Vienna: € 388.7 million (representing a 43 % increase in comparison to 13 flights per week)



Total Austria: € 480 million (representing a 43 % increase in comparison to 13 flights per week) € 168.9 million direct, € 96.4 million indirect, € 123.4 million induced (Vienna) / € 214.7 million induced (Austria)



€ 50.7 million of tourism spending in direct annual tax revenues for Government (representing a 43 % increase in comparison to 13 flights per week) viii

Cargo Impacts Due to additional flights of Emirates between Dubai and Vienna, the cargo capacity for Austrian exports to Dubai and 6th Freedom destinations has and could increase as displayed in the following figure. Emirates facilitates foreign trade and opens new markets for Austrian exporters with its regular operation between Vienna and Dubai and other 6th Freedom destinations. Additional flights guarantee an increase of the annual export rate of Austria and ensure an increase of the awareness level of Austrian products and their image building worldwide. With reference to industry experts and insiders, Austria as a nation exporting highquality products will definitely profit from increased flights of Emirates.

VIE = Vienna International Airport, DXB = Dubai International Airport, 6th Freedom = defined as the right of transporting, via the home State of the carrier, traffic moving between two other States

Potential Impact on Austrian Airlines (as part of the Lufthansa Group) Austrian Airlines or rather Lufthansa Group 1 will not be disadvantaged by an increase in flights of Emirates on the Dubai-Vienna route, given that the additional services bring more tourists and business travelers to Austria, who might interline with Austrian Airlines to get to other Austrian destinations. Emirates also operate to 53 destinations not directly served by Austrian Airlines or any other carrier. Almost 80 % of Emirates connecting traffic is from markets not directly served by Austrian Airlines. Austrian Airlines operates from Vienna to only six points to which Emirates also carries connecting passengers via Dubai. On these points, Austrian Airlines, respectively the Lufthansa Group has a dominant market position with an aver-

1

Austrian Airlines became a wholly-owned subsidiary of the Lufthansa Group in August 2009

ix

age market share of 64%. Emirates, in contrast to that, has a moderate average share of just 6% on the 6 points, hence poses little competitive threat to Austrian Airlines.

Qualitative Impacts An abstract of qualitative benefits and potential factors of influence of Emirates Airline’s operations in Austria are listed below:

Impacts on Austrian macro- and micro-economy



Emirates facilitate Austrian foreign trade, opening new markets for Austrian exporters  annual increase of export cargo volume



Potential of development and extension of economic and trade relationships with UAE/other Middle East countries and 6th freedom destinations



Increase of international high-profile and image of Vienna airport and Austria due to Emirates Airline operations and its exclusive service image



Emirates guarantee the delivery of the much needed intercontinental connectivity at Vienna airport (due to the reduction of Austrian Airlines long haul operations in the past). Increased connectivity implies many advantages for passengers as time spent in transit is reduced and greater frequencies to destinations are offered, which as a result allows for shorter waiting times and better targeting of departure and arrival times



Dubai-Vienna connection creates a potential important infrastructure asset that generates benefits through attracting foreign direct investment and talent, enabling business clusters, specialization and other spill-over impacts on the Austrian economy’s productivity capacity



Upgrading of the Austrian business location due to regular connection to UAE/ other Middle Eastern countries

x

Impacts on Austrian tourism



International image and marketing effects for the tourism destination Austria and Vienna throughout Emirates worldwide network as part of its on-going multimillion dollar investment in advertising



Additional Emirates flights to Austria encourage the national tourism strategy “New ways in tourism” (Ministry of Economy, Family and Youth, 2010) to increase the market share of international arrivals and overnights in Austria



Potential to increase the demand for holiday in Austria in the main source markets of Emirates (UAE, Middle East, India, Australasia)



Above-average tourism spending of Middle East tourists: € 450,- tourism spending per day and 4.1 days of average length of stay in the Austrian tourism industry (accommodation, restaurants, tourist infrastructure etc.) with high value-added for other industries (retail trade, service industries etc.) in comparison to € 280,- average tourism spending of international tourists per day and 2.4 days of average length of stay



For the first time, in 2010, more guests from Middle East arrived in Austria than in Switzerland as a result of the marketing efforts of Emirates and the Austrian National Tourist Office  the Middle East represents one of the currently fastest growing markets

Conclusion The decision to increase Emirates services to Austria from 7 flights per week to 13 weekly flights in 2011/12 presents a significant economic stimulus to Austria’s economy, according to this study. In addition to the Vienna International Airport as one of the major profiteers of Emirates Airline, the Austrian tourism industry and all direct and indirect involved industries (retail, transport service, tourism infrastructure etc.) benefit from the increase of flights to Austria as well. Furthermore, the employment and tax impacts are also stimulated in a positive way. Regarding the possible increase from 13 flights to 21 flights in the future, the calculated figures based on estimated data suggest a favorable prognosis for realization of a possible Emirates flight extension to Austria. Apart from the quantified benefits of Emirates operations to Austria, various qualitative benefits and arguments plead for an increase of daily connection from Dubai to Vienna. xi

1. CURRENT SITUATION AND SCOPE OF STUDY 1.1 INITIAL POSITION Emirates Airline is one of the world’s largest independent airlines, operating a modern fleet of over 150 long-haul aircraft to a global network of over 100 cities in 67 countries. In 2004, Emirates Airline started daily operations at Vienna International Airport and has carried more than 211,000 round trip passengers between Dubai and Vienna in 2010. Passenger numbers and seat-load-factors are steadily rising on all flights also, including those of Austrian Airlines.

Figure 1: Rising demand between Dubai and Vienna

Starting with the Summer 2011 schedule, Emirates operates 13 weekly flights between Dubai and Vienna, meaning additional 6 weekly flights. A 14th weekly frequency is already planned to be added in the near future, meaning one additional flight to the existing 13 operations. For the purposes of this study, an Emirates triple daily operation has also been modelled in terms of its economic impact. Emirates contracted the Austrian company con.os tourismus.consulting to examine the potential economic impact on Austria of additional flights as described above. Con.os tourismus.consulting is specialized in the field of consulting and support of organizations, projects and enterprises with a touristic focus. Con.os tourismus.consulting has its headquarters in Linz and Vienna, working with national and international clients from the tourism and leisure industry. 1

1.2 AIM OF RESEARCH The study’s aim is to examine Emirates impact based on three scenarios. Initially, the economic impact of Emirates’ flights to Austria from 2004/2005 onwards was analyzed on the basis of the 7 weekly flights. Using data provided by Emirates and statistics from sources such as Statistics Austria, Austrian National Tourist Office and the Viennese Tourist Board following aspects were analyzed: 

Direct economic activity of Emirates operating in Austria



Direct economic activity of non-resident visitors in Austria



Relative gross domestic product generated in Austria



Job creating and maintaining effects (full-time equivalent employees and income/wages)



Tax impact



Cargo services



Qualitative impacts of Emirates flights

In addition to the above mentioned aspects, a further analysis based on the Summer schedule 2011, including 13 weekly flights between Dubai and Vienna, was made and is also supplemented by an additional 21 weekly flights scenario. Estimated numbers provided by Emirates as well as the numbers calculated in the first part of the study served as a basis for the analysis of the economic impacts of 13 and 21 weekly services of Emirates between Dubai and Vienna.

1.3 METHODOLOGY AND LIMITATIONS The study comprises primary research based on secondary data, which was provided by Emirates and by other external sources to con.os. The study relies on the following data provided by Emirates: 

  

Number of incoming and outgoing passengers including seat-load factors from 2004 to 2010 between Dubai and Vienna including forecasts for 13 respectively 21 weekly flights Average expenditure of Emirates for operating at Vienna International Airport Cargo data – exports from Vienna International Airport Passenger booking information between Dubai and Vienna

Further to the data provided by Emirates, con.os utilized the latest available data from following sources:  Statistics Austria – a Tourism Satellite Account 2000-2011  Austrian National Tourist Office – statistics on tourist spends in Austria 2

 Vienna Tourist Board – statistics on tourist spends in Vienna and distribution of guests on provinces in Austria Due to data limitations in terms of missing statistics some numbers had to be modeled from a number of sources using an agreed set of assumptions based on conversations with Emirates and using industry norms. It is important to note that statistical variation in customer booking behaviors will influence the representativeness of the estimates. Nevertheless, con.os has taken every effort to ensure the study results are realistic and that the overall margin of error is small and will not materially affect the results of economic impact analysis derived from these assumptions.

1.4 CHAPTER OVERVIEW Chapter two provides an overview on source markets of Emirates for the Dubai-Vienna route, analyzing the potential impact of additional Emirates flights to Vienna on other carriers, as well as on Austrian domestic air traffic. Chapter three describes the methodology applied for conducting the economic impact study. Chapter four is dedicated to the economic impact analysis associated with Emirates Airline operating in Austria. Within this chapter three different “scenarios” are presented and discussed, namely a seven, thirteen and twenty-one weekly flight scenario on the Dubai-Vienna route. Furthermore, additional information in terms of potential cargo capacities is provided. Chapter five deals with the economic impact analysis of incoming passengers travelling with Emirates to Austria, providing again numbers for seven, thirteen and twenty-one weekly flights to Vienna. Chapter six provides a summary of the economic impact analyses presented in the previous two chapters. Chapter seven aims at illustrating the qualitative benefits for different stakeholders of a greater frequency of Emirates flights on the Vienna-Dubai route, focusing on impacts on the Austrian macro- and micro economy and on Austrian tourism. In the appendices a glossary of terms used in this report, as well as additional information concerning the economic impact associated with Emirates and non-resident visitor spending will be given.

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2. IMPACTS OF EMIRATES’ FLIGHTS ON VIENNA/ AUSTRIA 2.1 SOURCE MARKET ANALYSIS Emirates Airlines, as a network carrier, offers connections via its Dubai hub between Vienna and various markets in the Middle East, Africa, Asia and Australasia. By operating to 53 destinations in those markets which are not directly served by Austrian Airlines or any other carriers, Emirates facilitates Vienna’s accessibility. As a matter of fact, almost 80% of Emirates connecting traffic is from markets not directly served by Austrian Airlines. Only six points to which Emirates also carries connecting passengers via Dubai are operated directly from Vienna by Austrian Airlines. Emirates’ has carried more than 215,000 passengers between Dubai and Vienna in the period of April 2010 – March 2011. About 37% of them were Third or Fourth Freedom passengers. 63% of all passengers on this route were Sixth Freedom Passengers. Total Traffic between Dubai and Vienna

215,874

100%

3rd/4th Freedom traffic

79,685

37%

6th Freedom traffic

136,189

63%

April 2010- March 2011

Chart 1: Total Traffic on DXB-VIE-DXB route in numbers and percentiles in 2010/11

Figure 2 shows the different source markets of the total number of passengers between Dubai and Vienna, based on point-of-sale data. It can be concluded that in addition to Europe, the Far East and Australia/NZ with 19%, Middle East with 13% and South Asia with a share of 5% are all major source markets for the Vienna-Dubai-Vienna route. Hence, Emirates provides an important connection between these markets and Vienna.

4

Figure 2: Source market analysis of traffic between Dubai and Vienna based on 2010/11 data

2.2 POTENTIAL IMPACT OF ADDITIONAL EMIRATES FLIGHTS ON OTHER CARRIERS 2.2.1

Relevant International Services by Austrian Airlines

The route between Dubai and Vienna is not only operated by Emirates, but by Austrian Airlines as well. Basis of these operations are the air services arrangements between the UAE and Austria. Emirates’ operates to 53 destinations that are not directly served from Vienna by Austrian Airlines or any other carrier in 2010. As already pointed out in section 2.1, almost 80% of Emirates connecting traffic to or from Vienna is from markets not served by Austrian Airlines directly. Austrian Airlines operates from Vienna to only six points to which Emirates also carries connecting passengers via Dubai. Those points are:



Bangkok



Beijing



Delhi



Mumbai



Tehran



Tokyo

5

2.2.2

Market Shares

Figure 3 shows the average market shares of different airlines on the 6 common points of Emirates and Austrian Airlines listed in section 2.2.1. It can be concluded that Austrian Airlines enjoys a dominant position on the above listed points with an estimated average market share of 58%, respectively 64% for the whole Lufthansa Group (incl. Austrian Airlines, bmi, Lufthansa and Swiss). 2 Emirates, in contrast to that, has a moderate average share of just 6% on the 6 points, hence poses little competitive threat to Austrian Airlines.

Figure 3: Average market shares on Austrian Airlines/ Emirates common points 2010

According to an analysis based on MIDT sourced from GDS booking data, Austrian Airlines sources a lot of passengers on the route between Dubai and Vienna from destinations beyond Vienna in Europe and North America. About 76% of total passenger bookings of Austrian Airlines are such transfer passengers, destined for Dubai and beyond, carried via Vienna to points of which 24 cities are served directly by Emirates from Dubai.

Total Austrian Airlines Passenger Bookings between Dubai and Vienna in 2010

93,988

100%

3rd/4th Freedom traffic

22,394

24%

6th Freedom traffic

71,594

76%

Chart 2: Total number of Austrian Airlines passenger bookings between Dubai and Vienna 2010

2

Data based on booking information from Global Distribution Systems for 2010.

6

Chart 3 lists some of the 24 cities served by both, Emirates and Austrian Airlines as well as the respective share of Austrian Airlines’ 6th Freedom passenger bookings to each of the 24 destinations in 2010. 3

3 Data presented in the table is based on MIDT sourced from GDS booking data and does not represent actual flown traffic, but does reflect bookings which are an industry proxy.

7

Common points of Austrian Airlines & Emirates

Austrian Airline Bookings

% of total 6th Freedom passengers (76%)

Prague

2,833

4.0%

Paris

2,757

3.9%

Amsterdam

1,353

1.9%

Rome

1,334

1.9%

London

1,279

1.8%

Milan

1,217

1.7%

Frankfurt

1,180

1.6%

Munich

1,094

1.5%

Hamburg

995

1.4%

Zurich

987

1.4%

Venice

969

1.4%

Dusseldorf

777

1.1%

Geneva

740

1.0%

Toronto

461

0.6%

Nice

407

0.6%

Other destinations

226

0.3%

18,609

26%

71,594

100%

Total common points (24) Total Austrian Airline 6th Freedom traffic all points

Chart 3: Share of common points of Austrian Airlines & Emirates out of Austrian Airlines’ transfer passengers between Dubai and Vienna in 2010

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2.2.3

Stimulation of Markets

There are two main market stimuli which an increased frequency of air services between Vienna and Dubai may imply. Firstly, awareness of the additional services might be raised by reducing airfares and secondly, consumers might chose to fly because of an improvement of the air travel product in terms of scheduling or non-stop services. An improved quality in air services such as greater flight frequencies, stimulate additional demand, of course, depending to some degree on how good the improved services might be. Especially business travelers are very sensitive in terms of time efficiency and scheduling and will be encouraged to travel if there are several options from which to choose the optimal travel time. With reference to Emirates increased flight frequency from 7 to 13 weekly flights and even 21 weekly flights in future, consumers are offered additional opportunities to travel and to best match their business schedules with overall trip duration. Furthermore, additional services between Vienna and Dubai imply additional opportunities for consumers to travel to the 53 destinations offered by Emirates or vice versa for travelers from markets in Asia, Australasia, the Middle East and Africa to come to Austria.

Frequency

7 weekly actual (2010)

13 weekly actual + estimated

21 weekly estimated

DXB-VIE-DXB

DXB-VIE

Annual Pas-

Seat-Load

Non-

Stimulated Non-

senger

Factor %

Residents

Residents

211,659

82.3%

66,672

16,922

312,463

74.6%

98,426

30,736

444,311

72.1%

139,958

72,268

Chart 4: Estimated new traffic from additional Emirates air services 4

Numbers shown in Chart 4 are based on point-of-sale data, which served as a basis for estimating stimulation and forecasting the number of new non-resident visitors to Austria per annum. The increase in Emirates’ 7 weekly services on the Vienna-Dubai route to 13 weekly air services will probably result in 30,736 new non-resident visitors to Austria. Moreover, if Emirates’ operated 21 weekly services an estimated number of 72,268 stimulated non-resident visitors could come to Austria.

4 The number of non-resident visitors is equal to estimated 63 % of half the number of total annual passengers.

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2.3 MIDDLE EAST- A GROWING HIGH POTENTIAL MARKET FOR AUSTRIAN TOURISM In addition to the presented effects on visitor income to Austria, of course, a greater frequency in air services between Vienna and Dubai could have effects on Austrian domestic air traffic as well. Taking high spending guests from the Middle East, which make up about 13% of all Emirates passengers coming to Austria, as an example it can be concluded that even though about 38.5 % of visitors from the Middle East tend to stay in Vienna, other provinces such as Salzburg or Tyrol attract many visitors as well. Assuming that parts of the travelers visiting another province will decide to go by airplane, this could have an effect on Austrian domestic air traffic, implying additional passengers travelling from Vienna further to e.g. Salzburg or Innsbruck. An overview of the visitor distribution of travelers from the Middle East in Austria in 2010 among Austrian provinces according to the Austrian National Tourist Office is shown in chart 5.

Province

In %

Burgenland

0.3

Carinthia

0.9

Lower Austria

0.8

Upper Austria

1.6

Salzburg

42.9

Styria

1.1

Tyrol

12.3

Vorarlberg Vienna

1.3 38.5

Chart 5: Distribution of visitors from Middle East in 2010

Statistics show that visitors from the Middle East and especially from the UAE tend to spend much more money on average during their stay in Austria than guests from other countries do. -

Above-average tourism spending of Middle East tourists: € 450,- tourism spending per day and 4.1 days of average length of stay in comparison to € 280,- average tourism spending of international tourist per day and 2.4 days of average length of stay

Therefore, the Middle East represents a very important source market for the Austrian tourism industry and is by the way one of the currently fastest growing markets. In 2010, for the first time, Austria received more guests from the Middle East than Switzerland, hence, efforts from the Austrian National Tourist Office and Emirates to market Austria as a destination seem to bearing their first fruit.

10

2.4 CONNECTIVITY BENEFITS FOR AUSTRIA Austria’s and especially Vienna’s strategic location in the heart of Europe enables travellers to fly to many important destinations world wide. Emirates enriches the variety of destinations that can be flown to from Vienna, as it offers services from Vienna to 53 destinations that are not directly served by Austrian Airlines or any other carrier in 2010, and contributes therefore beneficially to the connectivity of Austria. Increased connectivity implies many advantages for passengers as time spent in transit is reduced and greater frequencies to destinations are offered, which as a result allows for shorter waiting times and better targeting of departure and arrival times. Furthermore, improvements in connectivity provide Austria-based companies greater access to foreign markets and encourage export. The Austrian economy heavily depends on its exports, given that according to the Austrian Federal Economic Chamber five out of ten euros of all exporting companies in Austria are generated in foreign markets. Vice versa, opening domestic markets for foreign competitors can also be an important factor for an economy. Apart from further impetus through the free movement of investment capital and workers between countries, greater access to a market may force domestic firms to adopt international best practices in production and management methods or may encourage innovation. Research has shown that economies that have a greater connectivity, in relation to their size, are prone to grow faster in the long run. Hence, an increased frequency of Emirates flights between Dubai and Vienna will imply many benefits for the Austrian economy based on an improvement of Austria’s connectivity.

11

3. THE METHODOLOGY FOR ECONOMIC IMPACT ANALYSIS 3.1 INTRODUCTION Economic impact analysis examines the effect of a policy, program, project, activity or event on the economy of a given area. The area can range from a neighborhood to the entire globe. Economic impact is usually measured in terms of changes in economic growth (output or value added) and associated changes in full-time jobs (full-time equivalents - FTEs) and income (wages). These measures can be useful in developing an appreciation of businesses, projects, investments and economic sectors.

3.2 ECONOMIC MULTIPLIERS To measure the economic contribution of Emirates operations (7 weekly, 13 weekly and 21 weekly) the two most commonly used means of measurement were applied in this study. The economic activity (=economic output) and Gross Domestic Product (GDP) are two ratios which correspond to the gross revenues of goods or services produced by an economic sector on the one hand (i.e. economic activity); however GDP measures only value-added revenues. GDP removes the revenues to suppliers of intermediate goods and services and only includes the contributions from labor and capital. The investigation of direct, indirect and induced economic activity and the GDP is challenging and would require an extensive primary data collection including thousands of data. As an alternative the use of economic multipliers is a common measure to evaluate direct, indirect and induced effects. Multipliers are derived from economic/statistical/accounting models of the general economy. In this case, the economic multipliers produced by Statistics Austria have been used to estimate the direct, indirect and value-added data. Choosing the appropriate set of multipliers to use must be exercised with great care. Following arguments and limitations should be mentioned in terms of prudence when using input-output multipliers:

12

It should be noted, that multiplier impacts must be interpreted with caution, as they present the potential direct, indirect and induced impacts that can be achieved under a given set of economic conditions.

13

3.3 ECONOMIC IMPACTS OF EMIRATES’ OPERATIONS In Chapters four and five the economic impact of Emirates Airline operating in Austria and the economic impact of Emirates non-resident incoming passengers in Austria are going to be displayed. The following chart illustrates the design of operation scenarios and economic impact data. Direct and indirect values presented in the table apply for both, Greater Vienna and Austria. However, concerning induced values it must be noted that results for Vienna and Austria differ, ultimately, numbers result in different total values for Greater Vienna and Austria. The estimated economic impacts, differentiated between flight frequency and direct, indirect and induced effects, are going to be generated within a period of approximately one year. Economic Activity

Operation

GDP in Million

FTEs 5

in Million

Income/ Wages

Tax Impacts

in Million

in Million

Direct Indirect

2010/11

Induced (Greater Vienna)

7-weekly

Induced (Austria)

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

Total (Greater Vienna) Total (Austria) Direct Indirect

2011/12

Induced (Greater Vienna)

13-weekly

Induced (Austria) Total (Greater Vienna) Total (Austria) Direct Indirect

21-weekly

Induced (Greater Vienna) Induced (Austria) Total (Greater Vienna) Total (Austria)

Chart 6: Design of operation scenarios and economic impact data

5

= Full-Time-Equivalent Employment = Full-Time-Jobs

14

4. ECONOMIC IMPACTS ASSOCIATED WITH EMIRATES AIRLINE OPERATING IN AUSTRIA 4.1 INTRODUCTION This chapter presents the economic impacts associated with the operation of the passenger and cargo service by Emirates Airline at the airport and the additional expenditures of Emirates; for example:  Crew layover  Employee related costs  Office Accommodation  Advertising, promotion and sponsoring/events Appendix A displays detailed information of Emirates expenditures. The estimated economic impacts, differentiated between flight frequency and direct, indirect and induced effects, are going to be generated within a period of approximately one year.

4.2 OPERATION 7 TIMES WEEKLY, 2010/11, DUBAI-VIENNA The seven times weekly operation lasted until the end of March 2011. According to Emirates Airlines, 29 full-time equivalent workers to handle the operation of passengers and cargo of seven weekly flights to Vienna International Airport were employed. The employment until March 2011 was made up of 15 office workers in sales, finance and administration, serving the town office in Vienna; 9 full-time airport services agents working out of VIE; 5 full-time employees involved in cargo operations in Vienna; Chart 7 shows the economic impact of Emirates Airline’s seven weekly operations at Vienna and Austria. The past operations at Vienna generated a total of 478 full-time jobs of total employment, generating € 17.8 million in direct wages along with € 22.4 million in total GDP and € 44.8 million in total economic activity at the airport. For Austria it can be concluded that a total of 597 full-time jobs of total employment, € 22.0 million in direct wages along with € 27.1 million in total GDP and 55.1 in total economic activity have been generated.

15

Economic Activity

GDP in Million

in Million

Employment (FTEs)

Income/ Wages in Million

direct

€ 19.8

€ 10.3

203

indirect

€ 11.1

€ 5.7

114

€ 4.4

€ 13.9

€ 6.4

161

€ 5.6

€ 24.2

€ 11.1

280

€ 9.7

€ 44.8

€ 22.4

478

€ 17.8

€ 55.1

€ 27.1

597

€ 22.0

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

6

€ 7.9

Chart 7: Impact of 7 weekly services to Vienna, approx. in one year

4.3 OPERATION 13 TIMES WEEKLY, 2011/12, DUBAI-VIENNA Since April 2011 the number of flights has increased from seven times weekly to 13 weekly operations by Emirates between Dubai and Vienna. According to our estimations the total expenditure of Emirates Airline in Austria amounts to € 84.9 million for 2011/12 for Vienna as well as € 104.4 million for Austria. 13 services per week are estimated to generate a total of 905 full-time jobs in Vienna and 1,130 in, generating € 33.8 million in total wages in Vienna; respectively € 41.6 million in Austria. In terms of GDP, Emirates operations generate € 42.4 million for Greater Vienna and € 51.4 million for Austria.

Economic Activity

GDP in Million

in Million

Income/ Wages in Million

direct

€ 37.5

€ 19.5

384

€ 14.9

indirect

€ 21.0

€ 10.7

216

€ 8.3

€ 26.4

€ 12.1

305

€ 10.6

€ 45.9

€ 21.1

530

€ 18.4

€ 84.9

€ 42.4

905

€ 33.8

€ 104.4

€ 51.4

1130

€ 41.6

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

6

Employment (FTEs)

Number includes 29 full-time equivalent Emirates workers

16

Chart 8: Impact of 13 weekly services to Vienna, approx. in one year

4.4 OPERATION 21 TIMES WEEKLY, DUBAI-VIENNA Based on an average expenditure of € 2.88 million per flight per year, total expenditures of Emirates Airline in Austria are being estimated with € 137.0 million for Vienna and € 168.4 for Austria. On the basis of input-output multipliers, it can be concluded that 1,460 full-time jobs are created in Vienna and 1,823 full-time jobs in Austria. € 54.5 million are generated in wages in Vienna along with € 68.4 million in GDP. For Austria € 67.1 million are generated in total wages, respectively € 82.9 million in GDP. Economic Activity

GDP in Million

in Million

Employment (FTEs)

Income/ Wages in Million

direct

€ 60.5

€ 31.5

620

€ 24.0

indirect

€ 33.9

€ 17.3

348

€ 13.5

€ 42.5

€ 19.6

492

€ 17.0

€ 74.0

€ 34.1

856

€ 29.6

€ 137.0

€ 68.4

1,460

€ 54.5

€ 168.4

€ 82.9

1,823

€ 67.1

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

Chart 9: Impact of 21 weekly services to Vienna, approx. in one year

17

4.5 INCREMENTAL AND TOTAL ECONOMIC IMPACTS This section summarizes the incremental and total economic impacts (direct, indirect & induced) for all Emirates operations in Austria. (past, present, scenario) Economic Activity

GDP in Million

in Million 2010/11

Total Vienna

7weekly

Total Austria Total Vienna + incremental

2011/12 13weekly

Total Austria + incremental

Increase in % Total Vienna + incremental

21weekly

Total Austria + incremental

Increase in %

Employment (FTEs)

Income/ Wages in Million

€ 44.8

€ 22.4

478

€ 17.8

€ 55.1

€ 27.1

597

€ 22.0

€ 84.9

€ 42.4

905

€ 33.8

+ € 40.1

+ € 20.0

+ 427

+ € 16.0

€ 104.4

€ 51.4

1,130

€ 41.6

+ € 49.3

+ € 24.3

+ 533

+ € 19.6

Increase of 90 % in comparison to 7-weekly flights

€ 137.0

€ 68.4

1,460

€ 54.5

+ € 92.2

+ € 46

+ 982

+ € 36.7

€ 168.4

€ 82.9

1,823

€ 67.1

+ € 113.3

+ € 55.8

+ 1,226

+ € 45.1

Increase of 61 % in comparison to 13-weekly flights

Chart 10: Summary of direct impacts for 7, 13 and 21 weekly services to Vienna, approx. in one year

18

Figure 4: Development of total economic impact of Emirates operations in Greater Vienna and Austria

Figure 5: By EK operations created full-time equivalent employment in Greater Vienna and Austria

19

4.6 INCREASED CARGO CAPACITY The following figures summarize the potential cargo tonnages to be carried from Vienna to Dubai and vice versa on each flight scenario. In addition to the increased number of passengers and the direct and indirect economic impacts, the planned flight operations will provide additional air cargo capacity between Austria and Dubai. 7

4.6.1

Export: Vienna – Dubai – 6th Freedom Destination

The average uplift per day per flight in kilograms is 11,450. Figure 6 summarizes the past and estimated annual cargo volume to be carried on each flight operation between Vienna, Dubai and the 6th freedom destinations.

Figure 6: Past and estimated annual export cargo volume on Vienna-Dubai-6th freedom route

According to Emirates the main export products from Vienna via Dubai to the final destinations (mainly Australia, India, Africa, and Far East) are: 

Glassware



High end electronic products (microchips, various CDs, DVDs and blue ray discs)



Products of new technology (i.e. solar equipment)



Furniture



Firefighting equipment



Paper products



Foodstuff (bio-friendly products)



High end steel parts

7

Note: The impacts of the cargo exports themselves are not included in the analysis due to the difficulty in quantifying the impact.

20



Railway equipment

Emirates faciliatates foreign trade and opens new markets for Austrian exporters with its regular operation between Vienna and Dubai and other 6th freedom destinations. Additional flights guarantee an increase of the annual export rate of Austria and ensure an increase of the awareness level of Austrian products and their image building worldwide. With reference to industry experts and insiders, Austria as a nation exporting highquality products will definitely profit from increased flights of Emirates.

4.6.2

Import: 6th Freedom Destination – Dubai – Vienna

The average uplift per day per flight is 10,400 kilograms. Figure 7 summarizes the past and estimated annual cargo volume to be carried on each flight operation between 6th freedom destinations via Dubai to Vienna.

Figure 7: Past and estimated annual export cargo volume on 6th freedom-Dubai-Vienna route

21

5. ECONOMIC IMPACTS OF EMIRATES INCOMING PASSENGERS ON AUSTRIA 5.1 INTRODUCTION This chapter presents the economic impact generated due to tourist spending by nonresident visitors to Austria. Appendix B discusses the methodology used in estimating non-resident visitor tourist spending in Austria. The estimated economic impacts, differentiated between flight frequency and direct, indirect and induced effects, are going to be generated within a period of approximately one year.

5.2 OPERATION 7 TIMES WEEKLY, 2010/11, DUBAI-VIENNA Operations based on seven weekly flights lasted until the end of March 2011. Chart 11 shows the economic impact of tourism spending generated by the 7 weekly operations until March 2011. In the given period 66,672 non-resident visitors were travelling to Austria on 7 weekly operations, adjusted of the proportion of returning Austrian resident passengers. The average tourist spend per day is € 380 (weighted average of tourist spending of Arab tourists and international tourists) with an average length of stay of 3.2 days (weighted average of Arab tourists and international tourists in Austria) 8 . The total amount of direct economic activity is € 81.0 million, which generates 2,196 total full-time jobs in Vienna and 2,706 in Austria, € 75.3 million in direct wages in Vienna and € 93.0 million in Austria along with € 94.9 million in direct GDP for Vienna and € 115.2 million for Austria. The ongoing direct taxation impact of tourism spending for the 7 weekly operations is € 24.3 million. 9

8

€ 380,- weighted average tourism spending per day = weight of average spending of Middle East tourists and spending of international tourists (6th Freedom destinations) 9

30 % of non-resident visitor spendings affect tax impacts for the Austrian public sector

22

Economic Activity

GDP in Million

in Million

Employment (FTEs)

Income/ Wages

Tax Impacts

in Million

in Million

direct

€ 81.0

€ 45.2

958

€ 32.7

€ 24.3

indirect

€ 46.2

€ 22.2

547

€ 18.7

--

€ 59.7

€ 27.5

691

€ 23.9

--

€ 103.9

€ 47.8

1,201

€ 41.6

--

€ 186.9

€ 94.9

2,196

€ 75.3

--

€ 231.1

€ 115.2

2,706

€ 93.0

--

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

Chart 11: Touristic impact of 7 weekly services to Vienna, approx. in one year

5.2.1

Economic Impact of Stimulated Non-resident Visitor Spending in Austria

Considering the volume of non-residents that were stimulated by Emirates beginning service in 2004/05, different empirical values of the industry sectors estimate that roughly 25 % of the 66,672 non-resident visitors represent stimulated visitors, which would be 16,668 stimulated non-resident visitors out of the total 66,672 non-resident visitors. The total amount of tourism spending associated with the stimulated visitors is € 47.3 million in Vienna and € 58.3 in Austria, assuming the same average amount of tourism spending of € 380 and the same average length of stay (3.2 days). Economic Activity

GDP in Million

in Million

Employment (FTEs)

Income/ Wages

Tax Impacts

in Million

in Million

direct

€ 20.6

€ 11.5

238

€ 8.3

€ 6.2

indirect

€ 11.8

€ 5.6

136

€ 4.7

--

€ 14.9

€ 6.9

173

€ 6.0

--

€ 26.0

€ 12.0

300

€ 10.4

--

€ 47.3

€ 24.0

547

€ 18.9

--

€ 58.3

€ 29.1

675

€ 23.4

--

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

23

Chart 12: Touristic impact of stimulated non-resident visitor spending, approx. in one year

24

5.3 OPERATION 13 TIMES WEEKLY, 2011/12, DUBAI-VIENNA Starting in April 2011 Emirates operates 13 flights per week. Chart 13 shows the potential economic impact of tourism spending generated by 13 Emirates flights to Vienna per week. Increasing Emirates’ services generate additional 30,736 non-resident visitors to Austria, in addition to the 66,672 non-resident visitors that have been travelling in 2010/11 (7 weekly flights). The average spend per trip is € 380 and the average length of stay is 3.2 days. The total amount of additional tourism spending (total economic activity for Vienna) is € 85.9 million and € 105.9 million (total economic activity for Austria), which generate 1,009 total full-time jobs in Vienna and 1,240 in Austria. € 34.6 million (Greater Vienna) and € 42.6 million (Austria) in wages along with € 43.6 million (Greater Vienna) and € 52.8 (Austria) in total GDP are generated as a result of thirteen weekly flights. Economic Activity

GDP in Million

in Million

Employment (FTEs)

Income/ Wages

Tax Impacts

in Million

in Million

direct

€ 37.4

€ 20.9

442

€ 15.1

€ 11.2

indirect

€ 21.3

€ 10.3

253

€ 8.6

--

€ 27.1

€ 12.5

314

€ 10.9

--

€ 47.2

€ 21.7

545

€ 18.9

--

€ 85.9

€ 43.6

1,009

€ 34.6

--

€ 105.9

€ 52.8

1,240

€ 42.6

--

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

Chart 13: Incremental touristic impact of 13 weekly services to Vienna additional to 7 weekly flights, approx. in one year

25

5.4 OPERATION 21 TIMES WEEKLY, DUBAI-VIENNA Chart 14 shows the potential economic impact of tourism spending generated by triple daily operations by Emirates to Vienna. Increasing services to three daily flights generate additional 72,268 non-resident visitors to Austria in addition to the 66,672 visitors on 7 weekly operations. The average spend per trip remain at € 380 and the average length of stay is 3.2 days. The total amount of additional tourism spending (total economic activity) is € 201.8 million for Vienna and € 248.9 million for Austria. This would generate additional 2,371 FTEs in Vienna and 2,915 in Austria. € 81.3 million are generated in total wages in Greater Vienna and € 100.2 in Austria along with € 102.5 million in total GDP for Vienna and € 124.2 million for Austria. Economic Activity

GDP in Million

in Million

Employment (FTEs)

Income/ Wages

Tax Impacts

in Million

in Million

direct

€ 87.9

€ 49.0

1,040

€ 35.5

€ 26.4

indirect

€ 50.2

€ 24.1

593

€ 20.3

--

€ 63.7

€ 29.4

737

€ 25.5

--

€ 110.8

€ 51.0

1,282

€ 44.4

--

€ 201.8

€ 102.5

2,371

€ 81.3

--

€ 248.9

€ 124.2

2,915

€ 100.2

--

induced (Greater Vienna)

induced (Austria)

Total (Greater Vienna)

Total (Austria)

Chart 14: Estimated incremental touristic impact of 21 weekly services additional to 7 weekly flights, approx. in one year

26

5.5 INCREMENTAL AND TOTAL ECONOMIC IMPACTS This section summarizes the incremental and total economic impacts (direct, indirect & induced) of non-resident tourism spending in Austria. (past, present, scenario). Economic Activity

GDP in Million

in Million 2010/11

Total Vienna

7weekly

Total Austria Total Vienna + incremental

2011/12 13weekly

Total Austria + incremental

Increase in % Total Vienna + incremental

21weekly

Total Austria + incremental

Increase in %

Employment (FTEs)

Income/ Wages in Million

€ 186.9

€ 94.9

2,196

€ 75.3

€ 231.1

€ 115.2

2,706

€ 93.0

€ 272.8

€ 138.5

3,205

€ 109.9

+ € 85.9

+ € 43.6

+ 1,009

+ € 34.6

€ 337.0

€ 168.0

3,946

€ 135.6

+ € 105.9

+ € 52.8

+ 1,240

+ € 42.6

Increase of 46 % in comparison to 7-weekly flights

€ 388.7

€ 197.4

4,567

€ 156.6

+ € 115.9

+ € 58.9

+ 1,362

+ € 46.7

€ 480.0

€ 239.4

5,621

€ 193.2

+ € 143

+ € 71.4

+ 1,675

+ € 57.6

Increase of 43 % in comparison to 13-weekly flights

Chart 15: Summary of touristic impacts of 7, 13 and 21 weekly services to Vienna, approx. in one year

27

Figure 8: Development of total impact of non-resident visitors in Greater Vienna and Austria

Figure 9: By EK operations created full-time equivalent employment in Greater Vienna and Austria

28

6. ECONOMIC IMPACT SUMMARY Chart 16 summarizes the total economic impacts of Emirates operations in Greater Vienna and Austria and the non-resident visitor spending for each flight scenario - (total numbers equate to approximately one year)

Operation

EMIRATES FLIGHTS

Economic Activity in Million

GDP in Million

Employ ment (FTEs)

VISITORS & TOURISM SPENDING

Income/ Wages in Million

annual pax DXBVIE-DXB

NonResident Visitors to Austria

Economic Activity = Stimulated tourism spending

Income/ Wages

in Million

Employment (FTEs)

€ 186.9

€ 94.9

2,196

€ 75.3

GDP

in Million

in Million Total

7-weekly flights 2010/11

Vienna Total Austria Total Vienna

13-weekly flights 2011/12 (estimated)

Total Austria

€ 44.8

€ 22.4

478

€ 17.8 211,659

66,672

€ 55.1

€ 27.1

597

€ 22.0

€ 231.1

€ 115.2

2,706

€ 93.0

€ 84.9

€ 42.4

905

€ 33.8

€ 272.8

€ 138.5

3,205

€ 109.9

+ € 40.1

+ € 20.0

+ 427

+ € 16.0

+ € 85.9

+ € 43.6

+ 1,009

+ € 34.6

€ 337.0

€ 168.0

3,946

€ 135.6

+ € 105.9

+ € 52.8

+ 1,240

+ € 42.6

€ 104.4

€ 51.4

1,130

€ 41.6

+ € 49.3

+ € 24.3

+ 533

+ € 19.6

Increase of 90 % in comparison to 7-weekly flights

+30,736 312,463

non-resident visitors to Austria

Increase of 46 % in comparison to 7-weekly flights

29

Operation

EMIRATES FLIGHTS

Economic Activity in Million Total Vienna

21-weekly flights (scenario)

Total Austria

GDP in Million

Employ ment (FTEs)

VISITORS & TOURISM SPENDING

Income/ Wages in Million

€ 137.0

€ 68.4

1,460

€ 54.5

+ € 52.1

+ € 26

+ 555

+ € 20.7

€ 168.4

€ 82.9

1,823

€ 67.1

+ € 64

+ € 31.5

+ 693

+ € 25.5

Increase of 61 % in comparison to 13-weekly flights

annual pax DXBVIE-DXB

NonResident Visitors to Austria

+72,268 444,311

nonresident visitors to Austria

Economic Activity = Stimulated tourism spending

Income/ Wages

in Million

Employment (FTEs)

€ 388.7

€ 197.4

4,567

€ 156.6

+ € 115.9

+ € 58.9

+1,362

+ € 46.7

€ 480.0

€ 239.4

5,621

€ 193.2

+ € 143

+ € 71.4

+ 1,675

+ € 57.6

GDP

in Million

in Million

Increase of 43 % in comparison to 13-weekly flights

Chart 16: Total economic impact summary

30

7. QUALITATIVE BENEFITS This chapter presents the qualitative benefits and potential factors of influence of Emirates Airline’s operations in Austria. The main potential impacts and benefits affect Austria’s macro and micro economics. In addition, the benefits of Emirates Airline’s operations concerning the national tourism industry are pointed out due to high relevance of tourism for the Austrian economy.

IMPACTS ON AUSTRIAN MACRO AND

IMPACTS ON AUSTRIAN TOURISM

MICRO-ECONOMICS

31

7.1 IMPACTS ON AUSTRIAN MACRO- AND MICRO-ECONOMY



Emirates facilitate Austrian foreign trade, opening new markets for Austrian exporters  annual increase of export cargo volume



Potential of development and extension of economic and trade relationships with UAE/other Middle East countries and 6th freedom destinations



Potential for internationalization of investment - Investment in airport infrastructure - Investment in Emirates Airline town-office infrastructure - Investment in local businesses



Austrian government profits from 30% of tax earnings of the economic activity of non-resident tourism spending, including sales-tax, income-tax and other taxation and social security contributions



Establishment of direct and indirect full-time equivalent jobs in Austria



Increase of international high-profile and image of Vienna airport and Austria due to Emirates Airline operations and its exclusive service image



Emirates provides direct connections via its Dubai hub between Vienna and various markets in the Middle East, Africa, Asia and Australasia (53 points are not directly served from Vienna by Austrian Airlines or any other carrier)



Emirates guarantees the delivery of the much needed intercontinental connectivity at Vienna airport (due to the reduction of Austrian Airlines long haul operations in the past)



Dubai-Vienna connection creates a potential important infrastructure asset that generates benefits through attracting foreign direct investment and talent, enabling business clusters, specialization and other spill-over impacts on the Austrian economy’s productivity capacity



Upgrading of the Austrian business location due to regular connection to UAE/other Middle Eastern countries



Large financial contributions to the Austrian economy (€ 30.9 million in 2010/11) for direct and indirect expenditures, advertising, promotions, sponsorships and purchase of Austrian products and services

32

7.2 IMPACTS ON AUSTRIAN TOURISM



International image and marketing effects for the tourism destination Austria and Vienna throughout Emirates worldwide network as part of its on-going multi-million dollar investment in advertising



Additional Emirates flights to Austria encourage the national tourism strategy “New ways in tourism” (Ministry of Economy, Family and Youth, 2010) to increase the market share of international arrivals and overnights in Austria



Potential to increase the demand for holiday in Austria in the main source markets of Emirates (UAE, Middle East, India, Australasia)



Opening of new markets for outgoing tourism sector (Middle East, UAE, India, Australasia) e.g. Austrian tour operators



Above-average tourism spending of Middle East tourists: € 450,- tourism spending per day and 4.1 days of average length of stay in the Austrian tourism industry (accommodation, restaurants, tourist infrastructure etc.) with high value-added for other industries (retail trade, service industries etc.) in comparison to € 280,- average tourism spending of international tourist per day and 2.4 days of average length of stay



For the first time, in 2010, more guests from Middle East arrived in Austria than in Switzerland as a result of the marketing efforts of Emirates and the Austrian National Tourist Office  the Middle East represents one of the currently fastest growing markets

33

BIBLIOGRAPHY Information concerning the actual and estimated data and statistics about Emirates Airline was provided by Emirates Airline.

Other sources: 

Statistics Austria, www.statistik.at, 2010, Input-Output-Multipliers



Austrian National Tourism Office, www.autriatourism.com, 2011



Austria National Tourist Office Dubai, Director Middle East Mr. Ehrenbrandtner, 2011



Vienna Tourist Board, http://b2b.wien.info, 2011

Benchmark-Studies 

Aviation Department by the Office of Policy and Planning, The Economic Impact of the Aviation Industry on the New York – New Jersey Metropolitan Region, 2005



InterVISTAS Consulting Inc., Economic Impact Study for Emirates Airline – Additional Flights between Dubai and Canada, 2010



con.os tourismus.consulting gmbh, economic Impact Study of Ryan Air on Upper Austria, 2009

APPENDIX A: SUMMARY OF ECONOMIC IMPACT ASSOCIATED WITH EMIRATES AIRLINE OPERATING IN AUSTRIA Chart 17 shows detailed information on Emirates expenditures at Vienna International Airport and in Austria based on information of Emirates.

in Million

Budget Period 2011/12 13-flights

€ 8.3

€ 20.5

--

€ 0.75

€ 1.4

--

€3

€ 5.4

--

In-Flight catering

€ 1.3

€ 2.2

--

Crew layover cost at Vienna

€ 0.8

€ 1.5

--

€ 0.04

€ 0.08

--

€ 5.6

€ 6.4

--

€ 19.8

€ 37.5

€ 60.5

Financial Period 2010/11 7-flights Fuel uplift Aircraft landing costs Aircraft handling costs

Overflying Charges to Austria Area overheads at Austria 

Employee related costs



Office accommodation costs



Advertising/Sponsorships



Others

Total in Euro €

Budget 21-flights in Million

in Million

Chart 17: Information about Emirates' expenditure in Austria

According to the Austrian Input-Output index 10 the following multipliers were used with consideration to the mix of different products and services.  Production multiplier

10



Value added multiplier



Multiplier of compensation of employees



Employees (Full-time equivalent)

source: http://www.statistik.at/web_de/statistiken/volkswirtschaftliche_gesamtrechnungen/input-outputstatistik/index.html

APPENDIX B: SUMMARY OF ECONOMIC IMPACT OF NON-RESIDENT VISITOR SPENDING IN AUSTRIA Methodology for Estimating Total Revenue of Non-Resident Visitors in Austria The evaluation of generated total revenues by Emirates incoming passengers is based on following key data:

Incoming passengers x average tourist spending per day x average length of stay

66,672 incoming passengers (adjusted of proportion of returning Austrian resident passengers) arrived in Vienna by Emirates. € 380 is the weighted average of tourist spending per day 11 and 3.2 days the weighted average of length of stay of Arab tourists and international tourists in Austria (Source: Austrian Tourism Office, 2010).

11

€ 380,- weighted average tourism spending per day = weight of average spending of Middle East tourists and spending of international tourists (6th freedom destinations)

Methodology for Estimating Non-Resident Visitor Impacts The economic impact model can estimate employment, wages, and GDP for each applicable industry by treating visitor expenditures as economic activity. Using the latest input-output multipliers from Statistic Austria, the model works backwards to determine the employment, wages and GDP associated with the visitor spending. According to the Austrian Input-Output index 12 the following multipliers were used with consideration to the mix of different products and services.

12



Production multiplier



Value added multiplier



Multiplier of compensation of employees



Employees (Full-time equivalent)

source: http://www.statistik.at/web_de/statistiken/volkswirtschaftliche_gesamtrechnungen/input-outputstatistik/index.html

APPENDIX C: GLOSSARY OF TERMS Term

Description

direct effects

Direct effects are the changes in economic activity during the first round of spending. It is the end product of transforming inputs into goods.

(=economic activity) economy impact analysis employees (fulltime equivalence) full-time employment (FTEs) GDP (also valueadded)

Estimates the impact of money from outside the region (“new euro”) on the region’s economy. Impact analysis typically includes only the spending of visitors and expenditures from outside the region Displays full-time equivalence employees necessary for the production of a product/service; FTEs the number of additional jobs created. It is expressed as the number of equivalent full-time jobs indicated in person years. GDP is the measure of net output or the unduplicated value of goods and services that is added to the economy. It is equal to the gross output minus the cost of purchased inputs.

indirect effects

Indirect effects are the changes in sales, income or employment within the region in backward-linked industries supplying goods and services to tourism businesses.

input-output model

An input-output model is a representation of the flows of economic activity between sectors within a region. The model captures what each business or sector must purchase from every other sector in order to produce a euro’s worth of goods or services. Using such a model, flows of economic activity associated with any change in spending may be traced either forwards (e.g., spending generates employee wages which induces further spending) or backwards (e.g., visitor purchases of meals leads restaurants to purchase additional input – groceries, utilities, etc.). Multipliers for a region may be derived from an input-output model of the region’s economy.

multiplier of compensation of employees

Quantifies wages/income necessary for the production of a product/service;

multipliers

production multiplier

taxes value added multiplier 3rd freedom of the air 4th freedom of the air 6th freedom of the air

MIDT

Multipliers capture the size of the secondary effects in a given region, generally as a ratio of the total change in economic activity in the region relative to the direct change. They may be expressed as ratios of sales, income or employment, or as ratios of total income of employment changes relative to direct sales. Multipliers express the degree of interdependency between sectors in a region’s economy and therefore vary considerably across regions and sectors. They can lead to illusory results, and thus must be used with great care. Displays the direct and indirect local production value generated through delivery of a product to final demand; it is always bigger than 1, as the production of the product itself is also included; Is the total amount of revenues generated by the economic activity for different levels of government. Quantifies the direct and indirect value added (GDP) generated through delivery of a product to final demand; The third freedom is the right to carry passengers or cargo from one's own country to another; The right to carry passengers or cargo from another country to one's own is the fourth freedom; The sixth freedom combines the third freedom and fourth freedoms and is the right to carry passengers or cargo from a second country to a third country by stopping in one's own country; Market Intelligence Data Tapes (MIDT) capture passenger booking data gathered from Global Distribution Systems (GDS) such as Apollo, Abacus, Travelsky, Farelogix, Galileo, Infini, Amadeus, Worldspan, Sabre, Topass & Axess. A worldwide computerized reservation network used as a single

GDS = global distri-

point of access for reserving airline seats, hotel rooms, rental

bution system

cars, and other travel related items by travel agents, online reservation sites, and large corporations.