Artūrs Kokars: The Latvian economy needs an aviation industry

It is now more important than ever to identify sectors that will help the Latvian economy survive this crisis and recover from it. One of them is aviation, which not only enables our citizens to move freely and establish international business links, but also has a direct impact on the country’s economy and human well-being.

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In 2019, the aviation sector in Latvia created 3.5% of value added to gross domestic product (GDP), as well as provided about 30,000 well-paid jobs. The added value of the industry is important to society and affects many aspects of our lives.

An economy stimulated by a strong aviation sector with many connections and destinations attracts direct investment and creates new jobs, which has a long-term positive impact on GDP. Given that Latvia is still a strong Baltic transit hub with its national airline and competitive airport, it is important to be aware of the aviation sector as a long-term investor in the national economy.

The primary task of the aviation industry is to provide added value by ensuring the mobility of people, which also has a natural impact on the economy and the well-being of society in both the countries of origin and destination. For example, in previous years, more than 50% of all multi-day tourists entering the country arrived in Latvia using air transport services. As a result, thanks to the wide range of destinations at Riga Airport, economic growth was ensured and new jobs were created in the hotel, leisure, public transport, catering and other service sectors in the country.

According to a report by the International Air Transport Association (IATA), in 2018, aviation supported 28,000 jobs in Latvia. Of which 7,000 people are employed by airlines, airports, aviation companies and the direct services sector operating at airports (aircraft repair, education services, restaurants, retail, etc.). In addition, the industry supported a further 6,000 jobs by purchasing goods and services from local suppliers. In addition, it is estimated that the industry provided support to another 2,000 jobs with wages paid to employees and some or all of which is spent on consumer goods and services in Latvia. It is also important to mention that foreign tourists arriving in Latvia by plane, spending money here, support an additional 12,000 jobs.

IATA report It is emphasized that if the Latvian aviation market had maintained a similar growth rate as in 2018, then its growth over the next 20 years would have been 58%. So, if people travel an additional 1.7 million by 2037, the impact on GDP would increase by around € 1.1 billion. Although this situation is currently changing due to the crisis, we can restore the growth that existed in Latvia before the Covid-19 crisis. Therefore, it is necessary to preserve the aviation industry and find a safe way for passengers to return to international air traffic.

It is clear that air transport contributes to economic growth by ensuring the exchange of goods, investment, people and ideas in a developed global society. Due to this circumstance, the aviation sector in Latvia is the one that will be able to directly provide high added value to the Latvian economy after the crisis and will allow a number of other sectors to recover faster.

Without a strong aviation industry, the Latvian economy will suffer irreversible damage, while people will lose convenient and fast connectivity to the world, but business will lose viability, access to the export market and the opportunity to develop.

https://www.iata.org/en/iata-repository/publications/economic-reports/latvia–value-of-aviation/

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