The United States of America aviation industry is one of the most lucrative fields of investment that plays a huge impact on the economic performance of the country. The aviation industry is larger than the airline industry in that an airline is concerned with the pilots, maintenance, and flying of goods and services (1). The aviation industry encompasses the airline industry as a whole as well as the manufacture of aircraft and their parts. The aviation industry is concerned with all factors that encompass air travel, one of the most significant inventions achieved by human beings. The USA aviation industry is under the management of the Federal Aviation Administration, which regulates its operations (1). The USA aviation industry has had significant growth and development over the years, and this may be evidenced by its relationship to the changes in imports and exports in the country, which calls for an in-depth analysis.
Size and Growth Rate Assessment
In a report released by the Federal Aviation Administration, it was observed that in the last decade, the USA aviation industry managed to create more than 10 million jobs. Researchers observe that the aviation industry alone contributes 1.7 trillion US Dollars to the economy of the country (2). Further, the airline industry, which is a subsector in the US aviation industry, is estimated to transport about 2.4 million passengers in and out of the country and about 58,000 tons of cargo every day (2). This trend has been attributed to the advancement in the safest standards and the advancement in the field of technology, which has been enhanced by the manufacturing and maintenance team.
However, it has been observed that despite the size and the growth and development of the USA aviation industry, not every subsector has made a major contribution. The manufacturing of aircraft and sale of general parts declined significantly between 2014 and 2017 and only registered a rise in 2018 (2). Itinerant operations declined by 1.8% in 2018 (1). Despite all these, it is expected that between 2019 and 2039, the aviation industry is bound to experience a significant growth which will be triggered by the increase in the number of passenger seats per airplane from 50 to 70-90 seats, and the increase in the use of Unmanned Aircraft Systems (UAS) in the country (1). These changes will impact the USA economy significantly and especially in the importation and exportation of goods and services.
Macroeconomic Indicator and Policy and Its Importance and Impact to the Aviation Industry
The USA aviation industry is influenced by numerous factors, which include employment rate, government expenditure, rate of inflation, and changes in real export and imports. The major issue of concern in this context is the changes in real export and imports (2). The changes in real export and imports are affected by the exchange rate, which influences the equilibrium between what is demanded and what is supplied. The exchange rate, which affects the changes in real export and imports, affects the rate of employment, is related to inflation, and impacts the trends in government expenditure in the aviation industry. In an eventuality whereby the domestic currency that is the US dollar is weaker, there is bound to be an increase in the rate of exports. Foreign countries are able to acquire more goods and services from the USA at a lower price, unlike in the past, and this trend is bound to encourage employment and increase government expenditure (2). Still, the US population will demand lesser imports as they will require more money to buy foreign goods.
In an eventuality whereby the US dollar is stronger, there will be more importation of services and goods as the international market is willing to sell to the US population. Foreign sellers can get more money from sale of goods and services. Still, the international population will likely demand lees of US goods and services as they will be subjected to pay more for lesser goods unlike in the past. This trend will result to an increase in the rate of unemployment rate in the country due to less demand (2). The changes in real import and export enhances a balance in trade, cash flow in the country’s economy and acts as the biggest determiner of the gross domestic product. Thus, the changes in real imports and exports in the aviation industry affect the economy of USA.
The exportation of goods and services from the US market registered a significant performance in the United States of America between 2018 and 2019. This is so in that despite the negative exportation change rate in the 3rd quarter of 2018 and 1st quarter of 2019, the period showed a positive trend. This is unlike in the year 2020, in the in the first half of the year the exportation of goods and services from the country has registered the poorest rate among all other periods (3). In the importation of goods and services, 2018 experienced a positive importation change rate. In 2019, importation of goods and services was worst hit in the 4th quarter with a -8.4% change rate, followed by -1.5% change rate in the 1st quarter, 0.0% change rate in second quarter and 1.8% in 3rd quarter. 2020ha been worst hit with a -15.5% change in the rate of importation (3). The 2020 export and import changes may be attributed to the COVID-19 pandemic (2). This has affected the operations of the aviation industry
The aviation industry in the USA is a major contributor of the changes in the economy of the country. This may be attribute to its impact of the GDP of the country and rate of employment which are majorly influenced by the changes in the real export and imports. From the recent trend it is evident that the current pandemic, COVID-19 has had a significant impact on the importation and exportation of goods and services which is a major blow to the aviation industry and the U economy as a whole.
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- Federal Aviation Administration, 2019, FAA Releases Aerospace Forecast. https://www.faa.gov/data_research/aviation/aerospace_forecasts/media/FY2019-39_FAA_Aerospace_Forecast.pdf
- Federal Aviation Administration, 2020, The Economic Impact of Civil Aviation on the U.S. Economy. faa.gov. https://www.faa.gov/about/plans_reports/media/2020_jan_economic_impact_report.pdf
- National Data, 2020, Table 4.2.1. Percent Change From Preceding Period in Real Exports and in Real Imports of Goods and Services by Type of Product. BEA: Data Tools. https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey