0 

# Title

- Case Title Here: Then one

- cap subtitle follows, both in 36

- point Arial bold **The economic contribution of Etihad to the US economy** 

**May 2015** 

# The economic impact of Etihad Airways

**on the US economy**1 The economic impact of Etihad Airways on the US econ omy



## CONTENTS

Executive Summary .................................

................................................... ........ 3 Introducing Oxford Economics ...................... .............................................. 7 Introducing economic impact analysis .............. ........................................... 8
1. Introduction ...................................

................................................... .......... 9 2. Etihad’s economic impact 2006-2015 .............. .......................................... 12 2.1 Etihad’s core impacts........................... ............................................. 12 2.2 Etihad’s catalytic impacts ..................... ............................................ 18 3. Forecasting Etihad’s impact 2016-2020 ............ ......................................... 27 3.1 Forecasting core impacts ....................... ........................................... 27 3.2 Forecasting catalytic impacts .................. .......................................... 28 4. Etihad’s economic impact by route ............... ............................................ 30 4.1 Etihad’s operational impact by route, 2006-2015 ............................. 30 4.2 Etihad’s catalytic impact by route, 2006-2015 .. ................................ 31 4.3 Forecasting Etihad’s impact by route, 2016-2020.. ............................ 32
5. Conclusion .....................................

................................................... ........ 33 6. Technical Appendix .............................

................................................... ... 35 6.1 Methodological overview ....................... .......................................... 35 6.2 Calculating Etihad’s core impact .............. ......................................... 36 6.3 Capturing the catalytic impact of Etihad ...... ..................................... 45
7. Further information ............................

................................................... ... 502 May 2015

Sources: Oxford Economics; Etihad; Diio; OAG3 The economic impact of Etihad Airways on the US econ omy



## EXECUTIVE SUMMARY

**Etihad Airways makes a substantial contribution to the global economy**  **offering vital connections across regions and econo mies.**  In this report, Oxford Economics quantifies Etihad’s economic impact in the USA from its first flight into New York in 2006 to the six US routes it operat es today, serving some 1.2 million passengers in 2015 alone. The report goes on to forecast the airline’s growing economic contribution to the USA out to 202 0. This economic impact study sets out to measure Etihad’s impact in two stages: the airline’s immediate contribution to, or ‘footpr int’ in, the economy of the USA, and the wider catalytic economic impact it gen erates through what its services allow others to do. **Etihad’s economic footprint in the USA.** Etihad’s economic footprint in the US economy can be quantified in terms of its contributio n to gross domestic product (GDP) and employment. To do this Oxford Econ omics has developed a bespoke global economic impact model that maps the co mplex global supply chains on which Etihad relies. The global impact mode l is unique in allowing us to quantify the full contribution of Etihad’s globa l activities on the economy of the USA for the first time. 1 In 2015 Etihad’s global operations will make a US $ 920 million contribution to the US economy and sustain 7,900 jobs. 2 This impact relates both to its operations in the USA itself and to the impact of its global operations on US suppliers, for example, in its partnership with aviatio n computer technology provider Sabre Airline Solutions. Meanwhile, the air line’s investment in aviationrelated equipment in 2015, with US suppliers includin g Boeing, from whom Etihad has ordered over 120 aircraft to date, will a dd a further US $ 2.0 billion to GDP and sustain nearly 15,600 US jobs. In total Etiha d will contribute over US $ 2.9 billion to GDP and sustain over 23,400 American j obs in 2015. Etihad’s economic footprint in the USA is growing. As a result, we forecast that by 2020 the contribution of its operations and aviati on-related investments to GDP will reach almost US $ 6.2 billion and sustain 46, 200 jobs. Over the fifteen year period 2006 to 2020, the tota l impact of Etihad’s operational and aircraft-related investment on the U S economy therefore sums to US $ 41 billion on an undiscounted basis.

1 All data shown in tables and charts are the result of modelling by Oxford Economics based on input dat a from Etihad Airways and Oxford Economics, except where o therwise stated and cited in footnotes.

2 All US $ values throughout are expressed in 2015 p rices. 

# $2.9 bn

GDP contribution in 2015

Etihad’s operations and capital spending on aviation equipment will contribute US $ 2.9 billion to the US economy in 2015, and sustain over 23,400 American jobs. 

# 23,400

American jobs in 20154 May 2015

Fig. 1: Etihad’s economic footprint in the USA, 201 5 and 2020

Etihad’s catalytic impact on the USA. Etihad’s economic impact goes well beyond its economic footprint. Catalytic impacts cap ture the wide-ranging benefits that are created for the US economy through what users of Etihad’s services are enabled to do by the ‘connectivity’ it p rovides. The airline’s services facilitate business, encourage foreign investment, stimu late tourism and foster trade, consequently raising the productivity and pro sperity of the USA. We can calculate and forecast Etihad’s contribution to US co nnectivity and, by combining this with the latest available research on the association between air connectivity and economic growth, it is possible to i dentify the scale of the boost Etihad provides to US productivity. We estimate that in 2015 this contribution will reach US $ 410 million. This conne ctivity impact is forecast to more than double over the next five years, to reach almost US $ 850 million by 2020, in no small part due to the growing importance of Abu Dhabi as a gateway airport to the Indian subcontinent and Asia’s other emerging economies. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

0 5,000 10,000 15,000 20,000 25,000

2015 2020 2015 2020

GDP Employment Capital expenditure Operations US $ millions 2015 prices Jobs

Source: Oxford Economics 97% growth



# $410 m

Connectivity impact in 2015

Etihad’s connectivity impact is forecast to more than double over the next five years, from US $ 410 million in 2015 to reach nearly US $ 850 million by 2020. 114% growth5 The economic impact of Etihad Airways on the US econ omy

Fig. 2: Etihad’s connectivity impact on US producti vity, 2006-2020

Three important specific examples of connectivity imp act are the trade, tourism and feeder passengers delivered to US airlines that E tihad enables. We consider each in turn.
Etihad’s trade impact. Air freight enables efficiencies, innovation and specialization, driving the comparative advantage of US firms. Etihad will carry around 80,000 tonnes of cargo between the USA and th e rest of the world in 2015, 57 per cent of this on its dedicated air freigh t services, delivered in partnership with US supplier, Atlas Air Worldwide – o perator of the world’s largest fleet of Boeing 747 freighter aircraft.
The tourism impact facilitated by Etihad. In 2015 Etihad flights will carry 260,000 international visitors bound for the USA. T he vast majority will arrive on an Etihad flight to one of the six US destinations no w served by the airline, with the remainder arriving on other carriers having tra nsferred from an Etihad flight elsewhere in the world. Almost nine out of ten of th e direct inbound visitors will originate from the Middle East or the Indian subconti nent, illustrating the degree to which Etihad’s operations serve new and emer ging markets. Through their spending, these visitors will generate a US $ 1 .6 billion contribution to the GDP of the USA in 2015, and sustain 19,400 jobs across the country. 0 100 200 300 400 500 600 700 800 900

Source: Oxford Economics US $ millions 2015 prices 8506 May 2015

Fig.3: Etihad’s tourism footprint in the USA, 2006- 2015

Etihad brings additional passengers into the US avi ation market. A large number of Etihad’s passengers to the USA take more tha n one flight to reach the country, and for thousands of them the journey do es not end there. In fact, it is estimated that this year around 300,000 Etihad passengers will take a flight on a US-based carrier (either domestically or inter nationally) as part of their journey. 3 This represents a 65 per cent increase on the Etihad f eeder traffic to US carriers in 2014. Etihad’s impact on the economy is substantial and g rowing fast. From the contribution to US GDP and employment of its operati onal and capital spending, to the trade, business, tourism and other economic ac tivity its services enable, Etihad’s impact on the economy is considerable and gro wing fast. As Etihad’s global network expands, its US flights will increasin gly connect the world’s largest economy to Asia’s most populous and vibrant o nes, providing opportunity and prosperity for millions.

3 Source: Etihad, this figure refers to bi-direction al passenger flows i.e. traffic in both directions on each route. 0 5,000 10,000 15,000 20,000 25,000 30,000

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Oxford Economics GDP US $ millions 2015 prices Jobs

GDP

Jobs



# 300,000

Feeder traffic in 2015

Around 300,000 passengers booked by Etihad will take a flight on a US-based carrier (either domestically or internationally) as part of their journey in the course of 2015.7 The economic impact of Etihad Airways on the US econ omy

INTRODUCING OXFORD E CONOMICS
Headquartered in Oxford, England, Oxford Economics is one of the world’s leading providers of global economic analysis, advice and models, and has b een at the forefront of high-quality research into the socio-economic impact of the aviation indust ry for 15 years. Recent work has included:

• International Air Transport Association (IATA): Sixty country studies on the importance of the aviation sector. Each study looked at the economic fo otprint of airports, airlines, ANSP and aircraft manufacturing.

• Air Transport Action Group (ATAG): A series of studies on the economic benefits that the aviation industry brings to the world economy. The l atest, completed in 2014, analysed the economic impact of airports and the rest of the aviat ion sector in over seventy countries.

• Airbus: An assessment of the global economic and social impact of air transport.

• Boeing: A study exploring the employment impact of Boeing’s supply chain in Europe. The study quantified the jobs supported through manufacturing a nd other operations, supply chain spend, wage consumption impacts and the consequential impacts, including purchases of engines, seating and interiors from a range of Boeing -approved suppliers around Europe.

• Rolls-Royce: A series of studies looking at the economic contrib ution of Rolls-Royce to the UK, US, German and global economies, particularly as a r esult of its R&D in engine manufacture for planes and helicopters, and assessing the economic contr ibution of key projects to the UK.

• British Airport Authority (now Heathrow Airport Hol dings Ltd): A study on the economic importance of London Heathrow airport to the UK’s co untries and regions, investigating three channels through which greater connectivity benefit s are achieved: greater exports, tourism and inward foreign direct investment.

• Air Passenger Forecast Service: In partnership with IATA, providing annual forecasts of air passenger flows for almost 4,000 routes and 185 major m arkets over the next 20 years, representing over 90 per cent of all air travel in t hat time period. Regional flows are included and important rapidly growing new routes are also c overed.

• Transport for London (TfL): An economic impact study of the proposed London estu ary airport. This study measured the economic activity generated b y the construction of the new airport hub with a national and local input-output modellin g framework. In addition, an assessment was made of the impacts on the local population and labour markets.

• American, Continental/United and Delta Airlines: A study for three US airlines on how Air Passenger Duty in the UK could be restructured in a re venue neutral way, while also benefiting the UK’s tourism economy.

• Consortium study: A study for a consortium of stakeholders including the Austrian Chamber of Commerce (WKO), the Federation of Austrian Indust ries (IV), Austrian Airlines, and Vienna International Airport to investigate the impact of c hanges to the structure of the Air Transport Levy on the Austrian economy.

• Malaysia Airlines: A study on the contribution it makes to the country’ s economy.8 May 2015

INTRODUCING ECONOMIC IMPACT ANALYSIS
The economic impact of a company or industry is measur ed using a standard means of analysis called an economic impact assessment. This consists of two parts. First, we quantify the three ‘core’ channels of impact that comprise the organisation’s ‘economic footprint’ , comprising:

• Direct impact , which relates to the activities of Etihad operatin g locally within the USA;

• Indirect impact , which encapsulates the activity and employment suppo rted in Etihad’s supply chain as a result of its procurement of goods an d services; and

• Induced impact , comprising the wider economic benefits that arise when employees of Etihad and its supply chain spend their earnings, for example in local retail establishments. Using these pathways, a picture of Etihad’s economic f ootprint in the US economy is presented, using two key metrics:

• GDP , or more specifically, Etihad’s gross value added (GVA) contribution to GDP ; and

• Employment , as the number of people employed, measured on a hea dcount basis.
Economic impact assessments traditionally only consider the activity that is generated by the operations of a given business or sector but Etihad’s ec onomic footprint extends also to the capital expenditure that it makes on new aircraft and compo nents both within the USA and beyond. This study therefore quantifies capital as well as operational ‘core’ impacts.

Second, we examine the ‘catalytic’ effect the company’s services or products have in bo osting economic activity elsewhere in the economy.
The catalytic impact of Etihad represents the wider b enefits that governments, consumers, society and other industries derive from the services Etihad provides. For an airline these are primarily captured in the contribution that increased air connectivity makes to wider economic potential. A variety of research in recent years has demonstrated ho w greater air connectivity raises the productivity of an economy, opening up new business opportunities and stimulating innovation. The impact of higher connectivity benefits all parts of the US economy, but three of the most important specific examples of this impact are the tou rism, trade and feeder traffic that are facilitated by the activities of the airline. As well as quantifying the overall connectivity impact, we therefore also explore the scale of economic footprin t of each of these kinds of catalytic impact.
Drawing on historical data and projections from a wid e range of sources, the modelling on which this report is based computes the economic footprint of Etihad from 2006 to 2015 , and then forecasts the airline’s expected impact through to 2020 . Economic contributions are shown for the whole US economy and split out for the main routes into the USA.
Further detail about the economic impact methodolog y is included in the further technical appendices that accompany this report.9 The economic impact of Etihad Airways on the US econ omy



## 1. INTRODUCTION

Etihad Airways makes a substantial contribution to the global economy offering vital connections across regions and econo mies. In early 2015, Etihad Airways commissioned Oxford Economics to undertake a c omprehensive analysis that explored and quantified its impact in the USA as a key market that benefits from its activities.
Air transport is a major contributor to global econ omic prosperity, a large global employer and a source of significant social benefits. Oxford Economics, in association with the Air Transport Action Group (AT AG), has calculated that aviation supported over 58 million jobs worldwide and contributed US $ 2.4 trillion to the world economy in 2012. 4 Perhaps even more significant than this is the role aviation plays in connecting countries and people to the global economy – raising their ‘connectivity’. Greater con nectivity stimulates exchange of ideas and technology, fosters global competition, underpins international business cooperation and sustains foreign investment. A ll of these are essential contributors to economic growth. Etihad’s operations across the world play a significant part in raising connectivity, thereby con tributing to that growth.
Etihad’s services to the USA have helped to improve US connectivity since it opened its first route in 2006. Etihad’s presence in the US market began in 2006 with the introduction of Abu Dhabi (AUH) to New Yor k (JFK), bringing with it a growing economic contribution to US productivity. I n 2009 the airline added Chicago O’Hare (ORD) to its destinations, followed by Washington Dulles (IAD) in 2013. During 2014 Etihad doubled the number of s ervices it provides to the USA, adding routes to San Francisco (SFO), Dallas-F ort Worth (DFW) and Los Angeles (LAX).
Etihad’s services connect the USA to important emer ging economies. Both the Middle East and the Indian subcontinent are rapidly rising regional economies, and Etihad provides vital connections to and from the USA for hundreds of thousands of people each year. In 2015, approximate ly 1.2 million passengers will travel to or from the USA on one of over 2,300 Etihad Airways flights from Abu Dhabi to one of the six US destinations. In 2015 260,000 inbound passengers on Etihad flights will be non-US visitors (to urist or business travelers). Around 14,000 of these will arrive in th e USA on another airline having transferred from an Etihad flight elsewhere i n the world. Some 77 per cent of those arriving in the USA on Etihad flights will be transfer passengers,

4 Oxford Economics, "Value to the economy", in www.aviationbenefits.org <http://aviationbenefits.org/economicgrowth/value-to-the-economy/> [acce ssed 05 March 2015] 

# 1.2 m

Passengers in 2015

In 2015, approximately 1.2 million passengers will be carried in or out of the USA on one of over 2,300 Etihad Airways flights from Abu Dhabi to one of the six US destinations it serves.10 May 2015

highlighting the importance of the airline and Abu Dhabi in connecting people across the world to US destinations.

Report structure. This report first considers the economic footprint of Etihad’s global activities in the US economy during the perio d from 2006 to 2015. It quantifies the operational expenditure and capital investment contributions separately. It then considers the overarching catalyt ic impact of Etihad on the US economy to date. This is primarily captured by the bo ost to US productivity that Etihad effects by enhancing US air connectivity. The study goes on to explore the economic footprint of some specific types of catalytic impact facilitated by Etihad, including the contributions of tourism and tr ade, and the extent to which Etihad feeds US carriers with passengers. Finally, we consider the way in which the economic contribution of Etihad is expected to g row, in the years through to 2020, before looking in more detail at the airline’ s economic impact broken down by the six routes it currently operates into th e USA.11 The economic impact of Etihad Airways on the US econ omy

INTRODUCING OXFORD ECONOMICS’ GLOBAL IMPACT MODEL
Etihad’s economic impact can be traced as it ripple s across the global economy. Any time a company makes purchases of intermediate goods or servi ces it stimulates further economic activity in its supply chain. Often these supply chains encompass m any sectors across many different countries. Complex supply chains may therefore crisscr oss the globe, leaving and entering a single country many times, meaning that economic activity i n one part of the world can sustain jobs and contribute to GDP in countries that are apparently c ompletely unconnected to the initial purchase. For example, Etihad may buy an aircraft from Airbus. In turn, Airbus may purchase components and services from US suppliers. Therefore, although the in itial purchase is outside of the USA, it creates economic activity within the country.

Fig. 4: Oxford Economics’ global impact model

The vast majority of economic impact assessments look on ly within a given country, meaning that the economic activity stimulated by, for example Air bus’ purchases from US suppliers, goes unaccounted for: it ‘leaks’ out of the model. This a pproach can lead to substantial understatement of the company’s economic contribution to a country. Oxford Economics’ comprehensive model captures the impact of Etihad in these global supply c hains. To avoid understating Etihad’s contribution to the US economy, this study has develo ped a global input-output model that enables supply chains to be traced across the global economy. This bespoke model, designed and built by the Oxford Economics modelling team, enables linkages between all sectors and countries to be mapped, indicating where activity takes place and v alue is created throughout the global supply chain. It draws on the World Input-Output Database, b ut has been specifically augmented to provide greater geographical detail on key markets.12 May 2015



## 2. ETIHAD’S ECONOMIC IMPACT 2006-2015 5

This chapter sets out the results of Oxford Economics’ modelling of Etihad’s economic footprint in the USA from 2006 to 2015 (se e page 8). This ‘core’ economic impact can be described as the sum of the eco nomic activity and employment in the USA supported by Etihad’s global o perations and its capital spending. We explore each of these in turn.

2.1 ETIHAD’S CORE IMPACTS

2.1.1 OPERATIONAL IMPACT
Etihad’s economic footprint in the USA . Etihad’s immediate impact on the US economy can be quantified in terms of its contributio n to gross domestic product (GDP) 6 and employment. To do this Oxford Economics has deve loped a bespoke global economic impact model that maps the co mplex global supply chains on which Etihad relies. The global impact mod el is unique in allowing us to quantify the full contribution of Etihad’s globa l activities on the economy of the USA for the first time.
As Etihad’s passenger numbers have increased, so ha s the impact of both its US and global operations on the USA’s economy. Since Etihad’s US services began in 2006, the airline has seen its US workforce and wage bill increase steadily. And as its operations in the USA have increa sed so has the airline’s spend with US-based suppliers. Expenditures including f uel, landing fees, and maintenance costs directly linked to Etihad’s US rou tes account for the majority of all operational spending made with US suppliers in 2015.
At the same time, growth in the operational GDP foo tprint of Etihad over the past decade reflects more than just the increase in it s US operations. US suppliers have benefitted from the expansion of its gl obal operations, purchasing inputs ranging from aircraft to business ser vices.

5 Conducting an economic impact assessment is data i ntensive, particularly when a range of years and ge ographies are considered. To ease this process, the modelling and wider analysis contained in this report draws heavily on historical and forecast data provided by Etihad, ma jor aircraft manufacturers, national statistics age ncies, the World Input-Output Database, and Oxford Economics’ own macroeconomic projections. Other sources includ e: OAG, Diio, and Eurostat.
6 GDP is the main summary indicator of economic acti vity in the US economy. Gross value added (GVA) mea sures the value of goods and services at ‘basic prices’, i.e. the value to the businesses concerned, net of the taxes on sales, such as VAT. It is also known as ‘gross dome stic product at basic prices’. It therefore differs a little from ‘headline’ gross domestic product – ‘GDP at market prices’ – which is based on values including those taxes.13 The economic impact of Etihad Airways on the US econ omy

Fig. 5: Contribution to US GDP of Etihad’s global o perations, 2006-2015

In 2015 Etihad’s operational contribution to GDP is expected to be worth US $ 920 million to the US economy. 7 This comprises:

• US $ 450 million in direct and indirect supply chain impacts; and

• US $ 460 million in induced impact, as employees of Etihad and its supply chain spend their wages on consumer goods and serv ices. 8

Etihad’s global operations are estimated to sustain 7,900 US jobs in 2015 . This number has grown rapidly over the past decade. It com prises:

• 4,200 direct and indirect jobs in the US, that is em ployees of Etihad in the US and within the supply-chain created by Etihad ’s US and wider global economic activity; and

• 3,700 induced jobs sustained by direct and supply chain employees – both in the US and abroad - spending their wages on U S goods and services, for example, in retail.

7 All US $ values are in 2015 prices throughout.
8 Totals may not sum due to rounding. 0 100 200 300 400 500 600 700 800 900 1,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Induced
Direct and indirect US $ millions 2015 prices

Source: Oxford Economics 

# $920 m

GDP contribution in 2015

The operational impact of Etihad in 2015 is expected to be worth US $ 920 million to the US economy; 38 per cent of which will stem from its activities elsewhere in the world but influencing the US economy. Compound annual growth rate 2006

- 2015: 18 per cent14 May 2015

Fig. 6: Contribution to US employment of Etihad’s o perations in 2015

Etihad’s global operations have a sizable impact in t he USA. Over a third of Etihad’s total contribution to US GDP in 2015 stems f rom the company’s activities elsewhere in the world. The same is true for the employment Etihad’s operations sustain in the USA.
The impact of Etihad’s operations is distributed wi dely throughout the US
economy . US businesses supporting the air transport sector – undertaking activities ranging from operating airports and provi ding fuel, to selling air tickets – are the major beneficiaries of Etihad’s operationa l spending in the USA. In 2015 these companies will account for 51 per cent (U S $ 220 million) of the airline’s operational supply chain contribution to U S GDP. They also account for over half (2,200 jobs) of the indirect employment sup ported by Etihad in the USA. A further 21 per cent of the indirect GDP cont ribution and 20 per cent of indirect employment is located in the business servic es sector (including legal, consultancy, advertising and recruitment firms).

2.1.2 CAPITAL IMPACT
US suppliers form a substantial proportion of Etiha d’s aircraft and aviation equipment-related capital purchases . By purchasing large numbers of aircraft and their associated products - engines, simulators, fli ght entertainment systems and cabin interiors - Etihad supports considera ble activity. As home to Boeing and other high-tech manufacturing firms, the USA plays a prominent role in supplying aircraft to Etihad, and thousands of US j obs depend on this. In turn, the contracting of firms such as GE and Pratt & Whitn ey to deliver engines and other component parts supports activity in these com panies and their suppliers.

4,200 4,200 3,700 3,700

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

Direct & Indirect Induced Total Jobs

7,900

Source: Oxford Economics 

# 7,900 jobs

Sustained in 2015

Etihad’s operations will sustain 7,900 jobs in the US economy in 2015; 36 per cent represents US jobs that have been created because of the company’s activities elsewhere in the world15 The economic impact of Etihad Airways on the US econ omy

All across this supply chain there are further induced impacts as US employees make consumer purchases of goods and services. 9

But it isn’t simply Etihad’s capital spending with Boe ing and related US suppliers that drives its impact in the USA: the supply chains of Airbus, as well as related non-US suppliers reach deep into the USA, creating a substantial GDP contribution and thousands of US jobs. Firms which pro vide key components, also feature in the supply chains of both Boeing and A irbus that are supported by the capital purchases that Etihad makes outside of the USA. These indirect contributions to the US economy are captured and qu antified by our global impact model.
Capital expenditure, much more so than operational e xpenditure, varies yearby-year. The historical pattern for Etihad has noneth eless been of steady growth through to 2015. Figure 7 displays the economic impac t of Etihad’s capital spending in terms of both contribution to GDP and emp loyment.

Fig 7: Economic impact of Etihad’s capital expendit ure in the USA, 2006-2015

9 As with the assessment of the operational impacts of Etihad, this analysis presents the impact of Eti had’s investment in gross terms. Due to its hypothetical nature there is no consideration of potential displ acement effects – investment elsewhere in the economy that does not occur because of the investment made by Et ihad. 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

0 500 1,000 1,500 2,000 2,500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GDP Jobs

Source: Oxford Economics US $ millions 2015 prices Jobs16 May 2015

Etihad’s capital expenditure will sustain a US $ 2. 0 billion contribution to GDP in 2015 and sustain 15,500 jobs within the US econo my . This is comprised of:

• US $ 1.4 billion in direct and indirect supply chain impact, sustaining 9,800 jobs; and

• US $ 650 million in induced impact as employees spend their wages on consumer goods and services, sustaining a further 5,800 US jobs.17 The economic impact of Etihad Airways on the US econ omy

ETIHAD’S ECONOMIC IMPACT IN DIFFERENT SECTORS OF T HE US ECONOMY
Both manufacturing and business services sectors be nefit significantly from Etihad’s capital expenditure. While manufacturing sectors account for the majorit y of the indirect impact in the USA of Etihad’s global capital spending, the single se ctor benefiting the most from the airline’s capital supply chain is business services. These supplier s - which include those providing computer services, legal, recruitment and management consultanc y - account for nearly a fifth of the total indirect GDP and a quarter of indirect employment su pported in the USA.

Fig. 8: Sectoral breakdowns of indirect and induced employment impact in 2015

25%

22%

10% 9% 6% 27% Business Activities

Manufacture of Transport Equipment
Manufacture of Basic and Fabricated Metals
Manufacture of Electrical and Optical Equipment
Wholesale Trade

Other Indirect

19%

15%

12% 12% 8% 35% Health and Social Work

Wholesale and Retail

Business Activities

Hotels and Restaurants

Community, Social and Personal Services

Other Induced

Source: Oxford Economics18 May 2015

2.2 ETIHAD’S CATALYTIC IMPACTS

2.2.1 OVERALL CATALYTIC IMPACT
The economic impact of an airline goes far beyond it s operational and capital expenditure footprint. The services Etihad offers fac ilitate a wide range of economic activity elsewhere in the USA and global e conomy – enabling business interaction, foreign investment, tourism and trade, a mong other things, all of which feed into understanding Etihad’s full economic impact in the USA.
Etihad’s activities enhance US connectivity. The overall catalytic impact generated by Etihad on the US economy can be best u nderstood in terms of the difference that the airline’s activities make to US ‘air connectivity’. Connectivity is a measure of the aviation linkages a country has wit h major cities and markets around the world. The level of US connectivity refl ects the number of passenger seats available on flights out of US airports and the economic salience of the destinations they serve. The implication of this is th at a new service that connects the USA to a global airport hub has substantia lly greater catalytic impact on the USA than an equivalent capacity fligh t destined for a small city offering few onward connections to elsewhere in the world. Drawing on research by InterVISTAS that relates the impact of a change in a country’s air connectivity to its economic productivity, it is possi ble to estimate the productivity boost that Etihad generates for the US e conomy. 10

Fig. 9: The contribution of Etihad to air connectiv ity, 2006-2015

10 InterVISTAS for ACI, Economic Impact of European Airports; a Critical Ca talyst to Economic Growth (Bath: InterVISTAS, 2015)

. 410

0 50 100 150 200 250 300 350 400 450

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Oxford Economics/InterVISTAS US $ millions 2015 prices 

# $410 m
Boost to US productivity in 2015

Etihad’s contribution to US air connectivity in 2015 will boost the productivity of the US economy by some US $ 410 million.19 The economic impact of Etihad Airways on the US econ omy

We estimate that Etihad’s contribution to US air co nnectivity in 2015 will boost US productivity by some US $ 410 million. This represents a sharp increase compared to 2014 as the impact of the first f ull year of operation for three of its six routes begins to be felt. In 2015, Et ihad’s overall catalytic boost to GDP will be equivalent to some 3,400 jobs in the U SA.20 May 2015

THE CATALYTIC IMPACT OF AIR CONNECTIVITY
Air connectivity boosts economic growth. Air connectivity matters because greater integration to the global economy boosts local economic growth in a number of inter-related ways. It acts to open up new markets and fosters international trade; e ncourages domestic and foreign investment; raises competition thus improving domestic business efficiency; stimulates the tourism economy; and facilitates the exchange of idea s and technology across the world. All of these things encourage innovation, raising the produ ctivity of the local economy, and hence boost GDP and national prosperity.
Etihad’s services enhance US connectivity boosting the country’s productivity. Connectivity in the air transport network is a critical asset for a pr osperous and vibrant economy. It represents one of the key infrastructures upon which modern glo balised businesses depend, thereby supporting long-term sustainable economic growth. All airlines flying into the USA contribute to the country’s connectivity and therefore the econom ic benefits that result.
Etihad’s worldwide network connects passengers flying t o and from some of the most rapidly growing and under-served emerging markets - particula rly the Indian subcontinent and the Middle East - onto the US-bound flights both of Eti had and other airlines. Etihad’s worldwide services therefore provide critical linkages as part o f the USA’s air transport infrastructure.
The USA’s IATA connectivity index reading compares un favourably to a number of major global destinations. Indeed US connectivity relative to GDP has been falling since 2000. Without the additional flights and routes provided by Etihad’s exp ansion of US operations over the past decade, this position would undoubtedly have worsened still further.
Fig. 10: US connectivity relative to GDP, 2000-2015

Further explanation for how we quantify connectivit y is included in the technical appendices. 50 60 70 80 90 100 110 2000 = 100

Source: Oxford Economics/InterVISTAS21 The economic impact of Etihad Airways on the US econ omy

2.2.2 OTHER CATALYTIC IMPACTS

TOURISM IMPACT As well as quantifying Etihad’s overarching catalytic impact as measured by its connectivity contribution to the US economy, it is p ossible to estimate the scale of Etihad-facilitated tourism, trade and feeder tra ffic as specific examples of how greater connectivity reshapes the US economy. Air transport lies at the heart of global tourism a nd business travel. Through its speed, convenience and affordability, air transport h as expanded the possibilities of world travel for tourists and business t ravelers alike, allowing an ever greater number of people to experience diversi ty of geography, climate, culture and markets. Tourism is a major industry in t he US economy, with foreign visitors spending approximately US $ 150 bill ion in the USA each year. With over 40 per cent of international tourists trav elling by air globally, the global aviation network is the nerve system of the in ternational tourism industry on which millions of jobs depend.

Fig. 11: Etihad connections into Abu Dhabi and on t o the USA, 2015 (top 20 by origin of tourist arrivals to the USA)22 May 2015

Etihad’s services to the USA act as a critical faci litator for the domestic tourism industry . In 2015 Etihad flights will carry 260,000 internat ional visitors (tourists and business travelers) bound for the USA. 11 The vast majority will arrive on an Etihad flight to one of six US destinations currently served by the airline, either on a direct flight from Abu Dhabi or as a transfer pa ssenger through that airport. Around 14,000 of these visitors will arrive in the USA having transferred from an Etihad flight elsewhere in the world onto another c arrier’s US inbound service.
Oxford Economics’ sophisticated tourism spending forec asts allow us to identify the spending of inbound visitors to the USA by countr y of origin. Our analysis suggests that in 2015, international visitors carried b y Etihad on all or part of their journey to the USA will spend a total of US $ 1.3 billion – an average of US $ 4,900 per visitor.

For business travelers the economic benefits are, of course, more wide-ranging than simply their spending while in the country. The re is a close link between business travel and the trade impact described below. Air transport encourages international business ties by linking firms to potentia l customers and suppliers. For instance, a survey of City of London companies fo und that almost three quarters of companies reported that air services were ‘critical’ or ‘very important’ for meeting clients and service providers. 12

Fig. 12: Tourism spending in the USA of arrivals on Etihad flights, 2006-2015

11 We include foreign business visitors in the foreig n ‘tourist’ count for the purposes of this analysis

. 12 York Aviation, Aviation Services and the City (London: City of London, 2008). 0 200 400 600 800 1,000 1,200 1,400

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Oxford Economics US $ millions 2015 prices 

# $1.3 bn

Visitor spend in 2015

In 2015, international visitors carried by Etihad on all or part of their journey to the USA will spend a total of US $ 1.3 billion - an average of US $ 4,900 per visitor.23 The economic impact of Etihad Airways on the US econ omy

The economic footprint of Etihad-facilitated visito r spending in the USA is substantial. The impact that these arrivals make through their spe nding within the USA and the jobs that this expenditure supports ca n be quantified in a similar way to Etihad’s core operational and capital spending impact. In quantifying the benefits from visitor arrivals we se ek to capture the spending by tourists and business people on accommodation, food, r ecreation and other activities beyond their airfare (which forms part of our estimate of the direct calculation of Etihad). The numbers represent the eco nomic activity and jobs that are facilitated by Etihad within the US econom y, rather than directly attributable to it. In 2015 the economic footprint of Etihad’s visitor arrivals will be an estimated US $ 1.6 billion contribution to th e GDP of the USA, and some 19,400 jobs across the country. This represents a snapsh ot of Etihad’s growing contribution to tourism in the USA.

Fig. 13: GDP and employment facilitated by visitors arriving via Etihad

0 5,000 10,000 15,000 20,000 25,000 30,000

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GDP
Jobs

Source: Oxford Economics GDP US $ millions 2015 prices Jobs 

# 19,400

Jobs supported in 2015

In 2015 the economic footprint of Etihad’s visitor arrivals will be an estimated US $ 1.6 billion contribution to the GDP of the USA, and some 19,400 jobs across the country.24 May 2015

TRADE IMPACT Etihad’s dedicated freight services, to and from th e USA, act as an enabler of trade. Etihad flights play a role in enhancing trade into and out of the USA, and facilitating the globalization of trade more genera lly. The scale of this trade activity can be measured in terms of the quantity of goods carried.
Etihad will carry 80,000 tonnes of cargo between th e USA and the rest of the world in 2015 . Approximately 57 per cent of the total will be c arried on Etihad Cargo’s dedicated freight services, with the rest car ried as bellyhold cargo in Etihad’s passenger planes.
Air freight carried by Etihad consists of high-valu e, perishable and ‘just-in-time’ products in line with the global picture. Figure 14 illustrates the most important kinds of product carried by air between the USA and the EU28 in volume terms in 2014, and is indicative of the pattern of Etihad- carried freight. Machinery, mechanical equipment and precision instruments – typi cally high value and essential for high-tech engineering - are the most sig nificant items carried. Time sensitive products such as fish and publications also featu re highly. Echoing this, analysis of UN bi-lateral trade data of US cargo rou tes served by Etihad, combined with EU data on the likelihood of products being transported by air, suggests that the major products carried by Etihad to the USA is consistent with the pattern observed elsewhere in the world.25 The economic impact of Etihad Airways on the US econ omy

Fig. 14: Total imports and exports carried by air b etween Europe and USA, 2014 13

13 Not specific to Etihad. 21%

9%

8%

7% 4% 51% Machinery/mechanical applicances, computers Optical/photographic/ medical instruments Machinery/mechanical parts
Plastics

Printed books, other publications
Other Imports

22%

11%

7%

6% 6% 52% Machinery/mechanical applicances, computers Machinery/mechanical parts Optical/photographic/ medical instruments
Vehicles (land other than railway)

Fish and other acquatic animals Exports

Source: Eurostat26 May 2015

FEEDER TRAFFIC IMPACT
In addition to the tourism and trade impact of Etiha d’s activities, a further important impact relates to the passengers that the air line feeds to other carriers, as passengers book through Etihad onto the o nward flights of other airlines.
Etihad brings passengers into the US aviation marke t. While a large number of Etihad’s passengers to the USA take more than one fligh t to reach the country, for thousands of them the journey does not end there. In fact it is estimated that around 300,000 Etihad passengers will take a flight o n a US-based carrier (either domestically or internationally) as part of their jo urney in the course of 2015. 14 This represents a 65 per cent increase on the Etihad feeder traffic to US carriers in 2014.
With Etihad serving ultimate destinations and origins primarily in the Middle East and the Indian subcontinent, these represent new customers for the US aviation industry, who may not have arrived in the c ountry but for the global network Etihad provides.
These passengers have a positive impact on the US econo my. Those who take a domestic flight will spend money at their final dest ination in the USA, boosting the tourism industry and its supply chains. To the exte nt that these flights are domestic, the impact of these passengers is captured i n the tourism calculations presented above. However, onward international fligh ts will further contribute to the US economy via the US airlines in ways that a re additional to those reported elsewhere in this paper.

14 Source: Etihad, this figure refers to bi-direction al passenger flows i.e. traffic in both directions on each route. 

# 300,000

Feeder passengers, 2015

Around 300,000 Etihad passengers will take a flight on a US-based carrier (either domestically or internationally) as part of their journey in the course of 2015.27 The economic impact of Etihad Airways on the US econ omy



## 3. FORECASTING ETIHAD’S IMPACT 2016-2020

3.1 FORECASTING CORE IMPACTS
As has been shown, across a whole range of measures, the impact of Etihad on the USA has been rising as the airline expanded its services in terms of breadth and frequency. In this chapter we turn to the futur e, and report the results of Oxford Economics’ forecast of Etihad’s contribution in the USA in terms of its core operational and capital expenditure, as well as its catalytic impact through to the end of the decade. Network evolution will ge nerate a greater operational footprint and more employment in the USA. Equally, changes in patterns of capital expenditure across Etihad’s global activities are poised to provide a big boost to the US high-tech manufacturing sector in the coming years. Etihad’s operational footprint is set to increase. By 2020 Etihad’s operational economic footprint will total a US $ 1.4 billion co ntribution to GDP, sustaining over 11,000 jobs. This comprises:

• US $ 710 million direct and indirect GDP impact, sus taining 5,800 jobs; and

• US $ 710 million induced GDP impact, sustaining 5,30 0 jobs. 15

Fig. 15: The core economic impact of Etihad in the USA, GDP, 2016-2020

15 These figures do not add to the 11,000 total due t o rounding. 3,000 3,500 4,800 6,300 6,200

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

2016 2017 2018 2019 2020 US $ millions 2015 prices

Source: Oxford Economics 

# $1.4 bn

GDP in 2020

By 2020 Etihad’s operational economic footprint will total a US $ 1.4 billion contribution to GDP, sustaining over 11,000 jobs.28 May 2015

A burgeoning aircraft order book. Changes in patterns of capital expenditure across its global activities also affect the economic f ootprint of Etihad in the USA through to 2020. The economic footprint associated with Etihad’s airc raft and aviation equipment orders around the globe peaks in 2019, making a US $ 4.8 billion contribution to GDP in 2020 and sustaining som e 35,200 US jobs. Total core economic footprint. By the end of the decade, therefore, Etihad’s total core economic footprint in the USA is set to gr ow to a GDP contribution of US $ 6.2 billion, sustaining over 46,200 American job s.

3.2 FORECASTING CATALYTIC IMPACTS

3.2.1 FORECASTING OVERALL CATALYTIC IMPACT
A growing boost to US economic productivity. Etihad’s contribution to US connectivity is set to accelerate in the years ahead. Based on the airline’s future plans, we have been able to forecast their likely con tribution to US air connectivity and hence to US economic productivity. By 2020 Etihad is forecast to provide a boost to the productivity of the US eco nomy that reaches US $ 850 million. This is economic activity that it is estimate d would not exist without the air connectivity that Etihad will, by then, be prov iding the USA. This additional activity will be associated with some 6,400 US jobs.

Fig. 16: Etihad’s connectivity impact, 2016-2020

0 100 200 300 400 500 600 700 800 900

2016 2017 2018 2019 2020
Source: Oxford Economics/InterVISTAS US $ millions 2015 prices 

# $850 m

Boost to productivity in 2020

By 2020 Etihad is forecast to provide a boost to the productivity of the US economy that will reach US $ 850 million of GDP.29 The economic impact of Etihad Airways on the US econ omy

3.2.2 FORECASTING OTHER CATALYTIC IMPACTS
By 2020 Etihad will facilitate a greater tourism co ntribution in USA. The visitors arriving in the USA on Etihad flights will bring tou rism expenditure totaling US $ 1.9 billion or around US $ 5,000 per arrival. By 20 20 Etihad’s tourism-related economic footprint is projected to exceed a GDP cont ribution of US $ 2.4 billion, enabling more than 27,000 jobs related to the touris m economy and its supply chain.

Fig. 17: Economic footprint of tourism facilitated by Etihad, 2016 and 2020

Delivering new customers to US carriers. As Etihad’s global network continues to grow, the airline is set to become an increasingl y important link between the emerging markets of the Middle East and the Indian s ubcontinent, as we have already seen. But as well as providing air connectiv ity to these regions that has been lacking in the past, Etihad services will feed gr owing numbers of passengers onto US-based carriers. 0 5,000 10,000 15,000 20,000 25,000 30,000

0 500 1,000 1,500 2,000 2,500 3,000

2016 2017 2018 2019 2020

GDP Jobs GDP US $ millions 2015 prices

Source: Oxford Economics Jobs30 May 2015



## 4. ETIHAD’S ECONOMIC IMPACT BY ROUTE

To this point Etihad’s impact on the USA has been con sidered only as a whole, yet it is possible to explore how each of its US rout es contribute to the airline’s footprint in the USA. This chapter quantifies the ope rational and catalytic impact of each Etihad route on the USA. 16

4.1 ETIHAD’S OPERATIONAL IMPACT BY ROUTE, 2006-2015
The operational impact of any of Etihad’s US routes is determined by the value of the US supply chain spending associated with it. For the most part these can be estimated in line with a given route’s share of pa ssengers travelling to and from the USA. However, there are some areas of spending – such as corp orate overheads, aircraft leasing and financing costs – that are linke d to Etihad’s network as a whole and not to any one route. The existence of US routes plays some part in the level of spending that is required, as, for instan ce, flying these routes means that more corporate activities take place and so cor porate overhead costs increase. Therefore, one way in which these costs can be attributed to each route is through allocation determined by a given ro ute’s share of the total passengers travelling throughout Etihad’s worldwide ne twork.
On the basis of the attribution rules above, the six US routes contribute over US $ 40 million to GDP and sustain 400 jobs.

16 We do not allocate economic activity associated wi th capital spending since this is not related direc tly to one or other route into the USA. For example, the economic impact associated with Etihad’s investment in airc raft that will fly routes all over the world, but which are m anufactured in the USA, cannot readily be attribute d to any one route.31 The economic impact of Etihad Airways on the US econ omy

4.2 ETIHAD’S CATALYTIC IMPACT BY ROUTE, 2006-2015
Every route that Etihad operates to the USA boosts Etihad’s connectivity impact on the country. Therefore, we are able to quantify the growthenhancing impact of Etihad’s connectivity contributi on among its six US routes. This gives an indication of the relative importance of each route in terms of the boost it gives to US productivity. The Abu Dhabi to New York route has the largest impa ct, adding US $ 140 million to the productivity of the US economy. This portion of US GDP is associated with 1,200 jobs across the economy. The next most valuable contribution to connectivity is related to the route into Chicago O’Hare, adding US $ 79 million to the productivity of the economy. This portion of US GDP is associated with 700 US jobs. As with the core operational economic contribution o f Etihad and with connectivity impacts, we are able to allocate the e conomic contribution facilitated by the spending of visitors arriving on E tihad flights according to their destination airport. Doing so demonstrates how each r oute contributes to the tourism impact facilitated Etihad in the USA. The Abu Dhabi to New York route has the largest impa ct with 84,000 visitors arriving on this service, facilitating a US $ 500 mil lion contribution to GDP and 6,000 jobs in the US economy. This is followed by Chic ago, San Francisco, Los Angeles and Washington Dulles.

Fig. 18: Economic impact of Etihad by route into th e USA, 201532 May 2015

4.3 FORECASTING ETIHAD’S IMPACT BY ROUTE, 2016-2020
On current forecasts, the operational impact of most o f Etihad’s existing routes into the US will hold steady over the forecast perio d, with the contribution of the biggest single route – Abu Dhabi to New York - gr owing from US $ 14 million in 2015 to US $ 16 million by 2020.

The overall catalytic impact that enhanced connecti vity provides to US productivity can also be attributed to different Eti had routes according to the forecast seat capacity on each route and the project ed growth in importance of Abu Dhabi to the global aviation network. For instan ce, the connectivity boost to US productivity provided by the Abu Dhabi to New Yo rk route is expected to grow from US $ 140 million to US $ 275 million by 2 020. This portion of GDP is expected to be associated with 2,100 jobs. It is also possible to measure the tourism impact facil itated by Etihad on each of its routes. The increasing number of visitors arrivi ng at each destination translates into a growing tourism impact attributabl e to each route. Indeed, by 2020 the tourism impact facilitated by the Abu Dhab i to New York route is projected to grow from US $ 500 million in 2015 to US $ 690 million in 2020, supporting an additional 7,700 jobs.33 The economic impact of Etihad Airways on the US econ omy



## 5. CONCLUSION

This study has quantified the economic impact of Etih ad on the USA in terms of both the core contribution stimulated by its activiti es and the wider economic benefits its services enable for others. With six unique routes linking the USA to the Middle East and beyond, in 2015 Etihad’s economi c footprint in the USA is expected to amount to a GDP contribution of US $ 2. 9 billion and some 23,400 US jobs. After twelve years of growth in its worldwid e network, the air connectivity Etihad creates is estimated to boost the productivity of the US economy by US $ 410 million.
Growth in Etihad’s economic footprint in the USA ha s been considerable since it opened its first direct route into New York in 2 006 . But our forecasts show that its biggest contribution to the US economy lies ahead. On the back of a large expansion of aircraft-related expenditure and a rising operational impact, Etihad’s economic footprint in the USA is set to reac h US $ 6.2 billion by the start of the next decade and contribute 46,200 jobs, many of them in advanced manufacturing. Over the fifteen year period 2006 to 2020, the tota l impact of Etihad’s operational and aircraft-related investment on the U S economy therefore sums to US $ 41 billion on an undiscounted basis.

Fig. 19: The core economic impact of Etihad in the USA, GDP, 2006-2020

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Operational Capital

Source: Oxford Economics US $ millions 2015 prices34 May 2015

Etihad’s wider catalytic impact on the USA is also growing quickly . Providing increasing connectivity, linking the country to a r apidly-growing global hub airport in Abu Dhabi, means that Etihad is providing the US economy with an increasing level of global air connectivity. It is e stimated that the catalytic boost to the productivity of the US economy this creates wi ll grow from a negligible level in 2006 to almost US $ 850 million by the start of the next decade.

Fig. 20: The connectivity impact of Etihad in the USA, GDP, 2006-2020

Tourism is a crucial way in which Etihad’s connecti vity benefits the USA. The network connections Etihad provides make the USA a vi able tourist destination for millions of people for whom the trip was perhaps prohibitively expensive or inconvenient before. Their spending supports substantial economic activity in the USA, and this contribution is forecast to increas e over the next five years, growing to US $ 2.4 billion and sustaining over 27,00 0 American jobs.

All elements of Etihad’s contribution to the US eco nomy are therefore substantial. From its core contribution to the GDP and employmen t of the USA, to the trade, business, tourism and other economic ac tivity its services enable, Etihad’s impact on the economy is considerable and gro wing fast. As Etihad’s global network expands, its US flights will increasin gly connect the world’s largest economy to Asia’s most populous and vibrant o nes, providing opportunity and prosperity for millions.

0 100 200 300 400 500 600 700 800 900

Source: Oxford Economics US $ millions 2015 prices 85035 The economic impact of Etihad Airways on the US econ omy



## 6. TECHNICAL APPENDIX

6.1 METHODOLOGICAL OVERVIEW
In early 2015 Oxford Economics was commissioned by Et ihad to undertake a comprehensive analysis to quantify its economic impa ct, in Etihad’s home country – Abu Dhabi – and in six key markets, and fi ve other major global economies. This document presents detail of the metho dological approach used to calculate the economic impact of Etihad Airways o n the US economy as a part of that global study.

6.1.1 MEASURING ETIHAD’S ECONOMIC IMPACT IN THE USA
The study measures the economic impact of Etihad using a standard means of analysis called an economic impact assessment. This con sists of two parts. First we quantify the three ‘core’ channels of impact that comprise the organisation’s ‘economic footprint’. Second we examine the ‘cataly tic’ effect that the company’s services or products have in boosting economi c activity elsewhere in the economy, as well as examining specific examples of the kind of catalytic impacts that are facilitated, namely tourism, trade and feeder traffic onto US carriers.
Fig. 21: Channels of economic impact

The remaining sections of this document describe the approa ches employed to calculate the core and catalytic impact of Etihad i n the USA. First, however, the scope and data requirements of the study are discussed.36 May 2015

6.1.2 TIMEFRAME OF THE ANALYSIS – 2006 TO 2020
Etihad’s economic impact is calculated from the start of its operation in the USA, in 2006, and forecast out to 2020. Drawing on histor ical data and projections from a wide range of sources, the modelling on which this report is based computes the economic footprint of Etihad from 2006 to 2015, and then forecasts the airline’s anticipated impact in the year s from 2016 through to 2020.

6.1.3 DATA SOURCES USED
Conducting an economic impact assessment is data intensi ve, particularly when a range of years and geographies are considered. To e ase this process, the modelling and wider analysis contained in this report draws heavily on historical and forecast data provided by Etihad, major aircraft manufacturers, national statistics agencies, the World Input-Output Database, an d Oxford Economics’ own macroeconomic projections. Other sources include: OAG, Diio, and Eurostat.

6.2 CALCULATING ETIHAD’S CORE IMPACT
Etihad’s core economic impact comprises the activity supported by its operations and its capital spending on aviation equip ment. The same impact methodology is used to calculate each of these impact s. This section of the appendix explains in detail how t he methodology is applied to calculate the impact of the airline’s operations, before highlighting any differences when estimating the impact of Etihad’s ca pital spending. But first, we present a short introduction to economic impact asse ssments.

6.2.1 INTRODUCTION TO ECONOMIC IMPACT ASSESSMENTS

THE CHANNELS OF IMPACT To capture the full extent of an entity’s economic i mpact it is necessary to consider all of the means by which it interacts with t he rest of the economy. Typically when assessing the economic contribution of an entity three main channels of impact are analysed:

• At the core of any economic impact assessment is the direct effect . This is the impact generated by the entity itself.

• The second channel of impact focuses on how an entity interacts with other businesses in the economy. The entity’s indirect effect is the37 The economic impact of Etihad Airways on the US econ omy

activity that is supported elsewhere in the economy a s a result of its procurement of inputs of goods and services for use in producing its own output. This expenditure creates activity along the entity’s supply chain.

• The final channel of impact is known as the induced effect , and captures the activity that is stimulated by the consumer spendi ng of the individuals employed by the entity and in its supply c hain. These purchases take place predominantly in the sectors that supply consumer goods and services, such as retail and leisure outlets. By supporting this expenditure – through the payment of wages – the ent ity is inducing additional economic activity in these businesses. It also creates demand for goods and services along the retailers’ and leisur e outlets’ domestic supply chains.
Fig. 22: The channels of economic impact

Brought together the individual channels present a c omplete picture of the economic impact of the entity as it ripples from the direct effect out through the rest of economy. The total impact of the entity is th e summation of the three effects.

MEASURING IMPACT To effectively quantify economic impact it is necessar y to evaluate the contribution an entity makes in the same terms used to measure the size of the economy. Therefore, impact assessments typically focu s on two different

Induced Impact

-Consumer Spending -Housing -Recreation -Food & Beverages Indirect Impact

- Purchases of inputs from domestic suppliers -Suppliers own supply chain -Activities of the Entity Direct Impact38 May 2015

metrics: gross value added contribution to Gross Domestic Product (GDP) and employment. The first of these metrics - gross value added contribu tion to GDP - is a measure of net output. Three different approaches are avail able to calculate the gross value added contribution to GDP of a business: the p roduction (or output) approach, income approach and expenditure approach. United Nations Statistics Division 17 (UNSD) clearly defines the different methodologies: “The production approach [...] measures GDP as the di fference between the value of output less the value of goods and service s used in producing these outputs in an accounting period”. “The income approach measures GDP as the sum of the factor incomes generated to the economy [wages, salaries and bonus es payable to employees, taxes on production, and operating surplus for the producers]”. “The expenditure approach measures the final uses o f the produced output as the sum of final consumption, gross capital formati on and exports less imports”. Whatever approach is used, gross value added measures t he contribution to the economy of each individual producer. When aggregate d across all firms, gross value added sums to GDP. 18 GDP is one of the main summary indicators of a country’s economic performance. References to econom ic growth (or when the economy enters recession) typically relate to the ra te of change of GDP. Employment is the second metric by which the economic contribution of a firm can be measured. It can be defined in three ways: he adcount, full-time equivalent or job-years. A headcount employment mea sure corresponds to the number of people employed, irrespective of whether e mployment is full- or part-time. The full-time equivalent measure of emplo yment takes into account that some individuals may be employed on a part-time basis and adjusts the headcount employment figure for hours worked. The fi nal measure, job-years measures the number of years of employment that are su pported. One job that lasts for one year or two that last for six months each both equate to one jobyear. This study applied the headcount employment me asure.

GROSS VERSUS NET ECONOMIC IMPACT STUDIES The total contribution of an entity to an economy i s the sum of all three channels of economic impact. The results are usually presented on a gross basis

17 United Nations Statistics Division, "Links between business accounting and national accounting" (Hand book of National Accounting, 2000).
18 The link between GVA and GDP can be defined as GVA plus taxes on products less subsidies on products equals GDP.39 The economic impact of Etihad Airways on the US econ omy

rather than a net basis. The difference is whether acc ount is taken of what the resources used up - in the operation of the firm, its supply chain and through staff spending - could alternatively have been deploy ed to do. So a gross study ignores the alternative uses, whilst a net study estimat es the impact created by the firms in excess of that if the resources were used i n their second most effective use. Taking a net approach is more complex and controversial as it is necessary to estimate what the resources would alternati vely be used to do. For that reason this study follows a gross approach.

6.2.2 MEASURING ETIHAD’S OPERATIONAL IMPACT

CALCULATING THE DIRECT IMPACT OF ETIHAD
The direct value-added contribution Etihad makes to an economy is the sum of its profits (expressed in terms of earnings before int erest payments, taxation, depreciation and amortisation) and the payments of wa ges and salaries it makes to its employees. These data were provided by Etihad o n a global and geographical basis. It is important to note that as E tihad – along with other airlines – consolidates its profits in its home country , its direct impact in all other geographies is equal to its wage spending.

CALCULATING THE WIDER ECONOMIC IMPACTS Typically, an economic impact assessment focuses on esti mating an entity’s wider (indirect and induced) impact on a specific co untry. To do so it uses an input-output model of that particular country. An input-output model gives a snapshot of an economy a t any point in time. The model shows the major spending flows from “final de mand” (incorporating consumer spending, government spending, investment, an d exports to the rest of the world); intermediate spending patterns (the pu rchases that each sector makes from every other sector – the supply chains in o ther words); how much of that spending stays within the economy; and the dist ribution of income between employment incomes and other income (mainly profits). In essence an input-output model is a table which shows who buys wha t from whom in the
economy.40 May 2015

Fig. 23: A simple Input-Output model

A crucial weakness of using an input-output model fo r a single country is that any imports are treated as leakage and lost from the model. This can lead to understating the economic impact of an entity. The first way of understating impact occurs as a single country input-output model ignores that supply chains reach across many coun tries, and may often enter a country multiple times. For example, an insu rance firm in the USA may use an Indian company to operate its call centres. I n turn, the call centre company may use computers produced in the USA using c omponents sourced from China. The initial purchase creates an economic footprint at each of these stages. But in a single country input-output model c onsidering, in this example, the economic impact of the insurance company on the USA the purchase of call centre services in India is reported as a leakage. And the subsequent supply chain will not be considered for the model, even tho ugh it re-enters the USA at a later stage. Consequently, the impact assessment fails t o attribute the activity supported in the US computer company to the insurance company. To avoid understating Etihad’s global impact, this stud y employs a global inputoutput model that enables supply chains to be traced across countries. The model uses the global input-output developed by the World Input-Output Database (WIOD) as its foundation 19 . The WIOD provides time-series of world

19 M P Timmer et al., "An Illustrated User Guide to t he World Input–Output Database: the Case of Global Automotive Production", Review of International Economics , 2015.41 The economic impact of Etihad Airways on the US econ omy

input-output tables for forty countries 20 worldwide and a model for the rest-ofthe-world, covering the period from 1995 to 2011. Oxford Economics augmented the WIOD model by first i ncluding the domestic input-output models for the additional geographies covered in this study. Published input-output models were used for Switzerl and 21 and South Africa 22

. But for the other geographies (Abu Dhabi, Serbia, th e Seychelles, rest of Africa and rest of world) no published input-output models exist. In these cases Oxford Economics created estimated domestic input-output mod els, a process that incorporated four distinct steps. The first step was to identify a country from which an input-output model for each geography could be estimated. Choosing the corre ct country on which to base the estimation is important, as the estimated inp ut-output model will exhibit some of the same characteristics as the base c ountry. Therefore, countries with similar industrial structures and level s of economic development were chosen. For Abu Dhabi the base country was the UA E, and an input-output model previously developed by Oxford Economics. For Serbia, the input-output model of Romania published by WIOD was chosen. The inp ut-output model of Mauritius, published by Statistics Mauritius, was used f or the Seychelles 23

. Finally, the WIOD estimation of the domestic input-o utput model of the rest of world 24 was used as a base for generating the input-output mo dels for the rest of Africa and rest of world. The second stage of estimating each geogrpahy’s input- output table was to develop a coefficients table using input-output mod els for the base countries and the system based on the location-quotient method developed by Flegg et al

. 25 In this table each cell was expressed as a proportion of that industry’s output, for example any values in the agriculture c olumn were expressed as a proportion of agricultural output, and so on for eac h different sector. Following the Flegg et al. approach, the coefficients table was adjusted to develop a new input-output model for each geography using two steps:

20 The countries included are the EU 27, Australia, B razil, Canada, China, India, Indonesia, Japan, Sout h Korea, Mexico, Russia, Taiwan, Turkey and the USA.
21 Sourced from the OECD Structural Analysis Database

. 22 Statistics South Africa, "Input-output tables for South Africa, 2010 and 2011" (Report No. 04-04-02, Statistics South Africa, 2014).
23 Available at http://statsmauritius.govmu.org/Engli sh/StatsbySubj/Pages/Investment.aspx#iot
24 The WIOD definition of rest of world differs to th at used by Oxford Economics. For the WIOD it incorp orates all countries except the 40 presented individually in t he WIOD model. For Oxford Economics, Abu Dhabi, Ser bia, the Seychelles, Switzerland and rest of Africa are also excluded.
25 Flegg, Webber and Elliott, "On the appropraite use of location quotients in generating regional input -output models", Regional Studies , 1995: 547-61.42 May 2015

• The Size Effect

adjusted the coefficients matrix for each sector to t ake into account the differences between the absolute siz e of a sector in the base country and the geography in the study; and,

• The Scale Effect

then adjusted the coefficients matrix according to the size of each sector relative to the rest of the econo my. These adjustments ensured that differences between indu strial linkages in the two geographies are captured. The output of these adjustments was a ‘first-cut’ in put-output model for each geography. To finalise the models, the first-cut mode ls were then scaled to meet published data on sector output, GVA, compensatio n of employees, imports, exports, household spending, government spendi ng, gross capital formation in in each geography. These data were draw n from national statistics agencies for Abu Dhabi, Serbia and the Seychelles. C orresponding data were calculated for the rest of Africa and rest of world u sing data published by the United Nations’ National Accounts Main Aggregates Data base. 26
Incorporating the additional geographies in the glo bal input-output model requires not only the inclusion of domestic input-ou tput models for each geography, but also estimates of how these geographies link to the rest of the global economy. As each of the geographies are incorp orated within rest of world within the WIOD, an overview of the total lin kages is presented in the original WIOD model. For example, if the WIOD model suggests that agriculture in the rest of the world imports US $ 10 million of b asic metals from Australia, the sum of all imports of basic metals from Australia to the agricultural sectors in the additional geographies must equal US $10 milli on. The key is how this US $ 10 million is distributed between the additional ge ographies. To allocate all imports and exports Oxford Economics r elied on two known figures. The first was the total number of imports an d exports by each sector in each geography, calculated in the domestic input-out put models. The second is the distribution of imports and exports by trading pa rtner for each geography, taken from data published by the IMF and collated by Oxford Economics’ Global Trade Service. These two pieces of data enabled Oxfo rd Economics to estimate how each of the additional geographies linked to the rest of the global economy, and estimate a global input-output model la rger than that published by WIOD. Once finalised, the global input-output model was us ed to generate industry multipliers by using the Leontief system. 27 Under the Leontief system industry multipliers are calculated through a series of manipul ations of the input-output

26 Available at http://unstats.un.org/unsd/snaama/Int roduction.asp
27 Wassily Leontief, Input-output economics (New York: Oxford University Press, 1986).43 The economic impact of Etihad Airways on the US econ omy

matrix. The first of these manipulations was the creat ion of a base coefficients matrix (A matrix) for global economy. The second ma nipulation was the creation of an identity matrix (I matrix), within which all values were zero except for when the consuming country and industry (columns) and the producing country and industry (rows) are the same; these cells were giv en a value of 1. The third stage of the manipulation was the subtraction of the A matrix from the I matrix. The final stage was the inversion of the matrix produ ced in the third stage. The result of these manipulations was a matrix in which the values represent the individual cross-multipliers for each industry, sho wing the impact on each producing industry (row) of an increase in 1 unit of output in a consuming industry (column). The total multiplier for each con suming industry is the sum of the multipliers in the relevant column. In other wor ds, the total multiplier for each industry represents the strength of its supply chain

.

USING THE INPUT-OUTPUT MODEL TO CALCULATE WIDER ECO NOMIC IMPACTS The input-output model represents a powerful tool for modelling Etihad’s contribution to the global economy. Using the model enables the calculation of the indirect and induced impacts. To do so it is nec essary to identify the expenditure the airline makes with suppliers based aro und the world. Etihad provided data on the different type of expen ditures it makes, and where it makes them. Using the input-output model it is po ssible to disaggregate and align this spending to the industrial sectors in each g eography from which inputs were sourced. By allocating all spending to the relev ant industries, the purchases of inputs can be entered into the input-outp ut model. The model is then used to calculate the subsequent supply chain pur chases that occur within the global economy (through the use of supply chain m ultipliers). The summation of these purchases represents the total expend iture that is generated by Etihad’s procurement. To calculate the indirect contribution to GDP, the total expenditure effect is divided by sect or-level gross value-added to gross output ratios taken from the input-output model. The employment supported as a result of the indirect c ontribution to GDP is estimated by dividing the value-added indirect impac t by sector-level labour productivity data obtained from WIOD, national stati stical agencies and forecast by the Oxford Economics Global Macroeconomic model. The calculation of the induced impact – the activit y supported by the wagefinanced spending of people employed directly or ind irectly by Etihad – is a twostep process. The total induced effect is the sum of b oth calculation stages. The first step involves estimating the induced impact that is generated by people employed in the supply chain. To generate thi s result, the modelling44 May 2015

used for calculating the indirect impact outlined ab ove is extended to incorporate the income multipliers in the economy. T his gives the induced expenditure impact, which is translated into value-a dded, employment and tax revenue impacts using the same process as used for the ind irect impact. The second stage of the estimation of the induced impa ct is quantifying the effect of the spending of those employed by Etihad. U sing the input-output model, the wages paid to these employees can be alloca ted to countries and sectors in a manner that reflects the spending profile of the average household in each country where Etihad has employees. Using thi s profile, the total expenditure effects on the economy can be calculated using the income multipliers in the model. This expenditure is then tr anslated into value-added and employment impacts using the same process as used f or the indirect impact.

6.2.3 MEASURING ETIHAD’S CAPITAL IMPACT
Etihad’s economic footprint extends far beyond its ope rations; most significantly it includes the impact of its capital ex penditure on aviation equipment. Aviation is a capital intensive sector t hat invests heavily in aircraft systems and other advanced technology. By purchasing aircraft and their components, Etihad supports considerable activity in t he USA. In order to capture the full extent of Etihad’s impact on the U SA this study includes the capital spending that the airline makes on new aircra ft and components both within the USA and beyond. Data on capital expenditure were provided by Etihad . These data were used in two ways to estimate the global impact of this spendin g. In contact with Airbus and Boeing, Oxford Economics translated the spending on aircraft by Etihad into profits and wages for manufactures, and subsequent the su pply chain purchases each made throughout the world. These data were inpu tted into the global input-output model in the same manner as Etihad’s oper ational expenditures, and the global economic impact was calculated. Oxfor d Economics then allocated this spending to the transport equipment man ufacture sector and used the supply chain and consumer spending multiplier to estimate their global economic impact. The total economic impact of Etihad’s spending on ai rcraft related capital items is the sum of both approaches.

6.2.4 MEASURING IMPACT BY ROUTE INTO THE USA
Economic contributions made by Etihad are shown for t he whole US economy and split out for the main direct routes into the USA . By the end of 2014, Etihad operated six direct routes from Abu Dhabi into the U SA: New York (JFK);45 The economic impact of Etihad Airways on the US econ omy

Washington Dulles (IAD); San Francisco (SFO); Chicag o O’Hare (ORD); Los Angeles (LAX) and Dallas Fort Worth (DFW). For the r oute-specific footprint of Etihad’s operations, as well as for the route-specific connectivity and tourism contribution, we are able to allocate the impact th at is associated with each route, in terms of GDP and employment. We do not al locate economic activity associated with capital spending, since these are not related directly to any one route into the USA. For example, the economic impac t associated with Etihad’s investment in aircraft that will fly routes all over the world, but which are manufactured in the USA, cannot readily be attribut ed to any one route.

6.3 CAPTURING THE CATALYTIC IMPACT OF ETIHAD
Quantifying the catalytic benefits that arise from a n airline’s services is not straightforward. The benefits of a strong air transpo rt infrastructure stem from its role in boosting competition, promoting internat ional trade, facilitating tourism and encouraging inward investment. Each of these is a specific example of the catalytic impacts that Etihad’s service have on the US economy. But trying to quantify an airline’s overall catalytic contribut ion to an economy is difficult because many of these beneficial effects take time to appear and are hard to measure individually. Rather, to put an overall esti mate on Etihad’s catalytic contribution to the USA requires us to disentangle co nnectivity’s overall contribution to long-term growth from the many of o ther factors that affect an economy’s performance by looking at how the nationa l economies of countries with faster-growing air connectivity perform relativ e to ones with slowergrowing networks. 28

6.3.1 MEASURING CONNECTIVITY
A number of studies in recent years have attempted to quantify the overall catalytic impact of aviation on GDP growth. A Janua ry 2015 econometric analysis by InterVISTAS has deployed the most recent available data on European connectivity to isolate and quantify its re lationship to economic growth, while controlling for other factors that may have an impact of GDP (such as education levels, research and development inv estment, capital

28 This issue is reflected in the wide range of estim ates that studies have reached for connectivity’s i mpact on longrun growth. Three studies undertaken in 2005 and 20 06 provide estimates of the impact that connectivit y can have on long-run level of productivity (and hence GDP). The mechanisms through which connectivity generates this economic benefit are those described in Section 3.2 . These studies suggest that a 10% increase in conn ectivity (relative to GDP) will raise the level of productiv ity in the economy by a little under 0.5% in the lo ng run, with there being a fair degree of uncertainty around this aver age estimate. A much wider 2006 study, based on a c rosscountry statistical analysis of connectivity and pr oductivity, derived a lower estimate of 0.07% for t he elasticity between connectivity and long-run productivity.46 May 2015

spending, and institutional and regulatory factors). 29 The research subsequently found that a 10 per cent increase in the ratio of co nnectivity to GDP was associated with an increase in GDP per capita of 0.5 p er cent.
The InterVISTAS study used a definition of air conne ctivity developed by IATA, which measures the number of seats available from an a irport or country weighted by the importance of the destinations served . The weights reflect how “connected” each destination is in terms of potential onward connections and are approximated by the total number of passengers at each destination airport relative to Atlanta (the world’s largest airport). Se rvices to major hubs will therefore provide a greater boost to overall connect ivity than flights to smaller airports. For example, a flight to London Heathrow will have a larger weight (and therefore a bigger impact on US connectivity) than a flight to Athens International Airport given the same number of seats. Oxford Economics applied the IATA methodology to est imate 1993-2014 connectivity by making use of historical data on seat s available on flights out of the USA by airport destination from the Department of Transport (DoT) and Diio. 30 The destinations were weighted using ACI data on to tal passengers for each airport, and consistent with the IATA method th e weights were estimated relative to Atlanta. To project connectivity to 2020 the historical relat ionship between connectivity and total passengers was first analysed. This analysis r evealed that historically connectivity has grown less rapidly than passengers, ma inly due to seat growth lagging behind passenger growth. That is increasing p assenger volumes have, to a significant extent, been met by filling up existing spare seat capacity (i.e. load factors have increased) rather than by increasing sea t numbers. However, this trend in spare capacity/load factors has become progre ssively more difficult to maintain, meaning passengers and seats (and hence conne ctivity) have moved more in line with one another in recent years. Extr apolating this relationship forward enabled our calculations to reflect the chan ging nature of the relationship between passenger and connectivity growt h. The second step was to project US passenger numbers using the ACI passenge r traffic forecasts. These passenger forecasts combined with the relationsh ip between passengers and connectivity then allowed us to project connecti vity to 2020. The 0.5 per cent figure in the InterVISTAS study re fers to the relationship between 1) the ratio of connectivity to GDP; and 2) GDP per capita. The interpretation of the result is that a 10 per cent in crease in connectivity (relative to GDP) leads to an increase in GDP per capita of 0. 5 per cent. As the

29 InterVISTAS for ACI, Economic Impact of European Airports; a Critical Ca talyst to Economic Growth (Bath: InterVISTAS, 2015), xiii.
30 Diio Traffic Analyser47 The economic impact of Etihad Airways on the US econ omy

relationship is in growths an appropriate base year mu st be chosen from which to estimate connectivity impacts. For the relevant ye ar of analysis (e.g. 2014) the connectivity figure would be the growth in conn ectivity (relative to GDP) since the base year. Correspondingly, the GDP impact (via the 0.5 per cent relationship) would be the growth in GDP per capita since the base year attributable to connectivity effects. In other word s the impact is the additional GDP since the base year associated with the increase in connectivity that occurred over the relevant period. In the InterVISTAS study 1993 was selected as the bas e year for Europe as it marked the start of a liberalized EU aviation market and the growth of low-cost carriers. The estimated GDP impacts on the EU there fore captured the connectivity changes that have taken place since 19 93. As noted by InterVISTAS this could be considered a conservative estimate as i t does not account for potential connectivity benefits that may have built up pre-1993. Following InterVISTAS we have taken 1993 to be the base year f or the US connectivity calculations. This means our estimates should capture the major air liberalization developments that have occurred since the early 1990s. However, as mentioned it may be a conservative estimate as the p rocess of air liberalization in the USA began in the late 1970s. Given the base year of 1993, growth in US connectivi ty (relative to GDP) from 1993-2020 was first estimated. The 0.5% elasticity was t hen applied to obtain the estimated growth in GDP per capita (since 1993) attributable to air connectivity at the national level for each year fr om 2006-2020. The GDP per capita effect was converted to total GDP by applying population levels in the relevant year. The same calculation was performed usi ng a connectivity index which excluded the growth from Etihad’s flights (conn ectivity growth being lower without Etihad). The difference with the nati onal figure (including Etihad) then gave the impact of Etihad to national GDP thro ugh connectivity effects.

6.3.2 TOURISM IMPACTS
The approach employed to estimate the tourism impact of Etihad involved three main steps. Firstly, US foreign arrivals carried on Et ihad by true origin were estimated from 2006-2020. “True origin” being the co untry in which arrivals started their journey, which is not necessarily the sam e as the departure point of the Etihad flight used. The second step then applied historical and projected figures on spending per arrival by origin country/region from Oxford Econom ics’ Tourism Decision Metrics (TDM). This gave total US tourism spending by origin country reliant on Etihad from 2006-2020.48 May 2015

The final step then converted the tourism spend into GDP and employment impacts. This was achieved by breaking down total tou rism spending into specific tourism products (e.g. accommodation) using data from the National Travel and Tourism Office. The products were then all ocated to industry sectors consistent with the Global IO Model. The Global IO Mo del then produced direct, indirect and induced GDP/employment impacts resulting from tourism spending, in line with the methodology adopted in th e economic footprint analysis.

The estimates of US visitor arrivals attributable to Etihad utilise two datasets. The first is Etihad’s historical and projected local/t ransfer passengers by route; and the second is OAG’s Traffic Analyser, which prov ides data on the true origins and destinations of Etihad passenger bookings and deta ils of airport connection points. The essence of the approach was to use the OAG data to establish the true origins and destinations of passengers flying on ea ch Etihad route. This allowed the identification of those Etihad passengers who are travelling to the USA and their true origins. US resident travellers on these routes, who by definition do not contribute to tourism impacts, wer e then identified using information on the point of sale for the booking. Th e pattern of origins and destinations of Etihad passengers by route was obtained from 2014 OAG data.
The approach was applied at a disaggregate level to take account of the different types of Etihad passengers that could arrive into the USA. This consisted of local (direct) and transfer passengers, with each further by route.

1. Local (direct passengers) – existing (2014) Etihad rou tes Historical and future local passenger numbers on the six current US routes were provided by Etihad. OAG data on the point of p urchase for these passengers in 2014 was utilised to split passengers into foreign and US resident travellers.

2. Transfer passengers – existing (2014) Etihad routes This group consists of Etihad transfer passengers on exi sting Etihad routes who travel to the USA. Two sub-groups of passengers we re identified within this group – those who arrived into the USA on an Et ihad flight to one of six destinations in 2014; and those who arrived on another airline but had an earlier leg on Etihad. Those arriving on an Etihad f light were over 90 per cent of this passenger group.
To estimate those arriving on an Etihad flight OAG da ta was used to identify the true origins and destinations of passengers on each Etih ad US route in 2014. Combined with information on country of ticket purc hase this gave an estimate of US foreign arrivals on each Etihad US route for 2014 by country origin. This49 The economic impact of Etihad Airways on the US econ omy

was then taken back to 2006 and projected to 2020 us ing growth in the number of transfer passengers on the relevant US route. A similar approach was adopted for those Etihad transf er passengers arriving into the USA on another airline. In this case, to ta ke the estimates back to 2006 and forward to 2020, growth in total transfer traffi c on existing routes excluding US routes was used.50 May 2015



## 7. FURTHER INFORMATION

Separate technical appendices accompany this report.

All data shown in tables and charts are the result of m odelling by Oxford Economics based on input data from Etihad Airways and Oxford Economics, except where otherwise stated and cited in footnotes.
All information in this report is copyright © Oxford Economics Ltd.
All modelling and calculation results presented here are based on data and information provided by third parties. Any subsequent revision or update of those data will affect the assessments and projection s shown.
To discuss the report further please contact:
Ian Mulheirn,
imulheirn@oxfordeconomics.com
Director of Consulting

Oxford Economics
Broadwall House, 21 Broadwall
London, SE1 9PL, UK

Tel: +44 207 803 1400