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 economy 

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 .................................................................................. 50 
2 

May 2015

Sources: Oxford Economics; Etihad; Diio; OAG 
 

3 The economic impact of Etihad Airways on the US economy 

EXECUTIVE SUMMARY 

Etihad Airways makes a substantial contribution to the global economy 

offering vital connections across regions and economies. 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 operates 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 2020. 

This economic impact study sets out to measure Etihad’s impact in two stages: 

the airline’s immediate contribution to, or ‘footprint’ in, the economy of the 

USA, and the wider catalytic economic impact it generates 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 contribution to gross domestic 

product (GDP) and employment. To do this Oxford Economics has developed a 

bespoke global economic impact model that maps the complex global supply 

chains on which Etihad relies. The global impact model is unique in allowing us 

to quantify the full contribution of Etihad’s global 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 aviation computer technology 

provider Sabre Airline Solutions. Meanwhile, the airline’s investment in aviationrelated equipment in 2015, with US suppliers including Boeing, from whom 

Etihad has ordered over 120 aircraft to date, will add a further US $ 2.0 billion to 

GDP and sustain nearly 15,600 US jobs. In total Etihad will contribute over US $ 

2.9 billion to GDP and sustain over 23,400 American jobs 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 aviation-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 total impact of Etihad’s 

operational and aircraft-related investment on the US 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 data from 

Etihad Airways and Oxford Economics, except where otherwise stated and cited in footnotes.

2

 All US $ values throughout are expressed in 2015 prices. 

$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 2015 
4 

May 2015

Fig. 1: Etihad’s economic footprint in the USA, 2015 and 2020 

 

Etihad’s catalytic impact on the USA. Etihad’s economic impact goes well 

beyond its economic footprint. Catalytic impacts capture 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 provides. The airline’s services 

facilitate business, encourage foreign investment, stimulate tourism and foster 

trade, consequently raising the productivity and prosperity of the USA. We can 

calculate and forecast Etihad’s contribution to US connectivity and, by 

combining this with the latest available research on the association between air 

connectivity and economic growth, it is possible to identify the scale of the 

boost Etihad provides to US productivity. We estimate that in 2015 this 

contribution will reach US $ 410 million. This connectivity 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% growth
 

5 The economic impact of Etihad Airways on the US economy 

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

Three important specific examples of connectivity impact are the trade, tourism 

and feeder passengers delivered to US airlines that Etihad 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 the rest of the world in 

2015, 57 per cent of this on its dedicated air freight services, delivered in 

partnership with US supplier, Atlas Air Worldwide – operator 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. The vast majority will arrive on 

an Etihad flight to one of the six US destinations now served by the airline, with 

the remainder arriving on other carriers having transferred from an Etihad flight 

elsewhere in the world. Almost nine out of ten of the direct inbound visitors will 

originate from the Middle East or the Indian subcontinent, illustrating the 

degree to which Etihad’s operations serve new and emerging 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 850
6 

May 2015

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

Etihad brings additional passengers into the US aviation market. A large 

number of Etihad’s passengers to the USA take more than one flight to reach 

the country, and for thousands of them the journey does 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 internationally) as part of their 

journey.3 This represents a 65 per cent increase on the Etihad feeder traffic to 

US carriers in 2014. 

Etihad’s impact on the economy is substantial and growing fast. From the 

contribution to US GDP and employment of its operational and capital spending, 

to the trade, business, tourism and other economic activity its services enable, 

Etihad’s impact on the economy is considerable and growing fast. As Etihad’s 

global network expands, its US flights will increasingly connect the world’s 

largest economy to Asia’s most populous and vibrant ones, providing 

opportunity and prosperity for millions. 

 

 

3

 Source: Etihad, this figure refers to bi-directional 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 economy 

INTRODUCING OXFORD ECONOMICS

Headquartered in Oxford, England, Oxford Economics is one of the world’s leading providers of 

global economic analysis, advice and models, and has been at the forefront of high-quality research 

into the socio-economic impact of the aviation industry 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 footprint 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 latest, completed in 2014, analysed the 

economic impact of airports and the rest of the aviation 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 and 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 contribution of Rolls-Royce to the UK, 

US, German and global economies, particularly as a result of its R&D in engine manufacture for 

planes and helicopters, and assessing the economic contribution of key projects to the UK. 

• British Airport Authority (now Heathrow Airport Holdings Ltd): A study on the economic 

importance of London Heathrow airport to the UK’s countries and regions, investigating three 

channels through which greater connectivity benefits 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 markets over the next 20 years, 

representing over 90 per cent of all air travel in that time period. Regional flows are included 

and important rapidly growing new routes are also covered. 

• Transport for London (TfL): An economic impact study of the proposed London estuary airport. 

This study measured the economic activity generated by the construction of the new airport 

hub with a national and local input-output modelling 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 revenue 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 Industries (IV), Austrian Airlines, and Vienna 

International Airport to investigate the impact of changes 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 measured 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 operating locally within the USA; 

• Indirect impact, which encapsulates the activity and employment supported in Etihad’s 

supply chain as a result of its procurement of goods and 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 footprint 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 headcount basis. 

Economic impact assessments traditionally only consider the activity that is generated by the 

operations of a given business or sector but Etihad’s economic footprint extends also to the capital 

expenditure that it makes on new aircraft and components 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 boosting 

economic activity elsewhere in the economy. 

The catalytic impact of Etihad represents the wider benefits 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 how 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 tourism, 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 footprint of each of these kinds of catalytic impact. 

Drawing on historical 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 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 methodology is included in the further technical 

appendices that accompany this report. 
 

9 The economic impact of Etihad Airways on the US economy 

1. INTRODUCTION 

Etihad Airways makes a substantial contribution to the global economy 

offering vital connections across regions and economies. In early 2015, Etihad 

Airways commissioned Oxford Economics to undertake a comprehensive 

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 economic prosperity, a large 

global employer and a source of significant social benefits. Oxford Economics, 

in association with the Air Transport Action Group (ATAG), 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 connectivity stimulates exchange 

of ideas and technology, fosters global competition, underpins international 

business cooperation and sustains foreign investment. All of these are essential 

contributors to economic growth. Etihad’s operations across the world play a 

significant part in raising connectivity, thereby contributing 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 York (JFK), bringing with it a 

growing economic contribution to US productivity. In 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 services it provides to the 

USA, adding routes to San Francisco (SFO), Dallas-Fort Worth (DFW) and Los 

Angeles (LAX). 

Etihad’s services connect the USA to important emerging 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, approximately 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 (tourist or business 

travelers). Around 14,000 of these will arrive in the USA on another airline 

having transferred from an Etihad flight elsewhere in 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/> [accessed 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 period from 2006 to 2015. It 

quantifies the operational expenditure and capital investment contributions 

separately. It then considers the overarching catalytic impact of Etihad on the US 

economy to date. This is primarily captured by the boost 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 trade, 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 grow, 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 the USA. 

 
 

11 The economic impact of Etihad Airways on the US economy 

INTRODUCING OXFORD ECONOMICS’ GLOBAL IMPACT MODEL 

Etihad’s economic impact can be traced as it ripples across the global economy. Any time a 

company makes purchases of intermediate goods or services it stimulates further economic activity 

in its supply chain. Often these supply chains encompass many sectors across many different 

countries. Complex supply chains may therefore crisscross the globe, leaving and entering a single 

country many times, meaning that economic activity in one part of the world can sustain jobs and 

contribute to GDP in countries that are apparently completely 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 initial 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 only within a given country, meaning that 

the economic activity stimulated by, for example Airbus’ purchases from US suppliers, goes 

unaccounted for: it ‘leaks’ out of the model. This approach 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 chains. To avoid understating Etihad’s 

contribution to the US economy, this study has developed 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 value is created throughout the global supply 

chain. It draws on the World Input-Output Database, but has been specifically augmented to 

provide greater geographical detail on key markets.
12 

May 2015

2. ETIHAD’S ECONOMIC IMPACT 2006-20155

This chapter sets out the results of Oxford Economics’ modelling of Etihad’s 

economic footprint in the USA from 2006 to 2015 (see page 8). This ‘core’ 

economic impact can be described as the sum of the economic activity and 

employment in the USA supported by Etihad’s global operations 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 contribution to gross domestic 

product (GDP)6 and employment. To do this Oxford Economics has developed a 

bespoke global economic impact model that maps the complex global supply 

chains on which Etihad relies. The global impact model is unique in allowing us 

to quantify the full contribution of Etihad’s global activities on the economy of 

the USA for the first time. 

As Etihad’s passenger numbers have increased, so has 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 increased so has the airline’s 

spend with US-based suppliers. Expenditures including fuel, landing fees, and 

maintenance costs directly linked to Etihad’s US routes account for the majority 

of all operational spending made with US suppliers in 2015. 

At the same time, growth in the operational GDP footprint of Etihad over the 

past decade reflects more than just the increase in its US operations. US 

suppliers have benefitted from the expansion of its global operations, 

purchasing inputs ranging from aircraft to business services. 

 

5

 Conducting an economic impact assessment is data intensive, particularly when a range of years and geographies 

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, major aircraft manufacturers, national statistics agencies, the 

World Input-Output Database, and Oxford Economics’ own macroeconomic projections. Other sources include: 

OAG, Diio, and Eurostat. 

6

 GDP is the main summary indicator of economic activity in the US economy. Gross value added (GVA) measures 

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 domestic 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 economy 

Fig. 5: Contribution to US GDP of Etihad’s global operations, 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 services.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 comprises: 

• 4,200 direct and indirect jobs in the US, that is employees 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 US 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 cent
14 

May 2015

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

Etihad’s global operations have a sizable impact in the USA. Over a third of 

Etihad’s total contribution to US GDP in 2015 stems from 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 widely throughout the US 

economy. US businesses supporting the air transport sector – undertaking 

activities ranging from operating airports and providing fuel, to selling air tickets 

– are the major beneficiaries of Etihad’s operational spending in the USA. In 

2015 these companies will account for 51 per cent (US $ 220 million) of the 

airline’s operational supply chain contribution to US GDP. They also account for 

over half (2,200 jobs) of the indirect employment supported by Etihad in the 

USA. A further 21 per cent of the indirect GDP contribution and 20 per cent of 

indirect employment is located in the business services sector (including legal, 

consultancy, advertising and recruitment firms). 

2.1.2 CAPITAL IMPACT 

US suppliers form a substantial proportion of Etihad’s aircraft and aviation 

equipment-related capital purchases. By purchasing large numbers of aircraft 

and their associated products - engines, simulators, flight entertainment 

systems and cabin interiors - Etihad supports considerable 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 jobs depend on this. In turn, 

the contracting of firms such as GE and Pratt & Whitney to deliver engines and 

other component parts supports activity in these companies 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

7,900 Source: Oxford Economics 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 world 
 

15 The economic impact of Etihad Airways on the US economy 

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 Boeing 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 provide key components, 

also feature in the supply chains of both Boeing and Airbus that are supported 

by the capital purchases that Etihad makes outside of the USA. These indirect 

contributions to the US economy are captured and quantified by our global 

impact model. 

Capital expenditure, much more so than operational expenditure, varies yearby-year. The historical pattern for Etihad has nonetheless been of steady growth 

through to 2015. Figure 7 displays the economic impact of Etihad’s capital 

spending in terms of both contribution to GDP and employment. 

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

 

9

 As with the assessment of the operational impacts of Etihad, this analysis presents the impact of Etihad’s 

investment in gross terms. Due to its hypothetical nature there is no consideration of potential displacement 

effects – investment elsewhere in the economy that does not occur because of the investment made by Etihad. 

0

2,000

4,000

6,000

8,000

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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

Jobs
16 

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 economy. 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 economy 

 ETIHAD’S ECONOMIC IMPACT IN DIFFERENT SECTORS OF THE US ECONOMY 

Both manufacturing and business services sectors benefit significantly from Etihad’s capital 

expenditure. While manufacturing sectors account for the majority of the indirect impact in the 

USA of Etihad’s global capital spending, the single sector benefiting the most from the airline’s 

capital supply chain is business services. These suppliers - which include those providing computer 

services, legal, recruitment and management consultancy - account for nearly a fifth of the total 

indirect GDP and a quarter of indirect employment supported 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 Economics
18 

May 2015

2.2 ETIHAD’S CATALYTIC IMPACTS 

2.2.1 OVERALL CATALYTIC IMPACT 

The economic impact of an airline goes far beyond its operational and capital 

expenditure footprint. The services Etihad offers facilitate a wide range of 

economic activity elsewhere in the USA and global economy – enabling business 

interaction, foreign investment, tourism and trade, among 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 understood 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 with major cities and markets 

around the world. The level of US connectivity reflects 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 that a new service that 

connects the USA to a global airport hub has substantially greater catalytic 

impact on the USA than an equivalent capacity flight 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 possible to estimate the 

productivity boost that Etihad generates for the US economy.10

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

 

10 InterVISTAS for ACI, Economic Impact of European Airports; a Critical Catalyst 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 economy 

We estimate that Etihad’s contribution to US air connectivity 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 full year of operation for 

three of its six routes begins to be felt. In 2015, Etihad’s overall catalytic boost 

to GDP will be equivalent to some 3,400 jobs in the USA. 
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; encourages domestic and foreign 

investment; raises competition thus improving domestic business efficiency; stimulates the 

tourism economy; and facilitates the exchange of ideas and technology across the world. All of 

these things encourage innovation, raising the productivity 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 prosperous and vibrant economy. It represents 

one of the key infrastructures upon which modern globalised businesses depend, thereby 

supporting long-term sustainable economic growth. All airlines flying into the USA contribute to 

the country’s connectivity and therefore the economic benefits that result. 

Etihad’s worldwide network connects passengers flying to and from some of the most rapidly 

growing and under-served emerging markets - particularly the Indian subcontinent and the 

Middle East - onto the US-bound flights both of Etihad and other airlines. Etihad’s worldwide 

services therefore provide critical linkages as part of the USA’s air transport infrastructure. 

The USA’s IATA connectivity index reading compares unfavourably 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 expansion 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 connectivity is included in the technical appendices. 

50

60

70

80

90

100

110

2000 = 100

Source: Oxford Economics/InterVISTAS
 

21 The economic impact of Etihad Airways on the US economy 

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 possible to estimate the scale 

of Etihad-facilitated tourism, trade and feeder traffic as specific examples of how 

greater connectivity reshapes the US economy. 

Air transport lies at the heart of global tourism and business travel. Through its 

speed, convenience and affordability, air transport has expanded the 

possibilities of world travel for tourists and business travelers alike, allowing an 

ever greater number of people to experience diversity of geography, climate, 

culture and markets. Tourism is a major industry in the US economy, with 

foreign visitors spending approximately US $ 150 billion in the USA each year. 

With over 40 per cent of international tourists travelling by air globally, the 

global aviation network is the nerve system of the international tourism industry 

on which millions of jobs depend. 

Fig. 11: Etihad connections into Abu Dhabi and on to 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 facilitator for the domestic tourism 

industry. In 2015 Etihad flights will carry 260,000 international 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 passenger 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 carrier’s US inbound service. 

Oxford Economics’ sophisticated tourism spending forecasts allow us to identify 

the spending of inbound visitors to the USA by country of origin. Our analysis 

suggests that 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. 

For business travelers the economic benefits are, of course, more wide-ranging 

than simply their spending while in the country. There is a close link between 

business travel and the trade impact described below. Air transport encourages 

international business ties by linking firms to potential customers and suppliers. 

For instance, a survey of City of London companies found 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 foreign ‘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 economy 

The economic footprint of Etihad-facilitated visitor spending in the USA is 

substantial. The impact that these arrivals make through their spending within 

the USA and the jobs that this expenditure supports can be quantified in a 

similar way to Etihad’s core operational and capital spending impact. In 

quantifying the benefits from visitor arrivals we seek to capture the spending by 

tourists and business people on accommodation, food, recreation and other 

activities beyond their airfare (which forms part of our estimate of the direct 

calculation of Etihad). The numbers represent the economic activity and jobs 

that are facilitated by Etihad within the US economy, 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 the GDP of the USA, and some 

19,400 jobs across the country. This represents a snapshot 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 the 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 generally. 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 the USA and the rest of the 

world in 2015. Approximately 57 per cent of the total will be carried on Etihad 

Cargo’s dedicated freight services, with the rest carried as bellyhold cargo in 

Etihad’s passenger planes. 

Air freight carried by Etihad consists of high-value, 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 – typically high value and 

essential for high-tech engineering - are the most significant items carried. Time 

sensitive products such as fish and publications also feature highly. Echoing this, 

analysis of UN bi-lateral trade data of US cargo routes 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 economy 

Fig. 14: Total imports and exports carried by air between Europe and USA, 

201413

 

 

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: Eurostat
26 

May 2015

FEEDER TRAFFIC IMPACT 

In addition to the tourism and trade impact of Etihad’s activities, a further 

important impact relates to the passengers that the airline feeds to other 

carriers, as passengers book through Etihad onto the onward flights of other 

airlines. 

Etihad brings passengers into the US aviation market. While a large number of 

Etihad’s passengers to the USA take more than one flight 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 on a US-based carrier (either 

domestically or internationally) as part of their journey 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 country but for the global 

network Etihad provides. 

These passengers have a positive impact on the US economy. Those who take a 

domestic flight will spend money at their final destination in the USA, boosting 

the tourism industry and its supply chains. To the extent that these flights are 

domestic, the impact of these passengers is captured in the tourism calculations 

presented above. However, onward international flights will further contribute 

to the US economy via the US airlines in ways that are additional to those 

reported elsewhere in this paper. 

 

14 Source: Etihad, this figure refers to bi-directional 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 economy 

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 future, 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 generate 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 contribution to GDP, sustaining 

over 11,000 jobs. This comprises: 

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

and 

• US $ 710 million induced GDP impact, sustaining 5,300 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 to 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 footprint of Etihad in the USA 

through to 2020. The economic footprint associated with Etihad’s aircraft and 

aviation equipment orders around the globe peaks in 2019, making a US $ 4.8 

billion contribution to GDP in 2020 and sustaining some 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 grow to a GDP contribution of 

US $ 6.2 billion, sustaining over 46,200 American jobs. 

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 contribution 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 economy that reaches US $ 850 

million. This is economic activity that it is estimated would not exist without the 

air connectivity that Etihad will, by then, be providing 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 economy 

3.2.2 FORECASTING OTHER CATALYTIC IMPACTS 

By 2020 Etihad will facilitate a greater tourism contribution in USA. The visitors 

arriving in the USA on Etihad flights will bring tourism expenditure totaling US $ 

1.9 billion or around US $ 5,000 per arrival. By 2020 Etihad’s tourism-related 

economic footprint is projected to exceed a GDP contribution of US $ 2.4 billion, 

enabling more than 27,000 jobs related to the tourism 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 increasingly important link between the 

emerging markets of the Middle East and the Indian subcontinent, as we have 

already seen. But as well as providing air connectivity to these regions that has 

been lacking in the past, Etihad services will feed growing 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

Jobs
30 

May 2015

4. ETIHAD’S ECONOMIC IMPACT BY ROUTE 

To this point Etihad’s impact on the USA has been considered only as a whole, 

yet it is possible to explore how each of its US routes contribute to the airline’s 

footprint in the USA. This chapter quantifies the operational 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 passengers travelling to and 

from the USA. 

However, there are some areas of spending – such as corporate overheads, 

aircraft leasing and financing costs – that are linked 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 instance, flying these routes means 

that more corporate activities take place and so corporate overhead costs 

increase. Therefore, one way in which these costs can be attributed to each 

route is through allocation determined by a given route’s share of the total 

passengers travelling throughout Etihad’s worldwide network. 

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 with capital spending since this is not related directly to one or 

other route into the USA. For example, the economic impact 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 attributed to any one 

route. 
 

31 The economic impact of Etihad Airways on the US economy 

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 contribution 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 impact, 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 of Etihad and with 

connectivity impacts, we are able to allocate the economic contribution 

facilitated by the spending of visitors arriving on Etihad flights according to their 

destination airport. Doing so demonstrates how each route contributes to the 

tourism impact facilitated Etihad in the USA. 

The Abu Dhabi to New York route has the largest impact with 84,000 visitors 

arriving on this service, facilitating a US $ 500 million contribution to GDP and 

6,000 jobs in the US economy. This is followed by Chicago, San Francisco, Los 

Angeles and Washington Dulles. 

Fig. 18: Economic impact of Etihad by route into the USA, 2015 
32 

May 2015

4.3 FORECASTING ETIHAD’S IMPACT BY ROUTE, 2016-2020 

On current forecasts, the operational impact of most of Etihad’s existing routes 

into the US will hold steady over the forecast period, with the contribution of 

the biggest single route – Abu Dhabi to New York - growing from US $ 14 million 

in 2015 to US $ 16 million by 2020. 

The overall catalytic impact that enhanced connectivity provides to US 

productivity can also be attributed to different Etihad routes according to the 

forecast seat capacity on each route and the projected growth in importance of 

Abu Dhabi to the global aviation network. For instance, the connectivity boost to 

US productivity provided by the Abu Dhabi to New York route is expected to 

grow from US $ 140 million to US $ 275 million by 2020. This portion of GDP is 

expected to be associated with 2,100 jobs. 

It is also possible to measure the tourism impact facilitated by Etihad on each of 

its routes. The increasing number of visitors arriving at each destination 

translates into a growing tourism impact attributable to each route. Indeed, by 

2020 the tourism impact facilitated by the Abu Dhabi 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 economy 

5. CONCLUSION 

This study has quantified the economic impact of Etihad on the USA in terms of 

both the core contribution stimulated by its activities 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 economic 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 worldwide 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 has been considerable since 

it opened its first direct route into New York in 2006. 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 reach 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 total impact of Etihad’s 

operational and aircraft-related investment on the US 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 prices
34 

May 2015

Etihad’s wider catalytic impact on the USA is also growing quickly. Providing 

increasing connectivity, linking the country to a rapidly-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 estimated that the catalytic boost 

to the productivity of the US economy this creates will 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 connectivity benefits the USA. The 

network connections Etihad provides make the USA a viable 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 increase over the next five years, 

growing to US $ 2.4 billion and sustaining over 27,000 American jobs. 

All elements of Etihad’s contribution to the US economy are therefore 

substantial. From its core contribution to the GDP and employment of the USA, 

to the trade, business, tourism and other economic activity its services enable, 

Etihad’s impact on the economy is considerable and growing fast. As Etihad’s 

global network expands, its US flights will increasingly connect the world’s 

largest economy to Asia’s most populous and vibrant ones, providing 

opportunity and prosperity for millions. 

 

0

100

200

300

400

500

600

700

800

900

Source: Oxford Economics

US $ millions

2015 prices

850
 

35 The economic impact of Etihad Airways on the US economy 

6. TECHNICAL APPENDIX 

6.1 METHODOLOGICAL OVERVIEW 

In early 2015 Oxford Economics was commissioned by Etihad to undertake a 

comprehensive analysis to quantify its economic impact, in Etihad’s home 

country – Abu Dhabi – and in six key markets, and five other major global 

economies. This document presents detail of the methodological approach used 

to calculate the economic impact of Etihad Airways on 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 consists of two parts. First 

we quantify the three ‘core’ channels of impact that comprise the organisation’s 

‘economic footprint’. Second we examine the ‘catalytic’ effect that the 

company’s services or products have in boosting economic 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 approaches employed to 

calculate the core and catalytic impact of Etihad in 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 historical 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 years from 2016 through to 

2020.

6.1.3 DATA SOURCES USED 

Conducting an economic impact assessment is data intensive, particularly when 

a range of years and geographies 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, major aircraft manufacturers, national 

statistics agencies, the World Input-Output Database, and 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 equipment. The same impact 

methodology is used to calculate each of these impacts. 

This section of the appendix explains in detail how the methodology is applied 

to calculate the impact of the airline’s operations, before highlighting any 

differences when estimating the impact of Etihad’s capital spending. But first, 

we present a short introduction to economic impact assessments. 

6.2.1 INTRODUCTION TO ECONOMIC IMPACT ASSESSMENTS 

THE CHANNELS OF IMPACT 

To capture the full extent of an entity’s economic impact it is necessary to 

consider all of the means by which it interacts with the 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 the 
 

37 The economic impact of Etihad Airways on the US economy 

activity that is supported elsewhere in the economy as 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 spending of the 

individuals employed by the entity and in its supply chain. 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 entity is inducing 

additional economic activity in these businesses. It also creates demand 

for goods and services along the retailers’ and leisure outlets’ domestic 

supply chains. 

Fig. 22: The channels of economic impact 

Brought together the individual channels present a complete 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 the summation of the three 

effects. 

MEASURING IMPACT 

To effectively quantify economic impact it is necessary to evaluate the 

contribution an entity makes in the same terms used to measure the size of the 

economy. Therefore, impact assessments typically focus 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 Impact
38 

May 2015

metrics: gross value added contribution to Gross Domestic Product (GDP) and 

employment. 

The first of these metrics - gross value added contribution to GDP - is a measure 

of net output. Three different approaches are available to calculate the gross 

value added contribution to GDP of a business: the production (or output) 

approach, income approach and expenditure approach. United Nations 

Statistics Division17 (UNSD) clearly defines the different methodologies:

“The production approach [...] measures GDP as the difference between the 

value of output less the value of goods and services 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 bonuses payable to employees, 

taxes on production, and operating surplus for the producers]”. 

“The expenditure approach measures the final uses of the produced output as 

the sum of final consumption, gross capital formation and exports less imports”. 

Whatever approach is used, gross value added measures the contribution to the 

economy of each individual producer. When aggregated 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 economic growth (or when the 

economy enters recession) typically relate to the rate 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: headcount, full-time 

equivalent or job-years. A headcount employment measure corresponds to the 

number of people employed, irrespective of whether employment is full- or 

part-time. The full-time equivalent measure of employment takes into account 

that some individuals may be employed on a part-time basis and adjusts the 

headcount employment figure for hours worked. The final measure, job-years 

measures the number of years of employment that are supported. 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 measure. 

GROSS VERSUS NET ECONOMIC IMPACT STUDIES 

The total contribution of an entity to an economy is 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" (Handbook 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 economy 

rather than a net basis. The difference is whether account 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 deployed to do. So a gross study 

ignores the alternative uses, whilst a net study estimates the impact created by 

the firms in excess of that if the resources were used in their second most 

effective use. Taking a net approach is more complex and controversial as it is 

necessary to estimate what the resources would alternatively 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 interest payments, taxation, 

depreciation and amortisation) and the payments of wages and salaries it makes 

to its employees. These data were provided by Etihad on a global and 

geographical basis. It is important to note that as Etihad – 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 estimating an entity’s 

wider (indirect and induced) impact on a specific country. To do so it uses an 

input-output model of that particular country. 

An input-output model gives a snapshot of an economy at any point in time. 

The model shows the major spending flows from “final demand” (incorporating 

consumer spending, government spending, investment, and exports to the rest 

of the world); intermediate spending patterns (the purchases that each sector 

makes from every other sector – the supply chains in other words); how much 

of that spending stays within the economy; and the distribution of income 

between employment incomes and other income (mainly profits). In essence an 

input-output model is a table which shows who buys what from whom in the 

economy. 
40 

May 2015

Fig. 23: A simple Input-Output model 

A crucial weakness of using an input-output model for 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 countries, and may often 

enter a country multiple times. For example, an insurance firm in the USA may 

use an Indian company to operate its call centres. In turn, the call centre 

company may use computers produced in the USA using components sourced 

from China. The initial purchase creates an economic footprint at each of these 

stages. But in a single country input-output model considering, 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 though it re-enters the USA at 

a later stage. Consequently, the impact assessment fails to attribute the activity 

supported in the US computer company to the insurance company. 

To avoid understating Etihad’s global impact, this study 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 foundation19. The WIOD provides time-series of world 

 

19 M P Timmer et al., "An Illustrated User Guide to the 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 economy 

input-output tables for forty countries20 worldwide and a model for the rest-ofthe-world, covering the period from 1995 to 2011. 

Oxford Economics augmented the WIOD model by first including the domestic 

input-output models for the additional geographies covered in this study. 

Published input-output models were used for Switzerland21 and South Africa22. 

But for the other geographies (Abu Dhabi, Serbia, the Seychelles, rest of Africa 

and rest of world) no published input-output models exist. In these cases Oxford 

Economics created estimated domestic input-output models, 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 correct country on which to 

base the estimation is important, as the estimated input-output model will 

exhibit some of the same characteristics as the base country. Therefore, 

countries with similar industrial structures and levels of economic development 

were chosen. For Abu Dhabi the base country was the UAE, and an input-output 

model previously developed by Oxford Economics. For Serbia, the input-output 

model of Romania published by WIOD was chosen. The input-output model of 

Mauritius, published by Statistics Mauritius, was used for the Seychelles23. 

Finally, the WIOD estimation of the domestic input-output model of the rest of 

world24 was used as a base for generating the input-output models 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 models 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 column were expressed as a 

proportion of agricultural output, and so on for each 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, Brazil, Canada, China, India, Indonesia, Japan, South 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/English/StatsbySubj/Pages/Investment.aspx#iot 

24 The WIOD definition of rest of world differs to that used by Oxford Economics. For the WIOD it incorporates all 

countries except the 40 presented individually in the WIOD model. For Oxford Economics, Abu Dhabi, Serbia, 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 take 

into account the differences between the absolute size 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 economy. 

These adjustments ensured that differences between industrial linkages in the 

two geographies are captured. 

The output of these adjustments was a ‘first-cut’ input-output model for each 

geography. To finalise the models, the first-cut models were then scaled to 

meet published data on sector output, GVA, compensation of employees, 

imports, exports, household spending, government spending, gross capital 

formation in in each geography. These data were drawn from national statistics 

agencies for Abu Dhabi, Serbia and the Seychelles. Corresponding data were 

calculated for the rest of Africa and rest of world using data published by the 

United Nations’ National Accounts Main Aggregates Database.26

Incorporating the additional geographies in the global input-output model 

requires not only the inclusion of domestic input-output 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 incorporated within rest of 

world within the WIOD, an overview of the total linkages 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 basic 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 million. The key is how this US 

$ 10 million is distributed between the additional geographies. 

To allocate all imports and exports Oxford Economics relied on two known 

figures. The first was the total number of imports and exports by each sector in 

each geography, calculated in the domestic input-output models. The second is 

the distribution of imports and exports by trading partner for each geography, 

taken from data published by the IMF and collated by Oxford Economics’ Global 

Trade Service. These two pieces of data enabled Oxford Economics to estimate 

how each of the additional geographies linked to the rest of the global 

economy, and estimate a global input-output model larger than that published 

by WIOD. 

Once finalised, the global input-output model was used to generate industry 

multipliers by using the Leontief system.27 Under the Leontief system industry 

multipliers are calculated through a series of manipulations of the input-output 

 

26 Available at http://unstats.un.org/unsd/snaama/Introduction.asp 

27 Wassily Leontief, Input-output economics (New York: Oxford University Press, 1986). 
 

43 The economic impact of Etihad Airways on the US economy 

matrix. The first of these manipulations was the creation of a base coefficients 

matrix (A matrix) for global economy. The second manipulation 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 given 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 produced in the third stage. 

The result of these manipulations was a matrix in which the values represent 

the individual cross-multipliers for each industry, showing 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 consuming industry is the sum of 

the multipliers in the relevant column. In other words, the total multiplier for 

each industry represents the strength of its supply chain. 

USING THE INPUT-OUTPUT MODEL TO CALCULATE WIDER ECONOMIC 

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 necessary to identify the 

expenditure the airline makes with suppliers based around the world. 

Etihad provided data on the different type of expenditures it makes, and where 

it makes them. Using the input-output model it is possible to disaggregate and 

align this spending to the industrial sectors in each geography from which inputs 

were sourced. By allocating all spending to the relevant industries, the 

purchases of inputs can be entered into the input-output model. The model is 

then used to calculate the subsequent supply chain purchases that occur within 

the global economy (through the use of supply chain multipliers). The 

summation of these purchases represents the total expenditure that is 

generated by Etihad’s procurement. To calculate the indirect contribution to 

GDP, the total expenditure effect is divided by sector-level gross value-added to 

gross output ratios taken from the input-output model.

The employment supported as a result of the indirect contribution to GDP is 

estimated by dividing the value-added indirect impact by sector-level labour 

productivity data obtained from WIOD, national statistical agencies and forecast 

by the Oxford Economics Global Macroeconomic model. 

The calculation of the induced impact – the activity supported by the wagefinanced spending of people employed directly or indirectly by Etihad – is a twostep process. The total induced effect is the sum of both calculation stages. 

The first step involves estimating the induced impact that is generated by 

people employed in the supply chain. To generate this result, the modelling 
44 

May 2015

used for calculating the indirect impact outlined above is extended to 

incorporate the income multipliers in the economy. This gives the induced 

expenditure impact, which is translated into value-added, employment and tax 

revenue impacts using the same process as used for the indirect impact. 

The second stage of the estimation of the induced impact is quantifying the 

effect of the spending of those employed by Etihad. Using the input-output 

model, the wages paid to these employees can be allocated to countries and 

sectors in a manner that reflects the spending profile of the average household 

in each country where Etihad has employees. Using this profile, the total 

expenditure effects on the economy can be calculated using the income 

multipliers in the model. This expenditure is then translated into value-added 

and employment impacts using the same process as used for the indirect 

impact. 

6.2.3 MEASURING ETIHAD’S CAPITAL IMPACT 

Etihad’s economic footprint extends far beyond its operations; most 

significantly it includes the impact of its capital expenditure on aviation 

equipment. Aviation is a capital intensive sector that invests heavily in aircraft 

systems and other advanced technology. By purchasing aircraft and their 

components, Etihad supports considerable activity in the USA. In order to 

capture the full extent of Etihad’s impact on the USA this study includes the 

capital spending that the airline makes on new aircraft 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 spending. In contact with Airbus 

and Boeing, Oxford Economics translated the spending on aircraft by Etihad into 

profits and wages for manufactures, and subsequent the supply chain purchases 

each made throughout the world. These data were inputted into the global 

input-output model in the same manner as Etihad’s operational expenditures, 

and the global economic impact was calculated. Oxford Economics then 

allocated this spending to the transport equipment manufacture 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 aircraft 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 the 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 USA: New York (JFK); 
 

45 The economic impact of Etihad Airways on the US economy 

Washington Dulles (IAD); San Francisco (SFO); Chicago O’Hare (ORD); Los 

Angeles (LAX) and Dallas Fort Worth (DFW). For the route-specific footprint of 

Etihad’s operations, as well as for the route-specific connectivity and tourism 

contribution, we are able to allocate the impact that is associated with each 

route, in terms of GDP and employment. We do not allocate economic activity 

associated with capital spending, since these are not related directly to any one 

route into the USA. For example, the economic impact 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 attributed to any one route. 

6.3 CAPTURING THE CATALYTIC IMPACT OF ETIHAD 

Quantifying the catalytic benefits that arise from an airline’s services is not 

straightforward. The benefits of a strong air transport infrastructure stem from 

its role in boosting competition, promoting international 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 contribution 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 estimate on Etihad’s catalytic 

contribution to the USA requires us to disentangle connectivity’s overall 

contribution to long-term growth from the many of other factors that affect an 

economy’s performance by looking at how the national economies of countries 

with faster-growing air connectivity perform relative 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 January 2015 econometric 

analysis by InterVISTAS has deployed the most recent available data on 

European connectivity to isolate and quantify its relationship to economic 

growth, while controlling for other factors that may have an impact of GDP 

(such as education levels, research and development investment, capital 

 

28 This issue is reflected in the wide range of estimates that studies have reached for connectivity’s impact on longrun growth. Three studies undertaken in 2005 and 2006 provide estimates of the impact that connectivity 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 connectivity 

(relative to GDP) will raise the level of productivity in the economy by a little under 0.5% in the long run, with there 

being a fair degree of uncertainty around this average estimate. A much wider 2006 study, based on a crosscountry statistical analysis of connectivity and productivity, derived a lower estimate of 0.07% for the 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 connectivity to GDP was 

associated with an increase in GDP per capita of 0.5 per cent. 

The InterVISTAS study used a definition of air connectivity developed by IATA, 

which measures the number of seats available from an airport 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). Services to major hubs will 

therefore provide a greater boost to overall connectivity 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 estimate 1993-2014 

connectivity by making use of historical data on seats 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 total passengers for 

each airport, and consistent with the IATA method the weights were estimated 

relative to Atlanta. 

To project connectivity to 2020 the historical relationship between connectivity 

and total passengers was first analysed. This analysis revealed that historically 

connectivity has grown less rapidly than passengers, mainly due to seat growth 

lagging behind passenger growth. That is increasing passenger 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 seat numbers. However, this 

trend in spare capacity/load factors has become progressively more difficult to 

maintain, meaning passengers and seats (and hence connectivity) have moved 

more in line with one another in recent years. Extrapolating this relationship 

forward enabled our calculations to reflect the changing nature of the 

relationship between passenger and connectivity growth. The second step was 

to project US passenger numbers using the ACI passenger traffic forecasts. 

These passenger forecasts combined with the relationship between passengers 

and connectivity then allowed us to project connectivity to 2020. 

The 0.5 per cent figure in the InterVISTAS study refers 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 increase 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 Catalyst to Economic Growth (Bath: 

InterVISTAS, 2015), xiii. 

30 Diio Traffic Analyser 
 

47 The economic impact of Etihad Airways on the US economy 

relationship is in growths an appropriate base year must be chosen from which 

to estimate connectivity impacts. For the relevant year of analysis (e.g. 2014) 

the connectivity figure would be the growth in connectivity (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 words 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 base 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 therefore captured the 

connectivity changes that have taken place since 1993. As noted by InterVISTAS 

this could be considered a conservative estimate as it 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 for 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 process of air 

liberalization in the USA began in the late 1970s. 

Given the base year of 1993, growth in US connectivity (relative to GDP) from 

1993-2020 was first estimated. The 0.5% elasticity was then applied to obtain 

the estimated growth in GDP per capita (since 1993) attributable to air 

connectivity at the national level for each year from 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 using a connectivity index 

which excluded the growth from Etihad’s flights (connectivity growth being 

lower without Etihad). The difference with the national figure (including Etihad) 

then gave the impact of Etihad to national GDP through 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 Etihad by true origin were 

estimated from 2006-2020. “True origin” being the country in which arrivals 

started their journey, which is not necessarily the same 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 Economics’ 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 tourism spending into 

specific tourism products (e.g. accommodation) using data from the National 

Travel and Tourism Office. The products were then allocated to industry sectors 

consistent with the Global IO Model. The Global IO Model then produced direct, 

indirect and induced GDP/employment impacts resulting from tourism 

spending, in line with the methodology adopted in the economic footprint 

analysis. 

The estimates of US visitor arrivals attributable to Etihad utilise two datasets. 

The first is Etihad’s historical and projected local/transfer passengers by route; 

and the second is OAG’s Traffic Analyser, which provides data on the true origins 

and destinations of Etihad passenger bookings and details 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 each 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, were then identified using 

information on the point of sale for the booking. The 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 routes 

Historical and future local passenger numbers on the six current US routes 

were provided by Etihad. OAG data on the point of purchase 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 existing Etihad routes 

who travel to the USA. Two sub-groups of passengers were identified within 

this group – those who arrived into the USA on an Etihad 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 flight were over 90 per 

cent of this passenger group. 

To estimate those arriving on an Etihad flight OAG data was used to identify the 

true origins and destinations of passengers on each Etihad US route in 2014. 

Combined with information on country of ticket purchase this gave an estimate 

of US foreign arrivals on each Etihad US route for 2014 by country origin. This 
 

49 The economic impact of Etihad Airways on the US economy 

was then taken back to 2006 and projected to 2020 using growth in the number 

of transfer passengers on the relevant US route. 

A similar approach was adopted for those Etihad transfer passengers arriving 

into the USA on another airline. In this case, to take the estimates back to 2006 

and forward to 2020, growth in total transfer traffic 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 modelling 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 projections 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