Estimation of the Economic Benefit of Air Jamaica to Jamaica between 1995 and 2004

Abstract

In this study, we estimate the economic benefit of Air Jamaica to Jamaica between 1995 and 2004. Specifically, we determine the economic benefit of Air Jamaica by estimating the economic contribution of air transportation for the case where Air Jamaica does not exist and then subtracting this value from the economic contribution of air transportation for the case where Air Jamaica does exist. Thus the value we determine is the incremental contribution of Air Jamaica to the Jamaican economy, i.e. the benefit that can only be attributed to the presence of Air Jamaica. Although there are many different ways in which airlines contribute to socioeconomic growth, only two of these mechanisms are explored in this study: 1) the portion of airline revenues that remain in Jamaica by virtue of the wages that are paid to residents of Jamaica, and the goods and services that are purchased from companies in Jamaica; 2) the expenditures of foreign visitors. Therefore, this study represents a conservative estimate of the benefit of Air Jamaica to the Jamaican economy. The results of our analysis indicate that the economic benefit of Air Jamaica to Jamaica between 1995 and 2004 economy was US5.491 Billion of which US$1.830 Billion was a direct incremental contribution to the economy and US$3.661 Billion is the corresponding indirect incremental contribution.