ECONOMIC GROWTH AND AIRPORT DEVELOPMENT

Abstract

This academic exercise studies the significant relationship between economic growth and airport development. Over the years, airports have expanded from military base to become centre of activities. Following this is the increasing important association between economic growth and airport development. In order to enhance this connection and with expectation of higher demand for air travel, airport authorities in the world, particularly those in Asia-Pacific, are implementing plans to increase their airport capacity. There is a need to study the possible factors that influence air traffic volume. Here, the dependence of air traffic volume on economic growth is supported by the results of two regression models. Air passenger volume is found to be positively related to Singapore's Gross Domestic Product (GDP). Another model demonstrates positive correlation between air cargo volume and economic performance of domestic and foreign economies. Singapore's air cargo volume also shows positive relationship with Singapore Dollar exchange rate with respect to Japanese Yen. These results imply that with optimistic expectations of economic recovery from the Southeast Asian currency crisis in the near future, Singapore Changi Airport should not slow down its development, particularly the construction of a new passenger terminal. In recent years, the concept of 'Global Airport City' has gained much attention. Changi Airport's construction of the new passenger terminal is in line with this phenomenon. The concentration of activities is expected to further enhance the vital relationship between economic growth and airport development.