Why should an aviation business manager be concerned about the balance of payments in the various countries where their business operates?

The balance of payment (BOP ) measures the payments (exports and imports of goods , services , financial capital and transfers ) that flow between any individual country and all other countries during a specific period The BOP deficit or surplus refer to what is called current account . A deficit brings forth higher price level , higher GNP , higher interest rates , lower import barriers , more attractive investment opportunities and higher exchange rates (Stein , 2005 ) Ergo , a country with BOP deficit is a favorable location for aviation business due to revitalized business climate resulting from investment inflows subsequently

br providing operator huge outward remittances to its mother company in the form of profits and dividends further increasing latter country 's budget surplus with the former

However , from an environmentalist viewpoint , aviation is the most highly-polluting transport mode and the fastest-growing source of greenhouse gas emissions . Aside from environmental problem , its pollution constitutes major hidden cost to the economy , about ?4 billion a year , UK subsidizes its aviation industry with ?6 billion tax breaks draining UK 's BOP some ?3 .5 billion a year , excluding costs of imported fuel and aircraft (Johnson , 2001

Regulatory reform has been embraced by countries that promotes greater competition , stimulates industry and contributes to the overall economy The result has been improvement in key economic indicators such as higher economic growths , declined unemployment and an improved BOP Regulatory reforms further lead to social benefits . USA 1995 deregulation helped airlines increase their revenues of 12 .4 billion per year as travelers took advantage of lower fares . UK 's privatization of British Airways gained a privatization and promoting competition in aviation resulted into an improved BOP . It was proven that deregulation of the domestic aviation industry brings concrete benefits into country 's BOP . Hence international aviation deregulation will brings further social benefits revitalized economy improving BOPs and creating continuous cycle of improvement (Imahashi , 2004

References

Stein , Herbert , 2005 , Balance of Payments , The Concise Encyclopedia of Economics

HYPERLINK "http /www .ecolib .org /library /Enc /BalanceofPayments .html top http /www .ecolib .org /library /Enc /BalanceofPayments .html top

Imahashi , Ryu , 2004 , Railway Reform and International Exchange Regulatory Reform and the Railway Industryyo Japan Railway Transport Review No . 24 (pp . 4-9 ) HYPERLINK "http /www .jrtr .net /jrtr24 /f04_ima .html http /www .jrtr .net /jrtr24 /f04_ima .html

Johnson , D and Lambert , J , 2001 T5 : Blair blows it again , Forts published in the Morning Star , November 2001 HYPERLINK "http /www .greenparty .org .uk /articles /46 http /www .greenparty .org .uk /articles /46...