Airports, airlines, and visas:
factors shaping cross-border tourism

Tourism as a driver for development

International tourism has attracted far less attention than the trade in goods despite the fact that it is a truly global industry, accounting for seven percent of the world’s exports in goods and services. And, in the past decade, tourism exports exceeded manufacturing exports in four out of 10 developing countries. It is said to be the “passport to development” by the World Bank and a source of “untapped potential” by the DFID.

International tourism grew at an average annual rate of 4.2 percent between 1995 and 2016 (from around 524 million to 1,245 million international arrivals). The countries in Asia and the Oceania saw even faster growth minus seven percent per annum, reaching almost 400 million arrivals in 2016 (see Figure 8). The share of Asia and Oceania in international tourism also increased from 18 percent in 1995 to more than 30 percent in 2016.

Clearly many countries in the region are tapping into their potential, particularly China, which had the largest number of foreign visitors in 2016 at 59.3 million as well as Thailand (32.5 million), Turkey (30.3 million), Malaysia (26.8 million) and Hong Kong, China (26.6 million). Other countries are growing their tourism more quickly but from a smaller base, such as Bhutan, which increased its international arrivals by 11 times from 2006 to 2016, Georgia by 5.5 times and Myanmar by 3.6 times (see Figure 9).

Figure 8: International tourism: World, Asia, Pacific

Source: Authors’ calculations based on the World Bank’s WDI data.

Figure 9: Fast-growing international arrivals in Asia and Pacific

Source: Authors’ calculations based on the World Bank’s WDI data.

What is driving this international tourism in Asia? Rising incomes is a significant driver but hard and soft infrastructure, such as the number of airports, bilateral routes and visa exemptions, are also important in sustaining cross-border tourism flows (see Appendix 4: Airports, Airlines and Visas: Factors Shaping Cross-Border Tourism).

As seen in Figure 10, the number of tourists clearly rises with an increased number of operating airlines in both departure and destination countries—demonstrating the contributions of cross-border infrastructure.

Figure 10: Relationship between tourists and number of operating airlines in both countries of departure and destination

Source: TTCI report, 2007-2015. All the observations are grouped into 30 groups by equally dividing the value of x-axis. For each group, the group-mean x and y values are calculated and used to do the plotting.

It is estimated that a 10-percent increase in the number of routes in either the country of departure or destination country will lead an increase of international visitors by 7.4 percent.

The number of airports has a smaller impact. A 10-percent increase in the number of airports in either the country of departure or destination country creates a one-percent increase in tourists, while a 10-percent increase in the number of airports in both countries lead to a two-percent increase. However, it is important to remember that for any airline to operate, there must be an airport in the first place. Visa exemptions also have an effect on bilateral tourism flows.

Greening aviation through technology and air infrastructure

The rise in demand for air travel will undoubtedly put pressure on the environment and carbon dioxide emissions. Research and development efforts are underway to provide for a sustainable source of biofuels. Airports can also be made to operate more efficiently and with lower environmental impact.

Digitalization-assisted flight optimization can help to boost the provisions of most efficient flight routes, which will also help to mitigate the negative impacts of flights on the environment, such as reducing fuel consumption and carbon dioxide emissions, avoiding flying over densely populated areas and reducing noise.

As an important form of cross-border infrastructure, airports and the connecting routes services can promote trade in services significantly. AIIB, with its mandate to finance the development of infrastructure and productive sectors, can partner with the public sector private sector and other MDBs in the provision of both physical and institutional cross-border air infrastructures.