15.09.2023
The impact of air transport on the regional economy was investigated - weak links are reflected in companies' turnover and investments
About 300 companies operating in the catchment area of Oulu, Kajaani and Kuusamo airports responded to the survey. The survey was open in August 2023. Responses came especially from companies in industry, tourism and IT. Among the industries, the sawmill, paper and metal industries were highlighted. In total, the respondents represented 45 per cent of the region's turnover and 15 per cent of the region's forced labour.
The study was carried out by the Future of Air Transport in Northern Finland project managed by the Regional Council of Northern Ostrobothnia. Kainuu Regional Council and Naturpolis Oy are also involved in the ERDF-funded project. The study was carried out together with Sitowise Oy and Kiila Consulting Oy.
Clear result: Sales depend on flights
Globally, 80 per cent of companies need air transport and 25 per cent of the company's total sales depend on air transport. 43% of companies said that good air connectivity has an impact on workers’ choice of place of residence and place of work. The importance of air transport is emphasised especially among the more skilled and experienced employees.
According to the study, 51 per cent, or EUR 26 billion, of the turnover generated in the catchment area of Oulu, Kajaani and Kuusamo airports depends on air traffic. The turnover will create about 11,000 jobs in the region. This means tax revenue to the state and municipalities in the form of corporation tax and wage income tax of approximately EUR 319 million. 49% of businesses in the region consider that meeting customers and other stakeholders face-to-face is necessary and 32% consider it important.
Of the aviation-dependent turnover, 59 per cent, or EUR 16 billion, are international sales. This will create approximately 2,765 jobs and approximately EUR 90 million in corporate and wage tax revenue for the state and municipalities.
Investments require smooth connections
One in three companies in the region has made investments in the last 10 years that require smooth air connections. These companies account for 71% of turnover and 61% of jobs in the region.
The most common investments dependent on air transport have been the opening of a new office, a significant increase in the number of jobs, investments in new machinery and equipment, and investments in accommodation capacity by tourism companies. Most of the investments have been between EUR 1 million and EUR 5 million, but hundreds of millions of investments have also been made.
Globally, between 56 % and 63 % of companies consider air connectivity to be a necessary factor in their investment and 18 % of companies report that the lack of air connectivity has had a negative impact on the investment decision. Between 1993 and 2003, air transport accounted for almost a third of investment in Europe.
Businesses dependent on air transport expect better air connectivity to appear as a growing turnover. In the catchment area of Kajaani airport, 48 per cent of companies expect to increase their turnover, in the catchment area of Oulu airport by 50 per cent and in the catchment area of Kuusamo airport by 49 per cent.
At present, the annual turnover of companies dependent on air traffic in the catchment area of Kajaani Airport is EUR 1.7 billion, with 1,250 jobs. In the catchment area of Oulu's position, companies have a turnover of EUR 22.7 billion and 8,850 jobs. In Kuusamo, the turnover is EUR 540 million and the number of jobs is 1,020.
Operating flights - growth in turnover
Of the companies in the region that responded to the survey, 49 per cent estimated that they would increase their turnover if there were air connections better suited to their needs. Approximately EUR 1.7 billion of new turnover would be generated and approximately 5,350 new jobs would be created. This would generate a total of approximately EUR 109 million in tax revenue for both the state and municipalities.
There were discrepancies by industry when companies assessed the importance of more suitable air connections for turnover. As many as 97 per cent of companies in the tourism industry expect to increase their turnover. The growth would be approximately EUR 39 million, which would mean that the entire industry would grow by approximately eight per cent. 70 per cent of companies in the IT sector would also increase their turnover. The growth would be approximately EUR 75 million, which would mean that the entire industry would grow by approximately seven per cent. Significant growth was also anticipated in arts and entertainment companies, of which 78 per cent would increase their turnover. The growth would be approximately EUR 11 million, which would mean that the entire industry would grow by approximately eight per cent.
Fifty-four per cent of enterprises in the industry and mining sector expect to increase their turnover. The growth would be approximately EUR 472 million, which would increase the entire industry by approximately one per cent.
Investments not made
Nearly one in ten companies have not made investments in the last 10 years due to poor air connectivity. These companies account for 3% of turnover and 11% of jobs in the region.
Non-investment was particularly pronounced in mining (25 per cent of enterprises), the sawn timber and paper industry (25 per cent) and the IT sector (22 per cent). Most of the uninvested investments have been worth tens and hundreds of thousands of euros, coupled with a few investments of between EUR 1 million and EUR 10 million and at least one investment of EUR 150 million.
Redundant jobs
Ten per cent of companies in the region have cut jobs due to poor air connectivity. A total of 3 080 jobs have been lost. The most significant reduction has been in the IT sector (approximately 830 jobs). Jobs have fallen next most in manufacturing and mining, wholesale and retail trade and tourism. The impact of the development on the income tax revenue is estimated to have been approximately EUR 61 million.
Sales-related tasks have been reduced the most and project management-related tasks the second most.
Further information:
Project Manager Rauno Kurtti, Regional Council of Northern Ostrobothnia, rauno.kurtti(at)pohjois-pohjanmaa.fi, +358 400 686 130
