Chapter 3

Airports and Air Connectivity

3.1 Introduction
Air connectivity provides an important linkage between the civil aviation industry and
tourism and trade. For tourism, the IATA (2017) estimated that 54% of international
tourists fly globally. With regards to trade, 35% of world trade (in terms of value) is shipped
by air. Higher air connectivity reduces the costs of air transport and therefore enables a
location to be more strongly connected to the global value chains. Various studies and
rankings of competitiveness also indicate that well-connected cities rank highly in the
hierarchy of global cities as air connectivity is a key factor in the location decisions of
multilateral organisations and multinational corporations.
To improve Malaysia’s connectivity, it is important to first identify Malaysia’s competitive
position in terms of air connectivity. This is followed by benchmarking against Malaysia’s
neighbours’ connectivity positions within the same geographical market.
What does air connectivity mean and how does one measure it? There is no single
definition of air transport “connectivity”. The IATA defines a country’s air transport
connectivity as the scope of access between an individual airport or country and the global
air transport network. Meanwhile, the ICAO defines it as an indicator of a network’s
concentration and its ability to move passengers from their origins to their destinations
seamlessly1. Air connectivity relates to the degree in which the desired destinations are
serviced from convenient airports, along with the nature of associated routes. The nature
of the routes considers factors such as direct/indirect routes, number of destinations
served by the airport, frequency of service, travelling costs, and total travelling time.
This paper measures the international connectivity of Malaysia and other ASEAN Member
States. The paper covers the following areas:
• Explanation on the different categories of connectivity
• Methodologies to measure air connectivity
• Key findings based on the methodologies used
• Factors influencing connectivity

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3.2 What is air connectivity?
Air connectivity reflects how well a country is connected to cities around the world.
Access to greater air connectivity is fundamental to the ability of a given country or city
to develop economic linkages with the rest of the world. Air connectivity provides the
foundation for international mobility of people and goods and is therefore a vital engine
of economic growth worldwide.
The global air transport system can be thought of as a network of nodes connected by
air services offered by airlines. One central question to evaluating and reporting air
connectivity is the choice of a reference point – the node within the global air transport
system. IATA’s air connectivity index was developed to evaluate the linkages between
air connectivity and economic performance, so the relevant reference point is a country.
The connectivity score can also be reported for cities.
From an economic development perspective, it is important to evaluate how well a city
or a country (rather than an airport) is connected within the region or to the rest of the
world. The IATA air connectivity score can be used to evaluate air connectivity at the
level of a city, country or region. For example, a national government may be interested
in adopting policies aimed at improving its country’s air connectivity score within the
region. The IATA connectivity score at the country level can be used to benchmark the
country against other regional peers.
Other measures of air connectivity have used various reference points when analysing
air connectivity. These measures are designed for different purposes and the choice of
the reference point is linked to the objective of a given measure. ACI Europe uses the
NetScan methodology developed by SEO Aviation Economics. The connectivity score is
reported at the airport level and is designed for the competitive analysis of airline
networks and the airports they serve. The World Bank reports connectivity scores at the
country level and defines air connectivity in reference to the importance of a country as
a node within the 11 global air transport system. The World Bank measure aims to
examine the relationship between air connectivity and global trade.

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3.3 Clarifying Connectivity and Accessibility
With the definition of airport connectivity, a conceptual framework for analyzing airport
connectivity is developed as shown in Figure l. How airport connectivity is related to the
market, and how airlines respond in their flight scheduling strategy are discussed in the
following sections. It should be noticed that airport connectivity metrics described are
essentially supplier oriented (airlines and airports), and the associated cost and quality of
air services are passenger's prime considerations.

Figure 1: conceptual framework for analyzing airport connectivity.

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3.4 How is air connectivity measured?
Air connectivity is measured using a variety of measures at various levels of granularity.
These measures including total passenger movements, airfares, the number of direct
destinations, and travel time can serve as standalone proxies or may be combined to
create a measure capturing different features of the air-transport market. (See Figure 1.)

Figure 2: Air connectivity measures

Note: VFR is a subset of leisure travel. However, this segment differs from leisure in that passengers don’t have a choice of destinations and appear to
be less sensitive to price (price, however, may determine how frequently they travel).

Travellers have different priorities, depending on the purpose of their journey. That means
different measures can be used to assess air connectivity for each passenger segment.
For instance:
Business travellers tend to be time sensitive and relatively indifferent to fare levels.
Frequent and flexible service that enables passengers to quickly change flights to a more
convenient time, coupled with easy surface accessibility, matter most to this segment.
Thus air connectivity for them could be measured by frequency of service, convenience
of schedule, travel time, number of direct routes available and proximity to the city centre.

• Leisure travellers care more about fares, with cost-effectiveness often the most
important factor in decisions about whether to travel and where, especially for short

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breaks. An unacceptably high fare could cause them to change their mind about their
destination. Measurements of air connectivity for this segment should therefore include
fares.

Visiting friends and relatives passengers are travelling primarily to see loved ones. In
some markets, this category of travel is substantial. Passengers travelling for this purpose
tend to consider fares a major factor in determining how frequently they travel. However,
unlike leisure passengers, they don’t have the option of changing their travel destinations
if fares are too high.
The importance of air connectivity has led to the development of a number of indices in
aviation economics literature. (See Table 1.) Each measure aims to capture a range of
factors influencing connectivity. At the same time, aviation stakeholders looking to
understand the integration of country (or city) within the global air network can tailor their
choice of air connectivity indices to suit their needs by identifying the criteria most
important to the country (or city) they’re interested in and by developing an integrated
index which takes multiple variables into account.

Table 1: Air connectivity indices in aviation economics literature

3.5 How has air connectivity changed?

Over the past 10 years, the aviation industry has experienced the effects of various
shocks (such as terrorist attacks, natural disasters and pandemics), a weak economy and
rising fuel prices. The industry has shown its resilience by adapting itself to satisfy the
needs of an ever evolving market.
Air traffic growth, which was once led by North America and Europe, is now fronted by
the Middle East, Asia-Pacific region and Latin America which have experienced strong
growth over recent years. As reported by IATA2, in 2013 revenue passenger kilometres
(RPKs)3 in North America and Europe have grown at a rate of 2.2% and 4.0%
respectively. On the other hand, the Middle East, Asia-Pacific region and Latin America
have shown growth rates of above 6% per annum, specifically 11.9%, 7.2% and 6.5%.
Growth in Africa has also been remarkable with an increase of 5.1% in RPKs since 2012.

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Most of the growth can be attributed to economic growth as well as to regulatory changes
which allow for greater market access.
If we consider the number of direct international routes as a proxy to measure connectivity
at a regional level, we can see that a significant increase was observed by the Middle
East and Asia, with Europe’s routes almost doubling since 2003 as a result of the
increased penetration of low cost carriers and the subsequent increase in point to point
services.
Assessing direct and connecting passengers further highlights the aggressive expansion
of the Middle Eastern hubs, which experienced larger growth in passenger demand than
any other region around the world. (See Figure 3.) At the same time, Europe saw strong
growth in the number of direct passengers, driven mainly by the significant penetration of
LCCs in that market and a subsequent increase in the number of point-to-point services.
Asia, Latin America, and Africa have also shown considerable growth, as opposed to the
more mature North American market, which has seen a moderate increase in the number
of passenger movements.

Figure 3: Number of international routes by region: 2003 and 2013

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 Figure 4: Direct and connecting passenger traffic, 2003 and 2013

3.6 How are air connectivity and economic growth linked?

Aviation generates significant benefits for the global economy. In 2012, it contributed
US$2.4 trillion to the global GDP (3.4%). Direct benefits (i.e. employment and economic
activity generated by the air transport industry) are estimated at about US$606 billion;
indirect benefits (generated by employment and economic activity of suppliers of the air
transport industry) at US$697 billion.45 Aviation also plays a key role in enabling the
economic growth of countries which rely on major hubs such as Singapore and Dubai. In
Dubai, for instance, aviation generates about 28% of the city’s GDP.
Therefore, we can see how improved air connectivity plays a large role in creating such
economic value. Obviously, it benefits travellers by giving them access to a wider network
as well as more frequent and better connected services. But it also can strengthen a
country’s economy over the long haul, boosting productivity through its positive impact on
businesses. For example:
• Increased connectivity reduces air travel times, giving businesses access to a
wider marketplace.
• Increased connectivity makes it easier for managers and executives to oversee
far-flung operations, which infuses efficiency into those operations.
• Better transport linkages enable investment and human capital to flow more freely
across borders, improving returns on investment for some projects.
With such insights in mind, PwC conducted an econometric study for the UK Airports
Commission. The study used seat capacity as a proxy for air connectivity to estimate the

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impact of improved connectivity on the UK’s economy. The study revealed that a 10%
increase in seat capacity could improve:
• Short-term GDP by 1%.
• Tourism by 4% within the UK and 3% among UK tourists travelling abroad.
• Trade by 1.7% in terms of UK product imports and 3.3% in terms of UK product
exports. UK service imports and exports would also improve by 6.6% and 2.5%,
respectively.
• FDI by 4.7% in terms of increased UK FDI inflows and by 1.9% in terms of
increased UK FDI outflows.

Figure 5: Air connectivity and economic productive capacity

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3.7 Economic impact of the Aviation Sector
Air transport is a major global employer, supporting a total of 87.7 million jobs worldwide
and providing 11.3 million direct jobs. Aviation enables $3.5 trillion in global GDP. If
aviation were a country, it would be the 17th largest economy in the world, supporting
nearly 3.5 trillion dollars in economic impact. A new economic impact study finds general
aviation supports more than 1.1 million jobs and has a more than $246 billion economic
impact every year.

Figure 6: Economic impact of the Aviation

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ACI Asia-Pacific and Middle East Airport Connectivity Index and Top 10
airports in Asia-Pacific & Middle East:
The AC Asia-Pacific and Middle East Air Connectivity Index was developed to analyses
network coverage and performance of airports from a passenger-centric perspective. The
index represents a rigorous measure to evaluate a connectivity which includes
comprehensive quality parameters that are not covered by existing connectivity.

Figure 7: Asia-Pacific and Middle East Air Connectivity

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Due to 2023
1. Dubai International Airport, United Arab Emirate (DXB) is the primary international
airport serving Dubai, United Arab Emirate

2. Hamad International Airport. Doha Qatar (DOH) is the main airport for the city of
Doha, the capital of Qatar. It is the operating base for the national carrier, Qatar
Airways.

Figure 8: Hamad International Airport

3. ICN Incheon Airport, Seoul South Korea (ICN) is the main international airport
serving Seoul, the capital of South Korea. It is also one of the largest and busiest
airports in the world.

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 Figure 9: Incheon Airport

4. Changi International Airport, Singapore Changi (SIN), Airport is renowned

worldwide; it consistently earns the title of one of the best airports globally. Its
reputation is well-deserved, thanks to its unparalleled commitment to passenger
comfort and convenience.

Figure 10: Changi International Airport

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5. Soekarno–Hatta International Airport, Jakarta Indonesia (CGK), abbreviated as
SHIA or Cengkareng Airport with IATA pointer "CGK", is a major airport serving flights
for Jakarta, Indonesia.

Figure 11: CGK Soekarno–Hatta International Airport

6. Guangzhou Baiyun International Airport, Guangzhou China (CAN)is an

international airport serving Guangzhou, the capital of South-Central China's
Guangdong province.

Figure 12: Guangzhou Baiyun International Airport

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7. Indira Gandhi International Airport, Delhi India. (DEL ) is the primary international
airport serving Delhi, the capital of India.

Figure 13: Indira Gandhi International Airport

8. Shanghai Pudong International, Shanghai China (PVG). Airport is the main

international airport serving Shanghai, the largest city by population in China.

Figure 14: PVG Shanghai Pudong International Airport

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9. King Abdulaziz International Airport, Jeddah Saudi Arabia. (JED) is a major
international airport serving the cities of Jeddah and Mecca in Saudi Arabia.

Figure 15: King Abdulaziz Airport

10. Suvarnabhumi Airport, Bangkok Thailand. (BBK) , Bangkok’s main airport and the
busiest airport of Thailand.

Figure 16: Suvarnabhumi Airport

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3.8 What drives air connectivity?
Four main factors enable air connectivity: geography, airport infrastructure, airline models,
and a country’s regulatory and economic frameworks. These enablers all play an
important role in ensuring that a country can cement or expand its global air network to
enhance air connectivity.
Geography: Air connectivity is especially important to countries with isolated air-travel
markets (such as islands and large geographical areas) where passengers have few
viable alternatives to air travel. However, a country’s geographical location can enhance
its ability to develop a well-connected network. Examples include Singapore, Hong Kong,
Incheon, the Middle Eastern hubs of Dubai, Abu Dhabi, and Doha, as well as the
emerging Turkish hub of Istanbul, all of which have exploited their favourable position in
the global air-travel network to build strong hubs with far-reaching spokes.

Figure 17: Intercontinental transfer traffic

Note: The chart only shows interregional transfer passengers; it excludes direct passengers between regions as well as any passengers requiring more
than one connection and passengers travelling within the region. Turkey has been classified as Middle East.

3.9 Passenger perspective o f air connectivity

The “Airport Connectivity Indices” have been created by SEO Amsterdam Economics
using their proprietary NetScan model. Air connectivity is best considered from the
perspective of the air traveller. The one who wants to get from A to B. Or sometimes, from
A to B to C. The following definitions describe them and together they provide a
comprehensive picture of connectivity provided by an airport and how it links its
communities to the rest of the world.

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A. Direct connectivity
These are the direct air services available from The airport measured not just in terms of
destinations, but also factoring in the frequency of flights to the same destination (so for
example, an airport with 5 daily flights to another airport will register a higher score than
one with only 4).

B. Indirect connectivity
This measures the number of places people can fly to, through a connecting flight at
another airport from a particular airport. For example, if you fly from Malaga, Spain to a
hub airport such as Amsterdam Schiphol, that’s a direct flight from A to B. But with the
vast choice of onward destinations you can fly to from there the large number of available
onward connections from this airport expands the range of destinations available from the
airport of origin. Indirect connections are weighted according to their quality, based on
connecting time and detour involved with the indirect routing. For example, a flight from
Hamburg to Johannesburg via Frankfurt will register a higher score than an alternative
routing via Doha, which is geographically a longer diversion from the direct flight path.

C. Airport connectivity / Total air connectivity

As the name suggests, this is the most comprehensive metric for airport connectivity
taking into account both direct and indirect connectivity from the airport in question.
Airport connectivity is defined as the sum of direct and indirect connectivity thus
measuring the overall level to which an airport is connected to the rest of the world, either
by direct flights or indirect connections via other airports.

D. Hub connectivity
Hub connectivity is the key metric for any hub airport, big or small. It measures the number
of connecting flights that can be facilitated by the hub airport in question – taking into
account a minimum and maximum connecting time, and weighing the quality of
connections by connecting times and detour involved.

Figure 18: The Different Types of Connectivity

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3.10 Effect of COVID-19 on air connectivity:
Air transport in the European Union was particularly affected by the COVID-19 pandemic.
This paper investigates in detail the impact of the pandemic on air fares and connectivity
indicators in the European Union using data from a global distribution system provider for
air tickets for the period between 2018 and 2021. In order to identify heterogeneous
effects of COVID-19 on air fares and connectivity, separate analyses are conducted for
different destination regions and airline types. The results of this paper reveal that
connectivity was stronger affected than air fares. For most indicators, a steady recovery
is observable after a sharp initial shock in April 2020. A regression analysis indicates that
the impact of COVID-19 on air fares and connectivity in 2020 differed considerably
seasonally and geographically.
The COVID-19 pandemic led to a historic decline in global air passenger traffic. In Europe,
the consequences were particularly severe. In the European Union, traffic declined by
more than 69% in 2020 compared to 2019, whereas in the US, for example, traffic
declined by only about 59% in the same period (Sabre, 2022). Air transport organizations
and associations such as ICAO, IATA, and EUROCONTROL regularly publish reports
and statistics on the state of the industry in the crisis (see, e.g., ICAO, 2022; IATA, 2022;
EUROCONTROL, 2022). However, these organizations and associations analyze the
impacts of the pandemic predominantly from their perspective or that of their members.
For example, IATA, as an airline association, gives attention to airline revenues and costs.
Eurocontrol, the European organization for air traffic control, focuses on aircraft
movements. The impact of the crisis on air passengers, by contrast, has not, to our
knowledge, been extensively studied. If policymakers want to ensure the mobility of their
citizens with efficient measures, detailed knowledge of the impact on air passengers is
necessary.
Air passenger are affected in several ways. On the one hand, the discontinuation of routes
and reduction of frequencies leads to lower connectivity. Passengers may have to travel
to other airports, switch to connecting flights instead of non-stop flights, or accept an
earlier departure time in order to reach their destination on time. On the other hand, the
global decline in demand and the resulting reduction in supply has an impact on air fares.
In particular, higher fares are to be expected at route level if the discontinuation of routes
by some airlines reduces the intensity of competition.

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 - Pre COVID-19 air connectivity.

Figure 19: Disruptions to air connectivity in top 5 most connected countries in Asia Pacific Pre COVID-19.

- Post COVID-19 air connectivity.

Figure 20: Disruptions to air connectivity in top 5 most connected countries in Asia Pacific Post COVID-19.

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3.11 Energy Rationalize in Airports
For the past 10 years ACI EUROPE has been providing detailed a which both track and
analyse the air connectivity trends which flow. Much has changed over that period. When
we started collating connectivity data back in 2013, air connectivity was on a seemingly
unstoppable upward trend. It was also very much at the top of the European policy
agenda – a recognition of its role in supporting local economies, driving cohesion across
our continent, and enabling Europe’s ability to trade globally.
But the COVID-19 pandemic along with much increased geopolitical tensions -
particularly the war in Ukraine - have clearly challenged the resilience of air connectivity.
Overall, the recovery of air connectivity keeps lagging that of traffic volumes. It has also
been anything but uniform when one looks across geographies and individual airport
markets. What’s more, recovery patterns are now driving more structural changes,
reflecting a new reality for our aviation market. The dynamic recovery of direct
connectivity compared to indirect connectivity is a case in point - along with the way in
which hub connectivity remains much below its pre-pandemic levels.
Alongside these developments, the climate emergency is bringing the societal role and
value of air connectivity into question While the aviation sector is committed to net zero
air connectivity and is working hard to deliver it, there is no question that policymakers
and regulators have a crucial role to play in enabling this transformation. And if progress
has been made, we are not there yet.
Ultimately, making air connectivity sustainable requires achieving decarbonization whilst
at the same time preserving its formidable economic and social benefits. These must go
together if we are to de-risk our future across the board. During the COVID-10 pandemic,
the aviation industry was severely impacted by travel restrictions and border closures.
Since late 2021, post-pandemic recovery has been on track, with worldwide passenger
volume forecasted to fully recover by 2024, Enhancing airport connectivity vis essential
for both the aviation sector and the countries it serves This study introduces the ACI Asia-
Pacific & Middle East Air Connectivity Index, designed to measure an airport's
effectiveness in enabling passengers to access the global air transport network through
high-quality connections. For the first time, this Index employs a comprehensive and
consumer-centric approach to evaluate air connectivity. In addition to providing current
insights into airport industry connectivity in Asia-Pacific and the Middle East, the study
highlights the critical challenges facing the sector's modernization in the future.

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