An Inquiry Into The Economic Linkages Between The Swedish Air Transport Sector And The Economy As A Whole In The Context Of The Covid-19 Pandemic

Abstract

This thesis aims to assess the importance of the air transport sector for Sweden's economy in the context of the COVID-19 pandemic. Two complementary research goals are formulated. Firstly, investigating economic linkages of the Swedish air transport sector. Secondly, estimating the effects of the pandemic on Swedish air transport, and the spin-off effects on the economy as a whole. Overview of literature in the field reveals that while a fair amount of research exists on the importance of air transport, unsurprisingly, pandemic effects have yet to be investigated. The methodological framework chosen is input-output analysis, thus, the backbone of data materials used is the Swedish input-output table, complemented by additional datasets. For measuring economic linkages, basic input-output analysis is applied. Meanwhile, to capture the pandemic's impacts, a combination of inoperability analysis and the partial hypothetical extraction model is implemented. It is found that while Swedish air transport plays an important role in turning the cogs of the Swedish economy, when compared to all other sectors, it ranks on the lower end. Furthermore, while the COVID-19 pandemic has a detrimental short-term impact on Swedish air transport, the spin-off effects for the economy as a whole are milder. It is concluded, that out of a value-added perspective, the Swedish government, and by extension policy makers globally need not support failing airlines, and other air transport actors. Nonetheless, some aspects could not be captured through the methods used, such as the possible importance of airlines to national security at times of dodgy global cooperation. Lastly, to accurately capture not only short-term, but also long-term effects of the pandemic, future research using alternative, causality-based frameworks and dynamic input-output models will be highly beneficial.