economic evaluation – direct impacts 7 - economic...economic evaluation – direct impacts...

KENTUCKY STATEWIDE AVIATION SYSTEM PLAN

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7 Economic Evaluation – Direct Impacts

Aviationisanintegralpartoftheworld’seconomy.Countrieswithrobustairtransportationsystemsbenefitfromtheefficienciesthatairtravelprovides.ThesameistrueintheU.S.atthestateandregionallevel–airportsandthelinkagestheyprovidehelptodriveeconomiesinthosestates.TheCommonwealthofKentucky’ssystemof59publicly‐owned,public‐useairportsareessentialtothestate’stransportationandeconomicinfrastructure,supportingitsdiversifiedindustriesincluding,butnotlimitedto,manufacturing,distribution,aerospacetechnology,agriculture,healthcare,andthoroughbredhorseracing.AirportsconnecttheCommonwealth’scitizensandbusinessestotherestofthestate,ournation,andtheglobaleconomy,andserveasanimportantlinkforalmosteveryKentuckian,regardlessofwheretheylive.Airportsarethe“frontdoor”tocommunitiesandprovidecompaniesefficientaccesstotheiremployeesandfacilities.AirportsalsoprovideagatewayforvisitorsandtouriststotheAppalachianMountains,horseparksandhorsefarms,world‐classgolfcourses,andthehundredsofhistoric,recreational,andeducationalsitesincommunitiesthroughoutthestate.

Kentucky’sairportsareamajorcatalysttothestate’sgrowingeconomy.Inordertobetterunderstandtheeconomicbenefitofairportsstatewide,theKentuckyTransportationCabinetDepartmentofAviation(KDA)completedthiseconomicevaluationtoquantifytheon‐airportactivitiesfoundatsystemairports.Itisimportanttonotethatunlikeafulleconomicimpactanalysis,thissectionoftheSystemPlanonlyestimatestheon‐airportemploymentandpayrollgeneratedbyKentucky’sairportsandtheirbusinessandgovernmenttenants.Novisitor,multiplier,oron‐airportconstructionimpactswereincluded.Morespecifically,onlytheemploymentandpayrollimpactsdirectlysupportedbyairportmanagementandaviation‐relatedbusinessesandpublicsectortenantslocatedattheairportswereconsidered.Directeconomicactivity(output)impactswerenotcalculated.TheevaluationdidnotestimatethespendinggeneratedbyvisitorsarrivingintheCommonwealthoncommercialserviceorgeneralaviationaircraft.Nordidtheevaluationestimatetherippleeffectsassociatedwiththere‐spendingofdirectimpactswithintheCommonwealth’seconomy.Itshouldbenotedthatifon‐airportconstructionimpacts,visitorimpacts,andmultiplierimpactswereincludedinthisevaluation,theeconomicimpactsofthestate’sairportsystemwouldbesignificantlylargerthanwhatisreportedinthischapter.TheKYTCisconsideringafollow‐onstudytocalculatethecompleteeconomicimpactoftheCommonwealth’sairportsystem.

Methodology ThisanalysisfollowsaprovenFederalAviationAdministration(FAA)approvedmethodologyofdatacollectionandestimatingimpactsthathasbeenusedthroughoutthecountry.Thedirecteconomicimpactisquantifiedintermsofemploymentandpayroll.Whenacompleteeconomicimpactstudyiscompleted,outputwillalsobeestimated.Outputrepresentsspendingoreconomicactivityandaccountsforthevalueofaviation‐relatedactivitiesoccurringonthestudyairports.

Inafullairporteconomicimpactstudy,theeconomicimpactsoftheairportsarecalculatedusinganinput‐outputmodelingprocess,wherethemodelaccountsfortherelationshipofproductioninputsamongvariousindustrysegmentswhenmodelingtheoutputsofthoseindustries.Theinput‐outputmodeldescribesthreetypesofimpacts,eachofwhichareestimatedseparately:directimpacts(inputstotheeconomicmodel),multiplierimpacts(outputoftheeconomicmodel),andtotalimpacts.Asexplainedpreviously,however,forthisanalysistheKDAdesiredtoestimateonlythedirectimpactsoftheKentuckyairportsystem.Therefore,onlytheinputportionoftheinput‐outputmodelingprocess,theestimationofdirectimpacts,wasemployedinthisstudy.

Economic Evaluation – Direct Impacts


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Directimpactsoriginatefromon‐airportactivityandaccountfortheinitialpointwheremoneyfirststartscirculatingintheeconomy.On‐airportactivityincludesthebenefitsassociatedwithbusinessesandgovernmentagencieslocatedattheairportdirectlyrelatedtotheprovisionofaviationservices.Thesebusinessesincludefixedbaseoperators(FBOs),flightschools,airlines,andaircraftrepairfacilitiesandpublicsectortenantssuchasairportmanagement,theFAA,lawenforcementaviationunits,andtheTransportationSecurityAdministration(TSA).

Impactscalculatedinclude:

Employment–Employmentisbasedonthetotaloffull‐timejobspluspart‐timejobs.Inthisanalysis,twopart‐timepositionsaretheequivalentofasinglefull‐timeposition.

Payroll–Payrollrepresentstheannualsalary,wages,andbenefitspaidtoallemployees.

Surveys,DataCollectionMethods,andAssumptionsAspreviouslynoted,anextensivedatacollectioneffortwasundertakentogatherinformationforthesystemplan.Thisincludeddatanecessarytoestimateemploymentandpayrollimpacts.Dataforon‐airportactivitywascollected,whichincludesairporttenantsthatarebusinesseswithemployees,suchasairlines,FBOs,flightschools,concessionaires,corporateflightdepartments,andaircraftmaintenanceproviders.Alsoincludedinthisgrouparegovernmentalagencies,suchaspublicairportsponsors,airtrafficcontrollers,otherFAAunits,theTSA,aswellasvariousotherlocal,state,andfederalagencies.

Themethodsusedtogatherinformationfromthesegroupsarediscussedintheensuingsection,alongwiththeassumptionsneededtoarriveatemploymentandpayrollimpacts.

On‐AirportActivityAirportsponsorsandmanagerswerecontactedviaasurveytoprovidenames,mailingaddresses,e‐mailaddresses,andtelephonenumbersforeachon‐airportbusinessandpublicsectortenant.Allairporttenantshavingaviation‐relatedemployeesonKentuckyairportsduring2015werecontactedtocollectinformationregardingtheireconomicactivity.SincethepurposeofthisanalysiswastomeasuretheemploymentandpayrollimpactsofeachKentuckyairportandtheactivitythatreliedontheairport,adistinctionwasmadebetweenthoseon‐airporttenantsthatdependedontheairportandthosethatdidnot.Forexample,atenantfarmerlocatedonanairportwouldnotbedesignatedasaviation‐relatedsincefarmingisnotairportrelated.Asurveywasprovidedtoeachaviation‐relatedtenantandfollow‐upcallsande‐mailsweremadetoobtainresponsesandtoverifyinformationonreturnedsurveys.Airporttenantsateachairportweregroupedinto28categoriestoaidinanalysis.Thesecategoriesconsistedof:

Aerialapplicators Airambulances Aircargo Aircraftmaintenance(piston) Aircraftmaintenance(turbine) Airlines(passengeronly) Airportmanagement(commercialservice) Airportmanagement(generalaviation)



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Airportmanagement(generalaviationwiththreeorlessfull‐timeemployees) Airtrafficcontrol(public,i.e.,FAA) Airtrafficcontrol(private) Charter Concessions(commercialserviceairports) Concessions(generalaviationairports) Corporateflightdepartments FBOs(fiveorlessfull‐timeemployees) FBOs(large) Federalgovernment(notincludingairtrafficcontrolorTSA) Flightinstruction Flightinstruction(professional) Groundtransportation Hangarrentalanddevelopment Military Nonprofit Parking RentalCar Stateandlocalgovernment TSA

Thesurveysenttoeachairporttenant,includingairportsponsorsandmanagers,requestedthefollowinginformation:

Typeofaviationactivityconductedbythetenant Numberoffull‐time,part‐time,andseasonalemployeesin2015 Estimatedtotalannualwagesandbenefitspaidtoemployeesin2015 Variousotherbusiness‐relateddata

Ahighresponseratewasdesiredfortheairportmanagementandtenantsurveys.Severalroundsoffollow‐upcallsande‐mailswerethereforemadetonon‐respondingentitiesandairportmanagerstoobtainthegreatestresponseratepossibleforon‐airportemployment.Forairporttenantswhodidnotprovidecompleteinformationonpayrollexpenditures,estimatesweredevelopedusingratiosofpayroll.Theseratiosweredevelopedfromsurveydataobtainedfromthosetenantsandbusinessesthatdidrespondtothesurvey.ForthosecategoriesoftenantsthatdidnothavesufficientKentuckydatatoprovidereliableaverages,additionaldatawasusedfromtheconsultant’sin‐housedatabasecompiledfromairporteconomicimpactstudiesconductedthroughouttheUS.

Employment and Payroll Impacts for Kentucky Airports Kentucky’sairportsaresignificantgeneratorsofjobsandpayroll.Thissectionpresentsthedirectemploymentandannualpayrollsupportedbyon‐airportactivityatKentucky’s59public‐useairports.Itisimportanttonotethattheseimpactsdonotincludecommercialserviceorgeneralaviationvisitorimpactsormultiplierimpacts.

EmploymentImpactsThisanalysisfoundthatairportsinKentuckyareanimportantsourceofjobs.Employment,asdefinedinthisanalysis,isbasedonfull‐timeequivalent(FTE)jobs,whichisasumoffull‐timejobsandpart‐timejobs.Inthisanalysis,twopart‐timepositionsaretheequivalentofonesinglefull‐



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timeposition.Employmentimpactswerecalculatedforon‐airportactivity.On‐airportactivityincludesprivatebusinessesandgovernmentorganizations.

PayrollImpactsThesalaries,wages,andbenefitspaidtotheemployeesdescribedaboveresultinasignificantannualpayrollbenefittotheKentuckyeconomy.Estimatesofthepayrollimpactsrelatedtothepreviouslyidentifiedemploymentimpactsassociatedwithon‐airportbusinessesandtheiractivitiesaredetailedinconjunctionwithemploymentimpactsbelow.

StatewideEmploymentandPayrollfromOn‐AirportActivityKentucky’son‐airportactivitycreate792jobsatgeneralaviationairportsand22,600jobsatcommercialserviceairports,foratotalof23,392FTEpositions.Themajorityoftheseon‐airportjobsarerelatedtoKentucky’scommercialserviceairlines(includingUPSandDHLaircargohubactivity).Theon‐airportpayrollassociatedwiththesejobsisover$49.1millionatgeneralaviationairportsandapproximately$1.39billionatcommercialserviceairports;atotalofover$1.4billion.Thesejobsandtheassociatedpayarenotevenlydistributedacrosson‐airportbusinesstypes.

MajorEmployersThethreelargestsingleemployersatKentuckyairportsareUPS,DHL,andtheKentuckyAirNationalGuard.UPS’WorldportHubatLouisvilleInternationalemploysnearly10,000withanestimatedpayrollofover$682million,whileDHLemploysover2,700withanestimatedpayrollofover$192millionatitsNorthAmericanHubatCincinnati/NorthernKentuckyInternational.ThepresenceoftheseaircargohubsinKentuckyareatestamenttoKentucky’sideallocationforlogisticsanddistribution,as75percentoftheU.S.populationiswithinatwo‐hourflightofLouisville,andafour‐hourflightallowsforaccessto95percentoftheU.S.population.ThesteadyincreaseintonnagethroughputattheseKentuckyaircargohubs,coupledwiththesignificantgrowthine‐commercedistributionfacilitiessurroundingtheseairportsmeansthattheaircargoindustrywillcontinuetobeamajorsourceofjobsandeconomicgrowthforKentuckywellintothefuture.



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TheKentuckyAirNationalGuard’s123rdAirliftWing,locatedatLouisvilleInternational,employsover815withanassociatedpayrollofover$64million.EquippedwitheightC‐130Herculesaircraft,theKentuckyAirNationalGuard’s123rdAirliftWingmissionistoprovideworldwidetheaterairliftforU.S.militaryandhumanitarianoperations.Afterthesethree,thereisasignificantdropofftothenextlargestairportemployers,whichincludeairlines,terminalconcessionaires,TSA,rentalcaroperators,andairportstaffing.Thelargestnon‐governmentormilitarybusinessonageneralaviationairportisSummitAviationatLakeCumberlandRegional,with40on‐airportemployeesaccountingforanestimatedpayrollofover$1.8million.

ImpactsRelatedtoUniqueAspectsofAviationinKentuckyAshighlightedinChapter5ofthisstudy,thereareseveraluniqueaspectsofaviationinKentucky:aviationeducation,agriculturalactivity,andaviationinmedicalcare.Theseaviationaspectsrepresentimportantservicesthathavepresencesbothonandoff‐airport,buteachpositivelyimpactKentuckyaviationinsomeway.

Aviationeducationalopportunitiesareavailableattheuniversity‐levelthroughprogramsatEasternKentuckyUniversity,UniversityofKentucky,andMoreheadStateUniversity,while37Kentuckyhighschoolsofferaviationcoursesoradedicatedaerospacecurriculum.YoutheducationprogramsareavailablethroughtheAviationMuseumofKentucky’scampsatBlueGrassAirport,andnumerousYoungEaglesprogramssponsoredbylocalExperimentalAircraftAssociation(EAA).Inaddition,29ofKentucky’s59airportshavebasedflighttrainingservicesandnearlyallairportssupportflighttrainingactivities.TheresultsoftheinventoryeffortfoundthatinKentuckythereare63on‐airportjobsrelatedtoflighttrainingwithover$9.4millioninassociatedpayroll.

Aviationhasaroleinsupportingthestate’sagriculturalsectorforpurposesincludingaerialapplicationandlivestocktransport.Eachyear,aircraftareusedforaerialseedingoraerialpesticideapplicationofKentucky’sfarmland,whichin2015produced$2.8billionworthoftotalcropproduction.Kentucky’sairportssupportenablefarmerstoaddresstheneedsoftheircropsefficientlyandeconomicallythroughaviation.



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Theequineindustry–oneofKentucky’smostrenownedandculturallysignificantindustries–isheavilyreliantuponaviationforthetransportationofitsproducts.SpecializedairtransportcompaniessuchasH.E.TexSuttonForwardingCompany,basedatBlueGrassAirport,movehorsesaroundtheworldusingdedicatedaircraftoftencalled“airstables.”Kentucky’shometo242,000horsesthatsupporta$1.1billionindustrywithmorethan40,000jobs.TwoofthetopfiveairportsintheU.S.involvedinhorsetransportationareinKentucky(LouisvilleInternationalAirportandBlueGrassAirportinLexington).1

Aviationisalsoanessentialcomponentofthehealthcareindustry,oftenmostvisiblyintheformofhelicopteremergencymedicalevacuations.Furthermore,themedicalindustryusesaviationinthetransferofmedicalsupplies,tissuesamples,anddonororgans.Kentuckyiscurrentlyservedbyfiveairmedicaloperators,combiningfor31airmedicalbasesacrossthestate.Fourteenofthesebasesarelocatedatairports.Thespeed,reliability,andrangeaffordedbyaviationsavesliveseveryday,andallKentuckyairportsplayavitalroleinsupportingthiscriticalactivitywhenneeded.Theinventoryidentified229on‐airportjobsrelatedtoairambulanceoperatorswithanassociatedpayrollofover$13.7million.

1Harrington‐Snell,Jennifer.Alongfortheride,BusinessAirportInternational,January2012.



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Summary of On-Airport Economic Activities AirportsinKentuckysupporttheairtravelneedsoftheCommonwealth’sresidents,businesses,andvisitors,actingaseconomicenginesforregionaleconomies.ThischapterhighlightstheimportanteconomiccontributionsthattheCommonwealthrealizesfromitsairportsbyquantifyingdirectemploymentandpayrollassociatedwiththeseairports.Theresultsofthisanalysisarereportedforthestateasawholeandforeachindividualairport.Itisalsoimportanttonotethatthiseconomicevaluationprovidesa“snapshotintime”withrespecttoairportactivityandeconomicconditions.Thedataandthestateoftheeconomyforthischapterareallspecificallyrelatedto2015.

TheKentuckysystemofairportsanalyzedinthisevaluationconsistsofsixcommercialserviceairportsand53generalaviationairports.Theseairportsrangeinsizefromsmallairstrips,suchasProvidence‐WebsterCountyAirportandLiberty‐CaseyCountyAirport,toBowmanField,abusycorporategeneralaviationrelieverairport,toCincinnati/NorthernKentuckyInternationalAirport,oneofthe60busiestcommercialserviceairportsintheU.S.intermsofenplanements.2TheKDAsupportstheseairportsaspartofitsmissiontoprovideasafeandsecureairtransportationsystemthatensuresthemobilityofpeopleandgoods,enhanceseconomicprosperity,andpreservesthequalityoftheCommonwealth’senvironmentandcommunities.Thisanalysisfoundthatthesystemof59public‐useairportsinKentuckygeneratessubstantialdirecteconomicimpactsthroughouttheCommonwealth.Inbrief,the59airports:

Supportedmorethan23,000jobsatsystemairports Thesejobsgeneratedover$1.44billioninannualpayrollTable7‐1liststheemploymentandpayrollforthe59Kentuckypublic‐useairports.Again,thesenumbersonlyincludeon‐airportbusinessesandgovernmentagencyactivities.On‐airportcapitalimprovementprojects,visitorimpacts,andmultiplierimpactsarenotincluded.Itshouldbenotedthatforairportswith3orfeweron‐airportworkers,payrollwasnotlistedinthetablebelowtomaintainconfidentialityandtoavoidreportingindividualsalaryestimates.Adiverserangeofairport‐relatedactivityisreflectedintheseimpacts,fromUPS’WorldportaircargohubatLouisvilleInternationalAirport‐StandifordFieldwheremorethan9,000workersareemployed,toEagleFlightAcademy’stwofull‐timeflightinstructorsatHancockCounty–RonLewisField.

2https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/media/cy15‐all‐enplanements.pdf



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Table7‐1DirectEconomicImpactsforKentuckyAirports

Associated City Airport Name

Direct On‐Airport

Employment Direct On‐

Airport Payroll

Commercial Service Airports

BWG Bowling Green Bowling Green‐Warren County Regional 19 $681,000

CVG Covington Cincinnati/Northern Kentucky International 9,443 $493,290,000

LEX Lexington Blue Grass 520 $30,335,000

SDF Louisville Louisville International‐Standiford Field 12,436 $855,093,000

OWB Owensboro Owensboro‐Daviess County Regional 62 $4,004,000

PAH Paducah Barkley Regional 120 $7,552,000

Commercial Service Airports Total 22,600 $1,390,955,000

General Aviation Airports

DWU Ashland Ashland Regional 6 $286,000

BRY Bardstown Samuels Field 5 $455,000

1M9 Cadiz Lake Barkley State Resort Park ‐ $0

AAS Campbellsville Taylor County 2 Undisclosed

I96 Columbia Columbia‐Adair County 2 Undisclosed

0I8 Cynthiana Cynthiana‐Harrison County 2 Undisclosed

DVK Danville Stuart Powell Field 46 $2,281,000

8M7 Dawson Springs Tradewater ‐ $0

EKX Elizabethtown Addington Field 29 $1,163,000

2I3 Falls of Rough Rough River State Resort Park 1 Undisclosed

K62 Falmouth Gene Snyder ‐ $0

FGX Flemingsburg Fleming‐Mason 5 $362,000

FFT Frankfort Capital City 38 $9,726,000

1M7 Fulton Fulton ‐ $0

27K Georgetown Georgetown Scott County ‐Marshall Field 8 $407,000

M34 Gilbertsville Kentucky Dam Village State Resort Park ‐ $0

GLW Glasgow Glasgow Municipal 24 $1,375,000

M21 Greenville Muhlenberg County 20 $1,212,000

I93 Hardinsburg Breckinridge County ‐ $0

I35 Harlan Tucker‐Guthrie Memorial ‐ $0

JQD Hartford Ohio County 3 Undisclosed

CPF Hazard Wendell H. Ford Regional 29 $1,760,000

EHR Henderson Henderson City‐County 46 $2,031,000

HVC Hopkinsville Hopkinsville‐Christian County 4 $297,000

JKL Jackson Julian Carroll ‐ $0

K24 Jamestown Russell County 2 Undisclosed

M20 Leitchfield Grayson County ‐ $0

KY8 Lewisport Hancock Co‐Ron Lewis Field 4 $14,000

I53 Liberty Liberty‐Casey County ‐ $0

LOZ London London‐Corbin‐Magee Field 168 $10,688,000

LOU Louisville Bowman Field 92 $5,090,000

2I0 Madisonville Madisonville Regional 3 Undisclosed

5M9 Marion Marion‐Crittenden County 1 Undisclosed

M25 Mayfield Mayfield Graves County 2 Undisclosed

1A6 Middlesboro Middlesboro‐Bell County 2 Undisclosed

EKQ Monticello Wayne County 16 $1,355,000

SYM Morehead Morehead‐Rowan County Clyde A. Thomas Regional 17 $1,139,000



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Table7‐1DirectEconomicImpactsforKentuckyAirports

Associated City Airport Name

Direct On‐Airport

Employment Direct On‐

Airport Payroll

IOB Mount Sterling Mount Sterling‐Montgomery County 25 $1,234,000

CEY Murray Kyle‐Oakley Field 5 $87,000

PBX Pikeville Pikeville – Pike County Regional 3 Undisclosed

18I Pine Knot McCreary County ‐ $0

SJS Prestonsburg Big Sandy Regional 36 $1,462,000

2M0 Princeton Princeton‐Caldwell County ‐ $0

8M9 Providence Providence‐Webster County ‐ $0

RGA Richmond Central Kentucky Regional 20 $1,116,000

4M7 Russellville Russellville‐Logan County 3 Undisclosed

SME Somerset Lake Cumberland Regional 83 $3,968,000

6I2 Springfield Lebanon‐Springfield 18 $1,093,000

I50 Stanton Stanton‐Powell County ‐ $0

TWT Sturgis Sturgis Municipal 4 $204,000

TZV Tompkinsville Tompkinsville‐Monroe County 1 Undisclosed

9I3 West Liberty West Liberty ‐ $0

BYL Williamsburg Williamsburg‐Whitley County 17 $918,000

General Aviation Airports Total 792 $50,916,000

All Airports Total 23,392 $1,441,871,000

Source:CDMSmithNote:Payrollforairportswiththreeorfewerdirectemployeesarenotdisclosed.

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