tweed new haven airport authority sh&e

ECONOMIC IMPACT ANALYSIS FOR TWEED NEW HAVEN REGIONAL AIRPORT

Prepared for:

Tweed New Haven Airport Authority

Prepared by:

SH&E an ICF International Company

January 2011

Economic Impact Analysis for Tweed New Haven Regional Airport, January 2011 Page i

TABLE OF CONTENTS

1 Introduction and summary .................................................................. 2

2 Airport Overview ................................................................................... 3 2.1 Approach to Estimating Baseline Economic Impacts

for the Tweed New Haven Regional Airport .............................................. 3 2.2 Baseline Economic Impacts for the Tweed New Haven

Regional Airport ......................................................................................... 5

3 New Service Assumptions and Incremental Economic Impact Analysis ................................................................ 17 3.1 Potential Economic Impact ....................................................................... 17 3.2 Approach To Estimating Additional Economic Impact ........................... 19 3.3 Potential Annual Economic Impact of Tweed New Haven

Regional Airport ....................................................................................... 25

Appendix A: Supporting Information .......... Error! Bookmark not defined.26

1 INTRODUCTION AND SUMMARY

This report for the Tweed New Haven Airport Authority (HVN) has two primary objectives. The first objective is to estimate current annual economic impacts attributable to the Airport. The Airport’s annual economic impact is associated with businesses and tenants at the Airport, capital improvement projects accomplished at the Airport, and the spending of visitors who arrive via scheduled airlines or on general aviation aircraft. The analysis of current conditions provides a baseline economic impact for the Airport.

The second objective is to compare the Airport’s baseline economic impact to potential economic impact that could be achieved under various improved scheduled airline operating scenarios. These air service scenarios, as well as the likelihood of increasing the Airport’s economic impact, are discussed later in this report.

As only one of two scheduled service airports in Connecticut, Tweed New Haven Regional Airport is an important asset to the City of New Haven and South Central Connecticut. HVN links the local market to the world and provides access to visitors on both scheduled air service and general aviation aircraft who come to the area for business and/or leisure activities. The general public understands that HVN supports scheduled airline flights and flights by general aviation aircraft. The Airport, however, plays a larger role in the region’s economy than most realize. HVN’s importance can be easily overlooked or undervalued amidst the competitive airport landscape within a one to two hour driving time of the airport.

The Airport is a generator of economic development and stimulates real dollar activity. The economic importance of HVN has been quantified so the general public, policy decision makers, and other key constituents can understand its value in order to make informed decisions about its future development.

Our baseline analysis for 2010 calculates that HVN supports over 580 jobs in the market area and generates an estimated total economic output of $55 million.

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Economic Impact Analysis for Tweed New Haven Regional Airport, January 2011 Page 3

2 AIRPORT OVERVIEW

Tweed New Haven Regional Airport is defined by FAA as a non-hub1 primary facility that serves the scheduled air service and general aviation needs of the City of New Haven and surrounding communities. The Airport is owned by the City of New Haven, leased to the Tweed New Haven Airport Authority and operated by AvPorts under contract to the Airport Authority. The Airport is located approximately three miles southeast of downtown New Haven.

The Airport is served by two runways. Runway 2/20 is 5,600 feet long by 150 feet wide, and Runway 14/32 is 3,626 feet long by 100 feet wide. Landings and takeoffs at the Airport are facilitated by a precision instrument landing system (ILS) and by an on-site air traffic control tower.

Currently, US Airways provides scheduled regional flights to and from the Airport to Philadelphia four to five times daily, depending on the season. In 2010, the Airport served roughly 3,000 scheduled aircraft landings and takeoffs. The Airport served over 72,000 airline passengers, up approximately 8 percent from 2009.

The Airport is home to 58 based general aviation aircraft and one FBO. In addition, other general aviation aircraft, ranging from small single-engine planes to larger corporate business jets, use the Airport. The Airport sees roughly 37,000 annual takeoffs and landings by general aviation aircraft, both aircraft based at the Airport and visiting general aviation aircraft.

2.1 APPROACH TO ESTIMATING BASELINE ECONOMIC IMPACTS FOR THE TWEED NEW HAVEN REGIONAL AIRPORT

Economic impacts in this report are quantified in terms of employment, payroll, and output. Output represents total economic activity of businesses and other entities, or in the case of visitors, spending. As an economic impact indicator, output represents the value of all aviation-related activities supported by the Airport.

1 FAA airport hub size definitions are based on enplanement activity; Large (1% or more of total US enplanements), Medium (0.25% to 0.99% of total US enplanements), Small (0.05% to 0.24% of total US enplanements) and non-hub (less than 0.05% of total US enplanements)

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Economic impacts associated with Tweed New Haven Airport were estimated using survey data, data from an accepted input-output model, and industry information. Baseline economic impacts were estimated for each of the following measures:

! Employment – Employment is based on full-time equivalent positions.

! Payroll – Payroll is the annual salary, wages, and benefits paid to all employees.

! Output (Spending) – Output is defined as the total economic activity associated with a particular entity. Output for an on-Airport tenant is commonly assumed to be the sum of average annual capital expenditures and annual gross sales. For on-Airport tenants or businesses that do not have gross sales, such as government entities, output is derived from the sum of average annual capital expenditures, operating expenses, and payroll. In this report, output is also referred to as annual economic activity. For visitors, output is estimated through their spending.

One important note: when using the findings presented in this report, payroll and output impacts cannot be combined. Elements of economic impact related to payroll may also be contained in the output estimate. Each of the three economic impact measures (employment, payroll, and output) stands alone as a measure of the Airport’s annual economic impact.

All economic impacts discussed in this report are assigned to one of three categories: direct, indirect, or induced. Combined impacts from these three categories yield the total annual economic impact for each measure: employment, payroll and output. The three categories are discussed below:

! Direct Impacts - Direct impacts are the benefits associated with businesses or tenants located at the Airport which are directly engaged in the provision of aviation services. Direct impacts include the employment, payroll, and output of businesses such as the airline, air traffic control tower personnel, airport management, the Transportation Security Administration (TSA), rental car agencies, and the fixed base operator (FBO) and its affiliated companies. Direct impacts estimated in this report also consider capital improvement projects completed by the Airport Authority.

! Indirect Impacts – Indirect impacts take place off-Airport and are those impacts associated with the spending of visitors who arrive in the New Haven area on a scheduled airline flight or on general aviation aircraft. Visitor spending in this report is classified as output. Visitor spending helps


to support additional employment and the payroll associated with this employment.

! Induced Impacts - Induced impacts are economic impacts resulting from the recirculation of both direct and indirect impacts within the area economy. This recirculation is typically referred to as the multiplier effect. For example, as Airport employees spend their salary for housing, food, and other services, those expenditures continue to circulate through the area economy resulting in increased spending (output), payroll, and employment in the Airport’s market area.

In this report, multipliers from the Impact Analysis for Planning (IMPLAN) input-output model were used to estimate induced impacts. The IMPLAN model is one of three leading input-output models. The model is recognized by the FAA for application in this type of economic impact analysis. Induced impacts are estimated for both direct and indirect economic impacts.

2.2 BASELINE ECONOMIC IMPACTS FOR TWEED NEW HAVEN REGIONAL AIRPORT

Baseline annual economic impacts were estimated for each of the following:

! On-Airport tenants/business (direct impacts)

! On-Airport capital improvement projects (direct impacts)

! Visitors arriving on scheduled airlines (indirect impacts)

! Visitors arriving on general aviation aircraft (indirect impacts)

For each group noted above, this report estimates total annual output or spending. Employment associated with or supported by each group is estimated, as is the annual payroll tied to this employment. As is true for all economic analysis, economic impacts from the payroll and output measures cannot be combined.

2.2.1 Baseline Economic Impacts of On-Airport Tenants/Businesses

Economic impacts associated with tenants and businesses on the Airport fall into the direct impact category. On-Airport tenants/businesses at the Tweed New Haven Regional Airport include:

! Airport management

! Airlines


! Air traffic control tower staff

! Transportation Security Administration (TSA)

! Rental car agencies (three on-site; one off-Airport serving HVN)

! Fixed base operator (FBO) and its affiliates

A brief description of each tenant follows:

! Airport management – Tweed New Haven Airport is managed by AvPorts, which operates the Airport under contract to the Airport Authority. AvPorts’ employees are responsible for Airport administration, operation, and maintenance, as well as for air service development.

! Airlines – Currently, US Airways is the sole scheduled carrier providing airline service to and from the Airport. The carrier provides non-stop service to its hub in Philadelphia. From Philadelphia, New Haven travelers have access to connecting flights to many domestic and international destinations. The airline averages four or five arrivals and departures daily on the de Havilland Dash 8 aircraft which seats 37 passengers.

! Air traffic control tower – The FAA maintains a contract air traffic control tower at the Airport. This federally maintained facility helps to increase the efficiency and safety of the Airport and area airspace. The Airport’s air traffic control tower is manned by employees from a private company.

! TSA – Through the Department of Homeland Security, TSA is responsible for security screening of s airline passengers. TSA has employees on-site to process boarding passengers on all airline flights.

! Rental car agencies – Ground transportation to and from Tweed New Haven Regional Airport is facilitated through three national on-site car rental companies: Avis, Budget and Hertz, and one off-Airport company, Enterprise. For this analysis, only the portion of each rental car company’s business that is related specifically to the Airport was included.

! FBO – Robinson Aviation is currently under contract as the Airport’s fixed base operator or FBO. The FBO and its affiliates provide fueling services and aircraft storage. They also offer flight training and air charter services and provide a variety of aircraft maintenance and repair services.

With the assistance of Airport management, information on employment, payroll, expenditures, and capital improvement projects was collected from these entities.


For airport tenants/businesses who did not supply complete information on their payroll and output, estimates were developed using ratios of payroll per employee and output per employee. These ratios were developed from survey data obtained from those tenants who responded, as well as from industry experience. Information from services such as Manta and Dun & Bradstreet was used to supplement survey data. To protect the confidentiality of tenant-specific information, payroll and output/spending results for on-Airport tenants/businesses have been combined.

Table 1shows information collected for total direct on-Airport employment.

Table 1: Total Direct On-Airport Employment On-Airport Tenant/Business Estimated Direct Employment Airport management 17 full time; 5 part time Airline 4 full time; 10 part time Air Traffic Control Tower 4 full time; 0 part time Transportation Security Administration (TSA) 8 full time; 3 part time Rental car agencies 3 full time; 6 part time Fixed base operator (FBO) & Affiliates 17 full time; 3 part time

In this analysis, two part time employees were assumed to equal one full time employee. In the case of the rental car companies, employment is equivalent to more than nine full time jobs. However, information from the rental car companies indicates that approximately 35 percent of their total business is non-Airport related. As a result, for this baseline economic impact analysis, it was assumed that 65 percent of the jobs at the rental car companies are in support of the Airport. This translates into six full time jobs for the car rental agencies.

Using the calculated rental car employment figure and other full time and part time jobs supported by the Airport shown in Table 1, a total of 67 direct jobs are supported by the Airport. In the economic impact modeling process, these jobs were assigned to one of three categories: government, aviation, or concessions. Airport management, TSA, and air traffic control tower personnel were assigned to the government category. Airline and FBO personnel were assigned to the aviation category, and rental car employees were assigned to the concessions category.

The next step was to estimate direct payroll. Some tenants provided actual annual payroll information for use in this report. When this information was not provided, payroll information from the IMPLAN model and various databases was used to


establish direct payroll for all on-Airport employment. Output information was based on industry averages from other airports similar in size.

Table 2 reflects direct payroll and output impacts for the Airport and its tenants.

Table 2: Baseline Direct Annual Airport/Tenant Economic Impacts

Employment Payroll Output Government 33 $1,786,785 $3,370,290 Aviation 28 $1,176,000 $4,494,700 Concessions 6 $150,000 $710,000 Total 67 $3,112,785 $8,574,990

Annual direct payroll associated with the 67 direct on-Airport jobs is estimated at $3,112,785.

Businesses that operate at Tweed New Haven Regional Airport, as well as the Airport itself, make annual purchases for goods and services. Survey information, along with output information for similar businesses at other airports, was used to estimate the Airport’s direct annual economic impact for output. Because payroll amounts are included in the Output totals, the two figures are not additive. As shown in Table 2, the Airport’s direct annual output is estimated at $8,574,990.

As payroll and output associated with on-Airport tenants/businesses continues to circulate in the New Haven area economy, additional economic benefits are realized. Multipliers from the IMPLAN model were used to estimate these induced impacts. Induced impacts for the Airport and its tenants and businesses are shown in Table 3.

Table 3: Baseline Induced Annual Airport/Tenant Economic Impacts Employment Payroll Output

Government 22 $606,435 $3,782,485 Aviation 43 $1,118,023 $3,381,812 Concessions 2 $92,475 $540,231 Total 67 $1,816,933 $7,704,528

Combining direct impacts, shown in Table 2, and induced impacts, shown in Table 3, results in the total annual baseline economic impacts for the Airport and its tenants/businesses shown in Table 4.


Table 4: Total Baseline Annual Airport/Tenant Economic Impacts Employment Payroll Output

Government 55 $2,393,220 $7,152,775 Aviation 71 $2,294,023 $7,876,512 Concessions 8 $242,475 $1,250,231 Total 134 $4,929,718 $16,279,518

As shown, when both direct and induced impacts associated with tenants and businesses at Tweed New Haven Regional Airport are considered, total annual economic impacts for the on-Airport tenant/business group are as follows:

! Total annual baseline output/spending for on-Airport tenants/businesses is $16,279,518.

! Total baseline employment for on-Airport tenants and businesses is 134.

2.2.2 Economic Impacts of Capital Improvement Projects

Annual investment in capital projects at any airport varies in accordance with need. Primary factors that influence capital investment at most airports include:

! Changes in type or volume of aircraft and/or passengers using the airport

! Need for repairs to existing infrastructure

! Compliance with FAA standards for design and development

Information was gathered from the Airport on investment in capital improvement projects over the last four years. Annual investment costs were averaged in order to provide a “balanced” representation of annual capital investment at the Airport.

When goods and services are purchased to improve the Airport, this spending helps to support employment over the duration of the capital project. Capital projects most often support employment in the fields of architecture, engineering, project management, inspection, and construction. Annual economic impacts from capital improvement projects fall into the direct impact category.

Ratios of construction-related output/spending per employee from the IMPLAN model were used to estimate impacts of Airport capital improvement economic activity. Information from the IMPLAN model indicates that for every $1 million in annual investment in capital improvement projects in urban areas such as New Haven, an estimated 11 jobs are supported.


Over the last four years, approximately $37 million has been invested in capital improvements at the Airport. This results in an average annual expenditure of $9.25 million. In terms of benefit to the regional economy, it is important to note that almost all the businesses engaged to implement capital improvement projects for the Airport in this four year period are based in Connecticut.

Using a ratio of 11 jobs per $1 million in capital investment, it is estimated that annual construction activities at the Airport support an estimated 101 jobs in the direct impact category per year. An average annual salary of $40,500 was applied to the estimated 101 jobs. Accordingly, it is estimated that $4,090,500 in direct annual payroll impacts are tied to capital improvement projects at the Airport.

Similar to the direct output, employment, and payroll impacts from on-Airport tenants and businesses, once these construction impacts enter the area’s economy, they continue to circulate, creating additional induced impacts. Multipliers from the IMPLAN model were used to estimate induced impacts related to capital improvements/construction projects. Results are shown in Table 5.

Table 5: Baseline Capital Improvement Projects Annual Economic Impacts Direct Impacts Induced Impacts Total Impacts Output/Spending $9,250,000 $7,032,775 $16,282,775 Employment 101 38 139 Payroll $4,090,500 $2,521,233 $6,611,733

As shown, when both direct and induced impacts associated with construction impacts at Tweed New Haven Regional Airport are considered, total annual economic impacts for this category are as follows:

! Total baseline annual output/spending from capital improvement projects is $16,282,775.

! Total annual baseline employment supported by capital improvement projects is 139.

2.2.3 Baseline Economic Impacts of Scheduled Air Service Visitors

Economic impacts associated with spending (output) from visitors who arrive on scheduled airlines fall into the indirect impact category. As indirect impacts enter the economy, additional impacts are created by the multiplier effect. These impacts fall into the induced impact category. When combined, the indirect and induced impacts


related to spending by scheduled air service visitors yield a total for annual economic impact in this category.

Information was obtained from US DOT and the Airport to estimate economic impacts associated with spending by visitors who arrive in the New Haven area on scheduled flights. The airline enplaned approximately 35,000 passengers at the Airport in 2010. Data from US DOT indicates that under a standard formula, approximately 18,500 of all enplaned passengers would be non-local passengers, or visitors. The balance of the annual enplanements are residents of the area. However, the New Haven market area is home to an unusually high number of graduate and undergraduate university programs. Census data classifies students as residents, not visitors. Hence, the formula-driven estimate of annual visitors was reduced by 25 percent to account for a higher than average component of student travel. This results in an adjusted annual visitor estimate of 13,875 for baseline conditions.

When visitors arrive in the New Haven area on a scheduled airline, they have expenditures for hotels/motels, food/beverage, ground transportation, retail, entertainment, and other items. Expenditures for taxis serving the Airport and subsequent economic impacts related to taxi service are also included in visitor spending. Visitors who reach an area via scheduled airline service have trip durations that typically last an average of three days. For this analysis, it was assumed that each visitor arriving via scheduled airline service spent on average $600 over the duration of their trip. This includes spending by both business travelers and those who travel to the area for discretionary travel, such as trips to visit friends and family.

In order to calculate total annual spending associated with scheduled air service visitors, the number of estimated visitors (13,875) is multiplied times the average estimated spending per trip ($600). For Tweed New Haven Regional Airport, annual spending (output) from scheduled air service visitors is estimated at $8,325,000.

Once annual spending (output) associated with visitors who arrive on the scheduled airline is calculated, it is possible to determine employment and payroll impacts resulting from this spending or output. Based on ratios of employment per spending from the IMPLAN model, spending (output) from scheduled air service visitors supports an estimated 141 jobs in the indirect impact category.

An average annual salary for service/retail industries ($23,000) was applied to the estimate of employment to calculate the indirect annual payroll impact associated with scheduled air service visitor-supported employment. Annual indirect payroll


associated with the 141 jobs supported by scheduled air service visitor spending (output) is estimated at $3,243,000.

Employment, payroll, and spending (output) impacts derived from scheduled air service visitors comprise part of the Airport’s indirect economic impact. As these indirect impacts enter area’s economy, they circulate among other sectors, creating successive waves of additional spending.

In this report, these additional economic impacts are reflected in the induced economic impact category. Using multipliers from the IMPLAN model, Table 6 shows indirect, induced, and total economic impacts related to scheduled air service visitors who use New Haven Tweed Regional Airport.

Table 6: Baseline Scheduled Service Visitor Annual Economic Impacts Indirect Induced Total Spending (Output) $8,325,000 $6,110,550 $14,435,550 Employment 141 55 196 Payroll $3,243,000 $2,088,816 $5,331,816

As shown in this table, when both indirect and induced impacts associated with scheduled air service visitors are considered, this group is responsible for the following total annual economic impacts:

! Total annual baseline spending/output for scheduled service visitors is $14,435,550.

! Total annual baseline employment for scheduled service visitors is 196.

2.2.4 Baseline Economic Impacts of General Aviation Visitors

Economic impacts associated with general aviation visitors fall into the indirect impact category. This section provides a discussion of the process used to estimate economic impacts associated with the spending of visitors who arrive in the New Haven area on general aviation planes.

General aviation refers to all segments of aircraft activity unrelated to scheduled carriers or the military. Visitors arrive on general aviation aircraft for both discretionary and business travel. It is believed that the largest percentage of visitors who travel to New Haven on general aviation aircraft are traveling for business purposes.


Many travelers who use general aviation to reach New Haven choose this mode of transport to shorten their travel time. Some general aviation visitors most likely spend less than one day in the area, while others have longer trip durations.

When a visitor arrives on a general aviation plane, they may have expenditures for hotels, ground transportation, food, entertainment, shopping, or other needs. Average general aviation visitor expenditures for airports in urban areas that are not tourist destinations range from roughly $155 to $260 per trip per visitor. This average includes spending by business travelers who stay in the area less than one day.

Using hotel rate information published on the Airport’s website and the fact that most visitors are traveling for business purposes, for this analysis, each visitor who arrives on a general aviation plane was assumed to spend an estimated average of $260 per trip. Visitor expenditures reflected in this estimate take place off-Airport. General aviation visitor expenditures for aircraft-related expenses are captured in economic impacts associated with on-Airport tenant activity.

In addition to making assumptions concerning spending per general aviation visitor, it was also necessary to make an assumption regarding the average number of pilots and passengers on each general aviation visiting flight. For this analysis, it was assumed that each visiting general aviation aircraft that arrives at the Airport carries an average of 4 pilots/passengers.

Developing an estimate of the number of visiting general aviation aircraft is also essential to quantifying indirect economic impacts associated with general aviation visitors. To develop this estimate, it is necessary to identify the number of annual operations at the Airport that fall into the “itinerant” classification. General aviation operations (annual takeoffs and landings) are divided between local operations and itinerant operations. Local operations are typically those related to flight training and by definition do not depart the immediate area of an airport. Itinerant operations, on the other hand, leave an airport’s immediate environment.

The number of itinerant operations for the Airport was obtained from the Federal Aviation Administration’s (FAA) 5010 database. Once itinerant operations are identified, it is necessary to estimate what portion of these operations are true transient or visiting in nature. The focus of this report is on the portion of the Airport’s itinerant operations flown by visiting or transient general aviation aircraft.


Transient operations are business or discretionary flights conducted by aircraft not based at Tweed New Haven Regional Airport. Transient operations are the general aviation activity that brings visitors to New Haven. For airports in urban areas, itinerant operations that are transient typically average 50 percent.

Using the assumptions noted in this section, estimates of general aviation visitor spending, also classified as output, have been developed for the Airport

The process to estimate general aviation visitor spending (output) for the Tweed New Haven Airport is outlined below:

! The Airport’s number of itinerant general aviation aircraft operations was obtained from FAA data. According to FAA information for the most recent calendar year, there were 18,164 total itinerant general aviation operations (arrivals and departures) at the Airport.

! The 18,164 annual itinerant operations are divided by 2 to determine general aviation arrivals that are itinerant in nature.

! 18,164 annual itinerant aircraft operations ÷ 2 = 9,082 annual itinerant arrivals.

! The percentage of itinerant arrivals performed by true transient or visiting aircraft is estimated at 50 percent.

! 9,082 annual itinerant arrivals x .50 = 4,541 true transient annual arrivals.

! An estimate of the average number of aircraft occupants (pilots/passengers) per visiting general aviation aircraft is then applied to the estimate of true transient arrivals to determine the number of annual general aviation visitors.

! 4,541 annual transient arrivals x 4.0 persons/aircraft = 18,164 annual general aviation visitors.

! To calculate the economic impact these general aviation visitors have on the area’s economy, average expenditures per visitor per trip of $260 are applied to the annual general aviation visitor estimate.

! 18,164 annual general aviation visitors x $260/visitor/trip = $4,722,640 annual spending (output) by general aviation visitors using Tweed New Haven Regional Airport

Once annual spending associated with visitors who arrive in the area on general aviation aircraft is calculated, it is possible to determine employment and payroll impacts resulting from this spending or output. This analysis estimated that on


average visitors arriving in New Haven on general aviation aircraft spend an estimated $4,722,640 annually.

Based on ratios of employment per spending from the IMPLAN model, spending (output) from general aviation visitors supports an estimated 80 jobs in the indirect impact category.

An average annual salary for the service/retail industries ($23,000) is applied to the employment estimate to calculate the indirect annual payroll impact associated with general aviation visitor-supported employment. Annual indirect payroll associated with the 80 jobs supported by general aviation visitor spending (output) is estimated at $1,840,000.

Employment, payroll, and spending (output) impacts derived from general aviation visitors comprise part of the Airport’s indirect economic impact. As these indirect impacts enter the New Haven area’s economy, these impacts continue to circulate creating additional spending. Additional impacts created by the multiplier effect are classified as induced economic impacts.

Using multipliers from the IMPLAN model, Table 7 shows indirect, induced, and total economic impacts related to general aviation visitors who use Tweed New Haven Regional Airport.

Table 7: Baseline General Aviation Visitor Annual Economic Impacts Indirect Induced Total Spending (Output) $4,722,640 $3,466,418 $8,189,058 Employment 80 31 112 Payroll $1,840,000 $1,185,144 $3,025,144

As shown in this table, when both indirect and induced impacts associated with general aviation visitors are considered, this group is responsible for the following total annual economic impacts:

! Total annual baseline spending/output for general aviation visitors is $8,189,058.

! Total annual baseline employment supported by general aviation spending is 112.


2.2.5 Total Annual Baseline Economic Impacts for Tweed New Haven Regional Airport

In this report, annual economic impacts were estimated for each of the following:

! On-Airport tenants/business (direct impacts)

! On-Airport capital improvement projects (direct impacts)

! Visitors arriving on scheduled airlines (indirect impacts)

! Visitors arriving on general aviation (GA) aircraft (indirect impacts)

Economic impacts were measured for: total annual output/spending, employment, and annual payroll. It is important to re-state that economic impacts in the payroll and output/spending categories cannot be summed.

Direct and indirect impacts were estimated using survey and other appropriate industry data for entities involved in the provision of aviation-related services. Induced impacts were calculated using multipliers from the IMPLAN model. Baseline annual economic impacts for the Airport are shown in Table 8. Totals include direct, indirect, and induced impacts estimated through IMPLAN multipliers.

Table 8: Total Annual Baseline Economic Impacts for Tweed New Haven Regional Airport Employment Payroll Spending/Output On-Airport 134 $4,929,718 $16,279,518 Capital Improvement 139 $6,611,733 $16,282,775 Scheduled l Visitors 196 $5,531,816 $14,435,550 GA Visitors 112 $3,025,144 $8,189,058 Total 581 $20,098,411 $55,186,901

As shown in this table, when all direct, indirect, and induced baseline impacts associated with Tweed New Haven Regional Airport are considered, the Airport is responsible for the following total annual baseline economic impacts:

! Total annual baseline spending/output in all categories is $55,186,901

! Total annual baseline employment for all categories is 581

These economic results represent the Airport’s total annual baseline impacts for 2010. In the next section of this report, baseline economic impacts are compared to potential economic impacts that the Airport might realize if it is successful in securing additional scheduled airline service.


3 NEW SERVICE ASSUMPTIONS AND

INCREMENTAL ECONOMIC IMPACT ANALYSIS

3.1 POTENTIAL ECONOMIC IMPACT

Previous sections of this report provide an estimate of the current annual economic impact associated with Tweed New Haven Regional Airport. These are considered the “baseline” economic benefit of the Airport. This section provides an estimate of additional economic impact that might be achieved if the Airport successfully secures improved scheduled airline service. Together, the baseline and the additional economic impacts equal the Airport’s estimated potential economic impact.

3.1.1 Air Service Improvement Scenarios

Over the last decade, passenger traffic levels at the Airport have varied due to service changes. The Airport experienced a reduction in its scheduled airline service with the exit of US Airways Express service to Washington/DCA shortly after the tragic events of 9/11. Traffic and air service increased from 2004-2005 when Delta Express introduced regional flights to Cincinnati for approximately 16 months. The Delta service was discontinued when Delta filed Chapter 11 bankruptcy restructuring. In 2006, Boston-Maine Regional Airlines served the market and increased traffic slightly, but soon closed its operation in the Northeast and exited several markets, including HVN.

In recent years, US Airways has added scheduled flight frequencies; and in the last year, the airline began to offer competitive pricing via its Philadelphia hub. This service enabled HVN to complete 2010 with a total passenger traffic level of 72,045. However, HVN traffic in 2010 is lower than the 76,000 passengers attained in 2000 by approximately 6 percent. To combat service reductions, the Airport has aggressively engaged in efforts to secure additional airline service for the last eight years. One of the Airport’s challenges to attracting new service has been the length of the runway, as the current length limits the aircraft options available for potential consideration. The runway at HVN is shorter than almost every other airport in the country that has scheduled air service. While the existing runway length is sufficient for most regional aircraft, except on hot summer days when conditions may require passenger counts to be reduced to meet weight restrictions, it is generally insufficient for longer stage lengths flown by most narrow body mainline jet aircraft.

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The specifics of the Airport’s airline recruiting efforts are excluded from this economic impact assessment. An essential underpinning to estimating potential future economic impact for the Airport, however, is the additional enplanements that airline recruiting efforts could attract. The appendix to this report provides more detail on the assumptions used to estimate potential/additional enplanements for the Airport as presented in this report.

3.1.2 New Service Assumptions

The Airport is pursuing new scheduled airline service under three service scenarios, as follows:

! Carrier #1 would introduce regional service to Washington with three daily flights using 34-seat aircraft.

! Carrier #2 would serve a Florida market with limited (twice weekly) flights using narrow body aircraft like a 168-seat Boeing 737 or an Airbus A320.

! Carrier #3 would be a well-known airline that serves Florida with significant service to the Northeast, offering two daily flights on narrow body aircraft like a Boeing 737 or an Airbus A320 (150 seats).

It is important to note that most narrow body scheduled commercial aircraft will not operate efficiently on the existing runway currently without significant weight penalty. This may affect the profitability of HVN service for some airlines. On the other hand, Florida markets have some of the highest demand from the New Haven area, with four destinations in Florida among HVN’s top 10 O&D markets. If successful in recruiting new scheduled service from each of these carriers, it is estimated that the Airport would attract additional enplanements shown in Table 9. Details on the service assumptions can be found in the appendix.

Table 9: Estimates of Additional Enplanements for Tweed New Haven Regional Airport under Three Future Scenarios Add’l Annual Enpl Visitor Enpl Carrier #1 Regional flights to WAS 20,067 11,037 Carrier #2 2 weekly flight to Florida 15,410 3,853 Carrier #3 2 daily flights to Florida 82,629 20,657 Total add’l annual enplanements 118,106 35,547


The estimated 35,547 visitor enplanements represent that portion of the 118,106 total annual enplanements that would be associated with non-area residents. For this estimate of additional economic impacts, it was assumed all three service scenarios would be achieved. The additional enplanements shown in Table 9 were considered in estimating potential economic impacts for the Airport.

3.2 APPROACH TO ESTIMATING ADDITIONAL ECONOMIC IMPACT

In order to estimate the additional economic impact Tweed New Haven Regional Airport could support if all identified air service improvement scenarios are realized, a literature review was undertaken to examine findings from similar analyses. Using information from published sources included in the literature review, a ratio of additional enplanements per direct/indirect job was developed. With this ratio, it was possible to estimate additional economic impact that could result from securing all additional airline service associated with the three service scenarios.

If the Airport is successful in attracting additional airline service, it would experience increased economic activity in the following direct and indirect categories: government, aviation, concessions, construction, and scheduled service visitors. (See Tables 2, 5, and 6) For this particular analysis, no additional impact from general aviation visitors was assumed in the potential future economic impact estimate.

3.2.1 Additional Economic Impacts of On-Airport Tenants/Businesses

If the Airport is successful in attracting scheduled service from three additional airlines and increasing its annual enplanements by an estimated 118,100 passengers, increased on-Airport employment would be likely in several categories. Within the government category, it is envisioned that increased employment, primarily for TSA and to a lesser extent Airport management, would be needed to respond to increased scheduled airline activity. Since the number of daily airline flights would experience only a small increase, no additional staffing for air traffic control was assumed.

In the aviation category, the largest increase in on-Airport economic impact would be associated with new employment supported directly by the three additional airlines. Some increase in employment for the FBO and its affiliates would also be likely since they are engaged in fueling scheduled service aircraft at Tweed New Haven Regional Airport.


Increased employment in the concessions category would also be likely with 118,100 additional annual enplanements. All existing rental car companies serving the Airport, both on- and off-Airport, would experience the need for increased employment. In addition, with total annual enplanements exceeding 150,000 in the potential demand scenario (approximately 36,000 current annual enplaned passengers and 118,100 potential annual enplaned passengers), the Airport would most likely be able to support a modest level of increased employment in the passenger terminal to support limited concessions activity.

Table 10 presents the additional direct employment that would be expected in the on-Airport tenant category if the Airport is successful in attracting the previously noted airline service. Salary and output information for tenants/businesses in each of the three employment categories (government, aviation, and concessions) secured as part of this study’s data gathering efforts were used to estimate direct payroll and output associated with additional Airport/tenant employment. This information is also shown in Table 10.

Table 10: Additional Direct On-Annual Airport/Tenant Economic Impacts Employment Payroll Output Government 18 $974,610 $1,838,340 Aviation 24 $1,008,000 $3,852,600 Concessions 6 $150,000 $710,000 Total 48 $2,132,610 $6,400,940

As shown in Table 10, if successful in attracting additional airline service and enplanements as discussed, the Airport could expect an additional 48 direct jobs. These jobs would have direct annual payroll estimated at $2,132,610 and annual direct output estimated at $6,400,940.

There would also be additional induced economic impact associated with the multiplier effect. The approach to estimating induced impacts for the Airport and its tenants was discussed in Section 2.2.1 of this report. The same approach was used to estimate induced economic impacts for the potential additional direct annual impacts shown in Table 10. Table 11 presents additional induced impacts for the Airport and its tenants.


Table 11: Additional Induced Annual On-Airport Airport/Tenant Economic Impacts Employment Payroll Output Government 12 $303,782 $2,063,173 Aviation 37 $958,305 $2,898,696 Concessions 2 $92,475 $540,231 Total 51 $1,354,562 $5,502,100

Table 12 summarizes additional direct and induced impacts that would be associated with Airport/tenant employment, payroll, and output if the Airport is successful in securing noted additional airline service. Note that, as stated previously, the Payroll amount and Output amount cannot be added together.

Table 12: Additional Total Annual On-Airport/Tenant Economic Impacts Employment Payroll Output Government 30 $1,278,392 $3,901,513 Aviation 61 $1,966,305 $6,751,296 Concessions 8 $242,475 $1,250,231 Total 99 $3,487,172 $11,903,040

As shown in Table 12, when additional direct and induced impacts for the Airport and its tenants are considered, if the Airport is successful in attracting new airline service, total annual additional economic impacts that would result are as follows:

! Additional annual total output/spending for the Airport and its tenants/businesses would be $11,903,004.

! Additional total annual employment for the Airport and its tenants and businesses would be 99.

3.2.2 Additional Economic Impacts of Capital Improvement Projects

In order to accommodate improved scheduled airline service using larger commercial aircraft (narrow body Boeing 737 or Airbus 320) flying longer stage lengths, certain runway and taxiway improvement projects are needed at the Airport. For the Airport to successfully attract two of the three additional airlines they are pursuing, new airfield improvements would be required. Regional aircraft, such as the 34-seat Saab and certain regional jets, can operate on HVN’s current runway.


To pave runway safety areas and improve the parallel taxiway system serving the primary runway, capital improvement projects totaling approximately $14,700,000 have been identified. These projects would be implemented over a two-year period, after environmental approvals and design are completed. This results in an annual capital investment of $7,350,000.

During the time the capital improvement projects are being implemented, the Airport will support additional employment, payroll, and output. Section 2.2.2 provided a discussion of the methodology used to estimate economic impacts associated specifically with capital improvement projects. Using the same methodology, this section provides an estimate of additional economic impact in the capital improvement project category.

Assuming that investments are made to accommodate the full complement of air service improvements the Airport is pursuing, annual investment to improve the runway and taxiway system of $7,350,000 would be needed over a two-year time frame. This annual expenditure in the capital project category would support 80 jobs with an annual payroll of $3,240,000. As these direct impacts enter the area’s economy, additional induced impacts would be created.

Table 13 shows total additional annual economic impacts that could be realized in the capital improvement project category, assuming the Airport is expanded to meet the needs of candidate scheduled airlines.

Table 13: Additional Total Annual Capital Improvement Project Economic Impacts

Direct Impacts Induced Impacts Total Impacts Output/Spending $7,350,000 $5,588,205 $12,938,205 Jobs 80 30 110 Payroll $3,240,000 $1,997,016 $5,237,016

As shown in Table 13 when both direct and induced impacts are considered, additional annual economic impact from capital improvement projects is estimated as follow:

! Additional annual total annual spending/output from capital improvement projects would be $12,938,205.

! Additional total annual employment supported by new capital improvement projects would be 110.


3.2.3 Additional Economic Impacts of Scheduled Service Visitors

As discussed earlier in this report, the Airport now annually serves an estimated 13,875 enplanements who are true visitors to the New Haven area. As shown on Table 9, with three scenarios of air service improvements, the Airport would accommodate 35,547 additional scheduled airline visitors on an annual basis. Most of these additional visitors would not be “net new” visitors. They already come to the area, but arrive via either another airport or different mode of transportation. For this analysis, it was estimated that 20 percent of the additional visitors could constitute net new visitors to the area. As a result, the additional annual economic impacts from scheduled air service visitor spending were adjusted to reflect this more conservative approach. With this adjustment, if the Airport secures service from three additional carriers, new annual visitor enplanements for the Airport are estimated 7,110.

Section 2.2.3 of this report outlines the approach used to estimate the economic impacts of scheduled airline visitor spending. Using this methodology, Table 14 presents both indirect and induced impacts that would be associated with additional scheduled airline visitor spending from the improved air service scenarios.

Table 14: Additional Annual Scheduled Service Visitor Economic Impacts Indirect Induced Total Spending/Output $4,266,000 $3,131,243 $7,397,243 Employment 72 28 100 Payroll $1,656,000 $1,066,629 $2,722,629

As shown in Table 14 when both indirect and induced impacts are considered, additional annual economic impact from scheduled air service visitor spending is estimated as follow:

! Additional annual total annual spending/output for scheduled service visitors would be $7,397,243.

! Additional total annual employment supported by scheduled service visitors would be 100.

3.2.4 Additional Total Annual Economic Impacts from Improved Air Service

If the Airport attracts additional scheduled air service identified in this report, economc impacts from additional annual Airport tenants/businesses, capital


improvements, and scheduled air service visitors could be expected. These economic impacts are in addition to the baseline economic impacts estimated earlier in this report. Total annual additional economic impacts follow in Table 15.

Table 15: Total Annual Additional Economic Impacts for Tweed New Haven Regional Airport Employment Payroll Output/Spending On-Airport 99 $3,487,172 $11,963,040 Capital Improvement 110 $5,237,016 $12,938,205 Scheduled Visitors 100 $2,722,629 $7,397,243 Total 309 $11,446,817 $32,298,488

As shown in Table 15 when all additional direct, indirect, and induced impacts from the on-Airport tenants/businesses, capital improvements, and scheduled air service visitor categories are considered, additional total annual economic impact is estimated as follow:

! Additional total annual spending/output would be $32,298,488.

! Additional total annual employment would be 309.

3.2.5 Distribution of Additional Impacts among Candidate Airlines

As discussed in this section, the Airport is seeking service from three additional scheduled carriers. Estimates of additional economic impact shown in Table 15 reflect potential new economic impacts that could be achieved if all three additional airlines provide service.

Using the additional annual economic impacts estimated in this section and summarized in Table 15, estimated total annual enplanements and visitor enplanements for each of the three new airlines (see Table 9) were used to determine the portion of all additional economic impacts that would be associated with each of the three individual carriers.

It is important to note that the additional annual economic impacts shown in Table 15 include impacts from capital improvement projects related to the Airport’s primary runway and taxiway system. For the assignment of additional economic impact to each of the three potential new carriers, additional economic impacts in the capital improvement category were assigned only to Carrier #2 and Carrier #3. Since Carrier #1 would be providing regional service to Washington, DC using scheduled


aircraft similar to those that currently serve the Airport, additional capital improvements to support this carrier were not assumed to be necessary.

Table 16 shows how additional annual economic impacts reported in Table 15 could be distributed among the three candidate carriers.

Table 16: Distribution of Additional Annual Economic Impact by Carrier Employment Payroll Spending/Output Carrier #1 48 $1,436,835 $4,316,662 Carrier #2 42 $1,590,744 $8,910,653 Carrier #3 219 $8,419,238 $23,490,621

The economic impacts shown for each carrier in the table above include all direct, indirect, and induced impacts. The results show the relative impact each carrier could have on increasing on-Airport tenant impacts and additional spending by scheduled air service visitors. In this analysis, Carriers #2 and #3 would also support additional economic impacts from capital improvement projects, since the larger aircraft these carriers fly would require certain upgrades to the Airport’s runway and taxiway system.

3.3 POTENTIAL ANNUAL ECONOMIC IMPACT OF TWEED NEW HAVEN REGIONAL AIRPORT

For this analysis, potential economic impacts for Tweed New Haven Regional Airport are the sum of the Airport’s baseline economic impacts (see Table 8) and the Airport’s additional annual economic impacts (see Table 15). Baseline economic impacts are benefits currently being supported by the Airport on an annual basis, estimated using survey and other information from the Airport’s current tenants and scheduled air service and general aviation passengers.

The additional economic impacts were estimated assuming that the Airport is successful in securing airline service from three additional carriers. These additional impacts represent a “what if” economic impact for increased airline service and scheduled air service passengers.

Combined, the baseline and additional economic impacts represent the total potential economic impact for Tweed New Haven Regional Airport. The estimate of potential


economic impact represents the annual economic contribution that the Airport could make to the area economy under an improved air service environment.

Table 17 summarizes potential annual economic impacts for Tweed New Haven Regional Airport. As this table reflects, if the Airport is successful in its efforts to improve its facilities and attract additional airline service and passengers, there is a significant upside to the positive economic impact that the Airport would have on the Greater New Haven economy.

The economic impact analysis has concluded that the Airport’s potential economic impact is estimated at $ 87.2 million in annual output/spending. This annual economic activity could help to support a total of 890 jobs in the Airport’s market area.

Table 17: Total Annual Potential Economic Impacts for Tweed New Haven Regional Airport Employment Payroll Spending/Output On-Airport 233 $8,416,890 $28,182,558 Capital Improvement 249 $11,848,749 $29,220,960 Scheduled l Visitors 296 $8,254,445 $21,832,793 GA Visitors 112 $3,025,144 $8,189,058 Total 890 $31,545,228 $87,245,369

Table 18 shows the difference in the Airport’s baseline versus its potential annual economic Impact.

Table 18: Comparison of Annual Baseline and Potential Economic Impacts for Tweed New Haven Regional Airport Annual Baseline Impacts Annual Potential Impacts Jobs 581 890 Output $55,186,901 $87,245,369

As shown in Table 18, if Tweed New Haven Regional Airport is successful in expanding air service at the Airport to accommodate three additional airlines, the area’s economy would benefit on an annual basis from 309 additional jobs and over $32 million in additional output.

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