What Is The Economic Value of Your Airport?

Presentation to the Association of California Airports Annual

ConferenceSeptember 14, 2011

Presented byDoug Svensson, President

Applied Development EconomicsWalnut Creek, California

Today’s Presentation

Why do an economic impact study? What approaches can be used and how

do we collect the data? What can the results tell us? How can we focus on the right questions

for each airport?

Introduction

Purposes of Airport Economic Impact Studies

Measure economic significance of airport for the region

Justify airport investment/expansion Measure significance of airport for specific

industries Formulate economic development/planning

initiatives Supplement airport system plan Obtain financial support from municipal

partners Determine allocation of matching funds

Introduction

Perception of Airport Impacts – the sectors that represent the obvious impacts

Commercial passenger service General aviation Charters

Introduction

Airport Operations – big source of direct employment

Flight crews Ground support Customer service Terminal personnel

Introduction

Other Airport Operations –extensive, even without passenger service

Fixed-base operations Aircraft maintenance/repair Air traffic control Security Ground transportation Administration

Introduction

Other Airport Property Tenants – big impact that flies under the radar

Retail and personal services Offices Visitor services• recreation/sports (skydiving, golf, etc.)• excursions• charters• lodging• car rental

Introduction

Other Airport Property Tenants – big impact that flies under the radar

Industrial parks Distribution Warehousing/customs Food processing Air courier services Military functions R&D

Methodology

ACRP Study – identified three main approaches

Input-Output Analysis Collection of Benefits Catalytic Effects

Methodology

Input-Output Analysis captures the multiplier effects of the airport on the region–three categories of impact:

Direct – Onsite business activity Indirect - Off-site business to business

transactions Induced – Offsite employee spending

Methodology

Indirect Effects

All businesses need suppliers in order to operate

Airports and their tenants buy lots of stuff!

Supplier relationships generate jobs throughout a region

Methodology

Induced Effects

Jobs = income Income = spending Spending = more jobs created

throughout the region

Methodology

Collection of Benefits – quantitative or qualitative measure of airport benefits

Time saved Costs avoided Capacity improvements from reliever

airports Stimulation of business Local fiscal benefits

Methodology

Catalytic Effects– spillover effects in terms of benefit to local economy

Investment Trade Economic productivity and fiscal

benefits

Methodology

Aviation Trends Subject to Study

Growth in air freight Non-aviation commercial development

co-located with airport Use of air transportation in supply

chains and just-in-time delivery Reliance on aviation by specific

industries such as R&D, biotech, banking, and universities

Economic Impact Examples: California

Air Transportation – The Multiplier Effect

Every job in air transportation creates an additional 1.7 jobs

2010 air transportation jobs: 41,200 Total impact of airport operations also

includes other industries

Economic Impact Examples: Stockton Airport

Identifying the Actual Impact

Passenger carriers hadstopped service to Stockton (service has since resumed)

Perception that airport was dead However, ADE study identified over

1,500 jobs on Stockton Airport grounds Process included individual business

interviews and data research

Economic Impact Examples: Stockton Airport

Study Findings Jobs at airport site touched on a broad

range of aviation and non-aviation businesses

Multiplier effect: over 1,000 additional jobs supported throughout San Joaquin County

Total wages: $96 million Total economic impact: $245 million

Stockton AirportRegional Business Revenues

and Wages

Economic Output Labor Income$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

Induced Effects

Indirect Effects

Direct Effects

Stockton AirportEmployment Impacts

Direct Effects

Indirect Effects

Induced Effects

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

Employment

Employment

Stockton AirportAirport vs. Tenant Impacts

Airport Operations Airport Tenants0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

Economic Output

Economic Output

Handout: Quick Impact Calculator

Direct Jobs

Fixed-base operationsAircraft maintenance/repairAir traffi c controlSecurityGround transportationAdministrationGround supportCustomer serviceTerminal personnelOther

TOTAL AIRPORT OPERATIONS JOBS(A) (B) (C) (D) (E) (F) (G)

Direct Jobs

Jobs Multiplier

Total Job Impact (A x B)

Payroll Multiplier

(000's)

Total Payroll Impact (C x D)

Economic Output

Multiplier (000's)

Total Economic

Output (C x F)

AIRPORT OPERATIONS (from above) 2.7 $65.9 $235.3

Industrial 3.6 $68.9 $259.7Distribution 2.1 $62.8 $167.2Retail/Food Service 1.4 $37.5 $97.5Business Park/Offi ce 2.1 $60.5 $183.0Lodging 1.6 $43.0 $122.4

Subtotal Tenant/Patron Economic ImpactTOTAL AIRPORT ECONOMIC IMPACT

AIRPORT PROPERTY TENANTS/PATRONS

ECONOMIC IMPACT ANALYSIS

1. Fill in the direct jobs column from locally available data.

ONSITE AIRPORT OPERATIONS ACTIVITIES INSTRUCTIONS:

4. Subtotal the airport tenant/patron figures and then add to the airport operations figures to get total airport economic impact.

3. Multiply the total jobs by the payroll and economic output multipliers to get those values.

2. Multiply the total direct jobs from airport operations and the direct jobs from each type of business tenant by the jobs multipliers (column B) to get total jobs in column C.

Conclusion

Potential Pitfalls/Objections Cost of the study Collecting sufficient data Complexity of economic models Lack of standard methodologies Omission of offsetting impacts Need for periodic updates Difficulty of corroborating study results

Conclusion

Potential Benefits/Illumination Gaining the big picture perspective of an

airport’s true impact Documenting the airport benefits to the

community Broadening the airport’s benefits beyond its

boundaries Linking the airport to economic development

goals Defining an airport’s role as an important

resource Focusing discussions about an airport by

providing hard numbers

Thank You!

Discussion

Methodology

Developing Issues that Require Further Study

Fractional ownership Globalization Emergence of very light jets