What Is The Economic Value of Your Airport?
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Transcript of What Is The Economic Value of Your Airport?
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