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44 C H A P T E R 7 Structured interviews were conducted with representatives of airports, business associations, and corporations to ver ify and enrich the results of the quantitative research. In the course of this project, the research team conducted 76 inter views with companies that rely on business travel and air cargo shipments, as well as business organizations, airport administrators, and representatives of alliances of airports, airlines, and GA users. The purpose of the outreach program was to review observations and conclusions suggested by data research in âreal worldâ contexts. Moreover, an assessment of nonÂquantifiable national benefits was conducted to ensure that this research reported the full breadth of the national benefits of airports. These impacts span various industries, communities, and locations and are important to recognize alongside the quantitative impacts. Whether aviation supports the research of a university group, the saving of a life, or the protection of national borders, it is critical to health, safety, and welfare in ways that cannot be appropriately reflected in economic impact calculations. A complete accounting of the qualitative research conducted for this project is presented in Appendix 4. 7.1 Non-Quantifiable Impacts Qualitative benefits of U.S. airports can be recognized at many levels, whether it is local, regional, statewide, or national. Numerous agencies, individuals, and populations benefit from the qualitative impacts of U.S. airports. These impacts span various industries, communities, and locations and are impor tant to recognize alongside the quantitative impacts. Aviation is critical to our health, safety, and welfare in ways that econo mic impact calculations cannot reflect. Airports generate a wide range of activities that do not involve monetary transactions and they sponsor activities in which the full value is often not reflected in money circulated in the economy. Such activities do not result in economic impact benefits, or the benefits that are counted understate the full values attributable to airports. An example of the latter is medical air evacuations. The economic impacts of medical evacuation services can be estimated by accounting for oper ating costs of the services and the costs of the eventual medi cal care. However, economic impact analyses (distinct from benefitâcost analyses) do not factor in the value of life or pain and suffering. An example of a nonÂmonetary, community outreach activity is airportÂproduced air shows offered as free entertainment, which often does not result in new dollars being brought into the United States. 7.2 Business Interviews The research team conducted interviews with business own ers, staff of business organizations, and airport personnel to verify, modify, or enrich the MFP findings. Business interviews with firms in sectors highly dependent on air transportation best illustrated how air service can improve productivity for offÂairport businesses. For companies where reliance on air travel is moderate or low, the qualitative analysis was less con clusive as many other factors also are important to location decisions and productivity. However, for heavily air reliant businesses, the addition or loss of direct air service affects the cost of doing business and the opportunities for market expansion within the United States and in other countries. These sectors include manufacturing; professional, scientific, and technical services; finance; and the import/export of per ishable foods. The interviews also confirmed the importance of nonstop domestic and international destinations. Additions to air ser vice at an airport can open up markets previously not available to offÂairport businesses. The interviews found that increased air service are most important to businesses that already use air transportation extensively for customer service and shipments. Cities where airlines have closed hubs experienced large losses in connectivity that resulted in many company reloca tions away from the area and difficulties in attracting new Qualitative Research
45 firms to the area. However, cities with expanding hub air ports experienced the opposite effects. For example, indus tries located in Atlanta have been direct beneficiaries of a decision by Delta Air Lines to add connecting flights at the airport. Airports that serve as international gateways also are magnets for businesses that require direct intercontinental air service. Interviews with business executives and represen tatives of business organizations (such as chambers of com merce and industry associations) were conducted to provide a practical perspective to the data intensive economic impact analysis and the analysis of airport connectivity. Business Travel Interviews supported the importance of airport connectiv ity for business travel. Priorities identified by business travelers are listed below. Note that the first three bullets are directly applicable to connectivity: ⢠Frequent domestic and international service ⢠Choice of nonstop domestic and international flights ⢠Concentration of flights to and from particular markets during peak hours ⢠Reliable schedules with minimal delays ⢠Ease of rush hour commute to and from the airport ⢠Lower relative ticket costs, with competition on popular routes in order to reduce fares Though not surprising, the interviews confirmed that air travelers prefer direct flights between their particular city pairs of choice, and they want a variety of carrier options in order to ensure competitive pricing for tickets. Demand for tourism and travel contribute heavily to an airlineâs cityÂpair decision. For example, inbound tourist travel from Asia to San Francisco has supported an increase in flight frequency. In 2013, 150,000 Chinese travelers arrived at Bostonâs Logan Airport via an intermediate city airport. Direct air service from Beijing to Boston started in 2014. Boston is also pursu ing a direct flight to Tel Aviv because more than 200 busi nesses in Massachusetts have Israeli connections. In addition, foreign flag carriers are introducing service to U.S. destina tions that are not U.S. carrier international hubs. For exam ple, Japan Airlines, Copa Airlines (based in Panama), Turkish Airlines, Emirates (based in Dubai), and Hainan Airlines (based in China) chose Boston as a new nonstop destination. Interviews confirmed that the frequency of flights and the number of nonstop flights can improve competitive stand ing, improve productivity, and reduce costs by optimizing employee time. In this context as well, international flights make it possible to develop global markets and partner ships. (The availability of international passenger flights also makes it possible to transport highÂvalue air cargo as belly cargo.) FaceÂtoÂface meetings with customers, company personnel, and suppliers are a vital part of business success and, in this context, air service is extremely important. In addition, it was pointed out that reliable nonstop air service and good con necting service supports tourism and improves the likelihood of attracting companies to a region. The use of air travel for sales and onÂsite service continues to be the preferred mode for some internal company meet ings or meetings with clients and customers, except, perhaps, in shortÂhaul markets where air travel has become more lim ited and ground transport options save time. Companies that serve remote locations also depend on private or commercial air service. The preferences for business air travel is with the recognition that Internet services are replacing the need for some long distance business trips. Cargo In terms of cargo, air transport is the most expensive mode. In most cases, it is the choice of last resort, except for perish able goods, highÂvalue products (notably, but not limited to, technology), justÂinÂtime parts and supplies, other time sensitive delivery due to long distances or production delays, or explicit requests by customers. Interviews confirmed that shippers select a mode of trans port based on cost or scheduled delivery time to the desti nation. Once a shipment is consigned to a carrier or logistics firm, the firm responsible for transportation makes the deci sion whether to carry the shipment by air, ground, rail, or ship. Technology improvements have streamlined modal deci sions and itineraries for cargo shipments. Technologies that support timeÂdefinite air delivery have been adapted by many ground delivery services provided by integrated carriers, such as FedEx and UPS. This has allowed companies to select time definite ground transport as the lower cost option to air trans port. The integrated carriers have responded to this shift by expanding ground transport capabilities and delivery options. Integrator agreements with the U.S. Postal Service and access to postal distribution networks are also offering companies an even lower cost ground shipping option. Like the purchase of air travel, product shipment has become a commodity busi ness. Even when a company has a contract carrier in place, the logistics department will search for the lowest cost option from that carrier as pricing changes constantly. Moreover, logistics software is also available to company shipping departments to search for the lowest cost option for transport and to steer internal company shipping requests to the lowest cost option that meets delivery requirements. This software is modifying old habits that air transport is the only assured way for timeÂdefinite delivery and tracking capability.
46 Trade-offs Between Air and Other Modes Interviewees noted tradeÂoffs, particularly in cargo. For exam ple, for perishable goods (e.g., flowers, drugs, fish) air transport does not usually provide climate controlled environments, but shortens the time the product is at risk of perishing. Otherwise, refrigerated trucks and rail provide more controlled environ ments. Heavy manufactured parts and equipment tend not to be shipped by air unless absolutely necessary.34 To control trans portation costs, companies are more likely to locate in their sales region for service and shipping reasons. A good example of this trend is the automotive manufacturing industry in which Japa nese and German auto makers are producing their U.S. destined automobiles almost entirely in the United States. In practice, many location decisions are not dependent nec essarily on air access. Instead, they are determined by the own erâs desire to live in a particular place, access to venture capital, and/or the locationâs desirability to the employees required to produce the product. For products designed in the United States and manufactured in Asia, business location is driven by access to venture capital (VC). For example, the companyâs business is based in San Francisco near its VC firms. The com panyâs factory in Asia is located within a twoÂhour drive from a major airport with direct services from San Francisco Inter national Airport. Many VC firms prefer to do business with companies that are within driving distance of the VCâs office. In small to medium size businesses with domestic custom ers, people travel via car to an airport, then fly to another air port closest to the destination, then travel via rental car to the destination. Nonstop flights are best and closer to the destina tion is better. In locations where nonstop service has been discontinued and there is a direct flight airport option within driving dis tance, travelers will often drive to a hub airport in lieu of taking a connecting flight. 7.3 Interviews with Airport Managers and Staff of Aviation Organizations Interviews with professional membership organizations provided insight into the creation and the end use of the eco nomic impact data created for the aviation industry. Many membership organizations commission reports from private consulting firms either independently or cooperatively with other organizations. The FAA and the U.S. Census Bureau pro duce monthly and annual reports that are also valued through out the aviation industry. Primarily, the economic data is used to lobby for policy changes, funding, and regulatory initiatives at the federal level. Reports and presentations are developed for use at the state level and for the media. Catchphrases are developed from benchmarks to communicate the value of aviation in simple and direct terms. The aviation organizations interviewed all reported that they use the economic impact data primarily to create mes sages to legislators and regulators on Capitol Hill. In addition to advocating for funding to maintain airports or to pro mote additional investment in specific airports, other issues include FAA Pilot Rules, levels of customs staffing at U.S. Ports of Entry, business aviation use, the federal cap on local passenger facility charges and airfield access for pilots of GA aircraft. Some organizations said that they use economic impact data to address state elected officials, including governors and legislators, when aviation topics are on the state agenda. Others reported getting involved in airportÂspecific issues when there are actions being considered that will result in restricting airport access or reducing operational capacity. At least one organization also reported an occasional need to educate its members about the economic impact of aviation. Interviews with airport administrators were conducted to also confirm and enhance the data collection from the initial project research and literature review. Research reported in the early phases of this project identified computer and electronic products, miscellaneous manufactured commodities, machin ery, medical equipment and supplies, and apparel and accesso ries as top imports by industrial sector. The export list is similar. During the interview process, all of these items were identified as significant to airport cargo operations. One item added to the initial research was the importance of cargo movement related to perishable products including flowers, fruits and vegetables, and seafood. Several airport executives reported associated business development at or near their airports as a result of the cargo operations, including freight forwarders. Interviews also confirmed use of airports for business travel. These businesses include entertainment, technology, finance, pharmaceuticals, communications, automotive, health care, and real estate companies. There was confirmation that For tune 500 companies locate near airports for employee busi ness travel, although privacy protocols at each airport dictated that specific businesses or travelers were not generally known. Some anecdotal stories support location of sports teams and media operations near the airport. It was difficult to directly confirm research on the topic of industryÂsensitivity to airport access and industries that pur chase large amounts of aviation service. One exception was the confirmation by the Van Nuys Airport manager that a large percentage of the airportâs GA activity was related to the motion picture industry. Several airport managers were aware of Fortune 500 company headquarters in their areas. They could also report on the high level of corporate aviation use as a percentage of overall operations. However, the airport man agers at the three GA airports were emphatic about the need for discretion with corporate clients and could not say specifi cally which companies traveled in and out of their airports.
