Airport Economic Impact Methods and Models (2008)

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63 Airport Technology and Planning Group, Inc., The Economic Impact of Aviation in Pennsylvania, Bureau of Aviation, Penn- sylvania Department of Transportation, Harrisburg, n.d. This study measures the economic benefits of the state’s 150 air- ports within three airport segments—scheduled service airports, general aviation airports, and overall business dependence. Total economic benefits for the state’s scheduled service and general aviation airports was measured by total airport-related jobs and aviation-related output or spending (either capital improvements or spending by visitors arriving via an airport). To arrive at a total eco- nomic impact, these estimates were multiplied to account for suc- cessive waves of benefits. The authors also surveyed businesses to estimate the “value added” benefits of the state’s airports based on the number of jobs that rely on the availability (or access) to an air- port. Qualitative benefits (such as health, safety, and agricultural) are also provided. Analyzing the Economic Impact to the City of Fayetteville from Operations and Capital Improvements at Drake Field, Center for Business and Economic Research, Sam M. Walton College of Business, University of Arkansas, Fayetteville, 2005. This study considered the change in total direct, indirect, and induced economic impact related to the loss of commercial air ser- vice at Drake Field in Fayetteville, Arkansas. The authors measured the quantitative economic value of the facility in terms of the employment, economic output (purchases of goods and services in the region resulting from activity at the airport), and the local taxes that the airport and associated businesses produce. They then used an IMPLAN input–output model to determine the three types of impacts (direct, indirect, and induced). Local tax impacts were cal- culated by generating the local tax burden per employee (total tax revenues/employment base). This estimate was then multiplied by the estimated number of jobs generated by the airport. A Study of the Current Economic Impact of the Blue Grass Air- port on the Lexington–Central Kentucky Area, Center for Busi- ness and Economic Research, Gatton School of Business and Economics, University of Kentucky, 2001. This study comprises a traditional economic impact analysis that examines airport spending, employment and worker incomes, as well as other spending in the region that could be attributed to the airport. Direct on-airport impacts (from employment, payroll, and revenue/sales) were estimated by surveying airport businesses. Indirect impacts were calculated using a Micro IMPLAN model, with the total economic impact being the sum of the direct and in- direct effects. The economic effects of passengers (business and leisure) and regional business usage impact were calculated in a similar fashion based on origin, destination, and spending surveys (for airport passengers) and usage surveys for regional business establishments. Beyers, B. and S. J. Hyde, King County International Airport/ Boeing Field: 2003 Economic Impact Study, Airport Division, King County Department of Transportation, Seattle, 2003. This analysis used traditional methods to estimate sales, employment, labor income, and regional purchases by tenants at the King County International airport and was collected through tenant surveys. To calculate indirect and induced economic impacts, direct estimates of sales, employment, and labor income were inputted into an input– output model. One non-traditional method employed estimated the amount of “new money” (non-local demand for airport goods or services that could not be satisfied if the airport were not there) activ- ity generated by the facility. Estimated “new money” economic activity was generated through data collected via tenant surveys. Breitenbach Weiss and Martin Associates, The Local and Regional Economic Impacts of Milwaukee County’s General Mitchell International Airport 2005, Milwaukee County, Wis., 2005. This report is unique in its assessment of the economic impact of the General Mitchell International Airport in that its assumption that the impact of an airport on the local, regional, or national economy cannot be reduced to a single number. Furthermore, in order to pro- vide the most credible measurements of the facility’s impact, only direct measurement (i.e., no input/output models used) were incor- porated. Instead, airport activity creates several impacts including revenue impact, employment impact, personal income impact, and tax impact, with these impacts not being additive. To measure the impacts, the methodology was based on interviews, local economic data, and airport statistics. Bunting, D., et al., The Economic Impact of Spokane Interna- tional Airport, The Board of Spokane International Airport, Washington, 2006. To estimate the economic impact of the Spokane International Air- port on the regional economy (Spokane and Kootenai counties), the authors looked at five components of airport activity: • Visitors • Facility tenants • Business park tenants • Capital spending • Internal operations The authors used intercept surveys (conducted at three separate times) of visitors departing the airport to estimate visitor spending. Surveys were also distributed to businesses at the airport, as well as firms in the airport’s business park. Interestingly, the study did not attempt to quantify the value of the airport to locally based businesses (besides airport tenants) or residents traveling for personal reasons. As with many input–output studies, this study provides three measures of the economic size of the airport—output (sales), wage income, and jobs. Additionally, the study estimated the amount of federal, state, and local taxes generated by the facility based on the total impact of the airport. Center for Economic Development and Business Research, Eco- nomic Impact of Salina Municipal Airport and Salina Airport Industrial Park, Salina Airport Authority, Salina, Kans., 2007. This relatively simple study examines both the economic and fiscal impacts (for the current year, and forecasted over ten years) associated APPENDIX C Annotated Literature Review

64 with the Salina Municipal Airport and Salina Airport Industrial Center. The Salina Airport Authority provided business, employ- ment, payroll, and tax data paid by airport businesses used in the study. The authors based their analysis on many assumptions in- cluding average passenger overnight stays, proportion of airport employees living in Salina, and proportion of employee payroll spent on taxable retail goods—all of which have no source. Total current year economic impacts were calculated by multiplying direct airport employment and payroll figures by RIMS II multipli- ers. The total economic impact estimates were then simply multi- plied by ten in order to calculate the forecasted ten-year impact. The net fiscal impact was calculated by subtracting public ser- vice costs from the estimated tax (sales, income, property taxes, and other sources) revenues generated by the airport. It was unclear as to how the authors attributed the cost of providing public services to the airport. Direct and indirect impacts from visitor spending and airport operations (airport fuel sales, capital expenditures, and pay- roll) were estimated based on passenger and business surveys and airport data. Cooper, A. and P. Smith, The Economic Catalytic Effects of Air Transport in Europe, Eurocontrol, 2002. Although most airport economic impact studies concentrate on the direct, indirect, and induced contributions of airports, the authors suggest that economic catalytic (or spillover) impacts have received relatively little attention and not been quantified. This study devel- ops a methodology for quantifying the catalytic effects of Europe’s airports to 2005, and projected to 2025. Catalytic effects are defined as the net economic effects (e.g., on employment, incomes, gov- ernment finances, etc.) resulting from the contribution of air trans- port to tourism and trade and the long-run contribution to produc- tivity and gross domestic product (GDP) of growth in air transport usage. The authors further distinguish these effects into demand- side (through the transportation of tourists and goods) and supply- side (long-term contribution to productivity and GDP growth) cat- alytic effects from air transport. The authors conclude that the historical demand-side effects of air transport in Europe have been minimal. However, the supply- side catalytic effects have been significant in Europe, and are likely to continue to contribute significantly into the future. Eclat Consulting, Economic Impact Study, Newport News/ Williamsburg International Airport, Newport News, Va., 2006. The methodology used in this study to calculate the economic impact of the Newport News/Williamsburg International Airport is unlike any other study reviewed in this analysis. In calculating the direct on- and off-airport economic impact, the authors used an anticipated spending estimate per passenger multiplied by the num- ber of passengers using the facility. The estimated number of jobs created by the airport was calculated in a similar way based on a correlation between the number of jobs and passengers using the facility (jobs per one million passengers). The report provides an estimate as to the amount of state and local taxes generated by the airport; however, the methodology used to calculate this tax rev- enue estimate was not provided. Economic Development Research Group, Inc., Logan Interna- tional Airport’s Evolving Role in the New England Economy, The New England Council, Boston, Mass., 2001. As one of the most comprehensive airport economic impact studies reviewed, this report provides a vast array of economic facts which link Boston’s Logan Airport to the New England economy. Pro- vided mostly by secondary sources, the study provides exceptional amounts of quantitative information on the economic significance of Logan’s cargo and passenger customer base. Additionally, the report provides qualitative assessments in the form of testimonials from interviews of representatives of local companies that utilize Logan in their firms’ operations. More traditionally, estimates are provided as to the contribution of the airport to the economy relat- ing to on-airport activities (and related spin-off activities), as well as off-airport visitor activities (and related spin-off activities). Although the report is an excellent example of how to quantify the link between an airport and the economy, it falls short on provid- ing insights as to the methodology used to generate or formulate its conclusions. Economic Development Research Group, and Mead and Hunt, Economic Impact Study: Preliminary Final Report, Capital Region Airport Authority, Lansing, Mich., 2004. This comprehensive report quantified the economic impact of the Capital City Airport on each of three counties in the Tri-County Region, as well as the combined region. Like many studies, surveys were relied upon in order to collect wage, employment, and spend- ing data. In this study, surveys were distributed to airport managers and tenants, airport travelers (both residents and visitors), and, regional businesses and institutions. This report is comprehensive in that it measured six types of business activities that comprised the airport’s total economic impact including: • Airport-based economic activities, including airlines and ter- minal services • Off-airport businesses serving airport travelers • Airport-dependent businesses that rely on the airport to trans- port personnel and cargo • Off-airport businesses that provide goods and services to the airport, airlines, other on-airport agencies, and airport-depen- dent businesses • Off-airport businesses that provide goods and services to employees who earn their income on the airport • Tax revenues generated for the local economy by all of these types of businesses activities. Although some airport economic impact studies do not aggre- gate each of the individual economic measures (in this case the six types of business activities), in this case, this study aggregated the total of each measure as an overall airport economic impact estimate. Economics Research Associates, Economic Impacts, Costs and Benefits of Contra Costa County Airports, Contra Costa County, Calif., 2000. This comprehensive report determined the economic impact of Contra Costa County’s two airports—Buchanan Field Airport and Byron Airport. The report had four purposes including estimating the direct, indirect, and induced economic and employment impacts of the airports on the county economy; projecting future impacts based on hypothetical development scenarios at each airport; iden- tifying other qualitative and quantitative benefits and costs of the airports; and estimating the impact of the airports on surrounding property values. The authors measured five mechanisms through which the airports directly impact the Contra Costa economy: • Operating expenditures by airport businesses • County operating expenditures on airport administration and operations • Visitor expenditures (student pilots, pilots, passengers, busi- ness visitors, etc.) • Property taxes • County and airport business expenditures on construction and capital improvements. The report provides an estimate of the total economic impact of the airports including direct, indirect, and induced jobs created by the facilities.

65 Flint Communications, Economic Impact of Aviation in North Dakota, North Dakota Aeronautics Commission, Bismarck, 2004. Since 1994 and at intervals of every five years, the North Dakota Aeronautics Commission has completed an examination of the avi- ation industry’s economic impact on the state. The methodology used in the study involved surveying aviation industry groups including: • Commercial service airport tenants • General aviation management • Agricultural sprayers • Fixed-base operators (FBOs) • Air travel visitors • Commercial service airports • Travel agencies • Hotels/motels • Aviation manufacturing establishments. Although most studies include direct, indirect, and induced impacts, this study measured only the direct and induced economic impacts related to employment, and aviation-related expenditures. Harrah, J., et al., Wichita Mid-Continent Airport Economic Impact, Wichita State University, Wichita, Kans., 2003. Created more as a summary collection of economic and fiscal ben- efits, this report provides an examination of the economic impact of the Wichita Mid-Continent Airport. The study calculates direct eco- nomic impact based on total airport employment and payroll, to which total impact is estimated by using RIMS II multipliers. Net fiscal benefits are also provided for the airport based on estimated local revenue (property taxes, etc.) compared to estimated local costs to provided services and infrastructure to the airport. HNTB, The Economic Impact of Airports in Colorado, Division of Aeronautics, Colorado Department of Transportation, Den- ver, 2003. This report quantifies the economic impact of Colorado’s public use airports on the state economy. The methodology used measures the on-airport impacts, visitor spending and spin-off impacts in terms of three indicators: total jobs, wages and business sales. The study also suggests that Colorado’s airports provide qualitative benefits that add to the residents’ quality of life in terms of public safety, air medical transport, and recreation to name a few. Kaskie, S., Twin County Airport Economic Impact Analysis— Detailed Report, Marinette County UW–Extension, Menominee, Mich., Mar. 2007. This simple and understandable study examines the economic impact and fiscal benefits associated with the Twin County Airport in Menominee, Michigan. The author employs a traditional direct– indirect approach to examining the impact associated with the facil- ity, but prefers to use “initial” and “multiplier” impact terminology. Like most studies, airport businesses were surveyed to generate on-site employment, wage, and spending estimates (initial impact). These estimates were multiplied using a Social Accounting Matrix model (multiplier impact). The total economic impact was calcu- lated by the sum of both the initial and multiplier impacts. Interest- ingly, the study does not include the economic impact of capital improvement spending and related construction employment in the total economic impact figure, but provides an estimate of the fiscal benefits from the facility attributed to property and personal prop- erty taxes. Martin Associates, The Local and Regional Economic Impacts of Hartsfield Atlanta International Airport, Atlanta Department of Aviation, Atlanta, Ga., 1997. Similar in methodology to the economic impact study of General Mitchell International Airport (prepared by Breitenbach Weiss and Martin Associates) this study starts with the premise that the eco- nomic impact of an airport on the local, regional, or national econ- omy cannot be reduced to a single number, and only uses direct measurement (i.e., no input/output models used). The model used to examine Hartsfield Atlanta International Airport analyzes several impact categories including revenue impact, employment impact, personal income impact, and tax impact with these impacts not being additive. To measure the impacts, the methodology was based on interviews, passenger surveys, local economic data, and airport statistics. PA Consulting Services, Inc., and Economic Development Research Group, The Economic Role of Nashville International Airport, Metropolitan Nashville Airport Authority, Nashville, Tenn., 2001. The methodology used to estimate the economic impact of the Nashville International Airport is similar to many studies and was comprised of three methods. First, the authors reviewed data and information from previously completed reports. Second, wage, employment, spending, and origin and destination visitor data were collected through surveys of airport management, visiting passen- gers, airport tenants, and airport-reliant businesses. Finally, induced impacts were estimated using the IMPLAN model. The report sum- marizes the total economic impact of the airport in terms of jobs, sales, and wages. Separately, the report provides a summary of the airport’s economic contribution (sales, jobs, and wages) related to capital spending at the facility. Ricondo and Associates, Inc., Economic Impact Study: South- west Florida International Airport and Page Field General Avia- tion Airport, Lee County Port Authority, Fort Myers, Fla., 2006. This report analyzes the economic impact related to two airports (Southwest Florida International Airport and Page Field) in south- west Florida (Lee County). The economic impacts associated with the airports were classified into two impact types: direct (economic activities that would not have occurred in the absence of the airport) and induced (multiplier effects of the direct impacts). Typical of most studies, three separate components of economic impact were measured including: • Output: annual gross sales, taxes, capital expenditures, visitor spending, and airport management/government payroll • Payroll: the annual gross salary paid to all workers • Employment: full-time equivalent employment positions. Unlike many studies, this report clearly states that output and employment impacts should not be summed because the elements of economic benefit related to payroll are also contained to some extent in the output measure. As such, the reader is informed that each of the three impact categories (output, payroll, and employ- ment) stands alone as a measure of the airport’s total economic impact. SH&E, The Economic Impact of Aviation in Arizona, Aeronau- tics Division, Arizona Department of Transportation, Phoenix, n.d. To calculate the economic contribution of the aviation industry in Arizona, the authors used three indicators including payroll, employment, and economic activity. The first two indicators, pay- roll (wages and benefits of all persons whose jobs are directly and indirectly supported by aviation) and employment (total full-time equivalent jobs that are directly or indirectly supported by aviation) are common economic indicators. However, economic activity indicator, as defined, is very broad and includes “the value of all goods, services, and capital expen- ditures that can be linked to aviation . . . measured as sales for

businesses, operating budgets for government agencies, and spend- ing by air visitors.” Shoening, N., Economic Impact Study: Port of Huntsville 2003, Port of Huntsville, 2003. Data for this economic impact study came from several different sources including: • Surveys of 91 airport tenants and government offices and 132 businesses located within two miles of the airport • Other tenant data from previous surveys. The surveys generated data on the number of employees, total payroll, the county of residency of their employees, and total capi- tal investments made in 2002. These data were then used to estimate the direct economic impact of the facility. Indirect impacts were cal- culated using RIMS II multipliers supplied by BEA. This study could be considered a traditional example of an economic impact analysis for an airport, with the only exception being that passenger visitor spending was not factored into the study. Sparks Bureau of Business and Economic Research, The Eco- nomic Impact of Memphis International Airport, Center for Manpower Studies, University of Memphis, Memphis, Tenn., 2005. This analysis measures the dollar benefits that result from aviation- related activities at the Memphis International Airport—the coun- try’s largest airport cargo airport (by volume) and Memphis’ largest employer. The scope of this analysis is wide in order to cover the many functions of the airport, including cargo and passenger (domestic and international) operations, airport tenants, capital improvements and airport businesses that use or are affected by air- port activities and services. The explanation of the methodology used in this analysis is brief, indicating that it “involves estimating the direct and indirect economic impact . . . primarily through the use of U.S. Bureau of Economic Analysis RIMS II output, earnings, and employment for the Memphis MSA.” There was a wide range of data sources used within this study although some of the sources were unclear (total cargo volume and revenue per passenger mile, for example). Data sources included financial and enplanement data provided by the airport, U.S. DOT passenger origin and destination surveys, and surveys of local businesses. Teterboro Airport Economic Impact Study: Greater than the Sum of its Parts, Port Authority of New York and New Jersey, New York, N.Y., 2005. This study evaluates the direct, indirect, and induced effects of avi- ation services on the Bergen County economy by looking at four major activities: • Operational impact: Assesses the impact of on- and off-airport firms that provide a range of services to airport users. • Investment impact: Assesses the economic benefits from investment in the airport infrastructure. • Visitor impact: Evaluates the contribution made by visitors/ business people who come to the region by air. • Airport-dependent industries impact: Explores the indirect impact of businesses that do not provide airport services but are located in the neighborhood specifically because of the airport. This study is unique in that not only does it provide an estimate of the economic impact of the airport, but it provides examples and/or testimonials of (non-aviation-related) businesses that depend on the airport within their business operation. These businesses include financial institutions, lodging facilities, dry cleaners, and restaurants. 66 Estimating the Regional Economic Significance of Airports, U.S. Department of Transportation, Federal Aviation Administra- tion, Washington, D.C., 1992. Written primarily for airport managers and planners of small- to medium-sized public use airports whose budget or time constraints require an in-house economic impact analysis, this report provides advice on how to measure the importance of an airport to the econ- omy of the surrounding area. With general methodologies empha- sized rather than specific instructions, the procedures provided in the report evaluate the economic significance of an existing or pro- posed airport. Two indicators are provided to measure an airport’s importance—economic impact (employment and payroll) and its transportation benefit (time saved, travel cost, business stimulation, recreation, and access to the national airport system). The Economic Impact of a Major Airport, Urban Land Institute, Washington, D.C., 1993. Rather than examining the economic impact of an existing airport, this study was written as a primer for forecasting the number of jobs that may be generated due to the construction of a new air- port, or expansion of an existing airport. This study’s methodol- ogy is based on six parts (which move from simple to the most complex): • A model to forecast the number of direct jobs at an airport (airline jobs, airport and cargo jobs, etc.). • A methodology to forecast the number of indirect jobs (jobs created by air visitors to the region such as hotels, restaurants, etc.). • An input–output model to forecast the number of induced jobs (multiplier jobs). • A method to forecast the number of catalytic jobs (jobs attracted to the region for reasons on proximity). • A method to determine the residential distribution of job hold- ers throughout the region. • A generally accepted formula within the construction indus- try to estimate construction jobs. The study promotes methods based on complex statistical rela- tionships of enplanements, visitor expenditures, and input–output models to forecast and geographically allocate jobs, as well as development activity. Virginia, Commonwealth of, 2004 Virginia Airport System Eco- nomic Impact Study: Final Technical Report, Virginia Depart- ment of Aviation, Richmond, 2004. Using a base year of 2001, this study quantifies the economic impacts of the public use airports in Virginia, and describes the rela- tionship between the airports and Commonwealth’s economy. Although most studies analyze two or three impact categories, this study differs in that it quantifies total economic impacts based on four impact categories, rather than the usual three: • On-airport direct impacts: Impacts that would not occur if the airport did not exist (e.g., airlines and FBOs). • Off-airport direct impacts: Financial transactions that occur primarily off-site and are associated with visitor spending (lodging, food, entertainment, etc.). • Airport-dependent impacts: Businesses that are dependent on an airport and would relocate or suffer substantial loss if the airport were not available • Spin-off impacts: Calculated using impact multipliers which are used to estimate the recycling of dollars through the economy. Each of the four impact types was measured in three ways: jobs, wages, and economic activity (measured as business sales, annual

67 budget, or visitor expenditures). Data were obtained via surveys of the following groups: • Airport managers • Airport tenants • Airport-dependent businesses • Corporate-based aircraft owners • Air carrier visitors • General aviation visitors. Wilbur Smith Associates, Inc., The Economic Impact of Kansas City International Airport, Kansas City Aviation Department, Kansas City, Kans., 2001. This study examines the economic contribution of the Kansas City International Airport and, like most studies, quantifies the impacts relative to employment, payroll, and output (i.e., spending). Impacts were measured for two aviation-dependent groups, including on- airport tenants and visitors traveling to the Kansas City region via commercial service airlines. Data for the study were obtained through airport tenant and passenger surveys. Again, like most stud- ies, economic contributions were calculated using an input–output model which examined first round (direct and indirect), second round (induced), and total (sum of first and second round) impacts. Wilbur Smith Associates, Inc., Alabama Airports: Gateway to Economic Growth, Alabama Department of Transportation, Aeronautics Bureau, Montgomery, n.d. Similar to other statewide airport system impact studies, the esti- mation of the economic benefit of Alabama’s airport system is mea- sured by three indicators including employment (number of jobs in the aviation industry and the share of those employed in sectors that support aviation or aviation use), payroll, and output. This study is unique in that, for employment indicators, it equitably uses only a share of those sectors that support aviation or aviation use. Wisconsin, State of, Economic Impact: Austin Straubel Interna- tional Airport (GRB), Green Bay, Wis., Bureau of Aeronautics, Wisconsin Department of Transportation, Madison, n.d. This study of the economic impact of the Austin Straubel Interna- tional Airport in Green Bay, Wisconsin, is an example one in the series of impact studies completed by the Wisconsin DOT, Bureau of Aeronautics for airports in the state. Each of the studies was com- pleted using a similar format which included: • Airport location, service profile, current facilities, and activ- ity trends; • County economic profile; • Economic impact methodology outline; • Summary of economic impacts; and • Summary of other airport benefits. For each airport, the direct impact of the airport, the direct impact of airport users, and the multiplier impact were estimated expressed in terms of their effect on economic output (sales), employ- ment (jobs), and wage income. To estimate the multiplier effect, the study used IMPLAN (model) multipliers to consider the economic activity from local suppliers of goods and services to the airport, as well as businesses that host air travelers. As well, the model also analyzed the “re-spending” of payroll both from the airport itself, and businesses serving airport travelers. Data used in each of the studies included airport activity and business (jobs, income, and sales) survey data, U.S. BEA employment, wage and sales data, and IMPLAN multipliers. Wyoming, State of, 2004 Wyoming Economic Impacts of Avia- tion, Aeronautics Division, Wyoming Department of Trans- portation, Cheyenne, 2004. Wyoming’s study examined the economic impact of employment and spending from four segments related to the state’s 33 publicly owned, public-use airports. These segments included: • Airport-related businesses, airport management, FBOs, car rental services, airlines, FAA offices, and other businesses located on airports; • Local businesses; • Spending from visiting general aviation aircraft operators; and, • Spending from non-resident airline passengers. The total economic impact was measured as the sum of the direct, indirect, and induced impacts. Non-economic qualitative benefits (such as medical services) were also discussed.