Airport Economic Impact Methods and Models (2008)

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7SURVEY METHODOLOGY An online survey program was utilized to design and imple- ment two surveys, one for users of economic impact studies and one for authors. A standalone version of the survey was made available to those who did not complete the survey online and those results were then manually entered into the survey response database. Messages were distributed directly from the online survey program, as were reminders to com- plete the survey. These messages also provided background on the ACRP program and reiterated the purpose and impor- tance of this study. The questions were formulated to elicit consistent and com- parable responses to draw reasonable and sound conclusions. The surveys are reproduced in Appendix A. Each of the two surveys was designed to address the specific concerns of both users and authors of airport economic impact studies. The user’s survey was directed at four different groups: General aviation airports, non-hub commercial airports, hub airports, and state/regional agencies. In some cases, the state/regional agencies represented groups of airports, particularly smaller general aviation airports. It should be noted that for the pur- pose of this synthesis report, hub airports are defined in accor- dance with the National Plan of Integrated Airport Systems (NPIAS). The recipients of the author’s survey included professionals from academia, consulting firms, and private research groups. Online search engines were used to identify authors of recent airport economic impact studies. Such studies were also found on the websites of state departments of transportation (DOTs), airport commissions, and individual airports. Attempts were made to contact all authors of the economic impact studies. Both surveys contained similar questions regarding the util- ity, validity, and reach of the economic impact studies. The author’s survey specifically addressed the methodology used. Before the survey’s launch, recipients were contacted by telephone and/or e-mail to verify their interest in participating in the ACRP study and to confirm current contact informa- tion. Table 1 details the number of survey recipients contacted, how many agreed to participate, and how many ultimately completed the survey. Participation goals were set for each type of survey recipient. The final survey participation count represents 94.6% of the original participation goals. Of the 87 recipients who expressed an interest in completing the sur- vey, 69 did, representing a 79% response rate. This is reason- ably close to the 80% target response rate specified for ACRP synthesis studies. However, some categories did not meet the 80% goal, namely general aviation and non-hub commercial airports. Note that the survey was designed so that users could not progress to the next question without responding. Conse- quently, the response rates for individual questions are iden- tical to the survey response rate. RESULTS There were 69 total respondents for the two surveys: 58 re- sponded to the user’s survey and 11 responded to the author’s survey. Appendix B contains a statistical summary of the sur- vey results, including all written comments provided by the survey recipients. As shown in Figure 1, the respondents were fairly evenly distributed across the continental United States. Of the 58 respondents to the user’s survey, 46.6% work in airport management, 20.7% work in state government, 13.8% are members of an airport commission or authority, 10.3% work in local government, 1.7% work as consultants, and 6.9% responded “other.” Of the authors who participated in the study, 36.4% were from private consulting firms, 54.5% were from academia, and one respondent (i.e., 9%) was from a state DOT. Throughout this synthesis report, survey results from both groups are presented side by side. The tables are sorted accord- ing to the responses from the users of economic impact studies, the larger of the two groups of survey recipients. However, it should be noted that although the users represent the larger group, they are generally responding to one, or at most, a few studies. The authors, on the other hand, are responding in regards to a larger number of studies. More than 80% of both groups regarded themselves as “familiar to very familiar” with airport economic impact studies, although the majority indicated that they had completed, sponsored, or supervised five or fewer such studies. Three of the authors had com- pleted more than 20 studies, but only one of the users had experience with more than 20 studies. Both survey groups were comprised of professionals with significant experience. The average years of experience for CHAPTER TWO SURVEYING THE CRAFT OF AIRPORT ECONOMIC IMPACT STUDIES

8the users and authors of airport economic impact studies were 20.9 and 15.6, respectively. The intended audiences of the airport economic impact studies were primarily government agencies, citizen/resident groups, and airport management. The users of the airport eco- nomic impact studies also indicated that the intended audi- ences included elected officials, the business community, air- line officials, and other, broader, sets of stakeholders. Uses of Economic Impact Studies The surveys examined the particular reasons to initiate an air- port economic impact study. Both the users and authors groups indicated that the main reason was to measure the significance of the airport to the local community (93.1% and 100%, respec- tively). However, in practice, this result merely confirms the working definition of what an economic impact study is meant to accomplish. A more meaningful description of the use of such studies is found by examining the next highest ranking selections. Of these, the most frequently cited use is to jus- tify airport investment or expansion (67.2% and 63.6%, respec- tively). The next three most commonly cited reasons included measuring the significance of the airport to specific industries, formulating an economic development or a planning initiative, and supplementing the airport system plan. These reasons were all cited by more than 40% of users and more than 50% of authors. Other reasons given for the initiation of airport eco- nomic impact studies are detailed in Table 2. There is an interesting discrepancy between the two groups with regard to the studies’ use as a mechanism for determin- ing allocation of matching funds. The users considered it much less likely a factor than did the authors of the studies (3.4% vs. 34.6%). The users were also less likely than the authors to regard the studies as a tool to obtain financial support from other government entities (29.3% vs. 54.5%). Figure 2 shows how the results to this survey question var- ied by type of airport. The results are relatively cohesive. More general aviation airports than commercial airports indicated Type Participation Goal Survey Recipients Initial Count Confirmed to Take Survey Survey Completion Count Achieved Goal Agency 10 18 17 16 160% General Aviation 20 22 18 15 75% Hub 10 25 19 14 140% Non-Hub 20 26 22 13 65% Authors 10 15 11 11 110% Total 70 106 87 69 95% TABLE 1 SUMMARY OF SURVEY RECIPIENTS FIGURE 1 Location of respondents for user’s survey.

9that an objective was to measure the significance of the air- port to specific industries. Non-hub airports were more likely than either general aviation or hub airports to use the eco- nomic impact study to supplement an airport system plan. Hub airports were less likely to use economic impact studies to obtain support from other local government entities, perhaps indicating greater financial independence at such airports. Additional comments regarding the reasons for conducting airport economic impact studies included educating stakehold- ers about the importance of the airport, attracting investment, justifying noise issues, improving community and public rela- tions, and developing political support for aviation programs or expansions. Key Benefits of Airport Economic Impact Studies An open-ended survey question asking for the top three ben- efits of airport impact studies identified by the users resulted in a wide variety of responses. These ranged from develop- ing community-focused educational tools to influencing gov- ernment authorities to fund airport improvements. Overall, the emphasis was to provide quantitative and qualitative data Reasons for Economic Impact Studies Userís Response (%) Author’s Response (%) To measure significance of the airport(s) to the local community 93.1 100 To justify airport investment/expansion 67.2 63.6 To measure significance of airport to specific industries 44.8 54.5 To formulate economic development/planning initiative 43.1 63.6 To supplement the airport system plan 43.1 63.6 To obtain financial support from other municipalities or from county/region level 29.3 54.5 Other 13.8 9.1 It was an academic initiative 5.2 0.0 To determine allocation of matching funds 3.4 36.4 TABLE 2 SUMMARY OF RESULTS FOR INITIATION OF STUDIES 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% To m ea su re si gn ifi ca nc e of th e ai rp or t(s ) t o t he lo ca l co m m u n ity To ju st ify a irp or t in ve st m en t/e xp an si on To m ea su re si gn ifi ca nc e of a irp or t to s pe ci fic in du st rie s To fo rm ul at e ec o n o m ic de ve lo pm en t/p la nn in g in iti at iv e To s u pp le m en t t he ai rp or t s ys te m p la n To o bt ai n fin an ci al su pp or t f ro m o th er m u n ic ip al iti es o r fro m co u n ty /re gi on le ve l It w as an a ca de m ic in iti at iv e To d et er m in e al lo ca tio n of m at ch in g fu nd s GA Non-hub Hub FIGURE 2 Reasons for economic impact studies by type of airport.

10 by a majority in both groups of survey recipients. Variables identified in the category “other” included off-airport impacts, tax revenues generated by airports, induced economic impacts, investment impacts, regional economic growth, airport con- struction, and benefits to local businesses. Figure 3 highlights differences among the various classes of airports in response to this question. The results indicate that hub airports, which focus more on tourism and cargo, include more variables than general aviation and non-hub airports. Data Sources The surveys conducted for this study also identified sources of data used for airport economic impact studies including air- port authorities, airport planners, tenants, industries located on the airport, and local businesses. Other airport users, visi- tors, pilots, and passengers are also regularly surveyed as part of economic impact studies. Additional data sources used for impact studies included FAA aircraft activity databases, census data, other government data, Bureau of Economic Analysis (BEA) RIMS data, private-sector economic growth data, and information from airport master plans. Models and Methodologies An important part of the survey was to examine which spe- cific models and methodologies are currently being used and which have been found to be the most effective. Table 4 shows detailed results from the survey questions on methodologies. Figure 4 provides a graphical summary of the results from this question, showing only the share of survey recipients that answered either “extremely useful” or “very useful.” Variables Measured User’s Response (%) Author’s Response (%) Employment 96.6 100.0 Wages 93.1 90.9 Local/Regional Spending 79.3 90.9 Tourism 63.8 90.9 Air Traffic Levels 62.1 54.5 Cargo/Tonnage 52.2 36.4 Military/Emergency Services 24.1 54.5 Time Savings 24.1 18.2 Other 22.4 36.4 TABLE 3 SUMMARY OF RESULTS FOR VARIABLES MEASURED 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Employees Wages Local/Reg. Spending Tourism Air Traffic Cargo Military/Emer. Services Time Savings GA Non-hub Hub FIGURE 3 Variables measured by type of airport. to illustrate the airport’s importance to a region. Accord- ing to the survey responses, the objectives included (among others): education, public relations, and justification for air- port improvement funding. The key benefits identified by the authors included building community awareness, generating support for funding, and educating the community about the economic value of the airport. Variables Measured The surveys examined which variables were measured as part of airport economic impact studies. Table 3 shows that the responses to this question rank similarly across both groups. The exception is “military/emergency services,” which was cited much more frequently by authors than by users. The lead- ing variables included employment, wages, local and regional spending, tourism, and air traffic levels, which were reported

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Economic Input–Output Model Community Benefits Qualitative Survey “What-if” Analyses Users Authors FIGURE 4 Share of respondents identifying method as “extremely” or “very” useful. 11 Methodology Ranking User’s Response (%) Author’s Response (%) Extremely useful 41.4 72.7 Very useful 39.7 18.2 Useful 12.1 9.1 Not very useful 3.4 0.00 Not used in study 1.7 0.00 Econom ic Input–Output Model [e.g., direct, indirect, induced multiplier or Regional Input– Output Modeling System (RIMS)] Not applicable 1.7 0.00 Extremely useful 34.5 9.1 Very useful 31.0 18.2 Useful 19.0 45.5 Not very useful 3.4 9.1 Not used in study 3.4 9.1 Community Benefits Not applicable 8.6 9.1 Extremely useful 22.4 36.4 Very useful 32.8 36.4 Useful 25.9 9.1 Not very useful 3.4 0.00 Not used in study 5.2 0.00 Qualitative Survey (survey of airport users, passengers, etc.) Not applicable 10.3 18.2 Extremely useful 12.1 9.1 Very useful 8.6 9.1 Useful 24.1 9.1 Not very useful 5.2 18.2 Not used in study 19.0 18.2 “What-if” Analyses Not applicable 31.0 36.4 TABLE 4 USEFULNESS OF THE ECONOMIC IMPACT STUDIES

12 The input–output method was ranked as the most useful by both groups. The majority of both groups also indicated that the input–output method and the use of qualitative surveys were either “very useful” or “extremely useful.” The groups differed in their evaluation of measuring community benefits. The majority of users found this method “very useful” or “extremely useful,” compared with only 27.3% of authors. The majority in both groups described what-if analysis mod- eling as either not used in the studies or not applicable. In an explanatory note, one user suggested that community benefits and what-if analyses were not methodologies, but outcomes of developing the economic impact model (presumably using a traditional input–output model). The survey did not specif- ically ask about the catalytic method or about the specific models used for the input–output method. Disseminating Results of Airport Economic Impact Studies The survey responses regarding methods of disseminating the results of economic impact studies are detailed in Table 5. Sum- mary executive reports, presentations, and technical reports were the most commonly cited forms of disseminating results. The responses varied somewhat between the users and authors groups. The use of web-based products was reported much more frequently by authors than by users (81.8% vs. 43.1%). Conversely, the use of brochures for public distribution was reported more frequently by the users group. Only a minority of either group reported that video was used to disseminate results. Presentations of the results were given to a wide range of audiences including the general public, elected officials, key stakeholders, state DOTs, chambers of commerce, airport staff, airport users, as well as various commissions, civic groups, business organizations, and economic development agencies. Press releases, seminars, and community presentations were also indicated as methods of disseminating the results of studies. Differences in responses between the two groups are evident, especially for the responses “technical reports” and “web-based products.” These differences may reflect that cer- tain methods authors use to disseminate the results to airports are not used as frequently when the airports retransmit the results to its audiences. Trade-Offs and Limitations The focus here is on describing trade-offs and limitations of airport economic impact studies directly identified by the survey recipients. Limitations identified by both survey groups included the lack of participation resulting in inad- equate data, the expense of conducting the studies, and the absence of standard models and methodologies for measur- ing impacts. Airport surveys were the most commonly used sources of data for airport economic impact studies. However, users indicated that the lack of participation by fixed-base operators (FBOs) was problematic. This is confirmed in a 2005 report by the Minnesota DOT on the development of an online eco- nomic impact calculator for small- and medium-size airports, which reported that only 20 of 98 FBOs responded to ques- tionnaires for financial information (2). Another limitation frequently reported by survey recipients is the lack of assessment or validation. Only 25.9% of users and 27.3% of authors reported that any follow-up was con- ducted in terms of updates, ongoing assessment, or validation (i.e., corroborating the model against other metrics or other- wise using external information to verify the model). An analy- sis of written comments related to this question indicates that follow-up efforts primarily consisted of periodic model updates and did not include validation or assessment. Nearly all studies described in the survey were static in nature. Both users and authors specifically commented that the economic impact studies were snapshot views of the economic impact at the time the study was conducted. Similar comments expressed the sentiment that airport economic impact studies tend to quickly become outdated. Some respondents indicated that the impact studies were updated periodically; however, the majority of respondents were not aware of any follow-up procedure or updates. The majority of users and authors were of the opinion that the results were only sometimes used to encourage substantive change. Examples of substantive change provided in the sur- vey included encouraging airport investment, changing airport policy, or making changes to land use regulations. There were several comments among users of economic impact analyses addressing the general credibility of the results of such studies. One reason cited was the use of mul- tipliers, which are described as difficult to explain. Also, the high dollar estimates that can result from economic impact analyses were cited as possible evidence of overstating impacts or otherwise contributing to the credibility problem. Medium Used to Disseminate Results User’s Response (%) Author’s Response (%) Summary of Executive Reports 86.2 100.0 Presentations 74.1 81.8 Brochures for Public Distribution 69.0 45.5 Technical Reports 62.1 100.0 Web-Based Products 43.1 81.8 Other 12.1 18.2 Video 10.3 27.3 TABLE 5 DISSEMINATING THE RESULTS OF ECONOMIC IMPACT STUDIES

13 Other limitations are also worth noting. Both groups indi- cated dissatisfaction with the lack of standardization in the air- port economic impact study process. A number of users men- tioned the high costs of preparing economic impact studies. Trends and Recent Developments The surveys also attempted to capture the treatment of spe- cific trends in aviation. The results are shown in Table 6. The most commonly cited trends were non-aviation commercial development attracted to the vicinity of the airport; reliance on aviation by specific industries, such as R&D, biotechnol- ogy, banking, and universities; use of air transportation in supply chains and just-in-time delivery; growth of air freight; and growth of fractional ownership. These trends serve to highlight the extent to which aviation has become enmeshed into the economy. Less frequently cited trends were the emer- gence of very light jets and the development of international gateways. A total of 25.9% of users and 36.4% of authors sur- veyed indicated that no specific trends were captured for the airport economic impact studies in question. Variables Measured User’s Response (%) Author’s Response (%) Non-aviation commercial development attracted to the vicinity of the airport 50.0 36.4 Reliance on aviation by specific industries, such as R&D, biotech, banking, universities, etc. 41.4 36.4 Use of air transportation in supply chains and just-in- time delivery 32.8 9.1 Growth of air freight 31.0 18.2 None of the above 25.9 36.4 Growth in business aviation/emergence of fractional ownership 24.1 18.2 Emergence of very light jets 12.1 0.00 Development of international gateways 10.3 27.3 Other (please specify) 8.6 27.3 Consolidation and globalization 3.4 9.1 TABLE 6 TRENDS IN AVIATION CAPTURED IN AIRPORT ECONOMIC IMPACT STUDIES