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General Aviations ContributionTo The U.S. Economy
General Aviation Manuacturers Association
May 2006
Prepared or
Assessment by W. Bruce Allen, PhD David L. Blond, PhD Aaron J. Gellman, PhD
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Contents
Executive Summary............................................................................................................................................................................................................................... 1
Introduction ................................................................................................................................................................................................................................................... 6
Defnitions ....................................................................................................................................................................................................................................................... 7
GAs Direct Contribution ................................................................................................................................................................................................................ 13
GAs Indirect Contribution ............................................................................................................................................................................................................ 17
GAs Induced Contribution ........................................................................................................................................................................................................... 19
Approach and Methodology....................................................................................................................................................................................................... 21
Appendix A: Data Sources and Assumptions ........................................................................................................................................................... 28
Appendix B: Data and Results Tables............................................................................................................................................................................... 32
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List o Charts and Tables
Table 1. General Aviations Contribution to the U.S. Economy In 2005 ..................................................................................................... 2
Chart 1. Map o General Aviations Total Economic Contribution by State In 2005.......................................................................... 3
Table 2. Leading States In Terms O GA Total Economic Contribution in 2005 .................................................................................. 3
Chart 2. Map o GAs Total Economic Contribution Per Capita In 2005..................................................................................................... 4
Table 3. Leading States In Terms O GA Total Economic Contribution Per Capita in 2005 ....................................................... 4
Chart 3. Breakdown o GAs Total Economic Contribution in 2005 ............................................................................................................... 5
Chart 4. U.S. Sales by GA Aircrat Category in 2005 ............................................................................................................................................... 8
Chart 5. Flight Hours by GA Aircrat Category in 2005............................................................................................................................................ 8
Table 4. FAA GA Aircrat Use Categories ........................................................................................................................................................................... 9
Chart 6. Distribution o Flight Hours by GA Aircrat Category in 2005 ..................................................................................................... 11
Chart 7. Contributions Quantied and Not Quantied ........................................................................................................................................... 13
Chart 8. Assumed User Spending Patterns .................................................................................................................................................................. 14
Chart 9. Distribution o GAs Direct Contribution to the U.S. Economy in 2005 ............................................................................... 14
Table 5. Top Ten Industries Beneting rom Indirect Contributions o GA in 2005 ......................................................................... 18
Table 6. Leading Industries Receiving GAs Induced Contribution to The U.S. Economy in 2005 .................................... 19
Table 7. Direct Contribution (A-Matrix) Showing Hybrid Aircrat Direct Contribution Vector................................................... 24
Table 8. Hybrid GA Contribution Based on Inverse Matrix (in dollars) ...................................................................................................... 25
Table 9. Personal Consumption Expenditure Vector.............................................................................................................................................. 26
Table 10. Gross State Product Distribution by Industry Group......................................................................................................................... 27
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Executive Summary
General Aviation (GA) makes a signicant contribution to the national economy and to the economy o every state in
the U.S. Because o the diverse nature o the U.S. feet o general aviation aircrat, and the multitude o operations and
unique services they perorm, GAs economic contribution has sometimes been overlooked or it is combined with other
transportation sectors, masking its own contribution. Also, when dening GA activity too narrowly, economic studies
can easily underestimate GAs economic contribution.
The GA feet is diverse, as are the reasons or operating the aircrat. GA encompasses the manuacture and operation
o any type o aircrat that has been issued a certicate o airworthiness by the U.S. Federal Aviation Administration
(FAA), other than aircrat used or scheduled commercial air service1 (airlines) or operated by the U.S. military.
General Aviation includes xed-wing airplanes, helicopters (rotorcrat), balloons, dirigibles, and gliders. GA activities
include the manuacture and operation o aircrat equipped with turbine engines (turbojet, turboan, or turboprop) or
piston engines, and o non-powered aircrat. GA includes fights related to business or corporate transportation o
people or cargo, personal transportation (e.g., visiting amily), air ambulance, fight training, and many purposes such
as re spotting and suppression and pipeline patrol. GA operations are not determined by the ownership o the aircrat;
GA aircrat may be wholly-owned, jointly-owned, rented, chartered, or leased. GA operations are not dened by the
airman certicate o the pilot operating the aircrat. The pilot o a GA aircrat may hold a student, private, commercial,
or air transport pilot certicate, depending on the purpose o the fight and the number o pilots required to operate it
by the manuacturer.
This study breaks new ground by bounding general aviation activity using the FAAs standard denitions, which are
widely recognized by every segment o GA. The study uses FAAs estimates o annual fight activity and applies industry-
derived per-hour costs or operating various types o aircrat. GAs economic contribution is calculated by putting these
costs into regional economic models, widely accepted as valid by economists and available rom the U.S. Department
o Commerce.
General Aviation is an important element o economic growth in part because it ullls transportation needs which
can not otherwise be met. Only about 350 U.S. communities have scheduled air service; or the remainder, GA is the
only option or the movement o persons or cargo by air. Moreover, GA provides specialized air services, such as air
ambulance and trac patrol, to communities that do have scheduled air service.
1 Commercial air carriers sell air transportation to passengers and shippers. Commercial air carriers include operators o small, propeller-
driven aircrat (under Part 135 o the Federal Aviation Regulations) as well as operators o jet airliners (under FAR Part 121).
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The GA sector contributed at least $150 billion to national output in 2005 and, directly or indirectly, employed more
than 1,265,000 people whose collective earnings exceeded $53 billion. It should be noted that these gures are very
conservative, rst, because they refect only the economic
output that likely would not have been generated i GA did not exist and, second, because the analysis was restrictedto those portions o GAs contribution or which MergeGlobal ound suciently detailed and reliable data. As will be
discussed later in this report, the estimates o GAs economic contributions do not, by any means, include all o GAs
signicant net benets to the U.S. economy.
General Aviation contributes to the U.S. economy by creating output, employment, and earnings that would not
otherwise occur. Direct impacts, such as the purchase o a new aircrat, multiply as they trigger transactions and
create jobs elsewhere in the economy (e.g., sales o aluminum, plastic, rubber, electronics, and the wide range o other
materials and components required to make an airplane). To capture these ripple eects, MergeGlobal estimated GAs
direct, indirect, and induced contributions to the U.S. economy as summarized below:
T a b l e 1
General Aviations Contribution to the U.S. Economy In 2005
(All data except employment in $ billions)
General Aviation benets people and communities throughout the United States, and its economic contribution is
signicant in all regions o the country, as shown on the ollowing page4:
Direct Indirect Induced Total GA % of U.S.
Output $39.8 $49.9 $60.6 $150.3 0.66% 2
Wages & Salaries $14.5 $20.9 $17.8 $53.2 0.76% 3
Employment 225,000 560,000 480,000 1,265,000 0.90% 3
2 Based on U.S. gross output o $22.7 trillion in 2005, estimated rom the 2004 gures reported by the Bureau o Economic Analysis (U.S.
Department o Commerce).3 Based on U.S. total wages & salaries o $7.0 trillion and total employment o 140 million workers in 2005, as reported by the Bureau o
Labor Statistics (U.S. Department o Labor).4 Available data limits us to estimating GAs economic contribution at the state level. It is tempting to distribute state-level impacts to
congressional districts. Unortunately, doing so would require assumptions that cannot be proven right and might well be proven wrong.
For example, it is technically possible to allocate GAs economic contribution based on each congressional districts share o state
employment in a particular industry. The problem is that many industries (such as aircrat manuacturing) have economies o scale that lead
to concentrations o employment.
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C h a r T 1
Map o General Aviations Total Economic Contribution by State In 2005
T a b l e 2
Leading States In Terms O GA Total Economic Contribution In 2005 ($ billions)
It is important to remember that GA makes an signicant contribution to the economies o smaller or less-populated
states that do not appear in the preceding table. Indeed, GA can be disproportionately important in large, sparsely-
populated states (such as Alaska) because it oers transportation where ew viable alternatives exist. To refect this
aspect o GAs contribution, we calculated GAs total economic contribution per resident and summarized the results
below. O course, these data do not refect GAs intangible but important improvement to the economic viability and
quality o lie among dispersed populations in rural areas.
Not to scale
Not to scale
0.2%
2.2%
NH: 0.5%
VT: 0.2%
MA: 2.7%
NJ: 3.0%
CT: 1.7%
DE: 0.4%
4.1%
RI: 0.4%
DC: 0.4%
MD: 1.4%
6.2%
2.3%
2.8%
0.5%
1.2%
1.4%
0.6%
1.2%
2.3%4.1%
2.4%
2.0%
0.3%
0.5%
4.8%
0.9%
7.5%
0.6%1.9%
1.3%
0.4%
0.7%
12.2%
0.7%
1.5%
5.1%
5.9%
1.0%
0.4%
2.8%
1.7%
0.2%
3.7%
1.1%
1.8%
0.7%
0.3%
0.3%
0.3%
GAs Total Economic Contribution In 2005
1 Dot = $25 million
Rank State Total % of U.S. GA
1 California $18.2 12.2%
2 Texas $11.2 7.5%
3 New York $9.3 6.2%
4 Georgia $8.8 5.9%
5 Florida $7.5 5.1%
6 Kansas $7.1 4.8%
7 Illinois $6.0 4.1%
8 Pennsylvania $6.0 4.1%
9 Ohio $5.5 3.7%
10 New Jersey $4.4 3.0%
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1.0 Introduction
1.01 Introduction
The General Aviation Manuacturers Association (GAMA) and the National Association o State Aviation Ocials
(NASAO) jointly retained MergeGlobal, Inc. to assess and estimate General Aviations total contribution to the U.S.
economy. MergeGlobals study was led by W. Bruce Allen, PhD, David L. Blond, PhD, and Aaron J. Gellman, PhD.
MergeGlobals mandate was to deliver an independent, expert, and conservative assessment o GAs current
contribution to the U.S. economy at both the national and state levels.
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2.0 Defnitions
2.01 General Aviation Defned
General aviation (GA) encompasses the manuacture and operation o any type o aircrat that has been issued
a certicate o airworthiness by the FAA, other than aircrat used or scheduled commercial air service (airlines) or
operated by the U.S. military.
Thus, GA includes xed-wing aircrat, helicopters (rotorcrat), balloons, dirigibles, and gliders. GA includes the
manuacture and operation o aircrat equipped with turbine engines (turbojet, turboan, or turboprop) or piston
engines, and o non-powered aircrat. GA includes fights related to business or corporate transportation o people or
cargo, personal transportation (visiting amily), air ambulance, fight training and or many unique purposes, such as re
spotting and pipeline patrol. GA operations are not determined by who owns the aircrat. GA aircrat may be wholly-owned, jointly-owned, rented, chartered or leased. GA operations are not dened by the airman certicate o the pilot
operating the aircrat; the pilot o a GA aircrat may hold a student, private, commercial, or air transport pilot certicate,
depending on the purpose o the fight and the number o pilots prescribed to operate it by the manuacturer.
GA aircrat enable people, especially those in smaller communities and remote areas, to move quickly and eciently
across the country and around the world or both business and pleasure. GA is disproportionately important because it
touches so many sectors o the economy rom the helicopters transporting accident victims to hospitals, to corporate
jets carrying executives to meetings, to single piston engine aircrat fown by enthusiasts on the weekends.
2.02 Classes o GA Aircrat
MergeGlobal grouped GA aircrat into the ollowing classes that are consistent with Federal Aviation Administration
(FAA) classications:
2.02.1 Single-engine piston-powered airplanes5 comprise over 80% o the current GA feet in
the United States and are the most common Personal-Use aircrat, thanks to their relatively
low acquisition cost. The single piston engine drives a single propeller, and burns relatively
expensive aviation gasoline (avgas).
2.02.2 Multi-engine piston-powered airplanes usually have two piston engines driving separate propellers.
As with single piston aircrat, they use aviation gasoline, and Personal-Use accounts or much o their
fight time.
2.02.3 Single- or Multi-engine Turboprop airplanes are powered by one or more turbine engines that
drive propellers and burn aviation kerosene (jet uel). Turboprop aircrat typically are larger, aster, and
more expensive than piston aircrat. Turboprops are fown or a wide variety o purposes but are most
oten fown or business, corporate, and other proessionally crewed purposes.
5 In accordance with industry norms, Airplanes are xed-wing aircrat, Rotorcrat are rotary-wing aircrat (or, helicopters), while the term
Aircrat includes both airplanes and helicopters.
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The FAA assigns each aircrat in the U.S. GA feet to a single category o use based on the majority use reported by
operators. In reality, aircrat perorm a variety o missions e.g., a businessperson may use her aircrat or work during
weekdays, and or ski trips on the weekends. Since more than 80 percent o the aircrats fight hours are classied as
Business Transportation, the aircrat is classied as being used or Business Transportation. MergeGlobal assumedthat the majority use o an aircrat determines many costs, such as insurance rates and whether or not a proessional
crew is employed.
We recognize that there are exceptions in every category. For example, we assume that aircrat used or Aerial
Observation are proessionally crewed by news organizations, law enorcement, search and rescue agencies, and
oil and mineral exploration companies. However, some aircrat in this category do not have a proessional crew or
example, some aircrat are fown by owner-pilot ranchers to monitor livestock movement. Unortunately, FAA data does
not allow us to estimate the percentage o Aerial Observation hours fown by owner-pilots versus proessional crews,
but available evidence indicates that owner-pilots generate a small raction o these hours. Thereore, MergeGlobal
believes that the assumption (that 100 percent o Aerial Observation aircrat are proessionally crewed) is reasonable,
and that similar assumptions are reasonable or the other categories.
For purposes o this analysis, GA use is segmented into three classes:
2.03.1 Personal Aircrat fown or the personal purposes o the owner are Personal-Use. The owner-pilots
o these aircrat oten fy under Visual Flight Rules (VFR) and thus impose a limited burden on the
national air trac control system. Further, they are assumed to tie-down their aircrat rather than rent
hangars. It is assumed that they do not subscribe to a commercial weather service.
2.03.2 Business These aircrat are fown by owner-pilots or business transportation without a proessional
crew. A common example is a salesperson who uses his own aircrat to visit dierent areas o his sales
region. Such owners are assumed to share a hangar with other users and pay a business insurance
rate. They are assumed to purchase the commercial weather report service since travel is important to
the conduct o their business and, on average, they fy more requently than personal users.
2.03.3 Corporate, Utility, and Others For purposes o cost evaluation, this category includes all uses
which are assumed to use proessional crews. The owners o these aircrat are assumed to rent a
private hangar, pay the corporate insurance rate, and hire a proessional crew (pay and benets).
Crew compensation can dier according to use as the crew or a corporate helicopter, or example,
may be compensated dierently than that o a helicopter used to survey power lines. Thus, all uses
o helicopters other than Corporate/Executive Transportation uses are assumed to have the Utilitycost structure which eatures dierent crew costs and insurance rates. All the same, these costs are
much more similar to Corporate/Executive Transportation than to Personal-Use or Business Use.
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C h a r T 6
Distribution o Flight Hours by GA Aircrat Category in 2005
Source: MergeGlobal estimate based on FAA General Aviation and Air Taxi Activity (GAATA) Survey, 2004
MergeGlobal has also made some simpliying assumptions about hangar use. The calculations assume that personal
users do not rent hangars; rather, they pay tie-down ees. Business users use a shared hangar and Corporate, Utility,
and Others use private hangars.
1.02 Types o Economic Contribution
The United States has a complex economy in which industries depend upon each other or materials, supplies, andservices. Spending in any one sector o the economy causes changes in output not only in that sector but also in many
others. Thus, the direct impacts o GA considered here e.g., the purchase o new aircrat, uel, maintenance services,
etc. trigger transactions elsewhere in the economy. Such transactions lead to additional employment, spending, and
government tax revenues across a number o sectors. To capture these multiplier eects, GAs contributions to the
U.S. economy are shown in three orms:
1. Direct contribution U.S. economic output created by the manuacture, operation, or maintenance o GA
aircrat. Direct contribution measures include the value o new GA aircrat sales, pilot training, uel purchases,
airport charges (landing and parking), spare parts, etc.
2. Indirect contribution U.S. economic output created by the purchase o goods and services by rmsdirectly involved in the manuacture, operation, or maintenance o GA aircrat. Firms that benet rom GAs
direct contribution (including aircrat and engine manuacturers, maintenance providers, pilot training schools,
etc.) buy goods and services rom other rms. For example, aircrat manuacturers must buy aluminum,
plastic, glass, and other materials to make GA aircrat.
77%
4%
8%
11%
47%
16% 73%Turboprops
13% 40%Pistons
11% 81%Jets
92%Rotorcraft
8% 15%Experimental
Personal BusinessCorporate, Utility,
and Other
80%
2.5 million
3.9 million
Flight Hours
2.3 million
17.8 million
1.3 million
100%0% 70%20% 30%10% 50% 60%40% 90%
4%
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3.0 GAs Direct Contribution
3.01 Direct Contribution Defned
For purposes o this report, the direct contribution o GA is the U.S. economic output created by the manuacture,
operation, and maintenance o GA aircrat. Direct contribution measures include the value o new GA aircrat sales, uel
purchases, airport charges (landing and parking), spare parts, and other direct expenditures related to the operation o
GA aircrat. As discussed earlier, there are other contributions which are not measured, as well as intangible benets
which may or may not be quantiable.
The sum total o all purchasing, maintenance, and operating expenditures represent the direct contribution o General Aviation.
C h a r T 7
Contributions Quantifed and Not Quantifed
3.02 Direct Contributions Quantifed
Using industry sources, ederal data, and proprietary data rom aircrat manuacturers and service providers,
MergeGlobal measured the direct expenditures on General Aviation at the national and state levels. Some o the
variables considered are:
3.02.1 New Aircrat Sales The manuacture o a new aircrat requires not only parts or the airrame, but
also the purchase o engines, avionics, interior tments, tires, brakes, paint, instruments, etc.
3.02.2 Operations and Maintenance Operators o aircrat have dierent requirements and their spending
patterns can dier greatly. For example, the hangar acilities and crew wages or the operation o a
New Aircraft Sales
Used Aircraft Sales
Operations and Maintenance
GA Airport Expansion and Improvement
Catering
Value of Time Savings
Information and Periodicals
Quantifie
d
NotQ
uantifi
ed
Parti
ally
Qua
ntifi
ed
in
Oth
erCateg
orie
s
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The above chart demonstrates the sectors to which GA New Aircrat Sales and Operations and Maintenance activities
directly produce economic benets. Fuel and Insurance are unctions o Operations, while Other Services include
subscriptions to commercial weather services, maintenance services, and navigational chart services. The revenues
o Aircrat Manuacturers include not only new airrames but also maintenance and replacement parts or aircratalready in service; Aircrat Engines has the same pattern. Avionics are included in New Aircrat but also require periodic
maintenance or repair and are sometimes replaced in order to upgrade an aircrats systems. Cabin interiors include
seating and interior work on aircrat which can range rom simple to ornate components and are maintained throughout
an aircrats service lie.
3.03 Direct Contributions Not Quantifed
General aviation contributes to the U.S. economy in a number o ways that we did not attempt to specically quantiy
due to a lack o data and/or our belie that the measurable impact would be relatively small. Also, some o these
contributions are partially included in the quantied direct and indirect contributions described above. We recognize
that the non-quantied direct contributions may have a substantial combined value, so their exclusion increases the
conservatism o this estimate.
Direct contributions that are identied but not quantied include:
3.03.1 General Aviation airport expansion and improvement Private airport operators, Federal, state,
and municipal governments spend millions o dollars per year to upgrade the condition and capacity
o thousands o airports that are primarily, i not totally, used by general aviation. These expenditures
on GA expansion are oten captured in the landing, parking, and other ees paid by aircrat owners
which are measured as a direct contribution.
3.03.2 Catering There are some companies which provide catering services to owners o General
Aviation aircrat. This can range rom packed lunches to gourmet meals or cross-continental or inter-
continental fights. The little anecdotal data available estimating the size o this sector suggests that
it is relatively small compared to other aspects o General Aviation.
3.03.3 Used aircrat sales Although the aircrat itsel was built perhaps several years ago, the upgrades
or repairs require spending which contributes to the current economy and is categorized as a direct
contribution in this study. The payments made to aircrat brokers are not considered. There is a lack
o data available suggesting the values o aircrat sales and thus no reliable way to estimate payments
to brokers. The value o these payments is estimated to be very small compared to GA as a whole
and is not considered.
3.03.4 Value o time savings One o the common reasons or corporations to use their own aircrat is the
productivity gains and cost savings (e.g., avoided hotel nights) relative to using the scheduled airlines
or automobiles. Corporate executives have the ability to see more clients in a day, or see clients
more oten. They can also have meetings or conerence calls enroute which are not possible on
commercial airlines. Travelers can arrive at GA airports much more closely to the departure time and
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the airport itsel may be closer to their origin or destination. The most recent estimate o time savings
was undertaken by GAMA approximately teen years ago. We did not have sucient condence in
such old estimates to include time savings in this study.
3.03.5 Miscellaneous There are other benets rom GA spending which are not considered in this
study, or example, GA periodicals, inormation services, and or-prot internet sites and inormation
gatherers. Although these contributions would not occur but or General Aviation, we have elected
not to include them due to lack o available data and the small absolute value o the contribution.
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T a b l e 5
Top Ten Industries Benefting rom Indirect Contributions o GA in 2005
($ millions)
The industry grouping, or sectors, which are illustrated in this report and used in the I/O model are those identied or
analysis by the Bureau o Economic Analysis at the Department o Commerce. It is not surprising that the industries
which benet most rom GA are those which are somehow related to either the industry directly or through supplying
the GA industry with goods or services. For example, Mining/Extractive supplies the bauxite or iron ore rom which
aluminum and steel are produced these products, in turn, are used to produce aircrat airrames and other parts.Financial Institutions provide nancing to those who purchase aircrat and also to the services and manuacturers which
support GA. Avionics are produced by companies in the Radio, TV, and Communications Equipment industry category
and this same grouping produces many o the subcomponents used to build avionics suites. Business Services is a
very wide ranging group which includes accounting, janitorial, waste management, marketing, copy shop, inormation,
and IT services which serve not only GA users but also every other industry which receives some portion o GAs
contributions.
% of GA's
Rank Industry Total Indirect Contribution
1 Business Services $5,994 12.0%
2 Radio, TV, and Communications Equipment $4,756 9.5%
3 Mining/Extractive $2,922 5.9%
4 Aircraft Engines $2,792 5.6%
5 Real Estate and Dwellings $2,766 5.5%
6 Financial Institutions $2,649 5.3%
7 Construction $2,603 5.2%
8 Metal Products $2,470 4.9%9 Wholesale and Retail Trade $2,380 4.8%
10 Utilities $1,634 3.3%
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5.0 GAs Induced Contribution
5.01 Induced Contribution Defned
Induced contribution is the U.S. economic output created by the expenditures o people employed by the rms that
generate revenue rom GA, directly or indirectly. The portion o these wages attributable to GA is spent by employees on
various goods and services, leading to more economic output, employment, and earnings that are said to be induced
by GA.
5.02 Quantifed Induced Contributions
The Induced Benets add up the spending o wages which results rom both the Direct and Indirect Contributions.
Those portions o wages which are earned due to GA activities are then spent in various ways by the recipient. Since
people spend their wages in dierent ways than industries, the induced contributions have little to do with the industry
rom where the wages were earned and are instead based on the spending patterns o wage earners. An employee o
an aircrat manuacturer may have a very dierent job rom a armer, yet, on average, they will have a tendency to spend
their wages in similar ways ood, lodging, automobiles, etc.T a b l e 6
Leading Industries Receiving GAs Induced Contribution To The U.S. Economy In 2005
($ billions)
As with the Indirect Contributions o GA, Business Services scores high on the list o industries which benet rom GA.
As discussed above, Business Services is a wide ranging cluster o industries which includes such varied companies as
consulting, accounting, photocopy shops, veterinary care or livestock, janitorial services, maintenance o equipment,
% of GA's
Rank Industry Total Induced Contribution
1 Business Services $6,867 11.3%
2 Educational $6,444 10.6%
3 Real Estate and Dwellings $5,476 9.0%
4 Health Services $3,784 6.2%
5 Wholesale and Retail Trade $3,227 5.3%
6 Financial Institutions $2,654 4.4%
7 Communications $2,552 4.2%
8 Food $2,322 3.8%
9 Insurance $2,303 3.8%10 Personal and Household $1,925 3.2%
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and advertising. Although consumers may not purchase large amounts o Business Services, their purchases do
have eects on this industry group because Business Services support all the sectors in which consumers do make
purchases.
Since Induced benets are the result o direct and indirect consumer spending, it is understandable that the leading
industries or Induced Contributions are dierent than those o the Indirect Contributions. Consumer and household
spending patterns are quite dierent rom those o industry.
5.03 Induced Contributions Not Quantifed
For obvious reasons, MergeGlobal was not able to calculate induced contributions derived rom non-quantied direct
and indirect contributions. We recognize that the value o such inducted contributions may be substantial, and believe
that their exclusion increases the conservatism o the quantitative estimates.
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6.0 Approach and Methodology
6.01 Introduction
It is easier to describe GAs contributions in conceptual terms than it is to quantiy those contributions with
publicly-available data. For example, many people would acknowledge that GA is especially important or
communities with insucient regular commercial air service but might reasonably disagree about how
to value the time savings or economic stimulus that GA delivers to those communities. To avoid such
disagreements, MergeGlobal has restricted its estimate to those major components o GAs economic
contribution or which it has obtained suciently reliable and detailed data to provide a high degree o
condence in the estimates. Further, MergeGlobal has taken a conservative approach in estimating the
value o each quantied component o GAs contribution to the U.S. economy.
Outlined below is the underlying philosophy ater which there is a description o the methodology
employed. (Data sources and assumptions are summarized in Appendix B.)
6.02 Methodology To Quantiy GAs Direct Contribution
6.02.1 New aircrat sales
New aircrat are made rom components which come rom several dierent industries. The airrame is
generally assembled by those who can be thought o as aircrat integrators. Their names are oten
synonymous with general aviation. GAMA provided the average prices, component costs, and oreign
content o new aircrat delivered during the calendar year 2005. Components included:
a. Airrames and related assemblies wings, uselages, landing gear, controls, etc.
b. Avionics navigation, communications, transponders, etc.
c. Engines engines and engine subsystems
d. Interiors seating suraces, interior appointments
As an example o the dierences among aircrat type, the single engine or a home-built airplane
contributes a dierent percentage o the purchase price than the two engines purchased or a light twin-
engine jet.
For each o the above listed components, we added exports and domestic content o oreign manuacturedaircrat, while subtracting oreign content o domestic built aircrat. Import and export values are based on
Federal trade data and aircrat manuacturer cost evaluation. For example, a oreign-made jet may have
US-made navigation avionics, and a US-made aircrat may have oreign-made seating.
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6.02.2 Operations and Maintenance
As the largest component o overall GA contribution, the determination o Operations and Maintenance
costs are perhaps the most important part o this analysis.
6.02.2.1 Hours Each year, the FAA records the types o aircrat in service, their usage rates,
purposes or usage, and states in which aircrat are based. Since most aircrat operational
costs are reported in per hour ormat, these data are critical to the calculations.
6.02.2.2 Costs Conklin and deDecker collects cost data or operations and maintenance and this
is considered the industry standard. MergeGlobal weighted the average maintenance costs
by the number o each model sold during the past ten years. The data gathered by Conklin
and deDecker includes:
c. Insurance Rates dier according to aircrat type and purpose o use.
d. Crew wages and benets Corporate pilots and crew are paid based on industry
norms. Conklin and deDecker data are based on surveys conducted by the NationalBusiness Aircrat Association (NBAA).
e. Recurrent training Active pilots must ulll certain yearly training requirements in order
to maintain their active status.
. Navigational chart services Owners purchase subscriptions to these services in order
to have current, accurate navigational data. Individual costs are adjusted or each type
o aircrat based on typical dierences in range and usage patterns.
g. Computerized maintenance record services Owners o turbine powered aircrat
oten use a computerized maintenance management program in order to accurately
record maintenance intervals and expenditures so as to meet ederal maintenance
requirements.
h. Weather service This cost is the price o a subscription to a computerized weather
update service.
i. Hangar or Tie-down Some aircrat are likely to be stored in a hangar while others are
more likely to be stored in an open parking area reerred to as Tie-down. Fees are oten
based on the size o the aircrat, or its oot-print.
j. Modernization This includes the cost o routine upgrade work, or repairing uninsured
damages and the deductibles on otherwise covered damages.
k. Reurbishing The cost o maintaining the interior and exterior appearance o the
aircrat which includes seats, carpet, and painting.
l. Fuel usage (burn rate) The burn rate is the weighted average rate at which each type
o aircrat uses uel .
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6.03 Methodology To Quantiy GAs Indirect And Induced Contributions
6.03.1 Background
The Input-Output (I/O) model is an economic modeling tool or which Wassily Leontie won the Nobel
Prize in Economics in 1973. He had developed the model in the 1930s, but its practical value and use
awaited the post-war development o computers. The model uses data gathered rom industries in the
economy at a point in time (the currently available ull table covers the year 1997, while an in-process table
is under construction by the Bureau o Economic Analysis (BEA) o the Department o Commerce with
data or 2002). Preparing an input-output table rom reported Economic Census data is complicated by
the act that business establishments (the unit o measure or collecting data) oten make several dierent
product categories at the same location.
The benet o an I/O model is that it provides a map o how money fows within the economy as a
whole. It traces the expenditures o businesses and government through to their payment o wages,
taxes, and prots. It then traces the allocation o prots, taxes, and wages by private consumers,
business investors, and government. Thus, it gives a complete picture o the complex nature o fows in
a large and developed economy.
6.03.2 Input-Output summary
Essentially, an input-output model provides a snapshot o the economy at a moment in time. Because
o the general delay oten ten years in producing a ull scale table or the economy, the Bureau o
Economic Analysis develops an estimate o the current expenditure pattern in the economy as o a more
recent year. Yearly, less detailed tables o economic expenditures are produced and published. In this
study, a table available or 2004 was used, with modications. Taking the more detailed sub-sectors rom
the 1997 table, MergeGlobal created a slightly more robust model o the economy that tracks with theBEA developed more aggregated 2004 table. This alternative I/O ramework covers 65 sectors including
the important sectors or determining the impact o GA aircrat sales and operations on the economy (i.e.,
airrame, aircrat engines, avionics, and interiors).
An I/O model links buyers with sellers. Sellers are other industries as well as employees and shareholders
(who expect prots). This is the rst stage, or direct, impact on the economy o a purchase o a GA
aircrat. Since GA aircrat manuacturers purchase materials and components rom various suppliers,
MergeGlobal needed to trace these indirect impacts through the economy. Economists have devised a
very simple tool or tracing these indirect fows using a mathematical ormula to develop multipliers or
each direct purchase. With I/O analysis, ater taking into account the multiplier, the amount o purchaseswill be greater than the amount purchased directly.
Induced demand is based on the wages paid by each industry (derived rom the Gross Output generated
by the direct purchases or new aircrat and the operations and maintenance (O&M) thereo) as well as
pilot salaries. Wages are then allocated by category o consumer expenditure. This expenditure pattern is
then used to measure gross output (also called production) that results rom wages. In this way, the ull
impact o the GA industry is captured.
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6.03.3 The GA Pre-multiplier
Input-Output tables produced by the government refect set o industries. It happens that industries oten
produce dierent products at the same location, but data collected is classied into a single, dominant,
product-line. In the same way, GA aircrat come in dierent models. To properly allocate the sales o GAaircrat, MergeGlobal has developed a pre-multiplier that takes the individual product categories sold, i.e.,
the share or each aircrat that is spent on engines, airrame, avionics, and interior; adjusts or the portion
o these costs that are imported; and uses these totals when measuring direct contribution. Thus, the
generalized Input-Output model is adapted and calibrated or GA activity specically.
In this study, each category o aircrat is divided into its major constituent components. This allows a
more correct allocation o unds to industry groups. The cost o engines whether purchased by airrame
manuactures directly and included in their indirect expenditures or purchased separately by the buyers
(similar to the way commercial aircrat engines are purchased separately rom the purchase o the airrame)
are allocated to the engine manuacturing sector. In a similar ashion, avionics are allocated to the Radio
and TV Communications sector. Each aircrat type has a unique share o airrame costs, engines, avionics,
and interior. Thus, the generalized I/O or aircrat is made specic to individual aircrat types.
As the example below (Table 7) shows based on approximate shares or an aircrat within the GA
category this allows a ner detailed split o eects on sales. This hybrid aircrat represents the average
distribution in the main categories o expenditure on a new aircrat. The column on the ar right is the
new I/O category produced using these splits. The column then shows the approximate direct spend by
industries or each dollar o sales o a hybrid aircrat.
T a b l e 7
Direct Contribution (A-matrix) Showing Hybrid Aircrat Direct Contribution Vector
Supplier Industries
Radio, TV,
Communications
Equipment (Avionics)
Aircraft
Integrators
Aircraft
Engines
Other
Sectors
Hybrid
Aircraft
I/O Vector
0.001 0.007 0.001
0.001 0.659
0.023 0.028 0.001 0.054 0.026
0.149 0.105 0.100
0.441 0.107 0.010 0.111
0.081 0.044
0.218 0.488 0.607 0.070 0.458
0.318 0.226 0.206 0.200 0.260Wages 0.302 0.192 0.175 0.180 0.218
Taxes 0.009 0.003 0.003 0.003 0.004
Profits 0.008 0.031 0.028 0.017 0.038
1.000 1.000 1.000 1.000 1.000
*Sample categories for illustrative purposes only.
Highlighted cells are referenced in text below
Sum of Shares
Radio,TV,Communications Eqpt.
Aircraft Integrators
Others
Value Added (components below)
Agriculture
Mining/Extractive
Metal Products
Engines and Turbines
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Thus, or a dollar o direct purchases o a GA aircrat, it is expected that, in addition to the value generated by the aircrat
itsel, they will buy about 4.4 cents rom other aircrat integrators and parts manuactures. Aircrat engine manuacturers
main suppliers are other companies in the engines and turbines category, which make the parts that go into aircrat
engines (these two sectors are virtually the same companies). Approximately 26 cents o each dollar will contribute toGDP in the orm o value-added. The lions share o this, or nearly 22 cents, will be in the orm o wages.
However, once all the direct and indirect fows that are associated with making an aircrat are taken into account (Table
8), the ull impact o that dollar o sales can be observed. Thus, or every dollar o sales o general aviation aircrat,
one can expect $2.51 in direct and indirect benets to the economy. This excludes the impact that comes rom the
wages and salaries o the workers in the industries aected. They spend their money throughout the economy. Table
9 indicates the distribution o private consumption expenditures o these workers and the industries mainly impacted
directly. Each o these industries then buys rom other industries producing a multiplier on wages o slightly more than
two times the wages and salaries.
T a b l e 8
Hybrid General Aviation Contribution Based on Inverse Matrix Showing MultiplierAssociated with Direct Sales o New Aircrat
Supplier Industries
Furniture
and Fixtures
Petroleum
Refinieries
Radio, TV,
and
Communi-
cations
Aircraft
Integrators
Aircraft
Engines Insurance
Business
Services
Hybrid
Aircraft I/O
Vector
Agriculture $0.03 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.00
Mining/Extractive $0.01 $0.06 $0.01 $0.01 $0.01 $0.00 $0.01 $0.00
Food $0.05 $0.03 $0.03 $0.35 $0.02 $0.01 $0.01 $0.03Beverages $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
All other sectors $2.28 $2.69 $2.58 $2.24 $2.21 $1.59 $1.82 $2.48
Multiplier $2.36 $2.79 $2.62 $2.61 $2.25 $1.60 $1.84 $2.51
*Sample sectors for illustrative purposes only
Highlighted cell referenced in text
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Conklin & deDecker
Conklin & deDecker
Conklin & deDecker
Conklin & deDecker
Conklin & deDecker
Source
Includes thrust reversers and
APUs for some jets, propellers
on pistons and turboprops, and
life limited parts for rotary wing
aircraft
Costs allocated to overhaul of
engines
Average costs of all airframe
avionics, and minor engine
consumable parts
Average costs of routine,
scheduled, and unscheduledmaintenance labor for the
airframe and avionics
Lubricants, oils
Definition
Although engine types differ, there are restoration
intervals for each.
Engine Restoration Cost
Includes allocations for both parts and labor.Other overhaul
This does not include parts used in engine or life
limited parts
Maintenance Parts
This includes the maintenance costs of inspections
and part replacement, but does not include laborcosts related to engine overhaul which is considered
separately in engine restoration costs
Maintenance Labor
In cases where aircraft use or consume amounts of
engine or transmission oils during engine operation
Fuel Additives
NotesData
Conklin & deDecker
Conklin & deDecker
Conklin & deDecker
Conklin & deDecker
Conklin & deDecker
Source
Includes thrust reversers and
APUs for some jets, propellers
on pistons and turboprops, and
life limited parts for rotary wing
aircraft
Costs allocated to overhaul of
engines
Average costs of all airframe
avionics, and minor engine
consumable parts
Average costs of routine,
scheduled, and unscheduledmaintenance labor for the
airframe and avionics
Lubricants, oils
Definition
Although engine types differ, there are restoration
intervals for each.
Engine Restoration Cost
Includes allocations for both parts and labor.Other overhaul
This does not include parts used in engine or life
limited parts
Maintenance Parts
This includes the maintenance costs of inspections
and part replacement, but does not include laborcosts related to engine overhaul which is considered
separately in engine restoration costs
Maintenance Labor
In cases where aircraft use or consume amounts of
engine or transmission oils during engine operation
Fuel Additives
NotesData
Variable (hourly) Operating Costs2. Variable (hourly) Operating and Maintenance Costs
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Based on aircraft type and typical range of type; For
example: small piston engine aircraft get regional
subscriptions; heavy jets get worldwide subscriptions
Typical annual subscription costConklin & deDeckerNavigation Chart Service
Personal-Use aircraft owners are assumed to
purchase no plan, while business and corporate
owners are assumed to purchase a subscription
Average cost of yearly
subscription to a computerized
weather forecasting service
Conklin & deDeckerWeather Service
Conklin & deDecker
Conklin & deDecker
Source
Cost of subscription to a
computerized tracking and
record keeping service for
scheduled aircraft maintenance
and components
Cost of maintaining aircraft
interior and exterior
Definition
Owners of turbine powered fixed wing and all rotary
wing aircraft are assumed to purchase this service.
Computerized Maintenance
Program
This includes cleaning and repairs to cabin,
reupholstering seats, new carpet, repainting, etc.
Refurbishing
NotesData
Based on aircraft type and typical range of type; For
example: small piston engine aircraft get regional
subscriptions; heavy jets get worldwide subscriptions
Typical annual subscription costConklin & deDeckerNavigation Chart Service
Personal-Use aircraft owners are assumed to
purchase no plan, while business and corporate
owners are assumed to purchase a subscription
Average cost of yearly
subscription to a computerized
weather forecasting service
Conklin & deDeckerWeather Service
Conklin & deDecker
Conklin & deDecker
Source
Cost of subscription to a
computerized tracking and
record keeping service for
scheduled aircraft maintenance
and components
Cost of maintaining aircraft
interior and exterior
Definition
Owners of turbine powered fixed wing and all rotary
wing aircraft are assumed to purchase this service.
Computerized Maintenance
Program
This includes cleaning and repairs to cabin,
reupholstering seats, new carpet, repainting, etc.
Refurbishing
NotesData
Fixed (annual) Operating Costs, continuedFixed (annual) Operating and Maintenance Costs (Continued)
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Appendix B.
Summary o Results
T a b l e b 1
State Impacts Total value and per capita, 2005
State ($ millions) Per Capita State ($ millions) Per Capita
Alabama $1,703 $370 Montana $260 $259
Alaska $400 $571 Nebraska $721 $409
Arizona $2,766 $529 Nevada $962 $465
Arkansas $1,033 $376 New Hampshire $639 $499
Caliornia $18,202 $529 New Jersey $4,351 $518
Colorado $2,141 $479 New Mexico $761 $378
Connecticut $2,409 $726 New York $9,267 $508
Delaware $577 $722 North Carolina $4,140 $503
District o Columbia $483 $914 North Dakota $218 $322
Florida $7,520 $462 Ohio $5,462 $478
Georgia $8,751 $1,040 Oklahoma $1,215 $348
Hawaii $412 $307 Oregon $1,832 $507
Idaho $581 $393 Pennsylvania $6,009 $489
Illinois $6,040 $492 Rhode Island $465 $460
Indiana $3,352 $539 South Carolina $1,606 $398
Iowa $1,413 $481 South Dakota $303 $374
Kansas $7,072 $2,561 Tennessee $2,571 $431
Kentucky $1,746 $426 Texas $11,237 $523
Louisiana $2,059 $454 Utah $912 $378
Maine $521 $405 Vermont $274 $430
Maryland $2,085 $381 Virginia $3,333 $455
Massachusetts $4,046 $641 Washington $3,186 $509Michigan $4,138 $424 West Virginia $616 $333
Minnesota $2,976 $595 Wisconsin $3,523 $643
Mississippi $860 $296 Wyoming $353 $621
Missouri $2,498 $437
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Aaron J. Gellman, Ph.D.
Principal Advisor
Aaron Gellman is a noted transportation economist. His research and teaching include transportation economics andpolicy, the regulation o transportation, and the management and utilization o research and technology. Dr. Gellman
joined the aculty o the Kellogg School o Management in 1992 as a proessor o management and strategy. He also
holds an appointment as proessor o industrial engineering at the Robert R. McCormick School o Engineering and
Applied Science at Northwestern University. Dr. Gellman was the Director o the Transportation Center, Northwestern
University rom January 1992 through August 2000. He ounded and was ormerly president o Gellman Research
Associates, Inc., a consulting rm. Dr. Gellman also served 24 years as an adjunct proessor at the University o
Pennsylvania. He is the author o numerous published papers and has served on government panels and committees,
as well as corporate boards.
Dr. Gellman received his Ph.D. in Economics rom the Massachusetts Institute o Technology, and an MBA rom theUniversity o Chicago.
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