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Brookings Metropolitan Policy Program - Atlanta from the Air - Global Cities Initiative Forum -...

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Presentation by Adie Tomer, Senior Research Associate and Associate Fellow, Metropolitan Policy Program. Global Cities Initiative forum in Atlanta, GA on March 19, 2013. The Global Cities Initiative is a Joint Project of Brookings and JPMorgan Chase. For more information: http://www.brookings.edu/projects/global-cities.aspx
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  • 1. 1
  • 2. Iseparatedthe presentationintothreeparts: PassengerConnections:HartsfieldJacksonsroleas thesinglemostusedpassengerairportinthecountry; Theairportspositionasanengineforlocalindustrialproduction;andfinally WhatregionalpoliciescouldhelpexpandtheeconomicimpactderivedfromHartsfieldJackson. 2
  • 3. Startingwiththepassengersideoftheairport. 3
  • 4. Accordingtoourstatisticalsources, Atlantamovednearly 29millionlocalpassengersin2011.ThisisthenumberofpassengersthatactuallystartedorendedtheirtripatHartsfieldJackson.Itsisastrongnumber,ranking8th inthecountryandrelativelyinlinewiththemetroareaseconomicranking.Itsalsoagrowingnumberrepresentinga13percentincreasebetween2003and2011andstandsasevidenceoftheairportsexpandingroleinconnectingAtlantatothecountryandworld.and worldButmostmaybeusedtoseeing higher trafficnumbersthanthisfromthelocalairhubmoreonthatinasecond. 4
  • 5. Over3millionofthoselocalpassengerstravelinternationally,andthisisthebreakdownbyworldregion.OverathirdtraveltocountriessouthoftheU.S.,withanotherquartertravelingtoWesternEurope.Butthisdistributionisalreadychangingaswespeak,shiftingfrommoredevelopedmarketslikeWesternEuropeandCanadatotheburgeoningmarketsinSouthAmerica,Asia,andtheMiddleEast.Forexample,SeoulisnowthesinglelargestpassengerpartnerwithAtlanta,astrikingcommentonAtlanta sKoreaneconomicfluency.with Atlanta a striking comment on Atlantas Korean economic fluencyIfyoudliketoseeafulllistofthemajorglobaltradingpartnersinaviationterms,weveprovidedalistofthetop200. 5
  • 6. Butheresthereasonyoumaybe usedtoseeinghigherpassengernumbersatHartsfieldJackson:alargeshareofyourpassengersarejustpassthrough,forcedtotransferatAtlantaswellcalibratedpassengerhub.AcrosstheentireUS,AtlantastransfershareissecondonlytoCharlotteintermsofrelianceontransferpassengersfortotalbusiness. WhilethereisessentiallynoexpectationthatDeltawouldleaveAtlantaanytimeinthefuture,youcanseewhatmighthappentoyourtotalpassengernumbersiftheydid.Intheend,thiscouldimpactairconnectivity.your total passenger numbers if they did In the end this could impact air connectivityToputthesesharesincomparison,metroslikeNewYorkandLosAngelesseenomorethan10percentoftheirpassengersaspassthrough.Theysimplyusetheirairportsmoreforlocalactivitiesthanasthemiddlemanforotherpairsofplaces. 6
  • 7. Thereisamajoreconomicimplicationfromthatdifferencebetweentypesofpassengersserved.AccordingtoresearchfrommycolleagueZakNealatMichiganState,thereisadirectcorrelationbetweenjobscreatedbasedonairportpassengertypes.Metrosfocusedonconnectingpassengers,placeslikeAtlantaandCharlotte,helpgeneratejobsattheairportinotherwords,moretransportationfocusedjobs.Theseconnectingpassengerlevelswerenotfoundtohaveaneffectonbroaderjobcategories.Conversely,passenger levels were not found to have an effect on broader job categories Converselymetroswithmorecentralizedoperationspassengersactuallyleavingtheairporthadastrongereffectongrowingjobsbeyondtheairport.Thatleadstoanaturalquestion: howcantheAtlantaregionbuild onitssuccessinfilteringpassengerstohelpgrowitsbroaderregionalemploymentbase? 7
  • 8. Now,turningtofreightoperations. 8
  • 9. First, abitofcontextsetting.Airfreightisahighvalue business,focusedonmovinglowweight,highvalueproducts.Inthissense,ittheoppositeoffreightrailandastrongcomplimenttoseabornetradewhenitcomestointernationalfreight.Airfreightisalsoagrowingmodewithinthedomesticandglobalmarketplace.Interestingly,airfreightisrelativelybalancedbetweenexportsandimports.Thisstandsinsharpcontrasttoourportbasedtrade,whichisheavilyimportfocused. 9
  • 10. Asitstands,Atlantaisalreadyamajorplayerinlocalfreightmovedbyitsairports.Thisstatisticexcludesthosemetrosfocusedexclusivelyonpassthroughfreight,likeMemphisandLouisville.Atlantaissixthinlocalglobalfreightvalue,whichisevenbetterthanitslocalOD passengerranking.Thisincludesextensivetradetoourmajornationaltradingpartners,likeChina,Germany,andBrazil.ButitfartrailstheleadersinNewYork,Chicago,andMiami,allofwhichoutpaceAtlantaintermsofgoodstradeasaproportionofitseconomicoutput.Thissuggeststhesemetroshaveastrongerglobalconnectionviahighvalueproductseitherlocallyproducedorconsumed,especiallyforNewYork,orhavecreatedauniqueenvironmenttoaddvaluetogoodsshippedbetweenotherUSmarketsandtheirglobalpeers,suchasMiami. 10
  • 11. Sowhatcommoditiestendtogetshippedbyair?Inotherwords,whatdoImeanbyhighvalue? Fourcommoditycategoriesdominateaircargo:Machinery,tools,andmanufacturingproducts;Electronic products;MedicalandScientificproducts;andChemicalsandplastics.Thesefourcategoriesconstitute89percentofallUSfreightvalueshippedgloballybyair.Thisisastrikingconcentrationwithinjustahandfulofcommoditytypes. 11
  • 12. Butthisraisesanewquestion:whatdoesAtlantaproduceinthesecommoditycategories?Unfortunately,theanswerisnotenough.Thesearethepercentagesoftheregionaleconomythatmakeproductsinthesecommoditycategories.Asyoucansee,only3.6percentoftheAtlantaeconomyfocusesonproductionintheseadvancedindustries.Theseproductsareavitalcomponentofaregionaltransitiontoamoreproductivegrowthmodel,onethatleveragesUSadvantagesinaneducatedworkforce,technologically advancedcapitalinvestments,andproductin an educated workforce technologicallyadvanced capital investments and productinnovation.Now,thesestatisticswouldntincludethevaluechainemerginginglobalproductionnetworksasortofcentralcommandthatdoesoperateoutofAtlantaforfirmslikeCocaColabutitdoesntdenythefactthatnotenoughstuff isactuallymade g p p , ywithintheregion.Withoutamplelocalproduction,itwillbedifficulttotrulymaximizefreightbusinessattheairport. 12
  • 13. NowthatIvetalkedaboutwhereyou are,Iwanttospendthelastfewminutestalkingaboutwhereyoucouldbegoing.Ifitwasntclearalready,thereisatremendousamountofopportunitytocreatemoreeconomicvaluefromHartsfieldJackson.Anditallstartswitharegionalapproachtowardsarapidlygrowingregion. 13
  • 14. Thiswas thesizeoftheAtlantametropolitanareain1970justthosecorefivecounties.Overthecourseoffourdecades,themetroareagrewbyover6,700squaremilesandaddedover4millionpeople.Toputthatincomparison,thatsabiggerfootprintthantheentirestateofConnecticut.Thequestionis,howdoyoubetterunitearegiongrowing sofast,bothintermsofpeopleandgeography?Yourairportcanplaythatunitingrole,butitshouldforemostbe d h ?Y i l h ii l b i h ld f bconsideredafacilitatorratherthanadriver.Itsabouttheregionaladjustmentsyoumakeoutsidetheairportthatcandrivemorebusinessinsideit. 14
  • 15. Returningtothepassengerside,Atlantahasquiteafewdistinctadvantages: YouhavesomeofthebroadestconnectivityofanyUSmetro,helpingAtlantaresidentsandbusinessesflydirectlytowheretheywanttogo,andviceversathoselookingtovisitanddobusinessinAtlanta. Yourairportoperationsaresecondtonone,ensuringanenormousvolumeofflightscansafelyoperatethroughoutthedayandnight. Finally,youhaveasubstantialhighskillservicebase,thoseindustriesmostlikelytotakeadvantageofanairport.advantage of an airportThemajoropportunity,asmanyintheregionalreadyknow,istofigureouthowtogetmoreofthosetransferpassengersoutsideoftheairport.AflightlandingfromEuropemaybeglobal,butitwilltrulyhelpAtlantaifmostofitspassengersleavetheairportandinteractwiththefulllocaleconomy.Whenitcomestothepassengerside,thisshouldbethemajorgoaltocreatemorevaluefromwhatyoualreadyhaveandinthiscase,theoutcomecouldbesubstantialjobgrowth. 15
  • 16. Turningtothefreightside,asimilarsetofadvantages alreadyexist: Firstandforemost,itisalreadyatoprankedcargooriginanddestination,plusalltheadditionalonsitefreightforwardingdone. Thepresenceofworldclass,directpassengerconnectivityoffersunderbellycapacityforfreightexpansions.Manymetropolitanareascantclaimthisadvantage. Finally,thesurroundinglandandgreatermetropolitanareaincludesthelandtohelpdeveloplocalindustryandhighskillservices.Thisleaves threedistinctrecommendationstoexpandyourfreightbase. Growyouradvancedindustrialbase.Notonlydotheseindustriesprovidegreatjobswithgreatpay,theyremostlikelytoutilizetheairporttoshiptheirproductsabroad. AstheregioninitiatedduringtheGlobalCitiesInitiativesconvening,completearegionalexportplanandcontinuebuildingyourregionalpartnerships.Thereisnobetterwaytogetbetteruseofanassetthantoincludestrategicthinkingaboutitsvalue. Finally,andpossiblyaspartofyourexportstrategy,consideradiversifiedsetofinternationaltradingpeers.GlobaleconomicgrowthwillcontinuetoconcentrateindevelopingmarketshowcanAtlantabetterconnectandaccessthatgrowth? 16
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