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Understanding the Economic Development Contribution of Airports
Steven Landau
Economic Development Research Group, Inc. www.edrgroup.com
For the Pennsylvania Aviation & Aerospace ConferenceSeptember 26. 2013
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The More Things Change…
Ancient Trade Routes: Amber, Silk, Gold, Salt,
Frankincense
Inter-Modal passenger & freight movement ACCESS to goods and new
markets BUSINESS TRIPS for sales &
procurement TOURISM to visit new places
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Flash Forward Several Thousand YearsUS Transport Investment
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• ACCESS to broader markets & locations Affecting availability & quality of employment, residence,
materials (food, clothing), culture/recreation opportunities
Critical Understanding
The difference between measuring the economic benefit of an airport and the role of an airport in a local/regional economy
Uniqueness of communities/regions, airport facility & role, business mix, and projects
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Tell the Full Story of the Economic Importance of Your Airport
On Airport Economic
Impact
Off Airport Economic
Development
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Economic Development Benefits Generated From Transportation
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$ Passenger Time Value (business)
$ Travel Expense (business)
$ Freight Shipper Productivity
$ Indirect (Downstream) Productivity
$ Location Income Attraction
• Economic Development Perspective: Improving Access and Connections Facilitating access to new jobs, access to new business
markets, products & services
Who Cares?
City, county and state legislators and regulators who want to know ROI or are unaware of the economic contributions made by airports
Local economic development officials and other transportation agencies
The general public who are voters
Neighbors who object to operations and expansion plans
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Reporting Impacts
Avoid (or at least define) Jargon No One Understands & Use English
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These effects can also be reported together as “multiplier impacts”, “spinoffs” or “ripple effects”
Jargon Reasonable Translation/ clarification
Direct Include type of impact (e.g., on-airport)
Indirect Goods and Services sold by local suppliers to support initial economic activity
Induced Spending of wages earned by workers
Output Business sales, or economic activity
Clear Reporting
Direct Supplier Sales*
Wages Spent by Workers*
Total
On-Airport
Visitor Spending
Air Cargo Shippers*
Tax Revenues*
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Important Information:Jobs, Payroll, Output Business Sales, Local/State Tax Revenues, Value Added
* Impacts in “Off Airport” economy
Easier to Read Alternative
Direct Spinoff* Total
On-Airport
Visitor Spending
Air Cargo Shippers*
Tax Revenues*
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* Impacts in “Off Airport” economy
Varying Types of Impacts
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Off Airport Businesses
Direct Payroll Purchases of Goods & Services
Visitor Purchases of Goods & Services
(Meals, Hotels, Transportation, Retail)
Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income
on Consumer Purchases:Sales at Other Businesses Jobs & Income to Workers
Total Economic ImpactsSum of Direct + Indirect + Induced Jobs & Income
Fiscal Impacts: Government Tax Revenues
Businesses & GovernmentAgencies on Airport
Direct EffectJobs at the Airport Income to Workers
Direct EffectJobs in Retail & Services
Income to Workers
Indirect Effects (Off-Site)Sales at Supplier Businesses:
Jobs and Income to their Workers
Source: EDR Group
Shippers & Receivers/ Market Access
(freight, productivity)
The Big Picture
Airports Support: Cost-competitiveness of existing business
Rate of business expansion/attraction
Breadth of activities for key local institutions
Existing business mix
Land use and development trends and potential
Intermodal connections (both passenger & freight)
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Smaller Pictures…
Freight Patterns
Business Travel
Land Use
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Air Freight in Economic Development
Increase of air freight, just-in-time delivery, overnight courier
Expanding air-service reliant manufacturing & services
Growing technology industries, yielding new types of manufacturers & service providers
Use of corporate GA & fractional ownership
Intermodal air/truck/rail logistics
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Changing Freight Patterns
Higher value/weight*
Higher time sensitivity*
Overnight delivery*
Small package delivery trucks
Air & Marine port dependence on rail & hwy
Rail & truck companies focus on long-hauls
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Industries Most Dependent on Air Cargo
Civilian Aircraft, Engines, And Parts
Electronic Integrated Circuits
Pharmaceuticals & Chemicals
Electric Apparatus
Medical, Surgical, Dental or Veterinary Instruments
Automatic Data Process Machines
Precious Metals (gold, diamonds, etc…)
Machinery/Apparatus for Manufacturing Semiconductors & Semiconductor Devices
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Source: US Foreign Trade Division assembled by WISERTrade
Visitor SpendingTourism and Business Travel
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Support for Local Service Sectors
• Hotels
• Restaurants
• Entertainment
• Retail
• Local Transportation
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Industries Most Dependent On Passenger Air Transport
Telecommunications
Architectural, engineering, and related services
Management, scientific, and technical consulting services
Banking, finance and business services
Government, other Public Administration
Universities and R&D centers
Medical Services
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Support for Strategic Industry Sectors
• Manufacturing
• Advanced Logistics
• Creative Industries
• Life Sciences
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Land Use
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Development Significance
Air Industrial Parks
Warehousing
Hotel, Convention
Recreation
Office, Retail
Mixed Use Development
Airpark Business Ctr (BNA)
Las Colinas Near DFW
Traditional Economic Impact:Airport as a Jobs Center
Airport Administration Aviation Services Services to Aircraft (e.g., repairs, janitorial, etc..) Services to Passengers, Pilots & Crew: Terminal
Concessions Airport Business Services Government Services (e.g., FAA, Police, Fire, etc..) Support for Agricultural- Flights not crops Enables visitors - only off airport consideration
* Add it all up and present a number
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Capture How Airports Contribute to Economic Development “Outside the Fence”
Logistics facilities
Warehouses
Hi-tech sectors
Other Manufacturing
Finance
Business Services
Retail
Entertainment Industries
The Story of Economic ImpactsAIRPORT ACTIVITY: number of based aircraft by type; estimated operations by
private aircraft, charter/air taxi services, commercial cargo services, commuter or air carriers; volumes of freight and number of commercial passengers
AIRPORT FUNCTION: commuter, corporate, reliever, destination, hub, gateway, maintenance functions
AIRPORT CAPABILITIES/CONSTRAINTS: critical aircraft type (prop, corporate jet, air carrier craft); weight and range limits for critical aircraft; lighting and navigation aids
NEARBY FACILITIES: Industrial parks, business parks, resorts and other attractions
CHARACTERISTICS OF THE REGIONAL ECONOMY: population, workforce size and education, employment by industry; local growth/change patterns in those factors relative to broader state and national factors
CHARACTERISTICS OF THE REGIONAL SETTING: tourism attractions, business location site opportunities; supporting infrastructure; distance/connections to interstate highways, ports, urban centers, market area
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Airport Economic Development Factors
Regional Market Factors Airport Characteristics
• Industry Competition• Tourism Potential• Population• Business Attractiveness
• Runway Capacity• Airport Services• Expansion Potential• Highway Connections
Desired Outcomes• Increased Tourism• Increased Business Travelers• Increased Air-Freight Capacity• Business & Job Attraction/Retention
Airport Community Development Role
Preserve/enhance functioning of rural communities Examples: provide lifelines for transportation, freight,
medical evacuation
Support local institutions
Local, regional and statewide importance
Other ways that airports provide benefits
Examples: military use, air shows, non-aviation land use
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THANK YOU
Steven LandauEconomic Development Research Group, Inc.
155 Federal Street, 6th FloorBoston, MA 02110 USA
Telephone: 1-617-338-6775 x 206
Email: [email protected]: www.edrgroup.com
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Airport Economic Development
Regional Market Factors Airport Physical Characteristics
Industry Composition• Presence of industries that
use more aviation (travel, cargo) than average
• Presence of industries that use more aviation (travel, cargo) than average
• Potential for job growth in these industries
Tourism Potential• Jobs created due to
increases in visitors and expenditures
• Strength of tourist attractions in service area
• Current visitor expenditures
• Presence of a resort
Runway Capacity• Accommodate corporate
jets, cargo or commercial flights
(type of craft most appropriate to meet local economic development needs).
Airport Services• Refueling facilities• Maintenance facilities• Pilots Shop• Passenger terminal• Cargo terminal
Business Location Attractiveness• Office and Industrial Parks• Proximity to Markets• Supporting Infrastructure (sewer, water, electricity,
broadband, etc.) • Business Support Services
Other• Distance from major highway(s) • Distance of population from airport• Delivery market size/access• Potential for Expansion• On-airport and/or airport owned acres available
for development
Desired Economic Impacts• tourist expenditures• Business traveler expenditures• Business & job attraction/retention/expansion through cargo,
corporate and tourism activities
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