Steven Landau Economic Development Research Group, Inc. For the Pennsylvania Aviation & Aerospace Conference September 26. 2013 1.

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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