1. What Is The Economic Value of Your Airport? Presentation to the Association of California Airports Annual Conference September 14, 2011 Presented by Doug Svensson, President Applied Development Economics Walnut Creek, California

2. Today’s Presentation  Why do an economic impact study?  What approaches can be used and how do we collect the data?  What can the results tell us?  How can we focus on the right questions for each airport?

3. Introduction Purposes of Airport Economic Impact Studies  Measure economic significance of airport for the region  Justify airport investment/expansion  Measure significance of airport for specific industries  Formulate economic development/planning initiatives  Supplement airport system plan  Obtain financial support from municipal partners  Determine allocation of matching funds

4. Introduction Perception of Airport Impacts – the sectors that represent the obvious impacts  Commercial passenger service  General aviation  Charters

5. Introduction Airport Operations – big source of direct employment  Flight crews  Ground support  Customer service  Terminal personnel

6. Introduction Other Airport Operations –extensive, even without passenger service  Fixed-base operations  Aircraft maintenance/repair  Air traffic control  Security  Ground transportation  Administration

7. Introduction Other Airport Property Tenants – big impact that flies under the radar  Retail and personal services  Offices  Visitor services recreation/sports (skydiving, golf, etc.) excursions charters lodging car rental

8. Introduction Other Airport Property Tenants – big impact that flies under the radar  Industrial parks  Distribution  Warehousing/customs  Food processing  Air courier services  Military functions  R&D

9. Methodology ACRP Study – identified three main approaches  Input-Output Analysis  Collection of Benefits  Catalytic Effects

10. Methodology Input-Output Analysis captures the multiplier effects of the airport on the region –three categories of impact:  Direct – Onsite business activity  Indirect - Off-site business to business transactions  Induced – Offsite employee spending

11. Methodology Indirect Effects  All businesses need suppliers in order to operate  Airports and their tenants buy lots of stuff!  Supplier relationships generate jobs throughout a region

12. Methodology Induced Effects  Jobs = income  Income = spending  Spending = more jobs created throughout the region

13. Methodology Collection of Benefits – quantitative or qualitative measure of airport benefits  Time saved  Costs avoided  Capacity improvements from reliever airports  Stimulation of business  Local fiscal benefits

14. Methodology Catalytic Effects – spillover effects in terms of benefit to local economy  Investment  Trade  Economic productivity and fiscal benefits

15. Methodology Aviation Trends Subject to Study  Growth in air freight  Non-aviation commercial development co- located with airport  Use of air transportation in supply chains and just-in-time delivery  Reliance on aviation by specific industries such as R&D, biotech, banking, and universities

16. Economic Impact Examples: California Air Transportation – The Multiplier Effect  Every job in air transportation creates an additional 1.7 jobs  2010 air transportation jobs: 41,200  Total impact of airport operations also includes other industries

17. Economic Impact Examples: Stockton Airport Identifying the Actual Impact  Passenger carriers had stopped service to Stockton (service has since resumed)  Perception that airport was dead  However, ADE study identified over 1,500 jobs on Stockton Airport grounds  Process included individual business interviews and data research

18. Economic Impact Examples: Stockton Airport Study Findings  Jobs at airport site touched on a broad range of aviation and non-aviation businesses  Multiplier effect: over 1,000 additional jobs supported throughout San Joaquin County  Total wages: $96 million  Total economic impact: $245 million

19. Stockton Airport Regional Business Revenues and Wages

20. Stockton Airport Employment Impacts

21. Stockton Airport Airport vs. Tenant Impacts

22. Handout: Quick Impact Calculator

23. Conclusion Potential Pitfalls/Objections  Cost of the study  Collecting sufficient data  Complexity of economic models  Lack of standard methodologies  Omission of offsetting impacts  Need for periodic updates  Difficulty of corroborating study results

24. Conclusion Potential Benefits/Illumination  Gaining the big picture perspective of an airport’s true impact  Documenting the airport benefits to the community  Broadening the airport’s benefits beyond its boundaries  Linking the airport to economic development goals  Defining an airport’s role as an important resource  Focusing discussions about an airport by providing hard numbers

25. Thank You! Discussion

26. Methodology Developing Issues that Require Further Study  Fractional ownership  Globalization  Emergence of very light jets