This information was prepared in an effort to help small general aviation
airports estimate the impact they have on their local economy.
Acknowledgements
In starting we need to acknowledge that this package is a compilation of
information from a variety of sources. If this process is interesting to you we
would urge you to obtain and review one or more of the following resources.
AOPA’s "Airports Then & Now: A Guide to Obtaining Community
Support For Your Local Airport" is a tremendous resource for an airport
proponent. It does a very good job of explaining for the layman the basics of
economic impact analysis for an airport, as well as providing ideas for the
organization of an airport support group, how to handle public relations, and
airport planning.
A source that goes into much greater detail in the preparation of an economic
impact analysis is a 1992 DOT Report entitled "Estimating the Regional
Economic Impact of Airports".
Finally, an Eckrose/Green Associates publication, "How to assure the
Future of Your Airport", is another good resource for the airport
proponent. This publication was sponsored by NASAO in 1988. If you can find a
copy, you will find it very helpful.
Process
In reviewing the information provided by the above sources, as well as many
others, it was apparent that development of an economic impact analysis consists
of several phases.
1. Direct Impact
The first phase is to determine the direct impact that airport businesses
have on your local economy. In this situation the direct impact is defined as
economic activity that stems directly from the airport. This would be payroll,
business expenses, taxes, etc. that are generated by the businesses and entities
located on the airport.
To assist you in figuring out what these impacts are you will need to survey
each business or entity on the airport. When you do surveys make sure you
consider all entities on the airport. FBO’s, independent mechanics, painters,
upholsterers, ag sprayers and even the airport owner (city, county, authority,
etc.). The survey form attached will help you collect the information you will
need to do the analysis.
When you do your survey, we would suggest that if at all possible you do it
with an interview format. You will end up with a much better feel for the
numbers and some of the intangibles of the business if you will do it this way
rather than just handing someone a form and trying to interpret their responses
later.
When all of your surveys are done you need to total them into an annual total
direct impact. Please make sure that your numbers are in annual costs.
2. Indirect Impact
The second phase is to try to get a feel for what kind of indirect impacts
your airport has on the community. What is indirect impact? Indirect impact is
money that comes to your community through the airport, rather than being
generated directly at the airport. Indirect impacts are expenditures made off
airport as a result of the use of the services the airport provides.
Examples of indirect impacts would be:
the hotel rooms the pilot and/or his passengers rent when they stay
overnight,
The cost of the meals they eat,
Their entertainment while in town,
Supplies they purchase.
In addition to the examples above, when a doctor comes to town for a clinic
patients travel to your community to visit them. The money they spend in town is
also an indirect impact. If you have a manufacturing facility in your town and
corporate representatives fly in to check on the plant, there is some indirect
impact in the jobs that are created by the easy access to their facility that
the airport provides.
This is a phase in which you are going to have to brainstorm, you are going
to have to use your imagination! How is your airport used and how does that
affect your town? The following questions might get you started:
How many operations, total and itinerant, occur at your airport per year?
Who uses the airport?
Package services?
Doctors?
Life flights?
Charters?
Corporates?
Tourists?
Military?
Do people come to your community for a day?
Do they stay overnight?
Do they typically stay for several days?
Do they meet with one person or many?
Do people come to your town to meet with those who fly in?
What comes to your town through the airport?
Critical parts so the assembly line keeps moving or the farmer keeps
working?
Rapid package deliveries?
Bank check transfers?
While all of these things are kind of intangible they all serve you when you
move to the next step, which is choosing a multiplier for calculating induced
impact.
3. Induced Impact
What is induced impact? Each one of those direct dollars that you determined
above, and each one of the indirect dollars that comes to the community through
the airport circulates through your economy. For example, if one of these
dollars is spent at the local hotel, then the hotel operator has an additional
dollar, that came through the airport, to spend for materials at the lumber
yard, or for supplies, or for wages. In turn, the lumber yard has a portion of
that dollar to pay wages or buy additional merchandise. The hotel employee has
part of that dollar to spend at the grocery store or to buy shoes or pay bills.
In turn, now the grocery store has a fraction of that dollar to pay their wages
or to advertise their specials. As you can see, the dollars continue to
circulate through the economy.
How long do the dollars circulate? A very conservative multiplier for induced
impact might be less than one, a very optimistic multiplier might be as high as
seven. Some detailed analyses apply different multipliers to different kinds of
impact. For the purposes of the examples shown we have used a conservative
multiplier of 2.
4. Formulas
Finally, plug your total direct impact and your operational numbers into the
formulas provided. When you get done you should have a range of total impacts.
Some will be very conservative, others will be very optimistic. What you present to
people is up to how comfortable you are with what you have done.
For each of the following formulas we used the same default information so that
you can get a feel for how the different formulas vary in their output. For
formulas 3 and 4 below a spreadsheet has been incorporated into the web page.
Simply substitute your numbers for those in the yellow highlighted cells to
arrive at results for your airport.
EXAMPLE
Airville Airport
Annual operations = 8,000
Local 6,000
Itinerant 2,000
Direct impact $500,000
Sample Formula #1
This formula assumes that at a small GA airport itinerant operations do not
generate enough indirect impact to count. It also assumes a very conservative
multiplier for induced impact.
Direct $500,000
Indirect $ 0
Induced (.5xDirect) $250,000
Total Impact $750,000
Sample Formula #2
This formula assumes that indirect impact equals ½ of direct impacts,
regardless of airport operations. It also assumes that induced impacts equal
2x Direct plus 1X Indirect.
Direct $500,000
Indirect (.5xDirect) $250,000
Induced (2.5xDirect) $1,250,000
Total Impact $2,000,000
Sample Formula #3 Worksheet
This formula calculates indirect impact based on operations, an average
number of 2.5 passengers\GA flight and an assumption that the average
passenger will spend $70 while in your community. For the purposes of this
formula you may choose to vary the average number of passengers and the
dollars spent based on your experience and knowledge of your airport.
You may also choose to vary the multiplier in the calculation of the
induced impact. Some propose a range from 2 to 7. This example uses a
conservative multiplier of 2.
Given Direct Impact Compiled From Questionnaires (see below), The Induced
Impact Multiplier (see paragraph 3 above) Average Number of Passengers Per
Aircraft, Average Dollars Spent Per Day Per Passenger, And Total
Annual Itinerant (not home based) Operations:
Calculate Total Impact (enter your figures in the yellow
cells and hit the Enter key,
results are in blue)
This formula is very similar to #3, with the following revision. Some people
will travel to your community and stay for the day, some will stay for more than
one day. This formula suggests that, on average, 1/3 of your passengers will
stay for 3 days; the remaining 2/3 will come to town, do their business and
leave that day.
Again, you may choose the average number of passengers, the dollars
spent\day, the fractions (1/3-2/3) of those who stay, the average length of stay
and the induced impact multiplier based on your experience and knowledge of the
airport.
Given Direct Impact Compiled From Questionnaires (see below) And Average
Number of Passengers Per Aircraft, Average Dollars Spent Per Day Per Passenger,
Fraction of Passengers That Stay More Than One Day (Enter As A Decimal Fraction.
i.e. One-Third Would Be Entered As .33, Half As .5 And So On), The Average
Length of Stay Per Passenger For Those Passengers Staying More Than One Day, The
Induced Impact Multiplier (see paragraph 3 above) And The Total
Annual Itinerant (not home based) Operations:
Calculate Total Impact (enter your figures in the yellow
cells and hit the Enter key,
results are in blue)
We have done a lot of research over the years and what you have just read is
a very simplistic presentation of what we have learned. Please, use this
information in the spirit in which it was intended. We are not economists, nor
are we in the business of analyzing airports for their value. But we are very
interested in aviation and we understand how important an airport is to a
community. We believe that you probably feel the same way. Perhaps our work, and
yours, will help educate others as well.
Sample Survey
As the first step in trying to estimate the economic impact
our airport has on the local economy we are conducting a survey of all aviation
business entities located on the airport. Your answers to the following
questions will be invaluable in assessing the total value of aviation and the
airport to our community.
Please understand that we do not need exact numbers or
details about your business. We realize that is your business. Any approximate
or ballpark numbers you provide will never be published by business but will be
lumped together with similar information from all other businesses on the
airport to give us a feel for approximately how much money flows into our
economy directly as a result of the airport.
1. How many employees do you have at the airport?
_____________
2. What is your approximate annual payroll at the airport?
$____________
3. Do you employ additional people off the airport who are
integral to your operation on the airport?
_____________
4. If so, what is the annual cost of those additional
employees?
$____________
5. What are your typical annual business expenses at the
airport?
