Understanding the Economic Development Contribution of Airports

1. Steven Landau Economic Development Research Group, Inc.www.edrgroup.com For the Pennsylvania Aviation & Aerospace ConferenceSeptember 26. 2013 Understanding the Economic Development Contribution of Airports

2. 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

3. Flash Forward Several Thousand YearsUS Transport Investment • ACCESSto broader markets & locations • Affecting availability & quality of employment, residence, materials (food, clothing), culture/recreation opportunities

4. 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

5. Tell the Full Story of the Economic Importance of Your Airport

6. Economic Development Benefits Generated From Transportation • Economic Development Perspective: Improving Access and Connections • Facilitating access to new jobs, access to new business markets, products & services

7. 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

8. Reporting Impacts These effects can also be reported together as “multiplier impacts”, “spinoffs” or “ripple effects” Avoid (or at least define) Jargon No One Understands & Use English

9. Clear Reporting * Impacts in “Off Airport” economy Important Information: Jobs, Payroll, Output Business Sales, Local/State Tax Revenues, Value Added

10. Easier to Read Alternative * Impacts in “Off Airport” economy

11. Varying Types of Impacts

12. 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)

13. Smaller Pictures… Freight Patterns Business Travel Land Use

14. 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

15. 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

16. 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 Source: US Foreign Trade Division assembled by WISERTrade

17. Visitor SpendingTourism and Business Travel

18. Support for Local Service Sectors • Hotels • Restaurants • Entertainment • Retail • Local Transportation

19. 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

20. Support for Strategic Industry Sectors • Manufacturing • Advanced Logistics • Creative Industries • Life Sciences

21. Land Use

22. Development Significance • Air Industrial Parks • Warehousing • Hotel, Convention • Recreation • Office, Retail • Mixed Use Development Las Colinas Near DFW Airpark Business Ctr (BNA)

23. 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

24. Capture How Airports Contribute to Economic Development “Outside the Fence” • Logistics facilities • Warehouses • Hi-tech sectors • Other Manufacturing • Finance • Business Services • Retail • Entertainment Industries

25. The Story of Economic Impacts AIRPORT 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

26. 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

27. 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

28. THANK YOU Steven Landau Economic Development Research Group, Inc. 155 Federal Street, 6th Floor Boston, MA 02110 USA Telephone: 1-617-338-6775 x 206 Email: slandau@edrgroup.com Website: www.edrgroup.com

30. 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