The Value of My Airport
Airports, state departments of transportation, and others involved in the aviation community will commonly undertake or commission (from consultants or universities) economic impact studies as a way of communicating the economic role and importance of airports. Generally, economic impact analyses begin with an inventory of the direct effects of the airport. Direct impacts are those effects within the economy that are directly related to the provision of aviation services at your airport. Most commonly, the direct impacts evaluated for an airport study include:
- On-airport jobs, wages, and revenue (see Inside my Fence for guidance on how to collect this type of data)
- Jobs, wages, and revenue associated with visitor spending (see Visitor Spending)
- Jobs, wages, and revenue at airport-reliant businesses (see My Airport’s Business Constituency)
Direct effects can then be translated into broader spinoff (multiplier) effects in your regional economy. According to economics parlance, spinoff effects are broken down into two categories: indirect and induced impacts. Indirect impacts are the effect of increased economic activity for businesses that supply goods or services to businesses that directly benefit from the airport. For example, if an electronics manufacturer sells components to an airline doing business at an airport, the sales by the manufacturer represent an indirect impact. Moreover, this manufacturer creates additional indirect impacts on a regional economy when it purchases materials or services from other businesses in the airport area. Induced impacts are the effect of consumer spending by wage earners employed at businesses that directly or indirectly benefit from the airport. Spending by wage earners creates induced impacts within housing, retail, and service sectors.
Multiplier effects can be estimated (based on direct effects) using regional input-output models that use region-specific economic data to trace inter-industry relationships. Under tools you will find a list of modeling systems commonly used in economic impact analyses. Because economic impacts depend on a definition of what is “local” within a community, the determination of spinoff effects will depend on your selection of an impact area. Impact areas are generally defined to coincide either with the market area of an airport, or with an entire state if an assessment is being prepared for an agency or group interested in economic development from this broader perspective.
Preparing a full economic impact study may not be necessary or feasible in all cases. If you are interested in communicating the economic value of your airport, without engaging in a full impact study, a number of options are available:
- See if your airport has already been evaluated within a larger-scale study. Reach out to your state’s department of aviation, or conduct a search online.
- Present only direct impacts and then use qualitative descriptions or information obtained directly through interviews to discuss the types of spinoff effects likely to be accruing within your community.
- Contact local planning agencies, chambers of commerce, or business and tourism associations in your region to see if a potential partner organization already has economic data or models for describing multiplier effects.
Because the terminology used to describe economic impact studies can sometimes be unclear, there are two diagrams under the tools section, below, that can be used to help explain the process and outcomes of economic impact evaluations.