Greater Austin: Significant Growth in Economic Activity and Air Service

Case Study – Hub size: medium | Characteristic: sustained growth | Economic strength of region: information technology

AUS Case Study

Known for its arts and music and as the capital of Texas, the Greater Austin area features a diverse, highly professional economy. High-tech firms, particularly those related to semiconductors and software, are important economic pillars. The region was the third fastest growing area of the country from 2010 to 2019. Operations and passenger traffic at Austin-Bergstrom International Airport (AUS) have grown faster than the region’s population. In 2019, the airport set a new annual passenger record: 17.3 million people traveled through the airport. It was the tenth record-breaking year in a row. The Austin region is included as a case study because of its significant growth.

The Greater Austin Area

Introduction to the Region and Its Economy

The Greater Austin metropolitan statistical area (MSA) had a 2019 population of 2.2 million, an increase of nearly 600,000 (36 percent) since 2008. The region is growing twice as fast as Texas as a whole. Area employment rose by almost 500,000 (46 percent). Private, non-agricultural employment growth in the region averaged 2.92 percent annually—second only to the Miami area for the fastest growth in the country. The U.S. national average was 0.96 percent.

20082019Change #Change %
Population (000s)1,6342,22759336%
Total Employment (000s)1,0721,56649446%
Income per Capita – Constant 2019 $$50.74$61.98$11.2422%
Source: U.S. Bureau of Economic Analysis (BEA)

Regional Economic Strengths

The region’s economy is anchored by several large employment sectors. As the capital of Texas, the region has a significant number of local, state, and federal employees. This includes a large number of employees associated with education, especially the major public universities in the region. Other major sectors include the professional, scientific, and technological (PST) sector; health care; construction; administration and support; and information technology (IT).

The U.S. Cluster Mapping Project highlights the region’s economic strength in IT, which includes software publishing, semiconductor manufacturing and machinery, and computer and peripherals manufacturing. In IT, the region’s Location Quotient, a measure of employment concentration against a national average of 1.0, was 3.52. As can be seen in the map, the area’s largest IT establishments are all located in the urban area, within a 60-minute drive of AUS.

AUS business and drive time
AUS and Information Firms in the Region
Source: ESRI Business Analyst

Overview of the Airport and Its Air Service

From 2008 to 2019, the number of available air service seats rose by 4.3 million (70 percent), equivalent to an extra 12,000 seats per day. The number of flights rose by nearly 16,000 (30 percent), or almost 45 additional flights per day. Average aircraft size (seats per departure) rose from 115 to 150. And the number of enplaned passengers nearly doubled, rising from 4.5 million to 8.7 million.

AUS air service overview
AUS Air Service Overview

The number of nonstop markets served grew, as did the number of flights to major markets. In 2009, AUS had service (defined as 50 flights in a year or more) to 40 destinations. In 2019, it had service to 60. The airport also expanded its international service. AUS had service to Canadian and Mexican airports in 2008, but added new destinations, including Calgary and Guadalajara. AUS also gained nonstop service to London and Frankfurt.


“Connectivity” generally means the ability to reach a wide range of places in a short amount of time. Connectivity creates efficiencies that make firms more productive, which in turn attracts more businesses that have their choice of locations.

AUS connectivity
AUS Connectivity

Facilitated by new and growing service to major markets in the United States as well as to London and Frankfurt, connectivity from AUS nearly doubled between 2008 and 2019, rising by an average of 6.3% per annum. The figure summarizes the growth in connectivity at AUS using a method developed by the International Air Transport Association (IATA).

Air Service and Economic Activity

Origin and destination (O&D) traffic at AUS is highly correlated with total local employment. As total employment increases, total O&D increases. The correlation coefficient between the two is a near-perfect at 0.987. However, correlation does not demonstrate causation. That is, it is not evident whether rising total employment levels lead to more air traffic or whether more air traffic leads to more total employment.

AUS Employment and OD
AUS Employment and O&D

Foreign Direct Investment

Market access is one of many factors that firms consider when making site selection decisions. The Greater Austin Chamber of Commerce (Chamber) reports that since AUS gained nonstop service to Europe, the amount of foreign investment in the region has risen significantly. In the period 2010–2013, the region gained an average of two new foreign-based firms supporting 190 jobs annually. Since nonstop flights to London launched, the annual average has risen to eight firms supporting 560 jobs.

Stakeholder Perspectives on Contributions of Air Service to Economic Development

Improved air service is a critical element of the Chamber’s efforts to enhance regional economic development. Its “Opportunity Austin” initiative targets key industries, including advanced manufacturing, digital media technology, life sciences, data management, space technology, and corporate headquarters—all of which have notable reliance on air service. The initiative integrates economic development, consideration of sustainable and livable communities, and air service.

AUS coordinates with the Chamber through its Air Service Committee, which includes representatives from many major employers and works to improve the service, frequency, and competitive prices for nonstop service. It directly helped to bring transatlantic service to the region.

The Chamber also recognizes the challenge of measuring and reporting the effects of its economic development efforts for different audiences. For internal purposes, technical measures of economic activity are provided because the Chamber’s board comprises senior business executives. For public reports, the Chamber cites specific examples of successful efforts through press releases and posts basic measures on job growth, rising wages, economic diversity, and workforce matters.

Communicating the Airport’s Economic Impact

On its website, AUS lists only the highlights of its latest economic impact assessment:

  • $7.6 billion in total economic impact and
  • support of 74,000 jobs in the region.

The website also notes that

“[t]he tastes of Central Texas are growing at Austin-Bergstrom as well. In 2017, passengers enjoyed:

  • 61.5 tons of brisket (up 13% from 54.5 tons in first year recorded 2012)
  • 684,199 breakfast tacos (up 37% from 498,141 in first year recorded 2012)
  • 1,500 live music performances (up 86% from 805 in first year recorded 2012)”

It also noted that the airport is not dependent on support from state or local taxes: “Austin-Bergstrom is entirely self-sustaining, generating revenue to cover airport operating costs and future improvements.”

AUS Case Study – Full Report