San Diego: More Than Just a Tourist Destination

Case Study – Hub size: large | Characteristic: multi-airport region | Economic strength of region: PST

SAN Case Study

In Southern California, San Diego is renowned as a major tourist destination attracting close to 35.2 million tourists annually. With a population of more than 3.3 million, it is the second largest county in California and the fifth largest county in the United States.  San Diego International Airport (SAN) offers close to 500 flights daily, with over 60 nonstop destinations in the United States, Asia, Europe, Mexico, and Canada. This region is included as a case study because it is a large hub competing in an area served by multiple large airports.

San Diego-Chula Vista-Carlsbad MSA

Economic Strengths

San Diego County has grown moderately in both its population and employment since 2008. Total population rose by 316,000 (10 percent).  This is slightly faster than growth for California as a whole, which increased by 8 percent. Total employment increased by more than 320,000 (17 percent), slightly below the rate for California (which rose by 19 percent). 

20082019Change #Change %
Population (000s)3,0223,33831610%
Total Employment (000s)1,8832,20432117%
Source: U.S. Bureau of Economic Analysis (BEA)

Economic activity in industries related to tourism, which accounts for 13 percent of San Diego’s economy, supports 199,800 employees. But San Diego’s economy includes other sectors as well. San Diego is home to the largest military concentration in the world. More than 60 percent of vessels of the U.S. Pacific Fleet are stationed in San Diego, and defense-related activities make up 9.1 percent of the regional economy. The other largest industries in the local economy are finance; real estate; insurance; professional, scientific, and technical (PST) services; and information. A leading high-tech hub in the United States, the region’s innovation cluster (including information and communications, aerospace and navigation, as well as biotechnology and pharmaceuticals) accounts for 9.7 percent of the regional economy. These PST services employed 233,000, which is an increase of 21 percent from 2008 to 2019.

SAN Employment Growth
Industry Sectors Exceeding Average Employment Growth, 2008–2019

The U.S. Cluster Mapping Project highlights the region’s economic advantages. The area is ranked 8th nationally in its economic strength in hospitality and tourism (including accommodations and amusement parks). The region also shows strengths in aerospace and defense, biopharmaceuticals, information technology and analytical instruments, marketing, and education. Not surprisingly considering the concentration of naval activity, the area is ranked in the top 10 nationally in water transportation (e.g., boat building and repair).

Air Service and Connectivity

SAN Air Service Overview
SAN Air Service Overview
Source: Schedule data from Diio by Cirium

SAN flights and seats increased every year from 2011 to 2019. The airport handled a record of more than 25 million passengers in 2019. Following recovery from the global economic downturn in 2008, passenger traffic grew at a compound average growth rate of 6 percent between 2014 and 2019. The total number of nonstop markets served grew from 50 to 60 and includes flights to Mexico, Canada, Asia, and Europe. Available seat capacity rose by 27 percent.

Connectivity at SAN in 2019 was 25 percent higher than 2008 levels, with continued growth in nonstop passenger services to key destinations. International markets accounted for much of the increase. Between 2009 and 2017, flights were begun to Toronto (2009), London (Heathrow) (2011), Tokyo (2012), and Frankfurt (2017).

SAN Connectivity
IATA Connectivity Index for SAN, Indexed Against 2008 (2008 = 100)
Source: InterVISTAS analysis of Innovata schedule data from Diio Mi

With Los Angeles International Airport (LAX) about a 2.5-hour drive away, SAN leaks passenger traffic to LAX, especially for international services. SAN also competes for traffic with John Wayne Airport (SNA) in Orange County, Ontario International Airport (ONT) in San Bernardino County, and Tijuana International Airport (TIJ).

Analysis of Changes in Air Services and Employment

As the regional economy develops through increases in employment, total passenger traffic also increases. The correlation coefficient between origin and destination (O&D) traffic at the airport and employment in aviation-reliant industries is 0.97, indicating a strong positive relationship. Yet correlation does not establish causation. That is, it is not evident whether rising employment levels lead to more air traffic or whether more air traffic leads to more total employment.

SAN Employment and O&D Traffic
Relationship Between Total O&D Passenger Traffic and Aviation-Reliant Industry Employment

Airport Connections with Regional Economic Stakeholders

SAN has used its economic impact studies in air service development initiatives, especially in pursuing international air services. SAN also used the studies when undertaking new capital infrastructure projects. Although the economic impact studies were not necessary to justify these new services or projects, they quantified the value of SAN in economic terms. The studies have been well received by stakeholders, with many organizations citing the results in their own newsletters.

SAN Case Study – Full Report