sangan, Author at Air Service Development and Regional Economic Activity

Columbia, Missouri: Non-Hub in the Shadow of Larger Facilities

Case Study – Hub size: non-hub | Characteristic: sustained growth, multi-airport region

The Columbia-Jefferson City region is home to the major urban areas of central Missouri, with a total population of nearly 410,000 in 2019. The Columbia Regional Airport (COU) serves a catchment area with an estimated 730,000 origin and destination (O&D) passengers. COU captures only about 25 percent of its market, losing most of its potential traffic to St. Louis Lambert International Airport (STL) and Kansas City International Airport (MCI), each located within a 2-hour drive. Nevertheless, passenger traffic at COU has increased more than tenfold since 2008, rising to over 256,000 in 2019. COU has succeeded in replacing historic service to MCI and STL with flights from American Airlines to Chicago O’Hare International Airport (ORD) and Dallas Fort Worth International Airport (DFW) and flights from United Airlines to ORD and Denver International Airport (DEN). This has resulted in a substantial improvement in air connectivity for the region.

COU MSA CSA map — *The Combined Columbia-Jefferson City Region*

Economic Strengths

	2008	2019	Number	Change %	Compound Annual Growth Rate
Population (000s)	384,892	409,544	24,652	6.4%	0.6%
Total Employment (000s)	256,154	274,131	17,977	7.0%	0.6%
Per Capita Income	$34,776	$45,329	$10,553	30.3%	2.4%

Source: U.S. Bureau of Economic Analysis (BEA)

The bulk of economic activity in the region is driven by post-secondary education. The region hosts more than a dozen colleges and universities, with the largest being the main campus of the University of Missouri. With the state capital in Jefferson City, the region also has a large government workforce.

Regional employment is shifting toward professional services. Total employment rose at a compound annual growth rate (CAGR) of 0.6 percent between 2008 and 2019 but grew at a CAGR of 3.0 percent for the finance and insurance and real estate sectors. Since 2015, the fastest growth has been in transportation and warehousing (9.4 percent CAGR) and finance and insurance (5.7 percent CAGR).

The area’s economy features strength in several tradeable clusters, including

Insurance companies and related services. The region’s Location Quotient (LQ) for this sector was 4.98.
Financial services, including securities brokers, dealers, and exchanges; credit intermediation; and financial investment activities. The region ranks 33rd nationally in securities brokers, dealers, and exchanges. The region’s LQ for this sector was 3.64.
Education, including colleges, universities, professional schools, research organizations (e.g., biotechnology and physical, engineering, and life sciences), and professional organizations. The region’s LQ for this sector was 1.74.

These are sectors that tend to have a high propensity to fly. That is, these industry sectors have a relatively high dependency on using commercial aviation as an input to their final product.

Air Service Overview

Destination Airport	Airline	Weekly Seat Capacity 2008	Weekly Seat Capacity 2019
DEN	United	–	350
DFW	American	–	1,210
MCI	US Airways	456	–
ORD	United American	– –	1,050 1,820
Total		456	4,430

Scheduled capacity at COU rose from roughly 1,000 annual flights serving two regional destinations in 2008 to nearly 3,300 nonstop flights to three major hubs (ORD, DFW, and DEN) in 2019. Over the same period, the average seat capacity per flight grew from 25 in 2008 to 59 in 2019, driven by a broader industry trend of upgauging regional service.

Connectivity

Growth in the Connectivity Index at COU

The addition of service to American’s and United’s hubs significantly expanded the ability of local passengers to reach large numbers of domestic and international destinations via one-stop flights. The growth in connectivity from 2008 to 2019 facilitated sustained economic growth and increased the appeal and competitiveness of the regional economy.

Analysis of Changes in Air Service and Employment

COU’s O&D traffic is highly correlated with total local employment. However, correlation does not establish causation. That is, it is not evident whether rising total employment levels lead to more air traffic or vice versa.

The Airport, Its Economic Impact, and Regional Stakeholders

Source: U.S. BEA (CAINC4 Tables) & Sabre O&D Data

COU is formally organized within the City of Columbia’s Economic Development Department; this reporting structure involves close collaboration with the City’s economic development operations, which are housed within a non-profit, public-private partnership called Regional Economic Development Inc. (REDI). REDI staff are involved with air service development and airport initiatives, including coordinating stakeholder support and financing. COU’s air service development initiatives have focused on improved connectivity to destinations that are both key national hubs and have direct links to Columbia businesses. This supports REDI’s “Attract, Grow, Expand” economic development strategy. Accessibility also attracts new and more diverse businesses into the region, particularly from industry sectors that are more reliant on air service, which tend to support higher-paying job opportunities. In this manner, air service facilitates not only economic growth but a high-quality economic growth that supports a higher standard of living and a more resilient economy.

COU has not had an economic impact assessment since 2012. Because airport services have changed so much since then, the 2012 assessment results are no longer applicable.

The airport and its stakeholders believe that economic impact studies can provide useful insight but may not capture the full scale of the airport’s contribution to the regional economy. The proper narrative is critical in conveying the importance and role of air service to a community.

COU Case Study – Full Report

Greater Austin: Significant Growth in Economic Activity and Air Service

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

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.

AUS MSA CSA map — *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.

	2008	2019	Change #	Change %
Population (000s)	1,634	2,227	593	36%
Total Employment (000s)	1,072	1,566	494	46%
Income per Capita – Constant 2019 $	$50.74	$61.98	$11.24	22%

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

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

“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

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 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

Atlanta: Aviation and Increasing Employment in Two Major Industry Sectors

Case Study – Hub size: large | Economic strength of region: information technology

The metropolitan Atlanta region is the economic hub of the American Southeast, home to the world’s busiest airport—Hartsfield-Jackson Atlanta International Airport (ATL). The region was selected as a case study because of its size and the economic strength of employment in two sectors: (1) transportation, logistics, and warehousing and (2) information technology.

ATL MSA CSA map — *The Greater Atlanta Region*

Introduction to the Region and Its Economy

In 2019, the Atlanta-Sandy Springs-Alpharetta metropolitan statistical area (MSA) had a population of over 6 million, ranking ninth in the country. The region is home to 16 Fortune 500 companies, including Delta Air Lines, Coca-Cola, Home Depot, UPS, and the Southern Company, as well as another 13 companies listed among the Fortune 1000. The region ranks third nationally for Fortune 1000 headquarters. The region boasts a rapidly growing international population, and foreign investment has increased over time. In 2018, Metro Atlanta was home to more than 2,700 foreign-owned companies.

According to the Atlanta Regional Commission (ARC), the metropolitan planning organization for the region, the area’s freight and logistics sectors are a key component of the region’s economic base, responsible for 38 percent of the total regional economic output. Metro Atlanta’s global logistics presence is built in part on its airport; ATL is the 14th busiest cargo airport in the United States by landed weight.

	2008	2019	Change #	Change %
Population (000s)	5,930	6,853	923	16%
Total Employment (000s)	3,607	4,445	838	23%

Source: U.S. Bureau of Economic Analysis (BEA)

The U.S. Cluster Mapping Project’s data show that transportation and logistics (including air transportation, trucking, ground transportation, and support activities) made up the third largest “traded cluster” in the metro area in terms of total employment. Among traded clusters, it trailed only in business services (e.g., corporate headquarters, computer services, consulting, and engineering), and distribution and electronic commerce (which includes warehousing and storage along with wholesale suppliers of professional and commercial equipment and supplies). The area’s economy also features several other top-performing traded clusters, including marketing, design, and publishing and communications equipment and services.

Another industry sector where greater Atlanta has a competitive advantage is information technology, based on analyses of the strength of employment in the sector compared to national averages.

Overview of the Airport and Its Air Service

Home to Delta Air Lines, ATL offered nonstop service to 150 domestic and 75 international destinations in 2019. Between 2008 and 2019, total O&D traffic rose by more than 10 million (34%), and total passenger enplanements increased by nearly 20 million (22%).

ATL Total Passenger Traffic chart update — *ATL Total Passenger Traffic*

Over the same period, the total number of departures dropped by over 35,000 (-8%, from roughly 468,000 to 432,000). However, available outbound seating capacity rose by 14%, from 55 million seats to 63 million seats. As a result, the average number of available seats per departing aircraft increased from 118 to 145 (23%).

The airport reported that airlines carried a total of over 600,000 metric tons of cargo in 2019—40 percent of which was carried domestically and 60 percent internationally (freight and belly cargo). From 2013 through 2019, total tonnage handled at the airport increased by 37,000 tons (6 percent), with international tonnage increasing more than domestic tonnage.

Connectivity

ATL Connectivity Growth Index (2008 = 100)

Given the volume and variety of air service at ATL, the airport is among the most connected in the world. In 2019, ATL ranked 12th in the world and third in the United States in terms of total connectivity (including both domestic and international service).

The “Connectivity” figure indexes the change in connectivity at ATL between 2008 and 2019. ATL was not immune to the impact of the Great Recession. ATL’s connectivity dipped for several years due to the industry-wide consolidation of air operations. The airport returned to its pre-recession levels by 2015 and maintained moderate growth in connectivity. From 2015 to 2019, connectivity increased by 15 percent.

Air Service and Economic Activity

Relationship Between Total Regional Employment and Total O&D Traffic

Origin and destination (O&D) traffic at ATL is highly correlated with total local employment. In the figure “Relationship Between Total Regional Employment and Total O&D Traffic,” the correlation coefficient is 0.93. However, correlation does not establish 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. The correlation between total O&D traffic and “aviation-reliant” industry sectors such as information technology; professional, scientific, and technical services; and management of companies is also a near-perfect at 0.983. Again, however, correlation does not equate with causality.

Stakeholder Perspectives on Contributions of Air Service to Economic Development

The greater Atlanta region has an extensive array of community and business stakeholders that are involved with air service and economic development concerns. Some key partners of ATL are listed in the table.

Public Institutions	Private Organizations	Public-Private Partnerships
Hartsfield-Jackson Atlanta International Airport	Airlines (most notably Delta Air Lines)	Aerotropolis Atlanta Alliance
Atlanta Regional Commission (10 counties + City of Atlanta)	Metropolitan Atlanta Chamber of Commerce	Atlanta Convention and Visitors Bureau
Georgia Dept. of Economic Development

ATL and Its Major Air Service and Economic Development Stakeholder Organizations

The ARC is responsible for developing and updating the Atlanta Region’s Plan, including the Regional Transportation Plan. The ARC recognizes that ATL is the largest economic asset in the region, and its continued success will require regional coordination of land use, transportation, and economic development.
Aerotropolis Atlanta Alliance is a public-private partnership working to improve the regional economic competitiveness of the area around the airport.
The Metropolitan Atlanta Chamber of Commerce represents businesses, colleges and universities, and nonprofits across the 29-county region that makes up the nation’s ninth-largest market.
The Georgia Department of Economic Development is the state’s sales and marketing arm and is the lead agency for attracting new business investment, encouraging the expansion of existing industry and small businesses, as well as other initiatives.

Stakeholders meet regularly with airport officials to discuss related economic development matters. Because the airport and air service support employment and economic activity in these sectors, support for the airport and air service further contributes to the region’s overall development goals.

Communicating the Airport’s Economic Impact

ATL itself does not highlight its economic impact. There is no link on the website to the most recent analysis. There is only a single sentence reference: “ATL is the economic jewel of Georgia, generating a $34.8 billion economic impact for metro Atlanta.”

Several stakeholders noted the challenges of conveying economic concepts to the general public. The stakeholders have their own metrics by which they gauge performance, and these do not generally tie to the airport. Some of the metrics used are often applied to airport economic impacts—such as jobs supported and associated GDP. Some stakeholders suggested using individual stories to personalize how an individual’s employment or business is tied to the airport or airlines.

ATL Case Study – Full Report

Allentown-Lehigh Valley Airport’s Cargo Operations and Contributions to Regional Economic Development

Case Study – Hub size: non-hub | Characteristic: cargo / freight

The Allentown-Bethlehem-Easton Metropolitan Statistical Area (MSA) is in Eastern Pennsylvania approximately 60 miles north of Philadelphia and 100 miles west of New York City. This area is also known as the Lehigh Valley. In part because of its location close to major population centers on the East Coast, the Lehigh Valley International Airport (ABE or the Airport) has become a major facility for handling air cargo. In 2015, Amazon selected ABE as one of the few airports to be served by the company’s new air freight division, Amazon Air. The region was selected as a case study because of its air cargo and freight operations.

ABE MSA CSA map — *The Allentown-Bethlehem-Easton MSA*

Regional Economic Strengths

The region is vibrant economically, with population and employment increasing much faster than in Pennsylvania as a whole. The region’s largest sector (based on total employment in 2019) was health care and social assistance, with more than 72,000 employed. Other major sectors (with more than 40,000 employed) are manufacturing and retail. However, the sector where employment changed most significantly was transportation and warehousing. Employment more than doubled to nearly 40,000 and has recorded year-over-year employment growth of 9.4 percent for the past 5 years. The U.S. Cluster Mapping Project reports that the region is in the top 5 percent nationally in distribution and electronic commerce.

ABE Employment by Sector

A map of the area that identifies establishments in the transportation and warehousing sector within a 60-minute drive of ABE highlights the pivotal role of the airport’s cargo and freight operations. Manufacturing establishments within that 60-minute drive employ over 100,000.

*ABE and Transportation and Warehouse Establishments in the Region*
*Source: ESRI Business Analyst*

Overview of the Airport and Its Services

Air cargo has been a particular point of emphasis at ABE since September 2015, when Amazon began charter freighter operations at the airport. The operation is now known as Amazon Air, and ABE was one of the first three airports in the developing network. Prior to that, FedEx carried almost 100 percent of the cargo at the airport. By the end of 2017, ABE air cargo exceeded 100,000 metric tons—more than five times the pre-Amazon Air levels.

The growth in e-commerce and higher consumer demand has led to increased tonnage levels. Amazon Air has allocated more aircraft operations to ABE.

Meanwhile, in 2018, FedEx Ground opened an 850,000 square-foot distribution hub in the Lehigh Valley just 2 miles from ABE. FedEx has signaled a higher degree of integration between its ground and air operations, so the potential exists for a linkage to connect to ABE’s FedEx air cargo services.

Air Cargo – Metric Tons

Air Cargo Linkages to Regional Economic Development

The operations of Amazon Air at ABE have been transformative for the airport and the region. Three Amazon fulfillment centers, totaling over 2 million square feet, and the Amazon Air operation support the employment of approximately 3,000 Amazon employees in the Lehigh Valley. As e-commerce sustains growth, there is potential for further economic development related to ABE’s air cargo services. ABE recently signed an agreement with an airport real estate development firm to assist with on-airport cargo development and the recruitment of companies and tenants to use those capabilities.

The Airport works closely with the Lehigh Valley Economic Development Corporation (LVEDC), one of the principal regional organizations concerned with driving economic growth and activity for the region. LVEDC recognizes that the airport plays a pivotal role in and has an impact on regional economic development, and transportation resources are important for site selectors and businesses considering where to locate a building or expand an existing one. LVEDC notes that airports like ABE are important for foreign direct investment because international companies looking for places to invest in the United States need quick access to their facilities via airports. Although LVEDC is more involved in passenger air service development, there is recognition of the economic development potential related to air cargo services.

The Greater Lehigh Valley Chamber of Commerce also recognizes the contribution that the airport makes to the region and supports its development as part of a larger effort to improve the transportation infrastructure necessary for continued economic success.

ABE Case Study – Full Report