Identifying Regional Economic Development Stakeholders
Most cities or counties have organizations that focus on general economic development and/or the needs and interests of the business community. These groups are valuable regional stakeholders for airports because they represent not only a major source of travelers but more importantly because they can be effective advocates for improvements to the airport and its services. Evidence from the case studies shows that airports with close working relationships can generate and sustain new or expanded air service to new markets.
Chambers of Commerce
Chambers of commerce (“chambers”) are non-profit organizations that promote the local economy. There may be separate chambers for each community within a region along with an “umbrella” organization that supports broader regional interests. Chamber members pay fees to the organization for various services, including marketing and communication, advocacy (e.g., for changes in laws or regulations at local, state, and federal levels), events, and other matters. The chambers elect or appoint officers and staff to assist with advocacy and programmatic efforts.
The research team interviewed officials with the chambers in each of the case study locations and analyzed basic information on those organizations. The team reviewed the chambers’ websites and annual reports (if available) to understand their organizations, visions, missions, goals, and metrics. The vision and mission statements speak to goals of enhancing local or regional economic activity. The chambers commonly adopted organizations that featured key themes:
- Economic Development
- Workforce Development
- Transportation and Infrastructure
- Quality of Life
Examples of Chamber Vision Statements
- The chamber is the catalyst for business growth, community engagement, and action to drive economic vitality and advance our position as a global leader in technology and innovation.
- To lead our community, drive commerce in our region, and advance community and regional collaboration thereby enhancing the quality of where we live, learn, work, and play.
- United to drive economic growth with one voice, one mission, and as one region.
- The chamber promotes economic opportunity, business education, and successful business relationships throughout the region.
Economic Development
Economic development efforts promote business and a positive economic environment by assisting with business relocation or expansion. These efforts may include the development of multi-year strategic plans to build on the unique economic strengths of the region and promote targeted industries. For the case study regions, those targeted industries cited most often (by number of references) were
- Advanced manufacturing
- Financial services and technology
- Health care, medical technology, bioscience, or life science
- Logistics and distribution
- Aerospace and defense
- Information technology
- Corporate headquarters and regional offices
- Creative and digital media technology
- Clean technology
Workforce Development
Workforce development efforts incorporate initiatives to train people to start or advance their careers and ensure more students are college-, career-, and military-ready.
Transportation and Infrastructure
Most chambers included a reference to transportation and infrastructure. The areas of interest covered highways, bridges, public transportation, rail (freight and passenger), and air service. The references to highways and surface transportation were usually connected to congestion and the ability of businesses and residents to travel within the area. The references to air service included links to the local airport’s website and a high-level summary of service offerings (e.g., number of nonstop destinations served).
Several of the case study airports noted that they maintain structured relationships with chambers or other regional partners regarding air service improvements. The regional stakeholders or partners can offer suggestions for new nonstop service, based on information from their membership on developing markets and economic activity. In some cases, the regional partners can develop or support initiatives to mitigate the financial risk that airlines might undertake when entering a market.
In interviews, airport officials cautioned that some stakeholder groups may not have extensive experience with air service development efforts. Consequently, they may have unrealistic expectations about airlines’ abilities or willingness to operate in specific markets. Most stakeholder staff members interviewed did not understand how commercial air service was related to businesses in the region. However, some organizations’ staff members thoroughly understood the value of air service to different industry sectors through enhancing connectivity to markets and suppliers. This was especially true where airports provided service to international business destinations (as opposed to international locations that are primarily known as tourist destinations).
Quality of Life
Less frequently, chamber goals and advocacy efforts included references to enhancing the regional quality of life. Although often not clearly defined, these considerations were associated with enhancing employment opportunities, economic diversity, improved average wages, and housing affordability.
Chambers reported on the extent to which they achieved different goals and objectives within their larger organizational visions and missions. Chambers and other partners measured regional development and activity along these dimensions. As shown, the performance metrics most often used were the number of new or retained jobs (with a highlight on those paying average wages above the regional median), the amount of capital invested, and the number of new businesses established.
Examples of Chamber Mission Statements
Prepare, develop and promote our community for economic growth.
Promote success and sustained growth by proactively providing information and resources, facilitating knowledge-sharing, and elevating understanding of economic issues.
Promote and support the success of the regional business community through effective advocacy, education, and relationship building.
Strengthen member businesses by enhancing economic and workforce development, resulting in improved quality of life in our community and region.
Add quality jobs to the region by recruiting new companies, supporting the success of existing companies, and assisting newly forming companies, to diversify the economy and have a positive impact on the quality of life.
Regional Economic Elements Contributing to Quality of Life
Regional Economic Development Organizations
A regional development organization (RDO) is an umbrella term that describes a multi‐jurisdictional, public‐based regional planning and development organization. These public sector entities are governed by a regional policy board with majority control by local elected officials.
RDOs are known by various names. Economic development districts (EDDs) are a particular type of RDO recognized by the U.S. Economic Development Agency. They also are multi-jurisdictional entities, commonly composed of multiple counties, and in certain cases, they even cross state borders. They help lead locally based and regionally driven economic development planning processes.
Each of the 380 EDDs in the United States is required to develop a strategic plan for regional economic development known as a Comprehensive Economic Development Strategy (CEDS). A CEDS is the result of a “regionally owned” planning process. It provides a coordinating mechanism for individuals, organizations, local governments, and private industry to engage in the economic direction of their region.
Example CED
Like local or regional chamber of commerce strategic plans, the CEDS may feature target industries. For example, the 2020 CEDS for the Mid-Region New Mexico Council of Governments highlighted aerospace, information technology, advanced manufacturing, renewable energy, and health among others. The Mid-Region New Mexico area includes the four counties surrounding Albuquerque.
Other Regional Advocacy Groups
Specific regions may be home to other groups that have the aim to develop or enhance regional economic development. Examples revealed by the case studies include the Research Triangle Regional Partnership, the Miami-Dade Beacon Council, and the Aerotropolis Atlanta Alliance.
The Research Triangle Regional Partnership is an economic development organization sustained by and committed to 12 core counties in Central North Carolina. Its primary goal is to market the region to external audiences, promoting the Research Triangle region as a great place to live and do business. Target industries identified are
- Advanced Manufacturing
- Agriculture Technology (AgTech). Companies in this cluster explore plant and animal health, precision farming, environmental remediation, and human medicine. There is a continuing emergence of new technologies.
- Clean Technology (CleanTech). Companies in this sector can generally be identified by the fact that they are working toward preserving natural resources. In the Research Triangle region, this includes a heavy focus on smart grid technologies, smart metering, and expanding renewable energy and technologies.
- Life Sciences
- Gene and cell therapy
- Technology
- Cybersecurity
- Financial technology (FinTech)
The Miami-Dade Beacon Council, a public-private partnership, is the official economic development organization for Miami-Dade County. The organization facilitates business growth and expansion locally, nationally, and internationally. The Council was founded as an outgrowth of the Greater Miami Chamber of Commerce to focus on business recruitment, expansion, and retention. Its board of directors includes business leaders, university officials, local mayors, school superintendents, and a member of the Florida state House of Representatives.
The Miami-Dade Council’s economic development strategic plan identified target industries with the highest potential for job growth and high wages. They include
- Aviation
- Creative design
- Banking and finance
- Hospitality and tourism
- Technology
- Trade and logistics
- Life sciences and healthcare
The Aerotropolis Atlanta Alliance is a public-private partnership working to improve the regional economic competitiveness of the area around metro Atlanta’s greatest asset—the world’s busiest and most efficient airport. The Alliance works with its partners to coordinate economic development that integrates into the functions and impacts of the airport.
The Alliance convenes, organizes, and aligns stakeholder interests in the area around actionable initiatives meant to change the way people think about airport areas. These initiatives include marketing the airport area as a place to invest, facilitating solutions to workforce challenges, and partnering with educational institutions to develop the next generations of business and civic leaders.
The Alliance is in the early stages of developing its strategic blueprint but has preliminarily identified several target industry clusters. These include
- Aerospace
- Food/Agribusiness
- Logistics
- Bio-Life Sciences
- Multimedia production
Distinguishing Economic Impact from Regional Economic Development
Part of the disconnect between airports and regional economic development organizations lies in the mechanism and measures used to describe their contributions to the local economy. Airports report their economic impact, but the measures included in those analyses generally are limited to activity on airport property unless the effects of spending by visitors are included. Even when these effects are included, the economic impact analysis of airports only expands to incorporate effects on the hospitality industry. Other business sectors identified as key targets for recruitment and retention are not necessarily included. As a result, airport economic impact reports often fail to capture the true value air service provides to a region and are not seen by community stakeholders and audiences as being as important as other analyses.
Overview of Airport Economic Impact Analyses
Airports typically rely on economic impact assessments. As noted in ACRP Synthesis 7: Airport Economic Impact Methods and Models (Karlsson et al. 2008, p. 1):
The economic impact study is a tool frequently used by airport operators, planners, and regulatory agencies to measure the economic value that an airport contributes to its local and regional surroundings. It has become one of the standard airport planning documents, along with the airport master plan update, noise compatibility study, and required environmental documents.
Economic impact studies typically measure an airport’s economic impact using a number of standard dimensions. These are employment, earnings, gross domestic product (GDP), and economic output.
Measures of Economic Impact
Airport economic impact studies also typically include estimates of the economic impact of spending by visitors who arrive in the region via commercial or general aviation. The hospitality industry, in particular, benefits greatly from these visitors, who spend money on lodging, meals, entertainment, car rentals, and retail. Economic impact studies and analyses are not conducted via an accounting of jobs, payroll, and sales. Rather, they are modeled using statistical methods.
The most commonly used method to estimate an airport’s economic impact is an “input–output” method, which typically measures the sum of direct, indirect, and induced economic impacts (or multiplier effects). FAA has offered information for airports on how to conduct input–output studies since the 1980s. The areas of impact are defined as follows:
- Direct impacts account for the economic activity of the aviation sector itself. Direct employment impacts are measured by counting those individuals who work in this sector of the economy. In the case of an airport, all of those people who work in an aviation-related capacity either on site or off site would be included in the category of direct employment (e.g., airline ticket or gate agents, fixed base operators, maintenance staff, and airport staff members). For ease of labeling, these impacts are sometimes categorized as “airport operations,” even if the employment occurs off of airport properties. Capital development at airports is incorporated but often modeled separately because airport capital spending tends to vary significantly over time, on a project-by-project basis.
- Indirect impacts are the “supplier” impacts that arise because of the direct impacts. For an airport, indirect impacts originate from off-site firms that serve airport users. Indirect employment includes the portion of employment in supplier industries that is dependent on sales to the air transport sector.
- Induced impacts are economic impacts created by the spending of wages, salaries, and profits earned in the course of the direct and indirect economic activities. Induced employment is employment generated from expenditures by individuals employed indirectly or directly.
- Total impacts are the sum of direct, indirect, and induced impacts. It should be noted that indirect and induced impacts are sometimes collectively referred to as “multiplier impacts.”
Economic Impact—What Gets Counted
The Shortcomings of Traditional Economic Impact Analyses
Although traditional input–output airport economic impact assessments account for off-airport effects (e.g., supplier industries or remote airport rental car facilities), they do not include the impacts on other non-aviation-related businesses in the regional economy. That is, these assessments do not pick up the effects that air service has on businesses that require air service as an element of their operations (either to reach clients or customers or as a means of providing or obtaining a supply of inputs).
Studies that employ the “catalytic” method attempt to measure the impacts that spill over from the airport into the rest of the economy, including impacts on investment, trade, and overall economic productivity. Studies of the catalytic impacts of aviation tie the value of air transportation to other industries. Catalytic effects of air transportation have been defined as (Cooper and Smith, 2005):
The net economic effects (e.g., on employment, incomes, government finances) resulting from the contribution of air transport to tourism and trade (demand-side effects) and the long-run contribution to productivity and GDP of growth in air transport usage (the supply-side performance of the economy).
Air transportation facilitates employment and economic development in the national and regional economy through increased trade, attracting new businesses to the region, and encouraging investment. Industries and activities that would otherwise not exist in a region can be attracted by improved air transport connectivity. Catalytic effects can include some or all of the following:
- Trade effects. Additional air services open new markets to many businesses as a result of new destinations, better flight connections, and a higher frequency of flights offered. This leads to a broader demand for existing products.
- Investment effects. A key factor many companies take into account in decisions about the location of an office, manufacturing facility, or warehouse is proximity to an airport.
- Productivity effects. Air transportation offers access to new markets, which can enable businesses to achieve greater economies of scale. Air access also enables companies to attract and retain high-quality employees.
The Disconnect with Regional Economic Development
There is a disconnect between the information developed in a traditional airport economic impact study and the interests of regional stakeholders. Standard airport economic impact studies generally reflect activities confined to airport properties, except those studies that are modeled to include off-airport supplier industries and local businesses like grocery stores where airport employees spend their wages (the induced effects). Where the impacts of visitor spending are modeled, the effects of airports and air service include impacts on the hospitality industry—basically in the areas of accommodations, food service, ground transportation, entertainment and recreation, and retail.
Community stakeholders, especially regional development organizations, may not attach great value to an airport’s economic impact reports because these reports fail to capture the greater contributions that air service provides to a region. Airport economic impact studies do not generally describe how the airport and air service enable or facilitate activity in the business or economic sectors of most interest to economic development organizations. The target industries identified by chambers of commerce and economic development organizations (e.g., advanced manufacturing, financial technology, information technology, and bio- and life-sciences) rely on air service to maintain and grow their operations, but the linkage between air service and regional economic activity is not made.
Cooper, A. and P. Smith, The Economic Catalytic Effects of Air Transport in Europe. Eurocontrol Experimental Centre, Bretigny-sur-Orge Cedex, France, 2005. (Cited in Karlsson et al., 2008, pp. 15–16).
Karlsson, J., J. R. Ludders, D. Wilde, D. Mochrie, and C. Seymour. ACRP Synthesis 7: Airport Economic Impact Methods and Models. Transportation Research Board of the National Academies, Washington, D.C., 2008.
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