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N EW Y ORK S TATEWIDE AIRPORT E CONOMIC B ENEFITS S TUDY November 2003 2. METHODOLOGY To adequately measure economic impacts, an analysis that follows an industry-wide accepted methodology was used in this study. That methodology first identifies the direct spending and employment at airports (called direct impacts) and includes the direct spending at off-airport sites such as hotels and restaurants (called indirect impacts in this study). Armed with this information, regional multipliers are applied to the data to determine the multiplied impacts of direct spending (called secondary impacts). The technical processes involved in developing the analysis included the following: q Direct and Indirect Impacts q Secondary Economic Impacts It is important to note that for purposes of this study, surveys were used to gather data on impacts for 44 airports, data from business plans prepared by the Aviation Services Bureau of NYSDOT was used for 11 airports, results from previously prepared studies were used for 20 airports, and data from the Port Authority of New York and New Jersey (PANY&NJ) was obtained for two airports. These studies all used similar methodologies and provided a means for compilation of a significant amount of economic data to relate the benefits of New York’s aviation system. For the 20 airports from which results were extrapolated, many of these airports were analyzed by regional planning agencies as part of studies funded by the FAA. These studies primarily used the methodology from the 1991 “Economic Impact Assessment” of New York State’s airports, updating the data with new survey analysis. The data imported from these studies was inflated to reflect 2000 price levels to account for changes in buying power. Consumer Price Index (CPI) data for the northeast region was obtained from the U.S. Department of Labor’s Bureau of Labor statistics. For the two PANY&NJ airports, John F. Kennedy International and La Guardia, data were obtained from PANY&NJ for inclusion in this study. 3. DIRECT AND INDIRECT IMPACTS By way of definition for this study, direct impacts are associated with providers of services at the airport. They are immediate consequences of airport economic activity. The value of direct impacts is the sum of all payroll, capital expenditures, operating and maintenance costs, taxes, and fees incurred by providers of services at the airport. Direct impacts also include the employment and expenditures related to on-airport contracted employees such as construction workers or contracted air traffic control employees. Indirect impacts2, as they are defined in this study, are associated with the users of airport services. They are derived primarily from offsite economic activities that are attributable to the airport. The value of indirect impacts is the sum of the fees and charges paid, time and cost savings, expenses related to food, lodging, ground transportation, and similar outlays. 2The IMPLAN definition of Indirect Impacts is synonymous with Induced impacts of this plan. IMPLAN definition of Direct Impacts is synonymous with Direct and Indirect impacts of this plan. These nomenclature differences are taken into account in compiling impact tables for this report. R.A. Wiedemann, Wilbur Smith Associates, McFarland - Johnson 8 N EW Y ORK S TATEWIDE AIRPORT E CONOMIC B ENEFITS S TUDY November 2003 The collection of data concerning direct and indirect impacts is essential for the accurate assessment of overall economic impacts of aviation. That is why time and effort were expended to survey various components of aviation in New York such as: airport management and on- airport businesses. Response to these surveys varied by airport, but overall, much valuable information was collected. In some cases, extrapolation of the survey information was needed to cover non-respondents. For example, on-airport tenants were asked to specify their annual expenditures. From this statewide pool of information, averages for airports with similar tenant profiles and activity levels could be compiled and extrapolated for non-respondents. In other cases, the IMPLAN model was used to estimate expenditures for businesses and organizations for which employment levels were known. 3.1 Direct Impacts There were a number of ways that the direct impacts of aviation in New York were estimated. These included surveys, published data, and extrapolated results. From the surveys, specific questions were asked concerning on-airport spending and employment. This spending comes from one of two primary sources: the airport sponsor/management, and on-airport businesses and employers. From published data, information regarding average wages and labor cost components in various industries was collected. Both the survey data and the published data could be interpolated and extrapolated to estimate direct impacts of aviation. Airport Management Survey In addition to asking questions about the operational activity and number of businesses and employers located at the airport, the Airport Management Survey requested information concerning the number of full and part-time administration/operations employees. In addition, the survey requested an estimate of the annual expenditures on airport operations and employment. This information concerning employment and sponsor expenditures on the airport is considered direct airport-related impact and is not duplicated by other sources. The data was used directly from the surveys to input the direct spending component for airport management. On-Airport Business Survey The On-Airport Business Survey was distributed to all employers located on New York airports. Responses were screened by asking whether or not the business was aviation related. If the business had no requirement for aviation, its location on the airport was not an essential aspect of its operation and thus, it was not included in the economic impact model. Responses that were applied to the study’s catalogue of impacts were limited to those companies or employers that needed the airport in some way in order to operate effectively. Employers like Fixed Base Operators (FBOs), corporate flight departments, the Air National Guard, and so on, were included in the aviation-related impact base. Key questions asked in this survey included the number of full and part-time employees, annual gross sales volume, estimated annual expenditures, and total estimated payroll. The direct economic impact of these employers could be measured from the responses. R.A. Wiedemann, Wilbur Smith Associates, McFarland - Johnson 9 N EW Y ORK S TATEWIDE AIRPORT E CONOMIC B ENEFITS S TUDY November 2003 Some respondents only included the employment data on the survey and left the expenditures and payroll questions blank. For these employers, estimates of wages were made using either the IMPLAN model or the consultants’ extensive data base based on previous airport economic impacts studies from around the United States. While these numbers are averages and are likely to understate the actual wages paid to employees, they do provide a reasonable order of magnitude estimate of what is spent by on-airport employers for wages and salaries. In addition, using final-demand multipliers, an estimate of the final demand output can be made using the employment numbers. 3.2 Indirect Impacts As defined earlier, indirect economic impacts are those associated with the use of airports and aviation. They include expenditures by visitors who arrive by air and spend money at local hotels, restaurants, travel agencies, and other businesses as a result of airport use. Most indirect impacts are associated with off-airport locations. As can be imagined, a survey effort needed to track the indirect expenditures of airport users in New York would require resources much greater than those available for this effort. Therefore, a surrogate measure of indirect impacts was developed that did not require surveys of arriving passengers. The method for determining indirect impacts was based on an adaptation of the Aircraft Owners and Pilots Association method described as Module #2 in their publication What's Your Airport Worth? Essentially, this method first estimates the number of visitors to an airport. Then, an estimated expenditure per visitor is applied to the total number of visitors, quantifying indirect economic impacts. This method was used for both airline and general aviation visitors. To estimate the number of general aviation visitors in New York, it was assumed that only the transient pilots and passengers would be counted as visitors. To estimate the true number of visitors, it was assumed that for all airports, 10 percent of itinerant arrivals are conducted by transient aircraft (the other 90 percent were assumed to be conducted by aircraft based locally. Further, the FAA estimates that on average, there are 2.5 occupants aboard each general aviation flight. Thus, to calculate the actual number of visitors, one-half of the itinerant arrivals are multiplied by 2.5. q Itinerant Arrivals = Itinerant Operations/2 q Visitors = 0.10 times Itinerant Arrivals times 2.5 Using this method, the number of general aviation visitors was estimated for each airport in New York. To estimate the individual economic impact of air general aviation visitors using New York airports, the number of annual visitors was multiplied by a per trip assumed expense level based on the airport’s location. For example, airports in rural areas were assigned an average expense level of $300. Airports in upstate New York
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