Anchorage International Airport, 1998
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ANCHORAGE INTERNATIONAL AIRPORT 1998 ECONOMIC SIGNIFICANCE by Scott Goldsmith Professor of Economics prepared for Anchorage International Airport September 1998 Institute of Social and Economic Research University of Alaska Anchorage 3211 Providence Drive Anchorage Alaska 99508 907-786-7710 CONTENTS I. Introduction II. Summary of Findings III. Activity at the Airport IV. Jobs and Payroll at the Airport V. Total Economic Significance of the Airport VI. Economic Value of the Airport VII. Comparative Measures of Importance VIII. Airport Economic Impact Rules of Thumb I. INTRODUCTION This brief report updates our 1995 study, Economic Contribution of the Anchorage International Airport, which documented the airport's economic importance and described in detail the range of airport activities. Here we look primarily at growth in the number of airport-related jobs in recent years. Anchorage International Airport covers 4,700 acres and includes both domestic and international terminals and a general aviation and air taxi base around Lake Hood. Unlike airports in other U.S. cities of comparable population (about 250,000), Anchorage International Airport serves not only local households and businesses, but several other important clients: (1) international cargo carriers; (2) visitors from outside the state; and (3) visitors from other parts of Alaska. It also has a number of government and private tenants who find it either advantageous or necessary to be located at the airport. According to the Federal Aviation Administration, Anchorage has 3 times the passenger arrivals and 48 times the cargo arrivals you'd expect, based on the city's population. About half of all passengers who travel to Alaska by air arrive at Anchorage International Airport; an average of 166 passenger planes land daily. Most of the major U.S. and foreign cargo carriers operate out of Anchorage, providing cargo service between the U.S. and the Far East and Europe and the Far East. Several large cargo carriers have established hubs in Anchorage in the past decade, and consequently 93 cargo planes land on an average day. The federal government also recently gave foreign carriers the authority to transfer cargo from one plane to another in Anchorage, providing the potential for greater flexibility and reduced costs for those carriers—and for more cargo handling jobs in Anchorage. II. SUMMARY OF FINDINGS Today there are about 8,200 jobs at the airport. If Anchorage International Airport disappeared tomorrow, Anchorage would lose more than 12,000 jobs and $400 million in annual payroll—roughly one in every ten jobs in Anchorage and about 10 cents of every payroll dollar. That includes all jobs that depend on air transport activities—both at the airport and throughout the community. Also, if the millions of visitors who fly into the airport every year no longer came and spent money in the community, Anchorage would lose another 6,000 jobs and $115 million in payroll. That amounts to an additional 5 percent of Anchorage jobs and about 2.5 cents of every payroll dollar. Other losses—more difficult to estimate but nevertheless real—would follow. For instance, visitors who fly into Anchorage typically spend money in other Alaska communities as well, so other regional economies would also be hurt. And without the airport, the costs of moving people and goods to and within Alaska would be considerably higher, increasing costs for households and businesses throughout the state. But far from disappearing, Anchorage's airport is growing—led in recent years by very strong growth in international cargo operations. We estimate increased cargo operations have created 1,000 jobs in the air transport industry in Anchorage over the past two years and many more in related sectors that depend on air transport. Anchorage is the nation's most important air cargo airport, with an average of 93 cargo planes landing daily—up from 60 daily landings as recently as 1994. Figure A shows why the airport is so important to the local and the state economy. Airports in most cities the size of Anchorage exist mainly because of demand from local households and businesses. But only about 20 percent of airport jobs serve Anchorage households and businesses. Because of its geographic location, Anchorage also serves international carriers, especially cargo carriers. The biggest share of airport jobs—30 percent—result from international cargo operations. Those cargo operations are, as we mentioned above, leading growth at the airport. Anchorage is also the primary transportation link between Alaska and the rest of the country; tourists from outside the state generate 14 percent of airport jobs. Anchorage provides air services to many other Alaska communities as well. Alaskans from outside Anchorage—who come to shop, get medical care, and for many other reasons—create nearly 20 percent of jobs at the airport. Finally, various public and private tenants are also located at the airport, accounting for about 16 percent of airport jobs. III. ACTIVITY AT THE AIRPORT Business at the airport is increasing at a rapid rate, and this growth is reflected in the trends in the basic indicators of passenger and cargo traffic. Passengers The number of passengers served at the airport—the sum of arrivals (deplanements), departures (enplanements), and transit passengers—now exceeds 5 million per year, or almost 14,000 every day (Table 1). Table 1. ANCHORAGE INTERNATIONAL AIRPORT: ANNUAL PASSENGER ACTIVITY (in thousands) PASSENGER PASSENGER FISCAL DEPARTURES ARRIVALS YEAR (Enplanements) (Deplanements) TRANSIT TOTAL 1990 1,587 1,560 1,529 4,676 1991 1,729 1,744 1,069 4,542 1992 1,860 1,846 785 4,491 1993 1,836 1,832 577 4,245 1994 1,917 1,899 543 4,359 1995 2,040 2,039 598 4,677 1996 2,051 2,034 679 4,764 1997 2,132 2,135 782 5,049 1998 2,126 2,124 767 5,017 Source: Anchorage International Airport. Fiscal Years—July 1 to June 30. Since 1974, scheduled passenger departures (enplanements) have increased at an annual rate of 4.9 percent, and although that rate has slowed in recent years, the trend has still averaged 3.4 percent since 1990 (Figure 1B), well above the rate of population growth for the region. This growth has been fueled both by expansion of the Alaska population and economy and by the strong growth in the tourist industry, not only in Anchorage but in the rest of Alaska as well. The strong influence of tourist traffic is illustrated by the dramatic seasonal fluctuations in departures when viewed on a month-to-month basis (Figure 1A). Growth in departures has been dominated by the domestic carriers, which now account for over 98 percent of the total (Table 2). International departures declined in the early 1990s but have stabilized in the last three years. Table 2. ANCHORAGE INTERNATIONAL AIRPORT: Table 2. ANCHORAGE INTERNATIONAL AIRPORT: ANNUAL PASSENGER DEPARTURES (in thousands) FISCAL DOMESTIC INTERNATIONAL YEAR CARRIERS CARRIERS TOTAL 1990 1,527 60 1,587 1991 1,679 50 1,729 1992 1,823 38 1,861 1993 1,807 29 1,836 1994 1,889 28 1,917 1995 2,014 26 2,040 1996 2,018 33 2,051 1997 2,094 38 2,132 1998 2,093 32 2,126 Source: Anchorage International Airport. Fiscal Years—July 1 to June 30. Noteworthy is the fact that the number of transit passengers, which fell dramatically with the introduction of longer-range aircraft, has been increasing since 1994 (Figures 2A and 2B). This is due to a rebound in the number of transit passengers handled by the international carriers (Table 3). Table 3. ANCHORAGE INTERNATIONAL AIRPORT: ANNUAL TRANSIT PASSENGERS (in thousands) DOMESTIC INTERNATIONAL FISCAL TOTAL YEAR CARRIERS CARRIERS 1990 142 1,387 1,529 1991 137 932 1,069 1992 173 612 785 1993 187 391 577 1994 194 348 543 1995 189 409 598 1996 171 507 679 1997 147 635 782 1998 165 601 767 Source: Anchorage International Airport. Fiscal Years—July 1 to June 30. Although the number of passenger landings per month reflects considerable seasonal fluctuation (Figure 3A), when seasonally adjusted we see that they were declining through the early 1990s at an annual rate of -2.8 percent (Figure 3B). That trend has now been reversed, with both domestic and international landings having increased since 1996 (Table 4). The earlier decline in domestic landings was partly due to the departure of MarkAir from the local market, and partly the result of more efficient operations, since the number of passengers carried has continued to grow. Total scheduled passenger landings were nearly 61,000 for the year ending in June 1998, or 166 per day. Table 4. ANCHORAGE INTERNATIONAL AIRPORT: ANNUAL PASSENGER FLIGHT LANDINGS Fiscal DOMESTIC INTERNATIONAL TOTAL Year CARRIERS CARRIERS 1990 53,159 6,193 59,352 1991 60,887 4,581 65,468 1992 68,557 2,902 71,459 1993 62,889 2,197 65,086 1994 58,415 2,202 60,617 1995 58,844 2,298 61,142 1996 52,817 2,657 55,474 1997 55,351 3,369 58,720 1998 57,108 3,431 60,539 Source: Anchorage International Airport. Fiscal Years—July 1 to June 30. Passenger aircraft weight fluctuates considerably from month to month (Figure 4A), but the annualized certified maximum takeoff weight for passenger flights has increased since 1995 (Figure 4B). International carriers have accounted for this growth and now comprise 33 percent of the total (Table 5). Table 5. ANCHORAGE INTERNATIONAL AIRPORT: ANNUAL PASSENGER FLIGHT WEIGHT (million pounds) Fiscal DOMESTIC INTERNATIONAL Year CARRIERS CARRIERS TOTAL 1990 4,395 4,397 8,792 1991 4,707 3,168 7,875 1992 5,139 1,926 7,065 1993 5,009 1,350 6,358 1994 4,720 1,409 6,128 1995 4,501 1,605 6,106 1996 4,498 1,815 6,313 1997 4,528 2,314 6,842 1998 4,398 2,193 6,591 Source: Anchorage International Airport.