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Economic Study 2007

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Economic Study 2007 2 Executive Summary I. INTRODUCTION, OVERVIEW AND SUMMARY OF RESULTS . 3 1. IMPACT STRUCTURE . 3 1.1 Revenue Impact . 4 1.2 Employment Impact . 4 1.3 Income Impact . 5 1.4 Tax Impact . 5 2. METHODOLOGY . 5 2.1 Direct Impacts. 5 2.1.1 Direct Employment Impacts. 5 2.1.2 Direct Income Impacts . 5 2.1.3 Direct Revenue Impact. 6 2.2 Induced Impacts . 6 2.3 Indirect Impacts . 6 2.4 Tax Impacts. 6 3. DATA COLLECTION . 7 4. SUMMARY OF FINDINGS . 7 II. SUMMARY OF GA AIRPORT ECONOMIC IMPACTS BY AIRPORT. 11 III. ECONOMIC IMPACT OF ADIZ AND FRZ . 45 Table of Contents 1 The State of Maryland’s Aviation System Interviews were conducted with airport managers consists of 34 public use general aviation and and the tenants located at each of the airports. A commuter airports that serve the surrounding total of 354 interviews were conducted, accounting region in which each airport is located. The activity for 99 percent of airport tenants. Tenant sectors at these airports ranges from limited general interviewed include but were not limited to fixed- aviation activity to scheduled commuter service, base operators (FBOs), flight schools, maintenance such as at the Salisbury-Ocean City Airport and the and avionics providers, charter and commercial air Hagerstown Regional Airport. Corporate general carriers, freight airlines, rental cars, corporate aviation tenants at Carroll County Airport and aviation departments, and government agencies. Frederick Municipal Airport use these airports to Also included in the interview process were serve local industries, while flight schools provide aviation-related firms such as pilots’ organizations pilot instruction. Other users of these airports and aviation insurance providers. include private, recreational pilots with aircraft based at the individual airports, and the military at The Maryland Aviation Administration initiated this Martin State Airport. study to measure the economic impact of airport activity generated by the 34 general aviation and The activity at these airports generates jobs and commuter airports located throughout the State of personal income to those employed by airport Maryland. The base year of the analysis is fiscal tenants, as well as to local visitor industry firms year (FY) 2006. The economic impacts created by serving commuter passengers using Hagerstown the airport and the state-wide system are measured Regional and Salisbury-Ocean City Airports. in terms of jobs, personal income, state and local Business revenue is received by the firms providing taxes, and revenue generated directly by airport the services to the commercial airlines as well as to activity. the general aviation aircraft, military aircraft, and to flight schools. These firms providing the service and In order to measure the impacts in the most the individuals employed by these firms also pay defensible manner possible, the methodology Federal, state, and local taxes. utilized is based on interviews, local economic data, and airport statistics. Operational models of the 34 GA/commuter airports were developed to use in updating the impacts on a short term basis, and to measure the incremental changes in airport- generated impacts due to changes in such factors as changes in the number of flight operations or changes in aircraft mix (single-engine versus jet). Also, the model can be used to test the economic impacts of various capital investment and airport expansion projects. Introduction, Overview, and Summary of Results 3 1. IMPACT STRUCTURE 1.1 Revenue Impact Activity at a general/corporate/commuter airport At the outset, activity at the airport generates contributes to the local and state economy by business revenue for firms which provide air generating business revenue to local, regional and passenger service, freight service and ground national firms providing passenger service, freight support services for general and corporate aviation service and support services to the airport and its activity. This business revenue impact is dispersed tenants. The firms providing these services include throughout the economy in several ways. It is used FBOs, maintenance/avionics providers, charter to hire people to provide the services, to purchase operators, corporate flight departments, flight goods and services, to pay for the use of airports schools, military operations and state/local law and to make federal, state and local tax payments. enforcement operations. These firms, in turn, The remainder is used to pay stockholders, retire provide employment and income to individuals who debt, make investments, or is held as retained pay taxes to state and local governments. Exhibit 1 earnings. It is to be emphasized that the only shows how air traffic activity at these airports portions of the revenue impact that can be generates impacts throughout the local, state and definitely identified as remaining in the state are national economy. As this exhibit indicates, the those portions paid out in salaries to direct impact of an airport on a local, state or national employees, in state and local taxes, in local economy cannot be reduced to a single number, purchases, and in payments to the airport itself. but instead, airport activity creates several impacts. Fuel flowage fees and terminal rents paid by These are the revenue impact, employment impact, tenants provide for some of the costs of operation personal income impact, and tax impact. These of the airport and capital costs of new construction. impacts are not additive. For example, the income impact is a part of the revenue impact, and adding these impacts together would result in double counting. Exhibit I Flow of Economic Impacts Generated by Airport Activity Air Cargo Activity AirportAAirportAirirppoorrtt ActivityA ActivityAccttivivitityy Business Revenue BusinessBBusinessBuussinineessss RevenueR RevenueReevveennuuee Direct Employment Retained State and Local Purchases of RetainedRetained Earnings,Earnings, RetainedRRetainedReettaainineedd Earnings,E Earnings,Eaarrnnininggss,, RetainedRRetainedReettaainineedd Earnings,E Earnings,Eaarrnnininggss,, RetainedRRetainedReettaainineedd Earnings,E Earnings,Eaarrnnininggss,, Purchased to Provide Earnings, Dividends, Taxes Goods and Services Dividends,Dividends, Dividends,DDividends,Divividideennddss,, Dividends,DDividends,Divividideennddss,, Dividends,DDividends,Divividideennddss,, Business Services Investments Paid by Firms by Firms InvestmentsInvestments InvestmentsIInvestmentsInnvveessttmmeennttss InvestmentsIInvestmentsInnvveessttmmeennttss InvestmentsIInvestmentsInnvveessttmmeennttss Personal Re-spending Induced Jobs to RetainedRetaiIndirectned Earnings,Ear nings, Income of Income Supply Direct Jobs Dividends,sDivJobsidends,s State and TaxesTTaxesTaaxxeess Local Taxes 4 Introduction, Overview, and Summary of Results 1.2 Employment Impact 2. METHODOLOGY The employment impact of aviation activity consists As described in the previous section, economic of three levels of job impacts. impacts presented in this report are quantified in :: Direct employment impact - jobs directly terms of jobs, personal income, business revenue generated by airport activity, which would and state and local taxes. Furthermore, direct, vanish if activity at the airports were to induced and indirect impacts are estimated. The cease. following describes the methodology used to estimate these impacts for FY2006 activity at :: Induced employment impact - jobs created Maryland’s 34 public use GA airports. throughout the regional economy because individuals directly employed due to airport 2.1 DIRECT IMPACTS activity spend their wages locally on goods Direct impacts are those impacts that would cease and services such as food and housing. to exist if activity at the airport ceased. :: Indirect employment impact - jobs The direct impacts to be estimated include: generated due to the purchase of goods and :: Job impacts; services by firms dependent upon airport :: Personal income impacts; activity. :: Revenue impacts; and :: State and local tax impacts. 1.3 Income Impact The income impact is the measure of personal 2.1.1 Direct Employment Impacts wages and salaries received by individuals directly The direct job impacts by each employer (FBO, employed due to airport activity. This direct personal corporate flight, airport service category, passenger income is re-spent throughout the region by those ground transportation category, etc.) are estimated. that are directly employed. This re-spending effect These job impacts are estimated based on a direct in turn generates additional jobs -- the induced count of the airport category employees obtained employment impact. This re-spending throughout from the interview results of 354 companies. the region is estimated using a regional personal income multiplier, which reflects the percentage 2.1.2 Direct Income Impacts of purchases that are made within a region. The The direct income impacts are estimated by re-spending effect varies by region: a larger multiplying the average annual salaries (adjusted for re-spending effect occurs in regions that produce typical overtime hours and salaries where a relatively large proportion of the goods and applicable) for each of the direct number of jobs. services consumed by residents, while lower re- The direct income by category is obtained directly spending effects are associated with areas that from the interviews. import a relatively large share of consumer goods and services (since personal income “leaks out” A re-spending effect is then estimated using an
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