Regional Economic Impact of Airports: Final Report

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Regional Economic Impact of Airports: Final Report UvA-DARE (Digital Academic Repository) Regional economic impact of airports: final report Lieshout, R.; Boonekamp, T.; Tempelman, C.; Burghouwt, G. Publication date 2015 Document Version Final published version Link to publication Citation for published version (APA): Lieshout, R., Boonekamp, T., Tempelman, C., & Burghouwt, G. (2015). Regional economic impact of airports: final report. (SEO-rapport; No. 2015-13). SEO. https://www.aci- europe.org/component/downloads/downloads/4462.html General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). 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UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl) Download date:06 Oct 2021 Regional economic impact of airports Amsterdam, 20 October 2015 Commissioned by ACI EUROPE Regional economic impact of airports Final report Rogier Lieshout Thijs Boonekamp Caren Tempelman Guillaume Burghouwt Roetersstraat 29 - 1018 WB Amsterdam - T (+31) 20 525 1630 - F (+31) 020 525 1686 - www.seo.nl - [email protected] ABN-AMRO IBAN: NL14ABNA0411744356 BIC: ABNANL2A - ING: IBAN: NL96INGB0004641100 BIC: INGBNL2A KvK Amsterdam 41197444 - BTW NL 003023965 B “The science of knowing” SEO Economic Research carries out independent applied economic research on behalf of national and international clients – both public institutions and private sector clients. Our research aims to make a major contribution to the decision-making processes of our clients. Originally founded by, and still affiliated with, the University of Amsterdam, SEO Economic Research is now an independent research group but retains a strong academic component. Operating on a nonprofit basis, SEO continually invests in the intellectual capital of its staff by granting them time to pursue continuing education, publish in academic journals, and participate in academic networks and conferences. As a result, our staff is fully up to date on the latest economic theories and econometric techniques. SEO-report nr. 2015-13 Copyright © 2015 SEO Amsterdam. All rights reserved. Data from this report may be used in articles, studies and syllabi, provided that the source is clearly and accurately mentioned. Data in this report may not be used for commercial purposes without prior permission of the author(s). Permission can be obtained by contacting: [email protected]. SEO AVIATION ECONOMICS REGIONAL ECONOMIC IMPACT OF AIRPORTS Table of Contents 1 Introduction & Objective .......................................................................................... 1 2 Literature review ....................................................................................................... 3 3 Methodology ............................................................................................................. 5 3.1 Regression model .................................................................................................................. 5 3.2 Variables .................................................................................................................................. 8 3.3 Data........................................................................................................................................15 3.4 Data for other countries ..................................................................................................... 17 4 Model results ........................................................................................................... 19 4.1 Correlations .......................................................................................................................... 19 4.2 GDP per capita .................................................................................................................... 19 4.3 Employment in knowledge intensive sectors ................................................................. 28 5 Application to the ACI EUROPE Economic Impact calculator .............................33 5.1 Estimating an airport’s regional economic impact ........................................................ 33 5.2 Estimating effects in neighbouring countries ................................................................. 35 5.3 Allocation of catalytic impacts on country level over individual airports .................. 36 6 Conclusions .............................................................................................................37 6.1 Models used in the calculator ............................................................................................ 37 6.2 GDP per capita .................................................................................................................... 37 6.3 Employment in knowledge intensive sectors ................................................................. 38 7 References ................................................................................................................ 41 Appendix A Correlation matrix ......................................................................................43 Appendix B Airports present in the calculator ...............................................................45 Appendix C Weights metropolitan regions .................................................................... 51 Appendix D List of LCC carriers ....................................................................................53 Appendix E Technical model description ......................................................................54 SEO AVIATON ECONOMICS REGIONAL ECONOMIC IMPACT OF AIRPORTS 1 1 Introduction & Objective This report presents the results of a multivariate analysis regarding the impact of air travel on the local economy. The SEO airport database enables us to assess the regional impacts of air connectivity on GDP and employment within a certain radius around an airport. A fixed effects panel data model is used to determine to what extent change in connectivity affects change in GDP and employment (in knowledge intensive sectors). Numerous studies have shown the existence of a strong relationship between air travel and economic development. Some of these studies were able to prove that the causality runs in both ways. This results in the so-called ‘virtuous circle’ of connectivity: economic growth stimulates air passenger demand, which drives air connectivity. An increase in air connectivity leads again to an improved business climate and attracts tourism, which further enhances economic growth. Figure 1.1 Virtuous circle of connectivity The main objective of this study is to gain a deeper understanding of the economic impact of airports in Europe upon the local economy. This entailed building several models to assess the impact of factors such as an airport’s size, degree of connectivity and traffic composition upon the local economy. In addition, an ‘economic impact tool’ will be developed, based upon the most appropriate model. This tool will show for individual European airports1 to what extent it contributes to the national economy as well as to employment. For the development of the economic impact tool we strive to isolate the causal effect from connectivity to economic growth and employment. 1 Results provided for every airport which had scheduled traffic in both 2014 and 2015 and for which there was sufficient data available. The calculator presents results for the airports for which the required regional data is available. A list of these airports is given in Appendix B. SEO AVIATON ECONOMICS REGIONAL ECONOMIC IMPACT OF AIRPORTS 3 2 Literature review Numerous studies have been published on estimating the economic impact of air travel. These differ in their methodology, variables, regional granularity and results. To place this piece of work into perspective we briefly discuss the methodology and results from earlier studies in this paragraph. Table 2.1 provides an overview of (academic) papers and studies investigating the economic impact of air travel. Using various techniques, a positive correspondence between air travel and economic growth or employment was found. Table 2.1 Literature overview of the economic impact of air travel Source Methodology Result Effect of air service connectivity on Changes in connectivity have a greater employment. Three-stage least squares to influence on employment levels than Ivy, Fik, & Malecki, 1995 determine the effect of change in air changes in employment levels have on connectivity on employment and vice connectivity. versa. Two-stage least squares using the 10 percent increase in passenger following instruments: ‘hub’ dummy, enplanements leads to a 1 percent Brueckner, 2003 ‘proximity to other large airport’ dummy, increase in employment in service- ‘slot controlled airport’ dummy and ‘leisure related industries. destination’ dummy. Two-stage least squares
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