Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017
Total Page:16
File Type:pdf, Size:1020Kb
FINAL REPORT Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 Photo Credit: P&WC Photo Credit: Bombardier Photo Credit: CAE PREPARED FOR Canadian Business Aviation Association (CBAA) PREPARED BY InterVISTAS Consulting Inc. 27 September 2017 Executive Summary Business aviation plays an important role in facilitating transportation of service, specialist employees and executives to further their business initiatives and operations in Canada and abroad. Business aviation helps to improve worker productivity, customer service and retention, and also enhances supply chain performance in every province and territory in Canada. Canada is home to a number of aerospace manufacturing firms that manufacture and support the building of business aviation aircraft for use in Canada and abroad. As such, the industry is a major contributor of direct employment and generates $7.8 billion in direct economic output across the industry’s operations and also the business aircraft manufacturing that takes place in Canada. This study examines the current economic impacts of business aviation operations and business aircraft manufacturing in Canada and in individual provinces and territories. Business aviation in Canada provides many benefits to the nation’s economy by enabling productivity improvements, efficiency gains and business development. From an operations perspective, it: May be the only effective transportation option available for technicians and other professionals to reach remote or distant customer locations. Some of these may only be reachable by float plane or helicopter. Photo Credit: Scott Lewis Enhances productivity by allowing employees to work together in secure, private spaces. Enables employees to reach multiple destinations in a single day and return home to company headquarters or family. This saves time and money, and improves quality of life. There are an estimated 1,900 business aviation aircraft in operation, including both fixed wing (76%) and rotor aircraft (24%) in Canada. This is roughly 5% of the 36,000 registered aircraft in Canada. These business aviation aircraft are based across Canada in Ontario (504 Photo Credit: Sam Churchill based aircraft), Alberta (419 based aircraft), Québec (364 based aircraft), and British Columbia (288 based aircraft) and the remaining 316 aircraft are based in other provinces and territories. Canada also makes a strong contribution to the manufacture of business aviation aircraft that supports business aviation globally. It is home to Bombardier, a global leader in the design, manufacture and support of business aircraft, Pratt & Whitney Canada, Bell Helicopter Textron Canada, CAE and Viking Air Ltd, which are a few of the major players in the business aircraft manufacturing sector in Canada. This study quantifies business aviation’s contribution to the nation’s employment base and on the general economy. Economic impact is a measure of the spending and employment associated with a sector of the economy, a specific project, or a change in government policy or regulation. The three major components of economic impact are classified as direct, indirect and induced impacts. These classifications are used as a basis for the estimation of the total economic impact of business aviation operations and business aircraft manufacturing in Canada. Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 – Final Report (27Sep2017) i Ongoing Economic Impact of Business Aviation Operations and Manufacturing Ongoing Economic Direct economic impact measures the employment directly associated with business aviation operations and Impacts of Business business aircraft manufacturing in Canada. This includes Aviation Operations & employment generated at Fixed-Base Operators (FBOs), company flight departments, engineers, designers and Manufacturing fabricators at manufacturing facilities. Indirect impacts in Canada include employment in industries that supply or provide services to the business aviation and business aircraft manufacturing industry. Induced employment is Annual Direct Impacts: somewhat more complicated than indirect employment. Induced employment is employment that is generated in 23,000 FTEs of Employment the general economy based on expenditures by individuals who are employed directly or indirectly, e.g., $2.3 billion in wages jobs in the food/beverage industry when a business jet $3.4 billion in gross pilot goes out for dinner with his or her family. domestic product (GDP) $7.8 billion in economic Total impacts are the sum of the direct, indirect, and induced impacts. Including indirect and induced multiplier output impacts, annual economic impacts of business aviation operations and manufacturing in Canada amount to Annual Total Impacts: 47,100 FTEs of employment, earning approximately $3.5 billion in wages and salaries.1 Furthermore, business aviation in Canada (including operations and 47,100 FTEs of Employment manufacturing) contributes an estimated $5.8 billion in $3.5 billion in wages total gross domestic product (GDP) and $12.1 billion in $5.8 billion in gross total economic output. The total economic impacts of business aviation in Canada are summarized in Table domestic product (GDP) ES-1. $12.1 billion in economic output The industry generates an estimated 23,000 direct FTEs, of which 11,500 FTEs are associated with operations and 11,500 FTEs are involved in business aircraft manufacturing in Canada. Together, these employees earn approximately $2.3 billion in direct wages and salaries. The direct business aviation employment from operations and manufacturing combined produce $3.4 billion in GDP and $7.8 billion in economic output each year. See Figure ES-1. Figure ES- 2 shows the summary of total economic impact. Figure ES-3 shows the geographic distribution of total direct employment across Canada. 1 FTE is a full-time equivalent. Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 – Final Report (27Sep2017) ii Table ES-1: Annual Total Economic Impacts of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 Employment Wages GDP Output Impact (FTEs) ($ Billions) ($ Billions) ($ Billions) Direct 23,000 $2.3 $3.4 $7.8 Operations 11,500 $0.9 $1.3 $3.2 Manufacturing 11,500 $1.4 $2.1 $4.6 Indirect 14,300 $0.9 $1.4 $2.7 Operations 8,400 $0.5 $0.8 $1.6 Manufacturing 5,900 $0.4 $0.6 $1.1 Induced 9,800 $0.4 $1.0 $1.6 Operations 4,200 $0.2 $0.5 $0.7 Manufacturing 5,600 $0.2 $0.5 $0.9 Total 47,100 $3.5 $5.8 $12.1 Operations 24,100 $1.5 $2.6 $5.5 Manufacturing 23,000 $2.0 $3.2 $6.6 Note: Wages, GDP and Economic Output are presented in 2017 prices. Totals may not sum due to rounding. Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 – Final Report (27Sep2017) iii Figure ES-1: Annual Direct Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 Figure ES-2: Annual Total Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 – Final Report (27Sep2017) iv Figure ES-3: Distribution of Total Direct Business Aviation Operations and Business Aircraft Manufacturing Employment (FTEs) Economic Impacts per Business Aviation Aircraft (Operations Only) From an operations perspective, each business aviation aircraft contributes significantly to Canada’s economy. Each aircraft directly generates 6.1 person years of employment, earning approximately $460,000 in wages. This contributes $690,000 in direct GDP and $1.7 million in direct economic output to the Canadian economy. Including multiplier impacts, operations of a single business aviation aircraft support labour hours for a total of 12.8 person years, earning $820,000 in wages annually. Furthermore, the total GDP contribution of one business aviation aircraft is estimated at $1.4 million in GDP, while the total economic output is measured at $2.9 million. The direct and total economic impacts per business aviation aircraft are provided in Figure ES-4 and Figure ES-5, respectively. Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 – Final Report (27Sep2017) v Figure ES-4: Direct Economic Impacts of 1 Business Aviation Aircraft’s Ongoing Operations Per Annum Figure ES-5: Total Economic Impacts of 1 Business Aviation Aircraft’s Ongoing Operations Per Annum Economic Impact of Business Aviation Operations and Business Aircraft Manufacturing in Canada, 2017 – Final Report (27Sep2017) vi Annual Tax Impacts Tax Impacts of Business Business aviation operations and business aircraft manufacturing in Canada also contribute to government Aviation Operations and revenue that is received by the federal, Manufacturing in Canada provincial/territorial and local governments. Total taxes paid on an annual basis are estimated at nearly $900 Federal Government: million in 2017.2 $560 million (63% of total) The majority of taxes collected accrue to the federal and provincial/territorial governments at 63% and 35%, Provincial/Territorial respectively. Municipal taxes are also estimated to be Government: nearly $19 million across Canada (2% of total taxes collected). Figure ES-6 provides a summary of the taxes $317 million (35% of total) collected. Municipal Government: $19 million (2% of total)