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Economic Impact of Aviation on Michigan Volume I - Methodology and Findings

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Economic Impact of Aviation on Michigan Volume I - Methodology and Findings i j I , HE ! - 9797.5 I ; .M5 V35 i ! 1989 VALUE OF AIRPORTS TO THEIR COMMUNITIES - I 1 ECONOMIC IMPACT OF AVIATION ON MICHIGAN VOLUME I - METHODOLOGY AND FINDINGS prepared for i : MICHIGAN DEPARTMENT OF TRANSPORTATION [ - ~ WILBUR SMITH ASSOCIATES i :! l . .-f r I _.: AUGUST, 1989 j : --~- ----------- --------- i-' MICHIGAN DEPARTMENT OF TRANSPORTATION ' Bureau of Transportation Planning C: Value of Airports To Their Communities­ Economic Benefits of Aviation Study August, 1989 r:, VOLUME 1 • METHODOLOGY AND FINDINGS This report represents the findings and/or professional opinions of the staffs of the Michi~an Department of Transportation and their study consultants, Wilbur : :' Smith Associates and F. Coleman and Associates. It is not an official opinion '_.) of the Michigan State Transportation Commission. STATE TRANSPORTATION COMMISSION William C. Marshall, Chairperson Rodger D. Young Shirley E. Zeller Hannes Meyers, Jr. Nansi I. Rowe Stephen F. Adamini James P. Pitz Director : l ! The preparation of this document was fmanced in part through a planning grant from the Federal Aviation Administration under Section 505 of the Airport Improvement Act of 1982. The contents do not necessarily reflect the official views or policy of the FAA. Acceptance of this report by the FAA does not in any way constitute a commitment on the part of the United States to participate in any development depicted therein nor does it indicate that the proposed development is environmentally acceptable in accordance with appropriate public laws. ACKNOWLEDGEMENTS This document was prepared by the Aviation Planning Unit of MDOT's Bureau of Transportation Planning, through study consultant Wilbur Smith Associates, in association with Fred Coleman and Associates. Appreciation is extended to the airport managers and their staffs and to airport tenants at the 32 airports investigated in detail, for their assistance in providing data and answering inqniries. Local perspectives of airport activity also were provided by the airport managers. If further information is needed or' additional copies of this report are desired, please contact: Aviation Planning Unit Bureau of Transportation Planning Michigan Department of Transportation PO Box30050 Lansing, Michigan 48909 Attn: Value of Airports Telephone: (517) 373-9585 1-.:-: :j TABLE OF CONTENTS TITLE EXECUTIVE SUMMARY Chapter 1: lntrnduction and Methodology Study Purposes 1-1 Glossary of Terms -- Economic Impact 1-3 Glossary of Terms-- Aviation 1-4 Economic Impact Methodology 1-5 Economic Impact Types 1-6 Direct Impacts Methodology 1-8 Indirect Impacts Methodology 1-9 Induced Impacts Methodology 1-11 Chapter 2: Michigan's Airports System Airports Selected For Detailed Analyses 2-1 Michigan Air Carrier Airports 2-5 Michigan General Aviation Airports 2-7 Chapter 3: Economic Impacts of Studied Airports Impacts By Major Types 3-1 Impacts By Studied Airport 3-2 Impact/Aviation Activity Relationship 3-6 Airport Employment 3-9 Chapter 4: Statewide Economic Impacts of Aviation Impact Extrapolation Process 4-1 Additional Direct and Indirect Economic Impacts 4-4 Estimated Impacts at Unsurveyed Airports 4-4 Total Impacts Process 4-12 Total Estimated Economic Impacts of Michigan's Airport System 4-12 Employment Impacts 4-15 Industry Types Impacted By Airports 4-15 Interpretation and Conclusion 4-17 .· \ Chapter 5: Health, Safety and Welfare Impacts of Michigan's Airports Value of Air Carrier Airports To Communities 5-3 Value of General Aviation to Communities 5-4 Transportation Efficiency 5-5 Dependent Businesses 5-5 Specialized Service 5-6 Emergency Service 5-7 Perceived Community Asset/Economic Development 5-7 Distribution of Michigan Development 5-8 Conclusions 5-8 Appendix EXHIBITS I , I , EXHIBITS (continued) NUMBER TITLE PAGE 22 Annual Statewide Total Economic Activity Impacts By Airport Categories 4-14 23 Employment Impacts of Airports in Michigan .4-15 24 Statewide Economic Impact of Aviation in Michigan By Impacted Industry Type 4-16 25 Relative Economic Activity, Air Carrier and General Aviation Airports 4-18 26 Total Economic Impacts By MOOT's Airport Functional Categories 4-19 27 Average Economic Impacts Per Airport By MOOT's Airport Functional Categories 4-20 28 Consumers' Surplus Value of Air Services 5-1 .~ ! ••• , !···; EXECUTIVE SUMMARY This study assessed Michigan's airport system to define the values which the airports create for their communities. The investigations found that the quantifiable economic impacts are quite impressive, in terms of total economic activity: • the airports generate a combined $5.23 billion in annual economic activity, statewide; * Detroit Metro dominates with $4.08 billion; • the other 23 air carrier airports yield a $0.78 billion impact; • the 213 general aviation airports also are seen as important, creating a combined $0.37 billion annual impact; • households earn an estimated total of $1.70 billion from the economic activities related to Michigan airports; • overall, it is estimated that 101,105 jobs result, directly or indirectly, from the economic activities at the state's airports. The study also found .a number of ways in which airports support and enhance the health, welfare and safety of Michigan residents and visitors: • Creation of consumers' surplus values -- additional unquantifiable economic savings to trip makers who would be willing to pay more than the actual cost of air travel; • Michigan's airports add to transportation efficiency. For many trips, made by most people, the aviation mode offers the lowest total cost; for certain trips by certain people, the fast, direct service offered by general aviation justifies the expense of air taxi, charter or a local-based corporate aircraft. • Many Michigan employers depend upon the state's airports for a number of values which could not be quantified in dollar-terms; :-:! o clients -- current or prospective -- are flown in for meetings, inspection tours or presentations aimed at marketing or improved efficiency; o employees -- occasional general aviation use is justified by payoffs in sales, efficiencies or crisis management; o cargo -- instances of both routine and emergency use of general aviation for air cargo were found in the study surveys to be important to business users, although the value to the business could not be quantified. Page E-2 EXECUTIVE SUMMARY • specialized services were found during the surveys to occur at some airports. These are of value to all of Michigan and include support for forest fire control; wildlife and natural resource management; law enforcement support (bases for search and surveillance aircraft); utility patrols to inspect conditions along gas transimission pipes and power lines, to locate actual or potential trouble spots; aerial photography, agricultural seeding/ spraying; or weather stations. Many Michigan airports aid in preparation for aviation careers by supporting or supplementing local school or college programs and by offering flight training or opportunities for job experience; • emergency services are provided periodically at many Michigan airports. Discussions with airport representatives at the 32 surveyed airports identified the following more frequent illustrations: o medical evacuation; o shipment of medical supplies or samples for diagnosis or treatment; 10 access after winter storms • perceived community asset/stimulus to development ·· many community leaders in Michigan regard the local airport as a desirable facility which adds to the quality of local life. During the study surveys, many local discussions, especially those relating to airports in non-urbanized areas, remarked on the need for economic development and job opportunities in rural Michigan. Reasonably convenient access to an airport is perceived as a distinct advantage to communities seeking to attract industrial development. Chapter 1 INTRODUCTION AND METHODOLOGY Aviation is generally perceived to be an important means of transport for goods and people. However, it does much more than merely serve as a key form of transportation. Aviation has developed to the point that it is now a key part of the nation's total economy. The rapid and efficient transport. of people and goods has literally become the basis of a national and even a global economy. • People are relatively familiar with the value of the nation's large commercial service airports, e.g., Detroit-Metropolitan Wayne County Airport or Kent County International Airport. Airports such as these handle millions of passengers and thousands of tons of cargo annually, and their economic impacts are measured in tens of millions of dollars. Aviation, however, is much more than large airports. In the U.S. there are 16,291 airports, only 25 of which are considered to be "large hub" airports. However, much of the aviation activity occurs at the smaller airports -- the small and mid-sized commercial service airports (e.g., Tri-City Airport in Saginaw) and the dozens of general aviation airports which serve most of Michigan's cities and towns. Recognizing the importance of these small and mid-sized airports, and desiring to quantify that importance, the Michigan Department of Transportation supported by the Federal Aviation Administration, sponsored this study of aviation's economic role in Michigan. Study Purnoses Airports provide values of two types to Michigan communities: economic and non-economic. Economic activity is quantifiable in terms of dollars and jobs having impacts in the airport service area and the state. Non economic activity,
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