ESTIMATING TtiE REGIONIIL ECOit'O:dIC SIGNIFICANCE OF A1RFORTS Steviari E. Outler Ecoiloiiiic Analysi s Division \lolp? National Trailsportation Systcins Center Lt>iircnceJ. Kiernail National Planning Divisicn ' Fedel-a1 Aviation Adii~inis1.raiiorl Preface Ciiapter 1 - Introduction 1.1 Furpose 1.2 A ' lieI4east1rcs 1.3 Applications Chaplsr 2 - Benefits Catc-gorics of Benniiis Transportation Kencfit Rules of T1it111:b Effect of !ncreas~dActivity Reduced Delays Cor;,:ilc~ni iy 6erii;ii t 5 Stimulation of Busin~ss Access to th; National Lirport Syste111 Recreat i on Commerciai Activities Chapter 3 - Economic Impacts 3.1 Dofi ni Lions of Ecor>o~iiicII;!;)?c~s 3.2 r e i Esiiil:ztes Chapter 4 - Preparation of an Ecorlo;ijic !mp:ct Assess!~ient Chapter 5 - Surniaary Appendices 8 Oe~-i%:atio~~of Iehl? 3-1 for Estiinating Expenditures p?r Visitor C Est ir~atingECOI~U;;I~C I!~![)acts Usirg th~ R!I-1S 1I 1~1~11tipli~rs References .Lis:?. of Tables Paae 2-1 Transportation Beneii t Variables 2-2 Approxiniate Denciiis for Various Activity Lev~ls 3 - 1 Expendi turer, psr \:'isi tor 3-2 ~lpproximataimpacts for Yari cus Activity tcvels 4-1 Iipproximatc Genefi ts ant1 linpzcis for \/arious Acti vi ty Levels 36 1'4- 1 Airports with riior!? than 1 ilil lion Passengers 11-3 U- 1 Original Data Set B- I 8-2 Final Form of the Data Set 3-2 6-3 Expenditures per Visitor, !907=100 8-3 B-4 Expenditures per Visitor, 1991=!00 fj-4 C- 1 Aviation RIWS II Code Numbers C-3 Fic~ureNo. -.--Paoe 2-1 Transportation Benefit of an Airport 5 A- 1 Ai rports with 1-iore than On? 14i 11ion Passengers A-2 PREFACE This docu~iient is a revision of oui i096 report, tsleasui-ino the Regi.0~31~ Economni c Si(111ifi cance of Ai roorts, Report No. COTIFAAIPPI87-1. The car1 ifr report was prepared in response to requests fro111tiie airport conii~iunity for FAA guidelines for esti~natirignleasures of tile importance of indivitlual airports to thci r surrounding co~i~niuniti es. Like the 1896 report, tile present c!ocum.nt was v:ritten priniari 1y for airport managers arid pl anncrs whose budget and/or time constraints require that ir:~pact analyses Os conducted ill house, rattier than by a consultant. For this reason, our ouidelincs were prepared with saall- and mediunl-sized !)ablic use airports in e~ind. -I lie ycneral orgatiiz?t ion of the presetit docuiri~t;t renair;~based on thr tiistinction betv:e~.li ti-i.nsportation benefit zr;d economic ic~~act. 'I'h? ~iialcrial in Chzpter 3, i;o~;;ever, is no:.: prcscnted iri tco separate chapters, one on dcfini tions of econoo:ic i~~ipactand itip cclcul~lionof prelimin~ryesti~iintes and one on th? preparation of a mot.? tletai 1ed econoliii c impact: assessnEnL. Throc~gtioutthe report, data to be used irl the rule-of-Liiu~nb esti~lrationof transportation benefit ant1 economic iliipact have been ~rpilated. In addition, in Cha!)t:er 3 there is a ne+i: section on tlie esti~nationof i11di1.e~:impacts, bascd or1 a region's populatio!) 2nd origiii-destinaticn traffic. Also, the earl iel- trcalilie!it of induce6 impacts, i .e., regional niultiplie~'~,has ken refined to lake the sire of the region's population inic account. [he au~horsare grateful to tiie marly users of tlie !9g6 i-ei~ortfor ttieir comments and suggsstions. !lc owe special iiianks to Robel-t J. Zi~elsdorfof \k!i lf)l~rSmi tii Associates, wlio provided us vii Lh data or1 iircarid i riduced impacts. The United States has the sorld's riiost extensive airport sysierii. Ti~csystem is essential to riatiorla1 transportation, arid there is a l'rge Federal investmerlt in it. However, most public airports are owned and operated by units of local government. Pub1 i c ai I-ports must compete for furids with othcr ~~ovcl.!i~i~c~ittil - activities. they 2re scrutinized during bvdyet preparation and may b? ihe subject of public debate, particularly iT rilajor iinprovenie~its or IEW constri~ctionarc ariticipated. They may eveti be ihe target of proposed restrictions aimed at limiting aircraft noise levels. in such instances, the future of an airport is c!eterniined pririi;ri ly throwjt~the local pol i iicai process. I1 is important that tlie public and their. repr~ser~tatives appreciate the econoritic significance of airports if they are to !:oniinue to support theiil. This report is desigrled to zssist analyses of the economic importanc~of airports. It is not intended for use in iinancial feasibility studies or cost/benefil analyses. Rather, it provides informaiiort ltlat the average ci lizetl iliay find useful i;'iicn the current and future t-ole of an airport is bcing discussed. '[he report is directed to a \vide audience kii th val'ying levels oi sopl~isticaLionin the field of ecotioinics. One objective is to encourage a standard approach to the measurc?nrent of thc ecor\o~riic sicj~iificarlccor airports. l'he report includes a urli Toria set of definitions, illustrations of ttlc II~OS~useful cnalytical techniques, and descriptions of the conditions urider whicii tliey at-e niost appropriately applied. Gerier-a1 ~ircthodologiesarc ~11:phasized rather than specific it~struciions. Thc procedures descri lied in the rcpot-1. can be used to evaluitie the ecorlori~ic significatlce of an r-xisti~igor pl-c;poscd airpol.t or to study tlie cor.sci{rlences of irici-eesed iictivity at ;ti airport. The two nail3 indicators that lllay be measured arid ci ted as eviti?nce OF an airport's importance arc its ?conoa~ic inipaci and its I.rcrisportation bencfit. Ecorloillic inipact is the regional econoi:~ic activi ty, cmployi~~ent,aritl payl-011 that can be attributed, directly and indirectly, to the operation of a local airport. It describes the in~portanceof aviation as an industry. Benefit is the scrvicc that a local airport makes available to the surrounding area. The services e~~ipliasizedill this report are tinie saved and cost avoided by travelers, but benefits also include other advantages, such as i~~ijjrovecltransportation safety anti comfort. Benefits are a rileasurc of the iniproved transportation that the ai ]-port pl:ovid", and thus reflect the primary motive of a coil:l;urii ty in op'.r~.tina a pub1 ic airport. ProiiL, or the difierencc beti.:eeri i~lcoilleand costs, is a valid ~j~easureoi the viability of ii PI-ivate business. iio\.iever, pubi ic airports are ynerally operated as pub1 ic utilities, with provisiori - of scl-vice ~*atlierthan profit as tlie pl'iliiary motive. tiu us profit is riot partic~~larlyrelevant to (.he r~gionalecono11:ic sigtii ricarice of an airport. Financial feasibility, or the ability of an airport to pay its bills, is a relaied subject that is usually considered IS parl: of tile overall plannincj for a pub1 ic airpor.t. Tliis report does not include guida~iceon lioiv to determine tile financial feasi bi 1 ity of an airport. Inionn~tior~about tlic cconoi:~ic significance of airports lias a xide variety of uses. It is an ii~iportantelement in airport niastel- plans arid system plzns, 1)ccause it helps to describe tli? basis for arid consequences of tlie cievelopment of airports and tile public involvement in tiielil. Tlie pub1 ic is wore 1 i kely to suppol't ai I-~OI-~S when they are awar-e of tl:e stlbstaritial positive effects 011 thc su~.ro~indiiigarea. Economic impact slid beneiit data can b? us~ful in evaluating tl~ceffects of proposcd airport use I-estl'ictioris. 8e::eii 1 dala can bc- co~:!bined with inconc PI-ojeciions to lielp detcrinirie tile viatii 1 i ty of airpart dc-velop~ii?niproposd s. iiri;ilysts should consider :he ir1lend.d spplication of tlizir work its probabl e audience arid design thri I~ analgsi s accordi~igiy. 7reliminary calculations derived froill rules of ttlui~ib provid? "ball- park" measures of an ai r])oriis signi iicarice arid are appropriate orlly v;hcn quick-response information is required i~ritlprecision is not ccscntial. More detailed analytical techniqcies, wliicll require more tirue and liloriey to perfoi-in, are appropriate v:lien a more precise esti~uateis ncedetl. Detailed arialyses may be used to sc!pport major investment decisions or as input into debates of a technical natt~re. ?, freque~itflay: ill econorl~ic impact analysis is preseniation of the resul ts ill a for~iithat the cvo'age rn?mber of tlie audience firids boring or i~ninformative. 'I'll? purpose of the study is usually lo gain pub1 ic untlerstatidi r~gant! support, and ihe final report sliculd be desigi~etlui.itii this in niirid. k balance siiould bs rnaintain~d betxcn the effort in [)repari~:gan i.nz.lysis and the cifori in di sseii~inaiing th? results. The fol 1ov:ing suctions provide guidance on both simple rul c-s of thur:\j and wore sophi sticatctl arialytical techniques. Chapter 2 pres2nts a ~i:etliodology for the developracrit of measur-es of transportatio~ibenefit. Chapter 3 offcrs suggestio~isfor est ilnatil~geconon~ic illipacts by meznc of some statistical rules of thunib, anti Ctiagtef- 4 outli~iesa basic approach for coriducti~iga coii~preiiensivcecor!oirii~ assessraent. A brief su.m.t-y is presented in Clizpt~r5. 2.1 Catecrories of public-Kenefit Benefits are the services that a coi~!~i~utiityhopes to obtain by developing and mai ritaining an airport. 'They differ froin cconoi~iic irnpact, which is described in Ctiapter 3.