ACRP Project 03-28 The Role of U.S. Airports in
Description: ACRP Project 03-28 The Role of U.S. Airports in the National Economy 1 Introduction PART 1 2 Purpose of Research Distinguish between the role of airports in the national economy and local, regional and state airport economic impact reports.
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slide1. ACRP Project 03-28 The Role of U.S. Airports in the National Economy 1<br>
slide2. Introduction PART 1 2<br>
slide3. Purpose of Research Distinguish between the role of airports in the national economy and local, regional and state airport economic impact reports.
Estimate the national economic contribution of the U.S. airport system to the national economy
Estimate how changes in airport services (nonstop flights, air cargo transported and cost of air travel) affect the national economy 3<br>
slide4. Research Questions Four questions were investigated to trace the impacts of U.S. airports on the national economy:
What are the national economic impacts of U.S. airports?
To what extent do improvements in national and international connectivity add to the national productivity of U.S. industries?
What is the inter-relationship between air cargo and the U.S. industrial base?
How do changes in domestic and international airfare effect the national economy? 4<br>
slide5. Insight Through Complementary Analyses The static analysis of the national economic impacts of airports reports the economic footprint of airports within the national economy. This is similar to traditional methods of accounting for economic impacts of airports or airport systems, except it does not include redistribution of economic effects within the United States.
The dynamic analysis of connectivity estimates the growth in GDP resulting from a change in nonstop service among airports. Connectivity refers to the total resource costs in time and out-of-pocket expenditure to move between two places. The connectivity analysis estimates the economic impacts of cost changes due to changes in connectivity.
The dynamic analysis of air cargo estimates the interrelationship between air cargo and industry productivity as measured by changes in GDP.
The dynamic analysis of airfare traces the difference between what consumers are willing to pay for a good or service and what they actually pay. In the context of air service, the difference between willingness to pay for air service and what is actually spent leaves money in households’ “wallets,” and is available to be spent in the general economy on non-aviation goods and services. 5<br>
slide6. Overview of Role of Airports in the National Economy 6 1 2 3 STATIC DYNAMIC<br>
slide7. Definitions of Dollar Terms Used Throughout this Presentation 7<br>
slide8. Findings PART 2 8<br>
slide9. High Level Results Contribution to U.S. GDP 9 The national contributions of 1% changes in connectivity and air cargo are estimates based on a sample of metropolitan regions 20 regions and should be considered illustrative. Values are in 2010 dollars.<br>
slide10. Economic Impact Analysis Static contribution of U.S. Airports in the national economy
Similar to airport, regional, and state economic impact studies
Generally measures jobs, labor income, value added, and business sales (total output) generated by: airport administration, businesses and government agencies located on-airport, on-airport construction spending, off-airport spending by visiting passengers, the contribution to industry of providing air cargo services, and, at times, the impact of off-airport aeronautical industries. 10 1<br>
slide11. Economic Impact of U.S. Airports on the National Economy 11 NOT COUNTED:
Civil Aviation – Aircraft Manufacturing & Parts
Domestic Air Cargo
Off-Airport Spending of Domestic Air Visitors<br>
slide12. How is a National Economic Analysis of U.S. Airports Different than an Airport Study in a Region or State? Measures what airports add to the national economy:
On-airport commerce
International cargo (brings income to the U.S. from other countries)
Spending of international visitors who arrive by air
Does not include flows between domestic (U.S.) airports, which redistributes impacts within the U.S.:
Domestic air cargo are purchases and sales within the U.S.
Spending of domestic air visitors represent shifting of spending from one U.S. region to another
Also, does not include impacts of related off-airport aeronautics industries. 12<br>
slide13. Airline Employment and Commercial Airport Administration (2011) 13<br>
slide14. Profile of International Visitor Spending and Direct Jobs From the Spending 14 Visitor spending represents the net difference of spending by international travelers to the U.S. minus spending by U.S. residents traveling internationally Jobs Spending 2,731 18,732 Retail, $6.8, 23% Domestic Air Transportation, $2.3, 8% Travel agents, $0.4, 2%<br>
slide15. Direct Impacts of Airports on National Employment by Source (in total & by percent) 15 Total Direct Employment on National Economy = 2,172,200<br>
slide16. Total National Economic Impacts of Airports Including Direct and Multiplier Effects 16<br>
slide17. Total Economic Impacts of Airports on the U.S. Economy 17 Total impacts include direct, and indirect and induced multiplier effects. Employment is rounded to the nearest 100, and dollars are in 2010 value
Sources: BEA, Office of Travel and Tourism Industries of the U.S. Department of Commerce, BLS-CES, U.S. Census Bureau, U.S. Budget, FAA Form 127 & National Plan of Integrated Airport Systems (NPIAS) Report, ACI-NA, U.S. Department of Commerce data and other federal data assembled by IMPLAN. LLC. Calculations by EDR Group using 2012 National IMPLAN model.<br>
slide18. Total Impacts of U.S. Airports as Percent of U.S. Economy 18 Includes direct impacts & indirect and induced multiplier effects. Calculations based on national data sets and U.S. Bureau of Economic Analysis, using IMPLAN, LLC.<br>
slide19. Meta Analysis of Airport Economic Impact Studies Assembled 1,000+ airport economic impact studies
Studies varied by time, location, classification of airports & methodologies
Objective was to compare this approach to the assembly of the preceding national databases for the 3,330 NPIAS airports
Objective to estimate economic output generated “on-airport” 19<br>
slide20. On-Airport Calculation by Regression Analysis Explaining the Levels of Revenues Generated on Airports by Examining a Series of Independent Variables (Characteristics of Airports and their Regions) 20 *National Plan of Integrated Airport Systems Report, Federal Aviation Administration
**The United States Office of Management and Budget designates metropolitan statistical areas (MSA) . Each MSA must have at least one urbanized area of 50,000 or more inhabitants. Independent Variables Considered<br>
slide21. Estimates of Total On-Airport Impacts 21 Excludes off-airport visitor spending and cargo impacts On-airport impacts are validated by the regression analysis<br>
slide22. Dynamic Analyses Complement Static National Economic Impacts Dynamic: if changes at airports occur, the consequence will be increases in national productivity across U.S. industry sectors.
The Effects of Three Potential Changes Are Explored:
Strengthening connections among U.S. airports and between U.S. and international airports
Increasing air cargo transported through U.S. airports
Decreasing airfares for personal travelers 22<br>
slide23. Three Types of Dynamic Analyses 23 Connectivity of Airports
Inter-relationship of air cargo and industry productivity
Impacts of changes in air travel costs<br>
slide24. Airport Connectivity Connectivity
Improved connectivity has direct effects (costs and time) and can have indirect effects, for example, by increasing accessible market size and reducing costs in the supply chain. 24 2<br>
slide25. Key Connectivity Measures 25 Note: 18 connectivity variables were analyzed. The table above shows the variables that proved significant for one or more industries.<br>
slide26. Regions for Connectivity & Cargo Analyses 26<br>
slide27. 11 Industry Sectors Included in Connectivity Analysis 27<br>
slide28. Impacts of Connectivity Variables Differ According to Industry Sector 28 Example of Findings:
Dollars in 2010 Millions of GDP Generated by 1% Increases in the 3 connectivity variables shown ** Other represents the aggregation of 9 economic sectors shown on Slide 27.<br>
slide29. Direct Value Added per Industry Sector in 20 MSAs Based on 1% Increases of Connectivity Variables ($millions) 29 Note: Impacts on each industry sector vary according to connectivity variable.
** Other represents the aggregation of 9 economic sectors shown on Slide 27.<br>
slide30. Total Economic Impacts for the 20 MSAs Driven by a 1% Increase in Each Variable Including Direct & Indirect and Induced Effects 30 Note: Jobs rounded to the nearest 100. Values in 2010 dollars (millions). Direct employment, labor income, output and all spinoff impacts calculated using IMPLAN, LLC.<br>
slide31. Estimated National Impacts of Each Connectivity Variable National extrapolation is for illustrative purposes
to show order of magnitude effects 31 Note: Jobs rounded to the nearest 100. Values in 2010 dollars (millions). Calculations based on the value added previously presented. The basis of the extrapolation is that the national GDP is 4.3 times the aggregate GDP of the 20 regions tested.<br>
slide32. Air Cargo & Productivity Air cargo differs significantly from passenger travel
Key airports are different (cargo hubs, gateways)
Shipping cost is more important than connectivity
Current logistics network provides almost universal coverage
Approach
Developed a time series analysis relating changes in air cargo to changes in manufacturing and wholesale industry productivity (for the years 1995, 2000, 2005, and 2010)
Explaining changes to industry productivity reflected by the amount of air cargo handled 32 3<br>
slide33. Direct & Multiplier Impacts in Manufacturing and Wholesale Sectors Driven by a 1% Change in Air Cargo Tonnage in 20 Sampled MSAs 33 Note: Jobs rounded to the nearest 100. Values in 2010 dollars (millions). Direct employment, labor income, output and all spinoff impacts calculated using IMPLAN, LLC. Note: Dollars in $2010 Millions<br>
slide34. Estimated National Impacts Given a 1% Increase in Air Cargo Tonnage Direct Impacts for manufacturing and wholesale trade industry sectors:
$742 million in direct value added
5,100 direct jobs
Total impacts, including multiplier effects:
$2.5 billion in value added
23,000 jobs 34 National extrapolation is for illustrative purposes
to show order of magnitude effects<br>
slide35. Impact of a Presumed 1% Decrease in Air Fare (dollars in millions) 35 1% drop in airfare represents about $2 per domestic ticket and $7 per international ticket National economic impacts based on $815 million of additional consumer surplus Note: Jobs are rounded to the nearest 100. Dollars are in 2010 value using 2012 national model from IMPLAN, LLC. 4 Consumer surplus is the difference between what travelers are willing to pay and what they actually pay for air travel<br>
slide36. Conclusions PART 3 36<br>
slide37. Multiple Approaches 37 The multiple approaches carried out in ACRP Project 03-28 are complementary in understanding the economic impacts of airports to the national economy:
The economic impact analysis is a snapshot of the economic contribution of airports at a given moment
The dynamic analyses estimate how national economic impacts of airports will change if:
(1) connectivity between airports and regions; (2) air cargo tonnage; and/or (3) the cost of airfare change.<br>
slide38. Direct & Total Economic Impacts of U.S. Airports in the National Economy 38 Direct Impacts ($ values in millions) Total Impacts Including Direct plus Economic Multipliers ($ values as noted) Notes: Direct and total impacts of connectivity reflect the mean average of all 11 connectivity variables
All values are in 2010 dollars. Jobs are rounded to the nearest 100. Total impacts include estimates of direct, indirect, and induced impact. National extrapolation for connectivity and cargo is for illustrative purposes to show order of magnitude effects.
Calculations used IMPLAN, LLC national model, Version 3, 2012.<br>
slide39. Research Team Economic Development Research Group, Inc.
Dr. David Gillen, University of British Columbia
ICF International
Kramer aerotek
Mead & Hunt, Inc.
Cover photographs courtesy of Mead & Hunt 39<br>
slide40. Appendix Methodology Slides Part 4 40<br>
slide41. Airports’ Role in the U.S. Economy Generates Economic Impacts<br>
slide42. Process to Calculate Economic Impacts of Airports 42<br>
slide43. Results of Regression Analysis (1 of 2) Static Economic Impacts 43 Regressions based on NPIAS data base of 3,330 airports, aviation facilities and activities, regional socio-economic data and 1,013 economic impact studies<br>
slide44. Results of Regression Analysis (2 of 2) 44<br>
slide45. Measuring Productivity and Productivity Change Real GDP will increase if productivity in the economy increases
Production Function: 45 Multifactor Productivity (MFP) is the change in output(s) due to the change in inputs.
In this analysis, to estimate impacts of improved connectivity, output is Real GDP, and inputs are changes in airport connectivity as well as other standard inputs such as labor.
To estimate impacts from increased air cargo, output is Real GDP, and inputs are changes in enplaned and deplaned cargo tonnage.<br>
slide46. Estimate Linkage Between Changes in Air Connectivity and Changes in Productivity Select a representative sample of 20 Regions (MSAs) and 26 Airports
Assemble data on change in Multi-factor Productivity (MFP) for each region in 1995, 2000, 2005 and 2010: 46 MFP By Industry (BLS) Regional Economic Data (GRP, investment, labor) Nonstop Flight Pattern (O-Ds, frequency) for sample airports Among the 26 sample airports and between the 26 airports & 15 major international markets<br>
slide47. Two or More Daily Nonstop Domestic Flights in the Most Important of the Connectivity Variables 47 Calculated Elasticities of Airport MFP Analysis Interpretation: For every 1% increase of destinations served by Two or More Daily Nonstop Domestic Flights, GDP will increase by .000915 on average (1% * .0915).<br>
slide48. Basic Concept of Airfare Change (Consumer Surplus) Change in price leads to change in quantity demanded and in consumer surplus
Change in spending on air travel (measured by the change in consumer surplus) frees up money for other consumption
The increased spending on other goods and services contributes to economic growth 48<br>
slide49. Impact of a Presumed 1% Decrease in Air Fare 49 1% drop in airfare represents about $2 per domestic ticket and $7 per international, which is expected to create an aggregate of $991 million in passenger welfare National economic impacts based on $991 million of induced travel expenditure and $815 million of additional consumer surplus (dollars in millions) Note: Jobs are rounded to the nearest 100. Values are in 2010 dollars using 2012 national model from IMPLAN, LLC.<br>
slide2. Introduction PART 1 2<br>
slide3. Purpose of Research Distinguish between the role of airports in the national economy and local, regional and state airport economic impact reports.
Estimate the national economic contribution of the U.S. airport system to the national economy
Estimate how changes in airport services (nonstop flights, air cargo transported and cost of air travel) affect the national economy 3<br>
slide4. Research Questions Four questions were investigated to trace the impacts of U.S. airports on the national economy:
What are the national economic impacts of U.S. airports?
To what extent do improvements in national and international connectivity add to the national productivity of U.S. industries?
What is the inter-relationship between air cargo and the U.S. industrial base?
How do changes in domestic and international airfare effect the national economy? 4<br>
slide5. Insight Through Complementary Analyses The static analysis of the national economic impacts of airports reports the economic footprint of airports within the national economy. This is similar to traditional methods of accounting for economic impacts of airports or airport systems, except it does not include redistribution of economic effects within the United States.
The dynamic analysis of connectivity estimates the growth in GDP resulting from a change in nonstop service among airports. Connectivity refers to the total resource costs in time and out-of-pocket expenditure to move between two places. The connectivity analysis estimates the economic impacts of cost changes due to changes in connectivity.
The dynamic analysis of air cargo estimates the interrelationship between air cargo and industry productivity as measured by changes in GDP.
The dynamic analysis of airfare traces the difference between what consumers are willing to pay for a good or service and what they actually pay. In the context of air service, the difference between willingness to pay for air service and what is actually spent leaves money in households’ “wallets,” and is available to be spent in the general economy on non-aviation goods and services. 5<br>
slide6. Overview of Role of Airports in the National Economy 6 1 2 3 STATIC DYNAMIC<br>
slide7. Definitions of Dollar Terms Used Throughout this Presentation 7<br>
slide8. Findings PART 2 8<br>
slide9. High Level Results Contribution to U.S. GDP 9 The national contributions of 1% changes in connectivity and air cargo are estimates based on a sample of metropolitan regions 20 regions and should be considered illustrative. Values are in 2010 dollars.<br>
slide10. Economic Impact Analysis Static contribution of U.S. Airports in the national economy
Similar to airport, regional, and state economic impact studies
Generally measures jobs, labor income, value added, and business sales (total output) generated by: airport administration, businesses and government agencies located on-airport, on-airport construction spending, off-airport spending by visiting passengers, the contribution to industry of providing air cargo services, and, at times, the impact of off-airport aeronautical industries. 10 1<br>
slide11. Economic Impact of U.S. Airports on the National Economy 11 NOT COUNTED:
Civil Aviation – Aircraft Manufacturing & Parts
Domestic Air Cargo
Off-Airport Spending of Domestic Air Visitors<br>
slide12. How is a National Economic Analysis of U.S. Airports Different than an Airport Study in a Region or State? Measures what airports add to the national economy:
On-airport commerce
International cargo (brings income to the U.S. from other countries)
Spending of international visitors who arrive by air
Does not include flows between domestic (U.S.) airports, which redistributes impacts within the U.S.:
Domestic air cargo are purchases and sales within the U.S.
Spending of domestic air visitors represent shifting of spending from one U.S. region to another
Also, does not include impacts of related off-airport aeronautics industries. 12<br>
slide13. Airline Employment and Commercial Airport Administration (2011) 13<br>
slide14. Profile of International Visitor Spending and Direct Jobs From the Spending 14 Visitor spending represents the net difference of spending by international travelers to the U.S. minus spending by U.S. residents traveling internationally Jobs Spending 2,731 18,732 Retail, $6.8, 23% Domestic Air Transportation, $2.3, 8% Travel agents, $0.4, 2%<br>
slide15. Direct Impacts of Airports on National Employment by Source (in total & by percent) 15 Total Direct Employment on National Economy = 2,172,200<br>
slide16. Total National Economic Impacts of Airports Including Direct and Multiplier Effects 16<br>
slide17. Total Economic Impacts of Airports on the U.S. Economy 17 Total impacts include direct, and indirect and induced multiplier effects. Employment is rounded to the nearest 100, and dollars are in 2010 value
Sources: BEA, Office of Travel and Tourism Industries of the U.S. Department of Commerce, BLS-CES, U.S. Census Bureau, U.S. Budget, FAA Form 127 & National Plan of Integrated Airport Systems (NPIAS) Report, ACI-NA, U.S. Department of Commerce data and other federal data assembled by IMPLAN. LLC. Calculations by EDR Group using 2012 National IMPLAN model.<br>
slide18. Total Impacts of U.S. Airports as Percent of U.S. Economy 18 Includes direct impacts & indirect and induced multiplier effects. Calculations based on national data sets and U.S. Bureau of Economic Analysis, using IMPLAN, LLC.<br>
slide19. Meta Analysis of Airport Economic Impact Studies Assembled 1,000+ airport economic impact studies
Studies varied by time, location, classification of airports & methodologies
Objective was to compare this approach to the assembly of the preceding national databases for the 3,330 NPIAS airports
Objective to estimate economic output generated “on-airport” 19<br>
slide20. On-Airport Calculation by Regression Analysis Explaining the Levels of Revenues Generated on Airports by Examining a Series of Independent Variables (Characteristics of Airports and their Regions) 20 *National Plan of Integrated Airport Systems Report, Federal Aviation Administration
**The United States Office of Management and Budget designates metropolitan statistical areas (MSA) . Each MSA must have at least one urbanized area of 50,000 or more inhabitants. Independent Variables Considered<br>
slide21. Estimates of Total On-Airport Impacts 21 Excludes off-airport visitor spending and cargo impacts On-airport impacts are validated by the regression analysis<br>
slide22. Dynamic Analyses Complement Static National Economic Impacts Dynamic: if changes at airports occur, the consequence will be increases in national productivity across U.S. industry sectors.
The Effects of Three Potential Changes Are Explored:
Strengthening connections among U.S. airports and between U.S. and international airports
Increasing air cargo transported through U.S. airports
Decreasing airfares for personal travelers 22<br>
slide23. Three Types of Dynamic Analyses 23 Connectivity of Airports
Inter-relationship of air cargo and industry productivity
Impacts of changes in air travel costs<br>
slide24. Airport Connectivity Connectivity
Improved connectivity has direct effects (costs and time) and can have indirect effects, for example, by increasing accessible market size and reducing costs in the supply chain. 24 2<br>
slide25. Key Connectivity Measures 25 Note: 18 connectivity variables were analyzed. The table above shows the variables that proved significant for one or more industries.<br>
slide26. Regions for Connectivity & Cargo Analyses 26<br>
slide27. 11 Industry Sectors Included in Connectivity Analysis 27<br>
slide28. Impacts of Connectivity Variables Differ According to Industry Sector 28 Example of Findings:
Dollars in 2010 Millions of GDP Generated by 1% Increases in the 3 connectivity variables shown ** Other represents the aggregation of 9 economic sectors shown on Slide 27.<br>
slide29. Direct Value Added per Industry Sector in 20 MSAs Based on 1% Increases of Connectivity Variables ($millions) 29 Note: Impacts on each industry sector vary according to connectivity variable.
** Other represents the aggregation of 9 economic sectors shown on Slide 27.<br>
slide30. Total Economic Impacts for the 20 MSAs Driven by a 1% Increase in Each Variable Including Direct & Indirect and Induced Effects 30 Note: Jobs rounded to the nearest 100. Values in 2010 dollars (millions). Direct employment, labor income, output and all spinoff impacts calculated using IMPLAN, LLC.<br>
slide31. Estimated National Impacts of Each Connectivity Variable National extrapolation is for illustrative purposes
to show order of magnitude effects 31 Note: Jobs rounded to the nearest 100. Values in 2010 dollars (millions). Calculations based on the value added previously presented. The basis of the extrapolation is that the national GDP is 4.3 times the aggregate GDP of the 20 regions tested.<br>
slide32. Air Cargo & Productivity Air cargo differs significantly from passenger travel
Key airports are different (cargo hubs, gateways)
Shipping cost is more important than connectivity
Current logistics network provides almost universal coverage
Approach
Developed a time series analysis relating changes in air cargo to changes in manufacturing and wholesale industry productivity (for the years 1995, 2000, 2005, and 2010)
Explaining changes to industry productivity reflected by the amount of air cargo handled 32 3<br>
slide33. Direct & Multiplier Impacts in Manufacturing and Wholesale Sectors Driven by a 1% Change in Air Cargo Tonnage in 20 Sampled MSAs 33 Note: Jobs rounded to the nearest 100. Values in 2010 dollars (millions). Direct employment, labor income, output and all spinoff impacts calculated using IMPLAN, LLC. Note: Dollars in $2010 Millions<br>
slide34. Estimated National Impacts Given a 1% Increase in Air Cargo Tonnage Direct Impacts for manufacturing and wholesale trade industry sectors:
$742 million in direct value added
5,100 direct jobs
Total impacts, including multiplier effects:
$2.5 billion in value added
23,000 jobs 34 National extrapolation is for illustrative purposes
to show order of magnitude effects<br>
slide35. Impact of a Presumed 1% Decrease in Air Fare (dollars in millions) 35 1% drop in airfare represents about $2 per domestic ticket and $7 per international ticket National economic impacts based on $815 million of additional consumer surplus Note: Jobs are rounded to the nearest 100. Dollars are in 2010 value using 2012 national model from IMPLAN, LLC. 4 Consumer surplus is the difference between what travelers are willing to pay and what they actually pay for air travel<br>
slide36. Conclusions PART 3 36<br>
slide37. Multiple Approaches 37 The multiple approaches carried out in ACRP Project 03-28 are complementary in understanding the economic impacts of airports to the national economy:
The economic impact analysis is a snapshot of the economic contribution of airports at a given moment
The dynamic analyses estimate how national economic impacts of airports will change if:
(1) connectivity between airports and regions; (2) air cargo tonnage; and/or (3) the cost of airfare change.<br>
slide38. Direct & Total Economic Impacts of U.S. Airports in the National Economy 38 Direct Impacts ($ values in millions) Total Impacts Including Direct plus Economic Multipliers ($ values as noted) Notes: Direct and total impacts of connectivity reflect the mean average of all 11 connectivity variables
All values are in 2010 dollars. Jobs are rounded to the nearest 100. Total impacts include estimates of direct, indirect, and induced impact. National extrapolation for connectivity and cargo is for illustrative purposes to show order of magnitude effects.
Calculations used IMPLAN, LLC national model, Version 3, 2012.<br>
slide39. Research Team Economic Development Research Group, Inc.
Dr. David Gillen, University of British Columbia
ICF International
Kramer aerotek
Mead & Hunt, Inc.
Cover photographs courtesy of Mead & Hunt 39<br>
slide40. Appendix Methodology Slides Part 4 40<br>
slide41. Airports’ Role in the U.S. Economy Generates Economic Impacts<br>
slide42. Process to Calculate Economic Impacts of Airports 42<br>
slide43. Results of Regression Analysis (1 of 2) Static Economic Impacts 43 Regressions based on NPIAS data base of 3,330 airports, aviation facilities and activities, regional socio-economic data and 1,013 economic impact studies<br>
slide44. Results of Regression Analysis (2 of 2) 44<br>
slide45. Measuring Productivity and Productivity Change Real GDP will increase if productivity in the economy increases
Production Function: 45 Multifactor Productivity (MFP) is the change in output(s) due to the change in inputs.
In this analysis, to estimate impacts of improved connectivity, output is Real GDP, and inputs are changes in airport connectivity as well as other standard inputs such as labor.
To estimate impacts from increased air cargo, output is Real GDP, and inputs are changes in enplaned and deplaned cargo tonnage.<br>
slide46. Estimate Linkage Between Changes in Air Connectivity and Changes in Productivity Select a representative sample of 20 Regions (MSAs) and 26 Airports
Assemble data on change in Multi-factor Productivity (MFP) for each region in 1995, 2000, 2005 and 2010: 46 MFP By Industry (BLS) Regional Economic Data (GRP, investment, labor) Nonstop Flight Pattern (O-Ds, frequency) for sample airports Among the 26 sample airports and between the 26 airports & 15 major international markets<br>
slide47. Two or More Daily Nonstop Domestic Flights in the Most Important of the Connectivity Variables 47 Calculated Elasticities of Airport MFP Analysis Interpretation: For every 1% increase of destinations served by Two or More Daily Nonstop Domestic Flights, GDP will increase by .000915 on average (1% * .0915).<br>
slide48. Basic Concept of Airfare Change (Consumer Surplus) Change in price leads to change in quantity demanded and in consumer surplus
Change in spending on air travel (measured by the change in consumer surplus) frees up money for other consumption
The increased spending on other goods and services contributes to economic growth 48<br>
slide49. Impact of a Presumed 1% Decrease in Air Fare 49 1% drop in airfare represents about $2 per domestic ticket and $7 per international, which is expected to create an aggregate of $991 million in passenger welfare National economic impacts based on $991 million of induced travel expenditure and $815 million of additional consumer surplus (dollars in millions) Note: Jobs are rounded to the nearest 100. Values are in 2010 dollars using 2012 national model from IMPLAN, LLC.<br>