Advancing the Practice of State Aviation System Planning (2022)

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F-1   Supplemental Information for Aviation Economic Impact Studies F.1 Introduction Many references to aviation economic impact studies (AEISs) are made throughout the guide, as they are one of the most common supplemental or companion studies conducted during or around the time of a state aviation system plan (SASP). Although the guide is focused on SASPs, there are some important considerations to keep in mind if you also plan to conduct an AEIS. is appendix highlights the relationship between SASPs and AEISs, including options for inte- grating an AEIS into a SASP, strategies for measuring economic performance, tips on how to measure economic impact, and more. F.2 Why Consider an AEIS as Part of a SASP? An AEIS typically documents the importance of a state’s airports, individually and collectively, in supporting jobs, income, and business vitality. It can serve three purposes: • Generate economic performance measures for a SASP; • Provide insights about airport functions and uses that can aid in developing and rening future plans for airport improvements and can further support economic development and multimodal planning eorts; and • Provide information on the importance of airports that can be communicated to stakeholders, advisory committees, the broader public, and legislative decision-makers to improve understanding and support for airport improvement plans. For these reasons, many states periodically conduct a statewide AEIS as either an integral part of a SASP or as a separate contract that is designed to support and enhance a SASP. F.3 Options for Integrating an AEIS with a SASP If you have decided to conduct an AEIS, there are typically two options for how it may be developed: either in tandem with or sequential to your SASP. e tandem approach includes the AEIS as part of the SASP. With this approach, collection and analysis of economic information are conducted simultaneously with col- lection and analysis of other aviation information. e key advantage of this approach is that airport managers may be interviewed once for both elements, which reduces the burden placed on them. Economies of scale (budget savings) may also be associated with the survey and report development processes. e sequential approach involves a separate contract for the AEIS, which is done at a dierent point in time than the SASP. A key advantage of conducting the AEIS between A P P E N D I X F These uses of an economic impact study may be considered when scoping state needs and goals for a new SASP. LINK Examples of states that used a tandem approach include Colorado, Michigan, Nevada, and Utah. Examples of states that used a sequential approach include Massachuse s, Montana, Virginia, and Washington. STATE EXAMPLE

F-2 Advancing the Practice of State Aviation System Planning SASP updates is that it can serve to rene economic impact performance measures that can subsequently be (a) applied to improve airport plans and (b) used as part of the performance measure element of your SASP. Both approaches are common, and both can be used to support the three purposes noted in Section F.2, although there are possible trade-os in cost and eciency between the two approaches. Another possible option to consider is the supplemental approach, which avoids doing a formal AEIS but still incorporates economic factors in the SASP. is can be done by utilizing widely accepted and easily tracked performance measures that reect factors important for business activity (such as air cargo ows or on-airport employment). F.4 Measures of Economic Impact and Performance If you have chosen to conduct an AEIS in relation to your SASP, you will want to recognize the dierent indicators and measures of economic impact, so that you can determine how each may be used in understanding the ndings of your study. eir are four fundamental ways airports generate eects on the local and statewide economy: • On-airport jobs. People are employed to work for airport management, xed-base operators (FBOs), airport terminal retail and service tenants, and other vendors located at or adjacent to the airport that provide fuel, maintenance, or support for the operation of the airport. • O-airport passenger spending. Out-of-state visitors use the airport to y in from long dis- tances and then spend money locally on lodging, meals, recreation, and retail purchases. is provides income to o-airport businesses and their workers, which would likely not occur without the airport. • Airport-reliant businesses. Local business activities depend on the airport for shipping time- sensitive and high-value freight to customers (e.g., fresh sh, gold, and manufacturing parts and products), for business travel (e.g., headquarter-branch sta travel), for education (e.g., ight training), for business operations (e.g., tourism, aerial spraying, surveying, and military use), and for customer access (e.g., retreats, resorts, and meeting centers). • Indirect and induced impacts. e three previous classes of eects, referred to as “direct eects,” in turn generate orders for local suppliers of goods and services (e.g., furniture, equipment, buildings, and cleaning services), which are referred to as “indirect impacts.” Direct eects and indirect impacts create jobs and payroll, and workers spend that income on consumer purchases (e.g., housing, retail, and services), which is referred to as “induced impacts.” Some studies use alternative terminology, referring to “rst-,” “second-,” and “third-round” eects, or straightforward English such as “supplier sales” and “income re-spending.” Economists collectively refer to all of these eects as an airport’s “economic contribution” to the economy. ey distinguish that term from the incremental “impact” of a change in airport activity caused by airport improvement. However, that technical distinction is oen blurred in the titles of airport economic studies. While most AEISs today focus on the existing economic contribution of airports, there is an opportunity for future studies to also calculate the “what if ” case—that is, the additional economic growth that can come from further investment in (or accelerating adoption of) SASP-recommended improvements. In general, studies that document the importance of airports can be useful in supporting the SASP, as they can provide a justication for maintaining and improving the functionality of the aviation system and its components. For that reason, economic impact studies commonly also document the “noneconomic” or qualitative public support roles played by airports, such as law enforcement, reghting, and air ambulance uses. The options for integration of an AEIS with a SASP should be considered when the request for proposal for a SASP contractor is being developed. LINK

Supplemental Information for Aviation Economic Impact Studies F-3   F.4.1 Economic Impact Measures e overall economic impact of airports and the eect of changes in airport activity can all be measured in several ways. Consider representing your system’s total economic eects in terms of some or all of these measures: • Jobs, also referred to as “employment”; • Earnings, also referred to as worker income or payroll ($); • Gross regional product (GRP), a local concept synonymous with gross domestic product (GDP), also referred to as “value added” ($); • Output, also referred to as “business revenue” ($); and • State and local tax revenue ($). An example breakdown of dollar impacts by source is shown in Figure F-1. As the example shows, terminology other than that in the list above is sometimes used. You may also want to conduct your airport economic studies to show measures of airport activity associated with specic segments of the economy, such as • Air cargo ows and • Tourism spending enabled by airports. Economic impacts are typically shown in terms of both the local area economic impact of each individual airport in the state and the aggregate statewide economic impact of all airports together. You can also consider disaggregating data by industry to enable further insights into the eect of airports (and, thus, the SASP) in supporting goals of serving economic growth target industries and enhancing economic competitiveness for further business attraction. Consider how using consistent methods to calculate economic impact measures might lead to a further benet of tracking trends that may inform your SASP on the need to invest in airport facilities or change airport classications. F.4.2 SASP Economic Performance Measures Economic performance measures are common in SASPs. Drawing on economic impact studies, you may investigate adopting one or more of the types of measures listed below: • Overall economic impact (jobs, worker income, or tax revenue), • Service to specied target industries (e.g., tourism, high tech, oil/gas industry, or aerial/ agriculture), • Access to business airports (those with runways, fuel, and services to accommodate corporate jets), Source: Oklahoma Aviation and Aerospace Economic Impact Study: Executive Summary (Oklahoma Aeronautics Commission 2017). Note: Spending = expenditures needed to run an airport or tenant business, cost of capital expenditures, and visitor spending; economic activity = sum of payroll and spending. Figure F-1. Example of economic impact breakdown in a recent AEIS. Economic performance measures provided in an AEIS should align with broader goals of the associated SASP. LINK

F-4 Advancing the Practice of State Aviation System Planning • Availability of ground transport services for visitors (e.g., transit, rail, or intermodal service), • Airports with air cargo/freight activities, and • Availability of on-site or adjacent sites for aviation-reliant businesses (i.e., business parks or sites with necessary utilities) An example of economic performance measures incorporated into a SASP is shown in Figure F-2. It is common for a state to identify a SASP goal of providing airport infrastructure to attract business-supporting economic growth; at a minimum, that is reected in a perfor- mance measure regarding capacity to provide runways, services, and fuel for corporate jets. However, some states go further to dene performance measures that draw from the AEIS’s data collection process to measure airport support for target industries, as illustrated in Figure F-3. It is important to understand what type of economic performance measures and economic goals are right for your state, while keeping in mind what is important to your SASP and the capacity of your budget. F.5 Methods for Data Collection and Calculation Just as is needed during the development of your SASP, you will need to develop a methodology for collecting the necessary data to complete your AEIS. Following are some options to consider: Goals of the Michigan SASP include service to “business centers” and “signi cant tourism and convention centers.” A goal of the Colorado SASP is “economic sustainability,” de ned to include how well airports support “aerospace manufacturing, technology and/or testing.” STATE EXAMPLE Source: 2010–2030 Iowa Aviation System Plan (Iowa DOT 2010). Surveys and interviews conducted for an AEIS may be combined with those required for the SASP system inventory requests if both studies are conducted at the same time. LINK Figure F-2. Example of using economic performance measures in a SASP.

Supplemental Information for Aviation Economic Impact Studies F-5   • Interviews or surveys of airport managers and FBOs. These interviews can provide infor- mation about the number of on-airport jobs, including management and on-site tenants. The survey process can potentially be combined with other SASP development activities that also involve these parties. • Documentation of airport tenants and vendors. This documentation provides further infor- mation on employment and payroll among on-site tenants and off-site vendors. This infor- mation can often be obtained by surveying airport tenants and vendors or utilizing business database providers (e.g., Dun & Bradstreet, InfoUSA, or ESRI). • Surveys of airport users. Airport managers can distribute surveys to outgoing travelers regarding the extent of visitors, their origins, and their spending while visiting the area. Researchers can also obtain lists of businesses in air-dependent industries and then survey them regarding the extent of their business dependency on aviation for cargo or passenger movement. • Regional economic impact models. While the three previous sources can document direct effects, a regional input-output model can be applied to calculate indirect, induced, and total effects on jobs and income (which may include business revenues, worker earnings, and GRP). These models are location specific, so separate county and statewide models may be needed. F.6 Use and Communication of Economic Impact Results The results of a statewide aviation AEIS are intended to provide information that can be communicated to stakeholders, the broad public, and legislative decision-makers. Think about the ways in which you can use this information to effectively communicate the benefits of your system of airports. Findings can be used to support decision-making on all levels for projects, resources, and funding. For these reasons, it is important to consider the form and content of the AEIS findings and their inclusion in or relationship to your SASP. Different forms of information may be useful for different audiences. As such, your final AEIS deliverables may include a variety of items, such as reports, brochures, and presentations, Figure F-3. Example of reporting on an economic performance measure in a SASP. Source: Colorado Aviation System Plan and Economic Impact Study (Colorado DOT 2018).

F-6 Advancing the Practice of State Aviation System Planning depending on your needs and your budget. Following are some common AEIS deliverables and/or content: • Summary information on the total magnitude of jobs and income in the state that are gener- ated by or depend on airports in the state. This can be most useful for communications with state-level leaders and legislators. • Local airport tables or reports that specifically show how individual airports benefit their communities and the state. This can be useful for communications with local community leaders and residents. • Case studies that provide stories illustrating how various groups of interest depend on air- ports. This may include different sectors of the economy such as agriculture, forestry, fishing, manufacturing, tourism, education, and public services. This can be most useful for commu- nications with legislators, state economic development agencies, and business interest groups. The findings of an AEIS are sometimes reported inside the broader SASP final report, though it is more common for them to be presented in a separate companion report. That is true even when the two studies are conducted as part of the same contract (the tandem approach). Although commonly presented separately in terms of the technical reports, findings from a SASP and an AEIS are often combined in other deliverables, such as executive summaries and individual airport reports or brochures. Combining study findings in these documents presents a more complete picture of aviation activity benefits and needs at the local and statewide levels.