HomeMy WebLinkAboutAppendixE-EconomicImpactAPPENDIX “E”
ECONOMIC IMPACT ANALYSIS
INTRODUCTION
There are over 16,000 airports in the U.S. Most of the aviation activity occurs at the thousands of
general aviation airports similar to Georgetown Municipal Airport, which serve most of the nation's
cities and towns. The economic value of an airport is gauged in terms of the economic transactions
that an airport causes - the jobs, payroll and expenditures due to the provision of aviation services
and due to the extent of aviation use, the businesses that use it or serve it, and the investments that
are made because of it. The impact is in economic "value-added" terms - the monetary value which
the airport creates for the City and the area's economy.
This section presents an analysis of the magnitude of economic impact of forecast aviation activity at
Georgetown Municipal Airport.
The airport is expected to remain an increasingly important element in local economic growth during
the next 20 years.
METHODOLOGY
The methodology employed in this economic analysis consisted primarily of a statistical review of
other economic data developed by the State of Texas through its economic impact studies, the
review of specific Georgetown economic information as provided by the Capital Area Planning
Commission (CAPCO) the City’s Office of Economic Development and the City of Georgetown
through its staff. Survey data collected from all of the current airport businesses and employers was a
primary source.
A list of those firms interviewed and surveyed is contained in the Appendix “F” of this study.
________________________________________________________________________________________________________
City of Georgetown E.1 Airport Master Plan Update
Each of the airport business was asked to complete survey forms which addressed their specific types
of operation on the airport, or off the airport, numbers of employees (full-time, part-time or
contract), salary ranges of management, technical and non-technical staff, estimated total economic
contribution to the Georgetown economy and whether or not the local businesses in the Georgetown
area were used for subcontract services. Additionally, each firm was requested to provide an
overview of its business plan for the next five years as to whether the business would maintain its
status quo, expand or reduce operations.
The data was complied and is presented in this report; however, it should be recognized that,
because of budgetary limitations on this particular element of the study, an exhaustive economic
analysis was not feasible. If the economic impact of the airport on the Georgetown and local area
economy is of critical importance to the City, it is recommended that a formal economic study be
accomplished by a firm or individuals who specializes in such studies.
A review of the economic impact of general aviation in Texas as prepared by the Texas Department
of Transportation in June of 2003 was also undertaken for this impact assessment, and is shown in
Appendix “F“. However, there are significant variations in the level of economic contribution of the
airport by that study and this current analysis. The difference between the two studies appears to be
primarily in the degree of tertiary economic performance and distribution of such third tier
expenditures into the local economy. There are also slight differences in number of employees
considered to be engaged at the airport. However, it should be noted that in general there is
consistency in the conclusions that the airport does create substantial economic value in the
community and is a major source of economic benefit to the City and the area.
FUTURE AIRPORT CHARACTERISTICS
Georgetown Municipal Airport is a public use, publicly owned facility, operated without restriction or
discrimination. The airport provides aviation access to the area and is expected to continue to be an
important factor in the Georgetown area economy. Because of its location in close proximity to the
City of Austin, the airport provides immediate access to the Austin market and Central Texas area.
________________________________________________________________________________________________________
City of Georgetown E.2 Airport Master Plan Update
• Airport Services 1 - the airport offers services that include:
Hangar Rental Tie Downs
Jet Fuel Sales Avgas Fuel Sales
Avionics Sales and Repair Aircraft Maintenance and Repair
Flight Instruction Air Taxi/Charter Operations
Aircraft Rental Aircraft Sales
Automobile Rental Parts and Supplies
Vending Developable Space for Aviation Related Business
Other Appropriate Services
All of these services are of economic significance because they create employment, generate taxes
and help to attract activity and business to the Georgetown area.
• Airport Facilities - The airport has two runways, several corporate aircraft and
maintenance hangars, T-hangars, a full service FBO, and a public use terminal building.
The terminal building contains a lobby, meeting rooms, rest rooms, office space and flight
planning facilities. The airport also includes several acres of developable property that
will offer opportunities for aviation and business development on the airport in future
years.
• Airport Use - The airport is capable of handling corporate jets, as well as the majority of
aircraft in the general aviation fleet. For this study, the high range forecast of activity has
been used to establish the level of potential economic impact which could be generated
by development at the airport. Forecasts of future activity and development form the
basis for estimating the future economic impact of the airport.
AIRPORT ECONOMIC ROLE
The airport is a business and recreation oriented airport with the following characteristics providing
the most significant economic impact for Georgetown:
1 A survey conducted to determine possible user preference for services to be provided in the airport is shown
in Appendix "A".
________________________________________________________________________________________________________
City of Georgetown E.3 Airport Master Plan Update
• Attraction of Business - The airport will continue to be an important element in the
attracting businesses to the Georgetown area. It will continue to serve as the general
aviation gateway to the area providing air access for business operations and as a base for
corporate aircraft visiting the area.
• Support of Private Businesses - Many of the area's private businesses that own aircraft
have been attracted to the airport and are users. The airport is an essential part of their
operations, providing an easy, efficient, and cost-saving method for business trips.
• Aviation Related Firms/Businesses – The airport is supporting businesses which provide
aviation related services to the public or private businesses. Those businesses employ
people, pay taxes, attract more visitors who will spend money locally, and purchase
merchandise locally, etc. The airport should continue to support such firms by providing
developable space.
• Individual General Aviation Use - Individual general aviation aircraft bring visitors to the
area for business/commercial and recreational purposes. Those visitors spend money in
the area. Money brought in from outside is of obvious advantage to the Georgetown
area economy.
ECONOMIC IMPACT TYPES
Total economic impacts include locally purchased goods and services, calculated in "value added"
terms. The economic impacts are of three types: direct, indirect, and induced impacts.
• Direct Economic Impacts - Direct economic impacts occur as a consequence of providing
aviation services at the airport. The direct impacts comprise the financial expenditures by
firms that serve the general aviation functions (airport tenants), governmental agencies
which support aviation and or operate on the airport, the ground transport firms, and
others. In every instance, direct impacts include only expenditures whose recipient is
located within the airport's service area.
________________________________________________________________________________________________________
City of Georgetown E.4 Airport Master Plan Update
• Indirect Economic Impacts - Indirect impacts occur as a result of using air service, and
typically occur at locations away from the airport. They include the regional
expenditures made by air passengers who visit the region, expenditures by the region's
residents, and the value added impacts of firms that depend on the airport.
• Induced Economic Impacts - The direct and indirect impacts are important, since they
represent net increases in regional economics. Such increases, however, do not
represent the total economic impact attributable to the airport. There is also a
"multiplier" effect which accounts for the re-spending of initial dollars within a
community. The multiplier for the Georgetown area was determined through an analysis
of economic impacts attributed to similar size airports in similar regions in Texas, and
review of economic studies and data previously developed.
The airport's total economic impact will be the sum of the direct, indirect and induced impacts.
These impact estimates should be viewed as conservative since they include only impacts that are
absolutely traceable to the airport. Total economic impact is a function of primary (direct and
indirect) impact and induced impact.
FUTURE AIRPORT ECONOMIC ACTIVITY
The airport is expected to experience growth in aviation activity within the 20-year planning period,
which, in turn, will generate growth in aviation businesses located at the airport.
The forecasts of activity in Section Two were translated into facility requirements providing options
for airport development to meet the levels of forecast demand. This section presents the estimated
economic impact resulting from the high level of projected aviation activities, which is for "W/O
NCTA & W/ ATCT" forecast scenario. Table 1 summarizes the based aircraft and aviation operations
that were projected for Georgetown Municipal Airport for the next 20 years. The economic
estimates provided in this section are based upon sets of assumptions associated with the high range
and result in an estimate of the economic benefit potential related to ultimate airport development.
________________________________________________________________________________________________________
City of Georgetown E.5 Airport Master Plan Update
Table 1
Projected Levels of Aircraft Activities
Category 2003 (Existing) 2004 2009 2014 2024
Based Aircraft
Single Engine 214 220 243 272 332
Multi Engine 18 18 21 24 30
Turboprop 12 12 15 17 22
Jet 6 6 7 9 12
Helicopter 6 6 7 8 9
Total Based Aircraft 256 262 293 330 405
Forecast Annual Operations
General Aviation Local 83,660 86,551 96,792 109,015 133,791
General Aviation Itinerant 42,667 42,769 47,992 54,225 66,861
Air Taxi 873 873 873 873 873
Military Operations 500 500 500 500 500
Total Operations 127,700 130,693 146,157 164,613 202,025
Sources: Georgetown Municipal Airport Management, GRW Willis, Inc.
Future economic impacts were forecasted by estimating the probable size and category of the
aviation businesses which could be supported by the forecast aviation activity and development at
the airport. Probable industrial composition of development at the airport was based upon the
existing industrial clientele at the airport and similar airports within the Central Texas region.
The development schedule was translated into probable employment for the years shown, and was
then used to develop forecasts of direct payroll and local expenditures for each category of firms.
Indirect economic forecasts were projected using the high range forecast itinerant business aviation
projections identified in Section Two. Total residual economic impacts, as well as the total induced
economic impacts were computed based upon the following paragraphs.
Additionally, besides information obtained from managers and FBO's at similar airports, the following
information was also obtained for the purpose of economic impact projections.
• A review of similar economic studies of general aviation airports in various locations in
the region. An analysis of the expenditure patterns unique to the Central Texas area was
performed for use in identifying probable impacts of airport related direct expenditures
upon the local economy.
________________________________________________________________________________________________________
City of Georgetown E.6 Airport Master Plan Update
• Information concerning the local economy was obtained from local economic data, and
Federal, State and local sources. Multiplier rates for the airport also included studies of
similar airports within the United States.
Direct Employment Payroll
Estimates of direct annual employment payroll for the years 2004 (Current), 2009 (Short-Term), 2014
(Intermediate-Term) and 2024 (Long-Term) for the airport are shown in Table 2. Estimated retained
earnings in the City are also shown.
Table 2
Direct Annual Employment Payroll (1)
Current
Estimates Short-Term
Intermediate-
Term Long-Term
Employed Category No. Payroll No. Payroll No. Payroll No. Payroll
Total Full Time Employees 109 $4,260,000 126 $4,947,000 142 $5,547,000 174 $6,804,000
Total Part-Time Employees 27 $351,000 31 $402,207 34 $445,053 43 $555,826
Total Employees 136 $4,611,000 157 $5,349,207 176 $5,992,053 217 $7,359,826
Estimated Salaries Retained in
the City of Georgetown (80%)
$3,688,800 $4,279,366 $4,793,642 $5,887,861
Note: (1). Estimates are based on 2004 dollars, and not adjusted by inflation.
Sources: Georgetown Municipal Airport Management, GRW Willis, Inc.
Gross Revenues and Total Direct Economic Impact
The monies that will be generated by any firms or agencies located at the airport are termed gross
revenues. In the case of private firms, it is called business income and in the case of government
agencies, it is called the annual budget. The economic impact of the airport will be derived, in part,
from these gross measures.
In order to accurately measure economic impacts remaining in the local area, a distinction must be
made between all gross revenues that will be generated at the airport and that portion of gross
revenues that will be spent locally which will remain in the local economy. For the purposes of this
study, gross revenues spent locally are termed residual expenditures; and include rent, utilities, local
goods and services purchased, and profit. Residual expenditures do not include the portion of gross
________________________________________________________________________________________________________
City of Georgetown E.7 Airport Master Plan Update
revenues which leaves the local area (leakage) in the form of non locally manufactured goods
purchased for resale, federal taxes paid, etc. Table 2 provides estimates of expenditures which were
made in the local area.
Anticipated gross revenues and total direct economic Impact from airport derived from rental, leases,
fuel sales and fees are shown in Table 3.
Table 3
Total Direct Annual Economic Impact
Revenue Category 2004 2009 2014 2024
Tie-Down and Hangar Rental $315,763 $319,291 $323,827 $332,899
Commercial Land Leases $126,069 $141,972 $160,589 $198,643
Fuel Flowage Fees $980,172 $1,124,679 $1,298,840 $1,167,911
Subtotal 1,422,003 $1,585,942 $1,783,256 $2,204,452
Salaries Retained in Area 3,688,800 $4,279,365 $4,793,641 $5,887,861
Total Direct Annual Economic Impact $5,110,803
$5,865,307 $6,576,897 $8,092,313
Sources: Georgetown Municipal Airport Management, GRW Willis, Inc.
Indirect Impacts
Indirect impact is defined as those economic impacts which accrue to the community as a result of
the use of the airport, but are not included as a direct benefit. These economic benefits are primarily
derived from business use of the facility and are based upon an estimate of expenditures in the local
economy by business visitors. Business trips by air which result in local expenditures are important.
As identified in Section Two, Table 2.16 by 2009, approximately 28,795 itinerant business
operations (a departure or arrival is counted as one operation) or 14,398 business trips are estimated
for the airport. It is assumed that the new Central Texas airport will not exist.
In addition, increased operations will be results from additional aircraft anticipated to be based at the
airport for business purposes. The direct benefits of these business operations are included in the
FBO revenue estimates, however, such considerations as the increased competitive edge that
improved air access will give these firms is not easily quantifiable.
________________________________________________________________________________________________________
City of Georgetown E.8 Airport Master Plan Update
For the purposes of this study, the indirect impact of the airport was based upon an estimate of
expenditures in the local economy by business visitors. Basic data used for this analysis were derived
from pilot surveys and studies accomplished in previous projects.
Itinerant pilot surveys indicate that itinerant business aircraft trips at comparable airports carry an
average of 1.7 passengers plus the pilot. Applying the average business expenditure rates developed
in the surveys to the estimated levels of transient business visitors in the year 2009: 24,476 business
visitors, 60% will require overnight accommodations, and the remaining 40% will be one-day visitors.
Pilot surveys show that these overnight visitors can be expected to stay an average of 1.7 days
resulting in an estimated 24,965 room nights (24,476 x 60% x 1.7) of local hotel/motel sales. Typical
expenditures associated with transient business trips include the following per capita rates: $90/night
for lodging; $35/day for meals and incidentals; and $50/day for ground transportation. Table 4
below summarizes these expenditures.
Pilot surveys reveal that many business trips are made for the purpose of accomplishing important
business transactions. The close proximity of the airport to the surrounding community and Austin
provides a major advantage in attracting those segments of the business market that are best served
by private business aviation. For this analysis, the higher range of business expenditures were
discounted and an average was developed based upon using those business trips that generated
business revenues under $1,000. This resulted in an additional economic benefit of $54 per
itinerant business trip. Total indirect expenditures expected to be generated by the airport transient
business travelers into the local economy is estimated at approximately $4,578,998 in 2009,
$4,310,036 in 2014 and $4,998,544 in 2024, is shown in Table 4.
________________________________________________________________________________________________________
City of Georgetown E.9 Airport Master Plan Update
Table 4
Forecast Total Indirect Benefit
Category Rate Unit Quantity Unit Total Estimated Expenditures
2004
Lodging $90 Per day 22,248 Room Nights $2,002,320
Meals and Incidentals $35 Per day 21,812 Travelers $763,415
Ground Transportation (1)$50 Per day 12,831 Travelers $641,525
Business $54 Per trip 13,488 Trips $728,325
Total $4,135,585
2009
Lodging $90 Per day 24,965 Room Nights $2,246,850
Meals and Incidentals $35 Per day 24,476 Travelers $856,651
Ground Transportation (1)$50 Per day 14,398 Travelers $719,875
Business $54 Per trip 13,993 Trips $755,622
Total $4,578,998
2014
Lodging $90 Per day 27,655 Room nights $2,488,928
Meals and Incidentals $35 Per day 27,655 Travelers $967,916
Ground Transportation (1)$50 Per day 16,268 Travelers $813,375
Business $54 Per trip 13,488 Trips $728,325
Total $4,998,544
2024
Lodging $90 Per day 34,781 Room nights $3,130,290
Meals and Incidentals $35 Per day 34,099 Travelers $1,193,481
Ground Transportation (1)$50 Per day 20,059 Travelers $1,002,925
Business $54 Per trip 13,892 Trips $750,168
Total $6,076,864
Note: (1) Assumes ride sharing.
Source: GRW Willis, Inc.
Primary and Induced Impacts
As discussed previously, the estimated total economic impact of the airport reflects the sum of two
elements: primary and induced impacts. Primary impact, including direct and indirect impacts, is the
initial, or first round of expenditures associated with operations at the airport. Induced impact is the
second and subsequent round of spending as the initial expenditures "ripple" through the economy.
To measure the induced impact, multipliers are used, which represent the number of times a single
expenditure is re-spent in the economy. Also, the induced impact includes employment and the
increase in jobs as a result of these expenditures.
Multipliers vary and are not the same for all industries or metropolitan areas. The determination of
an accurate multiplier for a particular industry or collection of industries, as with an airport, in a
particular location, requires the development of an extensive input/output analysis. Such an effort is
beyond the scope of this study; however, multipliers for economic impact studies of other airports
are available and were evaluated for their applicability to the Georgetown area.
________________________________________________________________________________________________________
City of Georgetown E.10 Airport Master Plan Update
For example, the State of New Jersey used an overall multiplier factor of 3.0 for a statewide study of
general aviation airports. Massachusetts developed an income multiplier of 2.8 for general aviation
airports. Sacramento County (California) Department of Airports has previously used an income
multiplier of 2.46 and an employment multiplier of 4.73 for major commercial and general aviation
airports. The Aircraft Owners and Pilots Association recommends an income multiplier of 4.0 for
general aviation transient operations. The State of Washington has used an income multiplier of 3.80
for a statewide study of general aviation airports. The Port of Portland used a multiplier of 2.26 for
income and employment. Based upon these and related studies, a conservative multiplier of 2.4 was
utilized in calculating the secondary economic benefits of the airport. This study applied the
multiplier of 2.4, which represents every dollar generated by activity at the airport will be spent 2.4
times before it leaves the local area.
As discussed earlier, the primary impact of the airport to the local economy is that portion of gross
revenues which remain in the local economy to create income and employment for the resident
population.
Table 5 shows the total annual economic impact of the airport to be ranging from $31,437,719 in
2004 to approximately $48,175,202 in 2024. This analysis yields an average economic impact of
$39,608,862 per year, for a total 20-year (2004-2024) impact of $792,197,243.
Table 5
Summary of Components of annual Economic Benefit
Impact Category 2004 2009 2014 2024
Primary Impact
Direct $5,110,803 $5,865,307 $6,576,897 $8,092,313
Indirect $4,135,585 $4,578,998 $4,998,544 $6,076,864
Sub-Total Primary $9,246,388 $10,444,305 $11,575,441 $14,169,177
Induced Impact $22,191,331 $25,066,332 $27,781,058 $34,006,025
Total Impact $31,437,719 $35,510,637 $39,356,499 $48,175,202
Source: GRW Willis, Inc.
There are other economic implications associated with the development and operation of the airport
which are not immediately quantifiable but which are of great importance. The most important of
these is the increased ability of the Georgetown area to attract businesses that would base corporate
turboprop and/or jet aircraft at the airport, or would establish business operations in the area as a
result of air access via the airport.
________________________________________________________________________________________________________
City of Georgetown E.11 Airport Master Plan Update
Corporate relocations are made for a wide variety of reasons. When corporations evaluate possible
sites for major relocations or expansions, one of the considerations most frequently included in the
ranking of each candidate location is whether there is an airport that can accommodate the
corporation's aircraft. Most of the Fortune 500 industrial corporations maintain at least one corporate
jet or turboprop aircraft for executive transportation. The development of the airport as detailed in
this master plan will allow the Georgetown area to compete more effectively in the aviation-
dependent corporate market, even though this Master Plan Study does not present an aggressive
development concept such as major runway extensions, or alter projects to attract larger corporate
users.
The airport will be usable by most potential corporate aircraft under some limitations. However,
other criteria such as quality of life, utility and water availability, labor force, transportation
capabilities, and others may be more important and can be expected to vary significantly with
individual corporate requirements.
Assessing the potential numbers or kinds of corporate relocations which could be generated by the
development of the airport is speculation. For example, it is not unusual for large business aircraft to
be used by very small companies, consisting of one or a small handful of entrepreneurs as opposed to
large industrial based companies that may employ hundreds or thousands or people. The diversity of
firms that could utilize corporate aircraft in their business operations is very broad, and each
company has individual and distinct criteria relative to the use of aircraft in day-to-day business. It
should be noted however, that corporate America is increasingly using company owned aircraft to
travel; the reduction in scheduled airline services to smaller cities across the nation has made the
corporate airplane a necessity. Even if such companies were identified as potential aircraft operators,
there is no assurance that they ever would become one. In many cases the decision to own, operate,
or lease an aircraft is an incredibly complex decision that may involve many factors completely
unrelated to the use of the aircraft in its most economic, cost-effective an business-like manner.
The airport is anticipated to continue to be an important part of the local economy. The airport is an
aviation gateway into the economy and is expected to become an increasingly important factor in
attracting new businesses to the Georgetown area during the next 20 years.
________________________________________________________________________________________________________
City of Georgetown E.12 Airport Master Plan Update