Originally published in 1997
An airport is a valuable asset, and a viable economic gateway to your community. Have you ever wondered what the annual economic impact of the local airport is on your community? Economic impact can be determined using a three-part formula:
- Direct Impact
- Indirect Impact
- Induced Impact
Direct Impact is derived from providers of service at the airport, such as FBOs, air carriers, air freighters, flight schools, government/military facilities and the airport operator. The value of this impact is the sum of all payroll costs, capital expenditures, operating and maintenance costs, taxes and fees incurred by all those providers of service.
Indirect Impact is derived from the users of services at the airport — government agencies, aviation and nonaviation businesses, including both corporate and public users. The value of this impact is the sum of fees and charges paid, time and cost savings, expenses related to lodging, food, ground transportation and the income drawn by the retirees of the service providers. While it would be a major undertaking to gather all of the data necessary to determine the indirect impact, it can be estimated with sufficient accuracy for most applications by equating it to one-half of the direct impact (.5 x direct). This figure will, in all likelihood, be conservative for airports in major metropolitan centers where the indirect impact can be significant — even exceeding the direct impact.
Induced Impact, or the multiplier effect, gets its name from the action of a dollar spent. It does not disappear from the community, but continues to move throughout the community until it is slowly exported. To compute a conservative estimate of induced impact, use a multiplier of 2 to determine the induced impact (Induced = indirect + (2 X direct)].
Assume that your airport has a direct impact of $200,000, including all payroll costs, capital expenditures, operating and maintenance costs, taxes and fees. Using this figure as a starting point, you can estimate the total economic impact of your airport as follows:
Direct $200,000
Indirect (.5 X direct) $100,000
Induced
Indirect + (2 X direct) $500,000
Total Economic Impact $800,000
Excerpted from “How To Assure the Future of Your Airport, A Collection of Articles” by Roy A. Eckrose, P.E., and William H. Green, P.E.