The Opportunity

• Determine the economic impact to a region if it were to lose its status as a hub to a major passenger airline.
• Recommend strategies for the relevant governmental entities to enact in order to keep the airline in the region, if the measured impact is significant.

The Challenge

• Given the controversy surrounding economic impact studies, find a suitable method for measuring net economic impact given the many difficulties in measuring costs and benefits of assets and changes in assets.
• In particular, attaining a high confidence estimate of spending can be problematic without direct measures of spending from travelers and related businesses.
• Care must be taken to account for opportunity costs, the reallocation of local spending, and capacity constraints, to name a few typically misunderstood factors.

The Solution

• ESG has a unique and proprietary model, Airport Impact Model™ (AIM), whose goal or aim is to measure the economic impact of airports and many changes to those airports on the region. For example, the economic impact from adding a runway, or 10 gates, or a new airline to an airport can be measured. The model is capable of addressing many more changes to airports and their regions.
• The model was used to provide estimates of the associated effects of the change in the number of flights (including adjustments made by competing carriers), passengers and their spending, relative capacity, and more.
• A separate and direct method employing surveys was used to measure expected changes in the number of travelers and their local expenditures. Hub airports, while having many enplanements, tend to have relatively lower per passenger local spending because many passengers are on their way somewhere else.
• Separate measures of the multiplier were used to account for the re-spending of the new infusion of dollars.

The Deliverables

• Two final reports were submitted to the client fully explaining the results while clarifying the methodology and variances in the overall estimate.

The Results

• The client was very happy with the findings and felt that it could use the research to garner support in order to prevent the airline from leaving.
• The airline continues to use the airport as a hub.

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