TECHNICAL REPORT UCED 97/98-14 ESTIMATION OF ECONOMIC IMPACTS FOR AIRPORTS IN HAWTHORNE, EUREKA, AND ELY, NEVADA UNIVERSITY OF NEVADA, RENO
ESTIMATION OF ECONOMIC IMPACTS FOR AIRPORTS IN HAWTHORNE, EUREKA AND ELY, NEVADA Prepared By: Thomas R. Harris Nevada Cooperative Extension Center For Economic Development University of Nevada, Reno Thomas R. Harris is Director of the University Center for Economic Development and a Professor in the Department of Applied Economics and Statistics at the University of Nevada, Reno. September 1998 UNIVERSITY OF NEVADA RENO The University of Nevada, Reno is an Equal Opportunity/Affirmative Action employer and does not discriminate on the basis of race, color, religion, sex, age, creed, national origin, veteran status, physical or mental disability, and in accordance with university policy, sexual orientation, in any program or activity it operates. The University of Nevada employs only United States citizens and aliens lawfully authorized to work in the United States. ii
This publication, Estimation of Economic Impacts of Airports Located in Hawthorne, Eureka and Ely, Nevada was published by the University Center for Economic Development in the Department of Applied Economics and Statistics at the University of Nevada, Reno. Funds for this publication were provided by the United States Department of Commerce Economic Development Administration under University Centers Program contract #07-06-03262-97. This publication's statements, conclusions, recommendations, and/or data represent solely the findings and views of the authors and do not necessarily represent the views of the Nevada Department of Transportation, the U.S. Department of Commerce, the Economic Development Administration, the University of Nevada, Reno, or any reference sources used or quoted by this study. Reference to research projects, programs, books, magazines, or newspaper articles does not imply an endorsement or recommendation by the authors unless otherwise stated. Correspondence regarding this document should be sent to: Thomas R. Harris, Director University Center for Economic Development University of Nevada, Reno Department of Applied Economics and Statistics Mail Stop 204 Reno, Nevada 89557-0105 UCED University of Nevada, Reno Nevada Cooperative Extension Department of Applied Economics and Statistics September 1998 iii
Table 3. Total Impact Multipliers for White Pine County Standard Industrial Classification Total Output Multiplier Total Payroll Multiplier Total Employment Multiplier Aviation Related Tenant and Government Tenant Multipliers 1.25 1.43 1.44 Air Transportation and Aircraft Manufacturing Corporate Flight Aircraft Maintenance Flight Schools/Soaring FBO Government Activities and Expenditures Maintenance Construction New Building Construction Engineering and Architecture Services Visitor Multipliers 1.50 1.64 1.35 Average Visitor Impact Hotel/Motel Food/Beverage Auto Rental Misc. Retail Sales Source: Nevada IMPLAN Input-Output Tables 1
Ely Airport Impacts 2
A. Ely Airport/Yelland Field Ely Airport is approximately 5 miles northeast of Ely s central business district. This airport is a public facility serving the general aviation needs of the area. Ely Airport has two runways. The primary runway 18/16 is 5,998 feet long and 150 feet wide with a full parallel taxiway. The crosswind runway 12/30 is 4,944 feet long and 60 feet wide. Approximately 11 based aircraft are located on the airport and an estimated 10,100 annual operations occurred in 1995. In addition to serving the transportation needs of the area, Ely Airport serves as the base for the local Civil Air Patrol, which performs search and rescue operations in the area. 1. Airport Tenants The majority of the on-airport impacts at Ely Airport are a result of the business located at the airport. These impacts are discussed below. a. Airport Tenants Direct Impacts In 1995, the one (1) tenant on the airport reported a staff of 5 on-airport employees. The economic benefit of this airport tenant is derived by calculating direct or first round employment, payroll, and output impact. In order to preserve the confidentiality of the individual survey respondent and aid in discussion of impacts, the tenant s direct impacts were grouped together. Table 4 summarizes the direct impacts associated with the on-airport tenants. The direct impacts, as determined by the survey, for the aggregate category are discussed below. 3
Table 4. Direct Impacts Airport Tenant at Ely Airport Impact Category Employment Payroll Output Air Transportation Government/Management (Impacts are combined to preserve confidentiality) Total 5.0 $109,300 $557,100 Source: Nevada IMPLAN Data b. Airport Tenants Secondary Impact The direct impacts associated with on-airport tenants also create secondary impacts throughout the region. Table 5 presents the 1995 direct and secondary impacts for output, payroll and employment as they relate to on-airport tenants at Ely Airport. The IMPLAN model divides secondary impacts into indirect and induced benefits. Indirect impacts account for an additional 1.2 positions in the region; these employees received approximately $25,900 in payroll. Indirect output is estimated at approximately $73.6 thousand. Induced impacts create another 1.0 positions with a payroll of approximately $21,800. Induced output impacts are estimated at approximately $66.7 thousand. Table 5. Total Impacts Airport Tenant at Ely Airport Impact Employment Payroll Output Direct 5.0 $109,300 $557,100 Secondary Indirect 1.2 $25,900 $73,600 Induced 1.0 $21,800 $66,700 TOTAL 7.2 $157,000 $697,400 Source: Nevada IMPLAN Data c. Airport Tenants Total Impact For 1995, the total output (including direct and secondary impacts) stemming from all on-airport tenants at the Ely Airport is approximately $697.4 thousand. Total employment related to airport tenants, including all secondary impacts, is estimated at more than 7.0 persons, with a total payroll (direct and secondary) of approximately $157.0 thousand annually (see Table 5). 4
2. Visitors Using General Aviation A significant number of visitors arrive at Ely Airport via private general aviation aircraft. These transient general aviation operations include a percentage of business and pleasure flights carrying a quantifiable number of passengers who contribute to the local economy. It should be noted that general aviation expenditures related to fueling, maintenance, and other aircraft services are included in the tenant impacts; these impacts were previously included with FBO impacts under the air transportation sector. a. General Aviation Visitors Direct Impacts For this analysis, expenditures by general aviation visitors are considered a direct economic impact. To estimate economic impacts associated with general aviation visitors, industry standards for identifying general aviation visitor expenditures were used. Of the estimated 10,100 annual operations at the Ely Airport, 59 percent were reportedly itinerant. Using AOPA standards, over 980 true transient flights carrying more than 2,940 visitors, arrived at the airport. Each visitor was assumed to stay one day and spend approximately $100. The direct general aviation visitor output is estimated at $294.0 thousand for 1995. Estimated 1995 direct employment is 5.5 full-time positions, with a direct payroll of $88,300 (See Table 6.) b. General Aviation Visitors Secondary Impacts Multipliers for each industry segment directly linked to general aviation visitor expenditures (food/beverage, lodging, retail, etc.) were applied to output, payroll and employment to establish estimates of secondary (indirect and induced) general aviation visitor impacts. Again, induced and indirect impacts are considered secondary impacts for this study. Table 6 presents the direct, secondary and total impacts for general aviation visitors. Indirect impacts stemming from general aviation visitors contribute $86,500 in output to the local economy. Approximately 1.0 full-time positions earning $36,100 are created through indirect impacts. Induced impacts create more than $61.5 thousand in output, 1.0 full-time positions and $15,600 in payroll impacts. 5
Table 6. Total Impacts General Aviation Visitors at Ely Airport Impact Employment Payroll Output Direct 5.5 $88,300 $294,000 Secondary Indirect 1.0 $36,100 $86,500 Induced 1.0 $15,600 $61,500 TOTAL 7.5 $140,000 $442,000 Source: Nevada IMPLAN data c. General Aviation Visitors Total Impact Using this methodology, the total output, including all direct and secondary output impacts attributable to general aviation visitors in 1995 is approximately $442 thousand. When all employment impacts are summed, approximately 7.5 full-time positions are supported by general aviation visitor expenditures. 3. Total Airport Impact When the 1995 direct and secondary impact from all on-airport tenants and general aviation visitors are summed the total economic benefit stemming from the Ely Airport is quantified. The total area employment is estimated at more than 14.7 full-time positions; total annual payroll is estimated at more than $297.0 thousand and total output is estimated at more than $1.094 million. Table 7 summarizes the combined economic impacts for Airport tenants and visitors. Table 7. Total Economic Impact Summary Impact Employment Payroll Output Direct 10.5 $197,600 $851,100 Secondary Indirect 2.2 $62,000 $160,100 Induced 2.0 $37,400 $82,300 TOTAL 14.7 $297,000 $1,093,500 Source: Nevada IMPLAN data 6
This economic benefit, through direct impacts and the multiplier effect, provides a stimulus to almost every sector of the economy. IMPLAN data allows the total impact associated with each major industry sector to be estimated. Table 8 presents econometrics modeling estimates of the inter-linked benefits that can be attributed to each major industry sector. These estimates include all Ely Airport tenant and visitor direct and secondary benefits previously discussed. These benefits are divided among the major industry sectors. This table helps to illustrate the inter-dependence of the airport and the State s economy. This table is based on econometrics modeling and should be used to understand the relative impacts by each major sector of the economy. Table 8 uses total impacts identified in Table 4 to estimate how tenant-related activities impact the regional economy. The trade industry receives the single largest employment impact with the creation of more than 8.90 full-time jobs. Services also benefits by the creation of more than 3.09 positions. The majority of the output impacts occur within the trade, services, and government sector. Table 8. Total Ely Airport Impacts Industry Sector Employment Payroll Output Agriculture 0.02 $500 $3,000 Mining 0.01 $100 $400 Construction 0.80 $42,300 $93,100 Manufacturing 0.01 $300 $1,500 Transportation, Utilities and 0.28 $12,100 $57,400 Communication Trade 8.90 $118,700 $386,900 Finance, Insurance and Real Estate 0.31 $6,500 $65,600 Services 3.09 $59,900 $177,800 Government 1.28 $56,600 $307,800 TOTAL 14.7 $297,000 $1,093,500 Source: Nevada IMPLAN Data 7
Eureka Airport Impacts 8
Eureka Airport Eureka Airport is located approximately 2.5 miles north of Eureka. The airport is a public facility serving the general aviation needs of Eureka County. The current runway is 4,780 feet long and 60 feet wide with a small taxiway of 1,640 square yards. Two aircraft are occasionally based at the airport. Annual operators are currently estimated at 3,000. Eureka Airport has no FBO s or businesses at its airport. In order to understand the economic impact of any type of activity, two scenarios were developed based on two possible employment capacities by a manufacturing firm. These scenarios are based on two basic assumptions. First, the facility would have a published approach; and second, the facility would have buildings and hangars to support an aviation-related manufacturing firm. Each scenario considers the economic impact a manufacturing firm would have on employment, payroll, output (capital expenditures and operating expenses) and general aviation visitors impacts. To create the various scenarios, specific ratios were developed to determine the potential impacts based on data gathered from surveying tenants at the other three study airports. All future impacts for an improved Eureka Airport assume comparable payroll and output levels. Direct impacts for payroll are based on the average annual wages for aviationrelated and government employees at the three airports in the study area. Average annual wages for aviation-related tenants were determined to be $23,600. Direct impacts for output are based on the average annual capital expenditures and operating expenses for aviation-related and government firms at the three airports in the study area. Average annual output for aviation-related tenants is $83,978 per employee while average output for government agencies is $291,797 per employee. After determining the direct economic impacts for each scenario, multipliers were used to determine the total economic impacts. 1. Scenario 1 The first scenario developed for an improved Eureka Airport assumes the airport would have one FBO and a small aviation-related manufacturing operation. Based on data for the other area airports, it is assumed that such an airport would support approximately 11 on-airport employees (one airport manager and 10 other aviation-related jobs). Average direct output and payroll rates were developed from survey data for other area airports. Direct impacts would also be derived from an increased number of visitors using an improved airport. Scenario 1 assumes the annual number of operations will approximate the number of operations currently occuring at Yerington Municipal Airport ($18,000). Visitors using general aviation would directly create more than seven full time positions with a payroll in excess of $121,000. The direct output associated with these visitors is 9
more than $249,800 assuming an average expenditure of $50 per day. Table 9 presents the total economic impact resulting from Scenario 1. Table 9. Eureka Airport Potential Economic Impact Scenario 1 Impact Employment Payroll Output Direct On-Airport 11.0 $268,500 $1,156,000 Direct G.A. Visitors 7.3 $121,800 $249,800 All Secondary (itinerant and visitor0 Indirect 6.4 $139,900 $393,400 Induced 12.7 $222,900 $818,500 TOTAL 37.4 $753,100 $2,617,700 Source: Nevada IMPLAN data Scenario 1 has the potential to create more than 37 full-time jobs with a payroll impact of approximately $753,100. The total output is estimated at nearly $2.6 million annually. 2. Scenario 2 Scenario 2 for an improved Eureka Airport assumes the airport would serve as the base of employment for 25 aviation-related jobs. This number of employees would be anticipated with one or two FBO operations and a growing aviation-related manufacturing firm. Based on data for the other airports, it is assumed that such an airport would support approximately 2.5 government positions such as an airport manager, maintenance personnel, etc. Average direct output and payroll were developed from survey data for other area airports. The number of general aviation operations would be expected to increase under such a scenario. The estimated number of operations for this scenario was placed mid-way between those currently experienced at Yerington Municipal and Carson City Airports. Visitors using general aviation would directly create more than 14 full-time positions, payroll impacts in excess of $244,100 and a direct visitor-related output of $495,500. Table 10 presents the total economic impact resulting from Scenario 2. 10
Table 10. Eureka Airport Potential Economic Impact Scenario 2 Impact Employment Payroll Output Direct On-Airport 27.5 $671,200 $2,890,100 Direct G.A. Visitors 14.4 $244,400 $495,500 All Secondary (itinerant and visitor0 Indirect 15.6 $341,200 $963,800 Induced 29.6 $511,100 $1,913,900 TOTAL 87.1 $1,767,900 $6,263,300 Source: Nevada IMPLAN data Scenario 2, which represents an expanded facility accommodating approximately $35,700 in annual operations, has the potential to create more than 87.1 jobs. The payroll for these on-airport and secondary positions is estimated at approximately $1.8 million annually. The total output is estimated at approximately $6.3 million annually. 11
Winnemucca Airport Impacts 12
D. Winnemucca Municipal Airport Winnemucca Municipal Airport is located approximately 5 miles west of Winnemucca and serves the general aviation needs of the area. The airport has two runways and one taxiway. Runway 14-32 is 6,000 feet long and 100 feet wide. Runway 2-20 is 5,000 feet long and 100 feet wide. The taxiway is parallel to the runways and is approximately 30 feet wide. Annual operations are estimated at 24,520 and has 40 aircraft based at the airport. 1. Airport Tenants The majority of the on-airport impacts at Winnemucca Airport are a result of the businesses located on the airport. These impacts are discussed below. a. Airport Tenants Direct Impacts These tenants direct or first round employment, payroll and output impacts were derived from survey data. In order to preserve the confidentiality of the individual survey respondents and aid in the discussion of the impacts, the tenants direct impacts were grouped together. Table 16 summarizes the direct impacts associated with the on-airport tenants. The direct impacts, as determined by the survey effort, for these two categories are discussed below. Table 16 Direct Impacts Airport Tenants at Winnemucca Airport Impact Category Employment Payroll Output Air Transportation Government/Management (impacts are combined to preserve confidentiality) TOTAL 4.0 $59,200 $350,000 Source: Nevada IMPLAN Data b. Airport Tenants Secondary Impact The direct impacts associated with on-airport tenants also create secondary impacts throughout the region and the State. Table 17 presents the 1995 direct, secondary, and total impacts for output, payroll and employment as they relate to on-airport tenants. Indirect impacts account for 0.8 positions and $12,300 in payroll. Indirect output is estimated at $34,700. Induced impacts create 0.5 13
positions and a payroll of $8,900. Induced output impacts are estimated at $29,400. Table 17 Total Impacts Airport Tenants at Winnemucca Airport Impact Employment Payroll Output Direct 4.00 $59,200 $350,000 Secondary Indirect 0.8 $12,300 $34,700 Induced 0.5 $8,900 $29,400 TOTAL 5.3 $80,400 $414,100 Source: Nevada IMPLAN Data c. Airport Tenants Total Impact For 1995, the total output (including direct and secondary impacts) stemming from all on-airport tenants at Winnemucca Airport is approximately $414 thousand. Total employment related to airport tenants, including all secondary impacts, is estimated at 5.3 persons with a total payroll (direct and secondary) of approximately $80,400 annually (See Table 17). 2. Visitors Using General Aviation Visitors arriving at Winnemucca Airport via private general aviation aircraft also contribute to the area s economy. Direct, secondary and total impacts resulting from general aviation visitors are discussed below. a. General Aviation Visitors Direct Impacts There were an estimated 24,200 annual operations at the Winnemucca Airport, of which 33 percent were reportedly itinerant. This activity translates to approximately 12,000 visitors using the airport. Each visitor was assumed to stay one day and spend approximately $50. Output from general aviation visitors is estimated at $600,000. Estimated direct employment is 14.6 positions, with a direct payroll of $291,800 (see Table 18). b. General Aviation Visitors Secondary Impacts Industry segment multipliers were applied to output, payroll and employment to establish estimates of secondary (indirect and induced) general aviation visitor impacts. Table 18 presents the direct, secondary, and total impacts for general 14
aviation visitors. Indirect general aviation visitors impacts contribute $98,700 in output, 0.2 employment positions and a payroll of $32,700. Induced impacts add $106,800 in output, 0.6 employment positions and $32,200 in payroll impacts. Table 18 Total Impacts General Aviation Visitors at Winnemucca Airport Impact Employment Payroll Output Direct 14.6 $226,900 $600,000 Secondary Indirect 0.2 $32,700 $98,700 Induced 0.6 $32,200 $106,800 TOTAL 15.4 $291,800 $805,500 Source: Nevada IMPLAN Data c. General Aviation Visitors Total Impact The total output, including all direct and secondary output impacts attributable to general aviation visitors in 1995 is approximately $805,500. Total employment is estimated at 15.4 positions with a payroll of $291,800. 3. Total Airport Impact To quantify the total economic benefit of the Winnemucca Airport, the direct and secondary impacts from all tenants and general aviation visitors are combined. The total employment is estimated at more than 20.7 full-time positions; total annual payroll is estimated at more than $372,200; and total output is estimated at more than $1.2 million. Table 19 summarizes the combined economic impact for airport tenants and visitors. Table 19 Winnemucca Airport Total Economic Impact Summary Impact Employment Payroll Output Direct 18.6 $286,100 $950,000 Secondary Indirect 1.0 $45,000 $133,400 Induced 1.1 $41,100 $136,200 TOTAL 20.7 $372,200 $1,219,600 Source: Nevada IMPLAN Data 15
This economic benefit, through direct impacts and the multiplier effect, provides a stimulus to almost every sector of the economy. Table 20 presents econometric modeling estimates of the inter-linked benefits that can be attributed to each major industry sector. These estimates include all Winnemucca Airport tenant and visitor direct and secondary benefits discussed above. These benefits are divided among the major industry sectors. This table helps to illustrate the interdependence of the airport and the State s economy. This table is based on econometrics modeling, and should be used to understand the relative impacts by each major sector of the economy. Table 20 uses total impacts identified in Table 18 to estimate how tenant-related activities impact the regional economy. The service industry receives the single largest employment impact with the creation of more than 8 jobs. Trade also benefits by the creation of more than 6 positions. Transportation, communications and utilities industries also receive the benefit of more than 4 positions. Transportation, communications and utilities, services and trade contain the majority of the output impacts. Table 20 Winnemucca Municipal Airport Impacts by Sector Industry Sector Employment Payroll Output Agriculture 0.05 $900 $4,809 Mining 0.00 $100 $300 Construction 0.24 $4,300 $8,400 Manufacturing 0.11 $2,100 $5,900 Transportation, Utilities and Communication 4.19 $75,400 $411,700 Trade 6.66 $119,800 $336,100 Finance, Insurance and Real Estate 0.30 $5,400 $55,300 Services 8.96 $161,000 $390,600 Government 0.18 $3,200 $6,500 TOTAL 20.70 $372,200 $1,219,600 Source: Nevada IMPLAN Data 16