THE ECONOMIC IMPACT OF KANSAS CITY INTERNATIONAL AIRPORT 2006 Prepared for KANSAS CITY AVIATION DEPARTMENT by ENGINE OF ECONOMIC GROWTH DIRECT INDIRECT INDUCED IMPACTS EMPLOYMENT EARNINGS OUTPUT
TABLE OF CONTENTS SECTION 1... 1 INTRODUCTION... 1 A. INTRODUCTION... 1 B. THE AIRPORT... 2 C. THE AIRPORT S PRIMARY AND SECONDARY IMPACT REGIONS... 2 1. Population... 3 2. Civilian Labor Force... 5 3. Employment by Economic Sector... 5 3.1. The Services Sector... 7 D. BUSINESSES AT KCI... 9 1. Passenger Airlines... 9 2. All-Cargo Airlines... 9 3. General Aviation... 10 4. Ground Transportation... 10 5. Retail Concessions... 10 6. Airline and Airport Support Services... 10 7. Contract and Professional Services... 11 8. Airport Management and Government Agencies... 11 9. Other Tenants... 11 SECTION 2... 12 ECONOMIC IMPACT METHODOLOGY... 12 A. INTRODUCTION... 12 B. TYPES OF AIRPORT ECONOMIC IMPACT... 12 1. Direct Impacts... 12 2. Indirect Impacts... 12 3. Induced Impacts... 13 4. Total Economic Impacts... 13 C. MEASURES OF AIRPORT ECONOMIC IMPACT... 13 1. Employment Impacts... 13 2. Earnings Impacts... 14 3. Output Impacts... 14 D. TAX IMPACT... 14 E. BENCHMARK YEAR FOR THE ANALYSIS... 14 F. PRIMARY AND SECONDARY DATA COLLECTION... 15 1. Airport Tenant Survey... 15 2. Visiting Passenger Survey... 18 3. Secondary Data Collection... 19 G. DATA VALIDATION PROCESS... 19 H. OVERVIEW OF BEA RIMS II... 20 SECTION 3... 22 ECONOMIC IMPACTS OF KCI... 22 A. INTRODUCTION... 22 B. DIRECT IMPACTS OF KCI... 22 1. Direct Employment Impact 5,845 FTE jobs... 22 2. Direct Earnings Impact - $322.4 million... 26 3. Direct Output Impact - $1,113.3 million... 27 C. INDIRECT IMPACTS OF KCI... 30 D. INDUCED AND TOTAL ECONOMIC IMPACTS... 32 1. BEA RIMS II Final-Demand Total Multipliers Primary Impact Region... 33 DECEMBER 28, 2007 -i-
2. Total Direct Impacts Primary Impact Region... 34 3. Total Indirect Impacts Primary Impact Region... 37 4. Total Economic Impacts of KCI Primary Impact Region... 38 E. TOTAL ECONOMIC IMPACTS - SECONDARY IMPACT REGION... 40 1. BEA RIMS II Final-Demand Total Multipliers Secondary Impact Region... 40 2. Total Economic Impacts of KCI Secondary Impact Region... 41 3. Comparison of Total Economic Impact Primary and Secondary Regions... 43 F. TAX IMPACT OF KCI PRIMARY IMPACT REGION... 44 G. COMPARISON OF TOTAL ECONOMIC IMPACT 2006 and 2000... 45 1. Factors that Contributed to the Observed Differences in Impacts... 46 i. Changes at KCI... 46 ii. Changes in the Definition of the Airport s ASA... 46 iii. Differences in the Estimates of Visiting Passengers... 47 iv. The Role of Travel Agencies... 47 v. Differences in the Application of the RIMS II Multipliers... 48 vi. Changes in the RIMS II Multipliers... 48 H. PROJECTED ECONOMIC IMPACT OF KCI in 2011... 48 1. Underlying Assumptions... 49 2. Projected Total Impact of KCI Primary Impact Region... 49 DECEMBER 28, 2007 -ii-
LIST OF TABLES Table 1 Kansas City International Airport Primary and Secondary Impact Regions 2006 Population.. 4 Table 2 Kansas City, MO-KS MSA Civilian Labor Force 2000-2006...5 Table 3 Kansas City, MO-KS MSA Nonfarm Employment 2000-2006...6 Table 4 Kansas City, MO-KS MSA Employment in the Services Sector by NAICS 2000 and 2006...8 Table 5 Kansas City International Airport Categories of Aviation and Aviation-related Service Providers Surveyed 16 Table6 Kansas City International Airport BEA Regional Input-Output Modeling Systems (RIMS II) Impact Industries....21 Table 7 Kansas City International Airport Direct Employment Impacts by Source 2006....23 Table 8 Kansas City International Airport Geographic Distribution of Direct Employment Impact 2006..25 Table 9 Kansas City International Airport Direct Earnings Impact by Source 2006 26 Table 10 Kansas City International Airport Direct Output Impacts by Source 2006.28 Table 11 Kansas City International Airport Average Daily Ependiture per Visiting Passenger..30 Table 12 Kansas City International Airport BEA RIMS II Multipliers for Output, Earnings, and Employment by Industry Aggregation, Primary Impact Region, Kansas City, MO-KS MSA.....34 Table 13 Kansas City International Airport Total Direct Output Impact by Industry Group, Primary Impact Region, Kansas City, MO-KS MSA 2006...35 Table 14 Kansas City International Airport Total Direct Earnings Impact by Industry Group, Primary Impact Region, Kansas City, MO-KS MSA 2006...36 Table 15 Kansas City International Airport Total Direct Employment Impact by Industry Group, Primary Impact Region, Kansas City, MO-KS MSA 2006...37 Table 16 Kansas City International Airport Total Output, Earnings, and Employment Impacts by Industry Group, Primary Impact Region, Kansas City, MO-KS MSA.....38 Table 17 Kansas City International Airport Total Economic Impact by Type and Measure, Primary Impact Region, Kansas City, MO-KS MSA 2006 39 Table 18 Kansas City International Airport BEA RIMS II Multipliers for Output, Earnings, and Employment by Industry Aggregation, Secondary Impact Region, KCI Air Service Area.....40 Table 19 Kansas City International Airport Total Economic Impacts by BEA Industry Group, Secondary Impact Region, KCI Air Service Area 2006..41 DECEMBER 28, 2007 -iii-
Table 20 Kansas City International Airport Total Economic Impact by Measure and Type, Secondary Impact Region, KCI Air Service Area 2006.. 42 Table 21 Kansas City International Airport Comparison of Total Economic Impacts by Measure and Type, Primary and Secondary Impact Regions 2006..44 Table 22 Kansas City International Airport Ta Component of Total Economic Impact, Primary Impact Region, Kansas City, MO-KS MSA 2006 45 Table 23 Kansas City International Airport Comparison of Total Economic Impacts, KCI Air Service Area 2000 and 2006...45 Table 24 Kansas City International Airport Comparison of Total Economic Impact, Primary Impact Region 2006 and 2011..50 DECEMBER 28, 2007 -iv-
LIST OF FIGURES Figure 1 Kansas City International Airport Primary and Secondary Impact Regions.3 Figure 2 Kansas City, MO-KS MSA Distribution of Nonfarm Employment 2000 and 2006.7 Figure 3 Kansas City International Airport Distribution of Direct Employment Impact by Source 2006...24 Figure 4 Kansas City International Airport - Distribution of Direct Earnings Impact by Source 2006...27 Figure 5 Kansas City International Airport - Distribution of Direct Output Impact by Source 2006...29 Figure 6 Kansas City International Airport Indirect Output Impact, Annual Visitor Spending 2006.....32 Figure 7 Kansas City International Airport Distribution of Total Economic Impact, Primary Impact Region, Kansas City, MO-KS MSA 2006 39 Figure 8 Kansas City International Airport Distribution of Total Economic Impact, Secondary Impact Region, KCI Air Service Area 2006 43 APPENDIX DECEMBER 28, 2007 -v-
SECTION 1 INTRODUCTION A. INTRODUCTION In addition to providing convenient access to air transportation, Kansas International Airport (KCI, or the Airport) is an engine of growth in the City of Kansas City (the City), the adjoining region, and the State of Missouri. Aviation activity at KCI supports a wide range of jobs and businesses in the regional economy. The Kansas City Aviation Department (KCAD, or Department), contracted with Unison-Maimus, Inc. (Unison) to estimate the economic impacts of KCI on the regional economy and to prepare an Impact Report (Report) that documents the direct, indirect, induced, and total impacts derived from Airport operations. Additionally, the Report is to include a comparison of the findings of the current study with the findings of the 2001 study conducted by Wilbur Smith Associates, Inc. (the 2001 Study), and estimates of projected impacts of KCI in 2011. The methodology adopted for this study is consistent with the theoretical principles of regional economics and relevant aspects of the Federal Aviation Administration (FAA) guidelines for the estimation of the regional economic significance of an airport. 1 Two impact regions are defined for the purpose of estimating the total economic impact of the Airport. The bi-state Kansas City, MO-KS Metropolitan Statistical Area (MSA) (Kansas City, MO-KS MSA, or MSA) is defined as the Airport s primary impact region. According to the latest definition by the Office of Management and Budget (OMB) 2 the MSA comprises the following 15 counties: Bates County, MO; Caldwell County, MO; Cass County, MO; Clay County, MO; Clinton County, MO; Jackson County, MO; Lafayette County, MO; Platte County, MO; Ray County, MO; Franklin County, KS; Johnson County, KS; Leavenworth County, KS; Linn County, KS; Miami County, KS; and Wyandotte County, KS. The secondary impact region is defined as the Airport s air service area (ASA), which comprises the Kansas City, MO-KS MSA and the following adjoining counties: Andrew County, MO; Buchanan County, MO; Carroll County, MO; Daviess County, MO; Johnson County, MO; Livingston County, MO; Nodaway County, MO; Atchison County, KS; Douglas County, KS; Jefferson County, KS; and Shawnee County, KS. The rest of this section of the Report includes a profile of KCI, and a brief description of relevant economic and demographic trends in the Airport s primary and secondary impact regions. Additionally, the section highlights the categories of aviation and aviation-related services provided at the Airport. 1 FAA. Estimating the Regional Economic Significance of Airports, September 1992. 2 OMB Bulletin No. 07-01, December 2006. DECEMBER 28, 2007-1-
B. THE AIRPORT The FAA classifies U.S. commercial service airports into large hub, medium hub, small hub, and non-hub airports on the basis of annual enplanements. 3 Large hub airports are those that each account for at least one percent of total U.S. passenger enplanements per year. As of 2006, there were 30 large hub airports in the U.S., and collectively these airports accounted for 69% of total U.S. passenger enplanements that year. Medium hub airports are defined as airports that each account for between 0.25% and 1.0% of total annual U.S. passenger enplanements. There were 37 medium hub airports in the U.S. in 2006, which collectively accounted for 20% of U.S. total passenger enplanements that year. Small hub airports are those airports that enplane between 0.05% and 0.25% of total annual U.S. passenger enplanements. There were 72 small hub airports in the U.S. in 2006, and they accounted for 8% of the nation s total passenger enplanements that year. Commercial service airports that enplane less than 0.05% of annual U.S. passenger enplanements, but which have more than 10,000 annual U.S. enplanements, are classified as non-hub airports. A total of 243 U.S. airports were classified as non-hub airports in 2006, and they collectively accounted for 3% of the nation s total passenger enplanements that year. KCI is classified as a medium hub airport based on its reported enplanements of 5.42 million revenue passengers in 2006. 4 The Airport was ranked 34 th in the U.S. in terms of annual enplanements and 37 th in terms of enplaned cargo tonnage in 2006. KCI is an Enterprise Fund department of the City of Kansas City, and is supported wholly by aviation and nonaviation airport user charges. C. THE AIRPORT S PRIMARY AND SECONDARY IMPACT REGIONS According to the Airport s air service development manager, residents from communities in the four-state region of Missouri, Kansas, Nebraska, and Iowa drive to Kansas City to take advantage of the Airport s nonstop flights and the low fares. 5 As mentioned in the preceding subsection, two impact regions are defined for the purpose of estimating the regional economic significance of KCI: the 15-county Kansas City MO-KS MSA as the primary impact region and the 27-county KCI air service area (ASA) as the secondary impact region. Figure 1 shows the principal cities in the two regions. The demographic and economic trends discussed in this section focus of the primary impact region. Comparative data for the secondary region are presented where deemed informative. Additionally, comparisons between the data for 2000 and 2006 are drawn where applicable. 3 FAA. National Plan of Integrated Airport Systems (NPIAS), 2007-2011, September 2006, page 6. 4 Lambert-St. Louis International Airport is the other medium hub airport in Missouri in 2006. 5 See, for eample, the newsletter flykci.com of January-February 2007. DECEMBER 28, 2007-2-
FIGURE 1 KANSAS CITY INTERNATIONAL AIRPORT PRIMARY AND SECONDARY IMPACT REGIONS 1. Population Table 1 shows the population and shares of the counties in the Airport s primary and secondary impact regions. There were approimately 1.97 million residents in the Kansas City, MO-KS MSA in 2006, which represented 78.5% of the population of the two impact regions. There were approimately 0.54 million residents of the adjoining counties, which accounted for 21.5% of the population of the impact regions. Jackson County, MO was the largest among the counties, representing 26.5% of the Airport s ASA population in 2006. The second largest county was Johnson County, KS, which accounted for 20.6% of the population of the Airport s ASA. Clay County was ranked third in population in 2006, and Shawnee County, KS was the largest county among the adjoining counties, representing 6.9% of the population of the Airport s ASA. Together the 2.5 million residents of the Airport s primary and secondary impact regions represented 42.9% of the population of Missouri in 2006. DECEMBER 28, 2007-3-
TABLE 1 KANSAS CITY INTERNATIONAL AIRPORT PRIMARY AND SECONDARY IMPACT REGIONS 2006 POPULATION Population % of KCI ASA KANSAS CITY MO-KS MSA Missouri Counties Bates 17,116 0.7% Caldwell 9,313 0.4% Cass 95,781 3.8% Clay 206,957 8.3% Clinton 20,671 0.8% Jackson 664,078 26.5% Lafayette 33,186 1.3% Platte 83,061 3.3% Ray 23,999 1.0% Subtotal - Missouri Counties 1,154,162 46.0% Kansas Counties Franklin 26,513 1.1% Johnson 516,731 20.6% Leavenworth 73,628 2.9% Linn 9,962 0.4% Miami 30,900 1.2% Wyandotte 155,509 6.2% Subtotal - Kansas Counties 813,243 32.4% Total - Kansas City, MO-KS MSA 1,967,405 78.5% ADJOINING COUNTIES Andrew, MO 17,177 0.7% Buchanan, MO 84,955 3.4% Carroll, MO 10,058 0.4% Daviess, MO 8,072 0.3% DeKalb, MO 12,309 0.5% Johnson, MO 50,646 2.0% Livingston, MO 14,291 0.6% Nodaway, MO 21,660 0.9% Atchison, KS 16,745 0.7% Douglas, KS 112,123 4.5% Jefferson, KS 18,848 0.8% Shawnee, KS 172,693 6.9% Subtotal - Adjoining Counties 539,577 21.5% Total - KCI Air Service Area (ASA) 2,506,982 - MISSOURI 5,842,713 - Kansas City, MO-KS MSA as % of Missouri 33.7% - KCI ASA as % of Missouri 42.9% - Source: U.S. Census Bureau at www.census.gov. Population estimates are as of July 1, 2006. DECEMBER 28, 2007-4-
2. Civilian Labor Force Table 2 shows the recent trend in the Kansas City, MO-KS MSA civilian labor force. Between 2000 and 2006, the area s labor force increased at an average annual rate of 0.6%, from approimately 1.0 million in 2000 to 1.04 million in 2006. The number of employed persons increased at the rate of 0.3% per year during the 2000-2006 period. The number of unemployed persons fluctuated during the si-year period, but was relatively high during the 2003-2004 period as the economy slowly recovered from the impact of a nationwide economic slowdown in 2001, and the events of September 11, 2001. Not surprisingly, the unemployment situation in 2000 was relatively better than the unemployment situation in 2006. There were 33,343 unemployed persons in the area in 2000 compared to 52,236 unemployed persons in 2006. The corresponding unemployment rate was 3.3% in 2000 and 5.0% in 2006, which though relatively high, represented an improvement compared to the unemployment situation in 2002 through 2005. TABLE 2 KANSAS CITY, MO-KS MSA CIVILIAN LABOR FORCE 2000-2006 Civilian Labor Force Unemployment Year Total Employed Unemployed Rate 2000 1,002,898 969,555 33,343 3.3% 2001 1,006,563 962,143 44,420 4.4% 2002 1,004,687 949,643 55,044 5.5% 2003 1,014,481 953,609 60,872 6.0% 2004 1,022,730 960,471 62,259 6.1% 2005 1,027,799 969,982 57,817 5.6% 2006 1,037,335 985,099 52,236 5.0% Average Annual Growth Rate 2000-2006 0.6% 0.3% 7.8% - Source: U.S. Bureau of Labor Statistics at www.bls.gov. 3. Employment by Economic Sector The composition of jobs in the local labor market reflects the trend in job creation. Table 3 compares the composition of nonfarm jobs in the Kansas City, MO-KS MSA in 2000 and 2006. The distribution of employment by economic sector appears similar in both years. However, there were measurable shifts in the allocation of sector jobs during the 2000-2006 period. The most noticeable change is the net loss of 10,700 (11.4%) manufacturing jobs between 2000 and 2006. Nationwide, the Manufacturing sector has been undergoing restructuring characterized by outsourcing of jobs, relocation, and closure of plants. The DECEMBER 28, 2007-5-
Airport s local economy had its share of restructuring during the 2000-2006 period, including the downsizing of the former TWA (now American) overhaul and maintenance base, which resulted in the loss of approimately 2,000 Airport-based jobs between 2001 and 2002. TABLE 3 KANSAS CITY, MO-KS MSA NONFARM EMPLOYMENT 2000 and 2006 Employment (in thousands) Economic Sector 2006 2000 Percent Change Natural Resources, Mining and Construction 54.6 51.0 7.1% Manufacturing 82.9 93.6-11.4% Services 711.0 699.9 1.6% Government 145.7 136.1 7.1% TOTAL 994.2 980.6 1.4% Source: U.S. Bureau of Labor Statistics at www.bls.gov. In terms of number of workers, the Services sector was the leading sector in both 2000 and 2006, accounting for seven out of every ten nonfarm jobs in the Kansas City, MO-KS MSA in both years. The number of jobs in the service-providing sector increased 1.6%, from approimately 700,000 in 2000 to 711,000 in 2006. The number of jobs in the Government sector, which include the federal, state, and local levels of government, increased 7.1%, from 136,100 in 2000 to 145,700 in 2006. Government jobs accounted for 14.7% of nonfarm jobs in 2006, up from a 13.9% share in 2000. As mentioned in the preceding paragraph, the number of manufacturing jobs in the MSA decreased between 2000 and 2006. The corresponding share of manufacturing jobs dropped from 9.5% in 2000 to 8.3% in 2006. Natural resources, Mining, and Construction accounted for 54,600 jobs in 2006, up 7.1% from 51,000 jobs in 2000, with a corresponding increase in share from 5.2% in 2000 to 5.5% in 2006. Figure 2 summarizes the distribution of nonfarm employment in the Kansas City, MO-KS MSA in 2000 and 2006. DECEMBER 28, 2007-6-
FIGURE 2 KANSAS CITY, MO-KS MSA DISTRIBUTION OF NONFARM EMPLOYMENT 2000 and 2006 Services Government Manufacturing Natural Resources, Mining & Construction 2000 2006 0.0% 20.0% 40.0% 60.0% 80.0% 3.1. The Services Sector The Services sector is vital to the local economy judging by the number of workers whose income depends on the jobs generated in that sector. The U.S. Bureau of Economic Analysis (BEA) distinguishes between public-sector service-providing jobs and private sector serviceproviding jobs. The public sector service-providing sub-sector comprises the three levels of government (local, state, and federal). The private sector service-providing sub-sector includes Trade, Transportation and Utilities, Information, Financial Activities, Professional and Business Services, Educational and Health Services, Leisure and Hospitality, and other Services. Air transportation is classified under the Transportation and Utilities sub-sector. Ranked first in rail tonnage and third as a truck center in the United States, Kansas City is generally regarded as one of the most centrally located metropolitan areas in the nation. KCI is the largest air cargo airport in the si-state region of Missouri, Kansas, Arkansas, Iowa, Nebraska, and Oklahoma. Four major highways (I-29, I-35, I-70, and I-435) and a network of roadways connect the Airport and communities in the Kansas City metro area, which makes the City a major air, rail, and ground transportation hub for many businesses in the region. Table 4 presents the breakdown of employment in the Services sector of the Kansas City, MO-KS MSA in 2000 and 2006. Although the total number of jobs in the Services DECEMBER 28, 2007-7-
sector increased by 2.5% during the si-year period, the breakdown shows that there were variations in the pattern of job creation within the sector. TABLE 4 KANSAS CITY, MO-KS MSA EMPLOYMENT IN THE SERVICES SECTOR BY NAICS 2000 and 2006 Annual Average Employment NAICS Industry Name 2006 2000 % Change 40-000000 Trade, Transportation and Utilities 205,200 208,500-1.6% 41-000000 Wholesale Trade 49,000 49,600-1.2% 42-000000 Retail Trade 110,000 110,300-0.3% 43-000000 Transportation and Utilities 46,300 48,400-4.3% 50-000000 Information 41,400 56,000-26.1% 55-000000 Financial Activities 73,500 70,200 4.7% 60-000000 Professional and Business Services 141,400 136,000 4.0% 60-540000 Professional, Scientific and Technical Services 65,100 54,400 19.7% 60-550000 Management of Companies and Enterprises 16,100 19,200-16.1% 60-560000 Administrative and Support and Waste Services 60,200 62,400-3.5% 65-000000 Educational and Health Services 114,100 100,400 13.6% 70-000000 Leisure and Hospitality 95,200 89,400 6.5% 70-713000 Amusement, Gambling, and Recreation 17,800 16,300 9.2% 70-720000 Accommodation and Food Service 77,400 73,100 5.9% 70-721000 Accommodation 8,500 9,700-12.4% 70-722000 Food Services and Drinking Places 68,900 63,400 8.7% 80-000000 Other Services 40,200 39,400 2.0% 08-000000 Private Service Producing 710,900 699,900 1.6% 90-000000 Government 145,700 136,100 7.1% 90-910000 Federal Government 26,300 27,600-4.7% 90-920000 State Government 16,000 15,500 3.2% 90-930000 Local Government 103,400 93,000 11.2% 07-000000 TOTAL - SERVICES SECTOR 856,600 836,000 2.5% NAICS stands for North American Industry Classification System. Source: U.S. Bureau of Labor Statistics at www.bls.gov. The Information sector reported the largest proportionate loss of jobs (26.1%) between 2000 and 2006 due, in part, to job losses in the telecommunication sub-sector since 2000. Other segments that eperienced reductions in number of jobs included management (16.1%), accommodation (12.4%), and transportation and utilities (4.3%). The decrease in transportation jobs is due, in part, to the loss of air transport jobs resulting from the nationwide restructuring of the aviation industry, which has been characterized by downsizing of the industry workforce. DECEMBER 28, 2007-8-
D. BUSINESSES AT KCI The composition of sectors and jobs at the Airport is a reflection of the Services sector of the Kansas City, MO-KS MSA economy. Businesses that operate at KCI include passenger airlines, all-cargo carriers, a general aviation operator, ground transportation providers, retail concessions, and a variety of administrative, professional, technical, and support service providers. The Government sector is represented at KCI by the FAA, the Transportation Security Administration (TSA), the U.S. Customs and Border Protection, the Kansas City Police Department, and the Kansas City Aviation Department. KCI is unique in the sense that the Airport has a number of tenants under its Farm Program, as well as a full-service hotel located on Airport property. The participation of these businesses in the estimation of the Airport s economic impact is discussed under the data collection process in Section 2 of this Report. The rest of this section highlights each business category. 1. Passenger Airlines In 2006, 12 airlines provided scheduled passenger service to U.S., Meican, and Canadian destinations from KCI. The airlines include Air Canada Jazz, American, Continental, Delta, Frontier, AirTran, Mesa, Midwest, Northwest, Southwest, United, and US Airways/America West. A number of affiliate airlines operate alongside these carriers. For eample, Delta affiliates at the Airport in 2006 included Atlantic Southeast, Chautauqua, Comair, Shuttle America, and SkyWest. United was affiliated with the following carriers at KCI in 2006: Air Wisconsin, GoJet, Mesa, Shuttle America, SkyWest, and Trans States. In 2006, US Airways/America West affiliates at the Airport included Air Midwest, Air Wisconsin, Mesa, and PSA. In addition, charter operators provide non-scheduled passenger service at the Airport. Collectively, these airlines enplaned 5.42 million revenue passengers at KCI in 2006. The top destinations from the Airport in 2006 were Denver, Atlanta, Chicago, Dallas/Fort Worth, Phoeni, Las Vegas, Orlando, and Los Angeles. EpressJet Airlines began operating at KCI in April 2007. However, for the purpose of this impact study, only the data for those airlines that operated at the Airport in 2006 are included in the analysis. 2. All-Cargo Airlines Si major all-cargo carriers, Airborne Epress (ABX), BAX Global, DHL, Federal Epress (FedE), Kitty Hawk Air Cargo, and United Parcel Service (UPS), provide scheduled air cargo service at KCI. These carriers accounted for approimately 87% of enplaned cargo at the Airport in 2006. In addition, practically all of the major passenger airlines and their affiliates listed in the preceding paragraph provide air cargo service at KCI. Consistent with the importance of freight operations in Kansas City, several of the all-cargo carriers have facilities that provide ground support services located on-airport or within convenient distances from the Airport. Air and ground cargo operations at KCI are vital to the regional DECEMBER 28, 2007-9-
economy and establish the reputation of the Airport as a logistics friendly location for cargo. 3. General Aviation Eecutive Beechcraft is the Airport s sole full-service fied base operator (FBO). The FBO offers fueling, charter and ground transportation services to its clients. In April 2007, Eecutive Beechcraft announced that it had been acquired by BBA Aviation PLC, a global leader in the provision of flight support to business aviation, regional airline, military, and commercial aviation operators. The terms of the acquisition did not involve a name change for Eecutive Beechcraft. 4. Ground Transportation Ground transportation service is provided at KCI by rental car companies, shuttle operators, and on-airport parking operator. In April 2007, the Airport officially dedicated the new onairport consolidated rental car facility to house the operations of rental car companies that serve the Airport. Effective May 2, 2007, Avis, Budget, Dollar, Enterprise, Fo (formerly Payless), Hertz, Thrifty, and Vanguard (parent company of Alamo and National) have operated out of the facility. KCI Shuttle provides shared-ride service to and from the Airport, and on-airport parking service is managed by Standard Parking. 5. Retail Concessions The travelers needs for food and beverage, gifts, news, sundries, and communication are served by retail concessionaires that operate at the Airport. Two large nationally renowned retail concessionaires, HMS Host and The Paradies Shops, operate at KCI. Interspace Services provides advertising services and Business Traveler Services offer various support services to the passengers. 6. Airline and Airport Support Services Airline and airport support services include baggage handling, airline food, janitorial, aircraft maintenance and repair, fuel, landscaping, and other ground services. Over 20 companies engaged in the provision of support services were in operation at KCI in 2006, including Allied Aviation (MCI Fuel Company, LLC), KCI Car Care, Jet Delivery, CAM Contract Aircraft Maintenance, TUG Technologies, Parks Maintenance, and Huntleigh USA. Southwest Airlines operates a light maintenance facility and a provisioning center at KCI, and Midwest Airlines has an on-airport provisioning center. A number of on-airport cargo tenants provide ground support services to the airlines. In 2006, Evergreen Ground Services, Air Cargo Loadmasters, and Air Freight Center provided ground handling agent (GHA) services at the Airport. DECEMBER 28, 2007-10-
7. Contract and Professional Services The Kansas City Aviation Department engages the services of contractors, consultants, developers, and other professionals for diverse architectural, construction, management, and planning purposes. Such contracts may be on as-needed basis, short-term or long-term depending on the nature of the project. 8. Airport Management and Government Agencies The Kansas City Aviation Department is a department of the City of Kansas City. The Department has responsibility for the day-to-day management of KCI, along with the Charles B. Wheeler Downtown Airport, and the Richards-Gebaur Intermodal Transportation Facility (formerly the Richards-Gebaur Memorial Airport). 6 Other government agencies with KCIbased staff include the FAA, the TSA, the U.S. Customs and Border Protection, and the Kansas City Police Department. The TSA contracts a portion of its KCI operations to Firstline, which has staff based at the KCI. The Kansas City Fire Department provides contractual fire-fighting services at the Airport. The U.S. Postal Service operates a facility at KCI. 9. Other Tenants As mentioned in a preceding section, KCI operates a Farm Program under which land is leased to tenants for crop production and animal husbandry. The 382-room Airport Marriott Hotel, located on Brasilia Avenue, provides convenient lodging and restaurant food services to KCI patrons. Additionally, as part of its revenue diversification objective, the Airport owns a 283,034 square foot office building (the Ambassador Building ), and in 2006, tenants include the National Beef Packing Company, U.S. Premium Beef, Ltd, Land O Lakes Purina Feed, LLC, and The Rock of Kansas City Church. Estimates of the economic impacts attributable to the operations of these businesses at KCI are presented in Section 3 of this Report. 6 This information was obtained from the Airport s reports. DECEMBER 28, 2007-11-
SECTION 2 ECONOMIC IMPACT METHODOLOGY A. INTRODUCTION This section describes the methodology of economic impact estimation with a focus on the estimation of the economic impact of an airport. Economic impact analyses are frequently conducted to assess the impacts of eisting, new, and proposed projects on affected regions. At the center of an economic impact study are the inter-industry relationships within the impact region, which reflect how the regional economy operates. Regional input-output (I- O) multipliers, when systematically estimated, provide summary measures of regional interindustry relationships, which eplains the importance of multipliers in an economic impact study. The Bureau of Economic Analysis (BEA) has developed a method for estimating regional I-O multipliers known as Regional Industrial Input-Output Modeling System II (RIMS II), which is an accounting framework incorporating national and regional economic accounts. Further discussion of relevant aspects of RIMS II is presented subsequently in this section. Additionally, this section highlights relevant aspects of FAA guidelines for the conduct of airport economic impact studies. A description of the types of economic impacts, the measures used to quantify the economic impacts of an airport, and the data collection of process involved in the impact analysis are presented as a background to the estimates of the economic impacts of KCI presented in Section 3. B. TYPES OF AIRPORT ECONOMIC IMPACT FAA guidelines identify four types of economic impact applicable to airports: direct impact, indirect impact, induced impact, and total impact. The definitions of these impacts follow. 1. Direct Impacts Direct impacts result from economic activities conducted at the airport or near the airport. These activities include operations by passenger and all-cargo airlines, general aviation operators, ground transportation providers, retail concessionaires, contractors, airport management, government agencies, and owners of related businesses located at or near the airport. 2. Indirect Impacts Indirect impacts result primarily from airport-related economic activities conducted offairport. The distinguishing feature of indirect impact of an airport is that the activity can be attributed to the presence of the airport, even though the actual activity is conducted outside DECEMBER 28, 2007-12-
of the airport. For most airports, the primary sources of indirect impacts are generated by the leisure and hospitality, retail and ground transportation businesses that cater to the lodging, recreation, shopping, and ground transportation needs of visitors who arrive to the local area through the airport. 3. Induced Impacts Induced impacts result from the direct and indirect impacts, and represent the subsequent economic activities generated in the impact region. The additional economic activities are referred to as the multiplier effects of the direct and indirect impacts. Regional Input-Output multipliers allow for an estimation of the induced impacts specific to the defined impact region. Since regional multipliers reflect the underlying inter-industry relationships, regions that are more economically self-sufficient generate higher multiplier effects. The higher multiplier effects suggest a high level of interdependence among local businesses, which means that a relatively high proportion of the induced impact stays within the local economy. By contrast, an economy that is low in self-sufficiency (one with high dependence on regional imports) will report relatively low multiplier effects. Low multiplier effects suggest a low level of interdependence among local business, and the leakage of some of the multiplier effects. The multiplier factors used in the estimation of the induced economic impacts must appropriately reflect the degree of self-sufficiency of the impact region. The estimation of the induced impacts of KCI is based on the BEA RIMS II multipliers specifically developed for each of the impact regions defined for the purpose of this study, and hence capture the economic characteristics of the regions. 4. Total Economic Impacts Total economic impacts are the sum of the direct, indirect, and induced impacts, and therefore represent the quantifiable economic significance of the presence of an airport in its impact region. C. MEASURES OF AIRPORT ECONOMIC IMPACT Direct, indirect, induced, and total impacts are typically measured in terms of employment, earnings, and output. A description of each impact measure follows. 1. Employment Impacts Employment impacts represent the number of jobs that depends directly and indirectly on the presence of an airport. The number of jobs is epressed in terms of full-time equivalent (FTE) jobs. For the purpose of calculating the number of FTE jobs, a part-time job is counted as one-half of a full-time job. Consistent with the types of economic impact DECEMBER 28, 2007-13-
measures, the employment impacts of an airport are epressed as direct FTE jobs (typically airport-based), indirect FTE jobs, and induced FTE jobs. Total employment impact is the sum of all three categories of FTE jobs. 2. Earnings Impacts Earnings impacts represent the annual payroll of FTE employees whose jobs depend directly and indirectly on the presence of an airport. Payroll epenses include wages, salaries, and benefits paid to FTE employees. 3. Output Impacts Output represents the goods and services resulting from an economic activity. The BEA uses the term final-demand to represent the purchases of good and services by final users, and defines the value of final-demand or final-demand change as the value of output purchased by final users. Total operating revenues or sales directly or indirectly attributable to the presence of an airport, less the portion that is eported, constitute an acceptable measure of the total output impact of the airport. Consistent with the types of economic impacts, the direct output impact represents the local portion of revenues generated by providers of aviation and aviation-related services at the airport. The indirect output impact represents the local portion of revenues generated by related off-airport businesses, and the induced output impact is the revenue resulting from the multiplier effect. D. TAX IMPACT Taes are essentially transfers from consumers and businesses to federal, state, and local government. These taes are in one way or another incorporated in the three measures of economic impacts described in the preceding section. Consequently, the ta impact of an airport does not represent an additional economic impact. However, since ta revenues fund local public infrastructure and services, it is customary to isolate the dollar amount of the ta component of an airport s total economic impact. This study follows that custom by identifying the principal sources and amount of taes attributable to KCI. The estimates of ta impact are developed for the primary impact region only. E. BENCHMARK YEAR FOR THE ANALYSIS The estimation of economic impact is typically based on annual data, which eplains why the impacts are usually assumed to have occurred in a benchmark year. The benchmark year for this study is 2006; hence, the relevant data input is for 2006. The results of the analysis represent the measurable economic impacts of KCI in 2006. DECEMBER 28, 2007-14-
F. PRIMARY AND SECONDARY DATA COLLECTION FAA guidelines recommend that data used for the estimation of the direct economic impacts of an airport be collected directly from the businesses at the airport. Primary data collection involves survey design and administration. Secondary data from industry and government sources serve to supplement and validate the primary survey data. The data collection process for the KCI study involved the following tasks: 1. Airport Tenant Survey The estimation of the direct economic impact of KCI is based on the data collected from a survey of all business and government entities at the Airport. Working with the Department, customized questionnaires were designed to obtain the following information from each company and agency in relation to their KCI operations in 2006: Number of full-time and part-time employees Annual payroll epenses Annual non-payroll epenses Annual gross revenue at KCI Annual capital epenses at KCI over the 2004-2006 period Annual state and local taes paid The questionnaires were mailed in August 2007. In addition to follow-up telephone calls, reminder copies of the questionnaires were sent by mail and facsimile during September and October. The assistance of the Airport s project manager, particularly with the follow-up process, was instrumental to the success of this survey, which achieved a response rate of 74.4% from the tenants. Table 5 lists the businesses and government agencies included in the survey. Copies of the tenant survey questionnaires are included in the Appendi. DECEMBER 28, 2007-15-
TABLE 5 KANSAS CITY INTERNATIONAL AIRPORT CATEGORIES OF AVIATION AND RELATED SERVICE PROVIDERS SURVEYED Page 1 of 3 Data Source Company/Agency Name Survey Secondary Passenger Airlines Air Canada Jazz Air Midwest Air Tran Airways American Airlines Continental Airlines Delta Air Lines Frontier Airlines Mesa Airlines Midwest Airlines Northwest Airlines Southwest Airlines U.S. Airways U.S. Airways Epress United Airlines All-Cargo Carriers BAX Global DHL Federal Epress Kitty Hawk Air Cargo United Parcel Service General Aviation Eecutive Beechcraft, Inc. Ground Transportation On-Airport Rental Car Companies Avis Rent-A-Car Budget Rent-A-Car Dollar Enterprise Rent-A-Car Fo (formerly Payless) The Hertz Corporation Thrifty Vanguard Car Rental (Alamo/National) Other Ground Transport KCI Shuttle Standard Parking DECEMBER 28, 2007-16-
TABLE 5 KANSAS CITY INTERNATIONAL AIRPORT CATEGORIES OF AVIATION AND RELATED SERVICE PROVIDERS SURVEYED Page 2 of 3 Data Source Company/Agency Name Survey Secondary Retail Concessions Business Traveler Services HMS Host The Paradies Shops Interspace Services Inc. Airline/Airport Support Services Allied Aviation/MCI Fuel Company, LLC American Airlines ATR Aircraft Maintenance CAM Contract Aircraft Maintenance CoSentry, LCC Delta Global Services Huntleigh USA Jet Delivery KCI Car Care LINC Facility Services LSG/Skychefs Midwest Airlines Provisional Center Parks Maintenance Skyways Commissary Southwest Airlines Maintenance Southwest Provisional Center TUG Technologies Other Tenants Other On-Airport Cargo Tenants Evergreen Ground Services Continental Airlines - Cargo Southwest Airlines Cargo Air Freight Center American Airlines Air Freight Forward Air ABX Air Swissport DECEMBER 28, 2007-17-
TABLE 5 KANSAS CITY INTERNATIONAL AIRPORT CATEGORIES OF AVIATION AND RELATED SERVICE PROVIDERS SURVEYED Page 3 of 3 Data Source Company/Agency Name Survey Secondary Other Tenants Farm Management Associates KCI Airport Marriott Hotel KCI Farm Program - Tenant #1 KCI Farm Program - Tenant #2 KCI Farm Program - Tenant #3 KCI Farm Program - Tenant #4 KCI Farm Program - Tenant #5 KCI Farm Program - Tenant #6 KCI Farm Program - Tenant #7 Land O'Lakes Purina Feed, LLC National Beef Packing Co The Rock of KC Church U.S. Premium Beef, Ltd Government Agencies FirstLine Kansas City Aviation Department Kansas City Police Department KCI FAA Control Tower Transportation Security Agency U.S. Customs and Border Protection U.S. Postal Service 2. Visiting Passenger Survey Visitors who arrive through an airport represent the primary source of indirect impacts. The visiting passenger survey for this study was conducted over three days in August 2007. Unison engaged the services of Kansas City based Essential Market Research, Inc, to administer the survey. Carefully trained and pre-screened (by KCI) interviewers distributed the self-administered questionnaire to departing visiting passengers. Appropriate measures were taken to ensure that the sampling process and survey administration resulted in a representative sample of the Airport market. The questionnaire requested the following information from the visitors: Trip purpose Duration of visit in the Kansas City area DECEMBER 28, 2007-18-
Whether or not they stayed in a hotel Off-airport ependitures on: Food Lodging Retail merchandise Recreation and entertainment Ground transportation Other (optional) items A total of 1,428 completed questionnaires were collected from visiting passengers. The survey data were used to estimate the average duration of visit to the Kansas City area and the average daily ependitures made by visitors on the items listed above. A copy of the passenger survey questionnaire and sample characteristics are included in the Appendi. 3. Secondary Data Collection Secondary data were collected from the following sources to validate and supplement the primary data from the tenant and visiting passenger surveys: Kansas City Aviation Department records U.S. Bureau of Transportation Statistics databases U.S. Bureau of Economic Analysis U.S. Bureau of Labor Statistics U.S. Census Bureau Missouri Economic Research and Information Center Missouri Department of Revenue City of Kansas City Revenue Division Air Transport Association Missouri Tourism Department Kansas City Convention and Visitors Association G. DATA VALIDATION PROCESS As mentioned above, the response rate to the tenant survey was 74.4%, which means that some tenants did not respond to the survey. Gaps in survey data due to non-response or incomplete responses are not uncommon. As shown in Table 5, primary data were obtained from all categories of businesses and government agencies at the Airport, and most provided complete operating revenue, earnings, and employee count data. Missing revenue and employee count data for some tenants were supplemented from Airport records, which were assessed as credible. DECEMBER 28, 2007-19-
Gaps in employment and operating revenues for airlines that serve KCI were obtained from the U.S. Bureau of Transportation Statistics (BTS) database. The BTS collects, analyzes, and publishes etensive performance data on all aspects of the nation s transportation industry, including employment, operating revenue, epenses, and related data for all U.S. passenger and cargo airlines. An alternative measure of passenger revenue was based on the average airfare for each airline at KCI and the number of passengers they enplaned in 2006. The estimated all-cargo revenues for each carrier were based on the tonnage of freight handled at KCI in 2006 and each carrier s average revenue per ton-mile in 2006. H. OVERVIEW OF BEA RIMS II As mentioned in a preceding section, multipliers derived from the BEA RIMS II are widely used in estimating airport economic impact. RIMS II is based on the I-O accounting framework, and data derived from the national I-O table and regional economic accounts. RIMS II multipliers are available for any region composed of one or more counties, and for any industry or group of industries in the United States. There are five types of RIMS II multipliers: three final-demand multipliers for output, for earnings, and for employment, and two direct-effect multipliers for earnings and employment. These multipliers are used to estimate the impact of a change in final demand (output), in earnings, or in employment on a region s economy. The final-demand multipliers for output are the basic multipliers from which all other RIMS II multipliers are derived. The choice of multiplier to use for impact estimation is influenced by various factors, including the availability of data on the initial change in final-demand (output), earnings, and employment. Primary data obtained from the airport tenant and passenger surveys, supplemented with data from secondary sources, were used in the estimation of the direct, indirect, induced, and total economic impacts of KCI presented in Section 3 of this Report. Table 6 lists the BEA RIMS II industries included in the analysis. DECEMBER 28, 2007-20-
TABLE 6 KANSAS CITY INTERNATIONAL AIRPORT BEA REGIONAL INPUT-OUTPUT MODELING SYSTEMS (RIMS II) IMPACT INDUSTRIES RIMS II MODEL IMPACT INDUSTRY RIMS II Aggregate Multiplier AIRPORT BUSINESS CATEGORY Industry Code Industry Description Airline Operations Passenger 29 380 Air transportation All-Cargo 29 380 Air transportation General Aviation 29 380 Air transportation Ground Transportation Retail Concessions Airline Support Services 32 382 Truck transportation 33 384 Transit and ground passenger transportation 35 386 Other transportation, and support activities 35 471 Postal service 36 388 Warehousing and storage 28 379 Retail trade 47 424 Advertising and related services 49 436 Other support services 58 458 Food services and drinking places 47 427 Professional and technical services 49 432 Facilities support services 49 433 Business support services 49 436 Other support services Contractors and Consultants 7 33 Construction 47 416 Architectural and engineering services 47 417 Specialized design services 47 421 Management consulting services Farm Program 1 10 Crop and animal production Food Product Manufacturing 19 56 Food, beverage and tobacco product manufacturing Government Agencies 29 380 Air transportation 59 472 Other government enterprises Source: Regional Economic Analysis Division, U.S. Bureau of Economic Analysis, November 2007. DECEMBER 28, 2007-21-
SECTION 3 ECONOMIC IMPACTS OF KCI A. INTRODUCTION The economic impacts of KCI were estimated for two separate impact regions: the primary impact region was defined as 15-county Kansas City, MO-KS MSA, and the secondary impact region was defined as the 27-county region Airport air service area (ASA). The composition of these regions is shown in Table 1. The results of the analysis include the Airport s direct impacts, indirect impacts, induced impacts, and total impacts in each region measured in terms of employment, earnings, and output (business revenue). The ta components of the total economic impact of KCI in the primary impact region are isolated and presented. In addition to presenting the impact estimates, this section includes a comparison between the findings of the current study and the findings of the 2001 study conducted by Wilbur Smith Associates, Inc. Estimates of the projected economic impacts of KCI, based on specific assumptions about future trends in Airport operations and in the local economy, are highlighted. B. DIRECT IMPACTS OF KCI 1. Direct Employment Impact 5,845 FTE jobs The direct employment impact generated by providers of aviation and aviation-related services at KCI in 2006 is presented in Table 7. The direct employment amounted to 5,845 FTE jobs. In terms of number of jobs, the top five sources of direct employment at the Airport in 2006 were the providers of support services, the government agencies, the providers of contract and professional services, passenger airlines and general aviation, and ground transportation service providers. Collectively, these five business categories accounted for 4,889 FTE jobs, representing 83.6% of direct jobs at the Airport in 2006. DECEMBER 28, 2007-22-
TABLE 7 KANSAS CITY INTERNATIONAL AIRPORT DIRECT EMPLOYMENT IMPACT BY SOURCE 2006 Direct Employment Impact Impact Source FTE Jobs % of Total Airlines Passenger and general aviation 635 10.9% All-Cargo 242 4.1% Ground Transportation On-airport rental car 480 8.2% Shuttle 68 1.2% Parking 72 1.2% Airport Tenants Retail concessions 303 5.2% Other on-airport cargo services 127 2.2% Airline facilities and business support services 1,517 26.0% Other tenants 284 4.9% Contract and professional services 767 13.1% Government agencies 1,350 23.1% TOTAL 5,845 100.0% Notes: 1. To preserve confidentiality, the data for the sole general aviation operator at KCI are reported together with the data for passenger airlines in this and related charts. 2. Other tenants include the Airport Marriott Hotel, the Farm Program, and tenants in the Ambassador building. Figure 3 shows the distribution of the direct employment impact by business categories at the Airport. The largest share of direct jobs was in the provision of facility and business support services, accounting for 26.0% of FTE jobs in 2006. Employment by government agencies at KCI (including the Department) accounted for 23.1%, the second largest share of FTE jobs in 2006. The relatively high share of FTE jobs (13.1%) reported by contract and professional service providers reflect the diverse capital improvement projects implemented at KCI in 2006. Eamples of the projects include taiway and apron improvements, improvements in checkpoint and inline baggage screening, improvements in the terminals, completion of the consolidated rental car facility, and the upgrading of the Airport roadways. Passenger airlines and general aviation accounted for 10.9% of FTE jobs, while ground transportation (including rental car companies, shuttle, and parking) accounted for 10.6% of the Airport s FTE jobs in 2006. DECEMBER 28, 2007-23-
FIGURE 3 KANSAS CITY INTERNATIONAL AIRPORT DISTRIBUTION OF DIRECT EMPLOYMENT IMPACT BY SOURCE 2006 On-airport Cargo Services 2.2% All-Cargo Airlines 4.1% Other Tenants 4.9% Support Services 26.0% Retail Concessions 5.2% Ground Transportation 10.6% Government Agencies 23.1% Contract & Professional Services 13.1% Passenger Airlines & GA 10.9% Using employee badge data obtained from the Department, the direct FTE jobs were allocated by city of residency of employees. Table 8 shows the geographic distribution of the Airport s direct FTE jobs. It is no surprise that Kansas City was the largest beneficiary of the Airport s direct employment impact, accounting for the highest number of Airport-based employees, 2,377 FTE jobs or 40.7% of direct jobs in 2006. St. Joseph accounted for the second highest number of FTE jobs, representing 3.7%. Other cities in the top five, in terms of number of FTE jobs in 2006 were Independence, Overland Park, and Gladstone. The 50 cities shown in the table accounted for 90% of direct jobs at KCI, and the remaining 10% employees resided in approimately 100 cities across the Kansas City, MO-KS MSA. DECEMBER 28, 2007-24-
TABLE 8 KANSAS CITY INTERNATIONAL AIRPORT GEOGRAPHIC DISTRIBUTION OF DIRECT EMPLOYMENT IMPACT 2006 City/Area Zip Code FTE Jobs % of Total Kansas City 64101-64102, 64104-64106, 64108, 64114-64187 2,377 40.7% St. Joseph 64507 219 3.7% Independence 64058 200 3.4% Overland Park 66221 161 2.8% Gladstone 64119 151 2.6% Platte City 64079 148 2.5% Liberty 64068 135 2.3% Parkville 64152 135 2.3% Shawnee 66226 129 2.2% Smithville 64089 119 2.0% Leavenworth 66048 97 1.7% Lee's Summit 64086 93 1.6% Blue Springs 64015 81 1.4% Ecelsor Springs 64024 77 1.3% Kearney 64060 74 1.3% Olatte City 64079 74 1.3% Weston 64098 68 1.2% Riverside 64150 55 0.9% Holt 64048 45 0.8% Dearborn 64439 45 0.8% Lenea 66215 45 0.8% Grandview 64030 42 0.7% Lathrop 64465 42 0.7% Edgerton 64444 39 0.7% Camden Pointe 64018 35 0.6% Ferrelview 64163 35 0.6% Plattsburg 64477 35 0.6% Raytown 64133 32 0.6% Gower 64454 32 0.6% Topeka 66614 32 0.6% Atchison 66002 29 0.5% Lansing 66043 29 0.5% Pleasant Valley 64068 26 0.4% Cameron 64429 26 0.4% Gardner 66030 26 0.4% Pleasant Hill 64080 23 0.4% Savannah 64485 23 0.4% Merriam 66203 23 0.4% Belton 64012 19 0.3% North Kansas City 64116 19 0.3% Trimble 64492 19 0.3% Lawrence 66049 19 0.3% Mission 66202 19 0.3% Greenwood 64034 16 0.3% Lake Waukomis 64151 16 0.3% Weatherby Lake 64152 16 0.3% Maysville 64469 16 0.3% Basehor 66007 16 0.3% Prairie Village 66208 16 0.3% Grain Valley 64029 13 0.2% Subtotal - Listed Cities 5,262 90.0% Other Cities in Kansas City, MO-KS MSA 583 10.0% Total - Direct FTE Jobs 5,845 100.0% DECEMBER 28, 2007-25-
2. Direct Earnings Impact - $322.4 million Table 9 shows the direct earnings impact associated with the direct FTE jobs at KCI in 2006. The direct earnings amounted to $322.4 million. Providers of support services, passenger airlines and general aviation, the government agencies, contractors and professional service provider and all-cargo airlines were the top five in terms of contribution to the earnings impact of KCI in 2006. Collectively, these five business categories contributed $274.8 million or 85.2% of the direct earnings impact of the Airport in 2006. TABLE 9 KANSAS CITY INTERNATIONAL AIRPORT DIRECT EARNINGS IMPACT BY SOURCE 2006 Direct Earnings Impact Impact Source Million % of Total Airlines Passenger and general aviation $49.5 15.4% All-Cargo $23.7 7.3% Ground Transportation On-airport rental car $15.4 4.8% Shuttle $1.5 0.5% Parking $1.7 0.5% Airport Tenants Retail concessions $7.6 2.4% Other on-airport cargo services $4.3 1.3% Airline facilities and business support services $100.7 31.2% Other tenants $17.0 5.3% Contract and professional services $39.4 12.2% Government agencies $61.5 19.1% TOTAL $322.4 100.0% Notes: 1. To preserve confidentiality, the data for the sole general aviation operator at KCI are reported together with the data for passenger airlines in this and related charts. 2. Other tenants include the Airport Marriott Hotel, the Farm Program, and tenants in the Ambassador building. Figure 4 shows the distribution of the direct earnings impact by business categories at the Airport. The largest share of direct earnings was in the provision of support services, accounting for 31.2% of payroll epenses at the Airport in 2006. Earnings by employees of the government agencies at KCI (including the Department) accounted for 19.1%, the second DECEMBER 28, 2007-26-
largest share of payroll epenses in 2006. Passenger airlines and general aviation accounted for 15.4% of direct earnings impact, providers of contract and professional services accounted for 12.2% of the Airport s direct earnings impact in 2006. Payroll epenses by all-cargo airlines contributed the fifth largest share (7.3%) of direct earnings impact in 2006. Overall, the estimated average annual earning for a FTE job at the Airport was $55,158 in 2006. FIGURE 4 KANSAS CITY INTERNATIONAL AIRPORT DISTRIBUTION OF DIRECT EARNINGS IMPACT BY SOURCE 2006 Support Services 31.2% Government Agencies 19.1% Passenger Airlines & GA 15.4% Contract & Professional Services 12.2% All-Cargo Airlines 7.3% Ground Transportation 5.8% Other Tenants 5.3% Retail Concessions 2.4% On-airport Cargo Services 1.3% 3. Direct Output Impact - $1,113.3 million The direct output (measured in terms of business revenue) that was generated at KCI amounted to $1,113.3 million in 2006. Table 10 shows that passenger airlines and general aviation was the largest contributor to the direct output impact of KCI, accounting for $784.2 million or 70.4% of the Airport s direct output impact in 2006. All-cargo airlines contributed the second largest share of $84.2 million, while the $79.8 million business revenue reported DECEMBER 28, 2007-27-
by on-airport rental car companies was the third largest contribution to the Airport s direct output impact in 2006. TABLE 10 KANSAS CITY INTERNATIONAL AIRPORT DIRECT OUTPUT IMPACT BY SOURCE 2006 Direct Output Impact Impact Source Million % of Total Airlines Passenger and general aviation $784.2 70.4% All-Cargo $84.2 7.6% Ground Transportation On-airport rental car $79.8 7.2% Shuttle $2.5 0.2% Parking $36.5 3.3% Airport Tenants Retail concessions $26.6 2.4% Other on-airport cargo services $26.9 2.4% Airline facilities and business support services - - Other tenants $29.3 2.6% Contract and professional services $0.2 0.02% Government agencies $43.2 3.9% TOTAL $1,113.3 100.0% Notes: 1. To preserve confidentiality, the data for the sole general aviation operator at KCI are reported together with the data for passenger airlines in this and related charts. 2. Other tenants include the Airport Marriott Hotel, the Farm Program, and tenants in the Ambassador building. 3. Output is measured in terms of business revenue. It is assumed that revenues reported by support service providers and contractors are payments made to them by airlines and the Airport out of revenues generated at KCI. Consequently, in order to minimize doublecounting, the output reported in this table ecludes support and contractor receipts. Government agencies are typically non-revenue generating entities, and so have no output data. However, the Airport's operating revenue from non-aviation sources and non-operating revenues generated in 2006 are included in the output data. Figure 5 summarizes the distribution of the direct output impact of KCI in 2006. Collectively, passenger airlines and general aviation, ground transportation, all-cargo airlines, government agencies contributed 92.6% of the direct output impact of KCI in 2006. DECEMBER 28, 2007-28-
FIGURE 5 KANSAS CITY INTERNATIONAL AIRPORT DISTRIBUTION OF DIRECT OUTPUT IMPACT BY SOURCE 2006 Passenger Airlines & GA 70.4% Ground Transportation 10.7% All-Cargo Airlines 7.6% Government Agencies 3.9% Other Tenants 2.6% On-airport Cargo Services 2.4% Retail Concessions 2.4% Contract & Professional Services 0.02% A few caveats need be recognized in the interpretation of the estimates of direct output. Theoretically, only the portion of business revenue that stays in the impact region constitutes direct output impact. Some of the businesses at KCI, such as airlines, have national ad global financial obligations and may transfer significant portions of their receipts at KCI outside the impact region. However, it is not practical to estimate the eact fraction of the output generated by those companies that remains in the impact region beyond what is epended in payroll, Airport fees and charges, and local taes. Additionally, the close-knit nature of an airport environment fosters related transactions that may increase the likelihood of overestimation of the direct total output. To the etent possible, precautions are taken to minimize the incidence of double-counting in the estimates of the direct output impact of KCI in 2006. For eample, it is assumed that the business revenues reported by providers of support and contract services at the Airport are essentially transfers made from airline and airport revenues. Consequently, the estimate of direct output ecludes business revenues reported by support service providers and contractors. DECEMBER 28, 2007-29-
C. INDIRECT IMPACTS OF KCI Ependitures by visiting passengers who arrive through the Airport constitute the primary source of the indirect impacts of KCI. Spending by visitors generates activity in the local leisure and hospitality, ground transportation, and retail trade economic sectors that cater to area visitors. According to an airport survey conducted by Airport Interviewing and Research, Inc., 72.4% of originating enplanements were visitors. 7 Originating enplanements constituted 88% of total enplanements at KCI in 2006. Consequently, this study assumes that that 63.7% of enplanements at KCI in 2006 were visitors. In 2006, total enplanements at KCI were 5.42 million, which means that 3.45 million visitors arrived through the Airport in 2006. The estimate of annual visitor spending was based on data from the three-day passenger survey conducted at the Airport in August 2007. The survey showed that the average duration of visit to the Kansas City metro area was 4.1 days. Responses to spending on a list of items were used to estimate the average daily ependiture per visitor summarized in Table 11. Lodging was the most epensive item accounting for the largest share (37.1%) of daily ependiture. Overall, visitors spent a total of $102 per day during their stay in the Kansas City area. Additional survey findings on visiting passenger demographic, economic, and trip characteristics are presented in the Appendi. TABLE 11 KANSAS CITY INTERNATIONAL AIRPORT AVERAGE DAILY EXPENDITURE PER VISITING PASSENGER Average Daily Ependiture Per Visitor Epense Category Amount % of Daily Total Lodging $37.9 37.1% Food & beverage $20.3 19.9% Ground transportation $14.3 14.0% Retail merchandise $14.2 13.9% Recreation & entertainment $10.2 10.0% Other $5.1 5.0% TOTAL $102.0 100.0% Note: The data presented in this table were obtained from a three-day survey conducted at the Airport in August 2007. The survey asked visitors to include only those epenses incurred off-airport. The average daily ependiture was calculated for the entire sample of visitors including those who did not incur any epenses. 7 Airport Interviewing and Research, Inc., KCI Customer Satisfaction Assessment, July 2006. Visitors were defined as non-residents of Kansas City area. DECEMBER 28, 2007-30-
The average daily ependitures per visitor were used to estimate the total annual visitor ependitures of $1,450.7 million presented in Figure 6. These ependitures represent receipts by local businesses that provided goods and services to visitors, and constitute an estimate of the indirect output impact of KCI. Lodging epenses amounted to $538.8 million; a total of $288.8 million was spent on food and beverage, and ground transportation epenses amounted to $202.8 million. The survey findings regarding visitor spending are consistent with the information obtained from an informal survey of Kansas City area hotels, restaurants, and taicab companies. Unison prepared a short questionnaire, which was mailed to a sample of businesses within a five-mile radius of KCI. The objective of the survey was to assess, qualitatively, the perception of the business proprietors regarding the importance of KCI to their businesses. Although the response rate from the survey was relatively low (about 12%), those that responded were unanimous in their assessment of the significance of KCI, and indicated that the Airport was very important to their enterprise. DECEMBER 28, 2007-31-
FIGURE 6 KANSAS CITY INTERNATIONAL AIRPORT INDIRECT OUTPUT IMPACT - ANNUAL VISITOR SPENDING 2006 Total Visitor Ependitures ($1,450.7 million) Lodging ($538.8 million) Food & Beverage ($288.8 million) Ground Transportation ($202.8 million) Retail Merchandise ($201.8 million) Recreation & Entertainment ($145.4 million) Other ($73.0 million) D. INDUCED AND TOTAL ECONOMIC IMPACTS The Airport s direct employment, direct earnings, and direct output impacts are the same in both the primary and secondary impact regions because these direct impacts are generated by providers of aviation and aviation-related good and services at or near KCI. Additionally, the indirect output impact associated with visitors spending is assumed to be the same in both impact regions. Consequently, differences observed in the Airport s total economic impact in the primary and secondary impact regions arise from differences in the respective BEA RIMS II regional multipliers. In terms of actual estimation, the application of the RIMS II final-demand multipliers produces the total economic impacts. The induced impacts are derived by subtracting the direct and indirect impacts from the corresponding total impacts. For eample, the total output impact is derived by multiplying the direct and indirect output by the appropriate RIMS II final-demand output multipliers. The corresponding induced DECEMBER 28, 2007-32-
output is the difference between the total output impact and the direct and indirect impacts. The same process applies to the derivation of the Airport s induced earnings and employment impacts. 1. BEA RIMS II Final-Demand Total Multipliers Primary Impact Region The estimates of the total economic impacts of KCI in the Kansas City, MO-KS MSA are based on the RIMS II final-demand multipliers for the MSA presented in Table 12. As discussed in Section 2, regional multipliers capture the inter-industry relationships in the impact region. For eample, the final-demand output multiplier for the air transportation industry is 2.109, which represents the total dollar change in output in all industries in the Kansas City, MO-KS MSA for each additional dollar of output (business revenue) generated by the air transportation industry. The final-demand earnings multiplier for the air transportation industry is 0.5525, which represents the total dollar change in the earnings of households in the Kansas City, MO-KS MSA for each additional dollar of output (business revenue) generated by the air transport industry. The final-demand employment multiplier for the air transportation industry is 15.5556, which represents the total change in the number of jobs in all industries in the Kansas City, MO-KS MSA for each additional one million dollars of output (business revenue) generated by the air transportation industry. The differences between these multipliers and the multipliers for the secondary impact region are highlighted in a subsequent sub-section. DECEMBER 28, 2007-33-
TABLE 12 KANSAS CITY INTERNATIONAL AIRPORT BEA RIMS II TOTAL MULTIPLIERS FOR OUTPUT, EARNINGS, AND EMPLOYMENT BY INDUSTRY AGGREGATION PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA Final-Demand Multipliers (1) (2) (3) Industry Output Earnings Employment Industry Code (dollars) (dollars) (Jobs) Crop and animal production 1 2.0459 0.4003 17.3799 Food, beverage, and tobacco product manufacturing 19 2.6001 0.534 15.7594 Retail trade 28 2.1636 0.6663 26.9482 Air transportation 29 2.109 0.5525 15.5556 Truck transportation 32 2.3304 0.6742 19.6726 Transit and ground passenger transportation* 33 2.2978 0.7718 38.12 Other transportation and support activities* 35 2.137 0.8109 22.447 Warehousing and storage 36 2.1683 0.8142 25.273 Professional, scientific, and technical services 47 2.3220 0.8145 21.2369 Management of companies and enterprises 48 2.3726 0.7871 17.3745 Administrative and support services 49 2.2896 0.7516 30.0659 Amusements, gambling, and recreation 56 2.1684 0.6381 28.5246 Accommodation 57 2.1302 0.6158 25.3848 Food services and drinking places 58 2.1783 0.5987 33.3090 Other services* 59 2.2818 0.6871 26.3524 * According to the BEA, these sectors include government enterprises. BEA Definitions: 1. Each entry in the output column (1) is the total dollar change in output that occurs in all industries (in the impact region) for each additional dollar of output delivered to final demand by the industry corresponding to the entry. 2. Each entry in the earnings column (2) is the total dollar change in earnings of households (in the impact region) employed by all industries for each additional dollar of output delivered to final demand by the industry corresponding to the entry. 3. Each entry in the employment column (3) is the total change in the number of jobs that occurs in all industries (in the impact region) for each additional one million dollars of output delivered to final demand by the industry corresponding to the entry. 2. Total Direct Impacts Primary Impact Region The application of the regional multipliers (Table 12) to the direct output impact (Table 10) produces the estimates of the Airport s total direct output impact in Kansas City, MO-KS MSA by industry group shown in Table 13. Not surprisingly, the transportation and warehousing industry group was the largest beneficiary, accounting for $1,124 million (47.1%) of the Airport s total direct output impact in 2006. DECEMBER 28, 2007-34-
TABLE 13 KANSAS CITY INTERNATIONAL AIRPORT TOTAL DIRECT OUTPUT IMPACT BY INDUSTRY GROUP PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 Total Direct Output Industry Aggregates Million % of Total Agriculture, forestry, fishing, and hunting $10.0 0.4% Mining $1.8 0.1% Utilities* $26.6 1.1% Construction $9.2 0.4% Manufacturing $113.4 4.8% Wholesale trade $75.3 3.2% Retail trade $113.4 4.8% Transportation and warehousing* $1,124.0 47.1% Information $79.8 3.3% Finance and insurance $120.7 5.1% Real estate and rental and leasing $156.1 6.5% Professional, scientific, and technical services $97.1 4.1% Management of companies and enterprises $24.2 1.0% Administrative and waste management services $131.9 5.5% Educational services $12.2 0.5% Health care and social assistance $98.3 4.1% Arts, entertainment, and recreation $11.4 0.5% Accommodation and food services $80.5 3.4% Other services* $99.0 4.2% Total $2,384.8 100.0% * According to the BEA, these sectors include government enterprises. Table 14 and Table 15 show the estimates of the Airport s total direct earnings impact ($645.8 million) and employment impact (19,814 FTE jobs) associated with the total direct output. DECEMBER 28, 2007-35-
TABLE 14 KANSAS CITY INTERNATIONAL AIRPORT TOTAL DIRECT EARNINGS IMPACT BY INDUSTRY GROUP PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 Total Direct Earnings Industry Aggregates Million % of Total Agriculture, forestry, fishing, and hunting $1.5 0.2% Mining $0.4 0.1% Utilities* $3.2 0.5% Construction $3.3 0.5% Manufacturing $22.1 3.4% Wholesale trade $24.9 3.9% Retail trade $37.8 5.9% Transportation and warehousing* $274.5 42.5% Information $21.9 3.4% Finance and insurance $33.9 5.2% Real estate and rental and leasing $12.1 1.9% Professional, scientific, and technical services $42.5 6.6% Management of companies and enterprises $10.1 1.6% Administrative and waste management services $49.6 7.7% Educational services $5.3 0.8% Health care and social assistance $43.1 6.7% Arts, entertainment, and recreation $4.2 0.6% Accommodation and food services $23.4 3.6% Other services* $32.2 5.0% Total $645.8 100.0% * According to the BEA, these sectors include government enterprises. DECEMBER 28, 2007-36-
TABLE 15 KANSAS CITY INTERNATIONAL AIRPORT TOTAL DIRECT EMPLOYMENT IMPACT BY INDUSTRY GROUP PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 Total Direct Employment Industry Aggregates (FTE Jobs) % of Total Agriculture, forestry, fishing, and hunting 87 0.4% Mining 5 0.0% Utilities* 41 0.2% Construction 88 0.4% Manufacturing 445 2.2% Wholesale trade 467 2.4% Retail trade 1,821 9.2% Transportation and warehousing* 7,326 37.0% Information 222 1.1% Finance and insurance 764 3.9% Real estate and rental and leasing 644 3.3% Professional, scientific, and technical services 820 4.1% Management of companies and enterprises 130 0.7% Administrative and waste management services 2,234 11.3% Educational services 209 1.1% Health care and social assistance 1,242 6.3% Arts, entertainment, and recreation 214 1.1% Accommodation and food services 1,637 8.3% Other services* 1,418 7.2% Total 19,814 100.0% * According to the BEA, these sectors include government enterprises. 3. Total Indirect Impacts Primary Impact Region The application of the regional multipliers (Table 12) to the indirect output impact (Figure 6) produced the estimates of the Airport s total indirect output, earnings, and employment impacts in Kansas City, MO-KS MSA by industry group shown in Table 16. The results are consistent with the epected linkages among the local businesses in the impact region, with the lodging, ground transportation, and retail trade sectors as the top three contributors of impacts. The Airport s total indirect output amounted to $3,161.4 million, which supported 40,973 FTE jobs that paid a total of $937.3 million in earnings in the Kansas City, MO-KS MSA in 2006. DECEMBER 28, 2007-37-
TABLE 16 KANSAS CITY INTERNATIONAL AIRPORT TOTAL INDIRECT OUTPUT, EARNINGS, AND EMPLOYMENT IMPACTS BY INDUSTRY GROUP PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 Total Indirect Output Total Indirect Earnings Total Indirect Employment Industry Aggregates Million % of Total Million % of Total (FTE Jobs) % of Total Agriculture, forestry, fishing, and hunting $15.0 0.5% $2.2 0.2% 130 0.3% Mining $2.4 0.1% $0.5 0.1% 7 0.0% Utilities* $55.1 1.7% $6.7 0.7% 85 0.2% Construction $23.9 0.8% $8.8 0.9% 228 0.6% Manufacturing $168.1 5.3% $31.7 3.4% 663 1.6% Wholesale trade $96.3 3.0% $31.9 3.4% 596 1.5% Retail trade $325.1 10.3% $109.8 11.7% 5,222 12.7% Transportation and warehousing* $280.4 8.9% $106.9 11.4% 5,901 14.4% Information $119.1 3.8% $20.9 2.2% 342 0.8% Finance and insurance $175.0 5.5% $49.5 5.3% 1,114 2.7% Real estate and rental and leasing $266.2 8.4% $21.3 2.3% 1,104 2.7% Professional, scientific, and technical services $144.3 4.6% $62.4 6.7% 1,217 3.0% Management of companies and enterprises $51.2 1.6% $20.9 2.2% 277 0.7% Administrative and waste management services $82.3 2.6% $30.1 3.2% 1,323 3.2% Educational services $17.3 0.5% $7.5 0.8% 295 0.7% Health care and social assistance $140.1 4.4% $62.5 6.7% 1,770 4.3% Arts, entertainment, and recreation $163.8 5.2% $53.3 5.7% 2,909 7.1% Accommodation and food services $887.1 28.1% $261.8 27.9% 15,656 38.2% Other services* $148.8 4.7% $48.8 5.2% 2,131 5.2% Total $3,161.4 100.0% $937.3 100.0% 40,973 100.0% * According to the BEA, these sectors include government enterprises. 4. Total Economic Impacts of KCI Primary Impact Region Table 17 summarizes the Airport s total economic impact by type and measure. Total output impact amounted to $5,546.3 million, which supported 60,787 FTE jobs and paid $1,583.1 million in the Kansas City, MO-KS MSA in 2006. The components of the impacts are as follow: Direct output impact of $1,113.3 million associated with $322.4 million in earnings and 5,845 FTE jobs. Indirect output impact of $1,450.7 million associated with $461.7 million in earnings and 27,250 FTE jobs. Induced output impact of $2,982.3 million associated with $799.0 million in earnings and 27,691 FTE jobs. DECEMBER 28, 2007-38-
TABLE 17 KANSAS CITY INTERNATIONAL AIRPORT TOTAL ECONOMIC IMPACT BY MEASURE AND TYPE PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 Economic Impact Type Impact Measure Direct Indirect Induced Total Output (million) $1,113.3 $1,450.7 $2,982.3 $5,546.3 Earnings (million) $322.4 $461.7 $799.0 $1,583.1 Employment (FTE Jobs) 5,845 27,250 27,691 60,787 Figure 7 shows the distribution of the Airport s total economic impact by type. Induced impact constitutes the largest share of the total economic impact of KCI. For eample, the induced impact accounted for 53.8% of the Airport s total output impact in the Kansas City, MO-KS MSA in 2006. FIGURE 7 KANSAS CITY INTERNATIONAL AIRPORT DISTRIBUTION OF TOTAL ECONOMIC IMPACT PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 53.8% 50.5% 45.6% 26.2% 29.2% 44.8% 20.1% 20.4% 9.6% Output Earnings Employment Direct Indirect Induced DECEMBER 28, 2007-39-
E. TOTAL ECONOMIC IMPACTS - SECONDARY IMPACT REGION The secondary impact region was defined as the 27-county KCI air service area (KCI ASA). As mentioned in a preceding sub-section, the Airport s direct and indirect output impacts as the same for both primary and secondary impact regions. The estimation of the Airport s total impact in the secondary impact region is based on the BEA RIMS II final-demand multipliers for the KCI ASA. 1. BEA RIMS II Final-Demand Total Multipliers Secondary Impact Region Table 18 presents the RIMS II final-demand multipliers for the KCI ASA. A comparison of the final-demand multipliers for the ASA and the final-demand multipliers for the Kansas City, MO-KS MSA (Table 12) shows the implications of the relatively larger size of the ASA. TABLE 18 KANSAS CITY INTERNATIONAL AIRPORT BEA RIMS II TOTAL MULTIPLIERS FOR OUTPUT, EARNINGS, AND EMPLOYMENT BY INDUSTRY AGGREGATION SECONDARY IMPACT REGION - KCI AIR SERVICE AREA Final-Demand Multipliers (1) (2) (3) Industry Output Earnings Employment Industry Code (dollars) (dollars) (Jobs) Crop and animal production 1 2.0662 0.4049 17.2779 Food, beverage, and tobacco product manufacturing 19 2.6825 0.5492 16.1046 Retail trade 28 2.1729 0.6760 27.3043 Air transportation 29 2.0947 0.5584 15.5999 Truck transportation 32 2.3570 0.6915 20.1779 Transit and ground passenger transportation* 33 2.3253 0.7873 38.7267 Other transportation and support activities* 35 2.1522 0.8266 22.8957 Warehousing and storage 36 2.1858 0.8299 25.7330 Professional, scientific, and technical services 47 2.3358 0.8287 21.6163 Management of companies and enterprises 48 2.3791 0.7911 17.5183 Administrative and support services 49 2.2911 0.7625 30.4731 Amusements, gambling, and recreation 56 2.1747 0.6466 28.8421 Accommodation 57 2.1317 0.6225 25.6202 Food services and drinking places 58 2.1767 0.6062 33.7086 Other services* 59 2.2968 0.7033 26.9532 * According to the BEA, these sectors include government enterprises. BEA Definitions: 1. Each entry in the output column (1) is the total dollar change in output that occurs in all industries (in the impact region) for each additional dollar of output delivered to final demand by the industry corresponding to the entry. 2. Each entry in the earnings column (2) is the total dollar change in earnings of households (in the impact region) employed by all industries for each additional dollar of output delivered to final demand by the industry corresponding to the entry. 3. Each entry in the employment column (3) is the total change in the number of jobs that occurs in all industries (in the impact region) for each additional one million dollars of output delivered to final demand by the industry corresponding to the entry. DECEMBER 28, 2007-40-
The values of the final-demand multipliers for the ASA are generally higher than the finaldemand multipliers for the MSA. For eample, the final-demand multiplier for the truck transportation in the KCI ASA is 2.3570 compared to 2.3304 in the MSA. However, there are a few eceptions, which reflect the implications of slight differences in the underlying inter-industry connections in the two regions. For eample, the final-demand output multiplier for the air transportation industry in the KCI ASA is 2.0947 compared to 2.109 in the MSA. Overall impact of the differences in the regional multipliers in the two impact regions resulted in very subtle differences in the Airport s total impact. As is shown subsequently, the overwhelming majority of the economic impact of the Airport occurs in the MSA. 2. Total Economic Impacts of KCI Secondary Impact Region The application of the regional multipliers (Table 18) to the direct output impact (Table 10) and the indirect output impact (Figure 6) produced the estimates of the Airport s total indirect output, earnings, and employment impacts in KCI ASA by industry group shown in Table 19. Total output impact amounted to $5,549.6 million, which supported 61,449 FTE jobs and paid $1,616.3 million in the KCI ASA in 2006. TABLE 19 KANSAS CITY INTERNATIONAL AIRPORT TOTAL ECONOMIC IMPACT BY BEA INDUSTRY GROUP SECONDARY IMPACT REGION - KCI AIR SERVICE AREA 2006 Total Output Total Earnings Total Employment Industry Aggregates Million % Share Million % Share FTE Jobs % Share Agriculture, forestry, fishing, and hunting $22.5 0.4% $3.4 0.2% 194 0.3% Mining $3.7 0.1% $0.8 0.1% 12 0.0% Utilities* $94.1 1.7% $12.3 0.8% 156 0.3% Construction $33.2 0.6% $12.5 0.8% 323 0.5% Manufacturing $301.0 5.4% $56.6 3.5% 1,173 1.9% Wholesale trade $172.8 3.1% $57.9 3.6% 1,082 1.8% Retail trade $441.7 8.0% $150.6 9.3% 7,167 11.7% Transportation and warehousing* $1,402.0 25.3% $408.0 25.2% 13,437 21.9% Information $203.4 3.7% $36.1 2.2% 587 1.0% Finance and insurance $289.4 5.2% $82.3 5.1% 1,844 3.0% Real estate and rental and leasing $406.5 7.3% $31.5 1.9% 1,644 2.7% Professional, scientific, and technical services $235.4 4.2% $103.1 6.4% 2,011 3.3% Management of companies and enterprises $74.4 1.3% $30.0 1.9% 399 0.6% Administrative and waste management services $195.8 3.5% $74.2 4.6% 3,303 5.4% Educational services $37.5 0.7% $17.2 1.1% 679 1.1% Health care and social assistance $245.2 4.4% $110.3 6.8% 3,158 5.1% Arts, entertainment, and recreation $174.6 3.1% $57.4 3.6% 3,127 5.1% Accommodation and food services $967.9 17.4% $288.6 17.9% 17,506 28.5% Other services* $248.8 4.5% $83.5 5.2% 3,647 5.9% Total Economic Impact $5,549.6 100.0% $1,616.3 100.0% 61,449 100.0% * According to the BEA, these sectors include government enterprises. DECEMBER 28, 2007-41-
Table 20 summarizes the components of the impacts are as follow: Direct output impact of $1,113.3 million associated with $322.4 million in earnings and 5,845 FTE jobs. Indirect output impact of $1,450.7 million associated with $461.7 million in earnings and 27,250 FTE jobs. Induced output impact of $2,985.5 million associated with $832.2 million in earnings and 28,354 FTE jobs. TABLE 20 KANSAS CITY INTERNATIONAL AIRPORT TOTAL ECONOMIC IMPACT BY MEASURE AND TYPE SECONDARY IMPACT REGION - KCI AIR SERVICE AREA 2006 Economic Impact Type Impact Measure Direct Indirect Induced Total Output (million) $1,113.3 $1,450.7 $2,985.5 $5,549.6 Earnings (million) $322.4 $461.7 $832.2 $1,616.3 Employment (FTE Jobs) 5,845 27,250 28,354 61,449 Figure 8 shows the distribution of the Airport s total economic impact in the secondary region. Induced impact constitutes the largest share of the total economic impact of KCI. For eample, the induced impact accounted for 46.1% of the Airport s total employment impact and 53.8% of total output impact in the KCI ASA in 2006. DECEMBER 28, 2007-42-
FIGURE 8 KANSAS CITY INTERNATIONAL AIRPORT DISTRIBUTION OF TOTAL ECONOMIC IMPACT SECONDARY IMPACT REGION - KCI AIR SERVICE AREA 2006 53.8% 51.5% 46.1% 26.1% 28.6% 44.3% 20.1% 19.9% 9.5% Output Earnings Employment Direct Indirect Induced 3. Comparison of Total Economic Impact Primary and Secondary Regions A comparison of the total impact estimates in the two regions presented in Table 21 shows that that the inclusion of the nine adjoining counties to the MSA, increases the Airport s total output impact by only 0.1%, total earnings by 2.1%, and total employment by 1.1%. Stated differently, the results indicate the bulk of the Airport s impact occurs in the Kansas City, MO-KS MSA. For eample, the Airport s total output impact in the MSA represents 99.9% of the Airport s total impact in the KCI ASA. DECEMBER 28, 2007-43-
TABLE 21 KANSAS CITY INTERNATIONAL AIRPORT COMPARISON OF TOTAL ECONOMIC IMPACT BY MEASURE AND TYPE PRIMARY AND SECONDARY IMPACT REGIONS 2006 Total Economic Impact Secondary Primary Difference Impact Measure Region Region Numerical Percent Output (million) $5,549.6 $5,546.3 $3.3 0.1% Earnings (million) $1,616.3 $1,583.1 $33.2 2.1% Employment (FTE Jobs) 61,449 60,787 662 1.1% F. TAX IMPACT OF KCI PRIMARY IMPACT REGION The ta component of the Airport s total economic impact in the primary impact region is isolated by applying the respective prevailing City of Kansas City, Platte County and Missouri ta rates to the corresponding impact estimates. For eample, the estimated total output impact of $5,546.3 million was used as the ta base for the calculation of the retail sales and use ta revenue. Missouri retail ta rate is 7.975%, and the City of Kansas City imposes district ta of 1%. The ta base for the hotel/transient occupancy ta revenue is the estimated visitor spending on lodging, and the ta rates are 2.375% at the City level, 1.375% at the County level, and 4.225% at the State level. Table 22 shows that the total ta component of the Airport s total economic impact amounted to $613 million in 2006, with $66.7 million (10.9%) going to the City of Kansas City, $225.3 million (36.7%) going to Platte County, and $321.1 million (52.4%) going to the state. DECEMBER 28, 2007-44-
TABLE 22 KANSAS CITY INTERNATIONAL AIRPORT TAX COMPONENT OF TOTAL ECONOMIC IMPACT PRIMARY IMPACT REGION - KANSAS CITY, MO-KS MSA 2006 Ta Revenue (million) Type of Ta Kansas City Platte County Missouri Total Retail sales and use ta $5.5 $208.0 $234.3 $447.9 Hotel/transient occupancy ta $12.8 $7.4 $22.8 $43.0 Personal income ta $1.6 $2.9 $37.9 $42.4 Convention & tourism ta (C&T ta) $43.3 n.a. n.a. $43.3 Restaurant ta $3.4 $2.0 $6.1 $11.5 Property ta n.a. $2.5 n.a. $2.5 Motor vehicle licenses n.a. $0.05 $1.6 $1.7 State airline fuel ta n.a. n.a. $18.0 $18.0 Other taes n.a. $2.5 $0.3 $2.8 TOTAL $66.7 $225.3 $321.1 $613.0 G. COMPARISON OF TOTAL ECONOMIC IMPACT 2006 and 2000 The approach adopted in the 2001 study (using 2000 data) conducted by Wilbur Smith Associates, Inc. and the methodology adopted in this study were generally similar. For eample, the multipliers used in both studies for the estimation of the Airport s total impacts were developed by the BEA RIMS II. Table 23 compares the key findings of the two studies. TABLE 23 KANSAS CITY INTERNATIONAL AIRPORT COMPARISON OF TOTAL ECONOMIC IMPACTS - KCI AIR SERVICE AREA 2000 and 2006 Total Impacts Difference Impact Measure 2006 2000 Numerical Percent Output (million) $5,549.6 $3,163.7 $2,385.9 75.4% Earnings (million) $1,616.3 $1,463.7 $152.6 10.4% Employment (FTE Jobs) 61,449 67,414-5,965-8.8% Avg. Earning/FTE Job $26,303 $21,712 $4,591 21.1% Note: At the time the 2000 study was conducted the definition of the Kansas City, MO-KS MSA included 11 counties, and the Airport's air service area (ASA) comprised 24 counties. In 2006, the Office of Management and Budget (OMB) redefined the Kansas City, MO-KS MSA to include 15 counties. The corresponding KCI ASA now has 27 counties. DECEMBER 28, 2007-45-
The changes in the total economic impact of KCI between 2000 and 2006 are as follow: An increase of $2,385.9 million or 75.4% in total output impact An increase of $152.6 million or 10.4% in total earnings impact A decrease of 5,965 jobs or 8.8% in total employment impact An increase of $4,591 or 21.1% in the average earning per FTE job 1. Factors that Contributed to the Observed Differences in Impacts It is reasonable to epect that the total economic impact of the Airport in 2000 will be different from the Airport s total impact in 2006 reflecting changes in operations at the Airport and related changes in the local economy. Some of these changes were identified in Section 1 of this Report. Factors that contributed to the differences in impact estimates are highlighted in this sub-section. i. Changes at KCI The Airport has undergone remarkable transformation since 2000. The combined impact of the brief economic recession in 2001, the terrorist attacks of September 11, 2001, and the eit of Vanguard Airlines from KCI contributed to the reduction in enplanements at KCI in 2001 and 2002. Recovery remain sluggish through 2005, but enplanements at the Airport returned to steady positive growth path in 2006. Enplanements in 2006 were 9% higher than enplanements in 2005. However, the 5.42 million enplanements in 2006 were 10.7% lower than the approimately 6 million enplanements at the Airport in 2000. Ongoing restructuring of the U.S. aviation industry contributed to differences in the number and composition of jobs at KCI in 2006 compared to 2000. According to the 2001 study, there were a total of 7,492 direct FTE jobs at the Airport in 2000. The estimated number of FTE jobs at the Airport in 2006 were 5,845, representing a decrease of 22% between 2000 and 2006. The largest loss in direct jobs was reported by passenger airlines and support services. A contributing factor was the reorganization of former TWA operations at KCI following its acquisition by American Airlines. On the other hand, the composition of the government agencies at the Airport changed with the arrival of the TSA whose presence at KCI contributed to the doubling of government jobs in 2006 compared to 2000. In addition, compliance with TSA security regulations has resulted in changes in infrastructure and operations at the Airport that represent a significant departure from the business environment in 2000. ii. Changes in the Definition of the Airport s ASA The 2001 study acknowledges three impact regions for the Airport: a primary market, a secondary market, and a tertiary market. However, the study focused on the primary market DECEMBER 28, 2007-46-
area (aka air service area), which was defined as the 24-county region comprising 11 counties in the Kansas City, MO-KS MSA; two counties in St. Joseph MSA, one county in the Lawrence MSA, one county in the Topeka MSA, and nine adjoining counties in Missouri and Kansas. The current study defines two impact regions: the primary region comprises the Kansas City, MO-KS MSA, and the secondary region comprises the Airport s air service area. However, in its latest revision of the definitions of U.S. metropolitan statistical areas done in 2006, the Office of Management and Budget epanded the Kansas City, MO-KS MSA to include Bates County, MO, Caldwell County, MO, Franklin County, KS, and Linn County, KS, thereby bringing the total constituents to 15 counties. Consequently, the Airport s air service area used in the current study includes 27 counties instead of 24 counties. iii. Differences in the Estimates of Visiting Passengers The estimate of visiting passengers used in the 2001 study was significantly lower than the estimate used in the current study. According to the 2001 study, visitors were assumed to account for 33% of the Airport s enplanements in 2000, which resulted in a total of 1.99 million visitors used in the analysis. The current study assumes that visitors accounted for 63.7% of KCI enplanements in 2006, which resulted in the use of 3.45 million visitors in the analysis. Additionally, the 2001 study estimated the average daily spending per visitor at $117.2, and average trip duration of 4.2 days. The current study estimated the average daily spending per visitor at $102, and average trip duration of 4.1 days. Since visitor ependitures represent the primary source of the Airport s indirect impacts, any measurable difference in the number of the visitors and in their spending habit translate into differences in the Airport s total impact. iv. The Role of Travel Agencies Historically, travel agencies have played a significant role in facilitating the booking and purchase of air tickets, in return for commissions paid to them by airlines. Commissions received by travel agencies constitute a portion of the total impact of an airport. The 2001 study estimated that travel agencies in the Airport s impact region generated $72.9 million in sales. As correctly projected in the 2001 study, the role of travel agents in air travel arrangement has diminished significantly in recent years, particularly in airport markets like KCI that serve predominantly domestic travelers. Two factors contributed to that diminished role: 1) As part of their cost management, U.S. passenger airlines began reducing the commissions paid to travel agents in 1995, and by March 2002, they completely eliminated commissions on domestic tickets. 2) Simultaneously with the cuts in commissions, airlines began an aggressive advertising campaign encouraging their customers to purchase air tickets online, preferable at the carrier s website. Travelers responded, and now online ticket reservation and purchase is practically the norm for domestic U.S. air travel. Consequently, the current study does not isolate travel agency impacts because they are deemed to be essentially minimal. DECEMBER 28, 2007-47-
v. Differences in the Application of the RIMS II Multipliers As noted above, both the 2001 study and the current study used the BEA RIMS II multipliers in the estimation of the Airport s total impacts. However, there were differences in the actual application of the multipliers. For eample, the 2001 study developed weighted average multipliers for four major airport business categories: aviation-related tenant, concession, government, and commercial service visitors. 8 However, the BEA specifically recommends that RIMS II multipliers should not be averaged. The current study used the RIMS II multipliers developed for each industry as defined by the BEA and applied the respective industry multipliers to the corresponding Airport s output measure. vi. Changes in the RIMS II Multipliers The BEA implements periodic revisions in the RIMS II model and between 2001 and 2006 there were several upgrades in the model that may distort the comparisons of the multiplier impacts derived in the 2001 study and the multiplier impacts derived in the current study. The multipliers used in the current study were developed in the latest version of the RIMS II model released in November 2007. Additionally, at the time of the 2001 study, the Standard Industrial Classification (SIC) was the basis for classifying U.S. businesses. In 2002, the North American Industry Classification System (NAICS) replaced the SIC. The mapping of the industries from the SIC to the NAICS was close but not completely eact. Consequently, there may be material differences in the industrial classification of the businesses at KCI in the 2001 study (based on SIC) and in the current study (based on NAICS). H. PROJECTED ECONOMIC IMPACT OF KCI in 2011 One of the objectives of the study was to project the economic impact of the Airport over the foreseeable future. For the purpose of the projection, the future date is set at 2011, which is five-years from the 2006 benchmark date of the current study. Projections are subject to various uncertainties and unanticipated changes could have material impact on estimates of future impact. For eample, at the time of the 2001 study, the U.S. airline industry was into its ninth year of traffic growth. Five months after the study was completed the terrorist attacks dealt a devastating blow to the industry. At the time of the 2001 study, talks about the likely merger of TWA with American were in the preliminary stages, and it was difficult to estimate how that merger would affect KCI passenger traffic and airline support operations. The impact of the acquisition of TWA by American and the subsequent reorganization of American operations turned out to have a negative impact on Airport-based jobs, particularly aircraft maintenance and airline support jobs. The foregoing caveats should be borne in mind when interpreting the estimates of future impacts. The estimates of future impacts presented in this subsection are based on available information regarding future growth in Airport operations, anticipated trends in employment 8 See pages 22 and 23 of the 2001 Report. DECEMBER 28, 2007-48-
in the local economy and at the Airport, anticipated trends in earnings, assumptions about inflationary trends, and the absence of any major disruptions in the operations of airlines and other businesses that serve the Airport. 1. Underlying Assumptions The estimate of annual enplanements in 2011 was based on the latest FAA Terminal Area Forecast, which projects an average annual growth of 3.7% in annual scheduled enplanements between 2006 and 2011. Consequently, enplanements at KCI are projected to increase from 5.42 million in 2006 to 5.62 million in 2011. Visiting passengers are assumed to account for 63.7% (same share as in 2006) and number approimately 3.58 million in 2011. Obviously, survey data on future visitor spending are not unavailable; hence, it is assumed that inflation-adjusted average spending per visitor in 2011 will remain at the 2006 level. Available BEA data show that per capita personal income in the Kansas City, MO- KS MSA increased at an average annual rate of 2.5% during the 2000-2005 period. The OMB projects national inflationary trend to be moderate with an inflation rate of 2.3% in 2011. It is assumed that future wages will, at least, keep track with inflation; hence real (inflation-adjusted) average earnings at projected at 2.5% annual growth between 2006 and 2011. The Missouri Economic Research and Information Center (MERIC) prepared industry employment projections for the Kansas City metro area for the 2004-2014 period. MERIC is relatively pessimistic in terms of future trends in air transportation jobs in the area, projecting a 40.2% decrease between 2004 and 2014. However, significant positive growth is projected for jobs in ground transportation, support activities for transportation, food services and drinking place, accommodation, and federal and local government jobs. The implied trends were used to estimate an average annual growth of 1.7% in airport-based jobs between 2006 and 2011. 2. Projected Total Impact of KCI Primary Impact Region The number of job at the Airport is projected to increase from 5,845 in 2006 to 6,363 in 2011, representing an increase of 8.8% in the direct employment impact of KCI in the Kansas City, MO-KS MSA in 2011. The corresponding direct earnings impact is projected at $364.7 million in 2011, representing an increase of 13.1% compared to the direct earnings impact in 2006. The Airport s direct output impact is projected at $1,179.4 million in 2011, representing an increase of 5.9% compared to the direct output impact in 2006. The increase in the number of visiting passengers translates into a total indirect impact of $3,277.4 million in output associated with 42,618 jobs and $973.1 million in earnings. DECEMBER 28, 2007-49-
Table 24 compares the Airport s total economic impact in the Kansas City, MO-KS MSA in 2006 to the projected total economic impacts in 2011. Total output impact is projected to increase by 6.5%, from $5,546.3 million in 2006 to $5,909.2 million in 2011. The Airport s total employment impact is projected to increase from 60,787 in 2006 to 66,147 in 2011, representing an addition of 5,360 jobs. The corresponding total earnings impact is projected to increase by 12.9%, from $1,583.1 million to $1,787 million in 2011. TABLE 24 KANSAS CITY INTERNATIONAL AIRPORT COMPARISON OF TOTAL ECONOMIC IMPACT - PRIMARY IMPACT REGION 2006 AND 2011 Total Impacts Difference Impact Measure 2011 2006 Numerical Percent Output (million) $5,909.2 $5,546.3 $363.0 6.5% Earnings (million) $1,787.0 $1,583.1 $203.9 12.9% Employment (FTE Jobs) 66,147 60,787 5,360 8.8% DECEMBER 28, 2007-50-
APPENDIX: Survey Questionnaires Visiting Passenger Profile Unison Profile
Aviation Department Kansas City International Airport 601 Brasilia Avenue Kansas City, Missouri 64153-2054 P.O. Bo 20047 Kansas City, Missouri 64195-0047 Director Deputy Director Accounting Commercial Development Engineering Human Resources Information Services Marketing (816) 243-3100 243-3180 243-3120 243-3020 243-3030 243-3010 243-3151 243-3160 FAX 243-3170 243-3170 243-3172 243-3070 243-3071 243-3072 243-3222 243-3171 July 30, 2007 Dear, The Kansas City Aviation Department has contracted with the firm of Unison-Maimus, Inc. to conduct an economic impact study of Kansas City International Airport (Airport, KCI). The study will identify and quantify the employment, payroll and output generated in the local economy that are attributable to the presence of the Airport. The quality of the study and the usefulness of the findings depend on the information about businesses that serve or use KCI. The attached questionnaire was designed to obtain the data essential to the successful conduct of this important study. I assure you that the information reported on your questionnaire will be treated with strict confidentiality. Moreover, the data you provide will be combined with data from other respondents and aggregated in the study. This means that the sources of the information used in the analysis will be anonymous and your company data will not be identified in the final report. Please return the completed questionnaire by mailing it in the enclosed prepaid envelope or by FAX to the phone number indicated on the form. In order for us to meet the study timeline, please return your completed questionnaire by Wednesday, August 8th, 2007. If you have any questions about this survey, please feel free to contact Gary Bartek, Manager, Cargo and Economic Development for KCI at 816.243.3167 or Rachel Agheyisi of Unison-Maimus, Inc. at 714.750.1995. We epect to make the Eecutive Summary of the study available on the Airport s web site, www.flykci.com, in early 2008. Thank you for your cooperation with the crucial data collection phase of the study. Sincerely, Mark D. VanLoh, A.A.E., Director of Aviation Enclosure
ECONOMIC IMPACT OF AIRLINE OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Each airline serving KCI is requested to answer the following questions relating to its operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific airline. THANK YOU for your cooperation. 1. Airline: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your airline in jobs related directly to your operations at KCI? Staff Category Ground personnel based at KCI (ticket agents, baggage handlers, administrative, maintenance) Aircraft crew based in the local area (pilots, engineers, flight attendants) TOTAL # of Full-time Employees # of Part-time Employees 3. What was your airline s gross revenue from operations at KCI in CY 2006? 4. Please, provide an estimate of the number of hotel room nights spent by your airline s flight crew (based outside of KCI local area) in CY 2006. For eample, one pilot spending one layover night in a local area hotel equals one room night. Number of hotel room nights in CY 2006: MORE Page 1 of 2
ECONOMIC IMPACT OF AIRLINE OPERATIONS 5. Please, provide estimates of the ependitures made by your airline in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Fuel costs incurred at KCI $ Hotel epenses for layover crew $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ 6. Please, provide estimates of annual capital investments made by your airline at KCI in the 3 years shown: CY 2004: CY 2005: CY 2006: $ $ $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 15, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.8513. Page 2 of 2
ECONOMIC IMPACT OF GENERAL AVIATION OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Please answer the following questions relating to your operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Company Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your company in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. What was your company s gross revenue from operations at KCI in CY 2006? 4. Please, provide estimates of the ependitures made by your company in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Fuel costs incurred at KCI $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ MORE Page 1 of 2
ECONOMIC IMPACT OF GENERAL AVIATION OPERATIONS 5. Please, provide estimates of annual capital investments made by your company at KCI in the 3 years shown: CY 2004: CY 2005: CY 2006: $ $ $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 8, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.1995 or 714.750.8513. Page 2 of 2
ECONOMIC IMPACT OF ON-AIRPORT RENTAL CAR OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Each rental car company at KCI is requested to answer the following questions relating to its operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Company Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your company in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. What was your company s gross revenue from operations at KCI in CY 2006? 4. Please, provide estimates of the ependitures made by your company in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Business-related supplies $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ MORE Page 1 of 2
ECONOMIC IMPACT OF ON-AIRPORT RENTAL CAR OPERATIONS 5. Please, provide estimates of annual capital investments made by your company at KCI in the 3 years shown: CY 2004: CY 2005: CY 2006: $ $ $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 8, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.1995 or 714.750.8513. Page 2 of 2
ECONOMIC IMPACT OF GROUND TRANSPORT OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Each firm providing ground transportation services at KCI is requested to answer the following questions relating to its operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Company Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your company in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. What was your company s gross revenue from operations at KCI in CY 2006? 4. Please, provide estimates of the ependitures made by your company in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Business-related supplies $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 8, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.1995 or 714.750.8513. Page 1
ECONOMIC IMPACT OF PARKING OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Please answer the following questions relating to your parking operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Company Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your company in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. What was your company s gross revenue from operations at KCI in CY 2006? 4. Please, provide estimates of the ependitures made by your company in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Business-related supplies $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ MORE Page 1 of 2
ECONOMIC IMPACT OF PARKING OPERATIONS 5. Please, provide estimates of annual capital investments made by your company at KCI in the 3 years shown: CY 2004: CY 2005: CY 2006: $ $ $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 8, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.1995 or 714.750.8513. Page 2 of 2
ECONOMIC IMPACT OF TENANT OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Each tenant at KCI is requested to answer the following questions relating to its operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Company Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your company in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. What was your company s gross revenue from operations at KCI in CY 2006? 4. Please, provide estimates of the ependitures made by your company in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Business-related supplies $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ MORE Page 1 of 2
ECONOMIC IMPACT OF TENANT OPERATIONS 5. Please, provide estimates of annual capital investments made by your company at KCI in the 3 years shown: CY 2004: CY 2005: CY 2006: $ $ $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 8, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.1995 or 714.750.8513. Page 2 of 2
ECONOMIC IMPACT OF SUPPORT OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Each firm providing support services at KCI is requested to answer the following questions relating to its operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Company Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your company in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. What was your company s gross revenue from operations at KCI in CY 2006? 4. Please, provide estimates of the ependitures made by your company in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Business-related supplies $ State and local taes paid $ Other operating epenses $ TOTAL EXPENSES $ MORE Page 1 of 2
ECONOMIC IMPACT OF SUPPORT OPERATIONS 5. Please, provide estimates of annual capital investments made by your company at KCI in the 3 years shown: CY 2004: CY 2005: CY 2006: $ $ $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 15, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.8513. Page 2 of 2
ECONOMIC IMPACT OF GOVERNMENT AGENCY OPERATIONS As eplained in the attached cover letter, we request your assistance for the successful conduct of the economic impact study of KCI. Each government agency at KCI is requested to answer the following questions relating to its operations at the Airport. Your responses will be CONFIDENTIAL, and will not be disclosed in any way that is attributable to your specific company. THANK YOU for your cooperation. 1. Agency Name: Contact Person: Telephone: Fa: 2. In calendar year (CY) 2006, how many people were employed by your agency in jobs related directly to your operations at KCI? Staff Category Staff based at KCI Staff based off-airport in the local area whose jobs depend on your operations at KCI TOTAL # of Full-time Employees # of Part-time Employees 3. Please, provide estimates of the ependitures made by your agency in CY 2006. Please, include only those epenses relating to your operations at KCI. Epense Category Estimated Total CY 2006 Employee wages & benefits $ Airport fees & rent $ Business-related supplies $ Other operating epenses $ TOTAL EXPENSES $ THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY. Please return the completed form by WEDNESDAY, AUGUST 8, 2007. BY MAIL (in enclosed envelope) to: OR BY FAX to: Rachel Agheyisi 714.703.1529 Attention: Rachel Agheyisi 12459 Lewis Street, Suite 201 Garden Grove, CA 92840 If you have any questions regarding this survey, please contact Rachel Agheyisi at 714.750.1995 or 714.750.8513. Page 1
AIRLINE PASSENGER SURVEY As part of an economic impact study, Kansas City International Airport is conducting a survey of the spending habits of air travelers visiting the Kansas City area. We request your assistance in answering the following questions. Your responses will be anonymous and confidential and will be used solely for the purpose of the impact study. THANK YOU. PLEASE CIRCLE OR FILL IN THE BEST RESPONSE FOR EACH OF THE FOLLOWING QUESTIONS 1. What was the primary purpose of your visit to the Kansas City area? 1 Business 3 Business & pleasure 2 Conference 4 Pleasure/ vacation 5 Other 2. How long was your visit to the Kansas City area? Please specify. 1- # of Hours 2 - # of Days 3 - # of Weeks 3. Did you stay in a hotel during this visit to the Kansas City area? 1-No 2-Yes: Which Hotel (Name and City)? 4. During this visit to the Kansas City area, how much, in TOTAL, did you spend on the following? 1-Food (EXCLUDING food purchased at the Airport) 2-Merchandise (EXCLUDING purchases at the Airport) 3-Hotel/Lodging 4-Recreation Area tourist attractions 5-Entertainment 6-Other $ $ $ $ $ $ 5. Did anyone else travel with you on this visit to the Kansas City area? 1-Yes Go to question # 6 2- No Go to question #7 6. How many people traveled with you on this visit? Number in Travel Party (including yourself): 7. How many people are included in the epenses listed above? 1-Yourself Only 2-Entire Travel Party 3-Other (specify # of people) 8. During this visit, did you take a tai outside the Airport premises? 1-No 2-Yes: How much did you spend, in TOTAL, on tai fare? $ 9. During this visit, did you rent a car outside the Airport premises? 1-No 2-Yes: How much did you spend on car rental? $ How much did you spend on gasoline? $ 10. During this visit, did you use any other public transportation in the Kansas City area? 1-No 2-Yes: How much did you spend on public transportation? $ PLEASE TELL US ABOUT YOURSELF 11. Your gender: 1 Male 2 Female Page 1 of 2
AIRLINE PASSENGER SURVEY 12. Your age group: 1 Under 24 2 25 to 34 3 35 to 44 4 45 to 54 5 55 to 64 6 Over 65 13. Your education level: 1 High school or less 2 Some college/ AA 3 College degree 4 Post grad degree 14. Your total annual household income: 1 Under $20,000 2 $20,000 - $39,999 3 $40,000 - $59,999 4 $60,000 - $79,999 5 $80,000 - $99,999 6 $100,000 - $149,999 7 $150,000 - $199,999 8 $200,000 or more 15. Your home zip code: THANK YOU FOR PARTICIPATING IN THIS SURVEY. HAVE A SAFE FLIGHT. To be filled out by Survey Taker: Survey Date: Time: A.M./P.M. Airport Terminal: A B C Gate #: Airline: Page 2 of 2
VISITING PASSENGER PROFILE A. SAMPLE CHARACTERISTICS August 2007 Survey August 2007 Enplanements Airline % of Sample % Market Share Air Canada 0.7% 0.2% AirTran 3.2% 2.9% American 9.9% 9.7% Continental 6.0% 5.5% Delta 8.4% 7.0% EpressJet 3.0% 2.5% Frontier 4.4% 3.5% Midwest 12.3% 12.9% Northwest 7.2% 6.9% Skybus 0.8% 0.6% Southwest 35.5% 34.8% United 5.4% 7.4% US Airways 3.1% 6.1% Other 0.0% 0.1% TOTAL 100.0% 100.0% Note: The operations data for EpressJet and Skybus were not included in the estimation of the economic impact of KCI because they were not present at the Airport in 2006 (the benchmark year for the analysis). However, the two airlines were included in the passenger survey so as to obtain the best representation of the Airport's passenger mi. Source: Unison-Maimus, Inc. TABLE A1 KANSAS CITY INTERNATIONAL AIRPORT SURVEY SAMPLE AND ENPLANEMENT SHARES AUGUST 2007 DECEMBER 28, 2007
HOUSEHOLD INCOME EDUCATION AGE GROUP GENDER KANSAS CITY INTERNATIONAL AIRPORT VISITING PASSENGER PROFILE B. VISITING PASSENGER CHARACTERISTICS FIGURE A1 KANSAS CITY INTERNATIONAL AIRPORT VISITING PASSENGERS - DEMOGRAPHIC AND ECONOMIC CHARACTERISTICS Female Male 49.8% 50.2% 65+ 8.1% 55-64 19.6% 45-54 35-44 23.0% 25.2% 25-34 16.0% Under 24 8.1% Post Grad 31.4% College 37.6% AA 22.7% High School $200,000 or more $150,000-$199,999 8.4% 10.0% 10.6% $100,000-$149,999 20.1% $80,000-$99,999 $60,000-$79,999 $40,000-$59,999 $20,000-$39,999 10.8% 14.3% 18.7% 10.0% Under $20,000 5.5% Source: Unison-Maimus, Inc. KCI passenger survey conducted in August 2007. DECEMBER 28, 2007
VISITING PASSENGER PROFILE C. TRIP PURPOSE FIGURE A2 KANSAS CITY INTERNATIONAL AIRPORT VISITING PASSENGERS - TRIP PURPOSE Pleasure & Vacation 38.9% Business 28.1% Conference 13.0% Other 10.4% Business & Pleasure 9.7% "Other" trip purpose includes visiting family and friends, attending weddings, and attending special events in the Kansas City area. Source: Unison-Maimus, Inc. KCI passenger survey conducted in August 2007. DECEMBER 28, 2007
CONSULTANT PROFILE Founded in 1989, Unison-Maimus, Inc. (Unison) provides consulting services to airports in four practice areas: (1) Airport Finance and Economics; (2) Airport Retail Concessions Planning and Management; (3) Airport Facilities Planning; and (4) Systems Development. Under its Airport Finance and Economics Practice, Unison conducts various financial and economic analyses including financial feasibility and economic impact studies. Unison also conducts various types of surveys, such as airport tenant and passenger surveys as required in economic impact studies and airport retail concessions planning. Unison has 43 employees in eight offices at the following locations: Chicago Office (Headquarters) 409 W. Huron Street, Suite 400 Chicago, IL 60610 Orange County, CA Office 12459 Lewis Street, Suite 201 Orange, CA 92868 O Hare Program Management Office 10601 West Higgins Road, Building 500 Chicago, IL 60606 New York Office JFK International Airport Terminal 7 British Airways Jamaica, NY 11430 Newark Office Newark International Airport 35 Terminal B Newark, NJ 07114 St. Louis Program Management Office 13723 Riverport Drive, 4 th Floor Maryland Heights, MO 63043 O Hare Concession Management Office O Hare International Airport Terminal 3 Mezzanine Level Chicago, IL 60606 Retail Management San Antonio International Airport 9700 Airport Boulevard, Suite 246 San Antonio, TX 78216 Unison is a wholly owned subsidiary of Maimus, Inc., a publicly traded corporation engaged in government consulting, development of systems solutions, and operations program management. Maimus, Inc. has more than 5,500 employees in 280 offices worldwide. DECEMBER 2007
Offices: 409 West Huron, Suite 400 Chicago, IL 60610 Tel. (312) 988-3360 / Fa (312) 988-3370 12459 Lewis St., Suite 201 Garden Grove, CA 92840 Tel. (714) 750-1995 / Fa (714) 703-1529 13723 Riverport Drive, 4 th Floor Maryland Heights, MO 63043 Tel. (314) 551-5037 / Fa (314) 551-5038