Study: Non-Hub Airports Contribute Billions to U.S. Economy

The non-hubs range from larger points like Charlestown, W. Va and Chattanooga, Tenn. to small points like Meridien, Miss. and Reading, Pa.

Non-hub airports have a significant impact on the U.S. economy, according to preliminary data that tallies the economic impact of 72 non-hub airports. The airport study, compiled by East Tennessee State University, found that these airports generated $14.3 billion in total economic activity, expressed in 2005 dollars, and accounted for 181,000 jobs and $4.8 billion in earnings.

Ultimately, the study, commissioned by the Community Air Service Coalition, aims to capture the economic impact of 229 non-hub airports tracked by the Federal Aviation Administration (FAA). The non-hubs range in size from such larger points as Charlestown, W. Va, Chattanooga, Tenn., and Wilkes Barre, Pa., to such small points as Shenandoah Valley in Staunton, Va., Meridien, Miss., Lawton, Okla., and Reading, Pa.

"It used to be that if a market exists, someone will serve it," said Jon Lane Smith, director of the Bureau of Business and Economic Research at East Tennessee State University, who is conducting the study. "That is not so today, and we are losing a great deal of service. The question is, what are we really losing with that service? If we close these airports we lose $14.3 billion in direct, indirect and induced economic activity and nearly $5 billion in payroll."

Smith noted that even in the most dramatic scenario, not all points will lose service. But some cities will have to come to terms with the loss of commercial air service. "It is incumbent upon the decision-makers to understand what that really means," he tells Regional Aviation News. "They are going to have to come to grips with the long-term implications. The bottom line is there is no hue and cry over this loss of service."

The loss of air service in many communities has gone largely unnoticed by policymakers, distracted by the continuing bankruptcy and dislocation of the major carriers, Smith said. "This is a slow, slow death of 1,000 cuts," Smith said, adding that the implications for airports are already being seen. "We've had a decade of erosion, and as the industry changed so has the business model at the airport. Some smaller markets have foregone landing feels. Even so, as the commercial air service goes down, so do the parking revenues and the passenger facilities charges, as well as the income from concessions and rentals."

Airports, he noted, have always run on a business model that treats them as a municipal service. That may have to change in the face of the new economic reality at non-hub airports. As airlines make decisions on where to invest their aircraft, it becomes a downward spiral ? they move their equipment away from the markets that don't cover the relatively high fixed costs of that equipment.

These markets will also have to change the way they do business. "A market that enjoyed service from United [UAUA] and USAir [LCC], for instance, is a pretty good market," said Smith. "The city that goes to airlines with all the charts of O&D passengers and tries to get air service is often confronted by an airline saying, 'That's all well and good, but how much are you going to pay us to serve your market?' One city offered $250,000, which they thought was a lot, but it was not enough. For most cities, offering even that is not a possibility. Their transportation agencies are also telling them they will have to find another way to fund airport operations since tax dollars are already committed."

The purpose of the study is to try to step back and evaluate the markets and what they bring and find a business model for them, Smith said. Questions posed include: What is the state and federal responsibility in preserving air service given the tremendous economic impact of these non-hub airports? What is the appropriate amount to be funded by the taxpayer? Where do these non-hub airports fit into the total transportation network and the economic structure of the country?

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