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Economic Impact of Airport Soars

19 Jun 2018 by BizDESIGN in BizMILESTONE, SUMMER 2018

By April Bourie –

$7.4 Billion for Southern Arizona

To say things are “flying high” at the Tucson International Airport is more than just a cliché.

A recently completed economic impact study for the Tucson Airport Authority revealed that Tucson’s airport – TUS on your luggage tag – along with Ryan Airfield, west of Tucson, and the businesses located on the airports’ campuses have an annual economic impact of $7.4 billion in Southern Arizona. 

In addition, direct jobs at TAA’s airports have an individual average annual wage of $81,731 including benefits, which is 174 percent of the Pima County household median income of $47,000. 

“As the region’s major commercial airport, most people know what a valuable asset Tucson International Airport is when it comes to travel to and from Southern Arizona,” said Bonnie Allin, TAA president and CEO. “Yet these numbers are even more impressive because they are so much higher than airports in most communities our size. They are comparable to the Baltimore airport.” 

Although a study was conducted in 2012 by students at the University of Arizona Eller College of Management, this is the first time the TAA conducted a full-scale study to understand its economic impact. The study was conducted by Elliott D. Pollack & Company, whose client list includes Arizona cities and towns, county governments and a number of departments in state government.

“This is a much more robust assessment of the impact a well-run airport can have on an economy,” said Lisa Lovallo, chair of the TAA board and Southern Arizona market VP for Cox Communications.

Approximately 100 tenant companies on the TAA campus were included in the study in addition to the airlines and businesses that support the airport’s operations. Among the others, the most well-known are Raytheon Missile Systems, a maintenance and crew base for SkyWest Airlines (which flies for Delta, United, American, Alaska and other airlines), the Arizona Air National Guard 162nd Wing and Bombardier Aerospace, one of the world’s leading  manufacturers of commercial passenger and business jets. Some of the lesser-known businesses included are Ascent Aviation, an aircraft maintenance and overhaul company, and Aerovation, an aeronautical engineering, development and testing company.

“To determine impact figures, direct, indirect and induced statistics were gathered,” said Dick Gruentzel, TAA CFO and VP of administration and finance. “Direct impacts are the jobs created specifically at the airport and at the businesses within its complex. Indirect impacts are the number of jobs supported by suppliers to those airport businesses. Induced impacts are defined as the spending of both direct and indirect employees.” 

Direct operations of TUS, RYN and its tenants created 16,180 jobs with wages and benefits totaling $1.3 billion, resulting in an economic impact of $4.5 billion. 

Using new research conducted in 2017 of airport tenants and airline travelers, the study revealed not only the economic impact to the region, but also the fiscal impact for local governments. The city of Tucson received $36 million in tax revenues from businesses and employees of TAA, as well as airport tenants and tourist spending. This represents 3.7 percent of the city’s operating expenditures. Pima County received $45.4 million in tax revenues, 3.7 percent of its operating expenditures. 

Tourism impacts were significant as well. A total of $590 million was spent in the area by visitors arriving at TUS. This tourism spending generated approximately $22.5 million in taxes for the city, more than half of its total tax revenues generated by TAA. Taxes earned for Pima County by visitor spending were approximately $19 million, which is 42 percent of the total county taxes received from TAA’s operations. Spending by these visitors generated an additional 8,774 direct jobs with $241.7 million in wages and benefits.

“The impact was staggering,” said Brent DeRaad, Visit Tucson president and CEO. “We really believe that a key to the future growth in visitation to Tucson is the growth of the airport. We are proud to partner with the airport to make that happen.”

Like most commercial passenger airports in the U.S., TAA receives no local government funding. Operations are funded through revenues from public parking, space rentals and use fees, airline landing fees, concessions and land leases.

“The economic impact numbers are powerful,” said Tony Finley, past chair of the TAA board and CFO of Long Realty. “As a CFO, I understand that it’s important to show the numbers – $7.4 billion is a big number – and that helps with economic development.”

Yet there is more economic potential. A number of parcels of land within the TAA complex are available for lease and several are “shovel ready” with utilities already connected. 

It has been an ongoing goal of the TAA to develop the available land, and to that end, it has entered into a new partnership with Sun Corridor Inc., the economic development organization that works to foster business development in Pima, Pinal, Santa Cruz and Cochise counties. Sun Corridor Inc. is now in charge of promoting the vacant land managed by TAA.

The airport will be featured prominently when Sun Corridor Inc. promotes land to aerospace/defense and transportation/logistics companies – two of Sun Corridor’s industry focuses. The promotions will occur regionally, nationally and internationally.

“This agreement is the Reese’s Peanut Butter Cup of economic development,” said Joe Snell, president and CEO of Sun Corridor Inc. “The idea was hatched on the golf course while I was playing with Lisa (Lovallo). We started discussing how we could work more closely together to develop the available land at the airport. Once we presented our idea to TAA’s leadership, we found it was a natural fit.”

“We’ve had an agreement with Sun Corridor Inc. to promote our vacant land since the beginning of their existence,” said Allin. “Our location is perfect for aerospace/defense and transportation/logistics companies. We’re close to Mexico, rail lines, I-10, I-19, and the future I-11.

“The Arizona Department of Transportation recently did a study that showed we are also ideally located for multi-modal transportation companies. In our last airport master plan update, we did our most extensive planning ever for what we wanted in those vacant areas. We are ready to step up our marketing, and Sun Corridor Inc. has the contacts we need to do so.”

“I would categorize it as an evolution of our partnership that creates a force multiplier for us,” Lovallo said. “Sun Corridor has a greater reach than what we could do on our own, and their focus on aerospace and logistics fits nicely into our portfolio. This agreement will put the airport front and center as the economic engine that it is, and it will bring to the airport some new contacts to develop our airport and aerospace corridor.”

The success of the airport comes from its strong board and its relationships within the Tucson community, Lovallo said.

“The Tucson Airport Authority board has always advocated for our economic development, the Tucson community and the airport,” she said. “Our partnership with Sun Corridor, the county and the business community is very valuable to us. It really requires good collaboration to run a successful airport that has a broader impact on the community.”

The strength of the airport and its tenants is apparent, Finley said, “Air service is up and the recent renovations that were completed at the airport make us a world-class airport without lines,” he said.

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