ECONOMY

Assessing the Economic Importance of Airports and the Air Transport Cluster in Belgium
In the past few years, the logistics business has come to play a significant role in creating added value in the Benelux. Air transport and airports in particular are driving forces in this context, not only in terms of business generated within the air transport cluster, but also in terms of airports attractiveness. A close look at the top 20 cargo airports in Europe in 2006, shows us that three of the six Belgian airports are included in that list. Brussels Airport and Lige Airport occupy places 6 and 8 respectively, while Ostend-Bruges Airport ranks 20th. Moreover, in 2006, Brussels Airport was the 21st largest passenger airport in geographical Europe with 16.7 million passengers, and 19th within the EU. Both passenger and cargo rankings are spearheaded by the international airports of London Heathrow, Paris Charles de Gaulle, Frankfurt and Amsterdam Schiphol, which form the so-called FLAP quadrangle, at the centre of which lies Belgium. With six airports situated in a small country like Belgium, the question arises as to what economic effect those airports have on the Belgian economy. An estimate of the economic effect of the Belgian airports and air transport cluster was calculated in the National Bank of Belgium (NBB) Working paper No. 158, entitled Economic Importance of Air Transport and Airport Activities in Belgium, which was published in March 2009, and which forms the basis of this article.
By Franziska Kupfer and Frdric Lagneaux
Air Transport in Belgium From the six airports under review, Figure 1: Distribution of passenger and cargo trafc at Belgian airports in 2006 all operate in the passenger transport segment, which is heavily dominated by two airports: Brussels, the national airport, and Charleroi, an airport focusing on the low-cost sector. The airports at Ostend and Lige concentrate more on cargo, while the focus in Antwerp and Kortrijk lies on business travel. Passenger trafc, in particular, is focused in Brussels Airport, which represents over 85 percent of the approximately 20 million passengers recorded in the six airports under review in 2006 (see table 1). Next comes Charleroi with over 11 percent, Source: Own composition based on airport operators

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followed by Lige, Antwerp, Ostend, and nally Kortrijk, a very small airport in the west of Belgium. Of these six airports, it is Charleroi that has seen the biggest expansion in passenger trafc over the period 1997-2007, as the activities of RyanAir, the main airline operating at Charleroi, did not really take off until the early years of this century. Lige Airport also saw a very marked rise in passenger trafc, while Ostend witnessed some expansion too, but Antwerp and Kortrijk experienced a steady decline. For the rst time in six years, passenger trafc passed the 20 million mark again in 2007 (table 1), a level not reached since 2001, as a result of the strong expansion at Brussels and Charleroi, the former recording a better passenger load factor, while the latter combined this advantage with a steady increase in the number of ights. There was also some expansion, admittedly more modest in absolute terms, but nonetheless noteworthy, at the other four airports. In reality, the effects of the 9-11 attacks were not felt until 2002, a year in which substantial restructuring had been undertaken in the United States and in the rest of the world, thereby having a very marked impact on trafc levels. Also, the bankruptcy of the Belgian airline SABENA had a negative impact on air trafc in Belgium. Overall passenger trafc in Belgium in 2002 decreased about 23 percent in comparison to 2001. Since then, the total number of annual movements at the six Belgian airports has not exceeded 500,000 units. The average annual increase in trafc came to 2.3 percent. In Belgium, it grew by 4.6 percent1 on average at world level.
Table 1: Concession Revenue Determinants Passenger Traffic 2007 (x 1000 pax) Annual average passenger traffic growth 1997-2007 (in percent)
-3.8 +1.1 +27.8 -4.5 +7.8 +3.6 +2.3

difference is mainly derived from the exceptional growth of air m cargo at Lige Airport during that period. eriod Methodology The methodology and the denition of clusters in particular are very important for this article, so a short overview with the most important points is given here. For more detailed information, we refer to the original study published by the National Bank of b Belgium. (Kupfer and Lagneaux, 2009) x This article is concerned with the entire range of activities generctivit ated by airports including those that are not necessarily part of ssar the air transport industry. Two categories of economic activities omic are therefore used in the analysis, for which both direc and indirect direct effects are calculated. The air transport cluster in ster includes the air transport activities, i.e. all the economic branches that are ches specic to and generate air transport, and thus include airport des operations. These branches, which dene and are essential to the al air transport business, are also paramount for airport activities. Activities that are included are, for example, those of airlines, travel agencies and tour operators3, airport operators, airport port handling, airport construction, and aircraft maintenance. The economic branches that use the airport infrastructure and/ ructure or that are situated on the airports grounds, complementing the ement abovementioned air-transport activities, are grouped u ped under the heading other airport-related activities. They form th second rm the cluster analyzed in this study. This cluster includes, for ex example, passenger land transport, freight transport by road, hotels, r , restaurants, catering, and courier and postal services.
Figure 2: Categories of activities

Cargo Traffic 2007 (x 1000 tons)

Annual average cargo traffic growth 1997-2007 (in percent)

-4.0 +4.2 n. n. +30.0 +0.3 +7.6

Antwerp Brussels Charleroi Kortrijk Lige Ostend TOTAL

175 17,839 2,458 67 333 180 21,052

5 784 0 1 490 109 1,389

Source: Own calculations based on airport operators Source: Kupfer, Lagneaux (2009)

In the freight sector, it is again Brussels Airport that takes the lions share, accounting for almost 60 percent, which is 784,000 tons, of Belgiums air freight trafc, but it is relatively closely followed by Lige Airport, which represents about a third, i.e. 490,000 tons, of the same total (gure 1). Ostend is in third place with 8 percent. The strongest growth occurred at Lige Airport, which has recorded an impressive 30 percent annual average increase from 1997 up until 2007. In 2008, however, cargo trafc in Lige grew only 5.9 percent, as volumes have fallen dramatically since October 2008, a trend that has also been observed worldwide. The airport, which is currently two places behind Brussels in the European ranking of freight airports, in eighth position, aims to be among the top 5 in the medium term, on the basis of the steady growth of air cargo. Over the period, the average annual increase in the tonnage dispatched via the six airports under review was 7.6 percent. With this percentage, the growth of Belgian cargo trafc is well above the annual growth of world air cargo trafc (4.9 percent.2). This

The selection of rms used for the study is based on the list of concessionaires from each of the airports. All the data collected are for the year 2006. The main sources for the microeconomic data are the Central Balance Sheet Ofce (the main data, employment, e value added, etc.) and from the National Accounts Institute, naional tional accounts (classication of activities, regional breakdowns, tivitie sectoral aggregates, supply-use tables, input-output tables, etc.) bles, etc. and were published in 2008 for the nancial year 2006. na Direct Value Added and Employment inside the Belg oym gian airports This section deals with the activities r ies record in rms4 in 2006 ded at the six Belgian airports (see part a and b) of gure 2), and art a) d 2) offers a general view of the relative im e importance of those airp ports and of the sectors based there. It the therefore covers all airpo rportrelated activities for the nancial year 2006. 2

The analysis produces no surprises with regards to value added (VA), since Brussels Airport is very much the dominant airport in Belgium, with 83 percent of value added (gure 3), similar to its share of passenger trafc (85.5 percent, see gure 1). Next, a long way behind, comes Lige (8.3 percent), Charleroi (3.9 percent), Antwerp (2.4 percent), Ostend (1.8 percent) and Kortrijk (0.6 percent). At over 1.4 billion euro (table 2), the value added of Brussels Airport represents a considerable contribution to the national income. Two-thirds of that VA comes from the activities of the air transport cluster, which more or less corresponds to the average for all six airports (65.5 percent, 1,132.9 million euro in total). The other Flemish airports are slightly more dependent on air transport activity (69 percent), while at the two Walloon airports there is more of a balance between the two clusters (air transport cluster = 56.6 percent of the total).
Figure 3: Direct Value Added and Employment of Belgian Airports in 2006

Brussels Airport also clearly is the dominant airport in Belgium in terms of employment, accounting for 82 percent of the total (gure 3). A distant second comes Lige (8.6 percent), followed by Charleroi (4.3 percent), Antwerp (2.4 percent), Ostend (2.1 percent) and Kortrijk (0.7 percent). At almost 18,000 fulltimeequivalents (FTEs), the workforce of Brussels Airport represents a substantial contribution to employment in the region and in the country (table 2). The percentages for the rst cluster are signicantly lower than in the case of VA. The ratio between VA and employment is therefore higher in the air transport cluster than in other airport-related activities. At Brussels Airport, 54.1 percent of the total labor force is employed in the air transport cluster, corresponding roughly to the average for all six airports (53.7 percent). The other Flemish airports are also largely dependent on air transport activities for jobs (53.1 percent), while the opposite applies at the two Walloon airports, since they are dominated by airport-related activities (52.5 percent of the total), particularly owing to the importance of courier and post services at Lige. On average, about 53.7 percent of the labor force, which amounts to 11.534 FTEs, is employed in the air transport cluster at the Belgian airports. Indirect Value Added and Employment inside Belgian Airports Indirect value added, i.e. the wealth generated by suppliers (upstream) of rms based in the six airports, totaled well over 2 billion euro (table 4). Comparison with direct VA (1.7 billion euro) allows to estimate the multiplier5, which comes to 2.23 overall. This means that, for every euro of VA generated directly by the rms under review, 2.23 euro will be generated via the intersectoral links between them and their suppliers (including direct VA). These coefcients vary from one airport to another, Kortrijk having the highest multiplier (2.91) and Brussels the lowest (2.15)6. These differences are connected with the relative position of the various sectors of activity in the airports. In general, the air transport sector, the trade branches, construction, renting of aircraft, ying schools and other services exhibit a closer link between indirect and direct effects than the other branches, in terms of VA. Among the sectors that make up transport logistics, air transport is, in fact, a key sector, having considerable impact on its suppliers7. Indirect employment came to over 25,000 FTEs and in comparison with direct employment (21,500 FTEs), it indicates an overall multiplier of 2.18. This means that one direct FTE working in the rms under review will ultimately generate 2.18 FTEs in the entire economy (including direct FTEs) as a result of the intersectoral links with suppliers. These coefcients vary from one airport to another, Lige airport having the highest multiplier (2.68) and Ostend the lowest (2.06). As already mentioned, these differences are connected with the relative position of the various sectors of activity in the airports, with air transport - denitely the key sector - generating a large volume of indirect jobs (see next page).

Source: Kupfer, Lagneaux (2009) Table 2: Air transport and other airport-related activities at Belgian airports in 2006 Airport Cluster Value added (in million euro)
26.4 15.3 41.7 955.9 479.7 1,435.6 48.2 19.0 67.2 7.4 2.4 9.8 71.7 72.7 144.4 23.5 7.8 31.3 1,132.9 596.9 1,729.9 65.5 34.5 75.1 24.9 49.7 50.3 75.5 24.5 71.7 28.3 66.6 33.4

Share of clusters (in percent)

63.3 36.7

Employment (in FTEs)

294 225 519 9,528 8,089 17618 599 322 922 102 44 146 713 1,130 1,843 298 143 441 11,534 9,954 21,488

Share of clusters (in percent)

56.7 43.3

Antwerp

Air Transport

Other Airport-related act. Antwerp Total Brussels Air Transport

54.1 45.9

Other Airport-related act. Brussels Total Charleroi Air Transport

65.0 35.0

Other Airport-related act. Charleroi Total Kortrijk Air Transport

69.8 30.2

Other Airport-related act. Kortrijk Total Lige Air Transport

38.7 61.3

Other Airport-related act. Lige Total Ostend Air Transport

67.5 32.5

Other Airport-related act. Ostend Total Total Air Transport

53.7 46.3

Other Airport-related act. Grand Total

Source: Kupfer, Lagneaux(2009)

Table 4: Indirect value added and employment at Belgian airports Indirect value added (in million euro)
Antwerp Brussels Charleroi Kortrijk Lige Ostend TOTAL 71.5 1,650.9 87.3 18.7 266.3 39.3 2134.0

Multiplier VA

Indirect employment (in FTEs)

848 19,732 1,065 223 3,094 465 25,427

Multiplier FTE

2.71 2.15 2.30 2.91 2.84 2.26 2.23

2.63 2.12 2.16 2.52 2.68 2.06 2.18

dominated by the building and repairing of aircraft sector, which accounts for more than 45.6 percent of the total. In second place are the travel agencies and tour operators (31.3 percent), for whom only activities relating to air transport were included. This sector, reduced to its air transport activities, represents almost one-third of the air transport cluster outside airports. The airlines (air transport) represent over 16 percent of the total, the bulk of this activity being recorded in airports, while the other air transport supporting activities account for 6.9 percent of the same total. Indirect VA in 2006 amounted to 1,456.6 million euro. Therefore, by comparison with direct VA, the multiplier is as high as 2.75. This means that every euro of VA directly generated by air transport cluster companies established outside airports eventually produces 2.75 euro of income within the whole national economy, taking account of the VA generated by their suppliers at every level. This is more than the average recorded in transport logistics (1.65)9, which means that air transport, in spite of the sectors limited size in Belgium, has a substantial impact on other industries. The employees active in the air transport cluster (direct employment) excluding the activities of airports, came to more than 10,000 full-time equivalents (FTEs) in 2006 (table 5). Of those FTEs, an estimate of 8.8 percent of the 1,094 FTEs, which is almost 100 FTEs, are considered to be involved in air cargo activities, while the remaining 1,000 FTEs correspond to passenger transport activities. Like in the VA, employment is the highest in the building and repairing of aircraft sector (43.7 percent), closely followed by the travel agencies and tour operators (42 percent). The shares represented by the airlines (air transport) and other air transport supporting industries are smaller than in the case of VA, at almost 10.7 and 3.2 percent respectively. The comparison of indirect with direct employment indicates a multiplier of 2.99 with a total amount of 20,265 FTEs as indirect employment. Conclusion Looking at the evolution of air trafc in Belgium, regional airports in particular show signicant growth. The most important regional airport for passenger trafc is Charleroi, which has achieved an average annual growth of almost 28 percent between 1997 and 2007, owing much of that to the expansion of Ryanairs operations, the airports main carrier. When we analyzed air cargo trafc, we saw that the airport of Lige is an important player with a growth of 30 percent over the same period. Summarizing the impact of Belgian airports and air transport activity, we see that they generate a total value added (i.e. direct+indirect inside and outside airports) of 6,150 million euro and a total employment (i.e. direct+indirect inside and outside airports) of 77,359 FTEs. This nearly 6.2 billion euro value added represents 2 percent of Belgian GDP10 (i.e. 0.8 percent if direct VA alone is considered).

Source: Kupfer, Lagneaux, 2009

The direct and indirect effects of the air transport cluster outside airports in 2006 Besides the activities directely connected with the airports, so too do companies of the air transport sector that are located outside the airport perimeters have an impact on the Belgian economy. Therefore, this section covers all air transport activities recorded outside the airport zones for the 2006 nancial year (subset (a) in gure 3). In fact, these gures, when added to those for activities recorded inside airports, permit an estimate of the overall impact of air transport activities and related activities in Belgium, which will be summarized at the end.
Table 5: Direct value added and employment of the air transport cluster outside airports Sector Value Share added (in of value million added (in euro) percent)
134.4 259.9 378.4 57.3 830.1 16.2 31.3 45.6 6.9 100.0

Employment (in FTEs)

1,094 4,314 4,443 328 10,179

Share of employment (in percent)

10.7 42.4 43.7 3.2 100.0

Air transport Travel agencies and tour operators Building and repairing of aircraft Other air transport supporting activities TOTAL

Source: Kupfer, Lagneaux, 2009.

Direct value added (VA), i.e. the value that each enterprise adds to its inputs during the nancial year, came to about 830 million euro in 2006 in the air transport cluster outside airports (table 5). We could also estimate a breakdown of VA within air transport according to the type of transport8: 8.8 percent of the 134 million euro, or almost 12 million euro, is considered to relate to air cargo activities, while the remaining 122 million corresponds to passenger transport. The VA of the cluster outside airports is

Looking at the different clusters seperately, we see the following Another factor that will inuence the development of the air transport sector and airports in Belgium are the environmental division for the value added and employment in 2006: debates, as lively discussions about night ights and noise standards are currently held, particularly for Brussels Airports and (a) Air transport cluster outside airports: Ostend. direct VA: 830.1 million euro; indirect VA: 1,456.6 million The following years will reveal how the air transport business in euro direct employment: 10,179 FTEs; indirect employment: Belgium will develop in times of economic recession and possible stricter environmental norms, and when the trafc level 20,265 FTEs of the beginning of 2008 will be reached again. Furthermore, a follow-up study will have to show how the economic impact will (b) Air transport cluster inside airports: develop with those changes taken into consideration. direct VA: 1,132.9 million euro; indirect VA: 1,399.3 milReferences lion euro direct employment: 11,534 FTEs; indirect employment: Belgostat (2008), Belgostat online, http://www.nbb.be/app/cal/N/ BelgoHome.htm 13,672 FTEs

(c) Other airport-related activities:

direct VA: 596.9 million euro; indirect VA: 734.7 million euro direct employment: 9,954 FTEs; indirect employment: 11,755 FTEs

ICAO (1997-2006), Annual Review of Civil Aviation 19962005, ICAO Journal, vol.52-60, n6, Montral, Canada ICAO (2007), Environmental Report 2007, Montral, Canada Kupfer, F., Lagneaux, F. (2009), Economic Importance of Air Transport and Airport Activities in Belgium, NBB, Working Paper No. 158, Brussels Lagneaux F. (2008), Economic Importance of Belgian Transport Logistics, NBB, Working Paper No. 125, Brussels

The ndings of the study indicate that the air transport sector, together with the activities at airports, have an important impact on the Belgian economy. However, calculations could only be made for 2006, and one has to be careful with analyzing the results, as several changes that affect the Belgian air transport sector have taken place in the last few years. On April 1st 2008, the integrator DHL relocated its European hub from Brussels to Leipzig, Germany. This also had an effect on the Belgian economy as the number of employees at DHL in Brussels has decreased as a consequence of the relocation. After the move of DHL, cargo trafc at Brussels dropped about -5 percent in April 2008 and -7.7 percent in May 2008, compared to the same months of the previous year. The economic recession that started in the summer of 2008 added to this trafc decline, for cargo as well as for passengers. In February 2008, for example, passenger trafc was down 19 percent and cargo trafc even 48 percent at Brussels Airport. However, the numbers for April show that the decline is slowing down with a decrease of -40 percent in cargo trafc and -5.4 percent in passenger trafc. As more and more companies are introducing strict cost-reducing measures and reorganizing their operations, it can be assumed that the air transport sector in Belgium, as well as in the world, will shrink during (at least) the following year.

Endnotes
1. 2. 3. 4. Own calculations on the basis of ICAO (1997-2007) Own calculations on the basis of ICAO (1997-2007) For the travel agencies and tour operators a correction was applies, as not all operations of this sector is connected to air transport. This corresponds to 549 business establishments which, in 2006, pursued activities within the geographical boundaries of the airports. Taking account only of rms producing value added within the airport perimeters, the real total comes to 472 rms distributed as follows: 77 in Antwerp, 250 in Brussels, 31 in Charleroi, 34 in Kortrijk, 45 in Lige and 35 in Ostend.

5. 6.

It is worth comparing these gures with those obtained in some major economic branches: 2.3 in the maritime ports, 2.8 in the car manufacturing industry, 2.4 in the steel industry, 2.5 in the chemical industry and 2.1 in construction. 7. See Lagneaux (2008). 8. See Lagneaux (2008). 9. More details in section 2.2.1 of Lagneaux (2008). 10. Source: Belgostat (2008).

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