You are on page 1of 6

ECONOMIC IMPACT OF AIRPORTS

The Regional Impact of Airports:


How Can We Measure It?
In most countries, the majority of airports depend on public funding. This is usually granted
either for expansion projects or for the coverage of operational losses of airports. When
public money is allocated to airports, it is often justified with the actual or alleged impor-
tance of airports for promoting regional wealth and development. Local politicians, airport
managers and other advocates of regional aviation habitually justify their intentions by
referring to studies that demonstrate the importance of the particular airport for the re-
gional economy.
There does not seem to be a clear consensus, however, on which methodology is suitable
for the specific task of measuring the economic impact of an airport. A number of ap-
proaches are used in order to quantify the effects, based on input-output analysis (IOA),
cost-benefit analysis (CBA) or econometric estimations. However, the assumptions and
limitations of the methodologies are sometimes not thoroughly considered so that invalid
conclusions are drawn from the results. In this paper, we therefore analyze the strengths
and weaknesses of the three major approaches and their applicability to the quantification
of the economic impact of airports.1

by: Dr. Robert Malina and Christoph Wollersheim

In section II, we give a brief overview of the different effects Private benefits of airports are reflected mainly by lower trans-
that an airport generates within its region, both negative and portation and travel costs for companies and individuals within
positive. In section III, we take a closer look at the spectrum the airport region. Lower transportation costs give access to
of approaches, presenting their backgrounds, their application in new markets, both product and labor markets. This can improve
practice and their merits as well as their potential weaknesses. the international division of labor, and hence increase compa-
Finally, section IV concludes this paper. nies’ productivity. Whereas private benefits accrue to users of
air transport, external benefits also accrue to non-users of the
II. The Role of Airports for the Regional Economy particular airport. The marketplace is generally well-suited for
Airports can have a significant impact on regions. There are absorbing benefits through market prices (e.g. ticket prices, land
positive as well as negative effects on airport users, regional prices), however, some benefits might remain outside the market
economy, adjacent communities and the environment. The fol- mechanism.3 Generally, airports are an important factor in at-
lowing figure (Figure 1: Social impacts of airports) structures tracting inward investment since they can offer quick and conve-
the various bundles of effects produced by airports. nient access to air services and goods to businesses. Surely, air-
ports are only one of a number of factors in locational investment
Private costs occur in the profit and loss statement of airport decisions, but a nearby airport with good services can at least
operators. They include the planning and construction costs of help to push the region on a shortlist of potential search areas. 4
capital projects as well as operating costs and can easily be de-
termined. It is more difficult to identify external costs, since III. Measuring the Regional Impact of Airports
these occur outside the market and also impact non-users. Exter- Input-Output Analysis
nal costs are mainly (but not limited to) environmental impacts Input-output analysis is probably the most common approach for
of airports, which can be divided into noise, emissions, water analyzing an airport’s impact on the regional economy, whether
pollution and use, waste and energy management, and impacts related to developing or expanding airports or to current airport
on wildlife, heritage and landscape.2 operations. Since the 1980’s, a multitude of studies have been
carried out using IOA .5

e-zine edition 44 1
Figure 1: Social Impacts of Airports

Input-output studies use a Keynesian demand model based on Using IOA for project appraisal and investment decisions has
input-output tables. They estimate the effects on value added, several shortcomings:
employment and income that result from economic activities
at the airport.6 IOA does not only take into account direct ef- Treatment of private costs: In input-output models, a rise in de-
fects that accrue from economic operation on the airport site, mand leads to more value added, employment and income for
but also indirect effects that follow from demand generated by the economy. As costs (e.g. runway and terminal construction
the enterprises at the airport for intermediate and capital goods and operation costs) are treated as demand, the effects the model
and induced effects, which are a consequence of spending by generates increase when costs increase. Therefore, the higher the
employees of companies at the airport or of producers of inter- inefficiency of an airport the higher the economic impact for the
mediate goods. regional economy will be.11

Evaluation of the Approach Treatment of external costs: It is undisputable that air transporta-
IOA can give qualified insights regarding the overall and sec- tion does not only generate benefits but also technological exter-
toral demand effects that an airport generates.7 Therefore, IOA nal costs, which are not incorporated into the marketplace. While
is a sound means for measuring the economic impact of airport not directly generated by the airport itself, these negative effects
infrastructure on regional value added, employment and income. can at least partially be attributed to its presence, as airport in-
Information on the sectoral distribution of the effects can pro- frastructure is an essential intermediate good for air traffic to and
vide valuable information to policymakers as to which parts of from a region.12 Moreover, airport expansion projects aim at in-
the local economy benefit the most from the economic activity creasing air traffic, which in turn increases external costs. While
at the airport. external costs are not incorporated into market prices, they are of
course relevant for policymakers, who aim at maximizing or im-
Data requirements for IOA can be fulfilled rather easily com- proving social welfare. IOA cannot consider external costs, as it
pared to other approaches. Information on employment, invest- is part of the national accounting systems, which do not account
ment and intermediate good demand can be obtained from the for these costs. Basing themselves on the results of input-output
companies at the airport. Since in most countries input-output analysis, policymakers might erroneously prefer a project that
tables are publicly provided, the approach can be applied rather has fractionally higher values according to IOA but much higher
easily and inexpensively; the results are easy to understand for environmental costs compared to a different project.
the public.8 There are efforts to harmonise the national account-
ing standards, which would allow more accurate comparisons of Treatment of private and external benefits: Air transportation has
results across countries. One might, however, get the impression various benefits for its users - such as travel time and cost sav-
that the relative ease of data collection and application of the ings and access to new markets - but also for non-users: Adjacent
approach likewise is one of its weaknesses: It tends to lead to communities might benefit from higher locational attractiveness,
an ubiquitous application of input-output analysis on issues it is giving the region a competitive advantage over other regions,
not suited for. This has lead to a general mistrust in the results of leading to higher economic growth and higher employment.
IOA, which is not justified. It is not the results of the IOA that IOA is able to partially incorporate benefits of air transporta-
gives reason for distrust but the suppression or neglect of the tion. Employment, value added and income at the airport site
model’s limitations.9 (direct effects) are results of users’ demand for products and ser-
vices at the airport. The demand from companies at the airport
Probably the most severe misuse of input-output analysis is its for capital and intermediate goods (generating indirect effects)
application to the evaluation of investment decisions, such as the is likewise attributable to users’ demand and benefit: Without
appraisal of pros and cons of runway enlargements or terminal passengers and freight forwarders benefiting from and therefore
extensions. At one of Europe’s busiest hubs, Frankfurt airport, using the airport, there would be no demand from companies at
for example, the decision to build a new, fourth runway was de- the airport site for intermediate or capital goods as there would
cisively influenced by an input-output analysis that predicted the be no economic activity at all at the airport. However, direct and
creation of 57,000 jobs if the new runway was built.10 indirect effects do not incorporate all benefits: Travel time and

2
cost savings are reflected by passenger or cargo revenues of the Evaluation of the Approach
airlines.13 IOA does not fully cater for these benefits, as it only Econometric macrostudies offer interesting insights into general
accounts for expenditures of the airlines at the airport (e.g. for relationships which are universally valid for the entire airport
ground-handling staff, fuel, office space) and not for revenues. infrastructure of particular countries. The results of such studies
Besides, effects on the regional economy are measured only as indicate elasticities, which show the variation of employment,
buyer-supplier relationships, in which the companies at the air- population growth or regional GDP against an increase in re-
port order goods and services from the supplier. Potential higher gional air traffic. Since the necessary data is easy to collect via
locational attractiveness or economic growth cannot be integrat- the respective statistical offices, the costs for such econometric
ed into the analysis. estimations are very low. Furthermore, econometric estimations
enable researchers to carry out a multitude of various different
Econometric Analysis analyses for a wide range of research questions.
In principle, econometric estimations are suitable for a broad
range of various research questions. Some studies employ Treatment of private and external benefits: Applied on the re-
econometrics in order to test negative impact of airports on the search question as to whether airports and air traffic produce
surrounding region.14 There are a number of econometric stud- benefits for regions, regression models provide useful informa-
ies on the positive impact of (transport) infrastructure in general tion. However, this instrument is of lesser use for the application
starting with the seminal papers of Mera (1973) and Aschauer on individual airports. Politicians, bureaucrats or airport man-
(1989).15 However, there are still only a few examples of the agers who commission airport studies usually require specific
use of regression analysis techniques for measuring the posi- estimations for the economic impact of their particular airports
tive influence of airports on the regional economy. Generally, or planned expansion projects. Some econometric studies try to
regression analyses observe the relationship between one depen- apply the estimated elasticities on individual airport projects as
dent and one (simple regression) or several (multiple regression) well.16 However, one should bear in mind that econometric esti-
independent variables. When examining the economic impact mations have a rather global character. With applying only uni-
of airports for regional economies, the dependent variable is versally valid coefficients for updating or predicting economic
supposed to represent a good indicator for economic prosperity. impacts of particular airports, one does not consider regional
Prosperity can be reflected by employment, population growth characteristics. Differences in productivity and wages between
or regional GDP. Most studies test several of these dependent different regions of one country are neglected. For instance Pur-
variables in consecutive analyses. Independent variables are cell (2007) estimates for St. Thomas Municipal Airport (located
chosen according to their influence on economic prosperity. in the Canadian Province of Ontario, close to Lake Erie) for the
Table 1 gives an overview on studies employing econometric year 2005 a total of 65.8 person years of direct, indirect and in-
approaches in order to quantify the economic impact of airports. duced employment and gross revenues of CAD 12 million.17 This
Beside Brueckner (1982), all studies have found highly signifi- estimate is carried out by means of an econometric model which
cant relationships between airport activity and economic perfor- is based on Benell / Prentice (1993). However, such an estimate
mance. cannot reach the accuracy of an IOA.18

Table 1: Overview of Econometric Airport Impact Studies


Author (-s) / Field of Research and Number Dependent Variable Significant Independent Variables
year of Observations (-s)
Brueckner Sample includes 75 small and me- Employment growth Unknown
(1982) dium sized US metropolitan areas
Benell / Pren- Sample includes 44 Canadian air- Employment, airport Passenger traffic, wealth, number of large aircraft, maintenance
tice (1992) port regions, for which input-output revenue base
analysis had been carried out
Button / Lall / Sample includes all 321 US met- High technology employ- Hub airport, Fortune 500 companies, highway density, defense
Stough / Trice ropolitan statistical areas and 56 ment expenditure
(1999) airports which are defined as hubs
by the FAA
Cohen / Paul Sample includes all 48 continental Total Manufacturing Airport infrastructure stock, highway stock, private capital, prices for
(2002) US-states and data from 1982- Costs production and non-production labor, prices for materials
1996. Investigates the influence of
airports on manufacturing costs
Brueckner 2SLS and OLS estimation of 91 Passenger traffic, em- Population, passenger traffic, share of people under the age of 14 or
(2003) US metropolitan areas to examine ployment, goods related over 65, influence of unions, location in the rust belt, percentage of
the link between airline traffic and employment and service- population with a college degree, taxes
employment related employment
Green (2006) OLS and 2SLS regressions of 83 US Population growth, em- Boardings per capita, workforce in manufacturing and FIRE jobs,
metropolitan areas ployment growth state capital, population with high school and college degree, cooling
and heating degree days, various tax rates, influence of unions, aver-
age commute time
Wollersheim / OLS Panel analysis of 61 German Unemployment rate, WLU, population density, employees in the tertiary sector, university
von Blancken- airport regions over 4 years GDP/capita students, access time to high level centers, tax rates, location in the
burg (2009) former socialistic part of Germany, earnings in the secondary sector,
share of people of the age of over 65 and under 18 years
Allroggen / Sample of 11 German airports and Regional GDP Labour, capital, performance of surface transportation infrastruc-
Malina (2009) airport clusters and their corre- ture, scheduled aircraft movements, airport capital provision,
sponding catchment areas from interaction between airport capital and aircraft movements, period
1997-2006, 2SLS analysis in first fixed growth effects
differences

3
Another shortcoming of regression analy- Figure 2: Use of CBA in Europe by Transport Mode in 2004
ses is that the direction of causality is often
not quite clear. Green (2006) states: “While
good airport service could lead to econom-
ic success, economic success could lead to
good airport service”.19 Some of the above-
mentioned studies try to solve this prob-
lem by employing the Granger causality
test20 or the 2SLS method which includes
the use of exogenous instruments in the
analysis. Since the correlation between re-
gional wealth and air traffic is based on in-
terdependency, the accuracy of elasticities
estimated with simple regression analysis
(OLS methods) instead of 2SLS methods
are arguable, since an upward bias of those
elasticities is possible.

Treatment of private and external costs:


The degree, to which costs are considered,
depends on the research question of the
particular study. With regard to the sum-
marized papers in table 1, Cohen and Paul Source: Odgaard et al. (2005), p. 14.
(1998) are the only ones who focus on pri- Notes: *Mode only relevant for 20 countries.
vate costs. By means of adequate research existing airport for the regional economy. For this purpose, the
questions, external costs can be measured by means of economet- implementation of an input-output-study or even the use of gen-
ric estimations as well.21 Their results would again be universally eral results from macrostudies is sufficient. However, this does
valid and can be used in cost-benefit analyses. However, decisions not hold true for the evaluation of new investments in airports,
on particular airport projects should not be based exclusively on regardless if it is about securing the status quo or about enlarge-
these figures, since external costs, such as noise or engine emis- ments. CBA is the only approach that enables policymakers to
sions depend on local conditions. Nevertheless, the results from weigh up the full social benefits and costs of a proposed project,
regression models can provide useful information on parameter and therefore it is the only approach that is able to give sound
values for cost-benefit analyses such as average noise costs per information whether public money should be spent or not.
decibel or average water pollution costs per passenger. The vector
of quantities, however, has to be determined case-by-case. Due to the inclusion of all benefits and costs, CBA is superior
to other methodologies such as input-output analysis in the con-
Cost-Benefit Analysis text of project appraisal. So why can one identify such a large
Cost-benefit analysis is a method which aims at quantifying the discrepancy between the theoretical supremacy of CBA and its
net economic surplus of a publicly funded project, which is the practical implementation for airport projects? A possible expla-
difference between benefits and costs. Whereas project evalua- nation might be found in the complexity of the approach and
tion in the private sector is only concerned with private benefits the costs associated with it. Critical issues for conducting CBA
(in the form of revenues) and costs, CBA comprises all effects, involve the identification of the relevant effects, their measure-
private and external. CBA is used worldwide for the assessment ment, forecasting and monetization, the prevention of double or
of publicly funded transport infrastructure projects. However, triple counting or the determination of the discount rate.28 Com-
at least in Europe, there is a striking difference in application pared with other approaches, CBA needs much more specific
between the individual transport modes. Whereas 25 European information, more time and more resources. Especially smaller
countries22 apply CBA for road projects and 21 for rail projects, countries or regional entities might try to avoid the high imple-
only 9 use CBA for airport infrastructure investments.23 Con- mentation costs of CBA and rather rely on input-output analy-
trary to the US, where cost-benefit analysis is mandatory for the sis, even if the results are only pseudo-accurate. However, the
evaluation of airport expansion projects, authorities in many Eu- argument of prohibitive high implementation costs is a weak
ropean countries do not require the implementation of CBA.24 In one: First of all, CBA has been used successfully for many years
Germany, for example, all major road, rail and inland waterway for other transport modes. Quantifying the costs and benefits of
investments must be assessed using CBA, but for airport proj- a major road or rail infrastructure investment is by no means
ects CBA is optional and is, probably because of the high costs easier and therefore cheaper than quantifying the effects for an
involved, not employed at all.25 In the UK, however, airport ex- airport. Secondly, the welfare loss that arises when an inferior
pansion projects are assessed by means of CBA. The decision project is chosen based on a study that relies on an unsuitable
whether to build a new runway at Heathrow airport, for example, methodology will in most cases be higher than the cost savings
will be based on the results of a cost benefit study.26 The Eu- due to the relatively ease of study execution given the fact that
ropean Commission explicitly stipulates that all projects partly overall planning costs are only a fraction of the total invest-
financed by European funds should be evaluated by CBA.27 ment costs. Thirdly, there are a number of guidelines, both on
the national and the supranational level, offering standardized
Evaluation of the Approach appraisal techniques or even parameter values for benefits and
Cost-benefit analyses are not needed, when policymakers are costs so that only the vector of quantities has to be determined
just trying to get an impression of the overall importance of an on a case-by-case basis.29

4
Courtesy of Du Saar Photography © 2009 (www.dusaar.nl)

IV. Conclusion References


Decision-makers often have only a vague idea as to which ap-  Adler, H.A. (1987), “Economic Appraisal of Transport Projects”,
proach should be used for analyzing the role of an airport for Baltimore.
promoting regional wealth and development. Input-output stud-  Allroggen, F., Malina, R. (2009), “Estimating Effects of Airport
ies are comparatively cheap to conduct and give a good over- Capital on Economic Growth in Germany”, proceedings of the 13th
Annual World Conference of the Air Transport Research Society,
view of employment, income and value added that is created
June 27–30, 2008, Abu Dhabi.
due to the economic activity of the companies at the airport site.  Aschauer, D. (1989), “Is public expenditure productive?”, Journal
However, they are not suited for investment decisions. of Monetary Economics, vol. 23, no 2, pp. 177-200.
 Batey, P.W.J, Madden, M. and Scholefield, G. (1993), “Socio-eco-
Regression models provide interesting and universally valid in- nomic impact assessment of large-scale projects using input-output
formation about the relationship between regional air traffic and analysis: A case study of an airport”, Regional Studies, vol. 27, pp.
economic performance as well as between regional air traffic 179-191.
and external costs. However, one should be careful in estimating  Benell, D.W. and Prentice, B.E. (1993), “A regression model for
the effects of particular airport expansion projects exclusively predicting the economic impacts of Canadian airports”, Logistics
with the results of econometric estimations as they can only give and Transportation Review, vol. 29, no. 2, pp. 139-158.
rough ideas about the actual regional effects. Cost-benefit analy-  Bhatta, S. D. and M. Drennan (2003), “The Economic Benefits of
Public investment in Transportation: A Review of Recent Litera-
ses are essential for airport project evaluation, as it is the only
ture”, Journal of Planning Education and Research 22 (3): 288-296.
methodology that is capable of measuring the full social effects  Bickel, P. et al. (2006), HEATCO Deliverable 3: Proposal for Har-
of a proposed investment, including efficiency aspects. Expe- monised Guidelines.
riences from other transport modes and countries that employ  Brueckner, J.K. (1982), “Metropolitan airline traffic: determinants
CBA for airports show that the instrument can help to improve and effects on local employment growth”, unpublished paper, Uni-
policy decisions. Countries that are not yet using CBA should versity of Illinois at Urbana-Champaign.
thus develop and apply appropriate assessment tools. This could  Brueckner, J.K. (2003), “Airline traffic and urban economic devel-
significantly contribute to the avoidance of misinvestments and opment”, Urban Studies, vol. 40, no. 8, pp. 1455-1469.
the increase of social welfare.  Bulwien, H. et al. (1999), “Einkommens- und Beschäftigungsef-
fekte des Flughafens Frankfurt/Main”, Frankfurt. [“Income and em-
About the Authors: ployment effects of Frankfurt/Main Airport”]
Dr Robert Malina is the Managing Director of the Institute of Transport  Button, K., Lall, S., Stough, R., and Trice, M. (1999), “High-tech-
Economics at the University of Muenster. Beside airports, his current nology employment and hub airports”, Journal of Air Transport
fields of research include the airline market, road infrastructure and Management, vol. 5, pp. 53-59.
inland waterway shipping. Robert holds lectures at Muenster Univer-  Cohen, J.P. and Paul, C.J. (2002), “Airport Infrastructure Spillovers
sity, Bonn University and the Warsaw School of Economics. To contact in a Hub and Spoke System”, Department of Agricultural and Re-
Robert Malina: Robert.malina@wiwi.uni-muenster.de. source Economics, University of California Davis, Working Paper
no. 01-011.
Christoph Wollersheim holds a doctoral degree from the University of  Department for Transport (2009), Adding Capacity at Heathrow
Muenster. He is currently a Postdoctoral Fellow at MIT, where his re- Airport: Impact Assessment, 15 January 2009, London.
search focuses on the mitigation of aviation-related negative externali-  European Commission (2002), “Guide to cost-benefit analysis on
ties. Christoph is also an external lecturer at the International School of investment projects”, prepared for Evaluation unit, DG Regional
Management in Dortmund. Policy, Brussels.

5
 Federal Aviation Administration (1999), “Airport Benefit-Cost  Robertson, J. A. W. (1995), “Airports and economic regeneration”,
Analysis Guidance”. Journal of Air Transport Management, vol. 2, no. 2, pp. 81-88.
 Forsyth, P. (2006), “Estimating the Costs and Benefits of Regional  Tomkins, J, Topham, N., Twomey, J. and Ward, R. (1998), “Noise
Airport Subsidies: A Computable General Equilibrium Approach”, versus Access: The Impact of an Airport in an Urban Property Mar-
paper presented at German Aviation Research Society workshop, ket”, Urban Studies, vol. 35, no. 2, pp. 243-258.
June 29 – July 1 2006, Amsterdam.  Wollersheim, C. and von Blanckenburg, K. (2009), “External Ben-
 Graham, A. (2001), “Managing Airports”, Oxford, 2001. efits of Airports”, forthcoming.
 Granger, C. (1969), “Investigating causal relations by econometric
models and cross-spectral methods”, Econometrica, vol. 37, no. 2, Endnotes
pp. 424-438. 1. Less used approaches such as Computable General Equilibrium
 Green, R. K. (2006), “Airports and Economic Development”, De- Models (see for instance Forsyth (2006)) or the adaption of the Con-
partment of Finance, School of Business, The George Washington tingent Valuation Methodology, which is used for the estimation of
University, Washington, D.C, 2006. catalytic effects (see Malina, Schwab, Wollersheim (2008)), will not
 Heuer, K., Klophaus, R. and Schaper, T. (2005), “Regionalöko- be discussed.
nomische Auswirkungen des Flughafens Frankfurt-Hahn für den 2. See Graham (2001), p. 200 ff.
Betrachtungszeitraum 2003 – 2015”, Wissenschaftliche Forschun- 3. We will not focus on the distinction between technological and pe-
gsstudie im Auftrag der Flughafen Frankfurt-Hahn GmbH, Birken- cuniary externalities within the scope of this paper. Consequently,
feld. [“The regional impact of Frankfurt-Hahn airport in the years not all of the effects mentioned subsequently induce market failure.
2003 to 2015”] See Wollersheim / von Blanckenburg (2009) for details.
 Jorge, J.-D. and de Rus, G. (2004), “Cost-benefit analysis of invest- 4. See Robertson (1995), p. 84.
ments in airport infrastructure: a practical approach”, Journal of Air 5. See e.g. Batey / Madden / Scholefield (1993) and Malina / Peltzer /
Transport Management, vol. 10, pp. 311-326. Wollersheim (2006) for details.
 Klophaus, J. (2008), “The Impact of Additional Passengers on Air- 6. Some studies also take into account fiscal effects from tax payments
port Employment - The Case of German Airports“, Journal of Air- that are affected by the project. See e.g. Heuer / Klophaus / Schaper
port Management, vol. 2, pp. 265-274. (2005).
 Lu, C. and Morrell, P. (2006), “Determination and applications of 7. See Pfähler (2001), who has developed guidelines for conducting
environmental costs at different sized airports – aircraft noise and valid input-output studies.
engine emissions”, Transportation, vol. 33, no. 1, pp. 45-61. 8. See Pfähler (2001), p. 11, Münzenmaier (2001), S. 95.
 Macki, P. and Preston, J. (1998), “Twenty-one sources of error and 9. See Pfähler (2001), p. 13.
bias in transport infrastructure appraisal”, Transport Policy, vol. 5, 10. See Bulwien et al. (1999).
pp. 1-7. 11. See Niemeier (2001), p. 206.
 Malina, R., Peltzer, S. and Wollersheim, C. (2006), “Die regional- 12. Local and regional external effects of air transportation would not
wirtschaftlichen Effekte des Dortmund Airport, Motor für Industrie, accrue, if there was no airport in the region. This does, however,
Handel, Dienstleistung und Beschäftigung“, hrsg. von der Industrie not apply for greenhouse gas emissions as a global phenomenon.
und Handelskammer zu Dortmund, Dortmund, [“The regional eco- Greenhouse gas emission will only be avoided, if the overall level of
nomic impact of Dortmund Airport”] air traffic decreases, that is, if the closure of an airport does not lead
 Malina, R., Schwab, M. and Wollersheim, C. (2008), Using a con- to a 100 % substitution of traffic to another airport.
tingent-valuation approach for evaluating the benefits of airports for 13. See Jorge / de Rus (2004), p. 312.
regional economies, proceedings of the 12th Annual World Confer- 14. See e.g. Lu / Morrell (2006) or Tomkins et al. (1998).
ence of the Air Transport Research Society, July 6-10, 2008, Athens. 15. See Pfähler / Hofmann / Bönte (1996) and Bhatta / Drennan (2003)
 Mera, K. (1973), “Regional production functions and Social Over- for a detailed review of the empirical literature.
head Capital: An analysis of the Japanese case”, Regional and Ur- 16. See Benell / Prentice (1993) or Brueckner (2003).
ban Economics, vol. 3, pp. 157-185. 17. See Purcell (2007).
 Mishan, E.J. (1988), “Cost benefit analysis”, Boston, Sydney, Wel- 18. The author states that, compared to a survey-based IOA, the mod-
lington. el’s accuracy lies within a 5-10% range. However, another factor
 Münzenmaier, W. (2001), “Political consultation with the help of that contributes to the inaccuracy of the estimation might be due
Input-Output Analysis - the example of Baden-Württemberg”, W. to the fact that the model is applied 14 years after its publication in
Pfähler (ed.), “Regional Input-Output Analysis”, Baden-Baden, pp. 1993. The fact that employment per enplaned passenger can change
89-107. over the time does not seem to be considered in this context. See
 Nash. C. (1993), “Cost-benefit analysis of transport projects”, A. Klophaus (2008) for the change of direct employment per enplaned
Williams, F. Giardina (ed.), “Efficiency in the public sector, The passenger.
Theory and Practice of Cost-benefit analysis”, Cheltenham, pp. 83- 19. See Green (2006), p. 9.
105. 20. See Granger (1969).
 Niemeier, H.-M. (2001), “On the use and abuse of Impact Analysis 21. See e.g. Lu / Morrell (2006) or Tomkins et al. (1998).
for airports: a critical view from the perspective of regional policy”, 22. The sample includes 24 member states of the European Union plus
W. Pfähler (ed.), “Regional Input-Output Analysis”, Baden-Baden, Switzerland.
pp. 201-220. 23. See figure 2.
 Odgaard, T., Kelly, C. and Laird, J. (2005), “HEATCO Work Pack- 24. See Odgaard et al. (2005).
age 3: current practice in project appraisal in Europe,” Deliverable 25. The remarkably different treatment of airports in Germany is a result
1 / Volume 1 (main text). of a different allocation of compe-tences for federal and state author-
 Pfähler, W., U. Hofmann and Bönte, W. (1996), “Does Extra Public ities. Whereas the federal government is responsible for major road,
Infrastructure Matter? An Appraisal of the Empirical Literature”, rail and inland waterway projects, the federal states are in charge
Finanzarchiv, vol. 53 pp. 68-112. over the airports. CBA is only compulsory on the federal level.
 Pfähler, W. (2001), “Input-output analysis: A user’s guide and call 26. See Department for Transport (2009).
for standardization”, W. Pfähler (ed.), “Regional Input-Output 27. See European Commission (2002).
Analysis”, Baden-Baden, pp. 11-45. 28. See e.g. Adler (1987), Mishan (1988), Nash (1993), Mackie / Pres-
 Purcel, J. (2007), St Thomas Municipal Airport – Economic Impact ton (1998).
Study, West Vancouver. 29. See e.g. European Commission (2002), Federal Aviation Adminis-
tration (1999), Bickel et al. (2006).

e-zine edition 44 6