2013 Economic Impact Study of San Francisco International Airport

Transcription

1 2013 Economic Impact Study of San Francisco International Airport Prepared for: City and County of San Francisco San Francisco Airport Commission Prepared by: Economic Development Research Group, Inc. 155 Federal Street, Suite 600, Boston, MA In Association with: ICF SH&E, Inc. and Polaris Research and Development, Inc. May, 2013

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3 TABLE OF CONTENTS Executive Summary... 1 Total Economic Contribution... 1 Classification of Impacts... 2 Approach Introduction and Overview Airside and Groundside Airport Jobs Off-Airport Jobs Serving Airport Travelers Related Industries: Jobs that Rely on Air Cargo Methodology for the Analysis of Overall Economic Impacts Suppliers of Goods and Services (Indirect Multiplier Effects) Re-Spending of Worker Income (induced multiplier effects) Major Sources National Context Context: The Vibrant Bay Area Economy SFO s Role in International Trade Trade with Asia Export Commodities Import Commodities Trade Balance On-Airport Impacts Direct Employment Business Sales and Payroll Indirect and Induced Impacts On-airport Construction Visitor Spending Visitor Spending Jobs and Income Generated by Off-Airport Visitor Spending Indirect and Induced Impacts Impacts of Air Reliant Users (Freight Shippers) The Role of SFO in Air Exports International Exports Domestic Exports Economic Contribution of SFO to the Bay Area Effects on Suppliers of Goods and Services May, 2013 i

4 6 Tax Impacts Generated by Activities at SFO State and Local Tax Impacts Federal Aviation Taxes Appendix I: Study Methodology... A-1 IMPLAN... A-1 Appendix II: Distribution of Impacts by Bay Area Counties... A-5 On-Airport Effect among Bay Area Counties... A-5 Visitor Spending... A-8 Tax Impacts by Bay Area County... A-9 Appendix III: SFO Tenant and Visitor Surveys... A-11 May, 2013 ii

5 LIST OF TABLES Table ES-1. Summary of Economic Impacts of SFO in the Bay Area... 2 Table 1. Economic Contribution of SFO to the Bay Area... 6 Table 2. Visitors to the San Francisco Region arriving through SFO (year ending June 2012)... 8 Table 3. Top Ten SFO Export Commodities by Air Value and Weight, Table 4. Top Ten SFO Import Commodities by Air Value and Weight, Table 5. Direct Impacts of On-Airport Employees Table 6. Direct Employment, Personal Income, and Business Revenues at SFO Table 7. Summary of Direct, Indirect, and Induced Economic Impacts of SFO in Bay Area Table 8. Supplier of Goods/Services Industries (Indirect) Table 9. Re-Spending of Worker Income Industries (Induced) Table 10. Sector Mapping Table 11. Annual Average Impacts from SFO Construction on the Bay Area Economy Table 12. Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area Table 13. Breakdown of Total Visitor Spending Impacts Table 14. Earnings and Sales per Worker Table 15. Summary of Direct, Indirect, and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area Table 16. Top International Exported Industries Table 17. Top Domestic Exported Industries Table 18. Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Table 19. Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry Table 20. Estimated 2012 State and Local Tax Impacts (in $Million) Table 21. Estimated 2012 Federal Aviation Tax Revenues Table A1. Industry Classification of On-Airport and Visitor-Serving Industries... A-2 Table A1. Industry Classification of On-Airport and Visitor-Serving Industries, cont d... A-4 Table A2. Employment & Labor Income Impacts of On-airport Tenants by County... A-6 Table A3. Business Revenues Impacts of On-airport Tenants by Bay Area County... A-7 Table A4. Economic Impacts of Visitor Spending by Bay Area County... A-8 Table A5. Tax Revenues by County for On-airport Tenants... A-9 Table A6. Tax Revenues by County for Visitor Spending... A-10 May, 2013 iii

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7 LIST OF FIGURES Figure 1. Percentage of Bay Area International & Domestic Exports shipped from SFO by Industry Sector... 9 Figure 2. Elements of Economic Impacts and Interrelationships Figure 3. Illustration of the Bay Area by County Figure 4. Air Value of U.S. and Bay Area Exports, Figure 5. Top Five Airports by Air Value of Exports to Asia, Figure 6. U.S. and SFO Net Exports by Air Value, Figure 7. Distribution of On-Airport Jobs Figure 8. Percent of Relative Employment, Personal Income & Revenues by Aggregated Sector on SFO Figure 9. Profile of Air Visitors Arriving Via SFO by Place of Origin Figure 10. Relative Spending of Visitors per Trip by Origin and Purpose Figure 11. Visitor Destinations Outside of the Bay Area Figure 12. Percentage of the Bay Area s combined Domestic and International Exports shipped via SFO Figure 13. Methodology to Estimate Air Dependent Contribution to Bay Area Economy Figure 14. Employment Impacts on Suppliers of Goods and Services (Indirect) May, 2013 v

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9 EXECUTIVE SUMMARY This study examines the 2012 economic impact of the San Francisco International Airport (SFO) in the nine-county Bay Area Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, San Francisco, Santa Clara, Solano and Sonoma. SFO is the seventh leading passenger airport in the United States and the 19th largest air cargo airport. 1 In the 2012 calendar year more than 425,000 aircraft operations were conducted at the airport, serving almost 44.5 million incoming and outgoing passengers, and moving 385,000 metric tons of cargo. 2 Total Economic Contribution The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users, as well as the additional business activity associated with orders to suppliers and respending of worker income. These various elements of economic impact are each defined and shown in Table ES-1. In 2012, SFO directly accounted for $5.4 billion in business activity supporting the 33,580 jobs at the airport 3. Off-site business activities that depend directly on local air service for staff movements, cargo deliveries, or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $31.2 billion in business sales with 153,000 jobs. There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses, and the re-spending of additional worker income on consumer goods and services. Adding in these effects raises the total economic footprint of SFO in the Bay Area to almost $55.8 billion in business sales, including $19.6 billion in total payroll, and more than 288,000 jobs in the region. 1 Based on FAA data for 2011 and SFO Annual Report, Preliminary 2012 data issued by Airports Council International North America lists SFO as the 17 th largest cargo airport in North America. 2 Source: 3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO. May,

10 Table ES-1. Summary of Economic Impacts of SFO in the Bay Area Impact Type Employment Labor Income Output On-airport 33,580 $2,091,790,000 $5,461,671,000 Aviation dependent exports 36,430 $4,785,814,000 $16,635,714,000 Visitor Spending 82,790 $3,035,462,000 $9,125,587,000 Direct Total 152,800 $9,913,066,000 $31,222,972,000 Suppliers of goods and services 56,545 $4,866,751,000 $11,904,780,000 Re-spending of income 78,990 $4,855,162,000 $12,655,593,000 Total Impact 288,334 $19,634,979,000 $55,783,345,000 The economic activities generated by SFO also return significant tax revenues to the State of California, the nine Bay Area counties, and to the nation in terms of federal aviation taxes. The state and local tax revenues linked to operations at SFO totaled $2.5 billion in 2012, including $1.3 billion from direct activities and $1.1 billion from purchases of supplier goods and services (tax impacts from indirect effects) and subsequent spending of worker income in the Bay Area (tax impacts from induced effects). Approximately $1.6 billion ($1.1 billion from direct activities) stem from on-airport commerce and visitor spending, while more than $900 million are attributable to air-reliant shippers that use SFO for air freight ($300 million from direct economic activity). In addition, aviation operations at SFO generated $604 million dollars in federal taxes including $104 million from taxes on international and domestic passengers and $499 million in U.S. Customs revenue from domestic air freight shipments. These tax revenues are remitted to the U.S. Department of the Treasury and do not directly benefit the Bay Area or the State of California. Classification of Impacts The operation of SFO, providing terminal and related services for air travelers and cargo movement, is only a portion of the airport s contribution to the Bay Area economy. Visitors from international and domestic locations use SFO to visit the Bay Area for leisure or business, and their spending supports additional business activity within the region. In addition, companies in the region that produce manufactured and agricultural goods that are exported by air from SFO would be at a disadvantage without proximity to a major international airport. Altogether, these on- and off-site business activities fall into five categories: Airport-based economic activities (airport terminal-related and tenants) Off-airport businesses serving airport travelers May,

11 Off-airport businesses dependent on the airport for cargo movement Suppliers of goods and services to the airport and air-dependent business Re-spending of worker income (supported by airport-based activities, visitor spending, air-dependent businesses, and suppliers of goods and services). Approach Findings in this study were developed by: 1. Undertaking a rigorous survey involving airport administration and tenants to quantify on-airport direct employment. 2. Conducting a visitor intercept survey of 1,500 passengers. At this scale, the survey meets a confidence level of 99 percent with a five percent margin of error. The survey is used to establish trip purpose, levels of spending, and patterns of spending of visitors. The annual number of visitors and the proportion of international and domestic visitors are based on a combination of annual data from SFO, and the U.S. Departments of Transportation and Commerce. 3. Adapting the Impact Analysis for Planning (IMPLAN) Modeling Package to the ninecounty Bay Area region to (a) develop a county-specific economic profile of the Bay Area using data primarily from the U.S. Department of Commerce (Bureau of Economic Analysis) and U.S. Department of Labor to estimate jobs, wages, and personal income (direct effect), and (b) develop a model of the Bay Area to represent inter-metropolitan flows of business sales. This includes business orders to suppliers generated by on-airport businesses, off-airport businesses serving airport visitors, and airport-reliant businesses (indirect effects). It also includes business sales generated by the spending of additional workers income on consumer purchases (induced effects). 4. Utilizing data from SFO, in conjunction with data from the Foreign Trade Division of the U.S. Census Bureau (packaged by WISERTrade), to develop an analysis of the role of air cargo shipments in the economies of the Bay Area. 5. National and California state sources are used to identify aviation specific tax impacts and major state and local tax impacts. State sources include the Governor s Office, the California State Controller s Office, and the County of San Mateo. Federal sources include the Federal Aviation Administration, Bureau of Economic Analysis (BEA) and the U.S. Census Bureau. These sources are used independently and in conjunction with the IMPLAN Tax module to estimate tax impacts generated by SFO aviation activity for federal revenues, and state and local taxes by where the taxes are generated. May,

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13 1 INTRODUCTION AND OVERVIEW This report provides study findings of the economic impacts of San Francisco International Airport (SFO). This chapter introduces the study, provides an overview of the methodology used, and summarizes the airport s overall economic contribution to the nine-county Bay Area. The Bay Area encompasses more than 6,900 square miles of land, with a population of approximately 7.2 million people and an economy that supports about 4 million jobs. 4 Chapter Two reviews the economic context of SFO and the Bay Area. Chapters Three through Six describe the findings of the economic impacts generated by SFO. Chapter Three reports in detail the impacts derived from airport-based activities. Chapter Four describes the impacts of Bay Area visitors who arrive through SFO and spend money in the region. The impacts of the airport s construction program are part of on-airport activities reviewed in Chapter Three and are broken out and discussed separately in this chapter. Chapter Five reviews the economic contribution of shippers who transport their goods to international and domestic markets via SFO. These shippers are air-reliant, meaning that their businesses rely on air-freight. Chapter Six presents tax impacts of on-airport activities and visitor spending, including key federal aviation taxes and municipal, county, and state revenues. The operation of SFO, providing terminal and related services for air travelers and cargo movement, is only one part of the airport s total regional economic impact. Airportdependent businesses and airline travelers visiting the area for business or leisure support additional business activity within the Bay Area. Together, these on- and off-site business activities fall into five categories: Airport-based economic activities (airport terminal-related and tenants) Off-airport businesses serving airport travelers Off-airport businesses dependent on SFO for cargo movement Suppliers of goods and services to SFO and air-dependent business and to offairport businesses that serve visitors Re-spending of worker income (supported by airport-based activities, visitor spending, air-dependent businesses, and suppliers of goods and services). 4 Sources California Statistical Abstract, 2009 and BEA.gov. May,

14 The total economic contribution of SFO is the sum of the business activity directly associated with operation of the airport and the spending of its users, as well as the additional business activity associated with orders to suppliers and re-spending of worker income. The sum of on-airport activities at SFO, visitor spending by air visitors to the Bay Area, and regional exports supported by air cargo exceeds $31.2 billion in direct business sales, which in turn support nearly 153,000 direct jobs that generates a $9.9 billion payroll (see Table 1). Table 1. Economic Contribution of SFO to the Bay Area Airport Visitor Impacts Generated Spending Air -Related Total Impact Jobs Direct 33,580 82,790 36, ,800 Indirect 10,831 18,288 27,426 56,545 Induced 15,586 24,116 39,288 78,990 Total Jobs 59, , , ,334 Business Revenue ($m) Direct $5,462 $9,126 $16,636 $31,223 Indirect $1,845 $3,206 $6,853 $11,905 Induced $2,552 $3,949 $6,155 $12,656 Total Business Revenue $9,859 $16,280 $29,644 $55,783 Personal Income ($m) Direct $2,092 $3,035 $4,786 $9,913 Indirect $728 $1,346 $2,793 $4,867 Induced $1,027 $1,588 $2,240 $4,855 Total Personal Income $3,847 $5,970 $9,819 $19,635 Avg. Income/Employee ($/yr.) Direct $62,292 $36,665 $131,369 $64,876 Indirect $67,223 $73,602 $101,825 $86,069 Induced $65,869 $65,859 $57,023 $61,466 Weighted Avg. Income/Employee $64,111 $47,684 $95,194 $68,098 Sources: SFO, Survey of SFO Tenants, Survey of SFO Passengers, U.S. Department of Commerce data provided by MIG, Inc. (IMPLAN) and WISERTrade using data from the U.S. Census Bureau, Foreign Trade Division. Totals may not add due to rounding. Calculations by EDR Group. In addition to direct impacts on the economy, indirect multiplier effects are associated with suppliers of goods and services to directly-affected businesses, and induced multiplier impacts are generated by re-spending of additional worker income on consumer goods and services. May,

15 Counting direct, indirect, and induced impacts, SFO s contribution to the Bay Area economy is 288,000 jobs and $55.7 billion in business revenues, of which $19.6 billion is personal income (payroll). Table 1 summarizes the economic contribution of SFO to the Bay Area economy by impact category. Sections 1.1 through 1.3 provide a review of the different types of economic impacts generated by the airport, while Section 1.4 summarizes the economic impact methodology. 1.1 Airside and Groundside Airport Jobs Based on an airport-wide survey, 33,580 people work at SFO. This total includes 14,520 employees of passenger airlines that serve the airport. 5 The breadth of jobs at SFO involves: Airlines, both passenger and cargo activities Air terminal operation, including security, building maintenance, and facility management Public agencies such as the FAA, U.S. Departments of Immigration and Naturalization, Customs, Agriculture, Fish and Wildlife, and Drug Enforcement Agency, as well as Airport Administration (including police and fire departments) Airline support services, including catering, in-flight entertainment, aircraft handling, fueling and maintenance Freight services, including courier, delivery, customs broker, and trucking Concessions, including restaurants, retail stores, and passenger services Ground transportation services, including rental car, taxi and limousine service, and bus companies. 1.2 Off-Airport Jobs Serving Airport Travelers For the year ending in June 30, 2012, SFO processed nearly 42 million passengers, which included 21.4 million enplanements. Enplanements include persons transferring from one flight to another en route to their final destinations, residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region. From the perspective of regional economic impact, transferring passengers spend relatively little money during their short stays at the airport, and are counted in the analysis of terminal tenants. Off-airport spending by residents traveling through SFO also 5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO. May,

16 does not count as a regional economic impact, since residents spend most of their money in the Bay Area anyway. Therefore, only the visitors bring new money into the Bay Area outside of the airport. Overall, approximately 2 million international passengers plus 5.6 million from other states and 1.2 million Southern California visitors came to the Bay Area via SFO (see Table 2). These visitors spent more than $8 billion in the region on hotels, restaurants, retail purchases, recreation, and local travel (taxis, car rental, and public transportation). Table 2. Visitors to the San Francisco Region arriving through SFO (year ending June 2012) Market Passengers Domestic Origin & Destination at SFO 26,287,961 Enplaned Passenger at SFO 13,143,980 Percent of Enplaned Passengers who are Visitors 51.6% Number of Visitors 6,781,600 Domestic Visitors by Origin Percent Originating in California 17.7% Domestic Visitors Originating in California 1,197,804 Domestic Visitors Originating in Rest of US 5,583,796 International Visitors Arriving via U.S. Flag Airlines Origin & Destination at SFO 2,032,124 Enplaned Passenger at SFO 1,016,062 Percent of Enplaned Passengers who are Visitors 42.4% Number of Visitors 431,207 International Visitors Arriving via Non-U.S. Flag Airlines Origin & Destination at SFO 5,103,746 Enplaned Passenger at SFO 2,551,873 Percent of Enplaned Passengers who are Visitors 60.5% Number of Visitors 1,544,538 Total International Visitors (U.S. Flag and Non-U.S. Flag) 1,975,745 Total Visitors 8,757,345 Note: This table does not include travelers using SFO to connect from one flight to another. Sources: SFO Traffic Statistics; U.S. DOT O&D Survey, YE 2Q 2012; U.S. DOT, T-100 Database; IATA, PaxIS Database; U.S. DOC, International Air Travel Statistics, May,

17 1.3 Related Industries: Jobs that Rely on Air Cargo In the year ending June, 2012, commodities valued at roughly $30 billion were exported to international and domestic destinations from SFO. Of this total value, about $14 billion originated in the Bay Area. Air freight of products that originate in the Bay Area and are shipped from SFO overwhelmingly consists of technology goods produced in the Bay Area. Three commodity groups account for two-thirds of the total value of Bay Area goods that are internationally exported from SFO electrical machinery, optics and instruments, and industrial machinery. The leading two commodity groups in domestic exports, electronics and precision instruments, account for 92 percent of domestic value. Figure 1. Percentage of Bay Area International & Domestic Exports shipped from SFO by Industry Sector Sources: WISERTrade using data from the U.S. Census Bureau, Foreign Trade Division and the Freight Analysis Framework. Calculations by EDR Group. May,

18 1.4 Methodology for the Analysis of Overall Economic Impacts Airport jobs and commerce on the airport premises create strong economic stimuli for the Bay Area. This airport business activity itself generates an increased demand for other local goods and services. Not only do the businesses based on the airport pay local and state taxes, but the off-airport businesses that depend upon airport-based activity pay taxes as well. As shown in this study, the direct business activity and subsequent multiplier effects have a strong overall impact on the economy. All economic impacts in this report are described using the measures of jobs, payroll and business sales. The study quantifies three distinct categories of economic benefits that result from SFO-related activities: direct, indirect and induced effects, as described below. Direct impacts stem from the activity that is directly related to the provision of aviation services, visitor spending, or the activity of aviation-reliant businesses. For example, the direct impacts of on-airport tenants include the number of persons they employ on the airport, the wages and benefits paid to those workers, and their business sales. Similarly, the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures. Most of the direct impacts measured in this study occur on-airport, but some, such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport. Indirect and induced impacts, which are sometimes called multiplier impacts, result from: (1) a portion of business sales used for business-to-business purchases of goods and services (indirect effects); and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects). For example, an airport restaurant may buy supplies from a Bay Area produce vendor. This purchase represents income (i.e., new business sales) to the produce supplier, which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region. In addition, airport workers spend their wages on other items such as housing, retail purchases, and services. Those expenditures in turn support jobs in those industries, whose workers then spend their salaries in the Bay Area. These successive rounds of spending and job creation represent the indirect impacts (business to business) and induced impacts (spending of wages). This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Are The discussions of total impacts are based on the following analyses, and are illustrated in Figure 2. May,

19 Figure 2. Elements of Economic Impacts and Interrelationships Source: EDR Group. May,

20 1.4.1 Suppliers of Goods and Services (Indirect Multiplier Effects) Orders from Businesses at the Airport Activities occurring at the airport generate additional orders for goods and services from suppliers including orders for: Printing and publishing for the airport operator and the airlines Banking, insurance, legal, accounting, and technical services for airport businesses Off-site bus and parking services for SFO employees Food products for airport restaurants Wholesale merchandise to be sold by airport stores Furniture and equipment for offices, hotels, restaurants, and stores located at the airport. Orders from Off-Airport Businesses Serving Air Travelers Activities serving air travelers outside of the airport also generate additional orders for goods and services from suppliers for: Fueling and maintenance services for use by off-airport taxis, rental cars, tour buses, and public transportation Construction and support operations of convention and hospitality facilities for convention visitors Food products for off-airport restaurants Wholesale merchandise to be sold by off-airport stores Furniture and equipment for off-airport hotels, restaurants, and stores Re-Spending of Worker Income (induced multiplier effects) The workers at SFO, at off-airport businesses serving air visitors, and at supplier businesses earn income, and most of that income is re-spent on consumer purchases, which support additional jobs within the Bay Area. Examples of these purchases include: Retail purchases of food, clothing, home furnishings, cars, electronic devices, computers, and other products Purchases of services spanning haircuts, cleaning, car repair, and insurance. May,

21 1.4.3 Major Sources The discussion of total impacts is based on the following analyses conducted specifically for this study: 1. A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission. These data provide profiles of on-airport jobs by establishment, type of business activity, and place of residence by zip code for airport and tenant employees. 2. Surveys of airport travelers were conducted by Polaris Research. The survey profiles trip purposes, international or domestic origins, segmentation of visitors from local residents and connecting passengers, and the amount of money in the Bay Area spent by visitors using the airport. 3. Air freight analyses are based on data from SFO, WISERTrade using data from U.S. Census Bureau, Foreign Trade Division 6 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement. Detailed data from WISERTrade and FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and an 11 county combined statistical area for FAF). Therefore, the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area. 4. Econometric models for the nine-county Bay Area are based on the IMPLAN Economic Model System. IMPLAN is used to estimate wages and sales (or budget expenditures for public entities) for airport tenants, where only employment totals were available. Personal income and sales and/or expenditures per worker are derived primarily from U.S. Department of Commerce (BEA is a part of the Commerce Department) and Department of Labor data sets and are countyspecific. IMPLAN is also used to derive multiplier effects, including business orders to suppliers generated by on-airport businesses, off-airport businesses serving airport visitors, and airport-reliant businesses, and business sales generated by the spending of the additional workers income on consumer purchases. 6 The World Institute for Strategic Economic Research (WISERTrade), formed July 1, 2004 to continue the international trade data work of its predecessor, MISER, was chosen by the U.S. Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics. See May,

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23 2 NATIONAL CONTEXT The air transportation industry is a significant contributor to the U.S. economy, both in terms of output and employment. In 2010, for instance, the sector generated $148.3 billion in gross domestic product (GDP) and was responsible for employing 425,000 fulltime equivalent (FTE) workers. 7 The role of air transportation extends well beyond industry operations alone; however, air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers. San Francisco International Airport (SFO) is the largest airport in the Bay Area, the seventh largest in North America, and the twenty-first largest in the world in terms of airpassenger traffic. 8 When combined with the Oakland International Airport and Mineta San José International Airport, the three together constitute one of the largest domestic passenger markets in the U.S. 9 In 2012, SFO served 34.9 million total domestic passengers, capturing 66% of domestic Bay Area market share. Meanwhile, SFO had an international Bay Area market share of 97% with over 9.6 million international passengers served Context: The Vibrant Bay Area Economy The 6,900 square mile, nine-county Bay Area (see Figure 3) is home to 7.2 million residents, which accounts for 19 percent of California s population. The Bay Area s population density of over 1,000 people per square mile of land is more than four-times the California average. By itself, the region would be the nation s 13 th most populous state, falling between Virginia at 8.1 million residents and Washington (state) at 6.8 million. Moreover, the per-capita income of Bay Area residents is 35 percent above the California average and 43 percent above the national average. 7 U.S. Department of Commerce, Bureau of Economic Analysis, Industry Economic Accounts, Interactive Tables, available at as of July 26, SFO Annual Report, 2012, San Francisco, CA: San Francisco International Airport, Airports Council International 9 In 2008, the region represented the eighth largest U.S. air travel market when including all passengers for whom a Bay Area airport served as either the origin or final destination of their trip. 10 SFO s total Bay Area market share, including both domestic and international passengers, was 71 percent (or 44.5 million passengers) in May,

24 Figure 3. Illustration of the Bay Area by County Source: Data RITA NTAD (National Transit Atlas Database). Graphic EDR Group This generally high-income level is supported by competitive economic strengths in the national and global economies. The Bay Area is a national center for business innovation and technology while the city of San Francisco is a one of the United States leading domestic and international tourist destinations. Silicon Valley, located in Santa Clara County, is renowned as the country s technology (hardware and software) capital. Other leading industries include financial activities, pharmaceutical and medicine manufacturing, professional, scientific and technical services, information services, and higher education, as well as hospitality related industries. As a region, the Bay Area ranks second, behind New York, in hosting headquarters of major corporations. Moreover, if the region were a nation, the Bay Area would rank 19 th among the worlds national economies in terms of gross domestic product Bay Area Council Economic Institute. Bay Area Fast Facts (2012): cited includes U.S. Fortune 500 (Bay Area is second), Global Fortune 500 (Bay Area is second), Inc. and Fastest Growing 500 (Bay Area is second). All are from May,

25 These core strengths of the Bay Area economy have specialized air service needs that are served by San Francisco International Airport. 12 The high-tech and pharmaceutical manufacturing, knowledge based service sectors, hospitality, and agricultural industries rely on air services much more than other sectors, for both passenger and cargo travel needs, for the following reasons: Products produced that tend to be high-value, delicate and time-sensitive, and need to be shipped by air. Typically, these are technology-related products where value reflects high labor costs and precision manufacturing, but may also be perishable agricultural products (including fish and meat). Products that are heavy to ship, but that carry a large return on transportation costs invested, including just-in-time manufacturing and equipment needed to maintain high yielding production. Business and professional services depend on the sale of professional expertise, which often requires travel to meet with clients and make presentations. Companies have statewide, western, national and even global business networks, requiring frequent and often international travel between various offices. Airports serve resorts and tourist destinations. Producers of high-tech products, business services and computer-oriented firms are among the industries that spend the most money on air services. Most of these industries spend at least 40 percent more on air services than the average industry in the United States, and a few spend 50 percent or more than the average of all industries in the United States. 2.2 SFO s Role in International Trade Given its proximity to Asian markets, SFO has historically played an important role in international trade. Over the past decade, the airport experienced a trend in export activity similar to that of airports across the country (Figure 4). From 2003 to 2011, the total air value of exports 13 passing through SFO grew at an average annual rate of 8.9 percent, from $20.6 billion to $29.7 billion. The value of exports at all U.S. airports (including SFO) rose from $235.5 billion to $366.4 billion, or 11.1 percent annually, during this time. Following the financial crisis in 2008, export values then fell by 21.0 percent 12 The following is based on research conducted for Aviation Cooperative Research Program 03-28: Economic Impacts of U.S. Airports, for the Transportation Research Board of the National Academies, Technical Memorandum #2. 13 These are the value of the goods at the U.S. port of export. The value shall be the selling price (or the cost if the goods are not sold), including inland or domestic freight, insurance, and other charges to the U.S. seaport, airport, or land border port of export. May,

26 and percent at SFO and 14.0 nationally from 2008 to 2009, respectively. Total airport exports have since risen to a value of $26.5 billion at SFO and a decade high of $423.6 billion across the U.S. as of last year. Despite being one of three commercial service airports within the region, SFO now accounts for virtually all export value that flies out of the Bay Area (Figure 4). In 2003 and 2004, the Oakland International Airport exported $3.3 billion and $4.1 billion worth of commodities, respectively, only to see total air value fall to a level below one billion dollars every year since. The San José International Airport, similarly, exported an average annual air value of $303.1 million from Figure 4. Air Value of U.S. and Bay Area Exports, Air value of Bay Area exports (billions) $33 $450 $30 $28 $25 $23 $20 $18 $15 $13 $10 $8 $5 $3 $0 San Francisco Int'l. Airport Oakland Int'l. Airport San José Int'l. Airport U.S. Airports Source: US Census Bureau Foreign Trade Division, provided by WISERTrade Year $400 $350 $300 $250 $200 $150 $100 $50 $0 Air value of U.S. exports (billions) Trade with Asia SFO is a major player in international trade with Asia. 14 In 2011, the airport was the third busiest in the nation in terms of trans-pacific trade, serving as the pass-through port for $20.0 billion in total Asian export value after growing from a decade-low of $15.4 billion in 2009 (Figure 5). SFO accounted for 12.5 percent of the total value of U.S.-Asian exports by air in The airport has held its place among the most active in the country in terms of trade with Asia for at least the past decade. After competing for second place with JFK International Airport during the early 2000s, the New York airport surpassed 14 Defined here as the Asian continent excluding the Middle East and Turkey. May,

27 both SFO and the Los Angeles International Airport (LAX) after 2006 to become first in the nation in terms of total value of exports to Asia. Highlighting a potential vulnerability, however, is SFO s dependence on U.S. trade with Asia. Last year, for instance, Asian export value accounted for 75.5 percent of the airport s total export value. This reliance on Asian exports has been consistent at SFO, waxing and waning only slightly in recent years. While the airport s proximity to the continent is an important strength, volatility in Asian export markets could easily translate to volatility back home. 15 Figure 5. Top Five Airports by Air Value of Exports to Asia, Air value of exports to Asia (billions) $40 $35 $30 $25 $20 $15 $10 $5 $0 JFK LAX SFO ORD/MDW DFW/DAL Source: US Census Bureau Foreign Trade Division, provided by WISERTrade Export Commodities While SFO serves as the gateway for a host of commodities, the airport s top exports reflect the strengths of the Bay Area regional economy (Table 3). In 2011, electric machinery, sound equipment, and TV equipment exports alone were valued at $9.7 billion, or over 36 percent of the total value exported through the airport. In addition to strong trading in computer and technology commodities, California s pharmaceutical, aircraft manufacturing, and agriculture sectors are also well represented in terms of SFO export value and weight. By a measure of air weight, edible fruits and nuts topped the list of export commodities at SFO in 2011 at 33.8 thousand metric tons, or 19.9 percent of the airport s total. Industrial machinery, including computers; electric machinery; and 15 Asia dominates air exports at SFO because of the cargo capacity available. SFO is a top gateway for air services to Asia and airlines will work to fill the cargo holds to boost route profitability. May,

28 optic, photographic, and medical instruments also constituted a significant share of the commodity weight exported on SFO flights in Table 3. Top Ten SFO Export Commodities by Air Value and Weight, 2011 BY AIR VALUE Air Value % Change Rank Commodity (millions) ( ) 1 Electronic/Sound/TV Equip $9, % 2 Machinery & Computers $6, % 3 Optic/Photo/Med Instr. $5, % 4 Pharmaceutical Products $1, % 5 Aircraft, Spacecraft & Parts $ % 6 Misc. Chemical Products $ % 7 Arms, Ammunition & Parts $ % 8 Pearls/Stones/Metals/Coins $ % 9 Edible Fruit & Nuts $ % 10 Plastics $ % All Commodities $26, % BY AIR WEIGHT Air Weight % Change Rank Commodity (1,000s of Metric Tons) ( ) 1 Edible Fruit & Nuts % 2 Machinery & Computers % 3 Electrics, Sound, TV Equip % 4 Optic/Photo/Med Instr % 5 Plastics % 6 Vegetables, Roots & Tubers % 7 Iron and Steel % 8 Organic Chemicals % 9 Articles of Iron or Steel % 10 Misc. Chemical Products % All Commodities % Source: US Census Bureau Foreign Trade Division, provided by WISERTrade Since 2003, SFO has witnessed triple-figure growth in the export of several commodities (Table 3). In terms of air value, exports of pharmaceutical products; aircraft, spacecraft, and parts; arms, ammunition, and parts; and pearls, stones, metals, and coins; and plastics all grew significantly. And while the value of some historically-significant electronic exports grew at only single-digit levels from , it is notable that not one of SFO s top ten export commodities declined in value over this period. May,

29 2.2.3 Import Commodities SFO also serves as the port of unloading 16 or import for many commodity types (Table 4). Valued at $11.3 billion, commodities in the electric machinery, sound equipment, and TV equipment category topped the airport s list of most valuable imports in These commodities, when combined with those in the industrial machinery, including computers; and optic, photographic, and medical instruments; accounted for 80.6 percent of the airport s total import value in Chemical products; pharmaceuticals; pearls, stones, metals, and coins; photo or cinema goods; and apparel also constituted a significant portion of total import value at SFO last year, while plastics; ceramics; apparel; fish; and vehicles composed most of the airport s total import weight beyond typical electric-related commodities. Pharmaceuticals experienced strong growth over the last decade not only as an export commodity but also as an import to SFO (Table 4). From , the value of import commodities in this category grew from $48.8 million to $541.9 billion, an increase of over one thousand percent. Departing from export trends, however, were several top commodity types that declined in value during this period. The import value of electric machinery, sound equipment, and TV equipment; and industrial machinery, including computers; for instance, declined by over 7 percent and 31 percent, respectively. Table 4. Top Ten SFO Import Commodities by Air Value and Weight, 2011 BY AIR VALUE Air Value % Change Rank Commodity (millions) ( ) 1 Electronic/Sound/TV Equip $11, % 2 Machinery & Computers $5, % 3 Optic/Photo/Med Instr. $2, % 4 Special Classification $1, % 5 Misc. Chemical Products $ % 6 Pharmaceutical Products $ ,011.5% 7 Organic Chemicals $ % 8 Pearls/Stones/Metals/Coins $ % 9 Photo or Cinema Goods $ % 10 Apparel (not including knit) $ % All Commodities $23, %% ~ continued ~ 16 U.S. district and port data do not reflect state of origin or destination, but indicate pass-through location only. There are no data available on state imports because it is impossible to tell the ultimate destination once goods enter the country. May,

30 Rank Commodity BY AIR WEIGHT Air Weight (1,000s of Metric Tons) % Change ( ) 1 Machinery & Computers % 2 Electronic/Sound/TV Equip % 3 Optic/Photo/Med Instr % 4 Plastics % 5 Apparel (not including knit) % 6 Special Classification % 7 Ceramic Products % 8 Apparel (including knit) % 9 Fish, Crustaceans & Aquatic % 10 Vehicles (except rail or tramway) % All Commodities % Source: US Census Bureau Foreign Trade Division, provided by WISERTrade Trade Balance Trends including an overall decline in import commodity value of 8.6 percent and an even greater decline in imported air weight (21.0 percent) and the weight of most commodities highlight the shifting trade balance at SFO itself (Figure 6). While the U.S. had a negative air value trade deficit throughout the entire last decade and SFO until 2007, exports from SFO exceeded imports after 2008, eventually resulting in a decade-high trade surplus of $4.8 billion in Figure 6. U.S. and SFO Net Exports by Air Value, Air value of SFO exports (billions) $6 $4 $2 $0 -$2 -$4 -$6 SURPLUS DEFICIT San Francisco Int'l. Airport U.S. $1,200 $800 $400 $0 -$400 -$800 -$1,200 Air Value of U.S. Exports (billions) -$ $1,600 Source: US Census Bureau Foreign Trade Division, provided by WISERTrade. Calculations by EDR Group May,

31 3 ON-AIRPORT IMPACTS 3.1 Direct Employment In 2012, almost 34,000 people were employed at SFO, according to data from the surveys of airport management and tenants. In addition to 14,500 employees of passenger airlines, the airport supports a wide variety of other aviation-related jobs in transportation, retail, and government services. These jobs involve: Freight services, including dedicated cargo aviation, courier, delivery, custom broker, and trucking Air terminal operations, including security, building maintenance, and facility management Airline support services, including catering, in-flight entertainment, aircraft handling, fueling and maintenance Concessionaire services, including restaurants and retail stores Ground transportation, including rental car, taxis, and limousines Figure 7 shows the distribution of jobs at SFO by major function. Roughly 52 percent of airport jobs are directly aviation related, including passenger and dedicated freight airlines that use SFO and aviation support services, including in-flight catering firms and fixed-base operators (FBOs). The Airport Commission and contractors, federal agencies such as the FAA and the TSA, and other administrative functions account for 15 percent of on-airport employment. Terminal concessions account for 14 percent of employment, while ground transportation accounts for 16 percent of total full time and part time jobs. Construction related jobs make up three percent of the total. May,

32 Figure 7. Distribution of On-Airport Jobs Sources: Interviews of tenants and airport administration 3.2 Business Sales and Payroll In 2012, the SFO business establishments generated nearly $5.5 billion of business revenues (business sales and government budget expenditures), which included almost $2.1 billion of payroll for the 33,580 workers at the airport (see Table 5). Table 5. Direct Impacts of On-Airport Employees Impact Type Employment Payroll Revenues Direct Effect 33,580 $2,091,790,000 $5,461,671,000 Source: Airport Tenant Survey and data from the U.S. Department of Commerce aggregated through IMPLAN. May,

33 Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area. 17 Findings from this analysis show that passenger airlines represent 43 percent of employment at SFO, but also account for 47 percent of personal income earned by workers and 59 percent of revenues generated on the airport. Passenger Airlines, construction, and freight airlines are the only sectors that show a higher percentage of total personal income and productivity (revenues) than employment across all sectors as shown in Figure 8. Moreover, the average payroll for on-airport workers was $62,300, notably higher than the average income of $45,000 in the San Francisco MSA. 18 Figure 8. Percent of Relative Employment, Personal Income & Revenues by Aggregated Sector on SFO 70% 60% 50% 40% 30% 20% 10% 0% Jobs Output Income Sources: Interviews of tenants and airport administration, U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. 17 Survey respondents were asked for payroll. When it was not provided, the survey data were supplemented with U.S. Department of Commerce data for appropriate industry sectors for each employer, aggregated by the Minnesota IMPLAN Group (MIG, Inc.). 18 Source: Data from the Bureau of Economic Analysis aggregated by MIG, Inc. Group). May,

34 3.3 Indirect and Induced Impacts The direct economic activities at SFO lead to additional downstream impacts on suppliers, as well as re-spending of worker income. To calculate the impacts of these effects, indirect and induced multipliers were calculated for each of the categories listed in Table 6. Table 6. Direct Employment, Personal Income, and Business Revenues at SFO Classification of Activity by Sector Employment Payroll Revenues Passenger Services & Airport Administration Passenger Airlines 14,520 $983,163,000 $3,227,422,000 Airport Retail & Concessions 3,987 $117,785,000 $309,146,000 FBOs & General Aviation & Aviation. Services 2,104 $114,387,000 $306,150,000 City of San Francisco Airport Commission 1,528 $116,533,000 $131,040,000 Security Firms 1,362 $64,846,000 $90,261,000 Federal Government 1,191 $146,224,000 $174,095,000 State/Local Government 571 $61,253,000 $68,878,000 Parking & Misc 204 $14,932,000 $31,105,000 Mgmt., Maint/Cleaning, & Facilities Services 203 $16,398,000 $35,573,000 Other/Non-Profit 44 $2,476,000 $6,233,000 Sub Total 25,713 $1,637,997,000 $4,379,903,000 Freight Transportation Services Freight Airlines & Couriers 875 $69,007,000 $222,470,000 Passenger Ground Transportation Services Limos/Buses/Vans/Transit 2,961 $154,162,000 $294,959,000 Taxi Cabs 948 $49,357,000 $94,435,000 Rental Car 725 $37,027,000 $168,951,000 Sub Total 6,043 $313,904,000 $698,702,000 Contract Construction & Consulting Capital Construction 949 $70,881,000 $160,596,000 Total-Airport-Based 33,580 $2,091,790,000 $5,461,671,000 Sources: Interviews of tenants, airport administration, and U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. In 2012, the direct economic activities on-airport generated an additional $4.4 billion in business revenues in the Bay Area (indirect and induced effects), supporting more than 26,000 additional jobs and $1.7 billion in personal income (payroll). The total economic contribution of on-airport activity to the Bay Area is roughly $9.8 billion in revenues, May,

35 yielding 60,000 jobs and $3.8 billion in payroll for workers (see Table 7). Suppliers of goods and services generated approximately $1.8 billion in revenues, close to 11,000 jobs, and expended more than $700 million on payroll (indirect impacts). The respending of personal income by workers on airport and supplier firms supported approximately 15,000 additional Bay Area jobs and more than $1 billion in associated payroll, and $2.5 billion in new business sales. Table 7. Summary of Direct, Indirect, and Induced Economic Impacts of SFO in Bay Area Economic Impacts Employment Payroll Revenues I. Direct Impact: Airport-Driven Activity Airport-Based 33,580 $2,091,790,000 $5,461,671,000 II. Indirect Impact: Suppliers of Goods and Services Due to Airport and Related Activities 10,831 $728,109,000 $1,845,354,000 III. Induced Impact: Re-Spending of Worker Income Due to Airport and Related Activities 15,586 $1,026,605,000 $2,552,116,000 Total Regional Impact 59,997 $3,846,505,000 $9,859,141,000 Sources: Interviews of tenants, airport administration, and U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. On-airport businesses purchase supplies and services from the greater Bay Area economy. These supplies are highly concentrated in other air-reliant services, 19 transportation, other services, and restaurant industries that represent approximately three-quarters of all supporting industries (Table 8). The wages spent by employees of on-airport businesses for their daily living needs are also primarily spent on four major industries such as services (including personal services, household services and professional services), retail, and restaurant which combine to be 79 percent of all purchases made within in the Bay Area economy as indicated in Table Air-reliant services include: architectural engineering; business support; computer systems design services; facility support; financial services; management, scientific, technical services; and consulting. These are sectors that in themselves purchase large amounts of air transportation services. A full listing can be found in Appendix I. May,

36 Table 8. Supplier of Goods/Services Industries (Indirect) Industry Employment % of Total Air-reliant services 2,612 24% Transportation 2,108 19% Other Services 2,051 19% Restaurant 1,479 14% Distribution 454 4% Manufacturing 348 3% Travel agent 344 3% Courier 252 2% State/Local government 204 2% All Others 981 9% Total 10, % Sources: U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. Table 9. Re-Spending of Worker Income Industries (Induced) Industry Employment % of Total Services 8,187 53% Retail 2,252 14% Restaurant 1,844 12% Distribution 686 4% Entertainment 685 4% Manufacturing 292 2% Transportation 231 1% All Others 1,409 9% Total 15, % Sources: U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. 3.4 On-airport Construction SFO provided a summary of all capital projects from FY 07/08 to FY 10/11 organized by work phase group and project category. The project types covered several project categories such as Airfield, Airport Support, Groundside Terminal, and Utilities. An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending. The objective of this approach is to estimate economic impacts of construction at SFO for a typical year to mitigate the short-term investment periods associated with single construction projects. The construction dollars May,

37 reported from these multiple time periods were converted into a constant year of expenditure (YOE) fiscal year period for FY 10/11. Within each project type are construction categories, which are matched to the most appropriate IMPLAN indus described in Table try sector that best represented the type of project as Table 10. Sector Mapping SFO Work Phase Group Category Architectural & Engineering, Maintenance, ITT, & Airfield Construction IMPLAN Sector Description Maintenance & repair construction of nonresidential. Construction of other new nonresidential. NAICS NAICS Description 230 Construction of Buildings 230 Construction of Buildings Other (Overhead & Admin.) Facilities support services 561 Admin. & Support Services Prof. Services & Construction Management Mgmt., scientific, & tech. consulting services Architectural, engineering. & related services 541 Prof. Scientific, Tech., services 541 Prof. Scientific, Tech., services Source: SFO and U.S. Department of Commerce data provided by IMPLAN After classifying each Work Phase Group category into the corresponding IMPLAN sector, these capital costs were then entered into IMPLAN to estimate the Direct, Indirect, and Induced impacts on the nine Bay Area counties for an average year from FY 07/08 FY 10/11 (Table 11). Table 11. Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures Direct Effect 949 $75,458,000 $171,284,000 Indirect Effect 256 $20,211,000 $47,586,000 Induced Effect 502 $28,595,000 $78,500,000 Total Effect 1,707 $124,264,000 $297,370,000 Note: Dollars rounded to the nearest thousand Source: Employment and Labor Income derived using IMPLAN. 20 Each IMPLAN industry falls within a NAICS code May,

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39 4 VISITOR SPENDING In the year ending June 2012, roughly 52.4 percent of domestic and international air travelers arriving at SFO were non-residents visiting the region (representing 8.8 million of the 16.7 million enplanements at the airport, excluding connecting passengers). SFO Traffic Statistics and national data sets from the Department of Transportation show that that 23 percent of all visitors were international visitors, 14 percent were Southern California residents served by four airports, and 64 percent were visitors from other parts of the United States. Surveys of air travelers indicate that 74 percent of visitors traveled for personal reasons to the Bay Area and 26 percent for business reasons. The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than international travelers (Figure 9). Figure 9. Profile of Air Visitors Arriving Via SFO by Place of Origin International California Other US States Millions of Visitors Trip Purpose Passenger Segment Personal Business Domestic 52% 48% International 70% 30% Source: Visitor Survey Conducted by Polaris, Inc., SFO Traffic Statistics; U.S. DOT O&D Survey, YE 2Q 2012; U.S. DOT, T-100 Database; IATA, PaxIS Database; U.S. DOC, International Air Travel Statistics, Calculations by EDR Group and ICF SH&E. May,

40 4.1 Visitor Spending The survey of arriving visitors found that, on average, international visitors spend $1,333 in the Bay Area and domestic U.S. visitors spend $998. The breakdowns by trip origin and trip purpose (business or personal) are shown in Figure 10. Figure 10. Relative Spending of Visitors per Trip by Origin and Purpose International Business $1,818 International Personal $1,128 Domestic Business $1,167 Domestic Personal $844 $0 $500 $1,000 $1,500 $2,000 Individual Spending Per Trip Source: Visitor Survey Conducted by Polaris, Inc. Calculations by EDR Group. Overall, the off-airport spending of the 8.8 million domestic and foreign visitors who arrived through SFO visitor amounted to $9.4 billion, of which approximately $9.126 billion was in the Bay Area and an additional $275 million was outside the Bay Area 21. This encompasses spending on hotels, restaurants, retail purchases, entertainment and recreation, and local travel (e.g. taxis, car rental 22, site-seeing trips, and public transportation). The breakout of visitor spending by sector is shown in Table Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties. 22 On-airport car rentals are included in the On-airport tenant estimates. Car rentals off-airport is included in the Visitor Spending estimates. May,

41 Table 12. Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area Total within Bay Area Total Outside Bay Area Total Lodging $4,062,588,000 $99,227,000 $4,161,815,000 Food and Beverage $2,175,069,000 $62,368,000 $2,237,437,000 Car Rental $686,456,000 $39,221,000 $725,677,000 Entertainment $545,798,000 $29,520,000 $575,319,000 Retail $1,433,187,000 $39,418,000 $1,472,605,000 Ground Transportation $222,489,000 $5,221,000 $227,710,000 Total $9,125,587,000 $274,976,000 $9,400,563,000 * Dollars are rounded to thousands. Sources: SFO Traffic Statistics and national data sets from the Department of Transportation, Visitor Survey. Calculations by EDR Group Jobs and Income Generated by Off-Airport Visitor Spending The $9.4 billion spent in 2012 by visitors arriving via SFO supported more than 125,000 jobs within the Bay Area, and an additional 4,000 jobs outside the Bay Area, as shown in Table 13 (the region identified as being outside the Bay Area is shown in Figure 11). Table 13. Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct Effect 82,790 $3,035,462,000 $9,125,587,000 Indirect Effect 18,288 $1,346,011,000 $3,206,059,000 Induced Effect 24,116 $1,588,239,000 $3,948,546,000 Total Effect 125,193 $5,969,713,000 $16,280,192,000 Total Visitor Spending Impacts Outside of the Bay Area Direct Effect 2,787 $70,979,000 $274,976,000 Indirect Effect 602 $27,511,000 $83,492,000 Induced Effect 628 $27,844,000 $79,277,000 Total Effect 4,016 $126,334,000 $437,744,000 Total Visitor Spending Impacts Due to SFO Direct Effect 85,576 $3,106,441,000 $9,400,563,000 Indirect Effect 18,889 $1,373,522,000 $3,289,551,000 Induced Effect 24,743 $1,616,083,000 $4,027,823,000 Total Effect 129,209 $6,096,046,000 $16,717,937,000 Note: Jobs include employees and proprietors. Payroll includes wages, profits, and value of benefits Sources: Visitor Survey conducted by Polaris, Inc. SFO Traffic Statistics and national data sets from the Department of Transportation. Calculations by EDR Group. May,

42 Figure 11. Visitor Destinations Outside of the Bay Area Note: Counties highlighted in blue were aggregated into the Outside of Bay Area Region for analytical purposes. May,

43 To calculate direct jobs and wages from visitor spending, the IMPLAN modeling package was tailored to the nine-county Bay Area and a broader 21 county area to capture spending outside of the Bay Area, including Carmel, Monterey/Big Sur, Mendocino, Yosemite, Lake Tahoe and the central valley region to build profiles of each of the five visitor spending sectors shown in Table 12 (lodging, food and beverage, entertainment, retail, and local ground transportation). 23 The second step was to develop ratios of business sales (the actual visitor spending) to worker, and payroll to worker in each of the five sectors. These ratios are summarized in Table 14. With the development of these ratios, employment and payroll (earnings) were calculated as follows: 1. Step 1. Employment Generated by Visitor Spending = Visitor Spending/Business Sales per Worker (by sector) 2. Step 2. Personal Income Generated by Visitor Spending = Workers (calculated in Step 1 above) * Personal Income per Worker (by sector) Table 14. Earnings and Sales per Worker Sector Payroll Per Worker Sales per Worker Retail $38,494 $75,560 Entertainment $26,679 $69,816 Food & Beverage $24,620 $62,969 Lodging $24,620 $113,102 Ground Transportation $52,064 $99,615 Note: Payroll (personal income) includes wages and profits. Sources: U.S. Departments of Commerce and of Labor data provided by IMPLAN. Calculations by EDR Group. 4.2 Indirect and Induced Impacts Activities serving air travelers or visitors outside of the airport (see Table 12) also generate additional orders for goods and services from suppliers. These include orders for: Fuel and maintenance services by off-airport taxis, rental cars, tour buses, and public transportation Construction and operations of conventions and hospitality facilities for convention visitors Food products for off-airport restaurants 23 IMPLAN packages data from federal agencies on a county basis, including the U.S. Department of Commerce and the U.S. Department of Labor. EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region. May,

44 Wholesale merchandise to be sold by off-airport stores Furniture and equipment for off-airport hotels, restaurants, and stores. These orders, in turn, support additional employment and wages in the Bay Area. Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $1.3 billion in payroll in 2012, which is the equivalent of about $900 million in disposable personal income for the employees of supplier businesses. This income was then spent on consumer purchases, such as: Retail purchases of food, clothing, home furnishings, cars, etc. Purchases of services, houses and other investment activities. In 2012, the multiplier effects of spending by air visitors to the Bay Area generated an additional $7.1 billion in business revenues in the region, supporting 42,000 additional jobs, and provided almost $3 billion in total payroll expenditures. Including initial visitor spending, indirect supplier purchases and spending of earned income by workers in visitor services industries, the total economic contribution of SFO visitors to the Bay Area totaled roughly $16 billion in revenues, yielding more than 125,000 jobs and $6 billion in payroll (see Table 15). Suppliers of goods and services generated approximately $3.2 billion of revenues, 18,200 jobs and $1.3 billion of personal income (indirect impacts). The re-spending of earnings supported $3.9 billion of revenues, 24,000 jobs and $1.5 billion of personal income (induced impacts). Table 15. Summary of Direct, Indirect, and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area Economic Impact Business Revenues Payroll Jobs I. Direct Impact: Visitor Spending Activity Direct Visitor Spending $9,125,587,000 $3,035,462,000 82,790 II. Indirect Impact: Suppliers of Goods and Services Due to Visitor Spending Off-Airport $3,206,059,000 $1,346,011,000 18,288 III. Induced Impact: Re-Spending of Worker Income Due to Visitor Spending Off-Airport $3,948,546,000 $1,588,239,000 24,116 Total Regional Impact in Bay Area $16,280,192,000 $5,969,712, ,193 Sources: SFO Traffic Statistics and national data sets from the Department of Transportation, Visitor Survey. U.S. Department of Commerce data provided by IMPLAN, IMPLAN multiplier package. Calculations by EDR Group May,

45 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study, reliant users are defined as manufacturers and agricultural industries that ship products by air through SFO The Role of SFO in Air Exports SFO plays a critical role in California s economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets. This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the U.S. and the world, and thereby maximize shares of national and international trade. Without the services offered at SFO (and if the similar scale of air services are not assumed by another regional airport), companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed. In turn, economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced. A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO, in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups. This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration), and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group) International Exports SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world. To assess the role that SFO plays in exports from the Bay Area, the following methodology was applied. According to data from the 24 This definition is based on past SFO Economic Impact Studies. 25 At this writing, the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information is May,

46 Foreign Trade Division (collected by WISERTrade), 29 percent of all California air exports that originated in California passed through SFO. This percentage was applied to all industry sectors (3 digit NAICS) to estimate the value and types of Californian exports going through SFO. To isolate the Bay Area specific exports, the ratio of Bay Area output to total California output was calculated using U.S. Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO. 26 The results represent estimates of international exports by industry that are produced by Bay Area businesses and are exported for sale through SFO. Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area. The leading export industry is Computer and Electronics manufacturing which accounts for two-thirds of the region s exports by value, as indicated in Table 16. The next four ranked industries (chemicals, machinery, transportation equipment, electrical equipment & appliances) account for an aggregate 21 percent of total Bay Area exports. All together, the top five industries account for 88 percent of the total value of goods that originates in the Bay Area and are shipped through SFO. Table 16. Top International Exported Industries Industry Value (in $Millions) % of Total Computer & Electronics $5, % Chemicals $ % Machinery $ % Transportation Equipment $ % Electrical Equipment & Appliances $ % All others $1, % Total $8, % Sources: U.S. Census Bureau, Foreign Trade Division collected by WISERTrade 5.3 Domestic Exports The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to U.S. customers via SFO. The FAF areas are represented by Combined Statistical Areas (CSAs) the San Francisco CSA includes 11 counties (the Bay Area plus San Benito and Santa Cruz counties). To scale the commodity flows to the nine-county Bay Area, a ratio was applied similar to the approach described above for international 26 Provided through the Minnesota IMPLAN Group May,

47 exports. This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 11-county CSA. Even more concentrated than international exports, domestic shipments are highly concentrated in computer and electronics manufacturing this sector accounts for over 74 percent of the total Bay Area produced shipments through SFO. The second largest amount of exports is in machinery, which represents nearly 20 percent of all exports as indicated in Table 17. Together, the top two industries combine for 94 percent of the total value of Bay Area domestic exports through SFO. Table 17. Top Domestic Exported Industries Industry Value (in $M's) % of Total Computer & Electronics $5, % Machinery $1, % Leather & Allied products $ % Textile/Mills products $ % All Others $ % Total $7, % Source: Freight Analysis Framework, U.S. Department of Transportation Combining both domestic and international products still highlights the integral part that Computer and Electronics manufacturing plays within the Bay Area compared to other manufacturing sectors (Figure 12) and the significance that SFO has in enabling these products to reach their customers. Figure 12. Percentage of the Bay Area s combined Domestic and International Exports shipped via SFO Source: Sources: U.S. Census Bureau, Foreign Trade Division collected by WISERTrade and Freight Analysis Framework, U.S. Department of Transportation May,

48 5.4 Economic Contribution of SFO to the Bay Area The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages. To gauge the level of impact, EDR Group used U.S. Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced). BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where personal income is usually spent. Figure 13 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO and how BEA data via IMPLAN is used to estimate Indirect and Induced impacts. Figure 13. Methodology to Estimate Air Dependent Contribution to Bay Area Economy Overall we estimate that over $16 billion in domestic and international exports shipped via SFO contribute to over 36,000 jobs and over $4.7 billion in labor income (wages) within the Bay Area (Table 18). Domestic cargo contributes to $7.9 billion in value and 22,000 jobs. In addition, $8.6 billion in value and 14,000 jobs are attributed to international exports. When including purchases of supplier goods and services (Indirect) May,

49 and employee wage re-spending (Induced), the total impact of air exports on the Bay Area economy accounts for over 103,000 jobs and $29 billion in business sales (output). Table 18. Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 36,430 $4,785,814,000 $16,635,714,000 Indirect Effect 27,426 $2,792,631,000 $6,853,367,000 Induced Effect 39,288 $2,240,318,000 $6,154,931,000 Total Effect 103,144 $9,818,763,000 $29,471,417,000 Source: U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. 5.5 Effects on Suppliers of Goods and Services Figure 14 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses. In total, over 27,000 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO. The majority of jobs are in the services sector, which accounts for nearly 16,000 of the indirect jobs. Figure 14. Employment Impacts on Suppliers of Goods and Services (Indirect) Service Manufacturing Trade Transp., Info,. & Utilities Construction Government Agriculture Mining 0 4,000 8,000 12,000 16,000 20,000 Source: U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. May,

50 At a finer level of BEA industry detail, purchases made by Bay Area air-reliant businesses are concentrated in Wholesale trade, Management of companies, Semiconductors, and Scientific research. However, as shown in Table 19, these four industries only represent 33 percent of the total jobs supported by air reliant business purchases. Over 51 percent of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy. Table 19. Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry Industry Category Jobs % of Total Wholesale trade 3,921 14% Management of companies 2,735 10% Semiconductors 1,262 5% Scientific research 1,155 4% Employment services 960 3% Services to buildings/dwellings 858 3% Food services and drinking places 719 3% Real estate 636 2% Legal services 627 2% Truck Transportation 621 2% Rest of Others 13,932 51% Total 27, % Source: U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. May,

51 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal, state, county, and municipal tax revenues. This chapter presents estimates of state and local tax impacts from airport activities, as well as federal aviation taxes derived from aviation services State and Local Tax Impacts The state and local tax revenues linked to operations at SFO totaled $2.5 billion in 2012, including $1.3 billion from direct activities and $1.1 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced). These estimates are based on effective tax rates calculated by BEA and U.S. Census data (as organized through IMPLAN) as well by taking into account California publications, including the Governor s Budget Summary ; Comprehensive Annual Financial Report of the State Controller s Office, and the County of San Mateo. Appendix II includes a breakout of tax revenues by county where applicable. Table 20. Estimated 2012 State and Local Tax Impacts (in $Million) Tax Revenues from: Indirect/Induced Impact Category Direct Activities Activities Total Activities On-Airport $409 $220 $629 Construction $3 $6 $10 Visitor Spending $603 $323 $927 Air Reliant Businesses $309 $633 $942 Total Taxes $1,324 $1,183 $2,507 Sources: Totals may not sum due to rounding. Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the U.S. Census Bureau. 27 Data developed in this chapter should be considered as order of magnitude estimates. As in previous economic impact studies for SFO, tax impacts are derived from per-capita measures. May,

52 6.2 Federal Aviation Taxes Aviation operations at SFO generated more than $604 million dollars in federal taxes including $104 million from taxes on international and domestic passengers and $499 million in U.S. Customs revenue from domestic air-freight shipments (Table 21). These tax revenues are remitted to the U.S. Department of the Treasury and may not directly benefit the Bay Area or the State of California. Table 21. Estimated 2012 Federal Aviation Tax Revenues Type of Tax Charges/Fees Revenues in $Millions % of Total Customs and Immigration $5.50 & $7 per psgr $24.5 4% International Arrival & Departure Tax $16.70 per psgr $32.7 5% Domestic Passenger Taxes 1 $3.80 per psgr $25.8 4% Sept. 11th security fee $2.50 per psgr $21.9 4% Sub-Total - Passenger Related Taxes $ % U.S. Customs (freight) 6.25% of value $ % Total $ % 1 Includes US Gov. Segment tax. Does not include Domestic Transportation tax (7.5% of airfare cost) Sources: Federal Aviation Administration, and May,

53 APPENDIX I: STUDY METHODOLOGY This Appendix reviews the use of the IMPLAN Model System, WISERTrade data and the Freight Analysis Framework of the US DOT. IMPLAN To estimate the indirect and induced ( multiplier ) economic effects for each project, this study utilized the IMPLAN model system of MIG, Inc. IMPLAN is now the most widely used input-output economic modeling system in the U.S., with a client list of 500 public and private agencies including several federal agencies and numerous state agencies. It utilizes U.S. Commerce Department ("National Income and Product Accounts") data on inter-industry technology relationships (also known as input-output structural matrices), countywide employment and income data from the Bureau of Economic Analysis (BEA) and Bureau of Labor Statistics (BLS), and its own industry and county-specific estimates of local purchasing rates ( regional purchase coefficients ). It is enhanced over most other input-output models in that it also includes coverage of public sector activity and consumer activity (reflected in its social accounting matrix ). The industry detail is at the level of 440 industries, and is based on categories of the U.S. Bureau of Economic Analysis (BEA), which correspond to two to five digit groups in the North American Industry Classification System (NAICS). For this study, the direct job, payroll, and business revenue effects for on-airport and visitor spending were documented through surveys completed for this project and then assigned to specific sector groups, based on EDR Group s experience in aviation. SFO s support of air reliant industries was documented through databases maintained by the U.S. Census Bureau and the U.S. Department of Transportation. The IMPLAN model was then calibrated for the nine-county Bay Area, as well as for each county within the region, and a model calibrated for a defined region outside the Bay Area to measure additional visitor spending. The result was an estimate of the indirect and induced (and overall) job, business revenue and income impacts for each segment of airport beneficiary. The analysis of retail impacts was adjusted to account for retail markup margins and the concentration of sales in airports and in visitor industries. Retail portions of multiplier effects also incorporate these margins. Regardless of whether economic impacts are measured in terms of jobs, income or business sales, these impacts can be classified into three categories: Direct economic effects are the changes occurring at the project site as a direct consequence of the public investment, project or program. This is represented as the net increase in business activity associated with business at the SFO, initial May, 2013 A-1

54 visitor spending at off-airport businesses in each county s hospitality sector, the sale revenues earned by shippers who route air cargo through SFO. Indirect economic effects are the broader effects on business activity for off-site goods and services supplied to the directly-affected businesses. Induced economic effects are further shifts in spending on food, clothing, shelter and other consumer goods and services, as a consequence of the change in workers and payroll of directly and indirectly affected businesses. EDR Group assembled classifications of the 440 sectors in the IMPLAN modeling package to best mirror types of industries on SFO, types of visitor spending and industries related to commodities exported from SFO. The classification scheme used for this study for onairport and visitor spending impacts are shown in Table A1. Table A1. Industry Classification of On-Airport and Visitor-Serving Industries ON-AIRPORT Airport Tenants Classification Passenger Airlines Federal Governments FBO Security Distribution Wholesale Construction Freight Airlines/Couriers Local Government Retail Eating/Drinking IMPLAN Sectors Used Air Transportation Immigration, TSA, FBI US Customs & Border Patrol (CBP) National Weather Service Facility Support Electronic Repair Comm/Ind. Machinery Repair Security Aviation Firms Trucking/Warehousing Wholesale Trade business Industrial/Commercial Buildings Institutional Buildings Road/Water/Sewer Construction Non-residential structures Air Transportation Couriers Local and State Government Electronics/Appliance Stores Food and Beverage Clothing Stores Sporting Goods Stores Restaurants, Bars ~ continued ~ May, 2013 A-2

55 Rental Cars Airport Tenants Classification Ground Transportation Catering Firms Other Services Reliant Services Car Rental IMPLAN Sectors Used Taxis Limos/Buses/Vans/Transit Other Ground Transportation Food Services and Drinking places Medical Clinic Private Education Vending Machines Educational institutions Electronic repair services Insurance Medical services Other Support Services Telecommunications Waste Management Architectural/Engineering Business support Computer systems design services Facilities support Financial Services Management, scientific, technical consulting Parking & Misc. ~ continued ~ May, 2013 A-3

56 Table A2. Industry Classification of On-Airport and Visitor-Serving Industries, cont d VISITOR SERVING Retail Visitor Spending Classification Entertainment Restaurant Hotel Transportation IMPLAN Sectors Used Electronics/Appliance Stores Food and Beverage Health and Personal Clothing Stores Sporting Goods Book/Music Stores General Merchandise Performing Arts Spectator Sports Museums/Historical Sites Zoos/Parks Other recreation Restaurants, Bars Food Services/Drinking places Hotels/Motels Bed and Breakfasts Ground & Transit Scenic and Sightseeing Support Activities Gas Stations Source: U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. May, 2013 A-4

57 APPENDIX II: DISTRIBUTION OF IMPACTS BY BAY AREA COUNTIES This Appendix presents the distribution of direct jobs and income, and the distribution of tax benefits among Bay Area counties for on-airport and visitor spending categories. Local impacts are based on a sample of almost 16,000 on-airport employees by zip code from interviews with airport employers and visitor impacts based on the passenger survey. On-Airport Effect among Bay Area Counties Table A3 & A3 show estimates of jobs, payroll (labor income), and business revenues (output) associated with each of the nine Bay Area counties that are generated by onairport economic activity. In Table A2, direct employment and wages are allocated to the counties on the basis of the residence of employees of the Airport Commission staff, its contract workers and tenants. Due to the location of SFO, all direct business revenues (direct output) is generated in San Mateo County. For all three measures employment, payroll and business revenues, economic impacts associated with supplier purchases (indirect) and wages spent in the consumer economy of the Bay Area (induced) are spread throughout the region. May, 2013 A-5

58 Table A3. Employment & Labor Income Impacts of On-airport Tenants by County Bay Area County Impact Type Employment Labor Income Direct 5,146 $324,084,000 Alameda Indirect 1,567 $105,328,000 Induced 2,495 $164,375,000 Total 9,208 $593,787,000 Direct 3,019 $208,044,000 Contra Costa Indirect 898 $60,379,000 Induced 1,469 $96,749,000 Total 5,386 $365,172,000 Direct 554 $41,547,000 Marin Indirect 335 $22,551,000 Induced 280 $18,451,000 Total 1,170 $82,549,000 Direct 221 $14,289,000 Napa Indirect 89 $6,003,000 Induced 121 $7,942,000 Total 431 $28,234,000 Direct 7,419 $428,998,000 San Francisco Indirect 1,761 $118,397,000 Induced 3,078 $202,722,000 Total 12,258 $750,117,000 Direct 13,293 $800,768,000 San Mateo Indirect 1,141 $76,680,000 Induced 6,152 $405,203,000 Total 20,585 $1,282,651,000 Direct 2,035 $139,092,000 Santa Clara Indirect 4,496 $302,216,000 Induced 1,017 $66,985,000 Total 7,547 $508,293,000 Direct 1,523 $106,891,000 Solano Indirect 189 $12,693,000 Induced 794 $52,305,000 Total 2,506 $171,889,000 Direct 369 $28,077,000 Sonoma Indirect 355 $23,859,000 Induced 180 $11,873,000 Total 905 $63,809,000 Direct 33,580 $2,091,790,000 Total Indirect 10,831 $728,106,000 Induced 15,586 $1,026,605,000 Total 59,997 $3,846,501,000 Source: Airport Tenant Survey, Data Provided by SFO and U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. May, 2013 A-6

59 Table A4. Business Revenues Impacts of On-airport Tenants by Bay Area County Bay Area County Impact Type Business Revenues Direct $0 Alameda Indirect $266,949,000 Induced $408,634,000 Total $675,583,000 Direct $0 Contra Costa Indirect $153,029,000 Induced $240,513,000 Total $393,542,000 Direct $0 Marin Indirect $57,156,000 Induced $45,869,000 Total $103,025,000 Direct $0 Napa Indirect $15,215,000 Induced $19,744,000 Total $34,959,000 Direct $0 San Francisco Indirect $300,073,000 Induced $503,961,000 Total $804,034,000 Direct $5,461,671,000 San Mateo Indirect $194,343,000 Induced $1,007,325,000 Total $6,663,339,000 Direct $0 Santa Clara Indirect $765,952,000 Induced $166,524,000 Total $932,476,000 Direct $0 Solano Indirect $32,169,000 Induced $130,029,000 Total $162,198,000 Direct $0 Sonoma Indirect $60,469,000 Induced $29,516,000 Total $89,985,000 Direct $5,461,671,000 Total Indirect $1,845,355,000 Induced $2,552,115,000 Total $9,859,141,000 Source: Airport Tenant Survey, Data Provided by SFO and U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. May, 2013 A-7

60 Visitor Spending The visitor spending survey conducted at SFO documented the destinations of visitors who arrive in California through SFO. Table A5 indicates the economic impacts associated with visitor spending for each county. Table A5. Economic Impacts of Visitor Spending by Bay Area County Bay Area County Alameda Contra Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma Total Impact Type Direct Effect Employment 8,058 Labor Income $237,828,000 Visitor Spending $813,140,000 Indirect Effect 1,856 $111,293,000 $297,193,000 Induced Effect 2,757 $155,028,000 $413,392,000 Total Effect 12,671 $504,149,000 $1,523,725,000 Direct Effect 1,395 $38,598,000 $143,007,000 Indirect Effect 262 $14,376,000 $46,085,000 Induced Effect 311 $16,263,000 $49,682,000 Total Effect 1,968 $69,237,000 $238,774,000 Direct Effect 1,058 $34,951,000 $111,944,000 Indirect Effect 225 $12,333,000 $35,235,000 Induced Effect 300 $15,180,000 $44,944,000 Total Effect 1,582 $62,464,000 $192,123,000 Direct Effect 5,363 $173,861,000 $581,758,000 Indirect Effect 1,386 $64,695,000 $187,147,000 Induced Effect 1,922 $91,404,000 $246,726,000 Total Effect 8,670 $329,960,000 $1,015,631,000 Direct Effect 45,851 $1,841,862,000 $5,169,967,000 Indirect Effect 10,917 $900,795,000 $1,984,483,000 Induced Effect 13,942 $1,016,082,000 $2,401,098,000 Total Effect 70,710 $3,758,739,000 $9,555,548,000 Direct Effect 7,912 $267,325,000 $862,913,000 Indirect Effect 1,317 $96,019,000 $248,392,000 Induced Effect 1,765 $112,125,000 $304,878,000 Total Effect 10,994 $475,469,000 $1,416,183,000 Direct Effect 8,480 $318,808,000 $970,479,000 Indirect Effect 1,140 $93,121,000 $245,712,000 Induced Effect 1,663 $119,038,000 $304,429,000 Total Effect 11,283 $530,967,000 $1,520,620,000 Direct Effect 573 $14,035,000 $58,519,000 Indirect Effect 124 $5,279,000 $16,912,000 Induced Effect 137 $5,747,000 $17,193,000 Total Effect 834 $25,061,000 $92,624,000 Direct Effect 4,100 $108,195,000 $413,861,000 Indirect Effect 1,062 $48,100,000 $144,901,000 Induced Effect 1,319 $57,374,000 $166,205,000 Total Effect 6,481 $213,669,000 $724,967,000 Direct Effect 82,790 $3,035,463,000 $9,125,588,000 Indirect Effect 18,288 $1,346,011,000 $3,206,060,000 Induced Effect 24,116 $1,588,241,000 $3,948,547,000 Total Effect 125,193 $5,969,715,000 $16,280,195,000 Source: Airport Visitor Spending Survey, Data Provided by SFO and U.S. Department of Commerce data provided by IMPLAN. Calculations by EDR Group. May, 2013 A-8

61 Tax Impacts by Bay Area County Tax revenues including sales, property (business & personal), corporate, and income taxes are collected from on-airport tenants and the workers that they employ directly at SFO. Table A6 indicates the tax revenues generated from each impact type (direct, Indirect/Induced, and Total) by county. Direct tax revenues paid by individuals and households are apportioned according to place of residence of Airport Commission staff, contact employees and tenants. Direct taxes paid by businesses originate in San Mateo County due to the location of the Airport. Table A6. Tax Revenues by County for On-airport Tenants Bay Area counties Alameda Direct $8,686,000 Indirect / Induced $33,893,000 Total $42,579,000 Contra Costa $5,060,000 $19,754,000 $24,814,000 Marin $1,325,000 $5,099,000 $6,424,000 Napa $449,000 $1,748,000 $2,197,000 San Francisco $10,338,000 $40,412,000 $50,750,000 San Mateo $367,516,000 $61,472,000 $428,988,000 Santa Clara $11,989,000 $45,099,000 $57,088,000 Solano $2,085,000 $8,272,000 $10,358,000 Sonoma $1,157,000 $4,409,000 $5,566,000 Total $408,605,000 $220,158,000 $628,764,000 Sources: Governor s Budget Summary; State Controller s Office; the County of San Mateo; Bureau of Economic Analysis (BEA) National Income and Product Accounts (NIPA), the U.S. Census Bureau (Consumer Expenditure Survey, Annual Survey of State and Local Government Finances); U.S. Department of Commerce data provided by IMPLAN; Airport Tenant Survey; and Information Provided by SFO. Direct tax revenues shown in San Mateo County include an estimated $33 million in Possessory Interest Tax revenues. Calculations by EDR Group Tax revenues including sales, property (business & personal), corporate, and income taxes are also generated by visitors (sales tax) and businesses that provide goods and services to domestic and international visitors. Table A7 below outlines the tax revenues provided by each county by business in the hotel, restaurant, transportation, entertainment, and retail industries (direct), the businesses that support these industries (indirect), and the tax revenue generated by employees spending their earned income (induced). May, 2013 A-9

62 Table A7. Tax Revenues by County for Visitor Spending Bay Area Counties Direct Indirect / Induced Total Alameda $58,318,000 $35,164,000 $93,482,000 Contra Costa $10,592,000 $4,748,000 $15,339,000 Marin $7,159,000 $4,342,000 $11,501,000 Napa $39,164,000 $21,787,000 $60,950,000 San Francisco $327,732,000 $184,931,000 $512,663,000 San Mateo $61,011,000 $27,386,000 $88,398,000 Santa Clara $64,904,000 $26,895,000 $91,800,000 Solano $4,792,000 $1,806,000 $6,598,000 Sonoma $29,456,000 $16,339,000 $45,795,000 Total Taxes $603,128,000 $323,398,000 $926,526,000 Sources: Governor s Budget Summary; State Controller s Office; Bureau of Economic Analysis (BEA) National Income and Product Accounts (NIPA), the U.S. Census Bureau (Consumer Expenditure Survey, Annual Survey of State and Local Government Finances); U.S. Department of Commerce data provided by IMPLAN; and SFO Airport Visitor Survey. Calculations by EDR Group May, 2013 A-10

63 APPENDIX III: SFO TENANT AND VISITOR SURVEYS The following pages are the survey instruments used for SFO tenants and visiting passengers. Note that the passenger survey was administered in multiple languages. May, 2013 A-11

64 May, 2013 A-12

65 May, 2013 A-13

66 May, 2013 A-14

67 May, 2013 A-15