Aberdeen Airport Limited
The Economic Impact of the Runway Extension
This short note considers the economic impact of the recently opened runway extension at Aberdeen Airport. It builds on the previous work undertaken by York Aviation on the economic impact of Aberdeen Airport in 2010.
The £10 million, 124 metre runway extension was opened on 6th October 2011, around 8 months ahead of the original schedule. It is seen by stakeholders and the airport company as an essential piece of infrastructure development, enabling airlines to remove payload restrictions, increase aircraft range and potentially use larger aircraft.
The benefits of the runway extension in terms of increased passenger numbers are expected to start in earnest from 2012. Through to 2015, the runway extension is expected to boost terminal passenger numbers at the Airport by between 5% and 7% (see Table 1).
Table 1: Runway Extension Passenger Forecasts 2010 to 2015
2010 (actual) / 2011 / 2012 / 2013 / 2014 / 2015Terminal Passengers / 2,304 / 2,598 / 2,654 / 2,726 / 2,795 / 2,859
Helicopters / 459 / 495 / 500 / 530 / 546 / 556
Total (no extension) / 2,763 / 3,093 / 3,154 / 3,256 / 3,341 / 3,415
Additional Passengers / - / - / 120 / 176 / 195 / 205
Total (with extension) / 2,763 / 3,093 / 3,274 / 3,432 / 3,536 / 3,620
Source: Aberdeen Airport.
This rise in passenger numbers will have a consequential impact on the employment and Gross Value Added (GVA) generated by Aberdeen Airport through its operations. These impacts can be classified in to three categories:
-Direct – employment and GVA wholly or largely related to the operation of the airport and generated within the airport operational area (on-site) or in the immediate vicinity of the airport (off-site);
-Indirect – employment and GVA generated in the chain of suppliers of goods and services to the direct activities;
-Induced – employment and GVA generated by the spending of incomes earned in the direct and indirect activities.
Using the economic impact model developed for the 2010 economic impact study of the Airport, we have estimated the economic impact of the runway extension through to 2015 in Table 2 (impact in Aberdeen City and Shire) and in Table 3 (impact in Scotland as a whole).
Table 2: Economic Impact of the Runway Extension in Aberdeen City and Shire
2011 / 2012 / 2013 / 2014 / 2015Gross Value Added (£ million)
Direct / £ - / £ 2.7 / £ 4.0 / £ 4.4 / £ 4.6
Indirect / £ - / £ 0.4 / £ 0.5 / £ 0.6 / £ 0.6
Induced / £ - / £ 0.4 / £ 0.6 / £ 0.7 / £ 0.7
Total / £ - / £ 3.5 / £ 5.1 / £ 5.7 / £ 6.0
Employment
Direct / 0 / 50 / 70 / 80 / 80
Indirect / 0 / 10 / 10 / 20 / 20
Induced / 0 / 10 / 20 / 20 / 20
Total / 0 / 70 / 100 / 110 / 110
Source: York Aviation.
Within Aberdeen City and Shire, we estimate that the runway extension will enable Aberdeen Airport to support around £2.7 million in GVA and around 50 fte jobs through direct impacts in 2012. By 2015, we estimate that this will rise to around £4.6 million in GVA and around 80 fte jobs.
Including indirect and induced impacts as well, we estimate that the runway extension will support a total of £3.5 million in GVA and 70 fte jobs in 2012, rising to £6.0 million in GVA and 110 fte jobs in 2015.
Table 3: Economic Impact of the Runway Extension in Scotland
2011 / 2012 / 2013 / 2014 / 2015Gross Value Added (£ million)
Direct / £ - / £ 2.7 / £ 4.0 / £ 4.5 / £ 4.7
Indirect / £ - / £ 0.7 / £ 1.0 / £ 1.1 / £ 1.1
Induced / £ - / £ 0.5 / £ 0.7 / £ 0.8 / £ 0.8
Total / £ - / £ 3.9 / £ 5.7 / £ 6.3 / £ 6.7
Employment
Direct / 0 / 50 / 70 / 80 / 80
Indirect / 0 / 20 / 30 / 30 / 30
Induced / 0 / 10 / 20 / 20 / 20
Total / 0 / 80 / 120 / 130 / 130
Source: York Aviation.
Extending the analysis to Scotland as a whole captures more of the supply chain to the Airport and more of the induced effects. The total impact on Scotland from the runway extension is expected to be around £3.9 million in GVA and 80 fte jobs in 2012, rising to around £6.7 million in GVA and 130 fte jobs by 2015.
Furthermore, in addition to the operational impacts identified above, we would also anticipate a boost to inbound tourism expenditure within the region. According to the last CAA Passenger Survey undertaken at Aberdeen Airport in 2009 around 19% of traffic was inbound business travel and a further 10% was inbound leisure travel. Assuming these proportions remain appropriate for the additional passengers enabled by the runway extension, this suggests that between 17,000 and 30,000 additional visitors per annum will be brought to Aberdeen City and Shire between 2012 and 2015.
Based on estimates of average spend by visitors to the area from VisitScotland, we estimate that this will result in additional injection of tourism expenditure of between £3.7 million in 2012 and £6.4 million in 2015.
In addition, the runway extension will bring wider economic benefits to Aberdeen City and Shire:
-the additional passengers will ultimately support the commercial viability of the Airport, enabling it to invest in infrastructure and route development over the longer term;
-the additional runway length opens up the possibility of services to economically important medium haul destinations that could support the vitally important energy cluster within the region;
-continued investment in the Airport’s infrastructure, such as the runway extension, sends a powerful message in terms of the region’s international aspirations and its ‘openness’ for trade, investment and tourism.
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20 March 2014