The Importance of Air Transportation to the U.S. Economy: Analysis of Industry Use and Proximity to Airports

Abstract

This thesis investigates broader impacts of air transportation on U.S. economic productivity, as well as market access and business location, in order to help identify how aviation supports the national economy. More traditional economic impacts are reviewed before turning to enabling impacts. Mechanisms by which air transportation might enhance economic productivity are proposed and a production model is constructed as a framework for exploring the validity of these mechanisms. Two analyses are conducted which should provide new insights to the FAA on the importance of air transportation to the U.S. economy. Focusing on the demand side of the economy, a detailed analysis of input-output (I-O) data from the Bureau of Economic Analysis (BEA) identifies where air transportation appears to be especially critical to economic production. On the supply side, U.S. Census Bureau data is used to map distributions of population, business establishments, and Fortune 500 headquarters from hub airports. Additional distribution analyses are performed for cargo airports and for select metropolitan areas. Analyses of intermediate use of air transportation provide weaker evidence than initially hypothesized as to aviation’s role in supporting productivity growth. Both sets of analyses confirm that the importance of air transportation to industry is not uniform and that the government and services sectors appear to benefit from and take advantage of access to aviation more than other industry sectors. In particular, the analyses of business location relative to airports provide evidence that many service and high-value economic sectors are more concentrated near hub airports than are other industry sectors for which air transportation adds less value.