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Local airports have billion dollar impact
By Dan McCue
Staff Writer
The Charleston region’s six airports have a combined annual economic impact of $824 million, according to an analysis by the South Carolina Department of Commerce Division of Aeronautics.
The study, which covers all the airports in the state, is the first to be conducted since 1990 and reveals that the past 16 years have experienced significant growth and success for the Palmetto State’s aviation community. In fact, its economic impact more than doubled during those years.
The researchers concluded that the state’s commercial and general aviation airports, along with four military airfields, contribute a total of $4.3 billion in economic impact to the state, regional and local economies each year, in addition to supporting 65,533 jobs.
Ken Holt, president of the South Carolina Aviation Association, said the study goes a long way toward substantiating the economic impact of the state’s airports.
But David Jennings, chairman for the Charleston County Aviation Authority, cautioned that success, like the existence of the now-defunct Independence Air, can be fleeting.
Jennings attributed the international airport’s strong showing in the report to two specific events in 2004—a reduction in airfares by Delta Airlines and the introduction of Independence Air to the market.
Jennings is heartened that American Airlines, which has a hub in Dallas, has re-entered the market—something he attributed largely to Dallas-based Vought Aircraft Industries building a manufacturing plant here. He also believes that going forward the airport will confront much more uncertainty.
“Mainly that’s attributable to the fact that fuel prices have gone through the roof and also to the fact that the airline industry has yet to come up with a business model that really works,” Jennings said. “Only one of the six airlines that serve our community has never been in bankruptcy.”
Michael O’Donnell, the division of aeronautics’ executive director, said he understands Jennings’ concerns. Commercial airports such as Charleston International are directly dependent on the health of the airlines.
“Look at what happened to airport revenues and the economy as a whole after the 9/11 terrorist attacks,” he said.
Nevertheless, O’Donnell said there’s no getting around the fact that as of right now, when it comes to aviation, Charleston International is the state’s economic powerhouse.
“A lot of that has to do with Charleston itself,” he said. “Not only is it a destination city for business and vacation travelers, but it has a large military presence, a very low unemployment rate and high per capita income,” he said.
“Those factors contribute to the airport’s vitality, and the airport’s vitality, in turn, ripples through the state economy in a number of ways, including other small airports picking up Charleston International’s excess general aviation traffic,” he said.
Another entity looking at the economic impact of small airports, albeit from the national perspective, is the Bureau of Business and Economic Research at East Tennessee State University. Ultimately, the ongoing study, commissioned by the Community Air Service Coalition, aims to capture the economic impact of 229 non-hub airports tracked by the Federal Aviation Administration.
The definition of a hub is based upon the number of passengers that board airplanes in the current year.
Non-hub airports board from 10,001 to just under 0.05% of total passengers boarded at all airports in the country. The upper limit of 0.05% is about 352,000 passengers as a maximum for non-hubs.
Charleston Executive Airport in Johns Island, Berkeley County Airport in
Moncks Corner, East Cooper Airport in Mount Pleasant and Summerville Airport all fall into this category.
The public perception is that such facilities exist only for the benefit of recreational pilots, a belief Holt hopes the state study dispels.
“If people don’t understand the value of having these airports, they’re more reluctant to support maintaining them,” he said.
Professor Jon Lane Smith, director of the project, said based on the number of people who use it and how they use it, Charleston International Airport actually qualifies as what is defined as a small-hub airport rather than a non-hub airport.
For small hubs, the percentages go from 0.05% of total to 0.25% of total boardings. Based on total numbers for 2004, that would be a range from about 352,000 to about 1.8 million boardings.
Data that Smith has collected paints an interesting picture of Charleston International from a national perspective, he said.
“The nation’s 30 largest airports enplane about 69% of all passengers,” Smith said. “Small-hub airports, of which Charleston is one of 72 across the United States, enplaned 57.6 million passengers in 2004, or about 8% of the national total.
“While the numbers look small when compared to the enplanements for a large hub like Atlanta, which had 41 million enplanements in 2004, it’s important to remember that only a fraction of the passengers recorded as boarding planes in Atlanta are people who originated or ended their trips there,” Smith continued.
That’s a different kind of ridership than you see out of Charleston, which is the point of origin of many business passengers and a destination for many leisure travelers, he said.
“That’s what makes it such a vital and reliable economic development asset for the community,” Smith said.
The split between business and leisure travelers through the Charleston airport is roughly 50/50, Jennings said, and as a result, it experiences fewer peaks and valleys in ridership than more tourism-reliant airports.
“That stability has also been a factor in helping Charleston International Airport keep operating costs significantly lower than the national average for the airlines that fly from here,” he said. “For instance, an airline’s operating costs in Charleston are about $5 per enplaning passenger, while the national average is closer to $6.50 per passenger.”
Which begged the question: Why does it cost more to fly out of Charleston than, for instance, Myrtle Beach International Airport?
“I always sound flippant when I say this, but I think it’s the truth. It costs more for the same reason that Charleston has eight to 10 Starbucks and Myrtle Beach has three or four—people in Charleston are willing to pay more for that cup of coffee or the services they receive,” Jennings said.
Despite airlines being able to charge more per ticket here and the low operating costs in the market, Jennings said he doesn’t expect another carrier to call Charleston International home any time soon.
“We talk to airlines on a frequent basis, but given the current state of fuel prices, we don’t see a lot of movement,” he said. “Instead we see airlines looking to bolster what they are currently doing rather than looking for an area of expansion.
“Our airport director puts it this way, ‘It’s hard to catch fish at low tide,’ and that’s where we are right now,” Jennings said.
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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