"New Orleans airport spurs $478.3 million in direct spending in 2003"

Friday, May 21, 2004

Airport spurs $478.3 million in direct spending in 2003
Armstrong is behind 12,471 jobs in area, UNO report finds
By Keith Darcé
The New Orleans (LA) Times Picayune


Louis Armstrong International Airport generated $478.3 million in direct
spending in 2003, according to an economic impact study on the airport that
was released Thursday. 

The airport, which is in Kenner but owned and operated by the city of New
Orleans, was responsible for 12,471 jobs that delivered $458.7 million in
wages and direct income to workers and businesses in metro New Orleans, said
the report by economist and University of New Orleans Chancellor Timothy
Ryan. 

A 1995 economic impact study by Ryan concluded that the airport produced
$344.4 million in direct spending. The latest figures represent a 39 percent
gain over the past eight years. During the same period, passenger counts at
the airport rose 15 percent, from 8.1 million in 1995 to 9.3 million in
2003. 

City and airport officials said the report makes clear that Armstrong is a
key cog in the region's economic engine. 

"This study tells us exactly what is at stake if we don't work together
regionally to improve our airport," New Orleans Mayor Ray Nagin said in
unveiling the study's results at a late morning news conference at City
Hall. "It's an economic engine. It's a driver. And it's something we all
need to work on." 

The study was commissioned in September by the airport's governing body, the
New Orleans Aviation Board, and it cost the agency $15,000, said Maggie
Woodruff, the airport's deputy director of community and governmental
affairs. 

The study was meant to remind local and state officials about the important
role the airport plays in the local economy, Nagin said. 

The report comes two weeks after Gov. Kathleen Blanco met with people who
support building a $6.4 billion regional airport, rail and port complex near
Donaldsonville. The Louisiana Airport Authority, which has been developing
the idea since 1992, has asked the new governor to endorse moving the
project from the study phase to the construction phase, authority Executive
Director Glenda Jeansonne said Thursday. 

"We have asked (Blanco) to take a serious look at it," Jeansonne said. "If
this is what the Legislature and the governor would like to see happen, then
we need their support because we are ready to get it done." 

Project supporters have long said private investors are interested in the
concept but won't commit to financing the massive construction program until
state officials commit to supporting the project. 

Though no direct ties were made Thursday between the economic impact report
and the Louisiana Airport Authority's recent lobbying efforts, Nagin and
Armstrong Aviation Director Roy Rodney repeated their objections to the
proposed regional airport, saying it's too risky to build such a complex in
a rural area so far from New Orleans and that it will sap federal aviation
dollars away from Armstrong and other airports in the state. 

Blanco "is intrigued by the Louisiana airport concept," Nagin said. "As long
as it is on the table, it's a distraction." 

Blanco's chief of staff, Andy Kopplin, said in April that many questions
remained about the project's viability. 

Attempts to reach Blanco and senior staff members by phone Thursday were
unsuccessful. At Armstrong, the biggest sources of spending in 2003 were
concessionaires, cabdrivers, rental car agencies, parking lots and other
businesses, which produced $172.3 million in direct spending, according to
the report. 

The Aviation Board spent $88.5 million on salaries, supplies, utilities and
other goods and services. Airlines servicing the airport spent $80.7
million. Hotels near the airport spent $73.2 million. And construction
companies working at the airport spent $63.6 million. 

About $145.9 million of that spending occurred in Kenner, and $26.5 million
occurred in St. Charles Parish. Though the airport's terminal is in Kenner,
part of its footprint crosses into St. Charles. 

Using multipliers developed by the U.S. Commerce Department, Ryan calculated
that secondary spending from the airport amounted to $615.5 million,
resulting in a grand total of $1.09 billion in direct and secondary
spending. 

When measuring secondary spending, a dollar spent by the airport is, in
effect, counted multiple times as it ripples through the local economy. For
example, suppose an airport shop sells a turkey deli sandwich for $6 but
buys it for $3 from a catering business, which pays 50 cents for the sliced
meat and 5 cents for the bun. The accumulated value of all of those
transactions would produce a secondary spending effect of $9.55 even though
the sandwich was ultimately worth only $6. 

Many economists, including Ryan, agree that the most accurate measure of
economic impact is direct spending alone. However, many organizations that
commission economic impact studies combine the direct spending figure with
secondary spending to produce an inflated and less accurate total. 

In announcing the airport study results Thursday, city and airport officials
focused on the combined impact figure of $1.09 billion rather than the lower
direct spending figure of $478.3 million. In fact, the direct spending
figure wasn't even mentioned in the two-page news release from the mayor's
office touting the report's results. 

Later, Ryan said the direct spending figure was the most accurate measure of
the airport's economic impact. "The focus should be on the direct spending,"
he said.


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