Projects

In a recent study for the FAA on the economic development benefits from airport runway expansions (with a focus on Atlanta's Hartsfield-Jackson International Airport), covering a panel of 35 large and medium hub airports over a 12 year period (1996-2007), a translog model of airport short run operating costs was developed and estimated. The purpose of this proposal is to extend this analysis in five specific directions. First, data will be updated to 2008 and, if possible, 2009. Second, in order to isolate as much as possible the effects of airports and landing capacity on economic development, the sample for the original study only included MSAs with one commmercial airport. Although not excluding Atlanta's Hartsfield-Jackson International Airport, this did eliminate many of the largest MSAs and airports (e.g. Los Angeles, Chicago, New York). The proposed study will include these airports and explore how, if at all, this alters the economic development benefits of additional runway capacity. Second, the proposed study will develop and estimate a two output cost model, freight shipped and passengers served, which will provide additional insights on airport production technology (e.g. economies of scope), and on the impact that air freight has on economic development. Third, the original analysis included number of runways as a quasi-fixed factor of production to the exclusion of airport operating characteristics (e.g. retail and repair services, elevation, runway characteristics) that affect airport costs. By collecting these data (which are available) and including operating characteristics in the model, it will be possible to obtain better estimates of the underlying technology and of the impact that additional runway capacity has upon airport operating costs and, ultimately, upon economic development. Fourth, based upon the more general model, the proposed study will identify the link between airport operations and economic development and will expand the set of economic development indicators analyzed in the original study.