Colorado growing return on aviation investments

October 24, 2013

General aviation airports in Colorado will pump $2.4 billion into the state’s economy in 2013—an increase of $500 million compared to 2008, says a new economic impact study released by the state’s Division of Aeronautics.

GA's increased economic contribution—one result noted when measuring the impact of commercial-service and other public-use airports—was confirmed by the "more conservative approach" used to produce the financial analysis, the report said. In a departure from the method of data analysis used until 2008, the 2013 study applied regional multiplier effects to economic data from urbanized and rural districts of Colorado.

The five-year economic update reflected volatility during a period of economic downturn in which the aviation industry saw some contraction, as well as pressures from higher fuel prices. The industry “now does more with less in terms of the number of people employed,” noted the report’s executive summary.

Airports as catalysts

Describing Colorado’s airports as "economic catalysts" for the state, the 2013 report is the latest in a series of five-year updates launched in 1998. The documents "open your eyes about how much economic benefit" the state’s airports produce, said David Gordon, director of the Colorado Department of Transportation’s Aeronautics Division, in a phone interview.

The 2013 study also highlighted for the first time how capital reinvestment of state aviation fuel-tax revenue, estimated at $41.4 million in 2012, spreads economic benefits statewide. Related annual economic activity was estimated at $18.2 billion, and is credited with supporting 110,707 highly paid, family wage jobs that generated annual payrolls of $6.6 billion.  

The periodic studies have been valuable for making a quantifiable case to policy makers about aviation’s productivity, said Gordon, a former manager of Denver’s Rocky Mountain Metropolitan Airport. Having a means to present a detailed economic picture strengthens the system of 76 public-use airports that reinvests 100 percent of excise and sales-tax proceeds from aviation fuel sales in infrastructure and improvements and does not receive any money from the state’s general fund, he said.

Another boost to system efficiency came several years ago through legislation providing for continuous appropriations as the tax revenue is realized. That provision spares state aviation officials the need to make repeated requests for appropriations to a legislative budget panel, making it easier to plan and budget improvement projects, Gordon said.

The lack of a reliable way for officials to gauge the economic impact of the state aviation system led Colorado to create its division of aeronautics in 1988—the last state to do so, Gordon said. The economic impact studies produced since the process began have also given airport managers an educational and advocacy tool to use at the county and municipal levels.

The local-airport analyses might demonstrate how a general aviation airport supports local agriculture, helps to transport doctors to remote areas or sites of emergencies, or highlight other effects. In any case, the data "surprises a lot of people because they never realized how important that airport is," Gordon said. "It’s a great tool."

AOPA actively supports the development of state aviation economic impact studies, said David Ulane, AOPA’s Northwest/Mountain regional manager. The association "has worked closely with stakeholders in Colorado to help promote and protect the state’s existing aviation fuel tax structure, which invests over $41 million annually in the state’s airports," he added.

The 2013 economic impact study said excise and sales tax on aviation fuel "generated $41.4 million in tax revenues during fiscal year 2012. Two thirds of this amount was returned directly to the Colorado airports with the remainder going to support grants for system airports." It noted other "important aviation related tax contributions" from income taxes paid by aviation-related employees totaling an estimated $104 million from Colorado personal income taxes, and $402 million from federal income taxes.

Annually, the report said, approximately a million people visiting Colorado arrive in general aviation aircraft. (About 8 million arrive on commercial flights, with the large majority landing at Denver International Airport.) 

The direct tax contribution of general aviation visitors was estimated at $18.6 million.

Applying the more sophisticated multiplier effect for 2013, the report credited the operation and development of airports with supporting 265,700 jobs, with annual payrolls of $12.6 billion. It said total economic activity of $36.7 billion is created by airports

Dan Namowitz

Dan Namowitz | Aviation Writer

Dan Namowitz is an aviation writer and flight instructor. He has been a pilot since 1985 and an instructor since 1990.