York Aviation LLP
Aberdeen Airport Limited
The Economic Impact of the Runway Extension

This short note considers the economic impact of the recently opened
runway extension at Aberdeen Airport. It builds on the previous work
undertaken by York Aviation on the economic impact of Aberdeen Airport
in 2010.

The £10 million, 124 metre runway extension was opened on 6 th October
2011, around 8 months ahead of the original schedule. It is seen by
stakeholders and the airport company as an essential piece of
infrastructure development, enabling airlines to remove payload
restrictions, increase aircraft range and potentially use larger aircraft.

The benefits of the runway extension in terms of increased passenger
numbers are expected to start in earnest from 2012. Through to 2015, the
runway extension is expected to boost terminal passenger numbers at the
Airport by between 5% and 7% (see Table 1).
Table 1: Runway Extension Passenger Forecasts 2010 to 2015
2010
2011
2012
2013
(actual)
2014
2015
Terminal
Passengers
2,304
2,598
2,654
2,726
2,795
2,859
Helicopters
459
495
500
530
546
556
2,763
3,093
3,154
3,256
3,341
3,415
-
-
120
176
195
205
2,763
3,093
3,274
3,432
3,536
3,620
Total (no
extension)
Additional
Passengers
Total (with
extension)
Source: Aberdeen Airport.
 This rise in passenger numbers will have a consequential impact on the
employment and Gross Value Added (GVA) generated by Aberdeen
Airport through its operations. These impacts can be classified in to three
categories:
- Direct – employment and GVA wholly or largely related to the
operation of the airport and generated within the airport operational
area (on-site) or in the immediate vicinity of the airport (off-site);
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- Indirect – employment and GVA generated in the chain of
suppliers of goods and services to the direct activities;
- Induced – employment and GVA generated by the spending of
incomes earned in the direct and indirect activities.

Using the economic impact model developed for the 2010 economic
impact study of the Airport, we have estimated the economic impact of the
runway extension through to 2015 in Table 2 (impact in Aberdeen City and
Shire) and in Table 3 (impact in Scotland as a whole).
Table 2: Economic Impact of the Runway Extension in Aberdeen City and Shire
2011
2012
2013
2014
2015
Gross Value Added (£ million)
Direct
£
£
2.7
£
4.0
£
4.4
£
4.6
Indirect
£
£
0.4
£
0.5
£
0.6
£
0.6
Induced
£
£
0.4
£
0.6
£
0.7
£
0.7
Total
£
£
3.5
£
5.1
£
5.7
£
6.0
Employment
Direct
0
50
70
80
80
Indirect
0
10
10
20
20
Induced
0
10
20
20
20
Total
0
70
100
110
110
Source: York Aviation.

Within Aberdeen City and Shire, we estimate that the runway extension
will enable Aberdeen Airport to support around £2.7 million in GVA and
around 50 fte jobs through direct impacts in 2012. By 2015, we estimate
that this will rise to around £4.6 million in GVA and around 80 fte jobs.

Including indirect and induced impacts as well, we estimate that the
runway extension will support a total of £3.5 million in GVA and 70 fte jobs
in 2012, rising to £6.0 million in GVA and 110 fte jobs in 2015.
Table 3: Economic Impact of the Runway Extension in Scotland
2011
2012
2013
2014
Gross Value Added (£ million)
Direct
£
£
2.7 £
4.0
£
4.5
Indirect
£
£
0.7 £
1.0
£
1.1
Induced
£
£
0.5 £
0.7
£
0.8
Total
£
£
3.9 £
5.7
£
6.3
Employment
Direct
0
50
70
80
Indirect
0
20
30
30
Induced
0
10
20
20
Total
0
80
120
130
2015
£
£
£
£
4.7
1.1
0.8
6.7
80
30
20
130
Source: York Aviation.

Extending the analysis to Scotland as a whole captures more of the supply
chain to the Airport and more of the induced effects. The total impact on
Scotland from the runway extension is expected to be around £3.9 million
in GVA and 80 fte jobs in 2012, rising to around £6.7 million in GVA and
130 fte jobs by 2015.
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
Furthermore, in addition to the operational impacts identified above, we
would also anticipate a boost to inbound tourism expenditure within the
region. According to the last CAA Passenger Survey undertaken at
Aberdeen Airport in 2009 around 19% of traffic was inbound business
travel and a further 10% was inbound leisure travel. Assuming these
proportions remain appropriate for the additional passengers enabled by
the runway extension, this suggests that between 17,000 and 30,000
additional visitors per annum will be brought to Aberdeen City and Shire
between 2012 and 2015.

Based on estimates of average spend by visitors to the area from
VisitScotland, we estimate that this will result in additional injection of
tourism expenditure of between £3.7 million in 2012 and £6.4 million in
2015.

In addition, the runway extension will bring wider economic benefits to
Aberdeen City and Shire:
- the additional passengers will ultimately support the commercial
viability of the Airport, enabling it to invest in infrastructure and route
development over the longer term;
- the additional runway length opens up the possibility of services to
economically important medium haul destinations that could support
the vitally important energy cluster within the region;
- continued investment in the Airport’s infrastructure, such as the
runway extension, sends a powerful message in terms of the
region’s international aspirations and its ‘openness’ for trade,
investment and tourism.
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