From the dawn of civilization, transportation has been the defining force in economic progress. The earliest settlements were concentrated along the great navigable waterways of the world, and trails and trade routes determined commerce for millennia. Over time, railroads, highways and, more recently, airports have been added to the infrastructure complex of the world. As at the beginning, modern economies are defined by accessibility and logistics, and superior transportation offerings are a critical factor in the competitiveness and success of a region.
For more than 40 years, Dallas Fort Worth International Airport has been a crucial source of economic growth and development. Serving one of the most dynamic regions of the economy, the airport has provided air travel and cargo infrastructure essential to businesses and individuals in the region and beyond. It has been a dramatic and defining force in the integration of Texas into the global economy.
In addition, DFW Airport is a substantial source of business activity through operations of the airport itself as well as related businesses such as concessions and retail establishments in the terminals. Several office and industrial parks surrounding the terminal areas provide an ideal location for businesses dependent on proximity to air passenger and cargo service, further increasing the economic benefits. A significant amount of land is still available at DFW Airport; development of these parcels would involve significant spending on construction and an increase in jobs.
We were recently asked to examine the current and potential future economic and fiscal impacts of DFW Airport and associated facilities. In addition, the likely effects on local taxing entities were estimated. Here are a few of the highlights from our results.
DFW Airport is among the busiest in the world, ranking third in terms of operations and ninth in terms of passengers. Its operations lead to significant gains in economic activity across a spectrum of industries. In addition, travelers generate significant spending.
We looked at each of these categories, estimating economic activity associated with (1) activity within the terminals, including terminal operations, air carrier operations and concessions and retail operations at the airport including rental cars; (2) tenants located within the airport property including air cargo companies, hotels, the golf course and others; and (3) spending by visitors to the area arriving through DFW Airport.
Combining these sources of economic benefits (terminal and related operations, cargo-related and other tenants, and visitors) yields an estimate of the current impact of DFW Airport of some $37 billion in total expenditures and almost $19.8 billion in output (gross product) each year, as well as 228,000 jobs.
We also examined the fiscal benefits to the state of Texas and local taxing entities within North Central Texas. Business operations generate taxes for local governmental entities including cities, counties, schools and special districts in multiple ways. First, firms pay taxes directly. Second, taxes are generated through the economic activity associated with business operations. In addition, employees spend their paychecks, providing revenues to various governmental entities.
For example, gains in retail sales associated with the operations of DFW Airport, related facilities and collateral development were quantified as part of this study. A portion of these retail sales are taxable and lead to increased receipts to local taxing entities. In addition, DFW Airport and associated facilities are a source of jobs, increasing the demand for housing in the area and, hence, property tax values. Visitors who stay in local hotels generate occupancy tax revenue. When the total economic effects are considered, the gains in taxes from these indirect sources are significant.
We estimate that DFW Airport currently generates incremental tax receipts to the state of $1.1 billion per year, with an additional $533.8 million to local taxing entities. Furthermore, these benefits are likely to grow, with investments in upgrades and improvements and development of the approximately 4,000 acres of available land at DFW Airport.
As large as these numbers are, however, they do not tell the whole story. Many firms locate and expand throughout the region and the state because of the domestic and global accessibility provided by DFW Airport. The region’s convention, sports and entertainment venues depend on superior aviation infrastructure, and communities throughout the area routinely tout the airport as a primary asset in economic development efforts. It is difficult to imagine just how different Texas would look without this vital and catalytic infrastructure.
DFW Airport has been and will continue to be an essential source of economic and fiscal benefits to its region, the state and beyond. It has been integral to the emergence of the Metroplex as one of the world’s major urban centers, and it will be a force in the development of Texas for decades to come.
M. Ray Perryman is president and CEO of The Perryman Group. He is Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies. The full report is available for free download from The Perryman Group’s website at www.perrymangroup.com.