Canada's airports added $19 billion to national GDP in 2016

22 May 2018 Authored by Consulting.ca

The Canadian Airports Council has released an economic impact study conducted by consultancy InterVISTAS on the airport industry in Canada. According to the study, Canadian airports directly account for 194,000 jobs, $13 billion in wages, $19 billion in GDP, and $48 billion in economic output.

In a country of vast distances and population centres separated by multiple time zones and thousands of kilometres, the importance of airport infrastructure cannot be overstated. While railways initially linked the far-flung parts of Canada, airplanes have become the new transportation lifeblood of long-distance travelers – going into, across, and out of the country. Airports are likewise integral to the movement of goods – especially when they need to get somewhere fast – though air shipment can be more costly than slower avenues like trucking, ships, and trains.

The Canadian Airports Council – the federal representative of most airports in the country – wants people to know just how important they are to the national economy. Last month, the CAC released an economic impact study it commissioned from global consultancy InterVISTAS, which specializes in aviation, transportation, and tourism. InterVISTAS started as the consulting subsidiary of the Vancouver International Airport Authority in 1997, before being bought by its employees two years later. InterVISTAS was acquired by Dutch consultancy DHV Group in 2012; it has offices in Canada, the US, UK, Netherlands, and Brazil.Air passenger trafficThe consulting firm’s report highlights that Canada’s airports are a growing and thriving sector. Air passenger traffic in the country has increased from 66 million enplaned/deplaned passengers in 1988 to 140 million in 2016. This is a 112% increase in 28 years, or a compound annual growth rate (CAGR) of 3%. There has been a steady increase in the enplaning/deplaning of domestic, transborder, and international flight passengers.

While air passenger traffic has increased immensely, the increase in annual aircraft movements has been more modest. The number of aircraft movements rose from 1.9 million in 1999 to 2.1 million in 2016 – an increase of 10%. This can be explained by the fact that larger aircraft with more seats and higher load factors have allowed air passenger volume to grow tremendously while total aircraft movements have stayed relatively flat. Indeed, the average number of passengers per aircraft has increased from 45 in 1999, to 67 in 2016 – an increase of nearly 50%.Total impact of Canada’s airportsInterVISTAS conducted the economic impact study using data from 2016, examining the impact of airports in terms of jobs, wages, GDP, and economic output. In terms of direct impact on jobs – which covers the employment base at airports, including airline employees, aircraft maintenance, ground handling, customer service, airport authority staff, etc. – airports support 194,000 jobs. Directly, airports account for 21% of Canada’s transportation and warehousing sector, and 26% of the sector’s GDP.

Indirectly – which covers employment in downstream industries arising from the direct operational activities of airports – Canada’s airports support 99,000 jobs. An example of indirect jobs would be food wholesalers who supply food for in-flight meals.

Airports also create 62,000 jobs in terms of induced economic impact. Induced impact – also known as ‘household-spending effect’ – comes from the expenditures of people employed directly or indirectly by airports. For example, if an airline employee decides to renovate their house, this would result in induced employment hours in the construction industry.Direct Impact of Canada’s AirportsDirectly, airports create $13 billion in wages, with an additional $6 billion in indirect employment wages, and $3 billion in induced wages. Airports also contribute heavily to Gross Domestic Product (GDP) – the market value of all final goods and service produced in a country. Airports directly contribute $19 billion to Canada’s GDP, with an overall contribution of $35 billion.

Economic output – also known as economic activity – is the gross dollar value of all industrial output. It is similar to GDP, except that it includes the value of intermediate inputs, thus making the figure a deal larger. In 2016, airports directly accounted for $48 billion in economic output, while indirectly creating $20 billion, and inducing a further $11 billion.Taxation impact of Canada airportsAdditionally, the airport industry has a further ‘catalytic’ impact on the economy, facilitating the business of other sectors, like tourism. The connectivity provided by airports helps facilitate trade and investment, and contributes to the growth of the economy. Air infrastructure helps the Canadian economy chug along, moving people and goods – from European tourists to Nova Scotian lobsters.

The report also notes that airports are important generators of taxes for all levels of government. In 2016, airport employers and employees paid $6.9 billion in taxes. Indeed, taxes account for 54% of direct wages paid in the industry. 70% of taxes went to the federal government, while 24% went to provincial/territorial governments, and 6% went to municipalities.

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