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New Study In Houston Finds: No Plane, No Gain

October 24, 2011

It’s hard to find anyone who will argue your point that an airport is a major economic engine in a community. But a new study by GRA, Inc. and the University of Houston shows just how vital airports are in a city’s overall financial picture.

“What that study says is that when there’s more air travel in a given year, trade in the next year increases tremendously,” said UH Economics Professor Steven Craig, co-author of the study.

The Houston Airport System Economic Impact Study was unique in that it established a direct correlation between foreign air travel to Houston and the foreign trade that resulted. The city’s three airports, William P. Hobby, Ellington and George Bush Intercontinental together serve about 49 million people in 2010. They contributed more than $27.5 billion to the regional economy last year and provided jobs for more than 47,000 people.

But the key to this unique study was its look at how air travel to and from Houston’s three airports facilitates trade. “The average international air passenger from one of the 34 countries in our data results in up to $1,700 in exports out of Houston within the subsequent 12 months,” Craig and his co-authors wrote. “The average international air passenger from one of the 34 countries in our data results in, at a minimum, over $800 in exports out of Houston within the subsequent month.”

GRA, Inc. Vice President Richard Golaszewski called that the breakthrough element of this study.

“You always ask questions about the causality – did the trade cause the travel or did the travel cause the trade?” Golaszewski stated. “The way Professor Craig estimated it, he thinks he has the travel leading the trade.”

Craig pointed out that it was easier to study the impact of aviation on international trade because it was easier to quantify both international travel and international spending. “We believe that the same links between air travel and trade would be at least as strong, if not much stronger, between states as it is with other countries and Houston.”

Further, Craig said the study established a strong link between the aviation infrastructure in Houston and its ability to attract both international visitors and international trade. With three strong airports – two of them having major general aviation components – Craig said Houston is well established as an aviation enterprise city.

“The trade between Houston (and other countries) was highly correlated with air travel…. Conversely, places where there wasn’t very good air travel had very small trade,” Craig pointed out.

Craig and company weren’t alone in their findings. Another study, conducted by J. Poole at the University of Santa Cruz in California, showed $4,300 in trade is associated with each business traveler. 

“International air travel is a key input into facilitating international trade. The availability of convenient and cost effective air travel is central to developing the type of personal relationships that make doing business in a foreign environment easier, and as a result more productive,” the HAS study found.

Read the complete Houston Airport System study.