TomMitsoff.com -- Airport Lands $4.5 Billion On Region

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Airport Lands $4.5 Billion On Region

Report Says Delta Hub Means $2.8 Billion

BY TOM MITSOFF

CINCINNATI - The Cincinnati-Northern Kentucky International Airport has a $4.5 billion total annual economic impact on our region, according to a new University of Cincinnati study. The study also quantified Delta Air Lines' impact.

The report is based on figures for fiscal year 2003, according to George Vredeveld, president of UC's Economics Center for Education and Research. In addition to that financial windfall, the airport, located in Hebron, also produced more than 55,800 jobs, 17,700 of them in Boone, Kenton and Campbell counties. Forty-two percent of the jobs (23,700) were Hamilton County, Ohio-based, and 14,400 were based outside those four counties.

Vredeveld spoke at a Tuesday morning breakfast meeting at the Queen City Club, calling the $4.5 billion impact, "such a big number, it becomes almost meaningless."

Attempting to put it into perspective, he compared that economic impact on NKY and the region to "hosting the seventh game of the World Series every day of the year, and twice on Sundays."

Vredeveld and airport officials present at the Tuesday meeting all said they knew of no single, greater economic engine for NKY.

Busiest Regional Airport

CVG is the 11th busiest airport in the world, Vredeveld said, and serves the third-most U.S. destinations non-stop, behind only Atlanta and Minneapolis. Each day, CVG offers more flights than nearby airports in Columbus, Dayton, Indianapolis, Lexington and Louisville combined, Vredeveld added.

Despite that, the airport was still losing 30 to 34 percent of its "origin passengers" (people in the region who would naturally choose CVG by proximity) to other airports due to high fares. However, after Delta last year implemented its reduced "Simplifares" rate structure at CVG, its second-largest hub after Atlanta, passenger traffic is up as much as 40 percent.

"We are back up over our pre-9/11 levels," said Covington attorney William T. "Bill" Robinson, chairman of the Kenton County Airport Board, which sets airport-operating policy. "We are up over 20 million passenger trips per year."

Vredeveld's study also quantified the impact of CVG's status as a "hub." From the $4.5 billion in annual impact, $2.8 billion, or 63 percent, is directly attributable to the airport being a Delta hub, he said. Approximately 34,000 of the 56,000 airport-related jobs are Delta-hub-related, he said.

Airport officials are keenly aware of Delta's current financial woes, and the speculation that the airline may have to declare bankruptcy, said Director of Aviation Robert Hoelscher.

"These are things we have to get ourselves prepared for," he said. "All we hear from Delta is that they'll make it through."

When United Airlines filed bankruptcy, the number of that airline's flights in and out of CVG was unaffected, Hoelscher said. He expects the same to be true if Delta is forced to file for bankruptcy protection. Of long-term concern, according to Hoelscher, is which, if any, financially troubled airlines might "fall out" of business.

Ted Bushelman, director of communications for the airport, said that each time fuel prices increase by one penny, the financial impact on Delta is equivalent to adding 5,000 people to the payroll for an entire year.

"And you know what fuel prices are doing," he said.

Additional Impact

Vredeveld's study concluded that the Delta hub is responsible for economic development that has created an additional 97,500 jobs. With the 34,000 jobs directly related to the Delta hub, Vredeveld said 131,500 Tristate jobs are hub-related-or about 13 percent of the region's 1 million jobs.

The study is based on 2003 numbers, which include a fully functioning DHL Air Freight presence at CVG. Last year, DHL announced it would move its regional hub to Wilmington, Ohio.

Airport officials said the loss of DHL is being counteracted by the growth in passenger airline traffic. Federal funds, aviation revenue and user fees fund the airport, said Robinson, adding that Hamilton County bears none of the costs.

This article was appeared first on ChallengerNKY.com on June 1, 2005, and was then published June 5, 2005, in The Sunday Challenger, serving Northern Kentucky.