2

2016 Economic Impact Study

of San Francisco International Airport

Prepared for City and County of San Francisco San Francisco Airport Commission

Prepared by Economic Development Research Group Inc

In Association with ICF International Polaris Research and Development Inc and The Bay Area Council Economic Institute

June 2016

This Page Left Blank Intentionally

TABLE OF CONTENTS Page

Executive Summary1 Total Economic Contribution 1 Classification of Impacts 2 Approach 3

Introduction and Overview 5Chapter 1Airside and Groundside Airport Jobs 7 Off-Airport Jobs Serving Airport Travelers 7 Related Industries Jobs that Rely on Air Cargo 8 Comprehensive Analysis 10

National Context 11Chapter 2Context The Vibrant Bay Area Economy 11 SFOrsquos Role in International Trade 13 Export Commodities 14 Import Commodities 16 Total Trade 19

Chapter 3 On-Airport Impacts21 Direct Employment 21 Business Sales and Payroll 22 Indirect and Induced Impacts 23 On-airport Construction 25

Chapter 4 Visitor Spending 27 Visitor Spending 28 Jobs and Income Generated by Off-Airport Visitor Spending 29 Indirect and Induced Impacts 30

Chapter 5 Impacts of Air Reliant Users (Freight Shippers) 33 The Role of SFO in Air Exports 33 International Exports 33 Domestic Exports 34 Economic Contribution of SFO to the Bay Area 35 Effects on Suppliers of Goods and Services 36 Overview of International Air Freight Activity 37 SFO Connects the Bay Area to Domestic Markets 38 Commodities Shipped from SFO to Domestic Markets 39 County by County Commodity Movements 40

Chapter 6 Tax Impacts Generated by Activities at SFO43 State and Local Tax Impacts 43

Federal Aviation Taxes 43

Chapter 7 Distribution of Impacts by Bay Area Counties45 On-Airport Effect among Bay Area Counties 45 Visitor Spending 47 Tax Impacts by Bay Area County 48

Appendix I Methodology for the Analysis of Overall Economic Impacts 51 Suppliers of Goods and Services (Indirect Multiplier Effects) 53 Re-Spending of Worker Income (Induced Multiplier Effects) 53 Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO 54 Major Sources of Data Used in this Study 55

Appendix II Summary of IMPLAN Sectoring57

Appendix III SFO Tenant and Visitor Surveys 61

5

10

15

20

25

30

LIST OF TABLES Page

Table 1 Summary of Economic Impacts of SFO in the Bay Area 2

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015) 8

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through

Table 2 Economic Contribution of SFO to the Bay Area 6

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total 9 Table Air Value of US and Bay Area Export by Airport 2009-201514 Table 6 Top Ten SFO Export Commodities by Air Value and Weight 201515 Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 17

SFO In Order of Value of Trade19 Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees 22 Table Direct Employment Labor Income and Business Revenues for Tenant

and Administrative SFO 23 Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area24 Table 12 Supplier of GoodsServices Industries (Indirect) 24 Table 13 Re-Spending of Worker Income Industries (Induced) 25 Table 14 Sector Mapping25 Table Annual Average Impacts from SFO Construction on the Bay Area Economy26 Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area 28 Table 17 Breakdown of Total Visitor Spending Impacts 29 Table 18 Earnings and Sales per Worker30 Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor

Spending in the Bay Area31 Table Top International Exported Industries34 Table 21 Top Domestic Shipped Industries 34 Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO36 Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry37 Table 24 Core Sources of Domestic Flows in vFreight 39 Table Outbound and Inbound Commodities tofrom the Nine-County Bay Area 40 Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions) 43 Table 27 Estimated 2012 Federal Aviation Tax Revenues44 Table 28 Employment and Labor Income Impacts of On-airport Tenants by County45 Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County 46 Table Economic Impacts of Visitor Spending by Bay Area County47 Table 31 Tax Revenues by County for On-airport Tenants 48 Table 32 Tax Revenues by County for Visitor Spending49 Table 33 Industry Classification of On-Airport Industries 58 Table 34 Industry Classification of Visitor-Serving Industries 59

LIST OF FIGURES Page

Figure 1 International Exports Shipped from SFO and California by Industry Sector 9 Figure 2 Domestic Outbound Air Shipments from SFO

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector

10 Figure 3 Illustration of the Bay Area by County12 Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015 18 Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-201518 Figure 6 Distribution of On-Airport Tenants and Administrative Jobs 21

on SFO 22 Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin27 Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose 28 Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped

via SFO35 Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect) 36 Figure 12 Regional Share of SFO Export Traffic 37 Figure 13 Bay Area Exports by County for Electronics and All Freight (2013) 38 Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region 40 Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County

Catchment Region) 41 Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO

Nine-County Catchment Region) 41 Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County

Catchment Region) 42 Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region) 42 Figure 19 Elements of Economic Impacts and Interrelationships 52 Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy55

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

This Page Left Blank Intentionally

TABLE OF CONTENTS Page

Executive Summary1 Total Economic Contribution 1 Classification of Impacts 2 Approach 3

Introduction and Overview 5Chapter 1Airside and Groundside Airport Jobs 7 Off-Airport Jobs Serving Airport Travelers 7 Related Industries Jobs that Rely on Air Cargo 8 Comprehensive Analysis 10

National Context 11Chapter 2Context The Vibrant Bay Area Economy 11 SFOrsquos Role in International Trade 13 Export Commodities 14 Import Commodities 16 Total Trade 19

Chapter 3 On-Airport Impacts21 Direct Employment 21 Business Sales and Payroll 22 Indirect and Induced Impacts 23 On-airport Construction 25

Chapter 4 Visitor Spending 27 Visitor Spending 28 Jobs and Income Generated by Off-Airport Visitor Spending 29 Indirect and Induced Impacts 30

Chapter 5 Impacts of Air Reliant Users (Freight Shippers) 33 The Role of SFO in Air Exports 33 International Exports 33 Domestic Exports 34 Economic Contribution of SFO to the Bay Area 35 Effects on Suppliers of Goods and Services 36 Overview of International Air Freight Activity 37 SFO Connects the Bay Area to Domestic Markets 38 Commodities Shipped from SFO to Domestic Markets 39 County by County Commodity Movements 40

Chapter 6 Tax Impacts Generated by Activities at SFO43 State and Local Tax Impacts 43

Federal Aviation Taxes 43

Chapter 7 Distribution of Impacts by Bay Area Counties45 On-Airport Effect among Bay Area Counties 45 Visitor Spending 47 Tax Impacts by Bay Area County 48

Appendix I Methodology for the Analysis of Overall Economic Impacts 51 Suppliers of Goods and Services (Indirect Multiplier Effects) 53 Re-Spending of Worker Income (Induced Multiplier Effects) 53 Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO 54 Major Sources of Data Used in this Study 55

Appendix II Summary of IMPLAN Sectoring57

Appendix III SFO Tenant and Visitor Surveys 61

5

10

15

20

25

30

LIST OF TABLES Page

Table 1 Summary of Economic Impacts of SFO in the Bay Area 2

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015) 8

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through

Table 2 Economic Contribution of SFO to the Bay Area 6

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total 9 Table Air Value of US and Bay Area Export by Airport 2009-201514 Table 6 Top Ten SFO Export Commodities by Air Value and Weight 201515 Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 17

SFO In Order of Value of Trade19 Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees 22 Table Direct Employment Labor Income and Business Revenues for Tenant

and Administrative SFO 23 Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area24 Table 12 Supplier of GoodsServices Industries (Indirect) 24 Table 13 Re-Spending of Worker Income Industries (Induced) 25 Table 14 Sector Mapping25 Table Annual Average Impacts from SFO Construction on the Bay Area Economy26 Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area 28 Table 17 Breakdown of Total Visitor Spending Impacts 29 Table 18 Earnings and Sales per Worker30 Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor

Spending in the Bay Area31 Table Top International Exported Industries34 Table 21 Top Domestic Shipped Industries 34 Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO36 Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry37 Table 24 Core Sources of Domestic Flows in vFreight 39 Table Outbound and Inbound Commodities tofrom the Nine-County Bay Area 40 Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions) 43 Table 27 Estimated 2012 Federal Aviation Tax Revenues44 Table 28 Employment and Labor Income Impacts of On-airport Tenants by County45 Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County 46 Table Economic Impacts of Visitor Spending by Bay Area County47 Table 31 Tax Revenues by County for On-airport Tenants 48 Table 32 Tax Revenues by County for Visitor Spending49 Table 33 Industry Classification of On-Airport Industries 58 Table 34 Industry Classification of Visitor-Serving Industries 59

LIST OF FIGURES Page

Figure 1 International Exports Shipped from SFO and California by Industry Sector 9 Figure 2 Domestic Outbound Air Shipments from SFO

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector

10 Figure 3 Illustration of the Bay Area by County12 Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015 18 Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-201518 Figure 6 Distribution of On-Airport Tenants and Administrative Jobs 21

on SFO 22 Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin27 Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose 28 Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped

via SFO35 Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect) 36 Figure 12 Regional Share of SFO Export Traffic 37 Figure 13 Bay Area Exports by County for Electronics and All Freight (2013) 38 Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region 40 Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County

Catchment Region) 41 Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO

Nine-County Catchment Region) 41 Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County

Catchment Region) 42 Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region) 42 Figure 19 Elements of Economic Impacts and Interrelationships 52 Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy55

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

TABLE OF CONTENTS Page

Executive Summary1 Total Economic Contribution 1 Classification of Impacts 2 Approach 3

Introduction and Overview 5Chapter 1Airside and Groundside Airport Jobs 7 Off-Airport Jobs Serving Airport Travelers 7 Related Industries Jobs that Rely on Air Cargo 8 Comprehensive Analysis 10

National Context 11Chapter 2Context The Vibrant Bay Area Economy 11 SFOrsquos Role in International Trade 13 Export Commodities 14 Import Commodities 16 Total Trade 19

Chapter 3 On-Airport Impacts21 Direct Employment 21 Business Sales and Payroll 22 Indirect and Induced Impacts 23 On-airport Construction 25

Chapter 4 Visitor Spending 27 Visitor Spending 28 Jobs and Income Generated by Off-Airport Visitor Spending 29 Indirect and Induced Impacts 30

Chapter 5 Impacts of Air Reliant Users (Freight Shippers) 33 The Role of SFO in Air Exports 33 International Exports 33 Domestic Exports 34 Economic Contribution of SFO to the Bay Area 35 Effects on Suppliers of Goods and Services 36 Overview of International Air Freight Activity 37 SFO Connects the Bay Area to Domestic Markets 38 Commodities Shipped from SFO to Domestic Markets 39 County by County Commodity Movements 40

Chapter 6 Tax Impacts Generated by Activities at SFO43 State and Local Tax Impacts 43

Federal Aviation Taxes 43

Chapter 7 Distribution of Impacts by Bay Area Counties45 On-Airport Effect among Bay Area Counties 45 Visitor Spending 47 Tax Impacts by Bay Area County 48

Appendix I Methodology for the Analysis of Overall Economic Impacts 51 Suppliers of Goods and Services (Indirect Multiplier Effects) 53 Re-Spending of Worker Income (Induced Multiplier Effects) 53 Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO 54 Major Sources of Data Used in this Study 55

Appendix II Summary of IMPLAN Sectoring57

Appendix III SFO Tenant and Visitor Surveys 61

5

10

15

20

25

30

LIST OF TABLES Page

Table 1 Summary of Economic Impacts of SFO in the Bay Area 2

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015) 8

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through

Table 2 Economic Contribution of SFO to the Bay Area 6

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total 9 Table Air Value of US and Bay Area Export by Airport 2009-201514 Table 6 Top Ten SFO Export Commodities by Air Value and Weight 201515 Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 17

SFO In Order of Value of Trade19 Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees 22 Table Direct Employment Labor Income and Business Revenues for Tenant

and Administrative SFO 23 Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area24 Table 12 Supplier of GoodsServices Industries (Indirect) 24 Table 13 Re-Spending of Worker Income Industries (Induced) 25 Table 14 Sector Mapping25 Table Annual Average Impacts from SFO Construction on the Bay Area Economy26 Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area 28 Table 17 Breakdown of Total Visitor Spending Impacts 29 Table 18 Earnings and Sales per Worker30 Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor

Spending in the Bay Area31 Table Top International Exported Industries34 Table 21 Top Domestic Shipped Industries 34 Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO36 Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry37 Table 24 Core Sources of Domestic Flows in vFreight 39 Table Outbound and Inbound Commodities tofrom the Nine-County Bay Area 40 Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions) 43 Table 27 Estimated 2012 Federal Aviation Tax Revenues44 Table 28 Employment and Labor Income Impacts of On-airport Tenants by County45 Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County 46 Table Economic Impacts of Visitor Spending by Bay Area County47 Table 31 Tax Revenues by County for On-airport Tenants 48 Table 32 Tax Revenues by County for Visitor Spending49 Table 33 Industry Classification of On-Airport Industries 58 Table 34 Industry Classification of Visitor-Serving Industries 59

LIST OF FIGURES Page

Figure 1 International Exports Shipped from SFO and California by Industry Sector 9 Figure 2 Domestic Outbound Air Shipments from SFO

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector

10 Figure 3 Illustration of the Bay Area by County12 Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015 18 Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-201518 Figure 6 Distribution of On-Airport Tenants and Administrative Jobs 21

on SFO 22 Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin27 Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose 28 Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped

via SFO35 Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect) 36 Figure 12 Regional Share of SFO Export Traffic 37 Figure 13 Bay Area Exports by County for Electronics and All Freight (2013) 38 Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region 40 Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County

Catchment Region) 41 Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO

Nine-County Catchment Region) 41 Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County

Catchment Region) 42 Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region) 42 Figure 19 Elements of Economic Impacts and Interrelationships 52 Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy55

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

Federal Aviation Taxes 43

Chapter 7 Distribution of Impacts by Bay Area Counties45 On-Airport Effect among Bay Area Counties 45 Visitor Spending 47 Tax Impacts by Bay Area County 48

Appendix I Methodology for the Analysis of Overall Economic Impacts 51 Suppliers of Goods and Services (Indirect Multiplier Effects) 53 Re-Spending of Worker Income (Induced Multiplier Effects) 53 Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO 54 Major Sources of Data Used in this Study 55

Appendix II Summary of IMPLAN Sectoring57

Appendix III SFO Tenant and Visitor Surveys 61

5

10

15

20

25

30

LIST OF TABLES Page

Table 1 Summary of Economic Impacts of SFO in the Bay Area 2

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015) 8

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through

Table 2 Economic Contribution of SFO to the Bay Area 6

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total 9 Table Air Value of US and Bay Area Export by Airport 2009-201514 Table 6 Top Ten SFO Export Commodities by Air Value and Weight 201515 Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 17

SFO In Order of Value of Trade19 Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees 22 Table Direct Employment Labor Income and Business Revenues for Tenant

and Administrative SFO 23 Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area24 Table 12 Supplier of GoodsServices Industries (Indirect) 24 Table 13 Re-Spending of Worker Income Industries (Induced) 25 Table 14 Sector Mapping25 Table Annual Average Impacts from SFO Construction on the Bay Area Economy26 Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area 28 Table 17 Breakdown of Total Visitor Spending Impacts 29 Table 18 Earnings and Sales per Worker30 Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor

Spending in the Bay Area31 Table Top International Exported Industries34 Table 21 Top Domestic Shipped Industries 34 Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO36 Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry37 Table 24 Core Sources of Domestic Flows in vFreight 39 Table Outbound and Inbound Commodities tofrom the Nine-County Bay Area 40 Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions) 43 Table 27 Estimated 2012 Federal Aviation Tax Revenues44 Table 28 Employment and Labor Income Impacts of On-airport Tenants by County45 Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County 46 Table Economic Impacts of Visitor Spending by Bay Area County47 Table 31 Tax Revenues by County for On-airport Tenants 48 Table 32 Tax Revenues by County for Visitor Spending49 Table 33 Industry Classification of On-Airport Industries 58 Table 34 Industry Classification of Visitor-Serving Industries 59

LIST OF FIGURES Page

Figure 1 International Exports Shipped from SFO and California by Industry Sector 9 Figure 2 Domestic Outbound Air Shipments from SFO

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector

10 Figure 3 Illustration of the Bay Area by County12 Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015 18 Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-201518 Figure 6 Distribution of On-Airport Tenants and Administrative Jobs 21

on SFO 22 Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin27 Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose 28 Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped

via SFO35 Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect) 36 Figure 12 Regional Share of SFO Export Traffic 37 Figure 13 Bay Area Exports by County for Electronics and All Freight (2013) 38 Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region 40 Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County

Catchment Region) 41 Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO

Nine-County Catchment Region) 41 Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County

Catchment Region) 42 Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region) 42 Figure 19 Elements of Economic Impacts and Interrelationships 52 Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy55

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

5

10

15

20

25

30

LIST OF TABLES Page

Table 1 Summary of Economic Impacts of SFO in the Bay Area 2

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015) 8

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through

Table 2 Economic Contribution of SFO to the Bay Area 6

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total 9 Table Air Value of US and Bay Area Export by Airport 2009-201514 Table 6 Top Ten SFO Export Commodities by Air Value and Weight 201515 Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 17

SFO In Order of Value of Trade19 Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees 22 Table Direct Employment Labor Income and Business Revenues for Tenant

and Administrative SFO 23 Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area24 Table 12 Supplier of GoodsServices Industries (Indirect) 24 Table 13 Re-Spending of Worker Income Industries (Induced) 25 Table 14 Sector Mapping25 Table Annual Average Impacts from SFO Construction on the Bay Area Economy26 Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area 28 Table 17 Breakdown of Total Visitor Spending Impacts 29 Table 18 Earnings and Sales per Worker30 Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor

Spending in the Bay Area31 Table Top International Exported Industries34 Table 21 Top Domestic Shipped Industries 34 Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO36 Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry37 Table 24 Core Sources of Domestic Flows in vFreight 39 Table Outbound and Inbound Commodities tofrom the Nine-County Bay Area 40 Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions) 43 Table 27 Estimated 2012 Federal Aviation Tax Revenues44 Table 28 Employment and Labor Income Impacts of On-airport Tenants by County45 Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County 46 Table Economic Impacts of Visitor Spending by Bay Area County47 Table 31 Tax Revenues by County for On-airport Tenants 48 Table 32 Tax Revenues by County for Visitor Spending49 Table 33 Industry Classification of On-Airport Industries 58 Table 34 Industry Classification of Visitor-Serving Industries 59

LIST OF FIGURES Page

Figure 1 International Exports Shipped from SFO and California by Industry Sector 9 Figure 2 Domestic Outbound Air Shipments from SFO

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector

10 Figure 3 Illustration of the Bay Area by County12 Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015 18 Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-201518 Figure 6 Distribution of On-Airport Tenants and Administrative Jobs 21

on SFO 22 Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin27 Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose 28 Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped

via SFO35 Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect) 36 Figure 12 Regional Share of SFO Export Traffic 37 Figure 13 Bay Area Exports by County for Electronics and All Freight (2013) 38 Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region 40 Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County

Catchment Region) 41 Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO

Nine-County Catchment Region) 41 Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County

Catchment Region) 42 Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region) 42 Figure 19 Elements of Economic Impacts and Interrelationships 52 Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy55

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

LIST OF FIGURES Page

Figure 1 International Exports Shipped from SFO and California by Industry Sector 9 Figure 2 Domestic Outbound Air Shipments from SFO

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector

10 Figure 3 Illustration of the Bay Area by County12 Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015 18 Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-201518 Figure 6 Distribution of On-Airport Tenants and Administrative Jobs 21

on SFO 22 Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin27 Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose 28 Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped

via SFO35 Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect) 36 Figure 12 Regional Share of SFO Export Traffic 37 Figure 13 Bay Area Exports by County for Electronics and All Freight (2013) 38 Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region 40 Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County

Catchment Region) 41 Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO

Nine-County Catchment Region) 41 Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County

Catchment Region) 42 Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region) 42 Figure 19 Elements of Economic Impacts and Interrelationships 52 Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy55

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

EXECUTIVE SUMMARY

This study examines the 2015 economic impact of the San Francisco International Airport (SFO or ldquothe Airportrdquo) in the nine-county Bay Area of Alameda Contra Costa Marin Napa San Mateo San Francisco Santa Clara Solano and Sonoma

SFO is the seventh leading passenger airport in the United States and the 17th largest air cargo airport1

In the 2015 calendar year nearly 430000 aircraft operations were conducted at the Airport serving over 50 million incoming and outgoing passengers and moving 390000 metric tons of cargo (including express) and 69500 metric tons of mail2

TOTAL ECONOMIC CONTRIBUTION

The total economic contribution of SFO to metropolitan San Francisco is the sum of the business activity directly associated with operation of SFO and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income These various elements of economic impact are each defined and shown in Table 1

In 2015 SFO directly accounted for $79 billion in business activity supporting over 39000 jobs at the Airport3 Off-site business activities that depend directly on local air service for staff movements cargo deliveries or customer visits (visitor spending) together raise the direct airport economic contribution to the Bay Area to $346 billion in business sales with over 158000 jobs There are also spin-off activities in the region (indirect and induced multiplier effects) associated with suppliers of goods and services to the directly affected businesses and the re-spending of additional worker income on consumer goods and services Adding in these effects raises the total economic footprint of SFO in the Bay Area to over $617 billion in business sales including $207 billion in total payroll and more than 295000 jobs in the region

1 Based on FAA data for 2014 cited in SFO Annual Report 2015 Preliminary 2014 data issued by Airports Council International ndash North America lists SFO as the 18th largest cargo airport in North America

2 Source wwwflysfocom

3 This total includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 1

Table 1 Summary of Economic Impacts of SFO in the Bay Area

Impact Type

On-airport

Employment

39427

Labor Income

$2564150000

Output

$7850536000

Aviation dependent exports 27423 $4176110000 $16970133000

Visitor spending 91591 $3537205000 $9747654000

Direct Total 158441 $10277465000 $34568323000

Suppliers of goods and services 53906 $5038827000 $13012276000

Re-spending of income 82976 $5374609000 $14157615000

Total Impact 295323 $20690901000 $61738214000

Notes Includes impacts of temporary construction investment Dollars rounded to the nearest thousand Columns may not add due to rounding

The economic activities generated by SFO also return significant tax revenues to the State of California the nine Bay Area counties and to the nation in terms of federal aviation taxes

The state and local tax revenues linked to operations at SFO totaled $28 billion in FY 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (tax impacts from indirect effects) and subsequent spending of worker income in the Bay Area (tax impacts from induced effects) Approximately $18 billion ($12 billion from direct activities) stem from on-airport commerce and visitor spending while more than $979 million are attributable to air-reliant shippers that use SFO for air freight ($315 million from direct economic activity)

In addition aviation operations at SFO generated $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from international air freight shipments These tax revenues are remitted to the US Department of the Treasury and do not directly benefit the Bay Area or the State of California

CLASSIFICATION OF IMPACTS

The operation of SFO providing terminal and related services for air travelers and cargo movement is only a portion of the Airportrsquos contribution to the Bay Area economy Visitors from international and domestic locations use SFO to visit the Bay Area for leisure or business and their spending supports additional business activity within the region In addition companies in the region that produce manufactured and agricultural goods that are exported by air from SFO would be at a disadvantage without proximity to a major international airport Altogether these on- and off-site business activities fall into five categories

bull Airport-based economic activities (airport terminal-related and tenants)

bull Off-airport businesses serving airport travelers

bull Off-airport businesses dependent on the Airport for cargo movement

bull Suppliers of goods and services to the Airport and air-dependent business

bull Re-spending of worker income (supported by airport-based activities visitor spending air-dependent businesses and suppliers of goods and services)

2015 Economic Impact Study of San Francisco International Airport 2

APPROACH

Findings in this study were developed by

1 Undertaking a rigorous survey involving airport administration and tenants to quantify on-airport direct employment

2 Conducting a visitor intercept survey of 1900 passengers At this scale the survey meets a confidence level of 99 with a 3 margin of error The survey is used to establish trip purpose levels of spending and patterns of spending of visitors The annual number of visitors and the proportion of international and domestic visitors are based on a combination of annual data from SFO and the US Departments of Transportation and Commerce

3 Adapting the Impact Analysis for Planning (IMPLAN) Modeling Package to the nine-county Bay Area region IMPLAN was used to (a) develop a county-specific economic profile of the Bay Area using data primarily from the US Department of Commerce (Bureau of Economic Analysis) and US Department of Labor to estimate jobs wages and labor income (direct effect) and (b) develop a model of the Bay Area to represent inter-metropolitan flows of business sales This includes business orders to suppliers generated by on-airport businesses off-airport businesses serving airport visitors and airport-reliant businesses (indirect effects) It also includes business sales generated by the spending of additional workersrsquo income on consumer purchases (induced effects)

4 Utilizing data from SFO in conjunction with international data from the Foreign Trade Division of the US Census Bureau (packaged by WISERTrade) and domestic freight data from the Freight Analysis Framework (FAF) of the US Department of Transportation to develop an analysis of the role of air cargo shipments in the economies of the Bay Area

5 National and California state sources are used to identify aviation specific tax impacts and major state and local tax impacts State sources include the Governorrsquos Office the California State Controllerrsquos Office and the County of San Mateo Federal sources include the Federal Aviation Administration Bureau of Economic Analysis (BEA) and the US Census Bureau These sources are used independently and in conjunction with the IMPLAN tax module to estimate tax impacts generated by SFO aviation activity for federal revenues and state and local taxes by where the taxes are generated

2015 Economic Impact Study of San Francisco International Airport 3

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 4

CHAPTER 1 INTRODUCTION AND OVERVIEW

This report provides study findings of the economic impacts of San Francisco International Airport (SFO) This chapter introduces the study provides an overview of the methodology used and summarizes the Airportrsquos overall economic contribution to the nine-county Bay Area

The Bay Area encompasses more than 6900 square miles of land with a population of approximately 76 million people and an economy that supports nearly 49 million jobs4

The operation of SFO providing terminal and related services for air travelers and cargo movement is only one part of the Airportrsquos total regional economic impact Airport-dependent businesses and airline travelers visiting the area for business or leisure support additional business activity within the Bay Area Together these on- and off-site business activities fall into five categories

bull Airport-based economic activities (airport terminal-related and tenants)

bull Off-airport businesses serving airport travelers

bull Off-airport businesses dependent on SFO for cargo movement

bull Suppliers of goods and services to SFO and air-dependent business and to off-airport businesses that serve visitors This activity is off-airport in the Bay Area

bull Re-spending of worker income (supported by airport-based activities visitor spending air-dependent businesses and suppliers of goods and services) Almost all of the re-spending is off-airport in the Bay Area

The total economic contribution of SFO is the sum of the business activity directly associated with operation of the Airport and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income The sum of on-airport activities at SFO visitor spending by air visitors to the Bay Area and regional exports supported by air cargo exceeds $346 billion in direct business sales which in turn support over 158000 direct jobs that generates a $103 billion payroll (see Table 2)

4 Sources California Statistical Abstract 2009 and BEAgov (2014)

2015 Economic Impact Study of San Francisco International Airport 5

-

Table 2 Economic Contribution of SFO to the Bay Area

Impacts Airport Generated

Visitor Spending

Air Related

Total Impact

Jobs Direct 39427 91591 27423 158441 Indirect 12964 15120 25823 53906 Induced 19028 25110 38837 82976 Total Jobs 71419 131821 92083 295323

Business Revenue ($ millions) Direct $7851 $9748 $16970 $34568 Indirect $2704 $2940 $7368 $13012 Induced $3661 $4218 $6279 $14158 Total Business Revenue $14216 $16905 $30617 $61738

Labor Income ($ millions) Direct $2564 $3537 $4176 $10277 Indirect $1109 $1165 $2765 $5039 Induced $1370 $1547 $2458 $5375 Total Labor Income $5042 $6249 $9399 $20691

Avg IncomeEmployee ($yr) Direct $65035 $38620 $152285 $64866 Indirect $85520 $77073 $107072 $93475 Induced $71977 $61607 $63291 $64773 Weighted Avg IncomeEmployee $70603 $47409 $102072 $70062

Notes On-airport impacts include on-airport construction activities in 2015 Totals may not add due to rounding Sources SFO Survey of SFO Tenants Survey of SFO Passengers US Department of Commerce data provided by MIG Inc (IMPLAN) and WISERTrade using data from the US Census Bureau Foreign Trade Division Calculations by EDR Group

In addition to direct impacts on the economy indirect multiplier effects are associated with suppliers of goods and services to directly affected businesses and induced multiplier impacts are generated by re-spending of additional worker income on consumer goods and services

Counting direct indirect and induced impacts SFOrsquos contribution to the Bay Area economy is 295000 jobs and $617 billion in business revenues of which $207 billion is labor income (payroll) Table 2 summarizes the economic contribution of SFO to the Bay Area economy by impact category Sections 11 through 13 provide a review of the different types of economic impacts generated by the Airport Appendix I summarizes the economic impact methodology

2015 Economic Impact Study of San Francisco International Airport 6

AIRSIDE AND GROUNDSIDE AIRPORT JOBS

Based on an airport-wide survey 39427 people work at SFO This total includes 14692 employees of passenger airlines that serve the Airport5 The breadth of jobs at SFO involves

bull Airlines both passenger and cargo activities

bull Air terminal operation including security building maintenance and facility management (construction also included)

bull Public agencies such as the FAA US Departments of Immigration and Naturalization Customs Agriculture Fish and Wildlife and Drug Enforcement Agency as well as Airport Administration (including police and fire departments)

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Freight services including courier delivery customs broker and trucking

bull Concessions including restaurants retail stores and passenger services

bull Ground transportation services including rental car taxi and limousine service and bus companies

OFF-AIRPORT JOBS SERVING AIRPORT TRAVELERS

For the fiscal year ending in June 30 2015 SFO served over 482 million passengers which included 24 million enplanements Enplanements include persons transferring from one flight to another en route to their final destinations residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region

The visitor spending analysis in this report measures the extent that SFO facilitates money brought from outside the Bay Area and spent in the Bay Area to support jobs in the hospitality sectors of the regional economy Transferring passengers and local residents two classes of SFO passengers are excluded from this analysis While transferring passengers may make purchases at the Airport between flights this spending is accounted in the revenues of terminal tenants Thus including their purchases as ldquovisitor spendingrdquo would be a double count In addition off-airport spending by residents traveling through SFO also does not count as a regional economic impact since residents spend most of their money in the Bay Area anyway Moreover as with transferring passengers money spent in the terminal is included in the analysis of on-airport employment

Overall approximately 23 million international passengers plus 6 million from other states and 12 million Southern California visitors came to the Bay Area via SFO (see Table 3) These visitors spent more than $97 billion in the bay area region on hotels food and beverage retail purchases entertainment and local travel (taxis car rental and public transportation)

5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 7

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

APPROACH

Findings in this study were developed by

1 Undertaking a rigorous survey involving airport administration and tenants to quantify on-airport direct employment

2 Conducting a visitor intercept survey of 1900 passengers At this scale the survey meets a confidence level of 99 with a 3 margin of error The survey is used to establish trip purpose levels of spending and patterns of spending of visitors The annual number of visitors and the proportion of international and domestic visitors are based on a combination of annual data from SFO and the US Departments of Transportation and Commerce

3 Adapting the Impact Analysis for Planning (IMPLAN) Modeling Package to the nine-county Bay Area region IMPLAN was used to (a) develop a county-specific economic profile of the Bay Area using data primarily from the US Department of Commerce (Bureau of Economic Analysis) and US Department of Labor to estimate jobs wages and labor income (direct effect) and (b) develop a model of the Bay Area to represent inter-metropolitan flows of business sales This includes business orders to suppliers generated by on-airport businesses off-airport businesses serving airport visitors and airport-reliant businesses (indirect effects) It also includes business sales generated by the spending of additional workersrsquo income on consumer purchases (induced effects)

4 Utilizing data from SFO in conjunction with international data from the Foreign Trade Division of the US Census Bureau (packaged by WISERTrade) and domestic freight data from the Freight Analysis Framework (FAF) of the US Department of Transportation to develop an analysis of the role of air cargo shipments in the economies of the Bay Area

5 National and California state sources are used to identify aviation specific tax impacts and major state and local tax impacts State sources include the Governorrsquos Office the California State Controllerrsquos Office and the County of San Mateo Federal sources include the Federal Aviation Administration Bureau of Economic Analysis (BEA) and the US Census Bureau These sources are used independently and in conjunction with the IMPLAN tax module to estimate tax impacts generated by SFO aviation activity for federal revenues and state and local taxes by where the taxes are generated

2015 Economic Impact Study of San Francisco International Airport 3

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 4

CHAPTER 1 INTRODUCTION AND OVERVIEW

This report provides study findings of the economic impacts of San Francisco International Airport (SFO) This chapter introduces the study provides an overview of the methodology used and summarizes the Airportrsquos overall economic contribution to the nine-county Bay Area

The Bay Area encompasses more than 6900 square miles of land with a population of approximately 76 million people and an economy that supports nearly 49 million jobs4

The operation of SFO providing terminal and related services for air travelers and cargo movement is only one part of the Airportrsquos total regional economic impact Airport-dependent businesses and airline travelers visiting the area for business or leisure support additional business activity within the Bay Area Together these on- and off-site business activities fall into five categories

bull Airport-based economic activities (airport terminal-related and tenants)

bull Off-airport businesses serving airport travelers

bull Off-airport businesses dependent on SFO for cargo movement

bull Suppliers of goods and services to SFO and air-dependent business and to off-airport businesses that serve visitors This activity is off-airport in the Bay Area

bull Re-spending of worker income (supported by airport-based activities visitor spending air-dependent businesses and suppliers of goods and services) Almost all of the re-spending is off-airport in the Bay Area

The total economic contribution of SFO is the sum of the business activity directly associated with operation of the Airport and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income The sum of on-airport activities at SFO visitor spending by air visitors to the Bay Area and regional exports supported by air cargo exceeds $346 billion in direct business sales which in turn support over 158000 direct jobs that generates a $103 billion payroll (see Table 2)

4 Sources California Statistical Abstract 2009 and BEAgov (2014)

2015 Economic Impact Study of San Francisco International Airport 5

-

Table 2 Economic Contribution of SFO to the Bay Area

Impacts Airport Generated

Visitor Spending

Air Related

Total Impact

Jobs Direct 39427 91591 27423 158441 Indirect 12964 15120 25823 53906 Induced 19028 25110 38837 82976 Total Jobs 71419 131821 92083 295323

Business Revenue ($ millions) Direct $7851 $9748 $16970 $34568 Indirect $2704 $2940 $7368 $13012 Induced $3661 $4218 $6279 $14158 Total Business Revenue $14216 $16905 $30617 $61738

Labor Income ($ millions) Direct $2564 $3537 $4176 $10277 Indirect $1109 $1165 $2765 $5039 Induced $1370 $1547 $2458 $5375 Total Labor Income $5042 $6249 $9399 $20691

Avg IncomeEmployee ($yr) Direct $65035 $38620 $152285 $64866 Indirect $85520 $77073 $107072 $93475 Induced $71977 $61607 $63291 $64773 Weighted Avg IncomeEmployee $70603 $47409 $102072 $70062

Notes On-airport impacts include on-airport construction activities in 2015 Totals may not add due to rounding Sources SFO Survey of SFO Tenants Survey of SFO Passengers US Department of Commerce data provided by MIG Inc (IMPLAN) and WISERTrade using data from the US Census Bureau Foreign Trade Division Calculations by EDR Group

In addition to direct impacts on the economy indirect multiplier effects are associated with suppliers of goods and services to directly affected businesses and induced multiplier impacts are generated by re-spending of additional worker income on consumer goods and services

Counting direct indirect and induced impacts SFOrsquos contribution to the Bay Area economy is 295000 jobs and $617 billion in business revenues of which $207 billion is labor income (payroll) Table 2 summarizes the economic contribution of SFO to the Bay Area economy by impact category Sections 11 through 13 provide a review of the different types of economic impacts generated by the Airport Appendix I summarizes the economic impact methodology

2015 Economic Impact Study of San Francisco International Airport 6

AIRSIDE AND GROUNDSIDE AIRPORT JOBS

Based on an airport-wide survey 39427 people work at SFO This total includes 14692 employees of passenger airlines that serve the Airport5 The breadth of jobs at SFO involves

bull Airlines both passenger and cargo activities

bull Air terminal operation including security building maintenance and facility management (construction also included)

bull Public agencies such as the FAA US Departments of Immigration and Naturalization Customs Agriculture Fish and Wildlife and Drug Enforcement Agency as well as Airport Administration (including police and fire departments)

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Freight services including courier delivery customs broker and trucking

bull Concessions including restaurants retail stores and passenger services

bull Ground transportation services including rental car taxi and limousine service and bus companies

OFF-AIRPORT JOBS SERVING AIRPORT TRAVELERS

For the fiscal year ending in June 30 2015 SFO served over 482 million passengers which included 24 million enplanements Enplanements include persons transferring from one flight to another en route to their final destinations residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region

The visitor spending analysis in this report measures the extent that SFO facilitates money brought from outside the Bay Area and spent in the Bay Area to support jobs in the hospitality sectors of the regional economy Transferring passengers and local residents two classes of SFO passengers are excluded from this analysis While transferring passengers may make purchases at the Airport between flights this spending is accounted in the revenues of terminal tenants Thus including their purchases as ldquovisitor spendingrdquo would be a double count In addition off-airport spending by residents traveling through SFO also does not count as a regional economic impact since residents spend most of their money in the Bay Area anyway Moreover as with transferring passengers money spent in the terminal is included in the analysis of on-airport employment

Overall approximately 23 million international passengers plus 6 million from other states and 12 million Southern California visitors came to the Bay Area via SFO (see Table 3) These visitors spent more than $97 billion in the bay area region on hotels food and beverage retail purchases entertainment and local travel (taxis car rental and public transportation)

5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 7

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 4

CHAPTER 1 INTRODUCTION AND OVERVIEW

This report provides study findings of the economic impacts of San Francisco International Airport (SFO) This chapter introduces the study provides an overview of the methodology used and summarizes the Airportrsquos overall economic contribution to the nine-county Bay Area

The Bay Area encompasses more than 6900 square miles of land with a population of approximately 76 million people and an economy that supports nearly 49 million jobs4

The operation of SFO providing terminal and related services for air travelers and cargo movement is only one part of the Airportrsquos total regional economic impact Airport-dependent businesses and airline travelers visiting the area for business or leisure support additional business activity within the Bay Area Together these on- and off-site business activities fall into five categories

bull Airport-based economic activities (airport terminal-related and tenants)

bull Off-airport businesses serving airport travelers

bull Off-airport businesses dependent on SFO for cargo movement

bull Suppliers of goods and services to SFO and air-dependent business and to off-airport businesses that serve visitors This activity is off-airport in the Bay Area

bull Re-spending of worker income (supported by airport-based activities visitor spending air-dependent businesses and suppliers of goods and services) Almost all of the re-spending is off-airport in the Bay Area

The total economic contribution of SFO is the sum of the business activity directly associated with operation of the Airport and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income The sum of on-airport activities at SFO visitor spending by air visitors to the Bay Area and regional exports supported by air cargo exceeds $346 billion in direct business sales which in turn support over 158000 direct jobs that generates a $103 billion payroll (see Table 2)

4 Sources California Statistical Abstract 2009 and BEAgov (2014)

2015 Economic Impact Study of San Francisco International Airport 5

-

Table 2 Economic Contribution of SFO to the Bay Area

Impacts Airport Generated

Visitor Spending

Air Related

Total Impact

Jobs Direct 39427 91591 27423 158441 Indirect 12964 15120 25823 53906 Induced 19028 25110 38837 82976 Total Jobs 71419 131821 92083 295323

Business Revenue ($ millions) Direct $7851 $9748 $16970 $34568 Indirect $2704 $2940 $7368 $13012 Induced $3661 $4218 $6279 $14158 Total Business Revenue $14216 $16905 $30617 $61738

Labor Income ($ millions) Direct $2564 $3537 $4176 $10277 Indirect $1109 $1165 $2765 $5039 Induced $1370 $1547 $2458 $5375 Total Labor Income $5042 $6249 $9399 $20691

Avg IncomeEmployee ($yr) Direct $65035 $38620 $152285 $64866 Indirect $85520 $77073 $107072 $93475 Induced $71977 $61607 $63291 $64773 Weighted Avg IncomeEmployee $70603 $47409 $102072 $70062

Notes On-airport impacts include on-airport construction activities in 2015 Totals may not add due to rounding Sources SFO Survey of SFO Tenants Survey of SFO Passengers US Department of Commerce data provided by MIG Inc (IMPLAN) and WISERTrade using data from the US Census Bureau Foreign Trade Division Calculations by EDR Group

In addition to direct impacts on the economy indirect multiplier effects are associated with suppliers of goods and services to directly affected businesses and induced multiplier impacts are generated by re-spending of additional worker income on consumer goods and services

Counting direct indirect and induced impacts SFOrsquos contribution to the Bay Area economy is 295000 jobs and $617 billion in business revenues of which $207 billion is labor income (payroll) Table 2 summarizes the economic contribution of SFO to the Bay Area economy by impact category Sections 11 through 13 provide a review of the different types of economic impacts generated by the Airport Appendix I summarizes the economic impact methodology

2015 Economic Impact Study of San Francisco International Airport 6

AIRSIDE AND GROUNDSIDE AIRPORT JOBS

Based on an airport-wide survey 39427 people work at SFO This total includes 14692 employees of passenger airlines that serve the Airport5 The breadth of jobs at SFO involves

bull Airlines both passenger and cargo activities

bull Air terminal operation including security building maintenance and facility management (construction also included)

bull Public agencies such as the FAA US Departments of Immigration and Naturalization Customs Agriculture Fish and Wildlife and Drug Enforcement Agency as well as Airport Administration (including police and fire departments)

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Freight services including courier delivery customs broker and trucking

bull Concessions including restaurants retail stores and passenger services

bull Ground transportation services including rental car taxi and limousine service and bus companies

OFF-AIRPORT JOBS SERVING AIRPORT TRAVELERS

For the fiscal year ending in June 30 2015 SFO served over 482 million passengers which included 24 million enplanements Enplanements include persons transferring from one flight to another en route to their final destinations residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region

The visitor spending analysis in this report measures the extent that SFO facilitates money brought from outside the Bay Area and spent in the Bay Area to support jobs in the hospitality sectors of the regional economy Transferring passengers and local residents two classes of SFO passengers are excluded from this analysis While transferring passengers may make purchases at the Airport between flights this spending is accounted in the revenues of terminal tenants Thus including their purchases as ldquovisitor spendingrdquo would be a double count In addition off-airport spending by residents traveling through SFO also does not count as a regional economic impact since residents spend most of their money in the Bay Area anyway Moreover as with transferring passengers money spent in the terminal is included in the analysis of on-airport employment

Overall approximately 23 million international passengers plus 6 million from other states and 12 million Southern California visitors came to the Bay Area via SFO (see Table 3) These visitors spent more than $97 billion in the bay area region on hotels food and beverage retail purchases entertainment and local travel (taxis car rental and public transportation)

5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 7

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

CHAPTER 1 INTRODUCTION AND OVERVIEW

This report provides study findings of the economic impacts of San Francisco International Airport (SFO) This chapter introduces the study provides an overview of the methodology used and summarizes the Airportrsquos overall economic contribution to the nine-county Bay Area

The Bay Area encompasses more than 6900 square miles of land with a population of approximately 76 million people and an economy that supports nearly 49 million jobs4

The operation of SFO providing terminal and related services for air travelers and cargo movement is only one part of the Airportrsquos total regional economic impact Airport-dependent businesses and airline travelers visiting the area for business or leisure support additional business activity within the Bay Area Together these on- and off-site business activities fall into five categories

bull Airport-based economic activities (airport terminal-related and tenants)

bull Off-airport businesses serving airport travelers

bull Off-airport businesses dependent on SFO for cargo movement

bull Suppliers of goods and services to SFO and air-dependent business and to off-airport businesses that serve visitors This activity is off-airport in the Bay Area

bull Re-spending of worker income (supported by airport-based activities visitor spending air-dependent businesses and suppliers of goods and services) Almost all of the re-spending is off-airport in the Bay Area

The total economic contribution of SFO is the sum of the business activity directly associated with operation of the Airport and the spending of its users as well as the additional business activity associated with orders to suppliers and re-spending of worker income The sum of on-airport activities at SFO visitor spending by air visitors to the Bay Area and regional exports supported by air cargo exceeds $346 billion in direct business sales which in turn support over 158000 direct jobs that generates a $103 billion payroll (see Table 2)

4 Sources California Statistical Abstract 2009 and BEAgov (2014)

2015 Economic Impact Study of San Francisco International Airport 5

-

Table 2 Economic Contribution of SFO to the Bay Area

Impacts Airport Generated

Visitor Spending

Air Related

Total Impact

Jobs Direct 39427 91591 27423 158441 Indirect 12964 15120 25823 53906 Induced 19028 25110 38837 82976 Total Jobs 71419 131821 92083 295323

Business Revenue ($ millions) Direct $7851 $9748 $16970 $34568 Indirect $2704 $2940 $7368 $13012 Induced $3661 $4218 $6279 $14158 Total Business Revenue $14216 $16905 $30617 $61738

Labor Income ($ millions) Direct $2564 $3537 $4176 $10277 Indirect $1109 $1165 $2765 $5039 Induced $1370 $1547 $2458 $5375 Total Labor Income $5042 $6249 $9399 $20691

Avg IncomeEmployee ($yr) Direct $65035 $38620 $152285 $64866 Indirect $85520 $77073 $107072 $93475 Induced $71977 $61607 $63291 $64773 Weighted Avg IncomeEmployee $70603 $47409 $102072 $70062

Notes On-airport impacts include on-airport construction activities in 2015 Totals may not add due to rounding Sources SFO Survey of SFO Tenants Survey of SFO Passengers US Department of Commerce data provided by MIG Inc (IMPLAN) and WISERTrade using data from the US Census Bureau Foreign Trade Division Calculations by EDR Group

In addition to direct impacts on the economy indirect multiplier effects are associated with suppliers of goods and services to directly affected businesses and induced multiplier impacts are generated by re-spending of additional worker income on consumer goods and services

Counting direct indirect and induced impacts SFOrsquos contribution to the Bay Area economy is 295000 jobs and $617 billion in business revenues of which $207 billion is labor income (payroll) Table 2 summarizes the economic contribution of SFO to the Bay Area economy by impact category Sections 11 through 13 provide a review of the different types of economic impacts generated by the Airport Appendix I summarizes the economic impact methodology

2015 Economic Impact Study of San Francisco International Airport 6

AIRSIDE AND GROUNDSIDE AIRPORT JOBS

Based on an airport-wide survey 39427 people work at SFO This total includes 14692 employees of passenger airlines that serve the Airport5 The breadth of jobs at SFO involves

bull Airlines both passenger and cargo activities

bull Air terminal operation including security building maintenance and facility management (construction also included)

bull Public agencies such as the FAA US Departments of Immigration and Naturalization Customs Agriculture Fish and Wildlife and Drug Enforcement Agency as well as Airport Administration (including police and fire departments)

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Freight services including courier delivery customs broker and trucking

bull Concessions including restaurants retail stores and passenger services

bull Ground transportation services including rental car taxi and limousine service and bus companies

OFF-AIRPORT JOBS SERVING AIRPORT TRAVELERS

For the fiscal year ending in June 30 2015 SFO served over 482 million passengers which included 24 million enplanements Enplanements include persons transferring from one flight to another en route to their final destinations residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region

The visitor spending analysis in this report measures the extent that SFO facilitates money brought from outside the Bay Area and spent in the Bay Area to support jobs in the hospitality sectors of the regional economy Transferring passengers and local residents two classes of SFO passengers are excluded from this analysis While transferring passengers may make purchases at the Airport between flights this spending is accounted in the revenues of terminal tenants Thus including their purchases as ldquovisitor spendingrdquo would be a double count In addition off-airport spending by residents traveling through SFO also does not count as a regional economic impact since residents spend most of their money in the Bay Area anyway Moreover as with transferring passengers money spent in the terminal is included in the analysis of on-airport employment

Overall approximately 23 million international passengers plus 6 million from other states and 12 million Southern California visitors came to the Bay Area via SFO (see Table 3) These visitors spent more than $97 billion in the bay area region on hotels food and beverage retail purchases entertainment and local travel (taxis car rental and public transportation)

5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 7

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

-

Table 2 Economic Contribution of SFO to the Bay Area

Impacts Airport Generated

Visitor Spending

Air Related

Total Impact

Jobs Direct 39427 91591 27423 158441 Indirect 12964 15120 25823 53906 Induced 19028 25110 38837 82976 Total Jobs 71419 131821 92083 295323

Business Revenue ($ millions) Direct $7851 $9748 $16970 $34568 Indirect $2704 $2940 $7368 $13012 Induced $3661 $4218 $6279 $14158 Total Business Revenue $14216 $16905 $30617 $61738

Labor Income ($ millions) Direct $2564 $3537 $4176 $10277 Indirect $1109 $1165 $2765 $5039 Induced $1370 $1547 $2458 $5375 Total Labor Income $5042 $6249 $9399 $20691

Avg IncomeEmployee ($yr) Direct $65035 $38620 $152285 $64866 Indirect $85520 $77073 $107072 $93475 Induced $71977 $61607 $63291 $64773 Weighted Avg IncomeEmployee $70603 $47409 $102072 $70062

Notes On-airport impacts include on-airport construction activities in 2015 Totals may not add due to rounding Sources SFO Survey of SFO Tenants Survey of SFO Passengers US Department of Commerce data provided by MIG Inc (IMPLAN) and WISERTrade using data from the US Census Bureau Foreign Trade Division Calculations by EDR Group

In addition to direct impacts on the economy indirect multiplier effects are associated with suppliers of goods and services to directly affected businesses and induced multiplier impacts are generated by re-spending of additional worker income on consumer goods and services

Counting direct indirect and induced impacts SFOrsquos contribution to the Bay Area economy is 295000 jobs and $617 billion in business revenues of which $207 billion is labor income (payroll) Table 2 summarizes the economic contribution of SFO to the Bay Area economy by impact category Sections 11 through 13 provide a review of the different types of economic impacts generated by the Airport Appendix I summarizes the economic impact methodology

2015 Economic Impact Study of San Francisco International Airport 6

AIRSIDE AND GROUNDSIDE AIRPORT JOBS

Based on an airport-wide survey 39427 people work at SFO This total includes 14692 employees of passenger airlines that serve the Airport5 The breadth of jobs at SFO involves

bull Airlines both passenger and cargo activities

bull Air terminal operation including security building maintenance and facility management (construction also included)

bull Public agencies such as the FAA US Departments of Immigration and Naturalization Customs Agriculture Fish and Wildlife and Drug Enforcement Agency as well as Airport Administration (including police and fire departments)

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Freight services including courier delivery customs broker and trucking

bull Concessions including restaurants retail stores and passenger services

bull Ground transportation services including rental car taxi and limousine service and bus companies

OFF-AIRPORT JOBS SERVING AIRPORT TRAVELERS

For the fiscal year ending in June 30 2015 SFO served over 482 million passengers which included 24 million enplanements Enplanements include persons transferring from one flight to another en route to their final destinations residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region

The visitor spending analysis in this report measures the extent that SFO facilitates money brought from outside the Bay Area and spent in the Bay Area to support jobs in the hospitality sectors of the regional economy Transferring passengers and local residents two classes of SFO passengers are excluded from this analysis While transferring passengers may make purchases at the Airport between flights this spending is accounted in the revenues of terminal tenants Thus including their purchases as ldquovisitor spendingrdquo would be a double count In addition off-airport spending by residents traveling through SFO also does not count as a regional economic impact since residents spend most of their money in the Bay Area anyway Moreover as with transferring passengers money spent in the terminal is included in the analysis of on-airport employment

Overall approximately 23 million international passengers plus 6 million from other states and 12 million Southern California visitors came to the Bay Area via SFO (see Table 3) These visitors spent more than $97 billion in the bay area region on hotels food and beverage retail purchases entertainment and local travel (taxis car rental and public transportation)

5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 7

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

AIRSIDE AND GROUNDSIDE AIRPORT JOBS

Based on an airport-wide survey 39427 people work at SFO This total includes 14692 employees of passenger airlines that serve the Airport5 The breadth of jobs at SFO involves

bull Airlines both passenger and cargo activities

bull Air terminal operation including security building maintenance and facility management (construction also included)

bull Public agencies such as the FAA US Departments of Immigration and Naturalization Customs Agriculture Fish and Wildlife and Drug Enforcement Agency as well as Airport Administration (including police and fire departments)

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Freight services including courier delivery customs broker and trucking

bull Concessions including restaurants retail stores and passenger services

bull Ground transportation services including rental car taxi and limousine service and bus companies

OFF-AIRPORT JOBS SERVING AIRPORT TRAVELERS

For the fiscal year ending in June 30 2015 SFO served over 482 million passengers which included 24 million enplanements Enplanements include persons transferring from one flight to another en route to their final destinations residents of the Bay Area who are traveling and non-residents returning home after visiting the San Francisco region

The visitor spending analysis in this report measures the extent that SFO facilitates money brought from outside the Bay Area and spent in the Bay Area to support jobs in the hospitality sectors of the regional economy Transferring passengers and local residents two classes of SFO passengers are excluded from this analysis While transferring passengers may make purchases at the Airport between flights this spending is accounted in the revenues of terminal tenants Thus including their purchases as ldquovisitor spendingrdquo would be a double count In addition off-airport spending by residents traveling through SFO also does not count as a regional economic impact since residents spend most of their money in the Bay Area anyway Moreover as with transferring passengers money spent in the terminal is included in the analysis of on-airport employment

Overall approximately 23 million international passengers plus 6 million from other states and 12 million Southern California visitors came to the Bay Area via SFO (see Table 3) These visitors spent more than $97 billion in the bay area region on hotels food and beverage retail purchases entertainment and local travel (taxis car rental and public transportation)

5 Total on-airport employment includes the Virgin America airline headquarters located in Burlingame CA and affiliated with SFO

2015 Economic Impact Study of San Francisco International Airport 7

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

Table 3 Visitors to the San Francisco Region arriving through SFO (year ending June 2015)

Market Passengers Domestic Origin and Destination at SFO 27921024 Enplaned Passenger at SFO 13960512 Percent of Enplaned Passengers who are Visitors 5135 Number of Visitors 7168886 Domestic Visitors by Origin Percent Originating in California 1633 Domestic Visitors Originating in California 1170815 Domestic Visitors Originating in Rest of US 5998070 International Visitors Arriving via US Flag Airlines Origin and Destination at SFO 2387658 Enplaned Passenger at SFO 1193829 Percent of Enplaned Passengers who are Visitors 4270 Number of Visitors 509805 International Visitors Arriving via Non-US Flag Airlines Origin and Destination at SFO 5909298 Enplaned Passenger at SFO 2954649 Percent of Enplaned Passengers who are Visitors 6209 Number of Visitors 1834413 Total International Visitors (US Flag and Non-US Flag) 2344218 Total Visitors 9513104

Note This table does not include travelers using SFO to connect from one flight to another Sources SFO Traffic Statistics US DOT OampD Survey 2015 US DOT T-100 Database IATA PaxIS Database US DOC International Air Travel Statistics 2015 US DOC National Travel and Tourism Office (NTTO)

RELATED INDUSTRIES JOBS THAT RELY ON AIR CARGO

In the calendar year 2015 commodities valued at roughly $289 billion were shipped to international and domestic destinations from SFO Of this total value about $17 billion originated in the Bay Area

Products originating in California and shipped internationally from SFO primary consist of technology goods Three commodity groups account for an estimated 82 of total value exported internationally which include electrical machinery industrial machinery (including computers) and optics and instruments with the remaining value spread cross pharmaceutical products aircraft manufacturing chemicals plastics and other commodities Figure 1 presents the value of California exports through SFO (green legend) and all of California air exports (blue legend) The yellow line and y-axis to the right show the percent of SFO exports compared to all air exports from California This figure highlights that between 30 and 46 of Californiarsquos three leading exported commodities are shipped through SFO

2015 Economic Impact Study of San Francisco International Airport 8

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

Figure 1 International Exports Shipped from SFO and California by Industry Sector

Sources WISERTrade using data from the US Census Bureau Foreign Trade Division and the Freight Analysis Framework Calculations by EDR Group

$0 $5000 $10000 $15000 $20000 $25000

Others

Plastics amp Articles

Miscellaneous Chemical Products

Aircraft Spacecraft amp Parts

Pharmaceutical Products

Optic Photo amp MedicSurgical Instrments

Industrial Machinery (incl Computers)

Electric Machinery Sound amp TV Equip

CA SFO

International Exports in $ millions

Table 4 below presents how SFO ranks among the top five airports for these same three commodities groups previously mentioned SFO ranges between 8-12 of national exports and ranks between second and fifth nationally for electric machinery industrial machinery (including computers) and opticalsurgical instrument exports

Table 4 Airport Ranking for Top Three Exported Commodities by Percent of Total Electric Machinery Sound and

TV Equip Industrial Machinery (Incl

Computers) Optic Photo and Medic

Surgical Instruments Airport Total Airport Total Airport Total MSY 127 JFK 130 ORD 135 LAX 123 SFO 118 LAX 107 DFW 92 MIA 105 JFK 102 SFO 90 ORD 97 MSY 93 JFK 86 LAX 96 SFO 79 Total ($ millions) $ 89050 Total ($ millions) $ 66481 Total ($ millions) $ 61132

Source WISERTrade

In 2015 domestic outbound shipments from SFO totaled $83 billion and consisted primarily of electronics precision instruments pharmaceuticals motorized vehicles and machinery as shown in Figure 2

2015 Economic Impact Study of San Francisco International Airport 9

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

Figure 2 Domestic Outbound Air Shipments from SFO

Electronics 65

All Others 9

Machinery 2

Motorized Vehicles 3

Pharmaceuticals 9

Precision Instruments 12

Source FHWA Freight Analysis Framework (FAF)

COMPREHENSIVE ANALYSIS

Chapter Two places SFO in a regional national and international context

Chapters Three through Five review the multiple roles of SFO in the Bay Area Economy Chapter Three assesses SFO as an economic center of the Bay Area SFO is a jobs hub where almost 38000 people work In addition purchases of goods and services to support the Airport and wages earned and spent by workers support an additional 30000 jobs in the region

Chapter Four reviews how air service at SFO facilitates travel from domestic and international locations traveling for business and for personal reasons Altogether visitors spent about $10 billion in the Bay Area during 2015

In Chapter Five the study examines the role SFO plays by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets In 2015 almost $17 billion of products originating in the Bay Area were shipped to customers through SFO

Chapter Six contains an accounting of federal state and local tax revenues linked to SFO In total $4 billion in revenues are traced to the Airport

Chapter Seven presents the distribution of impacts by each of the nine Bay Area counties

Appendix I and Appendix II review the methodology used for this study and Appendix III includes copies of the survey instruments used to document tenant employment on-airport and visitor spending

2015 Economic Impact Study of San Francisco International Airport 10

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

CHAPTER 2 NATIONAL CONTEXT

The air transportation industry is a significant contributor to the US economy both in terms of output and employment In 2015 for instance the sector generated $879 billion in gross domestic product (GDP) and was responsible for employing 449000 full-time equivalent (FTE) workers6 The role of air transportation extends well beyond industry operations alone however air travel indirectly stimulates both the global and national economy by facilitating trade and transporting passengers

San Francisco International Airport (SFO) is the largest airport in the Bay Area the seventh largest in the United States and the 21st largest in the world in terms of air-passenger traffic7 When combined with Oakland International Airport and Mineta San Joseacute International Airport the three together constitute the seventh largest domestic passenger market in the US8 In FY 2015 SFO served 376 million total domestic passengers (enplaned and deplaned) capturing 66 of domestic Bay Area market share Meanwhile SFO had an international Bay Area market share of 95 with over 106 million international passengers served (enplaned and deplaned)9

This section outlines the role that SFO plays in facilitating domestic and international trade The role of SFO contributing to the regional economy as a domestic and international gateway for air cargo shipments from the Bay Area nine-county region is presented in Chapter Six

CONTEXT THE VIBRANT BAY AREA ECONOMY

The 6900 square mile nine-county Bay Area (see Figure 3) is home to 76 million residents which accounts for 19 of Californiarsquos population The Bay Arearsquos population density of over 1000 people per square mile of land is more than four-times the California average By itself the region would be the nationrsquos 13th most populous state falling between Washington at 70 million and Virginia at 83 million residents Moreover the per-capita income of Bay Area residents is 39 above the California average and 51 above the national average

6 US Department of Commerce Bureau of Economic Analysis Industry Economic Accounts Interactive Tables available at httpwwwbeagovindustryindexhtm as of April 2016

7 2015 SFO Annual Report 2015 San Francisco CA San Francisco International Airport httpmediaflysfocommedia201520Annual20Reportpdf Airports Council International

8 Federal Aviation Administration Passenger Boarding (Enplanement) and All-Cargo Data for US Airports 2014 9 2015 SFO Annual report SFOrsquos total Bay Area market share including both domestic and international passengers was 70

(or 482 million passengers) in FY2015

2015 Economic Impact Study of San Francisco International Airport 11

Figure 3 Illustration of the Bay Area by County

Source Data ndash RITA NTAD (National Transit Atlas Database) Graphic ndash EDR Group

Some of the largest and fastest growing companies in the country that make the region home fuel the economy of the Bay Area Twenty-eight of the global Fortune 500 and 29 of the US Fortune 500 are headquartered locally Both of these groups represent more than $10 trillion in sales Since 2011 no Fortune 500 companies have relocated from the Bay Area and a new entrant data management and cloud services provider NetApp has joined the list Beyond just large companies the Bay Area is home to 30 of the Inc Fastest Growing 500 list collectively accounting for approximately $17 billion in sales The Bay Area is also home to three of the top ten global companies ranked by market capitalization including the two most valuable companies in the world Apple and Google If the Bay Area were a country it would be the 21st largest economy in the world with a gross regional product that falls between the gross domestic products of Switzerland (20 among nations) and Sweden (21)10

This generally high-income level is supported by competitive economic strengths in the national and global economies The Bay Area is a national center for business innovation and technology while the city of San Francisco is one of the United Statesrsquo leading domestic and international tourist destinations Silicon Valley located in Santa Clara County is renowned as the countryrsquos technology (hardware and software) capital Other leading industries include financial activities pharmaceutical and medicine

10 Source Bay Area Economic Institute of the Bay Area Council Bay Area Fast Facts (wwwbayareaeconomyorg)

2015 Economic Impact Study of San Francisco International Airport 12

manufacturing professional scientific and technical services information services and higher education as well as hospitality related industries

These core strengths of the Bay Area economy have specialized air service needs that are served by San Francisco International Airport11 The high-tech and pharmaceutical manufacturing knowledge based service sectors hospitality and agricultural industries rely on air services much more than other sectors for both passenger and cargo travel needs for the following reasons

bull Products produced tend to be high-value delicate and time-sensitive and need to be shipped by air Typically these are technology-related products where value reflects high labor costs and precision manufacturing but may also be perishable agricultural products (including fish and meat)

bull Products that are heavy to ship but that carry a large return on transportation costs invested including just-in-time manufacturing and equipment needed to maintain high yielding production

bull Business and professional services depend on the sale of professional expertise which often requires travel to meet with clients and make presentations

bull Companies have statewide western national and even global business networks requiring frequent and often international travel between various offices

bull Airports serve resorts and tourist destinations

Producers of high-tech products business services and computer-oriented firms are among the industries that spend the most money on air services Most of these industries spend at least 40 more on air services than the average industry in the United States and a few spend 50 or more than the average of all industries in the United States12

SFOrsquoS ROLE IN INTERNATIONAL TRADE

Given its proximity to Asia markets SFO has historically played an important role in international trade Over the past decade the Airport experienced a trend in export activity similar to that of airports across the country (Table 5) From 2009 to 2015 the total air value of exports13 passing through SFO grew at an average annual rate of 32 from $21 billion to $253 billion The value of exports at all US airports (including SFO) rose from $3344 billion to $4388 billion or 46 annually during the same period

Despite being one of three commercial service airports within the region SFO now accounts for a majority of all export value that flies out of the Bay Area (Table 5) In 2015 Oakland International Airport exported $260 million worth of commodities with an annual average growth rate of 83 from 2009 to 2015 The San Joseacute International Airport exported an air value of $390 million in 2014 and experienced an annual average growth rate of 56 from 2009 to 2014 In 2015 the value of international air exports from San

11 The following is based on research conducted for Aviation Cooperative Research Program 03-28 The Role of US Airports in the National Economy for the Transportation Research Board of the National Academies published as ACRP Report 132

12 Ibid 13 These are the value of the goods at the US port of export The value shall be the selling price (or the cost if the goods are

not sold) including inland or domestic freight insurance and other charges to the US seaport airport or land border port of export

2015 Economic Impact Study of San Francisco International Airport 13

Joseacute International jumped by almost a factor of three to $106 billion in 2015 At this writing it is not clear if this represents a long-term increase or is a one-year anomaly

Table 5 Air Value of US and Bay Area Export by Airport 2009-2015 Airport 2009 2010 2011 2012 2013 2014 2015 SFO $210 $274 $265 $261 $281 $274 $253 SJC $03 $03 $03 $04 $05 $04 $11 OAK $02 $02 $02 $02 $03 $04 $03 Total from Bay Area International Airports $215 $279 $270 $268 $289 $281 $266

Source US Census Bureau Foreign Trade Division provided by WISERTrade

EXPORT COMMODITIES

While SFO serves as the gateway for a host of commodities the Airportrsquos top exports reflect the strengths of the Bay Area regional economy (Table 6) In 2015 electric machinery sound equipment and TV equipment exports alone were valued at $79 billion or over 32 of the total value exported through the Airport In 2013 exports of electric machinery sound equipment and TV equipment exports peaked at $104 billion dollars and have been declining since (a 23 decline from 2013-2015) However machinery and computers opticphotomedical instruments pharmaceutical aircraft manufacturing and agriculture sector exports have been growing in both value and weight By measure of air weight edible fruits and nuts topped the list of export commodities at SFO in 2015 at 255 thousand metric tons or 18 of the Airportrsquos total Industrial machinery (including computers) electric machinery and optic photo and medical instruments constituted a significant share of the commodity weight exported on SFO flights in 2015

2015 Economic Impact Study of San Francisco International Airport 14

-

-

-

-

Table 6 Top Ten SFO Export Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electronic Machinery SoundTV Equip $7984 -9 -15 2 Machinery and Computers $7825 52 72 3 OpticPhotoMedical Instruments $4845 29 43 4 Pharmaceutical Products $1292 58 79 5 Aircraft Spacecraft and Parts $824 71 94 6 Misc Chemical Products $488 05 01 7 Plastics $166 57 78 8 Photo or Cinema Goods $143 62 84 9 Edible Fruit and Nuts $138 23 35

10 Tanning Dye Paint and Paint $125 15 24 All Commodities $25302 20 32

BY AIR WEIGHT

Rank Commodity

Air Weight

(In 000s of Metric

Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Edible Fruit and Nuts 255 13 21 2 Machinery and Computers 246 7 11 3 Electric Machinery SoundTV Equip 149 -13 -24 4 OpticPhotoMedical Instruments 109 12 19 5 Vegetables Roots and Tubers 50 33 49 6 Meat 45 353 286 7 Plastics 39 2 03 8 Miscellaneous Chemical Products 35 -12 -21 9 Beverages Spirits and Vinegar 29 78 101

10 Articles of Iron or Steel 25 -25 -46 All Commodities 1387 76 12

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Since 2009 SFO has witnessed double-digit growth in the export of several commodities (Table 6) Meat exports by volume saw an annual average increase of 286 over the past six years with a notable increase of 59 just between 2014 and 2015

2015 Economic Impact Study of San Francisco International Airport 15

IMPORT COMMODITIES

SFO also serves as the entryway to the Bay Area for many commodity types (Table 7)14 Valued at $121 billion commodities in electric machinery soundTV equipment topped the Airportrsquos list of most valuable imports in 2015 These commodities when combined with those in the industrial machinery including computers optic photographic and medical instruments accounted for 79 of the Airportrsquos total import value in 2015 Pharmaceuticals chemical products pearls stones metals coins photo or cinema goods also constituted a significant portion of total import value at SFO last year while fish apparel plastics ceramics and vehicles comprised most of the Airportrsquos total import weight beyond typical electric-related commodities

Pharmaceuticals experienced strong growth over the last six years not only as an export commodity but also as an import to SFO (Table 7) From 2009-2015 the value of import commodities in this category grew from $2257 million to $13 billion an increase of 726 All of the top commodity types increased in value while only apparel (not including knit) and vehicles declined in volume during the same period

14 US district and port data do not reflect state of origin or destination but indicate pass-through location only There are no data available on state imports because it is impossible to tell the ultimate destination once goods enter the country

2015 Economic Impact Study of San Francisco International Airport 16

-

-

-

-

Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electric Machinery SoundTV Equip $12115 44 62 2 Machinery and Computers $7225 23 36 3 OpticPhotoMedical Instruments $2462 68 91 4 Special Classification $1402 48 68 5 Pharmaceutical Products $1277 726 422 6 Miscellaneous Chemical Products $641 62 84 7 PearlsStonesMetalsCoins $221 26 39 8 Photo or Cinema Goods $177 43 62 9 Apparel (not including knit) $168 14 22

10 Vehicles (except rail or tramway) $139 82 105 All Commodities $27571 47 66

BY AIR WEIGHT

Rank Commodity

Air Weight (In 000s of

Metric Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Machinery and Computers 432 1 02 2 Electric Machinery SoundTV Equip 408 43 61 3 OpticPhotoMedical Instruments 89 17 27 4 Fish Crustaceans and Aquatic 74 107 128 5 Apparel (not including knit) 52 -2 -04 6 Apparel (including knit) 49 10 16 7 Plastics 40 44 62 8 Special Classification 39 33 49 9 Ceramic Products 36 28 42

10 Vehicles (except rail or tramway) 35 -18 -32 All Commodities 1647 298 44

Source US Census Bureau Foreign Trade Division provided by WISERTrade Trade with Asia

SFO is a national gateway in terms of trade with Asia15 In 2015 the Airport was the fourth busiest in the nation in terms of trans-pacific trade serving as the pass-through port for $187 billion in total Asia export value which has grown from $154 billion in 2009 and peaked at $22 billion in 2013 (Figure 4) When measured by tonnage exported to Asia SFO ranked fourth among US airports each year since 2009 behind Los Angeles International (LAX) Chicago OrsquoHare International (ORD) and John F Kennedy International (JFK)

In 2015 Asia export value accounted for 74 of the Airportrsquos total export value This reliance on Asia exports has been consistent at SFO During the 2009-2015 timeframe SFO and JFK alternated as the lead

15 Defined here as the Asia continent excluding the Middle East and Turkey

2015 Economic Impact Study of San Francisco International Airport 17

US airport in in terms of value per exported ton as shown in Figure 5 Led by industrial machinery electrical machinery and optical instruments the value of exports to Asia through SFO averaged about $200000 per ton in 2015

Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$00

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013 2014 2015

Air V

alue

of E

xpor

ts to

Asia

(in

billi

ons)

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$50000

$100000

$150000

$200000

$250000

2009 2010 2011 2012 2013 2014 2015

Aver

age

Valu

e pe

r Met

ric T

on

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 18

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Joseacute International jumped by almost a factor of three to $106 billion in 2015 At this writing it is not clear if this represents a long-term increase or is a one-year anomaly

Table 5 Air Value of US and Bay Area Export by Airport 2009-2015 Airport 2009 2010 2011 2012 2013 2014 2015 SFO $210 $274 $265 $261 $281 $274 $253 SJC $03 $03 $03 $04 $05 $04 $11 OAK $02 $02 $02 $02 $03 $04 $03 Total from Bay Area International Airports $215 $279 $270 $268 $289 $281 $266

Source US Census Bureau Foreign Trade Division provided by WISERTrade

EXPORT COMMODITIES

While SFO serves as the gateway for a host of commodities the Airportrsquos top exports reflect the strengths of the Bay Area regional economy (Table 6) In 2015 electric machinery sound equipment and TV equipment exports alone were valued at $79 billion or over 32 of the total value exported through the Airport In 2013 exports of electric machinery sound equipment and TV equipment exports peaked at $104 billion dollars and have been declining since (a 23 decline from 2013-2015) However machinery and computers opticphotomedical instruments pharmaceutical aircraft manufacturing and agriculture sector exports have been growing in both value and weight By measure of air weight edible fruits and nuts topped the list of export commodities at SFO in 2015 at 255 thousand metric tons or 18 of the Airportrsquos total Industrial machinery (including computers) electric machinery and optic photo and medical instruments constituted a significant share of the commodity weight exported on SFO flights in 2015

2015 Economic Impact Study of San Francisco International Airport 14

-

-

-

-

Table 6 Top Ten SFO Export Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electronic Machinery SoundTV Equip $7984 -9 -15 2 Machinery and Computers $7825 52 72 3 OpticPhotoMedical Instruments $4845 29 43 4 Pharmaceutical Products $1292 58 79 5 Aircraft Spacecraft and Parts $824 71 94 6 Misc Chemical Products $488 05 01 7 Plastics $166 57 78 8 Photo or Cinema Goods $143 62 84 9 Edible Fruit and Nuts $138 23 35

10 Tanning Dye Paint and Paint $125 15 24 All Commodities $25302 20 32

BY AIR WEIGHT

Rank Commodity

Air Weight

(In 000s of Metric

Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Edible Fruit and Nuts 255 13 21 2 Machinery and Computers 246 7 11 3 Electric Machinery SoundTV Equip 149 -13 -24 4 OpticPhotoMedical Instruments 109 12 19 5 Vegetables Roots and Tubers 50 33 49 6 Meat 45 353 286 7 Plastics 39 2 03 8 Miscellaneous Chemical Products 35 -12 -21 9 Beverages Spirits and Vinegar 29 78 101

10 Articles of Iron or Steel 25 -25 -46 All Commodities 1387 76 12

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Since 2009 SFO has witnessed double-digit growth in the export of several commodities (Table 6) Meat exports by volume saw an annual average increase of 286 over the past six years with a notable increase of 59 just between 2014 and 2015

2015 Economic Impact Study of San Francisco International Airport 15

IMPORT COMMODITIES

SFO also serves as the entryway to the Bay Area for many commodity types (Table 7)14 Valued at $121 billion commodities in electric machinery soundTV equipment topped the Airportrsquos list of most valuable imports in 2015 These commodities when combined with those in the industrial machinery including computers optic photographic and medical instruments accounted for 79 of the Airportrsquos total import value in 2015 Pharmaceuticals chemical products pearls stones metals coins photo or cinema goods also constituted a significant portion of total import value at SFO last year while fish apparel plastics ceramics and vehicles comprised most of the Airportrsquos total import weight beyond typical electric-related commodities

Pharmaceuticals experienced strong growth over the last six years not only as an export commodity but also as an import to SFO (Table 7) From 2009-2015 the value of import commodities in this category grew from $2257 million to $13 billion an increase of 726 All of the top commodity types increased in value while only apparel (not including knit) and vehicles declined in volume during the same period

14 US district and port data do not reflect state of origin or destination but indicate pass-through location only There are no data available on state imports because it is impossible to tell the ultimate destination once goods enter the country

2015 Economic Impact Study of San Francisco International Airport 16

-

-

-

-

Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electric Machinery SoundTV Equip $12115 44 62 2 Machinery and Computers $7225 23 36 3 OpticPhotoMedical Instruments $2462 68 91 4 Special Classification $1402 48 68 5 Pharmaceutical Products $1277 726 422 6 Miscellaneous Chemical Products $641 62 84 7 PearlsStonesMetalsCoins $221 26 39 8 Photo or Cinema Goods $177 43 62 9 Apparel (not including knit) $168 14 22

10 Vehicles (except rail or tramway) $139 82 105 All Commodities $27571 47 66

BY AIR WEIGHT

Rank Commodity

Air Weight (In 000s of

Metric Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Machinery and Computers 432 1 02 2 Electric Machinery SoundTV Equip 408 43 61 3 OpticPhotoMedical Instruments 89 17 27 4 Fish Crustaceans and Aquatic 74 107 128 5 Apparel (not including knit) 52 -2 -04 6 Apparel (including knit) 49 10 16 7 Plastics 40 44 62 8 Special Classification 39 33 49 9 Ceramic Products 36 28 42

10 Vehicles (except rail or tramway) 35 -18 -32 All Commodities 1647 298 44

Source US Census Bureau Foreign Trade Division provided by WISERTrade Trade with Asia

SFO is a national gateway in terms of trade with Asia15 In 2015 the Airport was the fourth busiest in the nation in terms of trans-pacific trade serving as the pass-through port for $187 billion in total Asia export value which has grown from $154 billion in 2009 and peaked at $22 billion in 2013 (Figure 4) When measured by tonnage exported to Asia SFO ranked fourth among US airports each year since 2009 behind Los Angeles International (LAX) Chicago OrsquoHare International (ORD) and John F Kennedy International (JFK)

In 2015 Asia export value accounted for 74 of the Airportrsquos total export value This reliance on Asia exports has been consistent at SFO During the 2009-2015 timeframe SFO and JFK alternated as the lead

15 Defined here as the Asia continent excluding the Middle East and Turkey

2015 Economic Impact Study of San Francisco International Airport 17

US airport in in terms of value per exported ton as shown in Figure 5 Led by industrial machinery electrical machinery and optical instruments the value of exports to Asia through SFO averaged about $200000 per ton in 2015

Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$00

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013 2014 2015

Air V

alue

of E

xpor

ts to

Asia

(in

billi

ons)

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$50000

$100000

$150000

$200000

$250000

2009 2010 2011 2012 2013 2014 2015

Aver

age

Valu

e pe

r Met

ric T

on

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 18

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

-

-

-

-

Table 6 Top Ten SFO Export Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electronic Machinery SoundTV Equip $7984 -9 -15 2 Machinery and Computers $7825 52 72 3 OpticPhotoMedical Instruments $4845 29 43 4 Pharmaceutical Products $1292 58 79 5 Aircraft Spacecraft and Parts $824 71 94 6 Misc Chemical Products $488 05 01 7 Plastics $166 57 78 8 Photo or Cinema Goods $143 62 84 9 Edible Fruit and Nuts $138 23 35

10 Tanning Dye Paint and Paint $125 15 24 All Commodities $25302 20 32

BY AIR WEIGHT

Rank Commodity

Air Weight

(In 000s of Metric

Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Edible Fruit and Nuts 255 13 21 2 Machinery and Computers 246 7 11 3 Electric Machinery SoundTV Equip 149 -13 -24 4 OpticPhotoMedical Instruments 109 12 19 5 Vegetables Roots and Tubers 50 33 49 6 Meat 45 353 286 7 Plastics 39 2 03 8 Miscellaneous Chemical Products 35 -12 -21 9 Beverages Spirits and Vinegar 29 78 101

10 Articles of Iron or Steel 25 -25 -46 All Commodities 1387 76 12

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Since 2009 SFO has witnessed double-digit growth in the export of several commodities (Table 6) Meat exports by volume saw an annual average increase of 286 over the past six years with a notable increase of 59 just between 2014 and 2015

2015 Economic Impact Study of San Francisco International Airport 15

IMPORT COMMODITIES

SFO also serves as the entryway to the Bay Area for many commodity types (Table 7)14 Valued at $121 billion commodities in electric machinery soundTV equipment topped the Airportrsquos list of most valuable imports in 2015 These commodities when combined with those in the industrial machinery including computers optic photographic and medical instruments accounted for 79 of the Airportrsquos total import value in 2015 Pharmaceuticals chemical products pearls stones metals coins photo or cinema goods also constituted a significant portion of total import value at SFO last year while fish apparel plastics ceramics and vehicles comprised most of the Airportrsquos total import weight beyond typical electric-related commodities

Pharmaceuticals experienced strong growth over the last six years not only as an export commodity but also as an import to SFO (Table 7) From 2009-2015 the value of import commodities in this category grew from $2257 million to $13 billion an increase of 726 All of the top commodity types increased in value while only apparel (not including knit) and vehicles declined in volume during the same period

14 US district and port data do not reflect state of origin or destination but indicate pass-through location only There are no data available on state imports because it is impossible to tell the ultimate destination once goods enter the country

2015 Economic Impact Study of San Francisco International Airport 16

-

-

-

-

Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electric Machinery SoundTV Equip $12115 44 62 2 Machinery and Computers $7225 23 36 3 OpticPhotoMedical Instruments $2462 68 91 4 Special Classification $1402 48 68 5 Pharmaceutical Products $1277 726 422 6 Miscellaneous Chemical Products $641 62 84 7 PearlsStonesMetalsCoins $221 26 39 8 Photo or Cinema Goods $177 43 62 9 Apparel (not including knit) $168 14 22

10 Vehicles (except rail or tramway) $139 82 105 All Commodities $27571 47 66

BY AIR WEIGHT

Rank Commodity

Air Weight (In 000s of

Metric Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Machinery and Computers 432 1 02 2 Electric Machinery SoundTV Equip 408 43 61 3 OpticPhotoMedical Instruments 89 17 27 4 Fish Crustaceans and Aquatic 74 107 128 5 Apparel (not including knit) 52 -2 -04 6 Apparel (including knit) 49 10 16 7 Plastics 40 44 62 8 Special Classification 39 33 49 9 Ceramic Products 36 28 42

10 Vehicles (except rail or tramway) 35 -18 -32 All Commodities 1647 298 44

Source US Census Bureau Foreign Trade Division provided by WISERTrade Trade with Asia

SFO is a national gateway in terms of trade with Asia15 In 2015 the Airport was the fourth busiest in the nation in terms of trans-pacific trade serving as the pass-through port for $187 billion in total Asia export value which has grown from $154 billion in 2009 and peaked at $22 billion in 2013 (Figure 4) When measured by tonnage exported to Asia SFO ranked fourth among US airports each year since 2009 behind Los Angeles International (LAX) Chicago OrsquoHare International (ORD) and John F Kennedy International (JFK)

In 2015 Asia export value accounted for 74 of the Airportrsquos total export value This reliance on Asia exports has been consistent at SFO During the 2009-2015 timeframe SFO and JFK alternated as the lead

15 Defined here as the Asia continent excluding the Middle East and Turkey

2015 Economic Impact Study of San Francisco International Airport 17

US airport in in terms of value per exported ton as shown in Figure 5 Led by industrial machinery electrical machinery and optical instruments the value of exports to Asia through SFO averaged about $200000 per ton in 2015

Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$00

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013 2014 2015

Air V

alue

of E

xpor

ts to

Asia

(in

billi

ons)

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$50000

$100000

$150000

$200000

$250000

2009 2010 2011 2012 2013 2014 2015

Aver

age

Valu

e pe

r Met

ric T

on

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 18

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

IMPORT COMMODITIES

SFO also serves as the entryway to the Bay Area for many commodity types (Table 7)14 Valued at $121 billion commodities in electric machinery soundTV equipment topped the Airportrsquos list of most valuable imports in 2015 These commodities when combined with those in the industrial machinery including computers optic photographic and medical instruments accounted for 79 of the Airportrsquos total import value in 2015 Pharmaceuticals chemical products pearls stones metals coins photo or cinema goods also constituted a significant portion of total import value at SFO last year while fish apparel plastics ceramics and vehicles comprised most of the Airportrsquos total import weight beyond typical electric-related commodities

Pharmaceuticals experienced strong growth over the last six years not only as an export commodity but also as an import to SFO (Table 7) From 2009-2015 the value of import commodities in this category grew from $2257 million to $13 billion an increase of 726 All of the top commodity types increased in value while only apparel (not including knit) and vehicles declined in volume during the same period

14 US district and port data do not reflect state of origin or destination but indicate pass-through location only There are no data available on state imports because it is impossible to tell the ultimate destination once goods enter the country

2015 Economic Impact Study of San Francisco International Airport 16

-

-

-

-

Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electric Machinery SoundTV Equip $12115 44 62 2 Machinery and Computers $7225 23 36 3 OpticPhotoMedical Instruments $2462 68 91 4 Special Classification $1402 48 68 5 Pharmaceutical Products $1277 726 422 6 Miscellaneous Chemical Products $641 62 84 7 PearlsStonesMetalsCoins $221 26 39 8 Photo or Cinema Goods $177 43 62 9 Apparel (not including knit) $168 14 22

10 Vehicles (except rail or tramway) $139 82 105 All Commodities $27571 47 66

BY AIR WEIGHT

Rank Commodity

Air Weight (In 000s of

Metric Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Machinery and Computers 432 1 02 2 Electric Machinery SoundTV Equip 408 43 61 3 OpticPhotoMedical Instruments 89 17 27 4 Fish Crustaceans and Aquatic 74 107 128 5 Apparel (not including knit) 52 -2 -04 6 Apparel (including knit) 49 10 16 7 Plastics 40 44 62 8 Special Classification 39 33 49 9 Ceramic Products 36 28 42

10 Vehicles (except rail or tramway) 35 -18 -32 All Commodities 1647 298 44

Source US Census Bureau Foreign Trade Division provided by WISERTrade Trade with Asia

SFO is a national gateway in terms of trade with Asia15 In 2015 the Airport was the fourth busiest in the nation in terms of trans-pacific trade serving as the pass-through port for $187 billion in total Asia export value which has grown from $154 billion in 2009 and peaked at $22 billion in 2013 (Figure 4) When measured by tonnage exported to Asia SFO ranked fourth among US airports each year since 2009 behind Los Angeles International (LAX) Chicago OrsquoHare International (ORD) and John F Kennedy International (JFK)

In 2015 Asia export value accounted for 74 of the Airportrsquos total export value This reliance on Asia exports has been consistent at SFO During the 2009-2015 timeframe SFO and JFK alternated as the lead

15 Defined here as the Asia continent excluding the Middle East and Turkey

2015 Economic Impact Study of San Francisco International Airport 17

US airport in in terms of value per exported ton as shown in Figure 5 Led by industrial machinery electrical machinery and optical instruments the value of exports to Asia through SFO averaged about $200000 per ton in 2015

Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$00

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013 2014 2015

Air V

alue

of E

xpor

ts to

Asia

(in

billi

ons)

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$50000

$100000

$150000

$200000

$250000

2009 2010 2011 2012 2013 2014 2015

Aver

age

Valu

e pe

r Met

ric T

on

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 18

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

-

-

-

-

Table 7 Top Ten SFO Import Commodities by Air Value and Weight 2015 BY AIR VALUE

Rank Commodity Air Value (In $Ms)

Change (2009 2015)

Annual Change (2009 2015)

1 Electric Machinery SoundTV Equip $12115 44 62 2 Machinery and Computers $7225 23 36 3 OpticPhotoMedical Instruments $2462 68 91 4 Special Classification $1402 48 68 5 Pharmaceutical Products $1277 726 422 6 Miscellaneous Chemical Products $641 62 84 7 PearlsStonesMetalsCoins $221 26 39 8 Photo or Cinema Goods $177 43 62 9 Apparel (not including knit) $168 14 22

10 Vehicles (except rail or tramway) $139 82 105 All Commodities $27571 47 66

BY AIR WEIGHT

Rank Commodity

Air Weight (In 000s of

Metric Tons)

Change (2009 2015)

Annual Change (2009 2015)

1 Machinery and Computers 432 1 02 2 Electric Machinery SoundTV Equip 408 43 61 3 OpticPhotoMedical Instruments 89 17 27 4 Fish Crustaceans and Aquatic 74 107 128 5 Apparel (not including knit) 52 -2 -04 6 Apparel (including knit) 49 10 16 7 Plastics 40 44 62 8 Special Classification 39 33 49 9 Ceramic Products 36 28 42

10 Vehicles (except rail or tramway) 35 -18 -32 All Commodities 1647 298 44

Source US Census Bureau Foreign Trade Division provided by WISERTrade Trade with Asia

SFO is a national gateway in terms of trade with Asia15 In 2015 the Airport was the fourth busiest in the nation in terms of trans-pacific trade serving as the pass-through port for $187 billion in total Asia export value which has grown from $154 billion in 2009 and peaked at $22 billion in 2013 (Figure 4) When measured by tonnage exported to Asia SFO ranked fourth among US airports each year since 2009 behind Los Angeles International (LAX) Chicago OrsquoHare International (ORD) and John F Kennedy International (JFK)

In 2015 Asia export value accounted for 74 of the Airportrsquos total export value This reliance on Asia exports has been consistent at SFO During the 2009-2015 timeframe SFO and JFK alternated as the lead

15 Defined here as the Asia continent excluding the Middle East and Turkey

2015 Economic Impact Study of San Francisco International Airport 17

US airport in in terms of value per exported ton as shown in Figure 5 Led by industrial machinery electrical machinery and optical instruments the value of exports to Asia through SFO averaged about $200000 per ton in 2015

Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$00

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013 2014 2015

Air V

alue

of E

xpor

ts to

Asia

(in

billi

ons)

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$50000

$100000

$150000

$200000

$250000

2009 2010 2011 2012 2013 2014 2015

Aver

age

Valu

e pe

r Met

ric T

on

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 18

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

US airport in in terms of value per exported ton as shown in Figure 5 Led by industrial machinery electrical machinery and optical instruments the value of exports to Asia through SFO averaged about $200000 per ton in 2015

Figure 4 Top Five Airports by Air Value of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$00

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013 2014 2015

Air V

alue

of E

xpor

ts to

Asia

(in

billi

ons)

Source US Census Bureau Foreign Trade Division provided by WISERTrade

Figure 5 Top Five Airports by Air Value per Ton of Exports to Asia 2009-2015

JFK

LAX

ORD

SFO DFW

$50000

$100000

$150000

$200000

$250000

2009 2010 2011 2012 2013 2014 2015

Aver

age

Valu

e pe

r Met

ric T

on

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 18

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

TOTAL TRADE

In 2015 SFO facilitated nearly $53 billion of international trade (imports and exports) which required the transport of over 300000 metric tons of cargo The largest trading partners of US companies that use SFO are in order of air value China Japan the Republic of Korea Taiwan Malaysia and Singapore Trade between the US and these six nations accounted for 69 of the value and 62 of tonnage of commodities moved through SFO As displayed in Table 8 the Airport enabled trade of a billion dollars or more with 13 different nations in 2015 and nine of them are in Asia Germany is the largest non-Asia market connected through SFO

Table 8 Countries that Traded Commodities with Total Value More than $1 Billion in 2015 through SFO In Order of Value of Trade

Trading Partner Value of Trade 2015

Percent of Total SFO Air Trade

Metric Tons 2015

Percent of Total

Tonnage China $11312922000 21 68884 23 Japan $7196323000 14 46978 15 Korea Republic of $5683315000 11 23169 8 Taiwan $5397777000 10 28715 9 Malaysia $3567424000 7 8407 3 Singapore $3260217000 6 12865 4 Germany $1957530000 4 10486 3 Ireland $1663655000 3 3759 1 Hong Kong $1656515000 3 10184 3 Thailand $1470057000 3 5531 2 Philippines $1180608693 2 2776 1 United Kingdom $1052449344 2 8496 3 Switzerland $1020452265 2 3952 1 Other (224 countries) $6453989000 12 69219 23 Total $52873234000 100 303421 100

Source US Census Bureau Foreign Trade Division provided by WISERTrade

2015 Economic Impact Study of San Francisco International Airport 19

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 20

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

CHAPTER 3 ON-AIRPORT IMPACTS

DIRECT EMPLOYMENT

In 2015 almost 38000 people were employed at SFO (excluding employment generated by temporary construction expenditures) according to data from the surveys of airport management and tenants In addition to 14900 employees of passenger airlines the Airport supports a wide variety of other aviation-related jobs in transportation retail and government services These jobs involve

bull Freight services including dedicated cargo aviation courier delivery custom broker and trucking

bull Air terminal operations including security building maintenance and facility management

bull Airline support services including catering in-flight entertainment aircraft handling fueling and maintenance

bull Concessionaire services including restaurants and retail stores

bull Ground transportation including rental car taxis and limousines

Figure 6 shows the distribution of jobs at SFO by major function Roughly 52 of airport jobs are directly aviation related including passenger and dedicated freight airlines that use SFO and aviation support services including in-flight catering firms and fixed-base operators (FBOs) The Airport Commission and contractors federal agencies such as the FAA and the TSA and other administrative functions account for 17 of on-airport employment Terminal concessions account for 13 of employment while ground transportation also accounts for 12 of total full time and part time jobs

Figure 6 Distribution of On-Airport Tenants and Administrative Jobs

Passenger Airlines 40

Admin Gov Security 17

Terminal Concessions

13

Ground Transp 12

Aviation Support 11

Rental Car 6

Freight Transp 1

Sources Interviews of tenants and airport administration

2015 Economic Impact Study of San Francisco International Airport 21

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

BUSINESS SALES AND PAYROLL

In 2015 SFO business establishments generated nearly $75 billion of business revenues (business sales and government budget expenditures) which included over $24 billion of payroll for the 37500 workers at the Airport (see Table 9)

Table 9 Direct Impacts of On-Airport Tenants and Administrative Employees

Impact Type Employment Payroll Revenues

Direct Effect 37578 $2419276000 $7527914000

Note Data excludes on-airport construction activities in 2015 Source Airport Tenant Survey and data from the US Department of Commerce aggregated through IMPLAN

Payroll was calculated from a hybrid of the survey responses and average (mean) revenues and wages per worker by economic sector in the Bay Area16 Findings from this analysis show that passenger airlines represent 40 of employment at SFO but also account for 47 of labor income earned by workers and 61 of revenues generated on the Airport Passenger Airlines was the only sector with a higher percentage of total labor income and productivity (revenues) than employment across all sectors as shown in Figure 7 Moreover the average payroll for on-airport workers was $64400

Figure 7 Percent of Relative Employment Labor Income and Revenues by Aggregated Sector on SFO

70

0

10

20

30

40

50

60 Jobs Revenues Labor Income

Passenger Admin Gov Terminal Psgr Grnd Aviation Rental car Freight Transp Other Airlines Security Concessions Transp Support

Sources Interviews of tenants and airport administration US Department of Commerce data provided by IMPLAN Calculations by EDR Group

16 Survey respondents were asked for payroll When it was not provided the survey data were supplemented with US Department of Commerce data for appropriate industry sectors for each employer aggregated by the Minnesota IMPLAN Group (MIG Inc)

2015 Economic Impact Study of San Francisco International Airport 22

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

INDIRECT AND INDUCED IMPACTS

The direct economic activities at SFO lead to additional downstream impacts on suppliers as well as re-spending of worker income To calculate the impacts of these effects indirect and induced multipliers were calculated for each of the categories listed in Table 10

Table 10 Direct Employment Labor Income and Business Revenues for Tenant and Administrative SFO

Classification of Activity by Sector Employment Payroll Revenues

Passenger Services amp Airport Administration OtherNon-Profit 92 $5214000 $12323000 StateLocal Government 95 $7458000 $15237000 Parking and Miscellaneous 217 $15582000 $29795000 Mgmt MaintCleaning amp Facilities Services 360 $33166000 $71780000 Federal Government 1814 $212830000 $311610000 City of San Francisco Airport Commission 1976 $235162000 $274875000 Security Firms 1992 $96557000 $132656000 FBOs General Aviation and Aviation Services 4062 $175477000 $404017000 Airport Retail and Concessions 4684 $161021000 $606364000 Passenger Airlines 14962 $1128673000 $4598942000 Sub Total 30252 $2071140000 $6457599000

Freight Transportation Services Freight Airlines and Couriers 485 $33519000 $123117000

Passenger Ground Transportation Services LimosBusesVansTransit 2121 $95347000 $194798000 Taxi Cabs 1896 $85236000 $174140000 Transportation Network Companies (TNCs) 488 $21929000 $44802000 Rental Car 2336 $112106000 $533456000 Sub Total 6841 $314618000 $947196000

Total Airport-Based 37578 $2419277000 $7527912000

Notes Data excludes on-airport construction activities conducted in 2015 Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

In 2015 the direct economic activities on-airport generated an additional $61 billion in business revenues in the Bay Area (indirect and induced effects) supporting nearly 30600 additional jobs and $24 billion in labor income (payroll) The total economic contribution of on-airport activity to the Bay Area is roughly $136 billion in revenues yielding 68000 jobs and $48 billion in labor income for workers (see Table 11) Suppliers of goods and services generated approximately $26 billion in revenues over 12000 jobs and expended nearly $11 billion on payroll (indirect impacts) The re-spending of labor income by workers on airport and supplier firms supported approximately 18000 additional Bay Area jobs more than $13 billion in payroll and $35 billion in new business sales

2015 Economic Impact Study of San Francisco International Airport 23

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 11 Summary of Direct Indirect and Induced Economic Impacts of SFO in Bay Area

Economic Impacts Employment Payroll Revenues I Direct Impact Airport-Driven Activity Airport-Based 37578 $2419276000 $7527914000 II Indirect Impact Suppliers of Goods and Services Due to Airport and Related Activities 12419 $1067815000 $2596034000 III Induced Impact Re-Spending of Worker Income Due to Airport and Related Activities 18179 $1317065000 $3517625000 Total Regional Impact 68176 $4804156000 $13641573000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Sources Interviews of tenants airport administration and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

On-airport businesses purchase supplies and services from the greater Bay Area economy which is highly concentrated in air-reliant services17 transportation support other services and food and beverage industries which combined represent 69 of all supporting industries (Table 12) The wages spent by employees of on-airport businesses for their daily living needs are primarily spent on service sectors food and beverages and retail which combine to be 74 of all purchases made within in the Bay Area economy as indicated in Table 13

Table 12 Supplier of GoodsServices Industries (Indirect)

Industry Employment of Total Air-reliant services 2613 21 Transportation Support 2578 21 Other Services 2423 20 Food and Beverage 917 7 Couriers 557 4 Wholesale Trade 510 4 Manufacturing 469 4 State and Local Government 467 4 Construction 291 2 Banking and Financial Services 235 2 All Others 1360 11 Total 12419 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

17 Air-reliant services include architectural engineering business support computer systems design services facility support financial services management scientific technical services and consulting These sectors purchase large amounts of air transportation services Other Services include insurance rentalleasing building services landscaping waste management medical social and maintenance and repair A full listing is in Appendix I

2015 Economic Impact Study of San Francisco International Airport 24

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 13 Re-Spending of Worker Income Industries (Induced)

Industry Employment of Total Services 6280 35 Food and Beverage 2750 15 Reliant Services 2333 13 Retail 2006 11 Entertainment 750 4 Wholesale Trade 588 3 Banking and Financial services 446 2 Manufacturing 298 2 State and Local Government 277 2 All Others 2450 13 Total 18179 100

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

ON-AIRPORT CONSTRUCTION

SFO provided a summary of all capital projects from FY 1213 to FY 1415 The summary of projects was provided in five categories of expenditures including project management by Airport Commission staff construction costs professional services purchase of material and ldquootherrdquo An analysis over multiple years is preferable to smooth-out annual fluctuations that are typically seen in construction spending The objective of this approach is to estimate economic impacts of construction at SFO for a ldquotypical yearrdquo to mitigate the short-term investment periods associated with single construction projects

Each type of expenditure is matched to the most appropriate industry sector in the IMPLAN modeling package as described in Table 14

Table 14 Sector Mapping

SFO Work Phase Group Category

IMPLAN Sector Description

Airport Commission Labor Local government non-education Construction Construction of other new nonresidential facilities Professional Services Architectural amp Engineering services Materials (computers office Electronic computer manufacturing equipment amp furniture) Office supplies (except paper) mfg Other (misc services) Facilities support services

Source SFO and US Department of Commerce data provided by IMPLAN

After classifying each of the five expenditure categories into the corresponding IMPLAN sector these economic impacts of the capital investments were estimated for the nine Bay Area counties for an average year from FY 1213 ndash FY 1415 (Table 15)

2015 Economic Impact Study of San Francisco International Airport 25

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 15 Annual Average Impacts from SFO Construction on the Bay Area Economy Impact Type Employment Labor Income Expenditures

Direct Effect 1849 $144874000 $322622000 Indirect Effect 544 $40824000 $108382000 Induced Effect 850 $52543000 $143622000 Total Effect 3243 $238241000 $574626000

Notes Dollars rounded to the nearest thousand Columns may not add due to rounding Source Employment and Labor Income derived using IMPLAN

2015 Economic Impact Study of San Francisco International Airport 26

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

CHAPTER 4 VISITOR SPENDING

In the year ending June 2015 525 of domestic and international air travelers arriving at SFO were nonshyresidents visiting the region (representing 958 million of the 181 million origin and destination (OampD) enplanements at the Airport excluding connecting passengers) SFO traffic statistics and national data sets from the Department of Transportation show that that 25 of all visitors were international visitors 12 were Southern California residents served by four airports and 63 were visitors from other parts of the United States Surveys of air travelers indicate that 70 of visitors traveled for labor reasons to the Bay Area and 30 for business reasons The survey also shows that the trip purposes of domestic travelers are far more likely to be business related than for international travelers (Figure 8)

Figure 8 Profile of Air Visitors Arriving via SFO by Place of Origin

Other US States

California

International

Millions of Visitors

Trip Purpose Passenger Segment Personal Business Domestic 67 33 International 75 25

0 1 2 3 4 5 6 7

Sources Visitor Survey Conducted by Polaris Inc SFO Traffic Statistics US DOT OampD Survey US DOT T-100 Database IATA PaxIS Database US DOC National Travel and Tourism Office (NTTO) Calculations by EDR Group and ICF

2015 Economic Impact Study of San Francisco International Airport 27

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

VISITOR SPENDING

The survey of arriving visitors found that on average international visitors spend $1218 in the Bay Area and domestic US visitors spend $1011 per trip The breakdowns by trip origin and trip purpose (business or labor) are shown in Figure 9

Figure 9 Relative Spending of Visitors per Trip by Origin and Purpose

$1294

$875

$1842

$1016

$shy $200 $400 $600 $800 $1000 $1200 $1400 $1600 $1800 $2000

Domestic Business

Domestic Personal

International Business

International Personal

Individual Spending per Trip

Sources Visitor Survey Conducted by Polaris Inc Calculations by EDR Group

Overall the off-airport spending of the 95 million domestic and foreign visitors who arrived through SFO visitor amounted to nearly $103 billion of which approximately $97 billion was in the Bay Area and an additional $541 million was outside the Bay Area18 This encompasses spending on hotels food and beverage retail purchases entertainment and recreation and local travel (eg taxis car rental19 sightshyseeing trips and public transportation) The breakout of visitor spending by sector is shown in Table 16

Table 16 Off-Airport SFO Visitor Spending Inside and Outside of the Bay Area

Sector Total within Bay Area Total Outside Bay Area Total

Accommodations $4176228000 $243998000 $4420226000 Food and Beverage $2226633000 $118562000 $2345195000 Retail $1636851000 $83601000 $1720452000 Entertainment $768756000 $41179000 $809935000 Car Rental $660421000 $46276000 $706697000 Ground Transportation $278766000 $7203000 $285969000 Total $9747655000 $540819000 $10288474000

Note Dollars are rounded to thousands Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey Calculations by EDR Group

18 Visitor surveys conducted at SFO indicated if spending occurred within the Bay area or in surrounding counties 19 On-airport car rentals are included in the On-airport tenant estimates Car rentals off-airport is included in the Visitor Spending

estimates

2015 Economic Impact Study of San Francisco International Airport 28

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

JOBS AND INCOME GENERATED BY OFF-AIRPORT VISITOR SPENDING

The $97 billion spent in 2015 by visitors arriving through SFO supported nearly 132000 jobs within the Bay Area and an additional 8000 jobs supported by visitor spending outside the Bay Area in other counties in California

Table 17 Breakdown of Total Visitor Spending Impacts Impact Type Employment Payroll Visitor Spending Total Visitor Spending Impacts in Bay Area Direct 91591 $3537205000 $9747654000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217708000 Total 131821 $6249461000 $16905007000 Total Visitor Spending Impacts Outside of the Bay Area Direct 5469 $181180000 $540819000 Indirect 1183 $67057000 $198831000 Induced 1434 $70389000 $214551000 Total 8086 $318626000 $954201000 Total Visitor Spending Impacts Due to SFO Direct 97059 $3718385000 $10288473000 Indirect 16303 $1232374000 $3138476000 Induced 26544 $1617328000 $4432259000 Total 139907 $6568087000 $17859208000

Notes Jobs include employees and proprietors Payroll includes wages profits and value of benefits Sources Visitor Survey conducted by Polaris Inc SFO Traffic Statistics and national data sets from the Department of Transportation Calculations by EDR Group

The IMPLAN modeling package was tailored to the nine-county Bay Area and the rest of California to calculate direct jobs and wages from visitor spending in the region and to capture spending in the remaining counties of California In the initial stage of the analysis spending profiles were developed as shown in Table 16 (lodging food and beverage entertainment retail and local ground transportation) were used in the initial stage of the analysis20 The second step was to develop ratios of business sales (the actual visitor spending) to worker and payroll to worker in each of the five sectors These ratios are summarized in Table 18 With the development of these ratios employment and payroll (earnings) were calculated as follows

1 Step 1 Employment Generated by Visitor Spending = Visitor SpendingBusiness Sales per Worker (by sector)

2 Step 2 Labor Income Generated by Visitor Spending = Workers (calculated in Step 1 above) Labor Income per Worker (by sector)

20 IMPLAN packages data from federal agencies on a county basis including the US Department of Commerce and the US Department of Labor EDR Group developed the sectors that reflect visitor spending and aggregated the counties to build the Bay Area region and Outside-Bay Area region

2015 Economic Impact Study of San Francisco International Airport 29

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 18 Earnings and Sales per Worker

Sector Payroll per Worker

Sales per Worker

Ground Transportation $63268 $130574 Car Rental $48533 $225832 Accommodations $44728 $112797 Retail $39692 $82027 Entertainment $34213 $84608 Food amp Beverage $29110 $62033

Notes Payroll (labor income) includes wages and profits Retail Sales per worker are margined sales Sources US Departments of Commerce of Labor data provided by IMPLAN Calculations by EDR Group

INDIRECT AND INDUCED IMPACTS

Activities serving air travelers or visitors outside of the Airport (see Table 16) also generate additional orders for goods and services from suppliers These include orders for

bull Fuel and maintenance services by off-airport taxis rental cars tour buses and public transportation

bull Accounting fees paid by businesses in hospitality industries

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

These orders in turn support additional employment and wages in the Bay Area Supplier orders of off-airport businesses that serve visitors who arrive in the Bay Area through SFO led to more than $12 billion in payroll in 2015 Workers then spent this income on consumer purchases such as

bull Retail purchases for consumer items such as food clothing home furnishings and cars

bull Purchases of health care and childcare services

bull Rent and mortgage payments and other housing costs

In 2015 the multiplier effects of spending by air visitors to the Bay Area generated an additional $72 billion in business revenues in the region supporting 40000 additional job and provided over $27 billion in total payroll expenditures

Including initial visitor spending indirect supplier purchases and spending of earned income by workers in visitor services industries the total economic contribution of SFO visitors to the Bay Area totaled roughly $169 billion in revenues yielding nearly 132000 jobs and more than $62 billion in payroll (see Table 19) Suppliers of goods and services generated approximately $29 billion of revenues 15000 jobs and $12 billion of Labor income (indirect impacts) The re-spending of earnings supported $42 billion of revenues 25000 jobs and $15 billion of labor income (induced impacts)

2015 Economic Impact Study of San Francisco International Airport 30

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 19 Summary of Direct Indirect and Induced Economic Impacts of the Contribution of Visitor Spending in the Bay Area

Economic Impact Business Revenues Payroll Jobs I Direct Impact Visitor Spending Activity Direct Visitor Spending $9747654000 $3537205000 91591 II Indirect Impact Suppliers of Goods and Services Due to Visitor Spending Off-Airport $2939645000 $1165317000 15120 III Induced Impact Re-Spending of Worker Income Due to Visitor Spending Off-Airport $4217708000 $1546939000 25110 Total Regional Impact in Bay Area $16905007000 $6249461000 131821

Notes Dollars rounded to thousands Columns may not add due to rounding Sources SFO Traffic Statistics and national data sets from the Department of Transportation Visitor Survey US Department of Commerce data provided by IMPLAN IMPLAN multiplier package Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 31

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 32

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

CHAPTER 5 IMPACTS OF AIR RELIANT USERS (FREIGHT SHIPPERS) For this study ldquoreliant usersrdquo are defined as manufacturers and agricultural industries that ship products by air through SFO21

THE ROLE OF SFO IN AIR EXPORTS

SFO plays a critical role in Californiarsquos economy by enabling manufacturers and agricultural producers to transport commodities and finished goods to customers in both domestic and international markets This section on air reliant activities signifies the contribution of SFO to economic development in the Bay Area by enabling regional firms to sell products across the US and the world and thereby maximize shares of national and international trade Without the services offered at SFO (and if the similar scale of air services is not taken up by another regional airport) companies in the Bay Area that produce and ship products would find markets limited and market shares curtailed In turn economic activity in the Bay Area that is associated with production of goods shipped through SFO would be reduced

A review of the products shipped from the Bay Area through SFO provides an insight into the cross-section of the economy that is reliant on air cargo services at SFO in particular Silicon Valley located in Santa Clara county and home to major technology companies and start-ups This analysis is based on industry specific data from the Foreign Trade Division of the US Census Bureau and the Freight Analysis Framework of the US DOT (Federal Highway Administration) and economic output by industry from the US Bureau of Economic Analysis (collected by the Minnesota IMPLAN Group)22

INTERNATIONAL EXPORTS

SFO is a gateway for the Bay Area manufacturing and other industries to deliver their products to customers throughout world To assess the role that SFO plays in exports from the Bay Area the following methodology was applied According to data from the Foreign Trade Division (collected by WISERTrade) 27 of all California air exports that originated in California passed through SFO This percentage was applied to all industry sectors (three-digit NAICS) to estimate the value and types of Californian exports going through SFO To isolate the Bay Area specific exports the ratio of Bay Area output to total California output was calculated using US Bureau of Economic Analysis (BEA) data and applied to California exports going through SFO23 The results represent estimates of international exports by industry that are produced by Bay Area businesses and exported for sale through SFO This methodology is further explained in Appendix I

Air-freight shipped from SFO is overwhelmingly concentrated in technology goods produced in the Bay Area The leading export industry is Computer and Electronics manufacturing which accounts for nearly

21 This definition is based on past SFO Economic Impact Studies 22 At this writing the most recent year available for both Foreign Trade Division and US Bureau of Economic Analysis information

is 2015 23 Provided through the Minnesota IMPLAN Group

2015 Economic Impact Study of San Francisco International Airport 33

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

two-thirds of the regionrsquos exports by value as indicated in Table 20 The next four ranked industries (chemicals machinery transportation equipment electrical equipment and appliances) account for an aggregate 26 of total Bay Area exports Altogether the top five industries account for 90 of the total value of goods that originates in the Bay Area and are shipped through SFO

Table 20 Top International Exported Industries

Industry Value (in $Millions) of Total

Computers and Electronics $5705 635 Chemicals $886 99 Machinery $803 89 Transportation Equipment $441 49 Electrical Equipment and Appliances $226 25 All others $928 103 Total $8990 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade

DOMESTIC EXPORTS

The FHWA Freight Analysis Framework (FAF) was used to identify the domestic flows of Bay Area goods to US customers via SFO The FAF areas are represented by Combined Statistical Areas (CSAs) represent the FAF areasmdashthe San Francisco CSA includes 12 counties (the Bay Area plus San Benito Santa Cruz and San Joaquin counties) To scale the commodity flows to the nine-county Bay Area a ratio was applied similar to the approach described above for international exports This ratio was calculated using the BEA industry output for the nine-county region and was divided by the industry output for the 12-county CSA

Even more concentrated than international exports domestic shipments are highly concentrated in computer and electronics and electrical equipment manufacturingmdashcombined these sectors account for 75 of the total Bay Area produced shipments through SFO The second largest amount of exports is in chemicals which represents 95 of all exports as indicated in Table 21 Together the top five industries represent 90 of the total value of Bay Area domestic exports through SFO

Table 21 Top Domestic Shipped Industries

Industry Value (in $millions) of Total

Computers and Electronics $3419 426 Electrical Equipment and Appliances $2592 323 Chemicals $759 95 Transportation Equipment $300 37 Machinery $190 24 All Others $766 95 Total $8025 100

Source Freight Analysis Framework US Department of Transportation

2015 Economic Impact Study of San Francisco International Airport 34

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Combining both domestic and international products still highlights the integral part that computer and electronics and electrical equipment manufacturing (70) plays within the Bay Area compared to other manufacturing sectors (Figure 10) and the significance that SFO has in enabling these products to reach their customers

Figure 10 Percentage of the Bay Arearsquos Combined Domestic and International Exports Shipped via SFO

Computers amp Electronics

536

Electrical Equipment amp Appliances

166

Chemicals 97

Machinery 58

Transportation Equipment

44

All Others 100

Sources US Census Bureau Foreign Trade Division collected by WISERTrade and Freight Analysis Framework US Department of Transportation

ECONOMIC CONTRIBUTION OF SFO TO THE BAY AREA

To gauge the level of impact EDR Group used US Bureau of Economic Analysis (BEA) data included in IMPLAN to 1) estimate the jobs and wages associated with the domestic and international exports through SFO and 2) determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced) BEA data within IMPLAN is used because it contains information about the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent

Overall $169 billion in domestic and international exports shipped via SFO contribute to over 27000 jobs and over $42 billion in labor income within the Bay Area (Table 22) When including purchases of supplier goods and services (Indirect) and employee wage re-spending (Induced) the total impact of air exports on the Bay Area economy accounts for over 92000 jobs and $306 billion in business sales (output) Appendix I describes the methodology used to develop these calculations

2015 Economic Impact Study of San Francisco International Airport 35

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 22 Economic Value of Domestic and International Exports Originating in the Bay Area via SFO Impact Type Employment Labor Income Output Direct Effect 27423 $4176110000 $16970133000 Indirect Effect 25823 $2764871000 $7368215000 Induced Effect 38837 $2458062000 $6278660000 Total Effect 92083 $9399043000 $30617008000

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

EFFECTS ON SUPPLIERS OF GOODS AND SERVICES

Figure 11 profiles the employment supported when Bay Area air-reliant businesses purchase goods and services from other Bay Area businesses In total over 25800 jobs are dependent on Bay Area air-reliant businesses that purchase goods and services in order to make final products that are shipped via SFO The majority of jobs are in the services sector which accounts for over 13000 of the indirect jobs

Figure 11 Employment Impacts on Suppliers of Goods and Services (Indirect)

0 4000 8000 12000 16000

Mining

Agriculture

Construction

Government

Tranp Inform amp Utilities

Manufacturing

Trade

Service

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

At a finer level of BEA industry detail purchases made by Bay Area air-reliant businesses are concentrated in wholesale trade administrative support professional scientific and technical services management of companies and computers and electronics As shown in Table 23 these five industries represent 61 of the total jobs supported by air reliant business purchases Nearly 39 of the job impacts are spread across other industries indicating that the dependence on Bay Area businesses that use SFO is widespread across the majority of the local economy

2015 Economic Impact Study of San Francisco International Airport 36

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 23 Impacts on Suppliers of Goods and Services (Indirect) by BEA Industry

Industry Category Jobs of Total

Wholesale trade 4439 17 Administrative Support 4001 15 Professional Scientific and Technical Services 3325 13 Management of Companies 2277 9 Computer and Electronics 1734 7 Government 987 4 Repair and Maintenance 718 3 Food and Beverage 710 3 Fabricated Metals 674 3 Construction 628 2 Rest of Others 6331 25 Total 25823 100

Source US Department of Commerce data provided by IMPLAN Calculations by EDR Group

OVERVIEW OF INTERNATIONAL AIR FREIGHT ACTIVITY

SFO plays an important role in enabling goods produced in the nine-county region to be exported to various international markets Approximately 98 of all international exports from the nine-county region pass through SFO while some residual values are exported via other nearby airports such as Oakland (12) and San Jose International (12) Figure 12 shows that approximately 27 (by value) of all freight exports leaving the country via SFO come from the nine-county region The remaining 73 comes from the rest of California and neighboring states

Figure 12 Regional Share of SFO Export Traffic

Nine-County Region

27

California and Neighboring

States 73

Based on 2013 exports all commodities and value of goods shipped Source EDR Group vFreight using WiserTrade and IMPLAN data

2015 Economic Impact Study of San Francisco International Airport 37

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

The 27 of export traffic from the nine-county Bay Area primarily comes from Santa Clara San Mateo and Alameda counties Figure 13 below highlights the proportional share originating from each county for both electronics and all freight

Figure 13 Bay Area Exports by County for Electronics and All Freight (2013)

shy

1000

2000

3000

4000

5000

6000

7000

8000

Santa Clara Alameda San Mateo Sonoma Contra Costa Solano San Francisco Napa Marin

Expo

rts (

$M)

Electronics All Other Commodities

Source EDR Group vFreight using WiserTrade and IMPLAN data

SFO CONNECTS THE BAY AREA TO DOMESTIC MARKETS

SFO plays an important role in the Bay Area nine-county region by facilitating trade between domestic and international partners Chapter 2 outlines the role SFO plays in international trade for all trading partners in the United States and Chapter 6 outlines the economic contribution that SFO provides to the nine-county region as a whole This appendix outlines the role SFO plays in domestic and international trade with additional insights into domestic market trading partners and exports by each county in the Bay Area region These additional insights are made possible using EDRGrsquos proprietary vFreight database

The vFreight database comprises multiple freight data sources including economic input-output models which enables freight information (eg origin destination mode and commodities) to be developed at a county level (Table 24) vFreight makes use of Department of Commerce data within IMPLAN using production and consumption trade flows by industry and by county as a mechanism to allocate regionally aggregated freight flows down the county level of detail vFreight uses the Federal Highway Administration (FHWA) Freight Analysis Framework (FAF) data to generate county-to-county domestic freight flows by mode

2015 Economic Impact Study of San Francisco International Airport 38

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 24 Core Sources of Domestic Flows in vFreight

Data Source Function Freight Analysis Framework US Department of Transportation

Commodity origins and destinations1

Mode IMPLAN (based on US Department of Commerce data)

Commodity production and consumption by county

Oak Ridge National Laboratory EDR Group

Intercounty transportation impedances Gravity model to account for distances

Note FAF geography are MSAs and ldquorest of staterdquo 1 IMPLAN data are used to allocate MSA and ldquorest of staterdquo totals by commodity group to county levels Source EDR Group

Although the most current vFreight data is 2013 it provides detailed insights into domestic and international trading partners with the nine-county region as well as specific freight flows for each county within the Bay Area region Although these insights are not based on 2015 data the general relationships illustrated in this section are not expected to change significantly within the next two years of updated data

COMMODITIES SHIPPED FROM SFO TO DOMESTIC MARKETS

Outbound commodities shipped to domestic US markets via SFO are concentrated primarily in electronics (74) followed by precision instruments (16) and textilesleather (6) as shown in Table 25 The top two inbound shipments from other domestic trading partners are also electronics (42) and precision instruments (17) however the commodity mix is slightly more diversified across other commodities such as transportation equipment (11) milled grain products (4) pharmaceuticals (4) and chemical products (2)

Because electronics (inbound and outbound through SFO) are both material inputs and final demand outputs of industry activity within the nine-county region (Table 25) it is important to understand what is included in this commodity classification The two-digit standard classification of transportation goods code system (SCTG) for electronics is defined as ldquoElectronic and Other Electrical Equipment and Components and office Equipmentrdquo which includes everything from office and kitchen electronics electric conductors and parts all the way to computers and related equipment When using 43 2-digit SCTG commodity codes a wide range of commodity types may be included within a specific code which is why electronics has such a strong ranking presence as illustrated in Figure 14

2015 Economic Impact Study of San Francisco International Airport 39

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 25 Outbound and Inbound Commodities tofrom the Nine-County Bay Area

Outbound Commodities

Commodity 2013 $ millions)

Short tons

(000s) Electronics $4324 118

Precision instruments $934 91

Textilesleather $335 115

Machinery $43 03

Pharmaceuticals $34 07

Rest of Others $143 148

Total $5813 482

Inbound Commodities

Commodity 2013 ($ millions)

Short tons

(000s) Electronics $1711 121

Precision instruments $691 82

Transport equipment $430 01

Milled grain products $160 112

Pharmaceuticals $153 23

Chemical products $86 53

Motorized vehicles $76 37

Rest of Others $784 251

Total $4091 680

Figure 14 Inbound and Outbound Commodity Flows by Value from the Nine-County Region

shy

1000

2000

3000

4000

5000

6000

7000

Electronics Other Commodities

Inbound Outbound

Source EDR Group vFreight using Freight Analysis Framework of US DOT and IMPLAN data

COUNTY BY COUNTY COMMODITY MOVEMENTS

Domestic trading is illustrated by thematic maps (Figure 14 through Figure 18) which highlight patterns of air freight shipments to and from the nine-county region Figure 15 and Figure 16 illustrate outbound goods which represent sales from Bay Area businesses facilitated by shipment from SFO to domestic markets Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix Figure 17 and Figure 18 illustrate incoming shipments which represent goods shipped for use by Bay Area industries or for domestic consumer purchases

2015 Economic Impact Study of San Francisco International Airport 40

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Figure 15 and Figure 17 profile sales and incoming air shipments respectively for all commodity groups between the Bay Area and counties across the United States Due to the high level of value concentrated in electronics for the Bay Area Figure 16 and Figure 18 show the sales and acquisition of electronics commodities between the Bay Area and counties across the nation

Outbound air shipments from the nine-county region to domestic destinations show that the major metropolitan destinations of these shipments include Boston Buffalo Columbia Greenville Houston Indianapolis Los Angeles and Phoenix

Figure 15 Domestic Destinations of Outbound Air Freight All Commodities (From SFO Nine-County Catchment Region)

Figure 16 Domestic Destinations of Outbound Electronics Air Freight (From SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 41

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

The major regions for inbound shipments into SFO originate from the Boston Chicago Denver Los Angeles Phoenix and Portland metro areas

Figure 17 Domestic Origins Inbound Air Freight All Commodities (to SFO Nine-County Catchment Region)

Figure 18 Domestic Origins Inbound Electronics Air Freight (to SFO Nine-County Catchment Region)

2015 Economic Impact Study of San Francisco International Airport 42

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

CHAPTER 6 TAX IMPACTS GENERATED BY ACTIVITIES AT SFO The income and business sales produced by economic activities at SFO in turn generate federal state county and municipal tax revenues This chapter presents estimates of state and local tax impacts from airport activities as well as federal aviation taxes derived from aviation services24

STATE AND LOCAL TAX IMPACTS

The state and local tax revenues linked to operations at SFO totaled $28 billion in 2015 including $15 billion from direct activities and $13 billion from purchases of supplier goods and services (Indirect) and re-spending of worker income (Induced) Tax revenues are estimated using effective tax rates calculated by BEA and US Census data (as organized through IMPLAN) as well by taking into account California publications including the Governorrsquos Budget Summary ndash 2015-16 Comprehensive Annual Financial Report of the State Controllerrsquos Office and the County of San Mateo Appendix II includes a breakout of tax revenues by county where applicable

Table 26 Estimated 2012 State and Local Tax Impacts (in $ millions)

Impact Category Direct Activities Indirect Induced Activities Total Activities

On-Airport $563 $306 $869 Construction $7 $14 $20 Visitor Spending $644 $324 $968 Air-Reliant Businesses $316 $664 $980 Total Taxes $1530 $1307 $2837

Sources Totals may not sum due to rounding Based on information from Regional Economic Accounts (REA) and National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA) and Consumer Expenditure Survey (CES) and the Annual Survey of State and Local Government Finances (SLGF) from the US Census Bureau

FEDERAL AVIATION TAXES

Aviation operations at SFO generated more than $12 billion dollars in federal taxes including $395 million from taxes on international and domestic passengers and $821 million in US Customs revenue from customs duties on international air cargo shipments (Table 27) These tax revenues are remitted to the US Department of the Treasury and may not directly benefit the Bay Area or the State of California

24 Data developed in this chapter should be considered as order of magnitude estimates As in previous economic impact studies for SFO tax impacts are derived from per-capita measures

2015 Economic Impact Study of San Francisco International Airport 43

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

Table 27 Estimated 2012 Federal Aviation Tax Revenues

Type of Tax ChargesFees Revenues in millions

of Total

Customs and Immigration $550 and $7 per passenger $29 2

International Arrival and Departure Tax $1780 per passenger $83 7

Domestic Passenger Taxes $400 per passenger and 75 of airfare $229 19

Sept 11th security fee $560 per passenger $53 4

Sub-Total Passenger Related Taxes $395 32

US Customs Revenue (International Cargo) Customs Revenues (US ITC) $821 68

Total $1216 100

Notes Includes US Government Segment tax Does not include Domestic Transportation tax (75 of airfare cost) Table does not include domestic cargo waybill This exclusion is due to volatility in the domestic cargo weight and value calculations for 2015 and the difficulty in estimating the cost of cargo shipped as this study was being completed Sources Federal Aviation Administration wwwairlinesorg and wwwWiserTradecom

2015 Economic Impact Study of San Francisco International Airport 44

CHAPTER 7 DISTRIBUTION OF IMPACTS BY BAY AREA COUNTIES

This chapter presents the distribution of direct jobs and income as well as the distribution of tax benefits among Bay Area counties for on-airport and visitor spending categories Local impacts are based on a sample of almost 24000 on-airport employees by zip code from interviews with airport employers and visitor impacts based on the passenger survey

ON-AIRPORT EFFECT AMONG BAY AREA COUNTIES

Table 28 and Table 29 show estimates of jobs payroll (labor income) and business revenues (output) associated with each of the nine Bay Area counties that are generated by on-airport economic activity In Table 28 direct and induced employment and wages are allocated to the counties based on the residence of employees of the Airport Commission staff its contract workers and tenants Due to the location of SFO all direct business revenues (direct output) are generated in San Mateo County (Table 29) Economic impacts (employment payroll and business revenues) associated with supplier purchases (indirect) were applied proportionally to each county based on relative employment levels compared to the Bay Area region

Table 28 Employment and Labor Income Impacts of On-airport Tenants by County

County Impact Type

Employ ment Labor Income County Impact

Type Employ

ment Labor Income

Alameda

Direct 5056 $325471000 San Mateo

Direct 11238 $723467000 Indirect 2442 $209943000 Indirect 1352 $116230000 Induced 2446 $177188000 Induced 5436 $393859000 Total 9943 $712602000 Total 18025 $1233556000

Contra Costa

Direct 2395 $154206000 Santa Clara

Direct 1204 $77519000 Indirect 1308 $112477000 Indirect 3240 $278546000 Induced 1159 $83950000 Induced 582 $42202000 Total 4862 $350633000 Total 5026 $398267000

Marin

Direct 204 $13113000

Solano

Direct 1036 $66726000 Indirect 487 $41901000 Indirect 448 $38487000 Induced 99 $7139000 Induced 501 $36326000 Total 790 $62153000 Total 1985 $141539000

Napa

Direct 115 $7414000

Sonoma

Direct 183 $11802000 Indirect 251 $21620000 Indirect 732 $62904000 Induced 56 $4036000 Induced 89 $6425000 Total 422 $33070000 Total 1004 $81131000

San Francisco

Direct 6097 $392526000 Outside Bay Area

Direct 10050 $647033000 Indirect 2160 $185708000 Indirect 4300 $294537000 Induced 2949 $213693000 Induced 4862 $352248000 Total 11206 $791927000 Total 19213 $1293818000

Total

Direct 37578 $2419277000 Indirect 16720 $1362353000 Induced 18179 $1317066000 Total 72476 $5098696000

Sources Airport Tenant Survey Data Provided by SFO and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 45

Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County

County Impact Type Business Revenues County Impact Type Business

Revenues

Alameda

Direct $0

San Mateo

Direct $7527914000 Indirect $510407000 Indirect $282574000 Induced $473235000 Induced $1051921000 Total $983642000 Total $8862409000

Contra Costa

Direct $0

Santa Clara

Direct $0 Indirect $273450000 Indirect $677190000 Induced $224215000 Induced $112712000 Total $497665000 Total $789902000

Marin

Direct $0

Solano

Direct $0 Indirect $101868000 Indirect $93568000 Induced $19066000 Induced $97019000 Total $120934000 Total $190587000

Napa

Direct $0

Sonoma

Direct $0 Indirect $52561000 Indirect $152931000 Induced $10780000 Induced $17160000 Total $63341000 Total $170091000

San Francisco

Direct $0 Outside Bay Area in CA

Direct $0 Indirect $451486000 Indirect $808254000 Induced $570732000 Induced $940785000 Total $1022218000 Total $1749039000

Total

Direct $7527914000 Indirect $3404289000 Induced $3517625000 Total $14449828000

Sources Airport Tenant Survey Data Provided by SFO and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 46

VISITOR SPENDING The visitor spending survey conducted at SFO documented the destinations of visitors who arrive in California through SFO Table 30 indicates the economic impacts associated with visitor spending for each county

Table 30 Economic Impacts of Visitor Spending by Bay Area County Bay Area County Impact Type Employment Labor Income Visitor Spending

Alameda

Direct 6491 $250671000 $690787000 Indirect 1071 $82582000 $208324000 Induced 1779 $109627000 $298896000 Total 9342 $442880000 $1198007000

Contra Costa

Direct 4514 $174324000 $480393000 Indirect 745 $57430000 $144874000 Induced 1237 $76238000 $207861000 Total 6497 $307992000 $833128000

Marin

Direct 2603 $100532000 $277042000 Indirect 430 $33120000 $83549000 Induced 714 $43966000 $119873000 Total 3747 $177618000 $480464000

Napa

Direct 3748 $144734000 $398849000 Indirect 619 $47682000 $120283000 Induced 1027 $63297000 $172578000 Total 5394 $255713000 $691710000

San Francisco

Direct 49549 $1913563000 $5273303000 Indirect 8179 $630415000 $1590294000 Induced 13584 $836866000 $2281703000 Total 71313 $3380844000 $9145300000

San Mateo

Direct 9981 $385471000 $1062262000 Indirect 1648 $126992000 $320351000 Induced 2736 $168579000 $459630000 Total 14365 $681042000 $1842243000

Santa Clara

Direct 10322 $398627000 $1098515000 Indirect 1704 $131326000 $331284000 Induced 2830 $174333000 $475316000 Total 14856 $704286000 $1905115000

Solano

Direct 636 $24549000 $67651000 Indirect 105 $8088000 $20402000 Induced 174 $10736000 $29272000 Total 915 $43373000 $117325000

Sonoma

Direct 3748 $144735000 $398853000 Indirect 619 $47682000 $120284000 Induced 1027 $63297000 $172580000 Total 5394 $255714000 $691717000

Total

Direct 91591 $3537206000 $9747655000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217709000 Total 131821 $6249462000 $16905009000

Sources Airport Visitor Spending Survey Data Provided by SFO and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 47

TAX IMPACTS BY BAY AREA COUNTY

Tax revenues including sales property (business and labor) corporate and income taxes are collected from on-airport tenants and the workers that they employ directly at SFO Table 31 indicates the tax revenues generated from each impact type (direct IndirectInduced and Total) by county Direct tax revenues paid by individuals and households are apportioned according to place of residence of Airport Commission staff contact employees and tenants Direct taxes paid by businesses originate in San Mateo County due to the location of the Airport

Table 31 Tax Revenues by County for On-airport Tenants Bay Area Counties Direct Indirect

Induced Total

Alameda $9311000 $48698000 $58009000 Contra Costa $4412000 $24548000 $28960000 Marin $375000 $5756000 $6131000 Napa $212000 $3020000 $3232000 San Francisco $11230000 $51074000 $62304000 San Mateo $514672000 $68490000 $583162000 Santa Clara $2218000 $37527000 $39745000 Solano $1909000 $9467000 $11376000 Sonoma $338000 $8038000 $8376000

Outside Bay Area $18511000 $49461000 $67972000

Total $563188000 $306079000 $869267000

Notes Direct tax revenues shown in San Mateo County include an estimated $33 million in Possessory Interest Tax revenues

Sources Governorrsquos Budget Summary State Controllerrsquos Office the County of San Mateo Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN Airport Tenant Survey and Information Provided by SFO Calculations by EDR Group

Tax revenues including sales property (business and labor) corporate and income taxes are also generated by visitors (sales tax) and businesses that provide goods and services to domestic and international visitors Table 32 below outlines the tax revenues provided by each county by business in the hotel restaurant transportation entertainment and retail industries (direct) the businesses that support these industries (indirect) and the tax revenue generated by employees spending their earned income (induced)

2015 Economic Impact Study of San Francisco International Airport 48

Table 32 Tax Revenues by County for Visitor Spending

Bay Area Counties Direct Indirect Induced Total

Alameda $35585000 $24923000 $60508000 Contra Costa $24747000 $17332000 $42079000 Marin $14271000 $9995000 $24267000 Napa $20546000 $14390000 $34936000 San Francisco $271645000 $190255000 $461900000 San Mateo $54721000 $38325000 $93046000 Santa Clara $56588000 $39633000 $96221000 Solano $3485000 $2441000 $5926000 Sonoma $20546000 $14390000 $34936000 Total Taxes $502134000 $351684000 $853819000

Sources Governorrsquos Budget Summary State Controllerrsquos Office Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN and SFO Airport Visitor Survey Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 49

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 50

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

Table 29 Business Revenues Impacts of On-airport Tenants by Bay Area County

County Impact Type Business Revenues County Impact Type Business

Revenues

Alameda

Direct $0

San Mateo

Direct $7527914000 Indirect $510407000 Indirect $282574000 Induced $473235000 Induced $1051921000 Total $983642000 Total $8862409000

Contra Costa

Direct $0

Santa Clara

Direct $0 Indirect $273450000 Indirect $677190000 Induced $224215000 Induced $112712000 Total $497665000 Total $789902000

Marin

Direct $0

Solano

Direct $0 Indirect $101868000 Indirect $93568000 Induced $19066000 Induced $97019000 Total $120934000 Total $190587000

Napa

Direct $0

Sonoma

Direct $0 Indirect $52561000 Indirect $152931000 Induced $10780000 Induced $17160000 Total $63341000 Total $170091000

San Francisco

Direct $0 Outside Bay Area in CA

Direct $0 Indirect $451486000 Indirect $808254000 Induced $570732000 Induced $940785000 Total $1022218000 Total $1749039000

Total

Direct $7527914000 Indirect $3404289000 Induced $3517625000 Total $14449828000

Sources Airport Tenant Survey Data Provided by SFO and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 46

VISITOR SPENDING The visitor spending survey conducted at SFO documented the destinations of visitors who arrive in California through SFO Table 30 indicates the economic impacts associated with visitor spending for each county

Table 30 Economic Impacts of Visitor Spending by Bay Area County Bay Area County Impact Type Employment Labor Income Visitor Spending

Alameda

Direct 6491 $250671000 $690787000 Indirect 1071 $82582000 $208324000 Induced 1779 $109627000 $298896000 Total 9342 $442880000 $1198007000

Contra Costa

Direct 4514 $174324000 $480393000 Indirect 745 $57430000 $144874000 Induced 1237 $76238000 $207861000 Total 6497 $307992000 $833128000

Marin

Direct 2603 $100532000 $277042000 Indirect 430 $33120000 $83549000 Induced 714 $43966000 $119873000 Total 3747 $177618000 $480464000

Napa

Direct 3748 $144734000 $398849000 Indirect 619 $47682000 $120283000 Induced 1027 $63297000 $172578000 Total 5394 $255713000 $691710000

San Francisco

Direct 49549 $1913563000 $5273303000 Indirect 8179 $630415000 $1590294000 Induced 13584 $836866000 $2281703000 Total 71313 $3380844000 $9145300000

San Mateo

Direct 9981 $385471000 $1062262000 Indirect 1648 $126992000 $320351000 Induced 2736 $168579000 $459630000 Total 14365 $681042000 $1842243000

Santa Clara

Direct 10322 $398627000 $1098515000 Indirect 1704 $131326000 $331284000 Induced 2830 $174333000 $475316000 Total 14856 $704286000 $1905115000

Solano

Direct 636 $24549000 $67651000 Indirect 105 $8088000 $20402000 Induced 174 $10736000 $29272000 Total 915 $43373000 $117325000

Sonoma

Direct 3748 $144735000 $398853000 Indirect 619 $47682000 $120284000 Induced 1027 $63297000 $172580000 Total 5394 $255714000 $691717000

Total

Direct 91591 $3537206000 $9747655000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217709000 Total 131821 $6249462000 $16905009000

Sources Airport Visitor Spending Survey Data Provided by SFO and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 47

TAX IMPACTS BY BAY AREA COUNTY

Tax revenues including sales property (business and labor) corporate and income taxes are collected from on-airport tenants and the workers that they employ directly at SFO Table 31 indicates the tax revenues generated from each impact type (direct IndirectInduced and Total) by county Direct tax revenues paid by individuals and households are apportioned according to place of residence of Airport Commission staff contact employees and tenants Direct taxes paid by businesses originate in San Mateo County due to the location of the Airport

Table 31 Tax Revenues by County for On-airport Tenants Bay Area Counties Direct Indirect

Induced Total

Alameda $9311000 $48698000 $58009000 Contra Costa $4412000 $24548000 $28960000 Marin $375000 $5756000 $6131000 Napa $212000 $3020000 $3232000 San Francisco $11230000 $51074000 $62304000 San Mateo $514672000 $68490000 $583162000 Santa Clara $2218000 $37527000 $39745000 Solano $1909000 $9467000 $11376000 Sonoma $338000 $8038000 $8376000

Outside Bay Area $18511000 $49461000 $67972000

Total $563188000 $306079000 $869267000

Notes Direct tax revenues shown in San Mateo County include an estimated $33 million in Possessory Interest Tax revenues

Sources Governorrsquos Budget Summary State Controllerrsquos Office the County of San Mateo Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN Airport Tenant Survey and Information Provided by SFO Calculations by EDR Group

Tax revenues including sales property (business and labor) corporate and income taxes are also generated by visitors (sales tax) and businesses that provide goods and services to domestic and international visitors Table 32 below outlines the tax revenues provided by each county by business in the hotel restaurant transportation entertainment and retail industries (direct) the businesses that support these industries (indirect) and the tax revenue generated by employees spending their earned income (induced)

2015 Economic Impact Study of San Francisco International Airport 48

Table 32 Tax Revenues by County for Visitor Spending

Bay Area Counties Direct Indirect Induced Total

Alameda $35585000 $24923000 $60508000 Contra Costa $24747000 $17332000 $42079000 Marin $14271000 $9995000 $24267000 Napa $20546000 $14390000 $34936000 San Francisco $271645000 $190255000 $461900000 San Mateo $54721000 $38325000 $93046000 Santa Clara $56588000 $39633000 $96221000 Solano $3485000 $2441000 $5926000 Sonoma $20546000 $14390000 $34936000 Total Taxes $502134000 $351684000 $853819000

Sources Governorrsquos Budget Summary State Controllerrsquos Office Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN and SFO Airport Visitor Survey Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 49

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 50

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

VISITOR SPENDING The visitor spending survey conducted at SFO documented the destinations of visitors who arrive in California through SFO Table 30 indicates the economic impacts associated with visitor spending for each county

Table 30 Economic Impacts of Visitor Spending by Bay Area County Bay Area County Impact Type Employment Labor Income Visitor Spending

Alameda

Direct 6491 $250671000 $690787000 Indirect 1071 $82582000 $208324000 Induced 1779 $109627000 $298896000 Total 9342 $442880000 $1198007000

Contra Costa

Direct 4514 $174324000 $480393000 Indirect 745 $57430000 $144874000 Induced 1237 $76238000 $207861000 Total 6497 $307992000 $833128000

Marin

Direct 2603 $100532000 $277042000 Indirect 430 $33120000 $83549000 Induced 714 $43966000 $119873000 Total 3747 $177618000 $480464000

Napa

Direct 3748 $144734000 $398849000 Indirect 619 $47682000 $120283000 Induced 1027 $63297000 $172578000 Total 5394 $255713000 $691710000

San Francisco

Direct 49549 $1913563000 $5273303000 Indirect 8179 $630415000 $1590294000 Induced 13584 $836866000 $2281703000 Total 71313 $3380844000 $9145300000

San Mateo

Direct 9981 $385471000 $1062262000 Indirect 1648 $126992000 $320351000 Induced 2736 $168579000 $459630000 Total 14365 $681042000 $1842243000

Santa Clara

Direct 10322 $398627000 $1098515000 Indirect 1704 $131326000 $331284000 Induced 2830 $174333000 $475316000 Total 14856 $704286000 $1905115000

Solano

Direct 636 $24549000 $67651000 Indirect 105 $8088000 $20402000 Induced 174 $10736000 $29272000 Total 915 $43373000 $117325000

Sonoma

Direct 3748 $144735000 $398853000 Indirect 619 $47682000 $120284000 Induced 1027 $63297000 $172580000 Total 5394 $255714000 $691717000

Total

Direct 91591 $3537206000 $9747655000 Indirect 15120 $1165317000 $2939645000 Induced 25110 $1546939000 $4217709000 Total 131821 $6249462000 $16905009000

Sources Airport Visitor Spending Survey Data Provided by SFO and US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 47

TAX IMPACTS BY BAY AREA COUNTY

Tax revenues including sales property (business and labor) corporate and income taxes are collected from on-airport tenants and the workers that they employ directly at SFO Table 31 indicates the tax revenues generated from each impact type (direct IndirectInduced and Total) by county Direct tax revenues paid by individuals and households are apportioned according to place of residence of Airport Commission staff contact employees and tenants Direct taxes paid by businesses originate in San Mateo County due to the location of the Airport

Table 31 Tax Revenues by County for On-airport Tenants Bay Area Counties Direct Indirect

Induced Total

Alameda $9311000 $48698000 $58009000 Contra Costa $4412000 $24548000 $28960000 Marin $375000 $5756000 $6131000 Napa $212000 $3020000 $3232000 San Francisco $11230000 $51074000 $62304000 San Mateo $514672000 $68490000 $583162000 Santa Clara $2218000 $37527000 $39745000 Solano $1909000 $9467000 $11376000 Sonoma $338000 $8038000 $8376000

Outside Bay Area $18511000 $49461000 $67972000

Total $563188000 $306079000 $869267000

Notes Direct tax revenues shown in San Mateo County include an estimated $33 million in Possessory Interest Tax revenues

Sources Governorrsquos Budget Summary State Controllerrsquos Office the County of San Mateo Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN Airport Tenant Survey and Information Provided by SFO Calculations by EDR Group

Tax revenues including sales property (business and labor) corporate and income taxes are also generated by visitors (sales tax) and businesses that provide goods and services to domestic and international visitors Table 32 below outlines the tax revenues provided by each county by business in the hotel restaurant transportation entertainment and retail industries (direct) the businesses that support these industries (indirect) and the tax revenue generated by employees spending their earned income (induced)

2015 Economic Impact Study of San Francisco International Airport 48

Table 32 Tax Revenues by County for Visitor Spending

Bay Area Counties Direct Indirect Induced Total

Alameda $35585000 $24923000 $60508000 Contra Costa $24747000 $17332000 $42079000 Marin $14271000 $9995000 $24267000 Napa $20546000 $14390000 $34936000 San Francisco $271645000 $190255000 $461900000 San Mateo $54721000 $38325000 $93046000 Santa Clara $56588000 $39633000 $96221000 Solano $3485000 $2441000 $5926000 Sonoma $20546000 $14390000 $34936000 Total Taxes $502134000 $351684000 $853819000

Sources Governorrsquos Budget Summary State Controllerrsquos Office Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN and SFO Airport Visitor Survey Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 49

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 50

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

TAX IMPACTS BY BAY AREA COUNTY

Tax revenues including sales property (business and labor) corporate and income taxes are collected from on-airport tenants and the workers that they employ directly at SFO Table 31 indicates the tax revenues generated from each impact type (direct IndirectInduced and Total) by county Direct tax revenues paid by individuals and households are apportioned according to place of residence of Airport Commission staff contact employees and tenants Direct taxes paid by businesses originate in San Mateo County due to the location of the Airport

Table 31 Tax Revenues by County for On-airport Tenants Bay Area Counties Direct Indirect

Induced Total

Alameda $9311000 $48698000 $58009000 Contra Costa $4412000 $24548000 $28960000 Marin $375000 $5756000 $6131000 Napa $212000 $3020000 $3232000 San Francisco $11230000 $51074000 $62304000 San Mateo $514672000 $68490000 $583162000 Santa Clara $2218000 $37527000 $39745000 Solano $1909000 $9467000 $11376000 Sonoma $338000 $8038000 $8376000

Outside Bay Area $18511000 $49461000 $67972000

Total $563188000 $306079000 $869267000

Notes Direct tax revenues shown in San Mateo County include an estimated $33 million in Possessory Interest Tax revenues

Sources Governorrsquos Budget Summary State Controllerrsquos Office the County of San Mateo Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN Airport Tenant Survey and Information Provided by SFO Calculations by EDR Group

Tax revenues including sales property (business and labor) corporate and income taxes are also generated by visitors (sales tax) and businesses that provide goods and services to domestic and international visitors Table 32 below outlines the tax revenues provided by each county by business in the hotel restaurant transportation entertainment and retail industries (direct) the businesses that support these industries (indirect) and the tax revenue generated by employees spending their earned income (induced)

2015 Economic Impact Study of San Francisco International Airport 48

Table 32 Tax Revenues by County for Visitor Spending

Bay Area Counties Direct Indirect Induced Total

Alameda $35585000 $24923000 $60508000 Contra Costa $24747000 $17332000 $42079000 Marin $14271000 $9995000 $24267000 Napa $20546000 $14390000 $34936000 San Francisco $271645000 $190255000 $461900000 San Mateo $54721000 $38325000 $93046000 Santa Clara $56588000 $39633000 $96221000 Solano $3485000 $2441000 $5926000 Sonoma $20546000 $14390000 $34936000 Total Taxes $502134000 $351684000 $853819000

Sources Governorrsquos Budget Summary State Controllerrsquos Office Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN and SFO Airport Visitor Survey Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 49

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 50

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

Table 32 Tax Revenues by County for Visitor Spending

Bay Area Counties Direct Indirect Induced Total

Alameda $35585000 $24923000 $60508000 Contra Costa $24747000 $17332000 $42079000 Marin $14271000 $9995000 $24267000 Napa $20546000 $14390000 $34936000 San Francisco $271645000 $190255000 $461900000 San Mateo $54721000 $38325000 $93046000 Santa Clara $56588000 $39633000 $96221000 Solano $3485000 $2441000 $5926000 Sonoma $20546000 $14390000 $34936000 Total Taxes $502134000 $351684000 $853819000

Sources Governorrsquos Budget Summary State Controllerrsquos Office Bureau of Economic Analysisrsquo (BEA) National Income and Product Accounts (NIPA) the US Census Bureau (Consumer Expenditure Survey Annual Survey of State and Local Government Finances) US Department of Commerce data provided by IMPLAN and SFO Airport Visitor Survey Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 49

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 50

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 50

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

APPENDIX I METHODOLOGY FOR THE ANALYSIS

OF OVERALL ECONOMIC IMPACTS

Airport jobs and commerce on the Airport premises create strong economic stimuli for the Bay Area This airport business activity itself generates an increased demand for other local goods and services Not only do the businesses based on the Airport pay local and state taxes but the off-airport businesses that depend upon airport-based activity pay taxes as well As shown in this study the direct business activity and subsequent multiplier effects have a strong overall impact on the economy

All economic impacts in this report are described using the measures of jobs payroll and business sales The study quantifies three distinct categories of economic benefits that result from SFO-related activities direct indirect and induced effects as described below

Direct impacts stem from the activity that is directly related to the provision of aviation services visitor spending or the activity of aviation-reliant businesses For example the direct impacts of on-airport tenants include the number of persons they employ on the Airport the wages and benefits paid to those workers and their business sales Similarly the direct impacts of air visitors include the money they spend on services and supplies and the jobs and payroll supported by those expenditures Most of the direct impacts measured in this study occur on-airport but some such as visitor spending and the benefits produced by aviation dependent businesses occur off-airport

Indirect and induced impacts which are sometimes called ldquomultiplier impactsrdquo result from (1) a portion of business sales used for ldquobusiness-to-businessrdquo purchases of goods and services (indirect effects) and (2) the recirculation of worker incomes and business expenditures in the broader Bay Area economy (induced effects) For example an airport restaurant may buy supplies from a Bay Area produce vendor This purchase represents income (ie new business sales) to the produce supplier which uses a portion of that income to pay its workers and buy additional goods and services from other businesses in the region In addition airport workers spend their wages on other items such as housing retail purchases and services Those expenditures in turn support jobs in those industries whose workers then spend their salaries in the Bay Area These successive rounds of spending and job creation represent the indirect impacts (business-to-business) and induced impacts (spending of wages) This study specifically measured the indirect and induced impacts that occur in the county economies of the Bay Area The discussions of total impacts are based on the following analyses and are illustrated in Figure 19

2015 Economic Impact Study of San Francisco International Airport 51

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

Figure 19 Elements of Economic Impacts and Interrelationships

Spending by Visitors to BayArea via SFO

Business and Government Agencies Located at SFO

Direct Payroll Purchases of Visitor Purchases of at SFO Goods amp Services Goods amp Services

(Meals Hotels Transportation Retail)

Induced Effect (Off-Site)Spending of Direct + Indirect Worker Income

on Consumer Purchases Sales at Other Businesses Jobs amp Income to Workers

Total Economic ImpactsSum of Direct + Indirect + Induced Jobs amp Income

Fiscal Impacts Government Tax Revenues

Direct Effect Jobs at the Airport Income to Workers

Direct Effect Jobs in Retail amp Services

Income to Workers

Indirect Effects (Off-Site)Sales at Supplier Businesses

Jobs and Income to their Workers

Flow of Causation

Calculation of Total Ef f ect

Source EDR Group

2015 Economic Impact Study of San Francisco International Airport 52

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

SUPPLIERS OF GOODS AND SERVICES (INDIRECT MULTIPLIER EFFECTS)

Orders from Businesses at the Airport

Activities occurring at the Airport generate additional orders for goods and services from suppliers including orders for

bull Printing and publishing for the Airport operator and the airlines

bull Banking insurance legal accounting and technical services for airport businesses

bull Off-site bus and parking services for SFO employees

bull Food products for airport restaurants

bull Wholesale merchandise to be sold by airport stores

bull Furniture and equipment for offices hotels restaurants and stores located at the Airport

Orders from Off-Airport Businesses Serving Air Travelers

Activities serving air travelers outside of the Airport also generate additional orders for goods and services from suppliers for

bull Fueling and maintenance services for use by off-airport taxis rental cars tour buses and public transportation

bull Construction and support operations of convention and hospitality facilities for convention visitors

bull Food products for off-airport restaurants

bull Wholesale merchandise to be sold by off-airport stores

bull Furniture and equipment for off-airport hotels restaurants and stores

RE-SPENDING OF WORKER INCOME (INDUCED MULTIPLIER EFFECTS)

The workers at SFO at off-airport businesses serving air visitors and at supplier businesses earn income and most of that income is re-spent on consumer purchases which support additional jobs within the Bay Area Examples of these purchases include

bull Retail purchases of food clothing home furnishings cars electronic devices computers and other products

bull Purchases of services spanning haircuts cleaning car repair and insurance

2015 Economic Impact Study of San Francisco International Airport 53

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

CALCULATING THE DOMESTIC AND INTERNATIONAL VALUES FROM CARGO ORIGINATING IN THE BAY AREA AND SHIPPED THROUGH SFO

The combined $17 billion of international and domestic exports through SFO provides a significant direct contribution to the Bay Area economy as well as additional activity through economic linkages To estimate the level of impact EDR Group layered three sets of data ndash the Foreign Trade Database (FTD) of the US Bureau of the Census (tabulated by WISERTrade) the multi-modal Freight Analysis Framework (FAF) of the US Federal Highway Administration and US Bureau of Economic Analysis (BEA) data included in IMPLAN to

1) Estimate the jobs and wages associated with the domestic and international exports through SFO and

2) Determine the additional activity that percolates throughout the economy as air-reliant businesses purchase additional goods and services from suppliers (Indirect) and employees spend their additional income (Induced)

FTD data aggregated by WISERTrade was the basis of estimating the weight and value of goods produced in the Bay Area and exported from SFO to international markets FTD provides total exports by commodity and state of origin and the total value of California exports shipped through SFO WISERTrade also provides total value and weight by commodity for all shipments from SFO but not at a commodity level by point of origin Using IMPLAN data the ratios of output by commodity were calculated for the nine-county Bay Area compared to California totals This calculation estimated the ldquosharerdquo of California produced air exports with an approximate point of origin in the Bay Area The calculation was constrained by both the value and weight reported by WISERTrade of exports by commodity from SFO and the weight of international shipments from SFO taken from the flysfo website

FAF was the basis of estimating domestic cargo shipments FAF provides domestic air shipments of commodities that originate in the twelve county San Jose-San Francisco-Oakland CA Combined Statistical Area Using IMPLAN data output by commodity for the nine-county Bay Area were compared to the twelve county CMSA to estimate the ldquosharerdquo of each commodity shipped from the CSA

BEA data within IMPLAN profiles the structural buyer-supplier relationships within the economy as well as the industries where labor income is usually spent Figure 20 illustrates the methodology of calculating the domestic and international values from the Bay Area through SFO

2015 Economic Impact Study of San Francisco International Airport 54

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

Figure 20 Methodology to Estimate Air Dependent Contribution to Bay Area Economy

3 Freight shipments by value

2 Geography

1 Calculations

MAJOR SOURCES OF DATA USED IN THIS STUDY

The discussion of total impacts is based on the following analyses conducted specifically for this study

1 A survey of all airport tenants and the data provided by staff of the San Francisco Airport Commission These data provide profiles of on-airport jobs by establishment type of business activity and place of residence by zip code for airport and tenant employees

2 Polaris Research conducted surveys of airport travelers were conducted by Polaris Research The survey profiled trip purposes international or domestic origins segmentation of visitors from local residents and connecting passengers and the amount of money in the Bay Area spent by visitors using the Airport

3 Air freight analyses are based on data from SFO WISERTrade using data from US Census Bureau Foreign Trade Division25 and the Freight Analysis Framework (FAF) to develop a detailed profile of air exports from SFO by commodity and origin of movement Detailed data from FAF are not available for the Bay Area alone (statewide for the Foreign Trade Division and a 12 county combined statistical area (CSA) for FAF) Therefore the detailed commodity flows found in the data sets are proportioned based on the output per industry (converted from commodities) of the Bay Area

25 The World Institute for Strategic Economic Research (WISERTrade) formed July 1 2004 to continue the international trade data work of its predecessor MISER was chosen by the US Census Bureau to be one of its first Business and Industry Data Centers with special focus on foreign trade statistics See wwwwisertradeorg

2015 Economic Impact Study of San Francisco International Airport 55

4 Econometric models for the nine-county Bay Area are based on the IMPLAN Economic Model System IMPLAN is used to estimate wages and sales (or budget expenditures for public entities) for airport tenants where only employment totals were available Labor income and sales andor expenditures per worker are derived primarily from US Department of Commerce (BEA is a part of the Commerce Department) and Department of Labor data sets and are county-specific IMPLAN is also used to derive multiplier effects including business orders to suppliers generated by on-airport businesses off-airport businesses serving airport visitors and airport-reliant businesses and business sales generated by the spending of the additional workersrsquo income on consumer purchases

2015 Economic Impact Study of San Francisco International Airport 56

APPENDIX II SUMMARY OF IMPLAN SECTORING

To estimate the full range of direct effects and the indirect and induced (ldquomultiplierrdquo) economic effects this study utilized the IMPLAN model system of MIG Inc IMPLAN is now the most widely used input-output economic modeling system in the US with a client list of 500 public and private agencies including several federal agencies and numerous state agencies It utilizes US Commerce Department (National Income and Product Accounts) data on inter-industry technology relationships (also known as input-output structural matrices) countywide employment and income data from the Bureau of Economic Analysis (BEA) and Bureau of Labor Statistics (BLS) and its own industry and county-specific estimates of local purchasing rates (ldquoregional purchase coefficientsrdquo) It is enhanced over most other input-output models in that it also includes coverage of public sector activity and consumer activity (reflected in its ldquosocial accounting matrixrdquo) The industry detail is at the level of 536 industries and is based on categories of the US Bureau of Economic Analysis (BEA) which correspond to two to five digit groups in the North American Industry Classification System (NAICS)

For this study the direct job payroll and business revenue effects for on-airport and visitor spending were documented through surveys completed for this project and then assigned to specific sector groups based on EDR Grouprsquos experience in aviation SFOrsquos support of air reliant industries was documented through databases maintained by the US Census Bureau and the US Department of Transportation The IMPLAN model was then calibrated for the nine-county Bay Area as well as for each county within the region and a model calibrated for a defined region outside the Bay Area to measure additional visitor spending The result was an estimate of the indirect and induced (and overall) job business revenue and income impacts for each segment of airport beneficiary The analysis of retail impacts was adjusted to account for retail markup margins and the concentration of sales in airports and in visitor industries Retail portions of multiplier effects also incorporate these margins

Regardless of whether economic impacts are measured in terms of jobs income or business sales these impacts can be classified into three categories

Direct economic effects are the changes occurring at the project site as a direct consequence of the public investment project or program This is represented as the net increase in business activity associated with business at the SFO initial visitor spending at off-airport businesses in each countyrsquos hospitality sector and the sale revenues earned by shippers who route air cargo through SFO

Indirect economic effects are the broader effects on business activity for off-site goods and services supplied to the directly affected businesses

Induced economic effects are further shifts in spending on food clothing shelter and other consumer goods and services because of the change in workers and payroll of directly and indirectly affected businesses

EDR Group assembled classifications of the 536 sectors in the IMPLAN modeling package to best mirror types of industries on SFO types of visitor spending and industries related to commodities exported from SFO The classification schemes used for this study for on-airport and visitor spending impacts are shown in Table 33 and Table 34

2015 Economic Impact Study of San Francisco International Airport 57

Table 33 Industry Classification of On-Airport Industries Airport Tenants Classification IMPLAN Sectors Used

Passenger Airlines Air Transportation Freight Airlines Couriers Air Transportation Couriers Fixed Based Operator (FBO) Support activities for transportation Local Government State and Local Government State Government

Federal Government Immigration TSA FBI US Customs and Border Patrol (CBP) National Weather Service

Distribution TruckingWarehousing Wholesale Wholesale Trade business Security Security Aviation Firms

Construction

Highways and Streets Commercial Structures Non-residential structures Maintenance and Repair

Retail

ElectronicsAppliance Stores Food and Beverage Health and Labor Care Clothing Stores Sporting Goods Stores Misc Retail

Food and Beverage (includes Catering Firms) Full-service restaurants Limited-service restaurants All other food and drinking places

Car Rental Car Rental Ground Transportation (incl taxis limos buses vans and transit) Transit and ground passenger transp

Other Medical Clinic Vending Machines

Services

Educational institutions Electronic repair services Insurance Medical services Other Support Services Telecommunications Waste Management

Reliant Services

ArchitecturalEngineering Business support Computer systems design services Facilities support Financial Services Management scientific and Technical Parking and Misc

2015 Economic Impact Study of San Francisco International Airport 58

Table 34 Industry Classification of Visitor-Serving Industries

Visitor Spending Classification IMPLAN Sectors Used

ElectronicsAppliance Stores Food and Beverage Health and Labor

Retail Clothing Stores Sporting Goods General Merchandise Misc Retail Performing Arts Spectator Sports

Artists writers and performers Museums zoos and parks

Entertainment Amusement parks and arcades Gambling industries Fitness and recreational sports centers Bowling centers Other amusement recreation Full-service restaurants

Restaurant Limited-service restaurants All other food and drinking places

Hotels and motels Hotel

Other accommodations Transit and ground passenger transportation Scenic and sightseeing

Transportation Support activities Gas stations

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 59

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 60

APPENDIX III SFO TENANT AND VISITOR SURVEYS

The following pages are the survey instruments used for SFO tenants and visiting passengers Note that the passenger survey was administered in multiple languages

2015 Economic Impact Study of San Francisco International Airport 61

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

APPENDIX II SUMMARY OF IMPLAN SECTORING

To estimate the full range of direct effects and the indirect and induced (ldquomultiplierrdquo) economic effects this study utilized the IMPLAN model system of MIG Inc IMPLAN is now the most widely used input-output economic modeling system in the US with a client list of 500 public and private agencies including several federal agencies and numerous state agencies It utilizes US Commerce Department (National Income and Product Accounts) data on inter-industry technology relationships (also known as input-output structural matrices) countywide employment and income data from the Bureau of Economic Analysis (BEA) and Bureau of Labor Statistics (BLS) and its own industry and county-specific estimates of local purchasing rates (ldquoregional purchase coefficientsrdquo) It is enhanced over most other input-output models in that it also includes coverage of public sector activity and consumer activity (reflected in its ldquosocial accounting matrixrdquo) The industry detail is at the level of 536 industries and is based on categories of the US Bureau of Economic Analysis (BEA) which correspond to two to five digit groups in the North American Industry Classification System (NAICS)

For this study the direct job payroll and business revenue effects for on-airport and visitor spending were documented through surveys completed for this project and then assigned to specific sector groups based on EDR Grouprsquos experience in aviation SFOrsquos support of air reliant industries was documented through databases maintained by the US Census Bureau and the US Department of Transportation The IMPLAN model was then calibrated for the nine-county Bay Area as well as for each county within the region and a model calibrated for a defined region outside the Bay Area to measure additional visitor spending The result was an estimate of the indirect and induced (and overall) job business revenue and income impacts for each segment of airport beneficiary The analysis of retail impacts was adjusted to account for retail markup margins and the concentration of sales in airports and in visitor industries Retail portions of multiplier effects also incorporate these margins

Regardless of whether economic impacts are measured in terms of jobs income or business sales these impacts can be classified into three categories

Direct economic effects are the changes occurring at the project site as a direct consequence of the public investment project or program This is represented as the net increase in business activity associated with business at the SFO initial visitor spending at off-airport businesses in each countyrsquos hospitality sector and the sale revenues earned by shippers who route air cargo through SFO

Indirect economic effects are the broader effects on business activity for off-site goods and services supplied to the directly affected businesses

Induced economic effects are further shifts in spending on food clothing shelter and other consumer goods and services because of the change in workers and payroll of directly and indirectly affected businesses

EDR Group assembled classifications of the 536 sectors in the IMPLAN modeling package to best mirror types of industries on SFO types of visitor spending and industries related to commodities exported from SFO The classification schemes used for this study for on-airport and visitor spending impacts are shown in Table 33 and Table 34

2015 Economic Impact Study of San Francisco International Airport 57

Table 33 Industry Classification of On-Airport Industries Airport Tenants Classification IMPLAN Sectors Used

Passenger Airlines Air Transportation Freight Airlines Couriers Air Transportation Couriers Fixed Based Operator (FBO) Support activities for transportation Local Government State and Local Government State Government

Federal Government Immigration TSA FBI US Customs and Border Patrol (CBP) National Weather Service

Distribution TruckingWarehousing Wholesale Wholesale Trade business Security Security Aviation Firms

Construction

Highways and Streets Commercial Structures Non-residential structures Maintenance and Repair

Retail

ElectronicsAppliance Stores Food and Beverage Health and Labor Care Clothing Stores Sporting Goods Stores Misc Retail

Food and Beverage (includes Catering Firms) Full-service restaurants Limited-service restaurants All other food and drinking places

Car Rental Car Rental Ground Transportation (incl taxis limos buses vans and transit) Transit and ground passenger transp

Other Medical Clinic Vending Machines

Services

Educational institutions Electronic repair services Insurance Medical services Other Support Services Telecommunications Waste Management

Reliant Services

ArchitecturalEngineering Business support Computer systems design services Facilities support Financial Services Management scientific and Technical Parking and Misc

2015 Economic Impact Study of San Francisco International Airport 58

Table 34 Industry Classification of Visitor-Serving Industries

Visitor Spending Classification IMPLAN Sectors Used

ElectronicsAppliance Stores Food and Beverage Health and Labor

Retail Clothing Stores Sporting Goods General Merchandise Misc Retail Performing Arts Spectator Sports

Artists writers and performers Museums zoos and parks

Entertainment Amusement parks and arcades Gambling industries Fitness and recreational sports centers Bowling centers Other amusement recreation Full-service restaurants

Restaurant Limited-service restaurants All other food and drinking places

Hotels and motels Hotel

Other accommodations Transit and ground passenger transportation Scenic and sightseeing

Transportation Support activities Gas stations

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 59

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 60

APPENDIX III SFO TENANT AND VISITOR SURVEYS

The following pages are the survey instruments used for SFO tenants and visiting passengers Note that the passenger survey was administered in multiple languages

2015 Economic Impact Study of San Francisco International Airport 61

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

Table 33 Industry Classification of On-Airport Industries Airport Tenants Classification IMPLAN Sectors Used

Passenger Airlines Air Transportation Freight Airlines Couriers Air Transportation Couriers Fixed Based Operator (FBO) Support activities for transportation Local Government State and Local Government State Government

Federal Government Immigration TSA FBI US Customs and Border Patrol (CBP) National Weather Service

Distribution TruckingWarehousing Wholesale Wholesale Trade business Security Security Aviation Firms

Construction

Highways and Streets Commercial Structures Non-residential structures Maintenance and Repair

Retail

ElectronicsAppliance Stores Food and Beverage Health and Labor Care Clothing Stores Sporting Goods Stores Misc Retail

Food and Beverage (includes Catering Firms) Full-service restaurants Limited-service restaurants All other food and drinking places

Car Rental Car Rental Ground Transportation (incl taxis limos buses vans and transit) Transit and ground passenger transp

Other Medical Clinic Vending Machines

Services

Educational institutions Electronic repair services Insurance Medical services Other Support Services Telecommunications Waste Management

Reliant Services

ArchitecturalEngineering Business support Computer systems design services Facilities support Financial Services Management scientific and Technical Parking and Misc

2015 Economic Impact Study of San Francisco International Airport 58

Table 34 Industry Classification of Visitor-Serving Industries

Visitor Spending Classification IMPLAN Sectors Used

ElectronicsAppliance Stores Food and Beverage Health and Labor

Retail Clothing Stores Sporting Goods General Merchandise Misc Retail Performing Arts Spectator Sports

Artists writers and performers Museums zoos and parks

Entertainment Amusement parks and arcades Gambling industries Fitness and recreational sports centers Bowling centers Other amusement recreation Full-service restaurants

Restaurant Limited-service restaurants All other food and drinking places

Hotels and motels Hotel

Other accommodations Transit and ground passenger transportation Scenic and sightseeing

Transportation Support activities Gas stations

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 59

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 60

APPENDIX III SFO TENANT AND VISITOR SURVEYS

The following pages are the survey instruments used for SFO tenants and visiting passengers Note that the passenger survey was administered in multiple languages

2015 Economic Impact Study of San Francisco International Airport 61

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

Table 34 Industry Classification of Visitor-Serving Industries

Visitor Spending Classification IMPLAN Sectors Used

ElectronicsAppliance Stores Food and Beverage Health and Labor

Retail Clothing Stores Sporting Goods General Merchandise Misc Retail Performing Arts Spectator Sports

Artists writers and performers Museums zoos and parks

Entertainment Amusement parks and arcades Gambling industries Fitness and recreational sports centers Bowling centers Other amusement recreation Full-service restaurants

Restaurant Limited-service restaurants All other food and drinking places

Hotels and motels Hotel

Other accommodations Transit and ground passenger transportation Scenic and sightseeing

Transportation Support activities Gas stations

Sources US Department of Commerce data provided by IMPLAN Calculations by EDR Group

2015 Economic Impact Study of San Francisco International Airport 59

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 60

APPENDIX III SFO TENANT AND VISITOR SURVEYS

The following pages are the survey instruments used for SFO tenants and visiting passengers Note that the passenger survey was administered in multiple languages

2015 Economic Impact Study of San Francisco International Airport 61

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

This Page Left Blank Intentionally

2015 Economic Impact Study of San Francisco International Airport 60

APPENDIX III SFO TENANT AND VISITOR SURVEYS

The following pages are the survey instruments used for SFO tenants and visiting passengers Note that the passenger survey was administered in multiple languages

2015 Economic Impact Study of San Francisco International Airport 61

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

APPENDIX III SFO TENANT AND VISITOR SURVEYS

The following pages are the survey instruments used for SFO tenants and visiting passengers Note that the passenger survey was administered in multiple languages

2015 Economic Impact Study of San Francisco International Airport 61

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 62

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 63

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 64

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 65

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 66

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 67

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 68

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys

2015 Economic Impact Study of San Francisco International Airport 69

• Executive Summary
• • Total Economic Contribution
  • Classification of Impacts
  • Approach
  • • Chapter 1 Introduction and Overview
    • • Airside and Groundside Airport Jobs
      • Off-Airport Jobs Serving Airport Travelers
      • Related Industries Jobs that Rely on Air Cargo
      • Comprehensive Analysis
      • • Chapter 2 National Context
        • • Context The Vibrant Bay Area Economy
          • SFOrsquos Role in International Trade
          • Export Commodities
          • Import Commodities
          • Total Trade
          • • Chapter 3 On-Airport Impacts
            • • Direct Employment
              • Business Sales and Payroll
              • Indirect and Induced Impacts
              • On-airport Construction
              • • Chapter 4 Visitor Spending
                • • Visitor Spending
                  • Jobs and Income Generated by Off-Airport Visitor Spending
                  • Indirect and Induced Impacts
                  • • Chapter 5 Impacts of Air Reliant Users (Freight Shippers)
                    • • The Role of SFO in Air Exports
                      • International Exports
                      • Domestic Exports
                      • Economic Contribution of SFO to the Bay Area
                      • Effects on Suppliers of Goods and Services
                      • Overview of International Air Freight Activity
                      • SFO Connects the Bay Area to Domestic Markets
                      • Commodities Shipped from SFO to Domestic Markets
                      • County by County Commodity Movements
                      • • Chapter 6 Tax Impacts Generated by Activities at SFO
                        • • State and Local Tax Impacts
                          • Federal Aviation Taxes
                          • • Chapter 7 Distribution of Impacts by Bay Area Counties
                            • • On-Airport Effect among Bay Area Counties
                              • Visitor Spending
                              • Tax Impacts by Bay Area County
                              • • Appendix I Methodology for the Analysis of Overall Economic Impacts
                                • • Suppliers of Goods and Services (Indirect Multiplier Effects)
                                  • • Orders from Businesses at the Airport
                                    • Orders from Off-Airport Businesses Serving Air Travelers
                                    • • Re-Spending of Worker Income (Induced Multiplier Effects)
                                      • Calculating the Domestic and International Values from Cargo Originating in the Bay Area and Shipped Through SFO
                                      • Major Sources of Data Used in this Study
                                      • • Appendix II Summary of IMPLAN Sectoring
                                        • Appendix III SFO Tenant and Visitor Surveys