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CUPE: Airport investments yield uncertain returns

Nunn

Indianapolis is about to embark on a gargantuan public works project—the $974 million Midfield Terminal at Indianapolis International Airport. But will this investment pay off for the city?

Unfortunately, the answer to that question is uncertain. In an effort to predict the success of the airport investment for central Indiana, Sam Nunn, research director and senior scholar at the IUPUI Center for Urban Policy and the Environment (CUPE), analyzed the effects of aviation investments in Indianapolis and eight comparison regions.

"Public officials generally believe that modern airport facilities can boost economic development in a region," said Nunn. "Clearly, aviation infrastructure plays a crucial role in national and international networking, travel, materials processing and regional development. However, in many ways, the role of airports in economic success is nclear, and even a cutting-edge airport, by itself, may be incapable of sustaining adequate regional economic growth."

Nunn studied aviation investments and outputs (such as aircraft departures, enplaned passengers, freight-tons, and mail-tons) in Indianapolis and eight other comparison regions.

The comparison regions are metropolitan areas similar to Indianapolis and chosen based on criteria such as population size, economic structure, geographic location and presence of a state capital and a major research university. They have four competitor regions in the Midwest (Columbus, Cleveland and Cincinnati, Ohio, and Kansas City, Mo.), and four exemplar regions that are generally considered successful: Austin, Texas; Raleigh-Durham N.C.; Nashville, Tenn., and Sacramento, Calif.

The analysis showed that the Indianapolis Airport Authority made substantial airport investments in the 1990s that supported increased cargo volumes. Apparently, as a result, the percentage growth in freight tons enplaned in Indianapolis was 661 percent from 1990 to 2001—the highest growth rate in the nine regions studied.

However, Nunn said, "only an increase in plane arrivals and departures or larger commercial aircraft can increase the number of arriving and departing passengers. Regional leaders should consider how the terminal expansion will improve the airport’s airplane flight capacity as one way of increasing passenger volume."

Nunn said that one item included in the project that could conceivably enhance airport flight capacity is a new air traffic control tower. Its greatly increased height (340 feet, compared to the current 140 feet) might extend aircraft control over a wider area. In the end, however, the test of whether this leap in aviation investment is successful will be substantial increases in aviation outputs in Indianapolis.

Nunn’s report, "Airport Development Takes Flight," is part of an ongoing study at CUPE to compare central Indiana with other regions across a broad range of issues.

Center researchers believe that a strategy of multiple comparisons with the same set of regions will help them understand the differences in regions that can drive economic development and other quality of life issues. Decisions makers can then use the information to formulate policy choices that will benefit the region. For more information or the complete report, telephone 317-261-3000, or visit this Web site:

http://www.urbancenter.iupui.edu/pubpages/air_dev.htm