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Optimising the use of low-cost airlines for local and regional economic development and tourism

Marc AMOUDRY - General Director, Oise Chamber of Commerce and Industry, Governement administrator of Beauvais airport (France)

 

 

Beauvais airport provides an interesting example with regards to the fact that it only operates with low cost airlines and the 2,000,000 passengers that passed through its doors in 2006 were solely transported by these companies – RYANAIR, WIZZAIR, FLY ME and BLUE AIR, and exclusively on intra-European routes.

List of destinations covered by Beauvais airport

RYANAIR Dublin Shannon Glasgow Milan Rome Venice Stockholm Barcelona Madrid Porto

WIZZAIR Budapest Katowice Warsaw

BLUE AIR Bucharest

FLY ME Gothenburg

CENTRAL WINGS Lodz

 

In 2006, the overall passenger traffic of Beauvais airport reached 2,000,000 passengers, 50% relating to departures and 50% to arrivals.

The medium-term objective is to link up all of the European Union Member State capitals.

The 2010 perspective is to reach overall passenger traffic of 4,000,000 passengers.

The use of low cost airlines as drivers of economic and local and regional tourism development

The low-cost airlines that use the regional airports have a “carrier” business logic. Their corporate objective is to transport their passengers from point A to point B, at the lowest possible fare, in safe conditions and with optimum punctuality performance. They are not concerned with their passengers’ travel reason – business, tourism, visiting family etc.

Consequently, it is up to the airport managers and the regional authorities served by the airport to organise themselves and to make the most of this patronage so that the airports can become drivers of economic and tourism development.

With this in mind, the modest example of Beauvais demonstrates how an airport can be used as a means of regional development.

a) the economic aspect

The benefits of low fare connections as a means of facilitating trade between European regions no longer need to be demonstrated.

The Oise Chamber of Commerce and Industry, the airport’s government administrator, draws on its experience supporting and advising companies under its jurisdiction, particularly export companies, in order to enhance business relations between its own companies and those of its European colleagues. In doing so, it organises, in partnership with the Chambers of Commerce from these regions, exporter clubs and awareness raising sessions for companies new to export trade, using the low cost operators departing from Beauvais.

In 2006, a number of French company missions and participations in trade fairs and trade shows were organised in Dublin, Stockholm, Gerona and Porto. This programme is to be further extended over the next few years.

We cannot underestimate the social and economic impact of the jobs generated from the development of the airport activity.

Between 2001 and 2006, the airport’s traffic increased from 400,000 to 2,000,000 passengers, generating the creation of a total of 500 jobs, directly contributing towards boosting the local economy. The economic impact of the salaries and taxes paid, the investments made and the direct and indirect revenue increased from 100 to 450 million euros, also contributing to the growth of the local economy and job creation.

The airport traffic of 4,000,000 passengers allowed for the creation of 1,000 additional direct or indirect jobs and generated over 900 million euros for the local economy.

It is clear that the growth in passengers resulting from the development of the low cost airlines operating at the regional airports has transformed these airports into important centres of social and economic growth for the regional areas that they are helping to open up.

To achieve all of this, everyone’s role must be clearly defined: the low cost airlines, in their duty of transporting their passengers, increasing traffic and launching new routes, the airport administrators and the elected officials from the regional areas, in providing support in transforming these passengers into drivers of economic and tourism development.

b) the tourism aspect

The same issues arise as regards tourism development.

Beauvais in itself is faced with tough competition from the popular tourist destination of Paris, due to the capital being only one hour away by car.

On the other hand, the airport has an extensive base of loyal clients, who use the airport more than 6 times/year, and who make a significant contribution with the extent of potential customers in the region being several hundreds of thousands of tourists/year.

The visitors are generally people who have already visited Paris on a number of occasions and are seeking to explore new tourist destinations.

The new challenge facing the airport administrators and the Picardy region Oise tourism authorities is to build a new tourism offer that meets with their expectations.

We have numerous assets to offer, a historical and cultural heritage, a great deal of religious monuments, cathedrals, castles, forests and golf courses.

Short stay weekend break offers are being developed to take into account that 95% of our passengers book their tickets via the Internet.

The marketing of this new tourism offer via the Internet is of major priority. We believe it provides the essential link for generating passenger use of the airport and driving tourism development in the regions.

Thank you for your time.

Beauvais airport client base typology

The Beauvais airport client base is:

• Young 91% are in the 15 to 54 age bracket
• Experienced Internet users: 85% of passengers stated that they had booked their airline ticket via the Internet.
• Equally represented  51% female, 49% male
• Balanced: 50% departing passengers and 50% arriving passengers
• Active
  • 25% employees
  • 21% liberal professions
  • 15% executives
  • 15% students
  • 11% company managers
• With a leisure predominance: 70% relating to leisure holidays, 30% relating to business trips
• Fairly high earners

With an average stay duration of 4.5 days, passengers stated that they had spent the following amounts during their stays, excluding travel costs,

• One third, less than € 500
• One third, between € 500 and € 1000 ,
• One third, over € 1000

Source: analysis of the half-yearly surveys of passengers passing through the airport

 

METHODOLOGY: ECONOMIC IMPACT

Study carried out in accordance with the standard methodology recommended by ACI Europe (Airport Council International). It is recognised for its effectiveness by all of the air transport specialists. Base ratio of 1 million passengers = 1,000 direct jobs.

Consideration of the specific nature of our facility:

• A versatile team of staff, capable of dealing with layovers for 5 different airlines, a single support company.
• Importance of the bus link to Paris
• + 85% of staff live in the Beauvais region

1) Calculation of the direct impact

This is the direct repercussion of the economic activity generated by the airport complex. It measures the number of jobs created and the cash flows generated by this activity and allocated in the form of salaries, local taxation, consumption and investments (solely on behalf of the Oise Chamber of Commerce and Industry administrator).

2) Calculation of the indirect impact

It corresponds to the amount of expenses of non-resident visitors allocated to the regional goods and services operators.

3) Calculation of the induced impact

The sum of the direct and indirect cash flows allocated to the region, becomes a revenue source for certain regional goods and services operators. These operators in turn ensure the economic benefits for other local businesses. The induced economic impact is thereby measured as a sum of the revenue generated downstream.

€ 1 spent at the airport generates x € in the region

Calculation made from the distribution of operating expenses table for the Oise regional businesses (source: Banque de France)

Example: Method of calculation

In the distribution of operating expenses table for businesses located in the Oise region, the percentage shares associated with expenses allocated to the department were measured.

2003 Data
(2240 Oise businesses with a significant turnover >€ 750K)

Distribution of operating expenses 2003

Wage bill	40
Taxes	3,5
External consumption	46,7
Amortisation expenses and provisions	9,8

 

• For staff expenses, the total sum corresponding to staff costs is an economic driver for the region. The percentage remains constant at 40%.
• For taxes, the allocation is as high as 75% for the local governments and 25% for the State. The corresponding percentage is therefore 2.625
• The businesses and companies operating at the airport complex achieve a regional consumption percentage of 30%. The consumption share is therefore calculated at 14.01.
• Investments are made in the region at a rate of 60% with a final indirect share of 5.88.

The percentage that corresponds to the sums effectively paid by the departmental businesses is therefore (40+2.625+14.01+5.88) = 62.515

The following formula is applied to obtain the multiplier coefficient: 0.62515/(1-0.62515 = 1.67