2013 Economic Impact Study San Francisco International Airport SFO Connects the Bay Area to the World May, 2013 Prepared by: Economic Development Research Group, Inc. 155 Federal Street, Suite 600, Boston, MA 02110   In Association with: ICF SH&E, Inc. and Polaris Research and Development, Inc.

I Executive Summary

Findings Direct Impacts On Airport – 33,600 jobs, $5.5 billion in business activity Off Airport – 82,800 jobs from $9.1 billion in visitor spending Off Airport – 36,400 jobs from cargo valued at $17 billion, originating in the Bay Area and shipped from SFO Spin-off “ripple” effects of 135,500 jobs and $24.6 billion in business revenues $2.5 billion in state and local tax revenues

Total Economic Impact Impact Type Employment Labor Income ($Millions) Output On-airport 33,580 $2,092 $5,462 Aviation dependent exports 36,430 4,786 16,636 Visitor Spending 82,790 3,035 9,126 Direct Total 152,800 9,913 31,223 Suppliers of goods and services 56,545 4,867 11,905 Re-spending of income 78,990 4,855 12,656 Total Impact 288,334 $19,635 $55,783 4

How We Got There Verified on-airport direct employment Conducted a 1,500 person visitor intercept survey in 4 languages Collected and analyzed freight data Applied the IMPLAN Modeling Package Identified aviation and major state and local tax impacts

II Overview

SFO Plays an Important Role in the Bay Area A jobs center and economic engine An enabler of business and travel tourism Enhancing the regional economy and hospitality industries A freight gateway Supporting goods producing industries throughout the Bay Area A generator of tax revenues for California and the Bay Area 7

What are the impacts? Jobs Business Revenue Personal Income Direct Jobs – generated by SFO and would not exist without SFO. Indirect Jobs – generated when SFO or SFO-dependent firms buy goods and services from businesses located in the area. Induced Jobs – generated by spending of wages that are earned by workers of SFO or SFO - dependent firms, and by employees of suppliers, for items such as food, clothing and housing. Business Revenue Sales to airlines and service companies directly dependent on SFO. Reported in terms of direct, indirect (local purchases) and induced (labor re-spending) categories. Personal Income Wages and salaries received by individuals employed due to SFO activity. Reported in terms of direct, indirect (local purchases) and induced (labor re-spending) categories. 8

Categories and Measures of Impacts Jobs, business revenues, personal income and taxes are shown by airport-generated, visitor industry, and air cargo related categories Type of Activity Description Airport-Generated Airport operations and administration Capital investment (construction) Passenger & freight airlines Services to airlines Services to passengers Visitor Industry Spending by business and personal travelers arriving from international and U.S. locations Affected sectors: hotels, restaurants, entertainment, retail shops & off-airport ground transportation Aviation Dependent Exports Goods produced in the Bay Area are shipped to long distance customers through SFO, supporting regional economic development Measures of Impact Jobs Personal Income Business Revenue Aviation, State & County Taxes 9

Contribution to the Bay Area Economy Impact Type Employment (Jobs) Labor Income (Payroll) $ millions Output (Business Revenue) Airport-Generated 33,580 $2,092 $5,462 Aviation Dependent Exports 36,430 4,786 16,636 Visitor Industry 82,790 3,035 9,126 Direct Total 152,800 9,913 $31,223 Indirect (Suppliers of goods and services) 56,545 4,867 11,905 Induced (Re-spending of income) 78,990 4,855 12,656 Total Contribution 288,334 $19,63 $55,783 10

Jobs Center and Economic Engine III Jobs Center and Economic Engine

33,580 People Work at SFO Jobs at SFO include: Airlines – passenger and cargo activities Aviation Support Services – catering, in-flight entertainment, aircraft handling, fueling and maintenance Freight Transport – courier, delivery, customs broker and trucking Concessions – restaurants, retail stores and passenger services Ground Transportation Services – rental car, taxi, limousine service, and bus companies Air Terminal Operations Staff – security, building maintenance and facility management Public Agencies – FAA, other Federal Agencies and Airport Administration (including Police and Fire Departments) Distribution of On-Airport Jobs Concessions 15% Construction 3% Passenger Airlines 47% Freight Transport 2% Aviation Support Services 7% Passenger Ground Trans. 17% Admin., Gov’t & Security 9% Direct Personal Income Earned On Airport Average Personal Income Per Job $2.1 Billion Greater than $62,000 12

Jobs and Business Revenues by County Airport Generated Business Impacts (3) ($ millions) Jobs Across the Bay Area $35 $90 $162 $103 Subtotal Direct: 33,600 Subtotal Indirect & Induced: 26,400 Total: 60,000 $804 $394 $675 $6,663 $932 (1) By place of residence (2) By location of job (3) Includes direct, indirect, and induced impacts Note: Jobs rounded to the nearest 100. 13

Visitor Industry Impacts IV Visitor Industry Impacts

The Airport Supports Tourism 13.1 million total Domestic Enplaned Passengers 3.6 million total International Enplaned Passengers 51.6% 55.4% Domestic Visitors 6.8 million 2.0 million International Visitors Total Visitors 8.7 million 1.2 million California 5.6 million Rest of U.S. Note: Totals may not add due to rounding. Sources: SFO Traffic Statistics; U.S. DOT O&D Survey, YE 2Q 2012; U.S. DOT, T-100 Database; IATA, PaxIS Database; U.S. DOC, International Air Travel Statistics, 2011.

SFO Binds the Bay Area to the Nation 525 Daily Departures to 72 Domestic Markets (non-stop) Source: OAG, July 2013. 16

SFO is the Bay Area’s International Gateway 546 Weekly Departures to 33 International Markets (non-stop) Source: OAG, July 2013. 17

The Airport Supports Tourism Visitors spend on hotels, restaurants, retail purchases, recreation, and local travel (taxis, car rental, and public transportation) International business travelers on average spend close to $2,000 per trip while domestic leisure travelers spend more than $800 per trip Individual Spending per Trip * direct, indirect and induced 18

Total Impacts of Visitor Spending By County* Business Sales ($Millions) Jobs in County Solano $93 San Mateo $1,416 San Francisco $9,556 Napa $1,016 Marin $192 Contra Costa $239 Sonoma $725 Santa Clara $1,521 Alameda $1,524 Solano 834 San Mateo 10,994 San Francisco 70,710 Napa 8,670 Marin 1,582 Contra Costa 1,968 Sonoma 6,481 Santa Clara 11,283 Alameda 12,671 *direct, indirect and induced 19

Impacts of Air Reliant Users (Freight shippers) V Impacts of Air Reliant Users (Freight shippers)

Air Freight at SFO Supports the Bay Area Economy Enables transport of goods from Bay Area to customers in both long-distance domestic and international markets. Cargo services at SFO support Bay Area firms’ efforts to sell products across the U.S. and the world, and thereby maximize shares of national and international trade. Without the freight services offered at SFO (and if the similar scale of services are not assumed 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. 21

Value of Air Freight Goods produced in the Bay Area and shipped from SFO Represent sales of Bay Area companies in international and long distance US markets The sales bring income into the Bay Area from these markets to support jobs in the region. “Multiplier” effects (supplier sales and worker spending) generate additional jobs in the Bay Area. Parts of the sales revenue are paid as wages & profits that are spent in the region; and parts of the sales revenue is paid to supplier firms in the region for purchase of good and services that support additional jobs and wages

Exports from SFO Exceed Imports (by value) Value of Exports by Air – Value of Imports by Air = Surplus or Deficit Comparison of SFO and U.S. Air Exports by Value Source: US Census Bureau Foreign Trade Division, provided by WISERTrade. Dollars are in nominal value.

Shipments by Bay Area Firms through SFO Jobs – 103,144 Labor Income (payroll) – nearly $9.9 Billion Business Revenue – over $29 Billion Economic Value Top International Exports Top Domestic Shipments $8.64B $7.99B Chemicals 7% Machinery 8% Trans. Equip 4% Machinery 19% Computer & Electronics 67% Computer & Electronics 75% Elec. Equip. & Appliances 2% All Other 2% Textile / Mill Prod. 2% All Other 12% Leather & Allied Prod. 2% 24

State & Local Tax Impacts VI State & Local Tax Impacts

State & Local Tax Revenues Generated by SFO 2012 SFO State & Local Tax Revenues $629M $9M $927M $942M $2.5B $220M 35.0% $323M 34.9% $1.2B 47.2% $6M 66.7% $633M 67.2% $409M 65.0% $603M 65.1% $1.32B 52.8% $3M 33.3% $309M 32.8% 26

State & Local Taxes Generated On-Airport and from Visitor Spending Subtotal Direct: $1.01B Subtotal Indirect & Induced: $544M Total: $1.56B $ millions * Direct tax revenues from on-airport employees are based on place of residence 27

VII Summary of Impacts

SFO- Economic Engine for the Bay Area* 288,000 jobs $55.8 billion in business revenues, of which $19.6 billion is personal income $68,000 average income per employee * direct, indirect and induced 29

Aviation Dependent Exports Many Roles of SFO Create an Economic Engine for the Bay Area and its Counties Impacts Airport Generated Visitor Spending Aviation Dependent Exports Total Impact Jobs Direct 33,580 82,790 36,430 152,800 Indirect & Induced 26,417 42,404 66,714 135,535 Total Jobs 59,997 125,193 103,144 288,334 Business Revenue ($millions) $5,462 $9,126 $16,636 $31,223 $4,397 $7,155 $13,008 $24,561 Total Business Revenue $9,859 $16,280 $29,644 $55,783 Payroll/Personal Income ($millions) $2,092 $3,035 $4,786 $9,913 $1,755 $2,934 $5,033 $9,722 Total Payroll/Personal Income $3,847 $5,970 $9,819 $19,635 Weighted Average Income/Employee $64,111 $47,684 $95,194 $68,098 30

VIII Appendix

Elements of Economic Impacts and Interrelationships 32

Classification of Impacts Direct (Initial Economic Activities) Airport-based economic activities (airport terminal-related and tenants) Off-airport businesses serving airport travelers Off-airport businesses dependent on the airport for cargo movement Indirect Suppliers of goods and services to the airport and air-dependent business Induced Personal income spent by households in the Bay Area and re-circulated in the economy (earned by jobs in airport-based activities, visitor spending, air-dependent businesses, and suppliers of goods and services). 33

Direct Visitor Spending Ripples Through the Bay Area $9 billion of visitor spending in the Bay Area generated: 125,000 jobs $6 billion in labor income $7 billion in additional indirect and induced output ($16 billion in total output) County Direct Visitor Spending ($millions) Indirect & Induced Output ($ millions) Jobs* Payroll* (Labor Income in $millions) Alameda $813 $711 12,671 $504 Contra Costa $143 $96 1,968 $69 Marin $112 $80 1,582 $62 Napa $582 $434 8,670 $330 San Francisco $5,170 $4,386 70,710 $3,759 San Mateo $863 $553 10,994 $475 Santa Clara $970 $550 11,283 $531 Solano $59 $34 834 $25 Sonoma $414 $311 6,481 $214 Total $9,126 $7,155 125,193 $5,970 * direct, indirect and induced 34

Visitor Destinations Also Reach Beyond the Bay Area Common Visitor Destinations Outside the Bay Area 35