Economic

Economic

A Regional Economic Driver

Goal: Enhance community understanding of SAN as an economic engine and a portal of prosperity that enhances the region’s quality of life. [OSP]

 

Data Trends:

  • SAN contributes approximately $12 billion in economic activity annually to the region.
  • SAN facilitated the movement of 171,000 tons of cargo and goods in CY2019, which was 10% lower than 2018 levels.
  • More than 9,000 people work at SAN, a 31% increase from 2012 to 2019.

For nearly a century, San Diego International Airport has been one of the foremost economic drivers in the region, bringing millions of visitors here while providing opportunities for San Diego companies to do business all over the world.

While COVID-19 has posed unprecedented challenges, SAN’s mission has not changed. The airport is essential to the nation’s transportation infrastructure and has remained open throughout the pandemic, bringing home family and friends, providing essential travel services and transporting critical cargo.

Pre-pandemic in 2017, SAN’s overall economic impact was measured at nearly $12 billion annually.* The airport served more than 25 million passengers in 2019, and more than 9,000 employees work at the airport for the airlines, federal agencies, general aviation, cargo, concessions and the San Diego County Regional Airport Authority. Total employment supported by the airport has increased by 31 percent from 2012 to 2019. Nearly 118,000 residents in the region were employed directly or indirectly due to activities at SAN, generating nearly $3.9 billion in total annual payroll. Of total employment in San Diego County, SAN supports 5.7 percent of people employed in the region.

The airport itself is a critical piece of San Diego’s tourism industry, which is the third largest segment of the regional economy, behind manufacturing and the military. According to the San Diego Tourism Authority, visitors arriving by air spend an average of $835 per person per trip. In 2017, it is estimated that more than 5.9 million visitors to the region spent nearly $5 billion in the regional economy.

Advancing Small Business Development

Support for small- and minority-owned businesses is another way that the airport enhances the regional economy. The San Diego County Regional Airport Authority ensures that local and small companies, including all women- and minority-owned and disabled-veteran businesses in San Diego County have every opportunity to do business with the airport. Over the last decade, over $750 million and $252 million worth of construction projects went to local and small businesses, respectively.

25 Million

Passengers served in 2019

Today, the airport is poised to support the region’s economic recovery from the effects of COVID-19 through a variety of programs and initiatives. It continues to provide opportunities through its Small Business Development Program and is working to provide economic relief for airlines and concessionaires severely impacted by the virus.

The Airport Authority is cautiously moving forward with the Airport Development Plan (ADP), which will replace the aging Terminal 1 with a new facility that will provide a terminal experience that rivals the Green Build expansion of Terminal 2. The ADP is poised to provide thousands of well-paying jobs at a time of unprecedented unemployment.

Meanwhile, from an air service perspective, the Airport Authority is working to retain as many non-stop routes as possible while endeavoring to restore routes that were lost during the pandemic.

31 %

Increase from 2012-2019 in total employment support by SAN
Implementing a Prudent Plan of Finance

The Airport Authority is not a taxing entity, and no local taxes are used to pay for the airport. The Airport Authority’s revenue comes from a variety of sources including rents, leases and fees paid by airlines, air travelers, concessions, car rentals and parking, as well as FAA grants and other revenue sources.

The foundation of the Airport Authority’s economic strategy is a Plan of Finance that provides the financial resources necessary to fund essential operational expenses to manage the airport through the COVID-19 pandemic and preserves the Authority’s financial position. Highlights of the strategy include a Financial Resilience Plan and extensive cost-containment efforts Authority-wide.

The Airport Authority had a $317.6 million operating budget for FY2020, and its five-year Capital Improvement Budget, which covers FY20-24, began at $955.4 million with an increase of $3.0 billion in January 2020 to add the ADP, bringing the total budget to $3.9 billion.

On June 4, 2020, the Board adopted the Authority’s Fiscal Year 2021 budget. In the process of developing the budget, the Authority engaged in numerous industry discussions regarding the impacts the COVID-19 pandemic will have on the aviation industry, including the airport. The revenues and expenses included in the Fiscal Year 2021 Budget assume that enplanements at the airport will be approximately 6.3 million in Fiscal Year 2021 (a 30.1% reduction of the estimated Fiscal Year 2020 enplanements and a 48.8% reduction of the enplanements for the Fiscal Year ended June 30, 2019).

Operating and non-operating revenues are budgeted to be $376.0 million (a decrease of $100.8 million or 21.1% compared to the Fiscal Year 2020 Budget). Operating expenses are budgeted to be $160.5 million (a decrease of $23.3 million or 12.7% compared to the Fiscal Year 2020 Budget).

*Source: SAN 2018 Economic Impact Report

 

Airport Authority Taking Deliberative Approach to Capital Improvements

Goal: Grow and efficiently manage capacity for future demand, both landside and airside, including international facilities. [OSP]

 
Data Trends:
  • The Authority received $19.8 million in grant funds from the FAA in 2019 for airport improvement projects at SAN, and an additional $4.7 million from the federal government for previous capital investments’ interest rebates.
  • Overall, the Airport Authority Board of Directors has approved $3.7 billion in Capital Projects for FY2021-2025.

The economic impacts of COVID-19 have forced the Airport Authority to re-evaluate its entire Capital Program. Certain capital projects totaling approximately $220 million have been delayed or reduced in scope or will be phased in at a slower rate.

At this time, two major projects continue to move forward: the Airport Development Plan (ADP), which envisions the replacement of the 53-year-old Terminal 1; and the Airport Support Facilities (ASF) project, which includes major behind-the-scenes improvements.

Built into the ADP planning process are options to slow down, speed up, or even stop work completely so the financial impacts of moving forward can be carefully evaluated. The ADP is funded through a 10-year Airline Operating and Lease Agreement (AOLA) with the airline carriers at SAN as well as through future non-airline revenue sources and anticipated federal grants. The AOLA includes pre-approved funding for more than $500 million of transit and roadway improvements.

In addition to a new Terminal 1, the ADP would provide a new inbound access roadway that will remove thousands of cars from North Harbor Drive, numerous airfield improvements, and preserve an area for a future on-airport transit center that could connect to a regional transit solution such as an automated people mover or trolley line.

Protecting the Environment

To date, the Airport Authority has completed the California Environmental Quality Act (CEQA) certification process for the ADP. The federal National Environmental Policy Act (NEPA) process with the FAA is in progress and is anticipated to be complete by late Spring 2021. The Airport Authority is also working to secure permits with the California Coastal Commission for elements of the ADP.

Interviews with design/build firms for the ADP terminal and roadways portion were completed in June this year, and recommendation of the selected firm was presented and approved at an Airport Authority Board Meeting in September 2020.

Construction on the terminal and roadways portion of the ADP is slated to begin in late 2021 or early 2022 and the first 19 gates are anticipated to be in service by late 2024 or early 2025.

The Airport Authority completed a comprehensive Sustainability Management Plan in 2019, which will help inform the further design and implementation of the Capital Improvement Program and the Airport Development Plan.

Construction on parts of the ASF was already underway when the pandemic hit in early 2020. These behind-the-scenes facilities are critically needed to help our airport run efficiently. They provide essential services such as provisions for passenger air services, facilities maintenance of the airfield and terminals, and belly cargo shipped in passenger aircraft.

Included in the ASF project are the Airline Support Building (ASB), the Facilities Management Department (FMD), the Airport Fueling Operations (AFO) building, and an underground stormwater cistern.

Used for more than 50 years, the original buildings that housed the airport support services and facilities maintenance were outdated and inefficient. Relocating and updating the ASB, FMD and AFO buildings will offer more modern, energy-efficient buildings that are easily accessible both from the airfield and the public roadways.

Funding for the ASF project includes airport revenue bonds and airport cash.

Achieving Efficiencies

The FMD campus was completed in June 2020 and is located on 6.75 acres that include a modern administration building and adjacent mechanic and maintenance shops, fleet parking and material storage. The buildings and grounds boast significant energy efficiencies and modern workshops to maintain equipment and terminal facilities.

The ASB, which can be seen from North Harbor Drive, will allow several services once housed in multiple buildings to be consolidated under one roof. Anticipated completion date for the ASB is December 2020.

Also nearing completion is an underground, 3-million-gallon cistern that will capture stormwater runoff and prevent it from entering San Diego Bay, as well as reduce SAN’s consumption of potable water. This system is projected to capture 19 million gallons annually of storm water, which could be reused to wash cars at the nearby Rental Car Center or irrigate nearby landscaping.

In addition, stormwater infiltration beds adjacent to the ASB will aid in preventing stormwater pollutants from entering the San Diego Bay. Anticipated completion of these stormwater capital improvement projects is September 2020.

The Airport Authority has a strong commitment to -- and track record of -- completing capital projects on time, on or below budget, and with a high level of satisfaction. We will continue to prudently advance the ADP and will improve access and mobility in and around the airport. That includes continuing to engage the FAA and other agencies on available federal and state grant and loan programs that could help finance the replacement of Terminal 1 and other ADP improvements. While a number of Capital Improvement Projects have been put on hold due to COVID-19, we will monitor the environment to move those projects ahead if and when appropriate to do so.

2021 Late

Construction expected to begin on Terminal 1 replacement
Airport Authority Completes Major Bond Sale
 

In December 2019, the Airport Authority completed a major bond sale totaling approximately $700 million, obtaining a record-low interest rate that is estimated to save more than $100 million in financing costs over the next 20 years.

Approximately $280 million of the bonds will pay for current and future construction projects that will help capture and store stormwater runoff, provide a new facilities maintenance building, and deliver new and rehabilitated airfield pavement, among other projects.

The remainder of the bond proceeds were used to refinance existing debt that has been in place since 2010. The bonds will not cover the proposed Airport Development Plan, which envisions the replacement of Terminal 1 and related airfield and transportation improvements.

Demand was exceedingly strong – investors put in over $5 billion worth of orders for the bonds which contributed to an Authority record-low interest cost. Prior to the issuance, Fitch Ratings upgraded the Airport Authority’s senior bonds to AA- and A+.

Creating a Level Playing Field

Goal: Providing Opportunities for Small, Local, Disadvantaged and Veteran Owned Businesses

 
Data Trends:
  • Overall, the Airport Authority committed $126,883,875 to contracts with local businesses in 2019.
  • The Airport Authority certified 173 businesses as Local Business Enterprises in FY20
  • The Airport Authority exceeded its 19.1% ACDBE goal by almost 5% in 2019 from ACDBE Non-Car Rental concession contracts, achieving 23.14% participation.
  • The Airport Authority also saw its 2019 ACDBE Car Rental contracts participation increase beyond its 2.4% goal by almost 8%, achieving a 9.63% participation.

Creating a level playing field that attracts businesses of all sizes and provides opportunities for workers of all genders and ethnicities has been the goal of SAN’s Small Business Development (SBD) program since 2003. The SBD works with small, local, disadvantaged and veteran owned small businesses to provide them with the resources and knowledge to apply for eligible certification and ultimately successfully compete for Authority contracts.

During the past year, the department launched the Local Business Enterprise (LBE) certification. Businesses certified as LBEs are given preference in awarded contracts with the Airport Authority. Additionally, SBD promoted the new LBE certification through public outreach, workshops, hosting presentations; and also providing an educational training LBE presentation for the U.S. Veteran Business Alliance (USVBA).

The SBD also works to develop new methods and approaches to increase the participation of Disadvantaged Business Enterprises (DBE) to meet the overall goals on federally funded projects.

The SBD offered new workshops for DBEs and Airport Concession Disadvantaged Business Enterprise (ACDBE) certifications. An additional 30 OSHA workshops were offered due to high interest from contractors. The department also met and exceeded its overall ACDBE goals for both Car Rental, Non-Car Rental and concession contracts.

The increase in ACDBE participation for Non-Car Rental concession contracts are based on gross receipts and purchase of ACDBE vendor goods and services. ACDBE Car Rental concession contracts participation are counted through the purchase of ACDBE vendor goods and services and the Authority’s single ACDBE certified car rental company Green Motion’s gross sales.

Focusing on Virtual Workshops and Events

The SBD hosted a Lunch & Learn and Panel for ACDBEs, joint venture concessionaires, and emerging businesses to learn about ACDBE joint venture compliance, SAN’s ACDBE Program, and offered attendees an opportunity to learn from concessionaire panelists tips on how to become a successful airport concessionaire operator.

The SBD also hosted “Meet the Primes” in October 2019, which was designed to help businesses network and learn about future business opportunities from a range of exhibitors such as SAN airport departments, prime contractors, prime concessionaires, public agencies and business support services. More than 1,000 interested parties registered for the event.

A Veteran’s Appreciation Luncheon was also hosted by the SBD to recognize the outstanding work by veterans in the community, as well as provide information about SAN’s Capital Improvement Program and upcoming projects and opportunities. Attendees also heard from a panel of veteran prime contractors, public agencies, and veteran owned small businesses who shared their availability of resources and knowledge for veteran business owners in the southern region.

This year, certified businesses were awarded contacts at a range of large inclusionary projects such as the Terminal 2 Parking Plaza, the International Arrivals facility and the Airport Support Facilities construction project.

During the pandemic, the SBD worked to keep small businesses updated and informed on relief options and provided guidance and support to contractors and concessionaires. They pivoted educational workshops to a virtual platform to ensure small, local, veteran owned small businesses and the general public have the tools needed to apply for certification as well as comply with State and Local regulations.

The Airport Authority’s Small Business Development program is gearing up to provide opportunities for small and local businesses to compete for contracts for the Airport Development Plan, which envisions the replacement of Terminal 1, among other improvements.

Airport Innovation Lab – Reducing Barriers for Innovators
 

Between 2019 and 2020, 16 small businesses have had the opportunity to test and refine their airport business solutions in the Airport Innovation Lab. The Innovation Lab is a 16-week program, located in the decommissioned Commuter Terminal, that provides start-up support to entrepreneurs to develop concepts that can enhance the passenger experience, improve operational efficiency, increase revenues and/or decrease costs. The work the innovators participate in through the program helps reduce barriers to breaking into the aviation industry.

Successful innovators have the potential to negotiate a contract with the San Diego County Regional Airport Authority and also potentially gain entrée to other airports and analogous industries including other transportation hubs, convention centers, shopping malls and other large venues such as ballparks, theme parks and hotels.

This past year, the Airport Innovation Lab had six innovators successfully test their prototype concepts in the lab from October through December 2019. Included in this group were Cloud Club, Lift Your Eyes, Lorenzo Designs, NXT Robotics, and Nüdel Kart. Their solutions ranged from autonomous security robots to a virtual reality experience.

Recruiting for this group was focused on two opportunity areas: an Interactive Children’s Entertainment Solution and a “wild card” that welcomed ideas that may not previously have been thought of but could result in viable solutions.

Introducing the Fourth Cohort

In mid-March 2020, four companies, SkyLights, ZeroWaste, Encora and Keko, Inc., began participating in the fourth cohort to go through the lab. This fourth group of innovators was largely focused on reducing waste and enhancing the passenger experience. Their airport-oriented solutions ranged from a smart waste bin, to a virtual reality headset that provides immersive entertainment, to reusable dishware and to-go containers.

Due to COVID-19, the Innovation Lab pivoted to a full-virtual program, including virtual workshops, sessions with subject matter experts form the Airport Authority, and enhanced virtual networking. The virtual format has allowed these small early stage businesses to engage in meaningful work despite the pandemic.

Once participating companies complete the Airport Innovation Lab program, they compete for the opportunity to enter into contract negotiations with the Authority. Past Innovation Lab graduates that are now operating at SAN include @YourGate and Baggage Nanny.

A Sustainable Approach to Ground Transportation

Goal: Develop a plan for transportation to and at the airport by 2022 that anticipates technological changes and advances connectivity to the regional public transit network. [OSP]

 

The Airport Authority is committed to improving access to SAN for everybody, no matter what form of transportation they choose.

In October 2018, the Authority Board of Directors approved the creation of the Ground Transportation Ad-Hoc Committee (GTAC) to facilitate input from community stakeholders, subject matter experts, Board members, ground transportation industry partners and permittees regarding the future of ground transportation operations at SAN.

Throughout a seven-month process, the committee solicited input and collaborative discussion that emphasized finding solutions, recommendations, and initiatives that could be applied across modes, for the benefit of the airport, the broader transportation industry, passengers, and the community.

The GTAC emphasized the goals for SAN ground transportation of safety, high quality customer service, and efficiency in operations and infrastructure, economic value to the providers, minimal unnecessary trips & congestion, reduced environmental impact and alignment with airport strategies.

Goals and recommended actions of the GTAC are aligned with the Authority’s Clean Transportation Plan (CTP). The CTP advances the Airport Authority’s overall environmental strategy covers all ground transportation emission sources, including all vehicles and equipment accessing and operating at the airport, whether owned and operated by the Authority or by third parties.

A Future Transit Center

The Airport Authority is collaborating closely with the San Diego Association of Governments (SANDAG) and other public agencies to identify a regional, long-term transit solution to SAN. We have included in our Airport Development Plan an area for a future transit station that could connect with whatever transit solution is ultimately identified by SANDAG.

In early 2020, the Authority entered into a Memorandum of Understanding (MOU) on Major Regional Projects with SANDAG, the City of San Diego, and the San Diego Unified Port District. The MOU outlines each party’s commitments to data-sharing and collaborating on projects to enhance transit and roadway connectivity into and around SAN.

Public Transit to the Airport

Bus ridership has become increasingly prevalent among those who use public transit to access the airport. In fact, the MTS Bus 992 exceeded 420,000 riders in 2019, which is approximately an eight percent increase from the year before.

The 992 bus transports riders between downtown and the airport in 10 to 15 minutes. The bus operates seven days a week, picks up every 15 minutes and stops right outside of baggage claim at Terminals 1 and 2.

With a goal of reducing emissions, the Authority developed a plan to start an all-electric shuttle service that would carry transit passengers between Old Town Transit Center and the airport. This service was originally set to begin in mid-2020, however, with the onset of the COVID-19 pandemic that resulted in a significant decrease in passenger volumes, this has been delayed until 2021.

The Airport Authority will assist SANDAG in its efforts to develop a concept for a transit connection to better connect SAN to the regional transit network and in initiating the concept’s environmental review. Additionally, the Airport Authority will update its Ground Transportation Clean Vehicle Incentive program to promote low-carbon technologies and eventual vehicle electrification over the next decade. While this is happening, there will also be preparations made for the arrival of over 30 new electric buses and shuttles to replace current Authority fleet.

420 Thousand

MTS Bus 992 total ridership in 2019