Bergamo Airport (Orio al Serio) and its Economic Impact Analysis

In the third module of the TDM programme (DESTINATION DEVELOPMENT, FINANCE AND ORGANIZATION), we had the chance to focus on the economic impacts a specific company, event or even DMO could have on the surroundings (province, region, etc…).

In my report I focused on Bergamo Airport and which type of economic impact it had on the province of Bergamo.

Bergamo Airport (Orio al Serio) and its Economic Impact Analysis

  1. BERGAMO AIRPORT:

Bergamo Airport Orio al Serio is an Italian airport (both private and civil) located 5 km from Bergamo city centre and 45 km from Milan, Lombardy’s capital city. (Bergamo Airport Website) Its position is in the centre of Lombardy, and it is strategic for many reasons: first, Lombardy is known as the most industrialised region of Italy with 811.666 companies (18,3% on the national number) in 2011 (Bergamo Airport website, ISTAT 9° census on industry and services, institutions and no profit); secondly, Lombardy is in the center of the South European region, moreover it also important to underline that approximately 25% of the Italian GDP comes from the surrounded area (90 minutes from there)(Bergamo Airport Website). Bergamo Airport is close to many touristic attractions therefore can fit for different types of passengers. (Marta Trevisan, a.a. 2013/2014)

According to ASSAEROPORTI statistic (Italian association of Airport operators), Bergamo Airport is the third most important airport in Italy with 1.047.355 passengers considering only October 2017, following Roma Fiumicino (3.666.114) and Milano Malpensa (1.930.477) on a total of 15.494.387 passengers. During the period January-October 2017 the total passengers were 10.518.747.(Assaeroporti website, n.d) As regard the year 2017, the expectation is to reach the number of 12 millions of total passengers (Assaeroporti statistics. Integrative note). Bergamo Airport is also the third one for the air transported goods, and one of the most important companies for the “Express Couriers” in Southern Europe. (Bergamo Airport Website) The cargo of tons registered in the period January-October were 11.117. (Assaeroporti website, n.d)

 

  1. BERGAMO PROVINCE:

Bergamo Airport is very important for its Province. The population was 1.109.439 in January 2017 (ISTAT- Areas of administrative units for statistical purposes)and the area is 2745,936 km2 (ISTAT – Demographic statistics).

According to the Annual report 2016, made by the Tourism Observatory of the Bergamo Province, there are 3 macro-areas: the “orobie bergamasche” (97 municipalities), the “Lakes” (45 municipalities) and “Bergamo, island and valley” (103 municipalities). The tourist trend in the last years was positive, starting from 2013. In particular, 2015 was an exceptional year, in fact the province reached the number of 2 million of tourists. This was possible also due to the EXPO 2015, an international food event hosted in Milan from May to October 2015 that boosted the arrival numbers in many areas of the region. The tourist number in 2016 was 2.065.670 while in 2015 it was 2.060.564. The tourist presence was not only growing but also becoming more international: in fact, in the same period the international tourists number was increased by 6.6%. More in general, between 2006 and 2016 the growth of the international presence in the region was +80,3%, changing from 471.353 to 849.941. Bergamo city and Big Bergamo (36 municipalities) has a highnumber of international tourists: 2/3 of the total number in the case of Bergamo city. The most important market for the Bergamo province is Germany (13,2%).(Tourism Observatory of the Bergamo Province, 2006).

The most important stakeholders in the area can are public. The public ones are: the Lombardy Region, the CAL (Council of the local autonomies) and the Provinces (11 provinces and 1 metropolitan city) (Lombardy Region (2017), Treccani, n.d).

  1. THE REASONS TO CARRY OUT AN ECONOMIC IMPACT ANALYSIS AND THE TARGET.

Bergamo Airport and the Bergamo province are interconnected. This interconnection could be calculated through an economic impact analysis. It is usually made by 3 different levels: the direct impacts, the indirect impacts and the inducted impacts. In the first case, the direct impacts come from the direct tourist expenditure in the tourist industries (for example restaurants, accommodation and transport). The tourist industries, in turn, spend this income in other industries creating an indirect impact. The third level is made by the employee expenditure in both the sectors (tourist and other sectors) and they are called inducted impacts. (Klijs, J., 2015).

An economic impact analysis that summaries why the Bergamo Airport is so important in the province economy could be useful for many reasons. First of all, a clear evidence of the economic impact is essential to attract more investors in order to increase the development of the Airport; secondly, the management could use this information also to apply for regional, national or European funds, intended to sustain the growth of companies that have a real impact on the society and the economy. This analysis is addressed not only to the airport management, but also to the population of the Bergamo province that shows some interest on this topic. Sometimes, the civil society is not involved in this process by the institutions, even if it can be the one that is more affected by the airport economy itself.

  1. MOTIVATIONS TO CHOOSE THE INPUT/OUTPUT MODEL:

An  economic analysis can be carry out using different models. One of these models is the Input-Output model (IO) and it starts from the final demand (also called consumer spending) and it describes using a table the relationships between the consumer spending and all the economic sectors. In this report the IO model advantages and disadvantages will be described. These are the advantages: its simplicity: to create the I/O table could be used Microsoft EXEL and it not important to be experts to understand the results; it’s one of the most common approaches used in the tourism field and it implies that it is easy to find other reports to compare the results; the initial data are modest: an input-output table, the final demand data divided for sector and the labour productivity per sector (to calculate the effect on employment); the outcomes are pretty detailed: the impacts obtained are on the production, value added, income and employment, both on total and divided by sector; it very flexible: in fact can be carry out different types on analysis based on significance and impact.  On the other side, there are the disadvantages of using this model:  the final demand has to be calculated in advance to use this model and not always it is easy to define how collected these data; the IO table is not always available and sometimes has to be created; this model is based on some assumptions: the labour is always available if needed and this can’t be true; there are no productivity changes due to a change in final demand: double the productivity doesn’t mean the employee number and expenditure will be double too; it doesn’t give the spatial distribution of the impacts and just describe the situation in 2 moments of equilibrium without consider the time the economy need to adjust itself to the new situation; social and environmental consequences are not present. (Klijs, J., 2017, 2015b).

  1. THE TYPE OF ANALYSIS:

There are 2 different types of analysis that could be developed to describe a case study: Significance-analysis or Impact analysis. The main difference between them is that the first one is not trying to define what would happen if the airport doesn’t exist at all and it doesn’t include in the analysis the local population, the time and place switchers. (Klijs, J., 2017; Crompton, J. L., 2006).

The type of analysis I would carry on is the Significance-Analysis. It focuses on the effects in the Bergamo Province produced by all the expenditure of all passengers to the Airport. A significance-analysis was already made by CASI CeSTIT and Bergamo University in 2012, thanks to an extrapolation of the data collected by Bank of Italy about the International Tourism in the country in 2010 and 2008. The data obtained are very specific and included 4 different sections: the international tourists, the main markets of origin, which was the economic impacts on Bergamo province and the details about the internal market of Italians that travel abroad. (CASI CeSTIT, Bergamo University, 2012).

The significance analysis is the best option in this case study for 2 reasons. First, the Airport is a facility that is used not only from tourist that visit the area but also from time and place switchers. In other words all the people that would have visit the province anyway, but in a different moment or in another Province area. Secondly, the data availability makes easier a comparison between the data I could collect now and the previous data, understanding the similarity and differences. The analysis will be executed ex post, to understand the difference in the tourist expenditure before existence of the Airport and the current situation.

  1. DESCRIBE OTHER (NON-ECONOMIC) COSTS AND BENEFITS RELATED TO THE TOPIC:

The tourism expenditure is not the only important effect that the Airport has. In general, there are other non-economic impacts. From a social point of view the biggest impact is on the traffic in the area and the noise pollution caused by it. The traffic around the area is analysed in an article called “Bergamo. Orio al Serio is the most stressed layover in the North”. It reports that the airport has reach its limits with incredible numbers “220 flights per day (each of them burn approximately 70 tons of kerosene), 120 thousand cars on the A4 highway, 20 thousand cars reach the airport and 15 thousand the Orio Center (the shopping center located in front of the airport, connected by an underground passage) (Agenpress, 2017; Orio Center website). The noise pollution and the risks for the population living in the surrounding areas (the nearest houses are just 800 metres far away and at 2,9 km from the Airport there is a nursery school) is underlined by the Coordination of airport committees and the International Society of Doctors for the Environment. For that reason, last year Giorgio Gori, Bergamo mayor present to the Airport Commission a new take-off route with the aim to cut off by 50% (from 7.050 to 3.800 people), the population that was exposed to a noise higher than 60 decibel. (Bg Report, 2016). On the other side there 2 marketing aspects. First, the creation of the Orio al Serio Center, 75.000 m² large, counting 200 shops in 2004 and expanded again last May:105mila m², 280 shops including 50 food points, 14 cinemas (with the largest screen movie in Europe) and 1 ipermarket.(Eco di Bergamo, 2017). Secondly, the promotion of the Italian food. The best example is the Cuneo food lounge, large 100 mq, opened last September with the aim to promote the food and the touristic offer of the Cuneo province. (Bergamo News, 2017).

  1. DESCRIPTION

SAMPLING

The aim of the following questionnaire will be better understand the expenditure of the passengers at the Bergamo Airport in the province As said in the first paragraph of this report the number of passengers in the first 10 months of the year were  10.518.747, (Assaeroporti website). with an expectation of 12 millions in the whole year, considering both international and national tourists. (Integrative note from Assaeroporti statistics). Therefore, in order to get a reasonable accurate representation of the population, the confidence level is set at 95% with the error margin of 2.5%. Therefore, it going to be a sample size of 1,536. This number is the size of the sample we are going to hand out our questionnaire. The questionnaire will be distributed in different gate areas, after the security controls.

The reasons of this choice are 2: the gate areas are accessible only to the passengers are waiting for their flight and then because in this way the sample will be more representative of the total population.  The people will be chosen randomly during their waiting in the gate area. Moreover, the data collection will be done throughout the all year, twice a month, during different days and hours of the week, to be sure to reach different groups of people.

REASON TO VISIT, TIME AND PLACE SWITCHERS

According to the decision to carry on a significance analysis the questionnaire will be addresses to everyone, locals and internationals, time and place switchers, not considering which is the tourists trip purpose.

EXPENDITURE:

The following items could be link to the respective economic sectors:

Food and beverage catering
Nights Clubs, Lounges & Bars catering
private auto expensive: services
rental car expenses: services
retail shopping (souvenirs, gift, film, ecc.): culture, sports, recreation
accomodation expenses: Hotels
Other This category will be divided equally in all the sectors.

 

Determining the visitor number is possible multiplying the average expenditure in the different categories for the visitors in general.

  1. QUESTIONNAIRE

 

BERGAMO AIRPORT                                                                   DATE:_________

 

VISITOR SURVEY 2017                                                              TIME: _________

 

DEMOGRAPHICS:

 

  1. Are you an inhabitant of Bergamo Province: ________

 

  1. If no, which is your country of origin? __________

 

  1. Which is your age (in numbers)? ____________

 

  1. Which is your gender? FEMALE                    MALE

 

TRIP PURPOSE:

 

  1. Would you have visited Bergamo Province anyway in a different time?

YES    NO

 

  1. Would you have visited Bergamo Province anyway in a different location?                                           YES                    NO

 

EXPENDITURE:

 

Please indicate the approximate expenditure in euros that you have spent in average on a

 

day during your stay in the Bergamo Province:

 

Food and beverage (restaurants, concessions, cafeterias, etc.)      ________________

Retail shopping (souvenirs, gift, film, etc.)                                             __________________

Accommodation expenses:                                                                      __________________

Private auto expensive:                                                                            __________________

Rental car expenses:                                                                                __________________

Other                                                                                                            __________________

 

 

 

THANK YOU!

 

  1. IMPACT ON EMPLOYMENT

According to CLAS and SACBO (2005), the operators that work in Bergamo Airport can be divided in 3 main categories: SACBO S.p.A., private operators, air operators and public operators. First, SACBO is the society that manages the airport. The people that work in the society are 458, 7 senior executives, 11 senior management, 121 employees, 32 part-time employees. At these numbers it should be add temporary staff.

Secondly, the private operators are: shops and newsstands, bar, restaurants, catering, car rentals, refueling, security and surveillance, couriers and other services for the passengers. All together the employed people are 486. Thirdly, the Air Operators involve in total 2292 people divided in 178 people (130 flight crew, 18 inside the airport and 30 outside) and 2114 people for the cargo movements. Finally, the public operators are 320 of the total.

The total number of people that is working in Bergamo Airport is 3.596.

In general, the type of employment that is mostly created is core, especially for the air operators and public operators (2612 on 3596) because they need a specific trainer to work and it is not easy to replace their position.

Can be assumed that the quality of the work is already good but it can be improved, giving more possibilities to apply for full time jobs especially in the private sector.

  1. REFERENCES:

 

http://www.assaeroporti.com/wpcontent/plugins/multipage_xls_reader/pdf_file/Nota_Dati_di_Traffico_2017_10.pdf

 

 

 

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