The Regional Economic Impact of Memmingen Airport

Tasks

The Regional Airport of Memmingen was opened on the former military air base of Memmingerberg, which was closed down in 2003. Scheduled air services did not resume until 2007. To mark the 10-year anniversary of the opening of the commercial airport in the Allgäu, this study, commissioned by the Bavarian Ministry for Economic Affairs, Regional Development and Energy analyses the regional economic impact of Memmingen airport.

The study is divided into three parts: the main study analyses the regional economic effect of incoming passengers arriving at Memmingen airport on regional tourism in Bavaria. Short studies, conducted as supplements to the main study, analyse the airport’s influence on the regional quality of the location, as well as the operating and economic activities of regional companies on the one hand; and the implications of conversion duration and the type of subsequent use of the Memmingerberg air base compared to the subsequent use of other closed, former military facilities on the other.

Regional Economic Impact of Memmingen Airport on Tourism
Bavaria is one of Europe's leading tourism destinations and the most popular vacation destination in Germany. The regional airport Memmingen (FMM), opened in 2007, allows an internationally mixed group of tourists to easily and inexpensively reach some of the most touristic regions in Bavaria, namely Allgäu, Bavarian Swabia, Ammersee/Lech, the Five Lake Region, Pfaffenwinkel, the Zugspitz Region and the City of Munich. We quantify the regional economic impact of the airport FMM on the tourism industry in the regions mentioned above and we identify its impact on tourism. We discuss the potentials of the airport for tourism and its sustainable growth in each of the regions.

Memmingen Airport as a Location Factor for the Region: Results of a Company Survey
Airports as transport infrastructure facilities can influence local location, production and investment decisions, and significantly influence regional developments in the economy and employment as a result. An airport can influence journey time for business travellers and the ability to attract specialist workers from abroad, as well as helping to enhance a region’s image and make it a more attractive business location. Companies in the wider region were surveyed on the regional airport’s influence over the quality of the region as a business location, as well as the operational and economic activities of regional companies. Overall, 770 companies from 28 districts and independent towns in the vicinity of Memmingen airport were surveyed on their assessment of the regional airport in a non-representative special survey conducted as part of the ifo Business Survey.

Former Military Facilities and their Subsequent Use: the Memmingerberg Air Base and its Subsequent Use in a Case Study Comparison
The closure of military facilities that are not subsequently used for civil purposes can negatively impact the purchasing power and economic structure of the regions in question. This short study compares the duration of the transformation and subsequent use of the Memmingerberg air base and other former military facilities of a similar size; and also discusses developments in the respective neighbouring municipalities.

Methods

Regional Economic Impact of Memmingen Airport on Tourism
We examine the development of the airport FMM as an aviation infrastructure by its number of passengers and its revenues. We compare the development of aviation activities of the FMM airport with other regional airports in the south of Germany. We also examine whether the results of other studies dealing with the effects of long distance traffic infrastructure on tourism is applicable to our setting and tourism regions of interest in Bavaria. We define key characteristics of the tourism industry and examine their development in our tourism regions of interest. We conduct interviews at the airport to gain access to flight passengers' information. The interviews are carried out by a stratified sample survey based on the winter and summer flight schedule. The data is used to quantify regional economic impacts of the airport on the tourism sector in the year 2018.

We use difference-in-difference estimation and the synthetic control method approaches to identify the causal impact of the airport on the tourism industry. Based on these techniques we simulate the hypothetical development of the tourism industry in the target regions without opening of the airport FMM.

Memmingen Airport as a Location Factor for the Region: Results of a Company Survey
770 companies from 28 districts and independent towns in the vicinity of Memmingen air-port were surveyed on their assessment of the regional airport in a non-representative special survey conducted as part of the ifo Business Survey. The response rate to the special survey was 30.5% i.e. 235 companies gave their assessments of Memmingen airport.

Former Military Facilities and their Subsequent Use: the Memmingerberg Air Base and its Subsequent Use in a Case Study Comparison
A foray into the literature on this topic shows, for example, the simulated consequences of closing the German Bundeswehr base of Schneeberg in Saxony and quantifies the extent of the negative regional effects that can be expected without direct, value-adding subsequent use of this space. Furthermore, this short study compares the duration of the transformation and subsequent use of the Memmingerberg air base in the Allgäu with three former military facilities of a similar size; and also discusses developments in the respective neighbouring municipalities. The closure and subsequent use of the Laarbruch air base in North Rhine Westphalia, the Leipheim air base in the Bavarian district of Schwaben, as well as the Hainberg barracks in Mellrichstadt in Unterfranken are used as a comparison.

Data and other sources

Interview data of flight passengers at FMM airport; statistics of FMM airport; Federal and State Statistical Offices; ifo Business Survey; literature review.

Results

Regional Economic Impact of Memmingen Airport on Tourism
The Memmingen commercial airport has seen a positive and sustainable development in passengers since its opening in 2007. While the airport already had over 800,000 passengers in 2009, this number had risen to 1.17 million by 2017, a decade after its opening. The tourism branch in Bavaria has been growing steadily for many years. A look at the past decade since the opening of the commercial airport at Memmingen shows that arrivals and turnover in the hotel and catering industry in Munich and the Allgäu have risen higher than the average levels for Bavaria.

The passenger survey conducted at Memmingen airport between March and August 2018 shows that an average of 40% of passengers at Memming airport were incoming passengers. Projections show that around 294,700 incoming passengers are expected at Memmingen airport in 2018. Around two thirds of overnight stays by incoming passengers are made in Bavaria. Munich and the Allgäu account for the largest shares of these passengers. Almost a third of all overnight stays by incoming guests via Memmingen airport happen in Bavaria’s state capital of Munich, while around 21% take place in the touristic region of the Allgäu (Bavaria). When polled on the motive for their travel, almost a third of incoming guests responded that this was for private holidays. 45% of survey participants stated having visited friends or relatives, while 17% were travelling on business. Business people and holidaymakers spent EUR 195 and EUR 178 per day respectively, which was significantly more than travellers visiting friends/family, who spent just EUR 93 per day on average.

Based on conservative statistical projections, the expenditure and purchasing power effects of travellers arriving via Memmingen airport were calculated for 2018. Incoming travellers spent a projected total of around 237.4 million euros in 2018. Of this sum, 133.4 million euros were spent in the Free State of Bavaria and 119.2 million euros in the target regions of the Allgäu, Bavarian Swabia, Ammersee/Lech, Starnberg Five Lakes Country, the Pfaffenwinkel Zugspitz region and Munich. Each additional euro in expenditure by an incoming traveller triggers purchasing power inflows of around 1.43 euros in the target regions. Overall, expenditure by incoming passengers arriving at Memmingen airport thus triggers direct and indirect buying power inflows of 170 million euros in the study’s target areas. The biggest winners from the purchasing power inflows are hotel and catering firms (35% of all purchasing power inflows), as well as retailers (23 %). Transport services collected around 8% of purchasing power inflows, while service providers in art, culture, sport and entertainment accounted for around 7%. Economic links also benefitted regional producers, with 8% of all purchasing power inflows mainly coming from incoming guests. In view of the direct and indirect purchasing power effects of incoming travellers by air via Memmingen airport, 1,766 jobs are statistically linked to them in target regions in 2018.

To identify the actual causal effects of Memmingen airport on tourism in target regions, the study uses econometric methods to compare actual developments in tourism with a hypothetical development, which would probably have arisen without the opening of the commercial airport. The airport has a particularly positive effect touristic region of the Allgäu. Estimates indicate that on average around 14.9 – 17.8% more guests arrived in the counties and independent cities in the Allgäu via Memmingen airport than would have been the case if the commercial airport had not been opened in the time period under consideration of 2008 to 2016. The effect, however, is unequally distributed among the counties in the Allgäu region. The airport has a particularly positive effect on the number of registered arrivals in Memmingen and the Unterallgäu, that is the direct surrounding of the location of the airport. By contrast, for both Munich and the district Oberallgäu, which is the strongest tourism region in the Allgäu, Memmingen airport has no statistically significant causal effect on trends in tourism in the time period under consideration.

The results of the expert report suggest that Bavaria’s touristic regions would be able to tap more value-added potential for the region’s tourism branch by attracting more private travellers with the regional airport. The report shows development potential measures in the area of tourism marketing, as well as transport links to the airport.

Memmingen Airport as a Location Factor for the Region: Results of a Company Survey
The response rate to the special survey was 30.5% i.e. 235 companies gave their assess-ments of Memmingen airport. Among survey participants that regularly use airports, 12% use Memmingen regional airport regularly for business travel. This means that Memmingen airport is equally important to survey participants in the region as Gemany’s biggest airport in Frankfurt am Main. With 51% of responses, Munich airport was cited as the top airport, followed by Stuttgart at 15%. 30% of all companies that responded in the region reported having already used Memmingen airport for business travel.

For 21% of survey participants the regional airport has exerted a positive influence on the reach of their business and customer relations. A good third of respondents reported that Memmingen airport has positively influenced the quality of their region as a business location. Out of the region’s companies that rely on qualified foreign workers, around 31% said that flight connections to the regional Memmingen airport had a positive effect on attracting them.

20% of survey participants expect the already approved expansion of Memmingen airport to have a positive effect. Companies that expect the airport expansion to have a positive effect on their own company specifically expect improvements in their business and customer relations (41%). Several companies expect equally positive effects in terms of acquiring specialist workers (18%), as well as employment in general (15%).

The survey shows that the importance of Memmingen airport as a location depends on a company’s geographical proximity to the airport. Companies in districts and independent towns close to the airport report that Memmingen airport had stronger positive effects on their company and location than those situated further away from the airport.

In short, based on company surveys it can be seen that Memmingen airport has very positive effects on regional companies. The airport is used by several companies in the region for business travel and also exerts a positive influence on business and customer relations, location quality and attracting specialist workers from abroad.

Former Military Facilities and their Subsequent Use: the Memmingerberg Air Base and its Subsequent Use in a Case Study Comparison
A foray into the literature on this topic shows, for example, the simulated consequences of closing the German Bundeswehr base of Schneeberg in Saxony and quantifies the extent of the negative regional effects that can be expected without direct, value-adding subsequent use of this space. This example illustrates the importance of conversion duration and the type of subsequent use after military facilities are closed down. Comparing the transformation and subsequent use of the Memmingerberg air base in the Allgäu with three other former military facilities show that the duration and type of conversion play an important role in determining the regional economic effects, which may also depend on the respective structural framework conditions in the region.