Glasgow Prestwick Airport: economic impact assessment

Technical appendices

Appendix 1: GVA Impacts Methodology

GVA impacts, FY2023

To estimate the GVA impacts generated by GPA, a three-stage approach has been adopted as described below:

Step 1 - estimating GPA’s direct economic contribution

GPA’s financial accounts data for FY 2022-23 has been used to calculate the airport’s direct GVA contribution, estimated at £14.77m, as below.

Diagram showing a formula for calculating direct contributions to GVA. It reads:

• Direct contributions to GVA of £14.77m equals
• Operating profit before interest and tax of £0.84m plus
• Consumption of fixed capital of £2.57m plus
• Employee compensation of £11.36m.
  Elements are displayed in coloured boxes: orange for total GVA contribution, pink for individual components.

Step 2 - estimating the economic contribution of supplier spending

The economic contribution of supplier spending is estimated at £7.39m using the Type I multiplier from the 2019 Scottish Government’s Input-Output model, applied as a proxy for post-pandemic multipliers, calculated as below:

Diagram showing a formula for calculating indirect contributions to GVA. It reads:

• Indirect contributions to GVA of £7.39m equals
• Direct contributions to GVA of £14.77m multiplied by
• Type I GVA Multiplier of 1.5 minus 1.
  Elements are displayed in coloured boxes: orange for indirect contributions, pink for direct contributions and multiplier.

Step 3 - estimating the economic contribution of employee spending

The economic contribution of employee spending is estimated at £ 4.43 m using the 2019 Scottish Government’s Input-Output model’s Type II multiplier, as per below:

Diagram showing a formula for calculating induced contributions to GVA. It reads:

• Induced contributions to GVA of £4.43m equals
• Direct contributions to GVA of £14.77m multiplied by
• Type II GVA Multiplier of 1.8 minus Type I GVA Multiplier of 1.5.
  Elements are displayed in coloured boxes: orange for induced contributions, pink for direct contributions and multiplier details.

Together, the direct, indirect, and induced impacts represent a comprehensive quantifiable GVA impact of £26.6m from GPA’s core activities on the Scottish economy in FY 2022-23.

Appendix 2: Tourism GVA Impacts Methodology

Tourism spending impacts, FY2023

To estimate the tourism spending in the Scottish economy linked to GPA, a four-stage approach has been adopted as described below:

Step 1: Estimation of inbound visitors arriving in Scotland via GPA

Based on a total of 459,000 passengers for FY 2023, it is estimated that 20% of these passengers travelling through GPA are inbound, with 99.7% being visitors.^[61] The remaining 80% constitute outbound passengers, with 0.3% classified as business passengers. This calculation yields an estimated count of 91,525 inbound tourist visitors arriving in Scotland via GPA, as outlined below:

Diagram showing a formula to calculate the number of inbound visitors coming to Scotland through GPA. It reads:

• No. of inbound visitors coming to Scotland through GPA of 91,525 equals
• Total number of passengers travelling through GPA of 459,000 multiplied by
• % of inbound passengers of 20% multiplied by
• % of visitors of 99.7%.
  Elements are displayed in coloured boxes: orange for inbound visitors, pink for passenger numbers and percentages.

Step 2: Estimation of visitor expenditure in Scotland

According to data from the International Passenger Survey,^[62] the average visitor spend per visit in Scotland from overseas European visitors^[63] in 2019 was £550. ONS Consumer Price Inflation data^[64] is used to calculate the overall change between 2019 and 2023 price levels. It is estimated that a change of 20.7% occurs between 2019 and 2023. This implies that the £550 estimate from 2019 would be £664.

Step 3: Estimating spending in Scotland by inbound visitors travelling through GPA

Based on step 1 and 2 above, the spending in Scotland by inbound visitors travelling through GPA is estimated at £61m in FY 2023, as follows:

Diagram showing a formula to calculate spending in Scotland by inbound visitors traveling through GPA. It reads:

• Spending in Scotland by inbound visitor traveling through GPA of £61m equals
• Number of inbound visitors traveling through GPA of 91,525 multiplied by
• Average visitor spend of £664.
  Elements are displayed in coloured boxes: orange for total spending, pink for visitor numbers and average spend.

Step 4: Scenario analysis

Given uncertainties related to the assumptions underlying the above analysis, a scenario analysis has been undertaken by adjusting the key inbound visitor numbers and expenditure related assumptions made in Steps 1 and 2 above, as illustrated in Table 4.1.

Appendix 3: Profile of South Ayrshire and Neighbouring Local Authorities

This appendix, provided by SG at the time the research was undertaken to inform the analysis in this report, sets out the socio-economic context of GPA and the wider Ayrshire region. It is key to understanding the context of the economic impact analysis conducted.

Population

South Ayrshire (the local authority area where GPA is located) had a population of 112,500 in 2021, which was 2.1% of Scotland’s population (ONS Population estimates).^[65]

Labour Market Jan 2023 - Dec 2023

While Prestwick itself is relatively prosperous, the employment rate in South Ayrshire is the second lowest in all of Scotland. This is driven by higher economic inactivity, with higher proportions of the long-term sick (42.7% vs 31.6% in Scotland overall) and retired (23.5% vs 14.1%) among the working-age population (aged 16-64). South Ayrshire has a marginally higher rate of unemployment than across Scotland as a whole.

Source: Annual Population Survey

Notes: * Youth unemployment data is for Jan 2021 - Dec 2022, as it is the most recent non-disclosive data. Youth unemployment rate rank / East Ayrshire data is not provided as youth unemployment rate estimates are not reliable for many LAAs.

Earnings

Median weekly full-time earnings for employees who live in South Ayrshire were 7.3% higher than the Scottish average in 2023 (£753 in South Ayrshire compared to £702 in

Scotland as a whole) (ONS Annual Survey of Hours and Earnings, 2023). East and North Ayrshire meanwhile had medians of £709 and £702 respectively.^[66]

The percentage of all employees (18+) who work in South Ayrshire with hourly pay below the Living Wage, at 17.9% in 2023, was higher than the figure for Scotland as a whole, at 10.1%. The South Ayrshire figure is also higher than the percentage of employees earning below the living wage in neighbouring East and North Ayrshire, with figures of 14.7% and 10.4% respectively (Scottish Annual Survey of Hours and Earnings, 2023).^[67]

Employment by sector

The service sector accounted for 81% of total employment in South Ayrshire in 2022 (84% in Scotland), while manufacturing accounted for 11% (7% in Scotland). East and North Ayrshire in comparison have service sectors that compose 84 and 79% of the total employee jobs (ONS Annual Population Survey, Jan – Dec 2023).

Qualifications

In 2023, 49.4% of people between the ages of 16-64 in South Ayrshire were qualified to the equivalent of first-year degree level (RQF4) or greater. This is lower than the Scottish average of 55.1%. 11.2% of this age demographic in South Ayrshire had no qualifications, which is higher than Scotland’s rate of 8.2%. (ONS Annual Population Survey, Jan – Dec 2023).

Source: ONS annual population survey Jan – Dec 2023

Notes: Numbers and % are for those of aged 16-64; # = Sample size too small for reliable estimate

GVA

GVA in South Ayrshire was £2.359 billion in 2021, 1.6% of the Scottish total (Sub-Scotland Economic Statistics, January 2024).^[68] GVA per hour worked was £33.20, lower than the average across Scotland (£37). This is also slightly lower than all East and North Ayrshire, who collectively earn £33.50 per hour (ONS Subregional Productivity, June 2023).^[69]

Deprivation

In terms of deprivation, there is a mixed picture across the region. According to the Scottish Index of Multiple Deprivation 2020, 18.3% of South Ayrshire's 153 datazones were found in the 20% most deprived datazones in Scotland. This is a significantly better performance in terms of deprivation than East and North Ayrshire (at 39.8% and 31.3% respectively) (Scottish Index of Multiple Deprivation 2020).^[70]

Business performance

In 2021, the business start-up rate, at 38 per 10,000 resident adults in South Ayrshire, was below the rate for Scotland as a whole, at 41 (ONS Business Demography 2022).^[71] In 2019, business expenditure on R&D per head in South Ayrshire, at £85, was below the figure for Scotland, at £258. South Ayrshire outperformed East and North Ayrshire, at £298 and £43 respectively (Business Enterprise Research and Development Scotland 2019).^[72]

Small businesses

In 2023, small enterprises (i.e. firms with less than 50 employees) accounted for 42% of private-sector employment in South Ayrshire, compared to 37% in Scotland as a whole. This a lower than East and North Ayrshire, at 44% and 49% respectively (Sub-Scotland Economic Statistics Database, January 2024).

Commuter Flows – South Ayrshire

Shown below are the commuter flows data for South Ayrshire and other local authorities in 2023, showing that almost three quarters of employees in South Ayrshire also live in South Ayrshire, with approximately one quarter of employees in South Ayrshire commuting from another LA. This is slightly lower than the Scottish average of 77.6% of employees who work in the LAA that they live in.

Source: ONS Annual Population Survey (Jan – Dec 2023)

Sector Employment – South Ayrshire and Bordering Local Authorities (LAs)

Shown below is the distribution of employment as a percentage of total employment across all sections of the Scottish economy for South Ayrshire and other selected areas. Employment in South Ayrshire is notably more common in Wholesale and retail trade; repair of motor vehicles and motorcycles (section G), Manufacturing (section C), Accommodation and Food services (Section I) and Human health and social work activities (section Q) compared to the rest of Scotland. Employment in South Ayrshire is particularly less common in Administrative and support service activities (section N) compared to Scotland as a whole.

Source: ONS Business Register and Employment Survey 2022 (provisional)

Notes: % is a proportion of total employee jobs excluding farm-based agriculture. Employee jobs exclude self-employed, government-supported trainees and HM Forces. Data excludes farm-based agriculture.

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