“Spokane is a great place….Things are good in Spokane.”

We wish it were true!

But back in the reality-based world and this last post on this blog … by the numbers, Spokane is not getting better, it continues its long downward slide.

Spokane’s Economy In Easy to Read Charts

For decades, wages in Spokane have grown at half the rate of the rest of the state, falling further behind every year. Spokane wages average about 20% behind the rest of the state. Government and health care workers make close to King County wages – but everyone else here earns much less than the -20% wage  differential implies.

Every year, Spokane residents fall further and further behind their counterparts in the rest of Washington and in the nation. This chart shows that Spokane per capita income was at 90% of the State’s level in the 1970s, but has declined to less than 80% of the State’s level by 2008 (the orange line). In 2010, average wages rose 2.7% nationwide, but rose only 2.3% in Spokane County. Stated another way, average wages rose 17% faster everywhere else while and Spokane residents’ income fell relative to everyone else.

The next chart highlights the wage differential for those working in higher skilled jobs in Spokane.  Education and health care, which are shown, are similar to King County. (Government wage data was not available for this specific comparison). As we move to the right into higher skilled jobs like manufacturing, finance and engineering, the wage differentials are enormous. Spokane will never attract a national or world class high skilled workforce when wages in Spokane are up to 50% less than across the state. Which is why the State and local power brokers have identified Spokane as the low wage, low skilled industry cluster for the state.

 

Tons more data after the break …

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Updated Spokane and Felts Field Airport Operations Through August

Data comes from SpokaneAirports.net. The 2011 totals are estimated using the January through August totals. 2011 passengers enplaned is down about 2.5% from last year.  As you can see, SIA passenger usage has been in decline since a local peak in 2007, has been below 1996 levels for 3 years, and has been flat for 15 years.

The Felts Field traffic totals include a combination of flight operations including some training, business travel in private aircraft or on charters, cargo, medical air ambulance services, maintenance and aircraft upgrade test flights, and personal and recreational flying. The 2011 total is an estimate based on the January through August pattern.  Spokane Airports blames bad weather during the first half of the year for the 2011 fall off.

The airport’s full press release appears after the break.The press release acknowledges that this is a measure of economic activity but blames it on the national economic situation. I agree, but as noted in other posts on this blog, Spokane also has its own issues separate from the national situation. We need to be careful about hiding our situation underneath the national economic situation especially when Seattle and Portland are showing healthy growth and Boise is down -1% compared to -2.5% for Spokane, so far this year.

Seattle is up 4.57% over a year ago as of August. And their overall growth curve is very different than that for Spokane (chart is through 2010). Chart is from the SeaTac web site.

For 2011, Portland has seen a +4.1% growth in passengers versus last year. Vancouver, B.C., is up 1.2% versus a year ago. Great Falls, Montana airport is up 8.5% in 2011 and up 14% in the first quarter of 2012.

In August 2011, Boise is off -1% compared to last year. The following chart is through 2009 (chart source). Data is from the Boise Airport.

The data absolutely do not justify the claim that Spokane’s drop in air traffic is solely due to the national economy.

Again: up at Portland, Seattle, Great Falls, MT and Vancouver, BC, and down 1% at Boise.

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Federal government offers nearly $1 million bribe to restore L.A.-Spokane air service

Follow the logic (or lack of logic):

  • The statement from Sen. Cantwell says L.A.is “the second most travelled destination after Seattle and before Portland“.
  • The Federal government will give SIA a nearly $1 million grant that  “would enable the airport to recruit a carrier by offering short-term risk-offsets while the market fully establishes itself“.
  • Previous air service to L.A. died after 2004, when the economy was good, and died again in 2008. No grants were used in 2004 or 2008. And we think in this economy, this service will now fly on its own? Hello?
  • The 2nd most travelled destination needs a bribe but  the other 9 cities below that level do not?  This grant looks like a crony capitalist bribe as the logic in the explanation does not pencil out.

In this economic disaster, why would this air service last any longer than it did when it died in 2004 and died again in 2008? Will something be done fundamentally differently this time to achieve success?

Getting “free money” from the Feds sounds great, but like the more than half a billion spent on the North Corridor Freeway to/from nowhere, this “feel good” grant will likely have a similar outcome of temporary spending that does not produce the ROI we need right now and long term.

About half of all income in this area now comes from government wages, transfer payments, the government’s share of health care payments, plus outright subsidies of lots of stuff. Like this. This is not sustainable.

(Wow – see the comments to the press coverage – 100% of commenters agree this $1 million bribe is nonsense. And then wow again – we subsidize housing for sheriff’s deputies who get half priced housing for $100 down payments. Seems that Spokane is unable to function without massive government subsidies everywhere.)

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Spokane Airports Update for June 2011

The data in chart form. Data for the first 6 months is used to estimate the remainder of the year 2011.

While the first six months enplanements are down -2.36%, the month of June is down -5.5% total which could be an early indicator that the economy is softening again but it is too early to tell for sure.

(Update: Port of Seattle shipments have declined -10.3% starting in May and continuing in June. BNSF and UP are carrying roughly equal freight loads to one year ago as of a few weeks ago, and one year ago was considerably less than prior to 2008. Bulk shipments of coal and grain by rail are also down about -10% YoY. Combined with the local airport numbers, this does look like the possible start of a new downturn.)

The official press release concerning SIA:

Note the reference to the use of airport data as an indicator of the local economic situation in Spokane. Even the tiniest increase shows “the local economy continues to improve”. Odd, though, how all the decreases in airport usage and service apparently indicate no changes in the local economy!

Charter aircraft services out of SIA are down -46.3% since last year.  Charters have been below last year for 4 of the preceding 6 months, and sharply lower in June, with a decrease of -77%. But cargo is indeed up slightly, which is good.

It seems likely that 2011 passenger enplanements will be just below 2010, and 2012 is likely to be at or slightly below 2011 levels due to the loss of the Southwest flights to Seattle. But things could change for the better in 2012. While Alaska Air will add 2 flights to replace those lost by Southwest, Alaska will be flying smaller aircraft with just over 1/2 the seats that Southwest provided.

The official press release concerning Felts:

While June cargo at Felts Field is up for June, for the year, cargo through Felts Field is down -45%.

After a couple of months of good weather, we may have a better understanding as to whether the first half Felts Field traffic drop was due to weather or something else.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

Spokane Airport News back in 2001, 2005 and 2006

This is the last of the items on the airport that have been queued up.

Back in 2005, a growing Spokane International Airport represented economic growth for Spokane:

Spokane’s level of passenger growth is higher than the national average of 3.6 percent, Woodard says.

These numbers are a strong indicator that Spokane’s economy is growing at a robust rate, faster than the nation as a whole,” he says. “As a region, that’s a point of pride.”

….

Nonstop service invigorates the market, because of its ease and convenience,” Woodard says. “For our community’s economic growth in attracting capital investment, the Bay Area is the place for biotech and electronic development, and not having that nonstop flight puts us at a disadvantage.”

The Spokane Regional Chamber of Commerce’s air service marketing task force has been trying to reestablish nonstop service to the Bay Area for the past several years by talking to representatives of major carriers, such as Alaska Airlines and American Airlines, says Rich Hadley, the chamber’s president and CEO. He says the airport’s current passenger numbers indicate a strong economy, which could be boosted by increasing traffic to the Bay Area.

via SIA expects to soar to record | Journal of Business | Find Articles at BNET.

And in 2006:

“Spokane is more on the map than it’s ever been,” Hadley said. “The airport’s current numbers indicate a strong economy, which could be boosted by gaining more traffic from the Bay Area. Also, there’s a lot of interest in us coming out of California. The issue in San Jose is that we have more economic ties there than we had 10 years ago. Also, attracting capital investment is important here and the Bay Area is the right place for (financing) biotech and electronic development. Without nonstop flights to that area, we’re at a disadvantage (in attracting capital).

No kidding! VC money has dried up in Spokane. My contacts say if you want VC investments, you need to move to Vancouver, Seattle, Portland or the SF Bay area.

January 2001, Spokesman-Review:

North Idaho and Spokane have long struggled to show up on the short lists of computer and software companies looking for places to do business. The ability to travel to bigger cities, in a short amount of time, adds to the desirability of our region. Agilent Technologies and World Wide Packets for instance, frequently send their employees to California for meetings. …

Rich Hadley, president of the Spokane Regional Chamber of Commerce, e-mailed 130 companies in the region and asked them to consider the negative impacts of the canceled flights.

via The Spokesman-Review.com – Let’s tell United we stand together.

The last sentence is, in retrospect, funny. Apparently they did consider the negative impacts of the canceled flights. Agilent and World Wide Packets, mentioned in the story, closed their Spokane operations, as did numerous other high tech companies.

Certain classes of workers need to travel – including high skilled, highly educated sales and marketing, engineering, science and other staff. Other classes of workers do little business travel – warehouse workers, blue collar manufacturing including construction, retail sales, restaurant and hotel workers, and work that must be done locally, such as health care. Which kind of workers is Spokane left with?

The solution to Spokane’s economic dilemma, as always, is to pour more concrete into favored constituencies, says the 2006 edition of the Airport Journals :

Spokane International Airport (GEG) has become a major aviation hub for Eastern Washington and Western Idaho. Increased airline flights, an expanding aerospace business park and an $82 million capital expansion program in progress have spurred recent growth. By the end of 2008, the capital improvement program is expected to generate a ripple effect in the region, creating 3,246 direct and indirect jobs and infusing $203 million into the area’s economy, according to an airport study.

In fact, the area lost 15,000 to 20,000 jobs since 2008.  Undoubtedly, even with dropping usage, the airport “saved or created” (hence immeasurable) 3,246 direct and indirect jobs. Righto.

Observations

  • In 2005, the SIA marketing director said strong airport growth reflected the strong local economy.
  • In 2005, the Chamber of Commerce (now named Greater Spokane, Inc) president said “current passenger numbers indicate a strong economy”.
  • In 2005, SIA and GSI said Spokane needed more flights to the SF Bay area to boost our local economy.
  • In 2006, same thing.
  • in 2001, same thing.

How will they spin this? They told us in 2005 and 2006 that the airport was a proxy for Spokane’s economic situation.  In 2011, the airport is still a proxy for our local economy and what it says is the local economy has crashed and burned.

Does anyone care?

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.
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Half of Spokane airline flights flown on turbo props

Hydro Quebec Q400

Image by caribb via Flickr

Update: Since this was written, Alaska/Horizon announced it will add 2 additional turbo prop flights to the Spokane-Seattle route.  Alaska did not publicly announce their price hike, but in their reservation system, the price went up.

The airport situation, as you will see in the next post coming after this one, is an important barometer for Spokane. Or may be altimeter would be a better metaphor.

In January 2012, there will be a estimated 51 daily departures from Spokane. (Update: 53 now).

  • 23 25 of those flights will be flown on turbo props (propeller) aircraft (1315 on Alaska to Seattle, 5 on Alaska and 5 on Delta to Portland) like the one shown here.
  • 3 will be flown on smaller CRJ700 or 900 jets to Salt Lake City on Delta.

About half of the flights departing Spokane will be flown on propeller planes.

Doesn’t bother me but the flying public prefers to fly on jets. Turbo props are known for their cramped seating and less leg room.

This is from the NY Times – “Twilight of Turboprops? Passengers Go Out of Their Way to Catch Jets”:

An informal survey by Delta recently found that its passengers hate turboprops so much that most are willing to drive two to five hours to avoid flying in them.

5 hours drive to Seattle anyone?

What that means: The airport is in a spin, as in like a plane that has stalled and spun, headed towards the ground, and not as in PR spin.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

Related articles

Trend in Spokane “International” Airport Passenger Levels Versus National Air Passenger Levels

This picture was taken from the Spokane Intern...

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Trend in passenger growth (or loss) at Spokane “International” Airport versus Total National Air Passengers.

In this chart, the national total has been re-scaled to start at the same point as the Spokane total in order to compare the local growth rate (or loss) with the national growth rate in air travel. The data for Spokane come from SpokaneAirports.net and the national data comes from the U.S. Bureau of Transportation Statistics. Ignore the Y-Axis numbers as they are meaningless in the trend comparison due to re-scaling.

The start date of 1996 is because that is the oldest data available at the Bureau of Transportation Statistics. The end date is 2010, the most recent full year of data.

Interpretation:

  • Compare the starting point of the blue line to the ending point of the blue line. As you can see, national air traffic has increased over this time.
  • Compare the starting point of the red line to the end point of the red line.
  • Passengers at Spokane “International” Airport have gone down over this period while overall national air passenger levels have gone up.
  • Only in the period of about 2005 to 2010, does Spokane perform better. However, so far in 2011, Spokane has gone down while national air passenger counts have gone up by about 2%. 2011 is not shown in the chart.

This chart was added to the previous post to keep the charts on SIA performance (or lack thereof) in a single place.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

Trends in Spokane International Airport Destinations Served, Daily Departures, Passengers

Update: Since this was written, Alaska/Horizon announced it will add 2 additional turbo prop flights to the Spokane-Seattle route.  Alaska did not publicly announce their price hike, but in their reservation system, the price went up.

See prior post for how the number of flights and destination cities list was determined. There could be slight variations in the numbers used or estimated.

Actual data points for 2004, 2005, 2011 and 2012. In between values pro-rated estimates. First two charts are through January 2012.

Actual data points for  2005, 2011 and 2012. In between values pro-rated estimates.

Data values from from SpokaneAirports.net with 2011 estimated from first half year trend. Data for 2011 is estimated using passenger levels through June of 2011.

Trend in passenger growth (or loss) at Spokane “International” Airport versus Total National Air Passengers.

In this chart, the national total has been re-scaled to start at the same point as the Spokane total in order to compare the local growth rate (or loss) with the national growth rate in air travel. The data for Spokane come from SpokaneAirports.net and the national data comes from the U.S. Bureau of Transportation Statistics. Ignore the Y-Axis numbers as they are meaningless in the trend comparison due to re-scaling.

The start date of 1996 is because that is the oldest data available at the Bureau of Transportation Statistics. The end date is 2010, the most recent full year of data.

Interpretation: Compare the starting point of the blue line to the ending point of the blue line. As you can see, national air traffic has increased over this time. Compare the starting point of the red line to the end point of the red line. Passenger load at Spokane “International” Airport has gone down over this period.

The publicly funded downtown Central City convention center expansion was going to increase visitors to Spokane. How did that work out?  Update: The convention center expansion did not deliver on its expansion promises. Later this year, charts and data will be provided to show what happened.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

Boise airport loss of flights

Boise chamber downplays effects of Southwest cuts | Boise, Garden City, Mountain Home | Idaho Statesman.

Boise, like Spokane, is losing Southwest flights. Their Chamber of Commerce – equivalent to Spokane’s Greater Spokane, Inc – is spinning this as having  “minimal implications”.

Yet the first comment and others on the article say the changes make Boise a difficult place for business.

Southwest to abandon Seattle-Spokane route and SIA is not honest about it

ALASKA AIR VIEW

Image by shankool007 via Flickr

UpdateSince this was written, Alaska/Horizon announced it will add 2 additional turbo prop flights to the Spokane-Seattle route.  Alaska did not publicly announce their price hike, but in their reservation system, the price went up..

Southwest to abandon Seattle-Spokane route – Spokesman.com – July 27, 2011.

  1. Claim: Airport spokesperson says there are 20 daily flights on Alaska/Horizon to Seattle.
    Reality: There will be 3 jet flights and 13 turbo prop (propeller planes – just like a rural town) direct to Seattle. That’s 16, not 20. Four additional flights go to Portland where you can change planes, then go to Seattle. Total travel time including TSA groping and so on is longer than just driving. This is easy to check at Alaskaair.com.
  2. Claim: The airport spokesperson says Alaska is not raising fares.
    Reality:  On the Alaska web site, their lowest cost fare option vanishes in January the day before Southwest flights end. This is easy to check.
  3. Claim: The article says an expansion of flights “to Denver in recent years” adds more options.
    Reality: Except there appears to have been a 1/3d drop in flights to Denver this past year. Again, easy to check.
  4. Claim: The airport spokesperson suggests Spokane travelers can fly to “Denver and Phoenix” and then transfer to Seattle.
    Reality: That does not pass the giggle test – that takes far, far longer than just driving to Seattle! We are not idiots.

PR spin or outright lies? You decide.

Many are looking at the air travel situation and realizing we may need to move out of Spokane. It takes a day to get places that I used to get to in 2 to 2 1/2 hour flights, and with lack of options, I may have to stay over an extra night in a hotel.

Filed under “Crime” because the airport is being dishonest. Separately, the SR reporter /editor should have verified or clarified those statements for the reader.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

Spokane “International” Airport non-stop destinations as of January 2012

UpdateSince this was written, Alaska/Horizon announced it will add 2 additional turbo prop flights to the Spokane-Seattle route for a total of 18 flights (15 of which are on propeller planes).  Alaska did not publicly announce their price hike, but in their reservation system, the price went up.

The following airlines serve Spokane “International” Airport:

  • Alaska/Horizon
  • Southwest
  • Delta/Skywest
  • Frontier
  • United/United Express/Skywest
  • US Airways

Some airlines hire contract air carriers to service some of their routes. Alaska hires Horizon Air. Delta and United both hire Skywest, and United also has United Express.

A list of non-stop destination cities is provided by SIA in the form of a map (which will not be accurate for 2012).

Each of the above airlines’ schedule was checked for flight availability departing January 9th and returning on January 13th, 2012. This is similar to what was done a year ago for looking at flights in January of 2011.

The Blue bar is this year. The Red bar is 2012.

Notable changes:

  • Sharp drop in daily flights to Seattle. Alaska now has a monopoly on this popular route.
  • Loss of 1/3d of flights to Denver.
  • Increase in flights to Salt Lake City of about 60%.
  • Drop of 1 flight to Boise (or 1/3d drop since there were only 3 flights)
  • Service discontinued to Sacramento and San Jose.
  • Chicago flights are seasonal only – and not during the winter.
  • UPDATE: As of Nov 2011, no Chicago flights are scheduled in 2012. Chicago flights are now gone.

Total destinations now served non-stop, year round are 10 cities.

  • 2004 – 16 cities
  • 2005 – 15 cities
  • 2011 Jan. – 12 cities
  • 2012 Jan. – 10 cities

The general trend in non-stop destinations has been sharply downward.

4 cities have 4 or more flights per day. Six cities have only 2 options per day. From an air travel convenience stand point, SIA serves only 3 or 4 non-stop destinations.

  • 2005 – 70 daily flights
  • 2011 – 60 daily flights
  • 2012 – 51 daily flights

The general trend in total out going flights has been sharply downward.

The general trend in passenger loads has been flat for 16 years.


Reminder: “SIA said in 2005 that the airport’s passenger count reflects the local economy”. That strongly suggests Spokane’s economy has experienced considerable weakening.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

  • The airports new Master Plan appears to have already imploded.
  • In recent years, nearly one-quarter billion dollars of tax and mandatory passenger fees (aka tax) have been spent making improvements to SIA.
  • “International” is in quotes because there have been no scheduled international flights in many years.
  • Half of all daily flights out of Spokane (just over 50 total) in January 2012, will be on propeller planes.

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Alaska Air eliminates cheapest fares from Spokane to Seattle starting in January

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Probably in response to Southwest Air eliminating Spokane <–> Seattle service as of January 8th, Alaska’s lowest fare increases from $68 to $83 (before fees and taxes) for a one-way flight. Update: Confirming that as of January 9th, Alaska will have a monopoly as the only provider of scheduled airline service between Spokane and Seattle. More on this in the near future.

Before Southwest eliminates Spokane-Seattle service on January 8th, 2012:

After Southwest ends service, Alaska’s lowest fare rises to $83.

The above are screen captures from checking a flight in early January using the Alaska reservation system. Jan 2nd is omitted in the screen capture because, being the day after New Years, there are no lowest priced fares available.

Update:  As of mid-August, Alaska Air has lowered the prices back down to $69 for January 2012 flights to Seattle! That is hopefully great news!

Southwest Airlines to end all Spokane-Seattle flights

Southwest Airlines to end all Spokane-Seattle flights. They hope to restore service next spring.

That leaves Horizon as the main option, which means Horizon will raise their fares, for sure (updatelooks like they eliminated their cheapest fares).  All services between Spokane and Seattle will be ended as of January 8thIt appears short haul services are dying, which will further isolate Spokane.

More signs of Spokane’s booming economic engine.

2009-2011 passengers counts were already below 1996 levels before this announcement. After this announcement, it only gets worse.

REMINDER: The airport is a proxy for the local economy. The fall off in flights, non-stop destinations and passengers is primarily a reflection of the local and national economy . The data suggest that Spokane’s economy is doing worse than elsewhere. The data presented do not mean that airport management is (presently) doing a bad job, although their PR spin is amusing.

Spokane Airports Update

Total passengers remain below 1996 levels . 2011 data is estimated from operations through May of 2011. Passenger travel through SIA has been flat for about 16 years.

Air Cargo has fallen sharply. 2011 value is estimated from current data through May of 2011. While the overall trend is down, there has been a slight increase in 2011.

General aviation operations at Felts Field have collapsed. The airport blames the weather.  Weather is a factor, but high fuel prices and an insufficient local economy may be larger factors.  Area fuel prices are about $6 to $7 per gallon and $5 to $6 per gallon in Idaho.

The data suggest that like a decade ago, the new airport Master Plan is already out of date.  Here’s the year 2000 forecast for passenger boardings and cargo loading at SIA:

Here’s the official Airports press release.

Lawrence J. Krauter, Airport Director, Spokane International Airport, commented, “What
is notable about May’s performance is that enplanements were only down 2.5% against a
12% reduction in available seats, which indicates that demand remains strong from our
travelers.”

In the context of the old forecasts, that quote is hilariously funny.

A news story updates the concrete pouring at Spokane International Airport:

Getting There: Runway work reaches halfway point at airport – Spokesman.com – July 11, 2011.

Pouring concrete at SIA, says the story is “an important component of Spokane’s economy” and seems to be a primary purpose for SIA. Read the whole story.

While involvement in this web site has been cut back, we intend to continue updating the airport, general employment and income reports as these are important economic indicators for Spokane.

Spokane’s economic plan du jour

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Spokane’s future industry clusters:

  1. Retirees and transfer payments
  2. Health care services and health care academics
  3. Government, including education
  4. Manufacturing
  5. Low skill, low wage categories including retail, restaurants, hotels, recreation, trucking, warehousing.
  6. Various small categories including low skilled and high skilled workers.

Categories 1, 2 and 3 will account for 60+% of the local economy. Here’s the number of workers, per category, flipped from horizontal to vertical to present the relative size differences.  Retirees and transfer payments are not shown in the chart but would be in the top 3.

Here is the impact of transfer payments. As you can see, transfer payments are a large component of the local economy. For more information on transfer payments please see “Trend of Transfer Payments into Spokane County“.

Data Data from washington.reaproject.org

Retirees

Previously, many people retired from Southern California and took their large real estate capital gains to low cost Spokane. That source of retirees is diminished due to the housing collapse and its return in the future is not predictable. This is an important driver for health care, housing and service sectors.  Inbound migration may be at reduced levels for a long time.

Clusters

The State adopted an industrial clustering policy where the state selects the industry clusters to be supported in each region. The primary clusters for Spokane are health care, education, and trucking and warehouse operations. Manufacturing has been in a slow national decline for 30 years.

Health care is on a growth streak due to retirees, a doubling in individual use of medical services over the past 30 years, and more recently by expectations of “ObamaCare” leading to an expectation of increased demand for services primarily paid for by someone else.

Risks

The loss of retirees from Southern California produces risks to the area’s current strategy and may be why the 2011’s local economy continues to remain stuck well below 2007 levels. On the plus side, the nation’s overall large “baby boom” approaches retirement years. However, where they choose to settle in their retirement years will have a big impact – and some think relocating as part of retirement may be thing of the past, not of the future.

There is a risk that the health care act might not play out as expected. It is possible that court challenges may limit the growth in the health business sector.

There is a risk that shifting more money into health care services without addressing the exorbitant prices charged and excess consumer demand for health services paid for by other people means less money for the production side of the economy. This is not a sustainable path.

Spokane’s future is based on retirees and health care – but that future has risks. And a big risk is there is no plan B.

Low Wages Are By Design

Greater Spokane says our region’s primary competitive advantage is low wages and low land and housing costs (or stated another way, poverty). Per Greater Spokane, our region’s competitive advantage is low prices. And no one in power wants that to change.

Spokane will be the state’s low wage, low cost housing and low cost land destination. This appears to be by design.

Outside of the key clusters, wages and opportunities will be limited.

The substantial quantity of data collected on this web site, and reviews of all the economic plans going back to the 1980s show that the chronic low wages and limited opportunities are endemic to Spokane. Every one of the plans mentions these problems. These problems remain because not many people want to embrace change – low wages are a feature and are by design.  The area is settling into a future as a comfortable government-funded enclave of government and health care workers, and retirees collecting benefits.

Everything on this website has been mentioned before, often many times, in prior economic studies about Spokane. What I present on this website is not my opinion but is backed by data and numerous studies. This view is shared by business leaders of the past, by various politicians, current and former academic administrators and many more. The data tell this story, not me.

Why?

See the recommendations links at the right of this page. Lots of bad decisions were made in the past.

Hiatus

It’s been an interesting experience to go from wondering why so many businesses disappeared to finding out what really happened. The answer was not at all what was expected.

Unfortunately, no one cares. It’s always been this way in Spokane. As a friend said to us in the 90s, “It’s just a big small town, only bigger.” So true. (Well, at least one other person gets it…)

And nothing will change.

This web site will now be updated primarily for major events or changes.

Spokane Airport passenger traffic update

Update: The May 2011 numbers are available and its worse than expected.

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As of April 2011, passenger counts are running almost the same as 2010, suggesting 2011 will remain similar to or below 1996 passenger levels.

Airport passenger counts are a proxy indicator of the local economy. This suggests that Spokane’s economy is still stuck.

Felts Field air traffic has fallen a sharp 18.34% since a year earlier. Possibly due to the high cost of fuel – and (update) bad weather. (Update – if due to bad weather, we should see improvements in July and August. If we do not, then the problem lies elsewhere. Traffic was also down for May 2011.)

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New Spokane International Airport Master Plan

Today, SIA will host an open house to discuss the draft of their newest Master Plan.

Forecasting is an attempt to predict the future. Management must necessarily make assumptions and guesses about the future, even though predicting the future is usually not possible. SIA has used a variety of standard methods to create their forecast, and this may come as a surprise based on my past reports, but I agree with their methodology – they have done an excellent job with this.

Here is a chart showing actual passenger enplanements (passenger boardings) from 1990 through 2010. The curve from 2011 to 2030 is the new forecast produced by the airport. The data for the above chart comes from their Draft Report.

Even better is this chart from the Draft Report showing the different forecasts produced using the different methodologies. This chart is better because it helps us understand the range of potential possibilities. As you can see, the projections span a range from a minimal increase to a doubling.

Data tidbits from the report

  • From 1990 to 2010, SIA had a compound annual growth rate of 3.42%.
  • ALL of that growth took place in 1991 to 1996.
  • From 2000 to 2010, they had a “Compounded Annual Growth Rate (CAGR) of 0.39 percent”.
  • For the period 2011 through 2030, the range of forecast CAGRs extends up to about 3.4%.
  • The new forecast moves the 3,000,000 passenger threshold from about 2018  (the old forecast) out to about 2028. That is a significant and important change.

Obviously, they (and we) hope for better results in the coming years than in the past 15 years of flat passenger enplanements!

Local promoters and media will run with the maximum forecast calling for a doubling of passengers over the next 20 years (they already have).  SIA’s passenger count did double during the preceding 20 years, but only because of 1990-1996. It’s fair to say that the forecast range is up to a doubling of passengers, but a little unfair not to mention the rest of the story … it might also be a lot less.

Previously, I showed that SIA’s year 2000 forecast was out of date the year it was issued:

Forecasting is a magic art – some times you get lucky and sometimes you don’t get lucky. The problem was not that the forecast was off but that previous management did not seem to notice and revise that 20 year plan until ten years later (2010-2011)! Forecasts are seldom right – the problem was the lack of management followup!

The new SIA director will be comparing the forecast to reality every year and making adjustments as needed. I hear he is detailed oriented and pays attention to data and data analysis.

Passenger boardings are an important economic indicator, especially for an isolated airport like SIA. As shown elsewhere on this web site, SIA (and hence Spokane’s economy) appears to have lagged behind other PNW airports such as Boise and Seattle during the recent downturn.

And once more, congratulations to SIA on their excellent forecast methodology and detailed report. Several other government agencies could learn from these folks!

My only recommendation/comment to their forecast is that they do what they can to educate local promoters and media to accurately report on the range of possibilities, and discuss how they will monitor real world results compared to the forecast.

A meaningless correlation: Bloomsday participants versus Spokane Airport passenger counts

Chart shows annual Bloomsday event participants versus annual Spokane International Airport passenger counts, scaled to fit on the same chart.

Is the correlation random?  Probably.

Here is an updated Spokane International Airport historical passenger count trend line. Updated through end of year 2010.  For January and February 2011, passenger counts are running slightly below 2010 levels (not shown in chart). SIA passenger traffic remains roughly flat for 15 years and is a proxy indicator of the state of Spokane’s economy. In other words, Spokane’s economy is roughly flat for 15 years.

Here is airport traffic operations (e.g. takeoffs and landings) for Felts Field trend line:


Data for both charts comes from SpokaneAirports.Net.

Spokane Airport passenger traffic update for early 2011

FAA airport diagram for GEG (Spokane Internati...

Image via Wikipedia

The passenger counts for February showed slight improvement  over January but remain below 2010 levels. Both 2009 and 2010 were below the peak of 1996.

Airport traffic is a proxy indicator for the local economy.

Related:

New Spokane Airport Director Selected

SRTC Transportation Blog: Airport Closer To Having New Director.

Larry Krauter will take over the position in mid-March. He comes from the Lehigh Valley International Airport in Pennsylvania, an airport about 1/3d the size of Spokane.

Backstory

From 10 minutes of online searching ….

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