Federal AviationAdministrationValuation of NextGen

Capacity Benefits

A Consumer Surplus Approach to the Monetization of NASPAC Results

For: INNOVATIONS IN NAS-WIDE SIMULATION Conference

By: Michael Wells,NextGen Business Case Integration

Date: January 28, 2010

2Federal AviationAdministration

One Goal of NextGen is Increased Throughput

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Defining the Benefits of Increased Throughput

NextGen

Current Throughput

Delay per Flt

Flights

Current System

Current Operating Point

Future Delay, with NextGen

Future Throughput,

without NextGen

Future Delay, without

NextGen

Future Throughput,with NextGen

CurrentDelay

Future Operating Point,with NextGen

Future Operating Point without NextGen

Avoided Delay

Additional Flights

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Designing the Experiment in NASPAC

Three scenarios are modeled

1. "Do Nothing“ Case

– 2007 airport capacities, technologies, and procedures

2. “Runways Only“ Case

– New runways, runway extensions, and airport configurations included as they are projected to occur

3. “NextGen” Case ( = Runways + ATM Improvements )

– New runways, runway extensions, and airport configurations included as they are projected to occur

– NextGen technologies and procedures also included

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0

10

20

30

40

50

60

70

80

45

67

89

1011

1213

1415

1617

1819

2021

2223

24

Loc

al H

our

Operations (/15 min. epoch)

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2015

-Trim

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40

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8010012

0140

0

20

40

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80

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Dep

artu

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Arrlivals (/h

r)

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CM

MC

IMC

0

20

40

60

80100

120140

0

20

40

60

80

100

120

Departures (/h

r)

Arr

lival

s (/h

r)

VMC

MMC

IMC

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

Depar

ture

s (/h

r)

Arrliv

als

(/hr)

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CModeling…

01020304050607080 45

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1011

1213

1415

1617

1819

2021

2223

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ocal

Hou

r

Operations (/15 min. epoch)

2007

Bas

elin

eC

ap20

15_B

asel

ine

2015

-Trim

med

Weather CapacitiesDemand

FAA’s NASPAC is used to produce metrics for each scenario

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0

50

100

150

200

250

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Mil

lio

ns

To

tal M

inu

tes

of

Del

ay

Baseline

Runways Only

NextGen (Runways + ATC)

Less Delay in 2019 compared to the Baseline

v5d

21% delay reduction in 2019 compared with the baseline

21% delay reduction in 2019 compared with the baseline

Total Delay = Push-Back Delay + Taxi-Out Delay + Airborne Delay

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More Flights in 2019 compared to the Baseline

v5d

-

5,000

10,000

15,000

20,000

25,000

JFK EWR ATL FLL PHX ORD SFO LGA MCO BUF

Ad

dit

ion

al O

per

atio

ns

Rel

ativ

e to

Bas

elin

e

NextGen

Runways

66,000 more flights in 2019 compared with the baseline

66,000 more flights in 2019 compared with the baseline

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D

We Consider Delay as a Cost to the Passenger

Flights

$ per Flight

Baseline Delay Cost

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Generalized Cost includes both Fare and Delay

Cost of Delay (ADOC + PVT)

Flights

LRMC

Note: We define “Long Run Marginal Cost” (LRMC) as the equilibrium cost of providing a flight in the absence of delay

Consumer Surplus

$ per Flight

LRMC +Delay Cost

$$

Direct Cost of Unimpeded Flight

D

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Reducing Delay Increases Consumer Surplus

$

Flights

LRMC +Delay Cost

Note: We define “Long Run Marginal Cost” (LRMC) as the equilibrium cost of providing a flight in the absence of delay

$ per Flight

LRMC + NextGen Delay

$$

Increased Consumer

Surplus

LRMC

D

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Change in Consumer Surplus Can be Calculated

$

Flights

Note: We define “Long Run Marginal Cost” (LRMC) as the equilibrium cost of providing a flight in the absence of delay

$ per Flight

LRMC + NextGen Delay

$$

LRMC

D

Increased Consumer

Surplus

LRMC +Delay Cost

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Our Formula Assumes a Linear Demand Curve

$

Flights

Note: We define “Long Run Marginal Cost” (LRMC) as the equilibrium cost of providing a flight in the absence of delay

$ per Flight

$$

LRMC

D

Benefits = ( ∆ Delay Cost x Flights Base )

+ ½ ( ∆ Delay Cost x ∆ Flights )

Benefits = ( ∆ Delay Cost x Flights Base )

+ ½ ( ∆ Delay Cost x ∆ Flights )

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Applying this Formula to NASPAC Results

Value of Avoided Delayfrom NASPAC (2019) = $ 4 Billion

Inputs

CategoryDelay Cost per minute

Delay Minutes per Flight

Delay Cost per Flight

Delay Minutes per Flight

Delay Cost per Flight

Push-Back Delay $29 1.8 $51 1.6 $46Taxi-Out Delay $35 6.1 $209 5.2 $178Airborne Delay $69 2.7 $183 1.5 $102

PVT (for avg flight ) $41 10.5 $434 8.2 $341

Changes($210) Cost per Flt $877 $667

66,065 Flights 18,913,726 18,979,791

Rectangle: Triangle:0.5

18,913,726 x 66,065x ($210) x ($210)

($3,981,110,152) ($6,952,941)

= $3,981 million = $7 million

Baseline NextGen2019

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We Also Included Supplemental Estimates of Programs Not Modeled in NASPAC

$0

$1

$2

$3

$4

$5

$6

$7

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

An

nu

al B

enef

its

(FY

10$B

)

CDA Fuel Savings

Program Office Studies

NASPAC Delay Savings$ 2 Billion from other

studies

$ 4 Billion from

NASPAC

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Summary of our Assumptions

• Long Run Marginal Cost is constant over time (i.e. – the airlines’ supply curve is flat)

• There is no “producer surplus”

• Cost-per-minute of delay is the same for all flights

• Our demand function is not explicit, but implied– Flights are trimmed (or added) based on capacity constraints

– Assume a linear demand curve for calculating consumer surplus

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Thank you !

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NextGen Improvements Modeled in NASPAC

Solution Set Capability/Activity

Trajectory Based Operations

Delegated Responsibility for Horizontal Separation

Initial Conflict Resolution Advisories

Increase Capacity & Efficiency Using RNAV/RNP: RNAV Routes

Increase Capacity & Efficiency Using RNAV/RNP: Arrival/Departure Procedures

ADS-B Separation: Gulf High Altitude

DataComm Segment 1: Increased En Route Capacity

High Density

Improved Parallel Runway Operations: PRM-A

Improved Parallel Runway Operations: Closely-Spaced Parallel Operations

Time-Based Metering Using RNAV/RNP Route Assignments

Airspace Redesign: NY

Airspace Redesign: Chicago

Airspace Redesign: Houston

Flexible Terminal Areas Wake Turbulence Mitigation for Departures

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Program Office Studies Used

• ADS-B

• DataComm Segments 1 and 2

• Oceanic In-Trail Climb and Descent

• Integrated Arrival/Departure Airspace

• Surface Traffic Management

• CATM - Work Package 2

• AIM Modernization

• NextGen Network-Enabled Weather (NNEW)

• SWIM Segment 1

• AJP CDA Fuel Savings