2nd Annual NEXTOR GMU FAA Workshop
Innovations in NAS-Wide Simulation
In Support of NextGen Benefits Analysis
Advances in Monetization of
Benefits
January 28, 2010
GRA, Incorporated
David Ballard, Senior Economist
115 West Avenue • Jenkintown, PA 19046 • USA
bdballard@gra-inc.com 215 884 7500
Overview
 Acknowledgement of IPSA Team Members and Team Environment
 NextGen Performance Improvements
 ATM Improvements and Changes in Use of System
 ATM as One of Many Inputs for System Users and Decision-Making
 Benefits as User “Harvesting” of Performance Improvements under Specific
Scenarios
 Advances in Benefits Monetization




Environmental Implications of Aviation Growth and NextGen Capabilities
Benefits for High Performance GA Users
Assessing Benefits for Travelers and the Broader Economy
Airlines and NextGen – Beneficiaries or Intermediaries?
• Partners in either case
 What’s Next?
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IPSA Team Leadership and Members
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NextGen provides numerous NAS performance improvements
1
Through High Density Operations,
new runways, and other operational
improvements, airport capacities
increased 40 to 60%, allowing
increased throughput while
maintaining reasonable
Demand/Capacity ratios
3
Through Trajectory Based
Operations, satellite navigation,
data communications, and other
operational improvements, en
route capacities increased 70%
to 95%
4
Future individual aircraft (airframes,
engines) and ATC exhibit:
32 dB noise reduction
(cumulative)
33% reduction in fuel burn
60% reduction in emissions
X
NextGen
2
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Baseline
Delays attributable to Weather reduced by
over 40% through improved airport capacity in
Weather, improved aircraft capability in
Weather, and advances in probabilistic decision
making
Noise Exposure
Baseline
Noise
Exposure
NextGen
NEXTOR GMU -- Innovations in
NAS-Wide Simulation – 1/28/2010
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Primary benefit opportunities for NextGen performance are increased
throughput and reduced average delay
Baseline
Capacity
Average
Delay
NextGen
Capacity
Capacity Increase
Due to NextGen
Baseline Projected
Delay/Throughput
Accommodate
Growth
A
C
Reduce
Delay
B
Increased Throughput
Possible with Same
Average Delay as Baseline
D
Reduced Delay Possible with
Unchanged Throughput
Number of Flights
Feasible Projected
Throughput, Baseline
Future without NextGen
Feasible Projected
Throughput with NextGen
 This analysis is predicated on the fundamental capacity tradeoff between throughput (quantity of service) and
delay (quality of service) in the NAS
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What Must Operators Take into Account?
Operator Costs and Inputs





Fuel
Labor
Airport costs
Ownership/overhead
ATC Infrastructure and
Operations
 Delay costs
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Market Features
 Demand
 Competitive environment
 Environmental constraints
 ANSP policies and “rules of
the road”
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Depending on circumstances affecting other inputs and parameters,
NAS users will “harvest” the NextGen capabilities in different ways
Baseline
Capacity
Average
Delay
NextGen
Capacity
Capacity Increase
Due to NextGen
Baseline Projected
Delay/Throughput
Accommodate
Growth
A
C
Reduce
Delay
Increased Throughput
Possible with Same
Average Delay as Baseline
B
Reduced Delay Possible with
Unchanged Throughput
Number of Flights
Feasible Projected
Throughput, Baseline
Future without NextGen
Feasible Projected
Throughput with NextGen
 The response by airlines and other system users to NextGen capabilities (opportunities for delay savings and
increased throughput) will determine the ultimate levels of improved performance
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Valuing NextGen requires, in part, valuing possible scenarios
individually
Baseline
Capacity
Average
Delay
NextGen
Capacity
Capacity Increase
Due to NextGen
Baseline Projected
Delay/Throughput
Accommodate
Growth
A
C
Reduce
Delay
Reduced Delay Possible with
Unchanged Throughput
Increased Throughput
Possible with Same
Average Delay as Baseline
D
B
Operating
Point
Analyzed
Number of Flights
Feasible Projected
Throughput, Baseline
Future without NextGen
Feasible Projected
Throughput with NextGen
 D, the “operating point analyzed,” arises from modeling choices about parameter settings for the simulation tools
– D is not directly chosen
 Points shown (A through D) are simulation results but the curves are notional – actually tracing a curve requires
repeated simulation runs
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Note that some scenarios may rely on different combinations or uses of
NextGen components or alternatives, giving rise to different capacities
Baseline
Capacity
NextGen(s)
Capacities
Average
Delay
Capacity
Increase(s)
Due to
NextGen(s)
Baseline Projected
Delay/Throughput
Accommodate
Growth
A
C
Reduce
Delay
Increased Throughput
Possible with Same
Average Delay as Baseline
B
Reduced Delay Possible with
Unchanged Throughput
Number of Flights
Feasible Projected
Throughput, Baseline
Future without NextGen
Feasible Projected
Throughput with NextGen
 Examples of factors that might lead to different capacity curves include greater use of secondary airports,
differing levels of avionics equipage or capability, or differences in policy environments or “rules of the road”
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Advances – Environmental Implications
 Environmental implications of NextGen improvements are complex,
controversial, of interest to many parties and depend on the future
policy treatment of environmental mitigation across all sources
 IPSA is treating aviation environmental impacts through increasing
collaboration and coordination (through the JPDO Environmental
Working Group) with FAA AEE and its Aviation Environmental Portfolio
Management Tool (APMT), which is under development by several
universities and contractors.
 This coordination will involve use of a common set of methodologies and
parameters for measuring and valuing the relevant inventories
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Advances – HPGA Users
 Focus has been on
 Delay savings for these users based on simulated flight trajectories with
and without NextGen
 Analysis of user activity at the airport level has increased understanding of
where HPGA aircraft customarily operate, which affects where and how
NextGen equipage issues arise for these users
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Advances – Passenger Benefits
Baseline
Capacity
Average
Delay
NextGen
Capacity
Capacity Increase
Due to NextGen
Baseline Projected
Delay/Throughput
Accommodate
Growth
A
C
Reduce
Delay
B
Reduced Delay Possible with
Unchanged Throughput
Increased Throughput
Possible with Same
Average Delay as Baseline
D
Operating
Point
Analyzed
Feasible Projected
Throughput, Baseline
Future without NextGen
Feasible Projected
Throughput with NextGen
Annual
Number of Flights RPMs
 Depending on operator choices about “harvesting” NextGen capabilities, passengers may benefit from an increased
availability of flights with unchanged average delay (service quality), at point C, improved service quality (reduced delay) on
an unchanged level of seat availability at point B, or from additional flights and improved average delays, at an intermediate
point like D, the “operating point analyzed” shown above.
 There are relatively straightforward ways to value (from the passenger perspective) an outcome at point C (increased
consumer surplus due to fares lower than they would be otherwise) or an outcome at point B (reduced average delay valued
using the average value of passenger time), but how can intermediate points be assessed?
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Advances – Passenger Benefits
Baseline
Capacity
Average
Delay
NextGen
Capacity
Capacity Increase
Due to NextGen
Baseline Projected
Delay/Throughput
Accommodate
Growth
A
C
Reduce
Delay
B
Reduced Delay Possible with
Unchanged Throughput
Increased Throughput
Possible with Same
Average Delay as Baseline
D
Operating
Point
Analyzed
Feasible Projected
Throughput, Baseline
Future without NextGen
Feasible Projected
Throughput with NextGen
Annual
Number of Flights RPMs
 Depending on operator choices about “harvesting” NextGen capabilities, passengers may benefit from an increased
availability of flights with unchanged average delay (service quality), at point C, improved service quality (reduced delay) on
an unchanged level of seat availability at point B, or from additional flights and improved average delays, at an intermediate
point like D, the “operating point analyzed” shown above.
 There are relatively straightforward ways to value (from the passenger perspective) an outcome at point C (increased
consumer surplus due to fares lower than they would be otherwise) or an outcome at point B (reduced average delay valued
using the average value of passenger time), but how can intermediate points be assessed?
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Calculating the Hybrid Value
Baseline
Capacity
Key
 a annual throughput, baseline
feasible (Point A)
Average
Delay
• a average delay, baseline infrastructure with feasible throughput (Point A)
• b average delay, NextGen infrastructure with baseline throughput (Point B)
WITHOUT INVESTMENT:
 G annual throughput, NextGen infrastructure at approximate
of
Baselinelevel
Projected
average delay a (Point C)
Delay/Throughput
• x average delay associated with Point D
• Y annual throughput associated with Point D
Valuation
Aa
Reduce
Delay
•Using the reduction in average delay associated with operating unchanged
throughput through a more capable NextGen system, using on the passenger
NEXTGEN
value of time (PVT), the value of time savings at Point AFTER
D is denoted
VT = Value(B)
INVESTMENT: Reduced
•Using the reduction in average real yield associated with
bringing
increased
Delay
is Possible
for
Throughputof
throughput to market, the value to passengers at PointUnchanged
C is the aggregation
savings on RPMs sold at reduced average real yield (the consumer surplus
method), denoted CS = Value(C)
N
I
Accommodate
Growth
Y
a
c
G
x
b
B
D
C
Operating
Point
Analyzed
 a  x  
 Y  a  
Value( D)  
 VT   
 CS 
Feasible Projected
 a  b  
 G  a  
Throughput, Baseline
Future w/o NextGen
•The value of capabilities and operational outcomes leading to Point D is
calculated as a weighted sum of these two “corner” valuations:
Stakeholders can employ the increased capability offered by NextGen in a range of ways.
•Value at interior points can also be calculated.
for simulating NextGen infrastructure, ATM and operational characteristics in this analys
system operating at “point 2.5” which combines increased throughput with decreased
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Advances – Benefits to the Broader Economy
 Not currently a part of IPSA approach
 Other researchers (Harback, et.al. from Mitre-CAASD, Jeffrey Cohen from
University of Hartford) have looked at Computable General Equilibrium
(CGE) approaches to estimating the impact on GDP of aviation or
transportation infrastructure investment.
• This is not the same thing as “economic impact”
 Work is still preliminary for aviation – concern is that aviation is such a
small sector within entire economy
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Advances – Implications/Benefits for Airlines
 NextGen enables operational improvements to airline NAS users
across a variety of metrics
 Increased flight opportunities
 Reduced flight delays
 Reduced fuel requirements (more direct and precise flight trajectories)
• Lowers cost per flight
• Reduces environmental impacts
 Are airlines beneficiaries or just intermediaries that transfer the
capabilities (“harvest”) enabled by NextGen investments to final users
of the NAS (passengers, shippers, broader population)?
 Given current and anticipated institutional arrangements, the incentives
of airlines and other users to make necessary NextGen investments –
their “NextGen business case” – must be understood and taken
account of by policymakers (e.g., RTCA TF5)
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What’s in Operators’ “Big Picture?”
Operator Costs and Inputs





Fuel
Labor
Airport costs
Ownership/overhead
ATC Infrastructure and
Operations
 Delay costs
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Market Features
 Demand
 Competitive environment
 Environmental constraints
 ANSP policies and “rules of
the road”
NEXTOR GMU -- Innovations in
NAS-Wide Simulation – 1/28/2010
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Next Steps
 Stakeholder business cases
 Rationale and pace of equipage for specific users
 Active and ongoing engagement of stakeholders as NextGen is designed
and deployed
 Scenarios within which NextGen is deployed
 Economic growth/input costs
 Environmental constraints
 Alternative far term formulations for NextGen
 Equipage requirements
 Variations in infrastructure deployment or use
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Thank You
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