Valuation 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
Federal Aviation
Administration
One Goal of NextGen is Increased Throughput
Federal Aviation
Administration
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Defining the Benefits of Increased Throughput
Delay
per Flt
Current System
NextGen
Future Delay,
without
NextGen
Future Operating Point
without NextGen
Current Operating Point
Avoided
Delay
Future Delay,
with NextGen
Future Operating Point,
with NextGen
Current
Delay
Current
Throughput
Flights
Future
Throughput,
without NextGen
Additional
Flights
Future
Throughput,
with NextGen
Federal Aviation
Administration
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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
Federal Aviation
Administration
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60
0
10
4
30
40
50
20
Operations (/15 min.
epoch)
5
6
7
0
8
20
0
10
10
20
14
15
8
16
2007
9
11
line
Base
10
2015_Baseline
Local Hour
13
Cap
60
20
20
20
Federal Aviation
Administration
0
40
0
0
7
12
70
20
Cap
12
19
13
14
20
16
0
14
80
40
40
12
0
17
22
19
24
22
eak
23
Day
24
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4 2007 Baseline
5
6
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40
50
60
80
Chicago O'Hare (ORD)
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.
(/15
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Modeling…
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Capacities
FAA’s NASPAC is used
to produce metrics for
each scenario
5
Less Delay in 2019 compared to the Baseline
Total Delay Estimates for NextGen Planning
250
21% delay reduction in 2019
compared with the baseline
Baseline
Runways Only
NextGen (Runways + ATC)
150
Millions
Total Minutes of Delay
200
100
50
0
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
Total Delay = Push-Back Delay + Taxi-Out Delay + Airborne Delay
FY2016
FY2017
FY2018
FY2019
Federal Aviation
Administration
v5d
6
More Flights in 2019 compared to the Baseline
Additional Operations Relative to Baseline
25,000
NextGen
Runways
20,000
66,000 more flights in 2019
compared with the baseline
15,000
10,000
5,000
JFK
EWR
ATL
FLL
PHX
ORD
SFO
LGA
MCO
BUF
v5d
Federal Aviation
Administration
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We Consider Delay as a Cost to the Passenger
$ per
Flight
Baseline
Delay Cost
D
Flights
Federal Aviation
Administration
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Generalized Cost includes both Fare and Delay
$ per
Flight
LRMC +
Delay Cost
Consumer
Surplus
$$
Cost of Delay
(ADOC + PVT)
D
LRMC
Direct Cost of Unimpeded Flight
Flights
Note: We define “Long Run Marginal Cost” (LRMC) as the
equilibrium cost of providing a flight in the absence of delay
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Administration
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Reducing Delay Increases Consumer Surplus
$ per
Flight
LRMC +
Delay Cost
Increased
Consumer
Surplus
LRMC +
NextGen Delay
$$
$
D
LRMC
Flights
Note: We define “Long Run Marginal Cost” (LRMC) as the
equilibrium cost of providing a flight in the absence of delay
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Administration
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Change in Consumer Surplus Can be Calculated
$ per
Flight
LRMC +
Delay Cost
Increased
Consumer
Surplus
LRMC +
NextGen Delay
$$
$
D
LRMC
Flights
Note: We define “Long Run Marginal Cost” (LRMC) as the
equilibrium cost of providing a flight in the absence of delay
Federal Aviation
Administration
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Our Formula Assumes a Linear Demand Curve
$ per
Flight
Benefits = ( ∆ Delay Cost x Flights Base )
+ ½ ( ∆ Delay Cost x ∆ Flights )
$$
$
D
LRMC
Flights
Note: We define “Long Run Marginal Cost” (LRMC) as the
equilibrium cost of providing a flight in the absence of delay
Federal Aviation
Administration
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Applying this Formula to NASPAC Results
2019
Inputs
Baseline
NextGen
Delay Cost
per minute
Delay Minutes per
Flight
Push-Back Delay
Taxi-Out Delay
Airborne Delay
$29
$35
$69
1.8
6.1
2.7
$51
$209
$183
1.6
5.2
1.5
$46
$178
$102
PVT (for avg flight )
$41
10.5
$434
8.2
$341
Category
Changes
($210)
66,065
Cost per Flt
Flights
Delay Cost per
Flight
Delay Minutes
per Flight
$877
18,913,726
$667
18,979,791
Rectangle:
Value of Avoided Delay
from NASPAC (2019)
= $ 4 Billion
18,913,726
($210)
($3,981,110,152)
x
=
$3,981 million
Delay Cost per
Flight
Triangle:
x
x
=
0.5
66,065
($210)
($6,952,941)
$7 million
Federal Aviation
Administration
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We Also Included Supplemental Estimates of
Programs Not Modeled in NASPAC
$7
CDA Fuel Savings
$6
Annual Benefits (FY10$B)
Program Office Studies
$ 2 Billion
from other
studies
NASPAC Delay Savings
$5
$4
$3
$ 4 Billion
from
NASPAC
$2
$1
$0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year
Federal Aviation
Administration
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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
Federal Aviation
Administration
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Thank you !
Federal Aviation
Administration
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NextGen Improvements Modeled in NASPAC
Solution Set
Capability/Activity
Delegated Responsibility for Horizontal Separation
Initial Conflict Resolution Advisories
Trajectory Based
Operations
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
Improved Parallel Runway Operations: PRM-A
Improved Parallel Runway Operations: Closely-Spaced Parallel Operations
Time-Based Metering Using RNAV/RNP Route Assignments
High Density
Airspace Redesign: NY
Airspace Redesign: Chicago
Airspace Redesign: Houston
Flexible Terminal Areas
Wake Turbulence Mitigation for Departures
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Administration
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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
Federal Aviation
Administration
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