U.S. Domestic Analysis

1
The Business Case forDigital Data Link

• U.S. Domestic Analysis
• ATN 99
• September 22, 1999
• www.boeing.com/caft

2
The CNS/ATM Focused TeamC/AFT

• An Informal Industry Group
• Airlines
• Airframe Manufacturers (Boeing, Airbus)
• Air Traffic Service Providers (FAA, Eurocontrol)
• Associations (ATA, IATA)
• Research Organizations (MITRE/CAASD, NASA, LMI)
• Focus is Business Case Development
• Establish Problem -- Why do we need to change?
• Quantify Solutions -- What to do, and when?
• Develop Consensus -- How do we move forward?

3
Airline Data Link CommitmentKey Questions

• Is there a valid economic basis for airlines to
  commit to investment into ATC data link?
• What short and long term airline benefits are
  there for investment in ATC data link?
• Is there a Window of Opportunity for maximizing
  the return on this investment?
• How does ACARS fit in to this issue?
• What is the value of ATC data link as an enabling
  technology for future applications?
• Does this define a Benefits Driven approach?

4
Overview

• Introduction Assumptions
• AOC Situation
• ATC Situation
• C/AFT Modeling Process
• Model Inputs
• Investment Analysis Results
• Potential Future Data Link Benefits
• Conclusions

5
Introduction

• C/AFT airlines agree that future system capacity
  is a primary driver for global airspace changes.
• C/AFT proposes incremental operational
  enhancements that can be enabled by CNS
  technologies.
• C/AFT analyzed Digital Data Link as a primary
  enabler for ATC delay reduction.
• Business case development was based on analysis
  of costs and benefits from the U.S. airlines
  perspective.

6
Scope of This Analysis

• This is not an alternatives analysis, as data
  link is the only enabler considered.
• Analysis is for Cruise/Terminal Transition area
  capacity improvements in U.S. NAS.
• Value is based on airline point of view (airlines
  as an industry, not a single airline).
• Both AOC and ATC benefits considered.
• Analysis includes value of transitioning from
  Plain Old ACARS (POA) to VDL Mode 2 for AOC.

7
Airline Operations Control Why the Need for
Change?

• ACARS Demand is Increasing
• New aircraft being delivered
• New airline users entering service
• New applications and non-airline users
• ACARS is a Shared-Access System
• Based on non-discriminatory system of FCC
  frequencies
• Spectrum Availability and Congestion
• Limited number of VHF frequencies
• Interim ACARS expansion is short-lived and
  expensive

8
Airline Operations Control Increasing U.S.
Demand for Service

• Growing number of ACARS aircraft in U.S.
• Today Approx. 5600 U.S. 1500 Non-U.S. 7100
• Future Up to 1200 more over next 3 to 5 years
• Potential new demand from new participants
• Civil Large Scheduled (Regional), Cargo,
  Business
• Military Non-Tactical Aircraft, Air National
  Guard
• Estimated potential at more than 4500 additional
  a/c
• Increasing number of data link applications
• Aircraft Performance
• Crew Management
• In-flight Operations

9
Spectrum IssuesCongestion and Availability

• New applications are the primary reason for
  increasing demand for ACARS.
• New data link users entering service is the
  secondary reason for increasing demand.
• Many areas of US already already experiencing
  congestion on en route frequencies.
• Other industries are looking and petitioning for
  available spectrum.

Managing spectrum congestion and availability
will be a growing and continuing concern for the
airline industry.
10
ACARS Demand Will Exceed Capacity
ARINC, Inc
11
The Digital Solution (VDL-2)

• Migration of ACARS traffic to VDL-2 will
  effectively address projected frequency
  congestion
• Significant costs related to expanding interim
  ACARS capacity may be avoided
• ATC Data Link is a common element in most new
  applications related to ATC modernization and
  airspace management

12
ATC Data Link Situation

• American Airlines study of impact of delay on
  airline schedule
• Without capacity improvements airline flight
  schedule critically impacted by year 2005.
• By reducing separation, airline schedules can be
  maintained.
• Results from FAA study of Cruise/Terminal
  Transition area data link shows significant delay
  reduction potential
• Reduce voice frequency congestion.
• Off-loads routine comm from radar controller,
  allowing improved ATC services for increased
  sector productivity and efficiency.
• FAA has funding baseline for Builds 1 and 1a
  CPDLC
• Based on ATN over VDL Mode 2.
• PETAL-II trials in Europe underway to evaluate
  data link operational implementation issues.

13
FAAs Data Link ProgramBased on ATN over VDL-2

• Builds 1 and 1A are subset of PETAL-2
• Build 2 includes initial oceanic message support
• Build 2 has international scope
• Eurocontrol and European States requesting joint
  FAA collaboration to define follow-on data link
  implementation project.
• Build 2 follow-on activity expected to be key in
  setting the international standard for ATC data
  link in congested, highly developed airspace.
• Build 2 will define the beginning of the
  transition from FANS-1 to ATN.

14
C/AFT Modeling ProcessTransition Logic Diagrams

• C/AFT is proponent of incremental operational
  enhancements
• Transition Logic Diagrams
• separate diagram for each phase of operation
• developed for both capacity and efficiency
• operational enhancements enabled by technology
  or procedural improvements
• C/AFT analysis focuses on capacity-related
  improvements
• Reduced separations
• Additional routes

15
Aircraft Separation Rings
Resource-Constrained
Effective
Theoretical
Effective
Resource-Constrained
Prevention
Intervention
Detection
RNP, RMP, RCP
RMP
RMP, RCP
Display Weather Medium-Term Intent Data
Controller Comm g/g Pilot Flow Rates Airspace
Complexity
Sensor Display Short-Term Intent Controller Comm
a/g Pilot Closure Rate
Sensor Display Controller Pilot
Required Element Performance RxP f (sensors,
decision support, human) Required System
Performance sets Separation Standard RSP g (
RCP, RMP, RNP )
16
The First StepController Communications Workload
50
45
40
35
30
25
20
15
10
5
0
Strip Mgmt
Ext Coord
Int Coord
Conf Srch
R/T
Rdr Coord
Rdr Super
Rdr Interv
"SYSCO" Approximate Controller Workload
Distribution
17
5. Cruise/Terminal Transition Area Transitions
Airplane-Level Capacity Effects
System-Level Capacity Effects
Atlanta study baseline. Data Link used for
Clearances and Transfer of Comm
More Vertical Profiles

• FAA Atlanta Study
• Cruise/Terminal Transition Sector handles arrival
  sequencing, overflight traffic, and departures
• Restrictions are enforced due to communication
  volume saturation
• Problem During peak periods 20 Miles in Trail
  (MIT) for departures entering sector, resulting
  in ground delays
• Result Using data link for routine voice
  communications allowed reduction from 20 MIT to 5
  MIT (62 delay reduction)

14
18
C/AFT Modeling ProcessProbabilistic Economic
Model

• Determines
• Costs
• Benefits (converted to dollars)
• Risk
• Rules
• Builds Deterministic Sensitivity Analysis
• Identifies influence of each uncertainty on NPV
• Used to calculate overall risk and return

19
Data Link Investment ModelFull Influence Diagram
20
Data Link Investment ModelStructured Influence
Diagram
21
Model InputsConstants

• Start Year of Model 2000
• Final Year for Equipage 2015
• Final Year for Benefit 2020
• Discount Rate 12
• Inflation Rate 3.5
• Direct Operating Cost (DOC) 25 per minute
• (Not including ownership costs)
• Fuel of DOC 30
• Fuel inflation rate 5

22
Model InputsDelay Growth

• Derived from Free Flight, Preserving Airline
  Opportunity, by American Airlines, Fig. 4
• Large range of this variable due to
• AA study was using conservative good weather day
  estimate
• This represents delay over optimum (not schedule)
• This accounts for value of unmet traffic growth
  due to capacity constraints

23
Model InputsTraffic Growth

• Number of planes at start of model
• 5194 (Source ATA)
• Number of planes in 2015
• Low Estimate 8054
• Medium Estimate 8943
• High Estimate 9289

24
Model InputsInfrastructure

• Model includes both AOC and ATC Infrastructure
• CPDLC Builds have an associated Delay Reduction
  Effectiveness which represents the percentage of
  data link-related delay that is affected with
  each build.

25
Model InputsInfrastructure
26
Model InputsThree Stages of Equipage

• Stage 0
• Tied to AOC infrastructure readiness
• AOC benefits biggest driver (message cost
  reduction and penalty avoidance)
• No ATC delay reduction benefits
• High forward fit of VDL-2 equipment, low retrofit
• Stage 1
• Tied to ATC infrastructure readiness
• Both ATC delay reduction and AOC benefits
• Increased forward fit, med retrofit
• Ends when airlines equip more aggressively due to
  infrastructure maturity and realized benefits
• Stage 2
• Tied to ATC infrastructure maturity
• Both ATC delay delay reduction and AOC benefits
• Increased forward fit, high retrofit

27
Model InputsEquipage Relationship to FAA Program
28
Model InputsEquipage Percentages
29
Model InputsCosts

• ATM Infrastructure costs not included
• Equipment costs assumes minimal avionics and
  flight deck impact
• CMU, VDR, wiring
• Equipment Costs
• Aircraft Forward Fit and Retrofit for AOC
• CMU Software upgrade for ATC
• Airline host or router upgrade for AOC
• ATC Message Costs
• Who will pay? FAA, airlines, or both?
• Multiplying Factor takes into account this
  uncertainty

30
Model InputsCosts
31
Model InputsCosts

• Maintenance costs
• 10 per year of ATC software upgrade cost
• Message costs
• .18 per Kbit for 0 - 1 million Kbits/year
• .14 per Kbit for 1 - 4 million Kbits/year
• .10 per Kbit for 4 - 8 million Kbits/year
• .06 per Kbit for 8 - 15 million Kbits/year
• .05 per Kbit for gt 15 million Kbits/year

32
Model InputsAOC Benefits

• AOC Non-Availability
• Cost to an airline of not having full ACARS
  capability(16, 32, 48 per flight)
• AOC message cost reduction
• Cost-per-Kilobit savings and message length
  reduction (discount factor 0.67, 0.8, 0.86)
• AOC Penalty Avoidance for VDL-2 equipage
• Cost-per-Kilobit penalty (3, 5, 10 increase
  per year)
• Monthly Surcharge (900, 1000, 1100 per month)

33
Model InputsATC Benefits

• Delay reduction benefits applied to all
  airplanes, not just those equipped
• ATC Delay Reduction Benefit
• Based on Atlanta study scaled study benefits
• Assigned delay reduction to each FAA Build
• Uses the following formula
• Atlanta NAS-wide benefits discount factor
  annual delay growth
• Atlanta NAS-wide benefits 11,491,387 minutes
  saved in Cruise/Terminal Transition phase of
  flight
• Discount Factor 30, 50, or 80 of
  Atlanta-study benefits
• Annual Delay Growth 2.5, 7, 11 per year

34
Model InputsDelay vs. Equipage Curve
35
Data Link Scenario ComparisonReturn on Investment
CNS/ATM Focused Team Data Link Analysis (April
1999)
36
Full Data Link ScenarioCost Drivers by Category
(000s) CNS/ATM Focused Team Data Link Analysis
(April 1999)
37
Full Data Link ScenarioBenefit Drivers By
Category
(000s) CNS/ATM Focused Team Data Link Analysis
(April 1999)
38
Full Data Link ScenarioDeterministic Sensitivity
39
Full Data Link ScenarioCumulative Probability of
Return (NPV)
CNS/ATM Focused Team Data Link Analysis (April
1999)
40
Full Data Link ScenarioCash Flow Summary
41
Full Data Link ScenarioForward Fit - Cash Flow
Summary
42
Full Data Link ScenarioRetrofit - Cash Flow
Summary
43
Full Data Link Scenario Value of Perfect
Information and Control
Selected Chance Variables VOPI VOPC Equipage
Scenario 0.0 520M Delay Incr per Yr 0.0
512 ATC Build 1A Eff 0.0 25 Atlanta
Discount Factor 0.0 452 AOC NA Strt Yr 0.0
242 ATC SW Upgrade K 0.0 177 AOC NA ( per
Flt) 0.0 575

• Value of Perfect Information The value of
  knowing the outcome of an uncertainty before you
  make the investment decision.
• Value of Perfect Control The value you of
  ensuring that the outcome of an uncertainty comes
  out to the most favorable outcome for your
  decision.
• Note These calculations assume a 25 chance of
  the 10th percentile event occurring, a 50 chance
  of the 50th percentile event occurring, and a
  25 chance of the 90th percentile event
  occurring.

44
Model OutputsAOC Only

• AOC-only scenario uses Stage 0 equipage rates
• Forward Fit per Year 25, 60, 75
• Retrofit per Year 2, 3, 4

45
AOC Only ScenarioCost Drivers by Category
(000s) CNS/ATM Focused Team Data Link Analysis
(April 1999)
46
AOC Only ScenarioBenefit Drivers by Category
(000s) CNS/ATM Focused Team Data Link Analysis
(April 1999)
47
AOC Only ScenarioDeterministic Sensitivity
CNS/ATM Focused Team Data Link Analysis (April
1999)
48
AOC Only Scenario Cumulative Probability
Distribution
CNS/ATM Focused Team Data Link Analysis (April
1999)
49
AOC Only ScenarioCash Flow Summary
50
AOC Only ScenarioForward Fit - Cash Flow Summary
51
AOC Only ScenarioRetrofit - Cash Flow Summary
52
AOC Only ScenarioValue of Perfect Information
and Control(Stage 0 Equipage Rates)
Selected Chance Variables VOPI VOPC Equipage
Scenario 0.0 301M AOC NA Strt Yr 0.0
148 AOC NA ( per Flt) 0.0 349 AOC Cost per
Flt 0.0 98

• Value of Perfect Information The value you
  should be willing to pay to know the outcome of
  an uncertainty before you make the investment
  decision.
• Value of Perfect Control The value you should
  be willing to pay to ensure that the outcome of
  an uncertainty comes out to the most favorable
  outcome for your decision.
• Note These calculations assume a 25 chance of
  the 10th percentile event occurring, a 50 chance
  of the 50th percentile event occurring, and a 25
  chance of the 90th percentile event occurring.

53
Conclusions

• Data link is a strategic, long-term investment.
• Data link has a reasonable return on investment.
• The value of maintaining AOC data link capability
  is one of the primary cost-avoidance drivers.
• AOC drives forward fit, ATC drives retrofit.
• The AOC benefits enable airline equipage.
• Risks associated with investing in ATC data link
  are mitigated by the need to preserve AOC.

54
Conclusions

• Forward Fit equipage must start ASAP to avoid the
  high retrofit costs.
• ATC benefits are particularly dependent on
  successfully managing those factors with the most
  variance of NPV (deterministic sensitivity).

55
Potential Future Benefits Enabled by ATC Data
Link

• A Rough-Order of Magnitude Analysis

56
1. Planning Capacity Transitions
National / Local / Airport
International / National
C1-1
C1-3
ADS intent information allows for improved
terminal area arrival flow planning.
Enhanced Arrival Planning
Improved TFM
C1-4
C1-2
Collaborative Traffic Management
Integrated Airport Flow Planning
C1-5
Coordinated TFM System
57
2. Surface Capacity Transitions
Good Visibility
Low Visibility
C2-4
C2-1
Additional Gates, Taxiways and Aprons
Improved Surface Guidance and Control
C2-5
C2-2
Reduce Schedule Uncertainty
Visual Throughput in CAT IIIb
Improved Surface Sequencing, Scheduling and
Routing
C2-3
Detroit Digital Taxi Clearance baseline.
Use CPDLC to provide taxi clearance.
58
3. Final Approach / Initial Departure Capacity
Transitions
System-Level Capacity Effects
Airplane-Level Capacity Effects
C3-1
Reduced Prevention Buffer
C3-7
Increased Availability of Approaches/Departures
C3-6
C3-2
Reduced Intervention Buffer
Additional Runways
C3-8
3-Dimensional Approaches Only
Reduced Separation Minima
C3-3
Increased Runway Utilization
C3-4
Reduced Separation Minima
Reduced lateral spacing between runways
Use ADS to reduce lateral separation for
independent operations to 2500.
C3-5
Reduced Separation Minima
Reduced longitudinal spacing
59
4. Approach / Departure Transition Capacity
Transitions
Airplane-Level Capacity Effects
System-Level Capacity Effects
C4-1
C4-6
C4-7
Reduced Prevention Buffer
Increased Availability of Existing Transitions
More Transitions
Reduced Intervention Buffer
C4-2
Ground Vectoring
C4-3
Ground Guidance with A/C trajectories
Reduced Intervention Buffer
Use ADS with CTAS for more efficient sequencing.
C4-4
Reduced Intervention Buffer
Use CPDLC with 4-D Nav for accurate arrival at
the final approach fix.
A/C Guidance
C4-5
Reduced Separation Minima
TBD
60
5. TMA Arrival/Departure Capacity Transitions
System-Level Capacity Effects
C5-6
C5-5
Airplane-Level Capacity Effects
More Vertical Profiles
C5-1
Reduced Prevention Buffer
Newark study baseline. Data Link used for
Clearances and Transfer of Comm
Redistributed Controller Comm Workload
C5-2
ADS used to provide med-term state
vector information to CTAS for improved
sequencing and spacing.
Reduced Prevention Buffer
State vector prediction
C5-3
4-D contract ADS for intent, and CPDLC for
trajectory coordination. OR Improved
performance of CPDLC allows for reduced
controller intervention.
Reduced Intervention Buffer
C5-4
Reduced Separation Minima
TBD
61
6. En-Route Capacity Transitions (Procedural
Separations)
System-Level Capacity Effects
Airplane-Level Capacity Effects
C6P-1
C6P-8
C6P-7
Reduced Prevention Buffer
More Flight Levels
C6P-2
Reduced Intervention Buffer
C6P-3
Reduced Separation Minima 50/50 Horizontal
C6P-4
ADS used to provide position data to ATC.
Reduced Separation Minima 30/30 Horizontal
C6P-5
TBD
Reduced Separation Minima 15NM radius
C6P-6
TBD
Reduced Separation Minima lt 15NM radius
62
6. En-Route Capacity Transitions (Radar
Separations)
System-Level Capacity Effects
Airplane-Level Capacity Effects
C6R-6
C6R-5
More Flight Levels
C6R-1
Reduced Prevention Buffer Redistributed
Controller Comm Workload
Atlanta study baseline. Data Link used for
Clearances and Transfer of Comm
C6R-2
ADS used to provide state vector information for
medium-term trajectory prediction.
Reduced Prevention Buffer State vector prediction
C6R-3
4-D contract ADS for intent, and CPDLC for
trajectory coordination. OR Improved
performance of CPDLC allows for reduced
controller intervention.
Reduced Intervention Buffer
C6R-4
Reduced Separation Minima
TBD
63
Future Data Link Model Assumptions(1 of 2)

• This analysis provides only a rough-order-of-magn
  itude of some of the enabling benefits of future
  data link. With that in mind, these are the
  assumptions we made
• 12 discount rate and 3.5 inflation
• Cash flows start in 1998 and end in 2015
• Assumed no revenue enhancement
• No costs are included
• The following model assumptions are the same as
  the baseline data link analysis, including
• Equipage and infrastructure timing
• Relationship between equipage and delay reduction
• Airplane deliveries and airplanes removed
• Growth in delay
• Assessed an 11 full-up delay reduction (vs. 5
  for baseline data link)See next page

64
Future Data Link Model Assumptions(2 of 2)

• Source of Delay
• of Delay Surface 5.75
• of Delay Final App/Init Dep 41.85
• of Delay App/Dep Transition 19.8
• of Delay TMA Arrival/Departure 20.5

• Delay Reduction
• Surface Delay Red 69.5
• Final App/Init Dep Delay Red 19.3
• App/Dep Transition Delay Red NA
• TMA Arrival/Departure Delay Red 13.1

65
Future Data LinkDeterministic Sensitivity
66
Future Data LinkCumulative Probability
Distribution
67
Conclusions

• The magnitude of the potential value enabled by
  ATC data link are substantial.
• A more complete economic analysis will not be
  possible until operating concepts, along with
  associated benefits and costs, are better defined.

68
Questions?
69
Backup Information

• ATN 99
• September 22-23, 1999
• www.boeing.com/caft

70
Model InputsTraffic Growth

• Start with current number of airplanes, add new
  deliveries and subtract retiring planes each year
• 1997 Total Number of Airplanes 5194 (ATA)
• New Deliveries per Yr (1998 to 2007) 233
  (Boeing CMO)
• New Deliveries per Yr (2008 to 2017) 326
  (Boeing CMO)

71
Model InputsEquipage Timing Variables
72
Model InputsAOC Benefits