Valuation of NextGen Capacity Benefits

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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
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One Goal of NextGen is Increased Throughput
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Defining the Benefits of Increased Throughput
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Designing the Experiment in NASPAC

• Three scenarios are modeled
• "Do Nothing Case
• 2007 airport capacities, technologies, and
  procedures
• Runways Only Case
• New runways, runway extensions, and airport
  configurations included as they are projected to
  occur
• 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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Modeling
FAAs NASPAC is used to produce metrics for each
scenario
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Less Delay in 2019 compared to the Baseline
21 delay reduction in 2019 compared with the
baseline
v5d
Total Delay Push-Back Delay Taxi-Out Delay
Airborne Delay
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More Flights in 2019 compared to the Baseline
66,000 more flights in 2019 compared with the
baseline
v5d
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We Consider Delay as a Cost to the Passenger
per Flight
Baseline Delay Cost
D
Flights
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Generalized Cost includes both Fare and Delay
per Flight
LRMC Delay Cost

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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Reducing Delay Increases Consumer Surplus
LRMC Delay Cost
per Flight


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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Change in Consumer Surplus Can be Calculated
per Flight
LRMC Delay Cost


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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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
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Applying this Formula to NASPAC Results
Value of Avoided Delayfrom NASPAC (2019)
4 Billion
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We Also Included Supplemental Estimates of
Programs Not Modeled in NASPAC
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
Trajectory Based Operations Initial Conflict Resolution Advisories
Trajectory Based Operations Increase Capacity Efficiency Using RNAV/RNP RNAV Routes
Trajectory Based Operations Increase Capacity Efficiency Using RNAV/RNP Arrival/Departure Procedures
Trajectory Based Operations ADS-B Separation Gulf High Altitude
Trajectory Based Operations DataComm Segment 1 Increased En Route Capacity
High Density Improved Parallel Runway Operations PRM-A
High Density Improved Parallel Runway Operations Closely-Spaced Parallel Operations
High Density Time-Based Metering Using RNAV/RNP Route Assignments
High Density Airspace Redesign NY
High Density Airspace Redesign Chicago
High Density 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