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Economic Performance and NGATS
NEXTOR 2nd National Airspace System Infrastructure Management Conference
13 June 2006
Dr. Sherry S. BorenerDirectorEvaluation and Analysis DivisionJoint Planning and Development Office
Acknowledgement
This presentation includes work performed by a number of organizations and persons supporting
the JPDO Evaluation and Analysis Division.
GRA, Incorporated
Outline
• 2025 Aeronautics Activities and Worldwide Demand
• NAS Capacity Constraints Analysis – What if we can’t satisfy 3X demand?– Estimating the loss in feasible throughput– Estimating the economic loss
• JPDO Cost Workshops
• Supplement – Alternative Funding Schemes
2025 Global Aeronautics Activities
• 2/3 of world aeronautics industry will take place outside of North America by 2025.
• U.S.-International trade in aeronautics goods and services will grow in importance with respect to U.S. domestic trade in goods and services.
• American airlines and aeronautics companies will form more partnerships with foreign partners.
JPDO Process for Achieving the NGATS
R2 = 0.67
R2 = 0.62
-
1,000
2,000
3,000
4,000
5,000
6,000
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Weather Score
Del
ays
(>1
Hou
r) 20032004
R2 = 0.67
R2 = 0.62
-
1,000
2,000
3,000
4,000
5,000
6,000
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Weather Score
Del
ays
(>1
Hou
r) 20032004
$0
$1
$2
$3
$4
$5
FY04 FY05 FY06 FY07 FY08 FY09
ATO Capital Budget Shortfall
$ B
illio
ns
FY04 Capital Investment Plan
Projected Funding
Cumulative $3.2B
$0
$1
$2
$3
$4
$5
$0
$1
$2
$3
$4
$5
FY04 FY05 FY06 FY07 FY08 FY09FY04 FY05 FY06 FY07 FY08 FY09
ATO Capital Budget Shortfall
$ B
illio
ns
FY04 Capital Investment Plan
Projected Funding
Cumulative $3.2B
NAS Security Boundary
Core Enclave(s)
SupportEnclave(s)
I BM
Enclave Comm. Control (ECC)
DMZ
Security Management& ReportingIB M
Non-NAS Entities
NAS Security Boundary
Core Enclave(s)
SupportEnclave(s)
I BM
Enclave Comm. Control (ECC)
DMZ
Security Management& ReportingIB M
Non-NAS Entities
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
FY
FY05
$K
397 GBT + Backup F&E397 GBT + Backup O&MTotal Radar Centric F&E + O&M
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
FY
FY05
$K
397 GBT + Backup F&E397 GBT + Backup O&MTotal Radar Centric F&E + O&M
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
Staf
f
Define and ImplementIncremental Solutions
via Segments
Measure Post-Implementation
Performance, Service,and Cost of Segment
Vision
•Aircraft can self separate with or without pilots and when necessary control can be assumed from the ground
•Customers and operators are fully informed with increased options to self-manage their ability to meet their needs
•All communities are connected into the global air transportation network
Airs
pace Decouple from
Ground Based CNS
Veh
icle
s New Airframes, Materials and Propulsion
Refuse to Crash Avionics
2006 2008 2015 2025
Risk Based Screening
Self Separation
Integrated Aviation and Border Security Functions
Two Aircraft on Same Runway
Market Based Flow Management (NASDAQ)
Secu
rity
&
Safe
ty
Market for Environmental Credits
Environmental Ground Equipment & Operations
Noise Reducing Operations
Airp
orts
Revise AIP including Regional Capacity
PlanningAutomated Aircraft Taxi & Surface Management
Comprehensive Airport Program Model Airport of the FutureWith Transparent Screening
Proa
ctiv
e Sa
fety
Man
agem
ent C
ultu
re w
ith
Non
-Pun
itive
Dat
a Sh
arin
g &
C
ompr
ehen
sive
FA
R R
evie
w
Network EnabledCoordinated
Response
Fuzzy logic to manage Weather uncertainty
Routine Use ofRemote Pilots
Performance Based Services
Automated Maneuvering to avoid Mid-air collisions
Formation Takeoff & Landings
Exception Handling Services
Near all weathertakeoff & landing
Vision
•Aircraft can self separate with or without pilots and when necessary control can be assumed from the ground
•Customers and operators are fully informed with increased options to self-manage their ability to meet their needs
•All communities are connected into the global air transportation network
Vision
•Aircraft can self separate with or without pilots and when necessary control can be assumed from the ground
•Customers and operators are fully informed with increased options to self-manage their ability to meet their needs
•All communities are connected into the global air transportation network
Airs
pace Decouple from
Ground Based CNS
Veh
icle
s New Airframes, Materials and Propulsion
Refuse to Crash Avionics
2006 2008 2015 2025
Risk Based Screening
Self Separation
Integrated Aviation and Border Security Functions
Two Aircraft on Same Runway
Market Based Flow Management (NASDAQ)
Secu
rity
&
Safe
ty
Market for Environmental Credits
Environmental Ground Equipment & Operations
Noise Reducing Operations
Airp
orts
Revise AIP including Regional Capacity
PlanningAutomated Aircraft Taxi & Surface Management
Comprehensive Airport Program Model Airport of the FutureWith Transparent Screening
Proa
ctiv
e Sa
fety
Man
agem
ent C
ultu
re w
ith
Non
-Pun
itive
Dat
a Sh
arin
g &
C
ompr
ehen
sive
FA
R R
evie
w
Network EnabledCoordinated
Response
Fuzzy logic to manage Weather uncertainty
Routine Use ofRemote Pilots
Performance Based Services
Automated Maneuvering to avoid Mid-air collisions
Formation Takeoff & Landings
Exception Handling Services
Near all weathertakeoff & landing
Baseline andAssess Today’s
Performance
FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 FY 24
DEVELOP
DEVELOP
DEVELOP
DEVELOP
DEVELOP
DEVELOP
DEVELOP
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
Research , Analysis, and Demonstrations(Research $)
Enhanced System Operations to Meet NGATS Goals(Operations $)
Note: Segments are defined by their operational dateSpecific start dates and implementation timelines vary by IPT and solution element
Segment 1
Segment 2
Segment 3
Segment 4
Segment 5
Segment 6
Segment 7
Spec
Spec
Spec
Spec
Spec
Spec
Spec
FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 FY 24
DEVELOP
DEVELOP
DEVELOP
DEVELOP
DEVELOP
DEVELOP
DEVELOP
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
IMPLEMENT
Research , Analysis, and Demonstrations(Research $)
Enhanced System Operations to Meet NGATS Goals(Operations $)
Note: Segments are defined by their operational dateSpecific start dates and implementation timelines vary by IPT and solution element
Segment 1
Segment 2
Segment 3
Segment 4
Segment 5
Segment 6
Segment 7
Spec
Spec
Spec
Spec
Spec
Spec
Spec
• Define the “What”• Architect & Analyze• Define Solutions• Execute & Measure
Define Concept of Operations;
Identify Future
Capabilities and Outcomes
Develop EA; Identify Gaps and Overlaps; Determine Research and Program Needs
Analyze AlternativeSolutions and Assess
TradeoffsPolicy, Portfolio, Roadmaps,and Business Cases
2025 – International Harmonization
• Successful NGATS implementation will require significant coordination between the U.S. government and industry and foreign governments and industry.
• We must develop truly ‘international’ standards for aircraft, required equipage, and operational paradigms.– Because of residual value concerns, this is an issue even for
non-international carriers.
• Aeronautics companies must bear this in mind, paying more attention to other parts of the world.
• This will require placing increased emphasis on the needs of other countries and coordinating with key regions for the continued competitiveness of U.S. industry.
Notional NGATS Funding Profiles
Profile “C”:Major program phases and funding required
2006 2011 2016 2021 2026 2031
Budget Runout @ 3%NGATS BudgetCommitted Budget
$
Profile “B”:Moderate constant resource increase required
2006 2011 2016 2021 2026 2031
Budget Runout @ 3%NGATS BudgetCommitted Budget
$
Profile “A”: No new funds; Live within budget runouts
2006 2011 2016 2021 2026 2031
Budget Runout @ 3%NGATS BudgetCommitted Budget
$
2025 Fleet Predictions • Overseas demand for aircraft will by far outpace U.S. domestic
demand over the next 20 years– Airbus predicts that 72 percent of the demand for new aircraft though
2025 will be outside of the United States– Boeing forecasts that 66 percent of the demand will be outside of the
United States
• Of new aircraft needed, the United States will need 28 percent, Europe will need 32 percent, and Asia-Pacific countries will need 27 percent.
• Boeing predicts that the world passenger fleet will double in the next 20 years to almost 35,000 airplanes.
• The world freighter fleet will double over the next 20 years, from 1,766 to 3,456.
• By 2025, there will be more RPKs to/from the U.S. than within the U.S.
Aligning Incentives Between Providers and Users
Productive Efficiency
Allocative Efficiency
Users ATMProviders
ATM Costs
User Charges
Transparency Budgets
Analysis of NAS Capacity Constraints
• We know that there are many facets of National Airspace System (NAS) capacity– Terminals, Runways, Taxiways, En Route sectors
• At a macro level, for this analysis, we have lumped capacity into only two categories: en route and airport
• What we’d like to see is which of these two categories constrains NAS performance first and to what degree
• We also want to investigate characteristics of the traffic when the NAS performance is constrained
Capacity Analysis Approach
ASMs(available seat miles)
RPMs(revenue passenger miles)
Enplanements(revenue passengers boarding an aircraft)
Flights
Load Factor Load Factor
Average Aircraft Seats
Average Stage Length
Avg. Stage Length, Avg. Aircraft Seats
Average Stage Length, Average Aircraft Seats
Load Factor
One single-stage flight consists of two airport operations(takeoff and landing) plus a number of en route operations(ATC communications). The total time required for takeoff, travel through the NAS and landing is calculated for every flight (commercial and general aviation).
Capacity Analysis Metrics
• “Unconstrained demand” represents the public’s desire for air transportation
– The FAA’s Terminal Area Forecast, based on socio-economic data, does not consider whether future NAS capacity will be sufficient to accommodate all the demand
– Capacity constraints will force some of the demand to be left unsatisfied
• Our composite capacity metric is “feasible throughput” which is measured in terms of number of flights
– Flights are eliminated from the future flight schedule after a specified airport delay tolerance or sector capacity is reached
Fred’s Visualization
3X Scenario Results
100%
65% 66%
82%
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Unconstrained Demand Both Constraints Airport Constraints Only Sector Constraints Only
Feas
ible
Thr
ough
put (
fligh
ts)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dem
and Satisfied (% of U
nconstrained)
Feasible Throughput % Demand Satisfied
Summary of Capacity Constraints Analysis3X Demand
Category3X Baseline
Demand
3X Feasible Throughput (Airspace
Constrained)
3X FeasibleThroughput
(Airports Constrained)
3X FeasibleThroughput
(Airports and Airspace
Constrained)
Flights in NAS 173,980 142,782
31,198
18%
114,156 112,595Number of
Flights Trimmed N/A 59,824 61,385
% of Flights Trimmed N/A 34% 35%
•Assuming only FAA airport capacity benchmark report airport capacity improvements and no airspace capacity improvements, the portion of demand that cannot be satisfied ranges from 18% to 35%.
•Note that the unsatisfied demand for the Airport Constrained and the Airport/Airspace Constrained cases are almost identical.
Impact on U.S./International Traffic3X Demand – Airports/Airspace Constrained
Category International Outbound
Flights
International Inbound Flights
International Overflights
3X Unconstrained
Demand
8,100 7,400 20,106
3X Feasible Throughput
6,012 5,550 20,044
Number of Flights Trimmed
2,088 1,850 62
% of Flights Trimmed
26% 25% 0%
• Approximately ¼ of both International Inbound and International Outbound flights to/from the U.S. could not be satisfied under the 3X scenario.
• The impact on International Overflights is negligible.
Reduction in INTL flights at OEP Airports3X Demand – Airports/Airspace Constrained
- 200 400 600 800 1,000 1,200 1,400
SANMD
STLDCA
PITTPAPDXLGASLCCLEBWIDENPHXME
LASHNLCVGCLT
DFWBOSSFOMC
SEAMSPDTWATLPHLORDFLLEW
LAXIADIAHJFKMIA
OEP
Airp
orts
Airport Operations (Departures + Arrivals)
3X Baseline Demand
3X Airport and Airspace Trimmed Demand
Average number of INTL flights trimmed at OEP Airports: 89Average % of INTL flights trimmed at OEP Airports: 25% Average number of INTL flights are trimmed at Top 10 OEP Airports with most INTL Ops:223Average % of INTL flights are trimmed at Top 10 OEP Airports with most INTL Ops:29%
600 800 1000 1200 1400 1600 18009
10
11
12
13
14
15
16
17
18
19
20
3X RPMs
1625
9.92025
1220
10.6
Enroute-Constrained
1332
12.1
Terminal-Constrained
1072
15.1
Emissions Constrained
946
17.1
Noise Constrained
881
18.3
Constrained by All
836
19.3
RPMs (billions/fiscal year)
yiel
d (2
005 c
ents
)
demand curve at 3X RPM
APO Forecast Extrapolated from APO
3X Constraints AnalysisYield and Consumer Surplus
600 800 1000 1200 1400 1600 1800
10
11
12
13
14
15
16
17
18
19
RPMs (billions/fiscal year)
yiel
d (2
005 c
ents
)
FAA Forecast (Mainline+Regional)
Extrapolated from APO
2004
2017
2025
2032Elasticity = -1
NXTE
NTE
XTE
TET
E
Constrained by:N - noiseX - emissionsT - terminalE - enroute
As demand grows while constraints limit supply, prices will rise
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
Noise,emissions,terminal,enroute
noise, term,enr
emiss, term,enr
term, enr term enr
2016 2018 2019 2022 2022 2028Constraint (year of emergence)
NPV of Constraints Reduction (3X)
NPV
0 200 400 600 800 1000 1200 1400 1600 18009
10
11
12
13
14
15
16
17
18
19
20
$8.6B
$11.0B
$18.0B
$2.1B
$36.1B
$32.5BAll solved+$108.3B
Noise, emissions, terminal solved;+$75.8B
Noise, emissions, enroute solved; +$39.7B
Noise, emissions solved; +$37.6B
Noise solved; +$19.5B total
Emissions solved; +$8.6B consumer surplus (const 2005$)
Nothing solved
RPMs (billions/fiscal year)
yiel
d (2
005 c
ents
)
demand curve at 3X RPM
3X Constraints AnalysisYield and Consumer Surplus
JPDO Cost Workshops
• A detailed “bottom-up” design cost for a program of this complexity, duration, and number of “known unknowns” is not yet practicable
• Objective of Cost Workshops are to make first order engineering estimates of:
– required total funding– contingency reserves– funding profile shape, magnitude, and duration with
acceptable performance outcomes and risks
• Continually justify requirements through political and technical reviews
Cost Workshop 1 – Key Policy Issues• Who (NASA or FAA) will do the research?
– Distribution of funding and people?– Are the combined resources available?
• Research should account for international harmonization issues and requirements
• Industry wants to work collaboratively to develop specifics of the architecture
• Successful execution to the NGATS schedule requires strong linkage & leadership from fundamental research through decision points to certification and implementation
• FAA must gain commitment from other agencies
Cost Workshop 1 – Key Policy Issues• FAA commitment must be demonstrated
– Exploit existing aircraft capabilities, e.g., RNP1 procedures– Develop integrated process representing all FAA players and
necessary steps for implementation (including certification)– Harmonize international standards to preclude extra
equipage (impacts residual aircraft values)
• NAS users have short ROI horizons– Less than one year for existing equipment– Approximately 1 – 3 years for new equipment– Implication: early adopters will need hard incentives
• Subsidies, tax breaks, financing options, targeted deployments for early adopters
• An NGATS service roadmap is needed that– Specifies required equipage in specific time increments and airspace
accessibility– Bundles capabilities with clearly defined anticipated benefits and
needed investments– Uses a 4 – 5 year equipage cycle to synch
with maintenance schedules
Questions?