Financial Administration Federal Aviation Incentives for NextGen … · Federal Aviation Administration 3 Financial Incentives for NextGen Avionics 16 June 2011 Introduction • Proposal:

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Date:

Federal AviationAdministrationFinancial

Incentives for NextGen Avionics

ADS-B Case Study

2011 USA-Europe ATM Seminar

Joseph Post, Office of Systems Analysis

16 June 2011

Federal AviationAdministration

2Financial Incentives for NextGen Avionics16 June 2011

Outline

Policy Framework

Simulation Experiment

Business Case Results



Introduction

• Proposal: Public funds may be used to subsidize equipage in the event of "market failure"

• Externalities: A type of market failure

– "Free riders" - benefits also accrue to those who do not equip

• Capacity

• Safety

– Environmental benefits/costs - may not be considered in operator's business case

– Passenger time savings - may not be considered in operator's business case

Market Failure occurs when the allocation of goods or services by a free market is not efficient. An outcome other than that arrived at by the market may lead to a net societal gain.



The "Benefits Gap"

Avera

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efi

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TotalBenefits

Cost to the Government and the Operator

Discounted Costs and Benefits per Equipped Aircraft



The "Benefits Gap"

Avera

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ost

an

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efi

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TotalBenefits



Cost to the Operator



The "Benefits Gap"

Avera

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efi

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TotalBenefits


Other societal benefits

Spillover benefits to other users

Benefits to the equipped user





The "Benefits Gap"

Avera

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ost

an

d B

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efi

t (P

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TotalBenefits







Benefitsto User

Benefits Gap



Possible Cost/Benefit Relationships

$

Cost to Equip


$

Cost to Equip

$ Cost to Equip

Case 1:

Benefit to Equipped User >Cost to Equip

Case 2:

Total Societal Benefit >Cost to Equip >Benefit to Equipped User

Case 3:

Cost to Equip >Total Societal Benefit

No justification for

financial incentives

No justification for

program

Benefits to the equipped user Spillover benefits to other users

Financial incentives

justified

Potential

Financial

Incentive



Case Study Objective

• Estimate the costs and benefits of ADS-B Out equipage in Gulf of Mexico (GoMex) high altitude, non-radar airspace– Costs to equip– Benefits

• For those who equip• For those who don’t equip• For society at large

• Determine if there is a case for public investment in ADS-B Out avionics for aircraft that use GoMexairspace

This is a "high level" analysis. More detailed

work is required for airspace and route design.



Gulf of Mexico Surveillance Coverage

Radar Only Radar Plus ADS-B



Relevant Airspace



2009 GoMex Traffic Summary

Based on CY 2009 ETMS traffic sample

Excludes operators with less than one flight per day

COA, DAL, and AAL account for 57% of traffic

No other domestic carrier accounts for more than 2%

Carrier Code Carrier Avg. Operations/Day Share (%) Cumulative Share (%)

COA CONTINENTAL AIRLINES 94.4 28.3 28.3

AAL AMERICAN AIRLINES 61.3 18.4 46.6

DAL DELTA/NORTHWEST AIRLINES 34.6 10.4 57.0

GA General Aviation 22.8 6.8 63.8

AMX AEROMEXICO 15.5 4.6 68.5

MXA MEXICANA 13.5 4.0 72.5

MILITARY 7.8 2.3 74.8

JBU JETBLUE AIRWAYS 7.8 2.3 77.2

AWE AMERICA WEST AIRLINES 7.3 2.2 79.4

UAL UNITED AIRLINES 6.9 2.1 81.4

GWY USA 3000 AIRLINES 6.8 2.0 83.5

TAI TACA INTERNATIONAL AIRLINES 6.6 2.0 85.4

ACA AIR CANADA 5.6 1.7 87.1

FFT FRONTIER AIRLINES 4.9 1.5 88.6

SWA SOUTHWEST AIRLINES 4.7 1.4 90.0

TSC AIR TRANSAT A T INC 4.5 1.4 91.3

SSV SKYSERVICE AIRLINES 4.2 1.3 92.6

SWG SUNWING AIRLINES INC 3.8 1.1 93.7

ATE AEROMEXICO TRAVEL 2.5 0.8 94.5

SCX SUN COUNTRY AIRLINES 2.5 0.7 95.2

WJA WESTJET 2.3 0.7 95.9

AFR AIR FRANCE 1.9 0.6 96.5

CJA CANJET AIRLINES 1.8 0.5 97.0

NKS SPIRIT AIRLINES 1.8 0.5 97.6

IBE IBERIA 1.5 0.4 98.0

DLH LUFTHANSA 1.2 0.4 98.4

KLM KLM ROYAL DUTCH AIRLINES 1.2 0.3 98.7

DHL ASTAR AIR CARGO 1.1 0.3 99.1

FDX FEDERAL EXPRESS 1.1 0.3 99.4

ASA ALASKA AIRLINES 1.0 0.3 99.7

TOM 1.0 0.3 100.0

Total 333.9



Fleet Forecast, Continental AirlinesCONTINENTAL - Number of Aircraft - (Including Continental Micronesia)

Year End

Fleet Projected Total Fleet as of Year End

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Domestic Service _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

737-300 27 16 16 0

737-500 44 24 0

737-700 36 36 42 53 63 63 63 63 63 63 63 63 63 63 63 63

737-800 117 118 125 127 128 128 128 130 132 134 138 140 140 135 135 130

New Single Aisle 800 8 16 25 30

737-900 29 42 42 44 45 45 45 45 45 45 45 45 45 45 45 45

757-300 17 17 17 17 17 17 17 17 17 17 17 17 14 10 5 0

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Domestic Total 270 253 242 241 253 253 253 255 257 259 263 265 270 269 273 268

International Service

767- 200 10 10 10 10 5 0

767- 400 16 16 16 16 16 16 16 8 2 0

777-200/ 300 20 20 22 22 22 25 26 26 26 26 26 26 26 26 26 26

New Single Aisle 900 5 15 25 35 45

757-200 41 41 41 41 41 41 41 41 41 41 41 35 22 12 0

787-8 2 7 10 11 12 14 18 20 22 24 26 28 30

787-9 2 10 14 22 23 24 25 26 27 28

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

International Total 87 87 89 91 91 92 96 97 97 107 110 112 112 115 116 129

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Total Fleet 357 340 331 332 344 345 349 352 354 366 373 377 382 384 389 397

Aircraft assumed to be equippedExcerpt from Jan. 2010 FAA Fleet Forecast



Fleet Forecast, DAL/NWA AirlinesDELTA (WITH NORTHWEST) - DOMESTIC SERVICE - Number of Aircraft

Year End


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023


737-700 5 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10

A-319 57 57 57 60 62 62 62 62 62 62 62 62 62 62 62 62

New Single Aisle 700 / 319 5 15 20 20 25

737-800 71 71 71 71 71 80 95 105 115 125 135 145 145 145 145 145

A-320 69 71 71 71 71 80 95 105 115 125 135 145 145 145 145 145

New Single Aisle 800 / 320 15 20 30 40

757-200 182 166 166 166 166 166 166 166 166 166 166 155 135 100 80 30

757-300 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16

New Single Aisle 900 / 321 10 35 60 80 110

DC-9-10-50H 77 65 45 25 0

MD-80 114 110 110 100 100 90 60 55 40 30 25 15 0

MD-90 16 17 17 17 17 17 17 17 17 17 17 17 5 0

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Domestic Total 607 583 563 536 513 521 521 536 541 551 566 580 583 578 588 583


747-200 1 0

747-200F 11 3 0

747-400 16 16 16 16 16 16 16 14 12 10 8 6 4 2 0

767-300 79 79 79 79 75 75 71 71 60 45 35 25 10 0

767-400 21 21 21 21 21 21 21 21 21 21 21 21 21 15 10 5

777-200 10 16 17 18 18 19 20 20 22 24 26 28 28 28 32 34

787- 8 (or A-350) 1 7 10 13 20 30 40 50 60 70 85 100 110

787- 9 (or A-350) 2 5 10 15 20 25 30 35 40

A-330-200 / 300 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32 32

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____


_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Total Fleet 777 750 728 703 682 694 694 716 723 733 753 772 773 770 797 804

Excerpt from Jan. 2010 FAA Fleet Forecast Aircraft assumed to be equipped



Fleet Forecast, American AirlinesAMERICAN - Number of Aircraft

Year End


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023


757-200 124 124 124 124 124 124 124 124 124 124 124 100 70 40 10 0


737-800 77 108 152 172 185 200 230 260 300 340 350 350 350 350 350 340


MD-80 282 244 190 165 140 130 100 70 30 10 10 0

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Domestic Total 483 476 466 461 449 454 454 454 454 474 484 485 480 480 480 480


767-200 15 15 15 15 15 15 15 12 2 0

767-300 58 58 58 58 58 58 58 58 50 36 22 0

777-200/300 47 49 50 51 54 56 56 56 56 56 56 56 56 58 60 62

787-9 12 22 36 48 60 75 90 97 107 111 116

A-300 25 0

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____


Total Fleet 628 598 589 585 576 595 605 616 610 626 637 631 633 645 651 658

Excerpt from Jan. 2010 FAA Fleet Forecast Aircraft assumed to be equipped



Aircraft Equipped with ADS-B

7401,058Total

1010B787-8

1616B757-300

30166B757-200

8080B737-800

1010B737-700

8080A320Delta/Northwest

1010B787-8

017B757-300

041B757-200

4545B737-900

128128B737-800

6363B737-700Continental

1212B787-9

5656B777-200/300

0124B757-200

200200B737-800American

20232014TypeCarrier



Treatment Case

Base Case

Airspace Procedures

• Current Procedures– 7110.65, Section 8 - Caribbean ICAO Region, Longitudinal Separation– Turbojets at or above FL 200

• Mach Number Technique, or• 15 min.

– Turbojets below FL 200• 20 min.

– Nonturbojet Operations• 20 min.

• Proposed Procedures– ADS-B Performance-Based Route Strategy, June 2010 Draft, Longitudinal Separation– Low Equipage (0-30%), "Better Access to Airspace"

• No new routes, dedicated altitudes, or special sequencing• 5 nmi for coincidental DO-260B a/c pairs, all altitudes• Current separation for all other a/c pairs

– Medium Equipage (30-70%), "Dedicated Altitudes"• Dedicated altitudes for DO-260B equipped aircraft (e.g., FL 370 and 390)• 5 nmi on dedicated altitudes• Current separation elsewhere

– High Equipage (>70%), "Dedicated Routes"• Dedicated performance-based routes, FL 290 to 410• 5 nmi on dedicated routes• Current separation elsewhere



NASPAC Modeling

• NASPAC system-wide model used to estimate delay savings of increased ADS-B Out equipage and 5 nmilongitudinal separation

• Two cases examined:– Baseline Case (No Financial Incentives)

• No aircraft equipped with ADS-B DO-260B• 15 min. separation for all a/c

– Treatment Case (Financial Incentives)• Non-retiring COA, DAL, and AAL a/c at end of FY13 are equipped

with ADS-B DO-260B• 10 year service life• "Dedicated altitudes" (medium equipage) airspace rules

– Equipped aircraft use dedicated routes or altitudes– Longitudinal separation minima

» 5 nmi for all DO-260B a/c» 15 min. for all other a/c at or above FL 200



Simulated Flight Trajectories

August 13 2014

• FY14 and FY23 traffic scenarios

• Eight days modeled for each year

• Current route structure• "Gate Finder" algorithm used

to identify major traffic flows and create in trail restrictions

• GoMex airborne delay valued using taxi factors

– i.e., we assume all GoMexairborne delay will be absorbed on the surface (conservative)

• Propagated delay included



Simulation Delay Summary

0

2

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Base Treatment Base Treatment Base Treatment Base Treatment

Equipped

Carriers

Other

Operators

Equipped

Carriers

Other

Operators

Gulf Airspace Other Airspace

Avg

era

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Dela

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min

/flig

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Airborne Delay

Departure Delay

Pushback Delay

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6

8

10

12

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Base Treatment Base Treatment Base Treatment Base Treatment

Equipped

Carriers

Other

Operators

Equipped

Carriers

Other

Operators

Gulf Airspace Other Airspace

Avg

era

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Dela

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min

/flig

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Airborne Delay

Departure Delay

Pushback Delay

2014 2023



Business Case Cash Flows (FY10$M)

$0

$100

$200

$300

$400

$500

$600

Benefits

To

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Be

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PV

(m

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Cost to Equipped Operators

Present

Value FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Benefits to Equipped Carriers $120.2 $0.0 $14.5 $15.5 $16.5 $17.4 $18.4 $19.3 $20.3 $21.2 $22.2 $23.1

Benefits to Other Carriers $42.7 $0.0 $13.2 $11.5 $9.8 $8.1 $6.4 $4.7 $3.0 $1.3 -$0.3 -$2.0

Benefits to Public

Passenger Time Savings $0.0 $56.7 $56.9 $57.2 $57.4 $57.6 $57.9 $58.1 $58.3 $58.6 $58.8

CO2 $0.0 $2.7 $2.7 $2.7 $2.7 $2.7 $2.7 $2.7 $2.7 $2.7 $2.7

Total Public Benefits $395.9 $0.0 $59.4 $59.6 $59.9 $60.1 $60.3 $60.5 $60.8 $61.0 $61.2 $61.5

Total Benefit $558.8 $0.0 $87.1 $86.6 $86.1 $85.6 $85.1 $84.6 $84.1 $83.6 $83.1 $82.6

Total Equipage Cost $112.1



Conclusions• A theoretical framework has been developed for analyzing financial

incentive proposals

• The amount that may be subsidized equals

Avionics Cost - Direct Benefit to Equipped Operator

in cases where:

(1) The overall societal benefit >= Total Project Cost and(2) Avionics Cost > Direct Benefit to Equipped Operator

• Analysis suggests significant potential user benefit from reduced separation in the Gulf of Mexico enabled by ADS-B Out

• Magnitude of direct benefit suggests financial incentives may not be warranted in this case

– Issue: Long pay-back period– Issue: Allocation of passenger time savings

• Changes to assumptions could lead to a different conclusion

Questions?

Documents

Financial Administration Federal Aviation Incentives for NextGen … · Federal Aviation Administration 3 Financial Incentives for NextGen Avionics 16 June 2011 Introduction • Proposal: