overview: airport congestion management concepts regional airport planning committee april 27, 2007...
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Overview: Airport Congestion Management Concepts
Regional Airport Planning CommitteeApril 27, 2007
Oakland, California
AIRPORTS COUNCIL INTERNATIONALNorth America
1775 K Street, NW, Suite 500Washington, DC 20006
2
Discussion Topics
• Framework for thinking about congestion management
• Who plays what role?
• What are the tools available?
• What are the experiences and lessons learned?
• Some observations in the context of other presenters
3
Understanding the Playing Field
Administrative and Regulatory Approaches
“Market-based” Approaches
Federal Government
•Slots – DCA, LGA, ORD, JFK•Slot “Offspring” – ORD,
LGA•Lottery-oriented solutions•Conceptual discussions
about aircraft size minimums
• No federal authority since deregulation
• LGA auctions or fees run by FAA
– would be experiment– authority sought in FAA
reauthorization
Local Airport Operator
• Local limits – Long Beach, White Plains
• Concepts for minimum aircraft size
• “Up-gauging” incentive concepts
• Lease-based incentives – Possible PANYNJ route for LGA
• Regionalism solutions
• Minimum landing fees – various airports
• Auction and peak hour concepts floated by the PANYNJ in 2001 - LGA
• PACE program and the environmentally driven peak period pricing concept not yet activated – BOS
Wh
o I
mp
lem
en
ts?
How to Implement?
4
How - Administrative and Regulatory
Who - Federal Role and Limitations
• FAA has historically leaned toward administrative/regulatory solutions
– No FAA authority from Congress to impose fees
– Whatever federal agencies may have had was lessened by the Airline Deregulation Act
– Slots under the HDR fell out of favor...Slot “offspring” emerge
• FAA has some authority by virtue of the charge to run ATC efficiently – FAA has not really been challenged here
– When FAA has sought administrative authority to manage congestion it has been granted to some extent
– Often the measures are implemented as “short-term fixes”
• ORD “transitional” program effective?
– The measurements of effectiveness are usually incomplete
5
How - Administrative and Regulatory
Who - Airport Perspective
• Airline Deregulation Act limits airports too, although differently than federal agencies
• Airport Noise and Capacity Act of 1990 (“ANCA”) explicitly seeks to minimize or eliminate airport access “restrictions”
– Part 161 for noise purposes only?
– Part 161 path is not an easy or obvious one
• No doubt that an airport has a very high burden of proof both in taking action and in explaining why the proposed solution is acceptable
– Catch-22 problem: If the FAA has not initiated corrective action for congestion and is responsible for “efficiently” running ATC, how can FAA find that an airport is acting reasonably ?
• May be a “programmed failure” approach in the absence of FAA asking the airport to act
6
How - Administrative and Regulatory
Who - PANYNJ’s Concept for LaGuardia ManagementA New Path?
1. Finite capacity - Universal agreement that LGA is congested and there is no material capacity enhancing alternative
2. Regionalism has been and continues to be actively pursued – Perimeter rule, G.A. designated airports, JFK marketing and growth, ground access to less congested airports (e.g., AirTrain), airport acquisition (Stewart)
3. FAA limitations - Seems unlikely FAA will move forward on its NPRM that would give FAA control of LGA access terms, and legislation giving FAA new authority seems a limited probability
4. “Clear” Authority - Airports have more legal control over the leasing of facilities than airfield access regulations
Concept - The PANYNJ is considering a concept under which a lease obligation would include certain operation performance factors that manage congestion
7
How - “Market-Based”
Starting Point for Airport Fees: Rate-Setting vs. “Pricing”
1. Use of “pricing” to allocate aeronautical resources or to manage congestion is rare
2. Airport fees are generally established as cost-recovery rates
3. Airport fees are analogous to public utility rates (e.g., electricity), but without any time-of-day differentials
4. U.S. DOT has become a “reactive regulator” of airport fees over the years
5. U.S. DOT has not clearly endorsed concepts generating revenue in excess of “historical cost”
– Various concerns about “revenue positive” solutions
– Inherent limitation on effectiveness of “revenue neutral” solutions
8
How - “Market-Based”
Baseline Landing Fees in Context
• Fees are based on aircraft size, in particular the gross weight of an aircraft
• Weight-based fees are a product of evolution
– Today, weight-based fees are supported from an “ability to pay” perspective
• The range of payments among users is enormous
– For example, between a commuter aircraft and a wide-body aircraft a fifteen-fold difference is common
• There is generally no difference between peak, off-peak, or nighttime fees
9
How - “Market-Based”
Two General Approaches
1. Set the price at a level to produce the desired results
• Generally referred to as “peak pricing” or “congestion pricing”
• Minimum fees are the most simplified version of this
• Massport has been down this path twice for Logan International Airport
2. Define the results sought and use an auction to determine allocation of supply
• Lots of non-airport experience in auctions
• Given “segmented authority”, would appear to require the cooperation of both FAA and an airport on many fronts
10
Massport’s PACE Program - Goals
Delay Reduction - Customer service and environmental drivers
Aircraft Size - Encourage the use of larger aircraft
Hubbing - Minimize Logan’s traditional role as a New England connecting hub to reduce local impacts
Regionalism – Hanscom, MHT, PVD, ORH
Aircarrier
Com-muter
G.A.
Logan’s Traffic Mix
PACE “shifted” the fee schedule, but did not have time-of-day variations in Phase 1
Phase 1 was “revenue neutral”
Phase 2 never happened
11
Massport’s PACE Program - Results
• Limited experiment—Program was in place for only 6 months.
• Demand effects—In line with estimates
– General aviation: 30 - 50% of traffic eliminated
– Commuter/regional: roughly 10% reduction in traffic
• Flights reduced in “saturated” routes
• Few flights eliminated in peak periods
– Air carriers: no changes, as expected
• Delay reduction—Results confirmed that small reductions in demand produce large decreases in delays
• Regional effects—Not determined in short period of implementation
12
Logan Demand Management Over a Decade Later
Prospective Peak Fees
• Adoption of a “Demand Management Plan” was a condition of environmental permits for a new runway
• Key feature of the plan is a “revenue neutral” peak hour fee
• The actual levying of the fees is triggered by traffic levels, which have not yet been achieved
– Post 9/11 downturn
– Regionalism success story
– Key airlines in Chapter 11
• Well conceived monitoring and early warning programs
• Untested in terms of effectiveness and “longevity” in the context of revenue neutrality
• Small community issues unresolved
13
Why is Congestion Pricing Appealing?
Part 1
• The traditional weight-based fee approach to landing fees:
– Contradicts most experiences in society
– Pretends that resources are not scarce
– Cannot be explained, except by historical accident
Part 2
• Limited congestion pricing experience makes it often perceived as a panacea
• Complexities are often ignored regarding:
– Establishing a defensible pricing model
– Modeling and quantifying the potential benefits
– Estimating the potential negative effects of peak-spreading
– Addressing regional and corporate economic impacts
– Administrative and legal challenges
– Recognizing the relative costs of aircraft operations
14
Congestion Pricing Not for LGA?
The PANYNJ is “by-passing” congestion pricing, with good reason…
• Constraint of “revenue neutrality” makes little sense:
– The “peak hour” is all day
– Demand may be greater than any other airport
• Ample evidence that an unconstrained LGA would be unmanageable
• Complexities of establishing the “price” in a changing and reacting market are overwhelming
• No solution offered for smallest communities
• Perceived effects on ticket prices and airline finances
• User support appears to be zero
• Concerns about public perception, especially in regard to volume of “positive” revenue generated for this method to approach effectiveness
15
• No one-size fits all
• LaGuardia is different – Probably has limited “portability”
• Massport’s prospective approach for Logan has merit, but may prove insufficient as currently defined
• Ultimately, a mix of administrative and market-based tools would be needed
• Effectiveness means solutions cannot be “pain free”
• FAA participation/cooperation is essential with current uncertainties
• A federally authorized pilot program is the best way to cut through the complexities and test what works and what does not
Observations for Today’s Program
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