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19 larger changes in the likelihood of selecting those modes than Baseline Forecast Assumptions comparable changes in the automobile or commercial air modes--in other words, air taxi users are relatively more price- With the coefficient estimates in hand, the overall number elastic than automobile or commercial air users. While this may of trips from the ATS dataset (which was based on trips taken initially seem counter-intuitive, one must recognize that the in 1995) was scaled up to account for growth in the overall magnitude of travel between 1995 and 2007. All 1995 data val- elasticities are "point estimates" that reflect current observed ues used for automobile users were updated to 2007 values, and price levels and mode shares. For example, decreasing an air taxi increases in the time spent in terminal areas at commercial jet price of $1,200 by 1% would lead to a 3.15% increase in the airports (due to increased security measures since 2001) were likelihood of selecting that mode (which currently has less than accounted for in the commercial air mode. Then the revised 1% market share); this compares with decreasing the corre- population total (including commercial air and air taxi) was sponding commercial air price of, say, $300 by 1% leading to a combined with the coefficient estimates from the model popu- much smaller (0.18%) increase in the likelihood of selecting lations to generate estimates of trips by mode for the baseline that mode (which currently has a 52% market share). year 2007.14 Each trip is tied to specific GA and commercial air- The interpretation of the effects of income on the choice de- ports that would be relevant when making the mode choice cision is fairly difficult due to the choice-specific specification decision, so baseline estimates of air taxi activity at each of for income; this means that the direction of effect is relative to the 1,842 "VLJ-ready" airports for 2007 can be produced. These the normalized air taxi jet alternative. However, there is only estimates will be provided electronically as the appendix to one income elasticity indicating a relatively large nominal the second volume of this report, ACRP Report 17: Airports and effect (-1.86 for air taxi turboprop); in addition, there are only the Newest Generation of General Aviation Aircraft, Volume 2: a small number of travelers who selected air taxi turboprop. Guidebook. When reviewing these estimates, it is important to Consequently, it is believed that income effects in the model recognize that they account only for air taxi activity. are relatively unimportant and do not have a large effect on the overall results. To assess the overall fit of the model to the data, a "pseudo- Outlook for Air Taxi Services Utilizing R2" statistic was computed, which is somewhat analogous to Small Next-Generation Aircraft the standard R2 statistic often reported in linear regressions. The next step is to add in the new VLJ mode and prepare pro- Using a scale of 0 to 1, the statistic is an indicator of how well jections of trips by mode for the forecast years 2012 and 2017. the model fits the observed data. The pseudo-R2 estimate is Although the 2007 baseline estimates themselves do not include 0.675, which most analysts would consider quite good for a any VLJ activity by startup air taxi operators, there are in fact a multinomial logit model. number of existing startups that have already begun to use VLJs Another useful measure is to compute the implied values of or other small next-generation aircraft for air taxitype services. time for each mode. This is accomplished by dividing the com- There are a variety of business models being tried. mon time coefficient by the alternative-specific cost coefficients. The traditional "air charter" model typically involves ex- Table 16 shows the estimated value of time; these are consistent clusive rental of an entire aircraft for a fixed hourly rate that with the expectation that travelers selecting the air taxi modes covers the cost of the aircraft, including pilot salaries and fuel have higher values of time than those selecting the automobile costs. Additional costs can include taxes, repositioning fees, or commercial air modes. and overnight/waiting fees. Even if a return trip is not needed, These estimates are also generally consistent with FAA guid- there will likely be a charge for the cost of repositioning the ance on value-of-time estimates for business travelers using aircraft to its home (or other) location, and there may also be commercial air as published in its latest "Economic Values for a daily minimum charge. FAA Investment and Regulatory Decisions." They are some- The "air taxi" on-demand model involves rental of an entire what above the FAA estimates published for GA. aircraft for a fixed hourly rate, but no charges for repositioning or overnight/waiting times; all costs are built into the hourly rate. If there is a return trip, it may be on a different aircraft (or Table 16. Implied value of time estimates. even provided by a different company). This type of service may only be available between certain specified airports. Estimated The newest business model attempted by some operators is Mode Value of Time ($/hr) the "per-seat on-demand" model, which is somewhat similar Automobile 10.02 Commercial Air 44.04 Air Taxi Piston 40.78 14 Where necessary, small adjustments were made to the alternative- Air Taxi Prop 72.53 specific constants to obtain passenger trip estimates for each mode Air Taxi Light Jet 78.97 that were consistent with the observed baseline of 2007 trips.