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OCR for page 101
101 Figure 5.15. Time impacts of eliminating short-haul flights, by assumed access penalty, 4-day average. 50,000 seat-min of delay on average and over 80,000 seat- demand at any particular airport can realize benefit for some min. The savings exceed the access time penalty unless diver- flights they control by eliminating or rescheduling other sion penalty exceeds 5 hours. As the actual extra time involved flights, but this is generally a small fraction of the total bene- cannot be more than a hour or so, one would need to value fit (1). Moreover, in a competitive, unregulated, industry, the biz jet passengers' unit time cost at more than 5 times that of elimination of a flight by Airline A may be offset by initiation queuing delay to justify their presence at SFO. of a new service by Airline B. In this event, A has not only lost the operational benefit from its schedule change, but it also now faces stronger competition. 5.3 Implications The misalignment between authority and benefit realiza- It has been shown that changing the schedule at SFO, tion is greatest in airports that have both substantial conges- whether by eliminating short-haul flights, consolidating flights, tion and an unconcentrated distribution of flight traffic. In or diverting very small aircraft, can reduce delays and often the United States, such airports are found primarily in the does so at a reasonable cost in terms of the extra line-haul time, coastal mega-regions. By virtue of their high densities and schedule delay, and access time that such changes require. land constraints, these are places with high levels of flight traf- There is strong evidence that the conclusion generalizes. For fic relative to airport capacity. On the other hand, the periph- any airport with high delays due to inadequate operational eral location of coastal airports discourages their use as hubs, capacity, eliminating flights during busy periods will reduce which tend to be more concentrated. Thus, in addition to the delays considerably. The quantity of this benefit, as well as the other conditions--such as strong competition from other cost of losing any particular flight, will vary from flight to flight, modes--that make coastal mega-region airports unique, time period to time period, day to day, and airport to airport. such airports face unique challenges in encouraging their There is, however, a wide body of research and experience sug- users to schedule flights that appropriately reflect the costs of gesting that, in many circumstances, the benefit greatly exceeds congestion. the cost, and that the cumulative gain from such changes would be impressive. 5.4 The Role of Airport Managers What could be done to realize these gains? If the answer to in Increasing Capacity this question were easy, it would have already been done. Broadly speaking, in the current system there is no actor who Airport operators in the United States are only one element has both the authority to make the desired schedule changes of a complex set of factors that affect the creation and resolu- and the ability to realize the gains from doing so. Airlines and tion of airport capacity issues. A major, yet highly constrained other aircraft operators whose decisions determine the flight and limited, role is played by the airport managers.

OCR for page 101
102 5.4.1 Financing Enhancements 5.4.3 Restrictions Based in Law The most obvious, and best understood, role of airport Despite the tremendous impact of airline scheduling deci- operators is in providing the physical infrastructure that sup- sions on airport capacity, airport operators are very limited by ports increased airport traffic. The United States is almost federal law, regulation, and policy in their ability to control unique in providing a system of federal grants and munici- scheduling practices or aircraft size. Although a full legal dis- pal debt financing that, when combined with local public cussion of these restrictions is beyond the scope of this study, ownership of airports, provides both the capital and man- understanding the issues affecting airport operators requires agement resources needed for stable investments in infra- some discussion of the pertinent restrictions (2).35 structure at the large airports that handle most passenger In some cases, restrictive interpretation of legally enforce- traffic. These annual investments typically range from $7 to able policies may act as a capacity constraint, or at least impede $10 billion. potential solutions. The most noteworthy is the assurance of The primary financing tools used to support airport capi- AIP grant recipients to the secretary of Transportation. This tal development are debt from the tax-exempt municipal assurance is threefold: that their airports will be available for bond market, Passenger Facility Charges (PFC), the federal public use on reasonable conditions and without unjust dis- Airport Improvement Program (AIP), and retained earnings. crimination, that air carriers making similar use of an airport Together, these funding sources provide large airports with the will be subject to substantially comparable charges, and that financial capability for infrastructure development. Medium- the airport operator will not withhold unreasonably tenant/ sized airports, while having less financial capability, still retain signatory status from an air carrier that assumes obligations access to these resources, with funding levels that generally substantially similar to those already imposed on air carriers of increase with increases in passenger traffic. that classification or status. This assurance, required by Title 49 However, as is well known, adverse public reaction to air- USC 47107, and the restrictions contained in Title 49 USC craft noise and pollutant emissions at and near major airports 40116 on state and local taxes, fees, and other charges on air continues to seriously impede development of new airport travelers and air transportation, have proven to be significant infrastructure. This resistance is unlikely to decrease at the issues with local efforts to allocate traffic among airports. study area airports, and major development in the form of In general, airports are prohibited from direct regulation of new airports or new runways at existing major airports is airline routes, rates, and charges. This prohibition has been unlikely, despite the ability to adequately fund such projects. determined to include direct regulation of equipment type, fre- Still, at the core, the public management teams who operate quency of operation, time of day of operation, and aircraft airports in the United States are deeply committed to expand- environmental emissions. Airport proprietors' rights have long ing airport capacity through infrastructure development included the right to establish discriminatory fees and charges and the deployment of new technologies and procedures, for aeronautical use of the airfield. These rights have been rec- wherever possible. ognized as including the right to set minimum landing fees designed to affect various weight classes of aircraft differently, with the intent of providing incentives to reduce airfield delay 5.4.2 Market Factors during periods of congestion. A second major factor affecting airport capacity is the inter- In addition, the DOT 1996 Rates and Charges Policy (3) action of airports, airlines, and market forces. The decisions provides that an airport owner may impose a "properly struc- airlines make about which markets to serve, which aircraft tured peak pricing system that allocates limited resources types to serve them with, and the frequency of service all have using price" and may "establish fees that enhance the efficient a large impact on airport capacity. Yet, because of federal laws utilization of the airport." Similarly, the DOT's regulations on and regulations, airports are extremely limited in affecting airport noise and access restrictions (14 CFR Part 161) provide those airline decisions. that a peak-period pricing program with an objective "to align As discussed in Chapter 1 (Section 1.4.2), airport managers the number of aircraft operations with airport capacity" is not are often disconnected from decisions made by the airlines an "access restriction" (4). In a series of decisions in the Mass- concerning where to concentrate hubbing activities and where port Program for Airfield Capacity Efficiency (PACE) pro- to eliminate them. As noted in that section, fluctuations in ceeding, where the airport operator sought to use landing airline policies have significantly affected management of fees to regulate airfield congestion, the DOT concluded that, delay (congestion) at SFO, LGA, and JFK. The need to clarify "landing fee structures that vary from the traditional weight- the airport manager's role in the determination of the num- based approach are permissible so long as the approach ber of flights, and to forge a cooperative relationship with the airlines in the provision of those flights, has emerged as major 35 A thorough legal discussion of these issues can be found in the DOT NPRM on themes of this research. its policy on airport rates and charges.