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27 mined. As he explained it, the administration was trying to take eral factors, airport congestion is certainly among the most into account "a number of different perspectives but always prominent causes. with an eye to reducing disruption to the system." These per- spectives span those of the panelists. 1.5.1 Delay Times at the The roles these multiple voices should play were discussed. Mega-region Airports The airport operator said that in finding a solution, "we can't do it unilaterally. The airport operator should have a Six of the coastal mega-region airports are on the list of strong voice, and . . . complement the administration." This those with the 10 longest average 2007 taxi-out times--in order is because "the airport operator is in the best position to know from longest: JFK, EWR, LGA, PHL, BOS, and IAD. JFK had what is right and wrong for their airport." The airline repre- over 37 min on average, IAD just under 20 min. These com- sentative noted that a solution must "take into consideration pare with the average across all airports of 13.8 min in 1995 and the investment being made at the airports (by airlines). . . . 16.7 min in 2007. The patterns are similar with taxi-in times, Historic investments, historic operations, are something that though the range is considerably smaller and only JFK, EWR, we need to recognize." An aviation consultant echoed that and LAX among the coastal mega-region airports are among statement, adding, "there are clear distributional issues the 10 longest. Although it is arguable as to the portion of between the airports and the airlines." these delays that is directly attributable to airport congestion, it is clear that they represent considerable costs to the airlines and, in turn, to the air passengers both directly (through extra 1.5 Costs to Travelers of Airport time spent traveling) and indirectly (through higher fares Congestion and Delays charged for these flights to cover costs). See Figure 1.6. Airport congestion causes air passengers to incur addi- Regular increases in taxi-out and taxi-in times due to con- tional costs in several forms. Routine peak-period conges- gestion can be accommodated by adjusting scheduled flight tion increases the time between boarding and takeoff, and times, but at a cost to passengers of additional travel time this additional time is built into airlines' schedules for con- and to the airlines of additional crew, equipment, and fuel gested airports. According to a recent DOT report (7), the costs. However, the larger cost of airport congestion is more average taxi-out time (i.e., time between leaving the gate and likely attributable to the additional random delays beyond takeoff) increased by almost 3 min per flight between 1995 scheduled times. These are caused by a confluence of depar- and 2007 (21% increase), whereas taxi-in times increased by ture schedules that create flight operations at or near maxi- approximately 1.5 min (25% increase) over the same period. mum airport capacity and any event that reduces capacity. The Although some of these changes could be the result of sev- "unexpected" delays result in additional costs to passengers Perceived Cost of Delay (dollars) Mega-region Airports Figure 1.6. The perceived cost of delay per trip to or from major mega-region airports in 2007(5).

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28 and to the airlines. All of these costs can be quantified to some share for the mega-regions of the $40.7 billion/year impact degree and, in fact, represent considerable costs in total. cited in the Senate JEC report is approximately $7.7 billion/year, of which $2.3 billion is due to passengers' lost time, $3.6 is due to airlines' increased cost, and the remaining $1.8 billion Understanding the Role of is due to economic spillover effects. One could argue that air- Airport Congestion lines' increased costs are largely passed along to passengers in The U.S. DOT's BTS compiles both on-time performance the form of higher fares,7 and so the net cost to passengers is data and information about the causes of delays that result in likely closer to $6 billion/year (the sum of the passengers' late arrivals. For calendar year 2007, those data indicate that, travel time losses and increases in air fares resulting from nationally, weather delays directly caused only slightly more increased airline costs). than 5% of the late arrivals while "air carrier delays," "aircraft arriving late," and "national aviation system delays" accounted Quantifying the Economic Value of Delays for virtually all of the remaining 95% of delayed arrivals. Although airport and air traffic congestion are not listed The Senate JEC report (8) quantifies the increased travel explicitly as the ultimate sources of those three major types of times that passengers incur as a result of delays. However, it delay, over the 5 years between 2003 and 2007, boardings at explicitly excludes the additional delays that result from missed the 12 largest airports in the coastal mega-regions increased connections and from the inconvenience imposed on travelers by 25% in total, departures increased by 18%, and the percent as a result of delays. The effects on passengers of unscheduled of on-time commercial flights declined by over 10 points. flight delays include elements such as loss of productive time, This indicates a strong association between airport traffic and missed flight connections, missed ground connections, missed flight delays. meetings, and the general inconvenience associated with the necessary schedule adjustments. All of these effects cannot be measured directly, but there are ways of estimating passengers' Conclusions of the U. S. Senate Report perceived costs. One recent study, conducted by Resource According to a May 2008 report (8) from the U. S. Senate's Systems Group, Inc., (RSG), employed special survey and mod- Joint Economic Committee Majority Staff (JEC), flight delays eling techniques to measure the trade-offs (also called marginal in 2007 imposed a cost of over $40 billion per year on passen- rates of substitution) between the various components of ser- gers, the airlines, and the U.S. economy and resulted in a release vice associated with air itineraries (9). The survey used an of an additional 7.1 million metric tons of carbon dioxide approach known alternatively as "stated choices" in the trans- (CO2). The report's authors describe the impact of the "stag- portation literature or "choice-based conjoint" in the market gering levels of delays" as "large and far-reaching" and express research literature. See, for example, Louviere et al. (10). In this concerns that the delays will worsen without "reforms to the approach, survey respondents are presented with a set of choice system." The study described in that report uses reasonable alternatives from which they are asked to select the one that methods to derive its estimates but does not directly address they would most likely choose under the specified conditions. three questions whose answers are important for this coastal For the study of air itineraries, the survey questionnaire mega-regions airport study: asked respondents to describe their most recent domestic air trip, and then it created a set of realistic alternative flight 1. What portion of this impact is incurred at the airports in itineraries with associated arrival and departure airports, car- the coastal mega-regions? riers, schedules, flight times, aircraft types, fares, and percent 2. What are the full costs to coastal mega-region travelers of on-time performance. Much as they would when faced with the delays? alternatives generated by travel agents or online flight search 3. How might these costs change in the future? engines, respondents were asked to choose their most pre- ferred itinerary from those shown. The data from this type of survey can be used to statistically estimate coefficients of a choice model and, from that model, rates of trade-off among 1.5.2 Costs of Delays at the Major Mega-region Airports 7 Carriers may not assign costs directly to the flight and airport combinations that The answer to the first of these questions is relatively straight- are experiencing the delays, and thus peak-period passengers may not see higher forward. The Senate JEC report (8) calculates the impacts of fares associated with frequently delayed flights. Conversely, passengers on flights delays across the entire domestic air system, but also details that operate at off-peak times from uncongested airports may pay higher fares as a result of the operational costs incurred on the other delayed peak-period flights delays at 60 of the largest airports, including all of the major from congested airports. However, the net effect is still that the costs are likely mega-region airports. On the basis of these data, the pro rata passed on to the passengers in the aggregate.

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29 the attributes of the flight itineraries can be calculated. When value is based on percentages of average wage rates, whereas these trade-offs are calculated relative to fares, they are called the values used here are those applied by travelers in their "willingness to pay" and can be interpreted as the amount of choices among alternative air travel itineraries. Thus, the use additional fare that a passenger is willing to pay to get differ- of an alternative method for calculating the VOT might lower ent levels of that attribute. the "costs" stated in Table 1.3 and Table 1.4 by about one quarter. Applying this lower VOT with the use of the year 2003 benchmark results in a "low-range" estimate of roughly Establishing the Value of Time $2.9 billion for 2007. The most commonly calculated willingness to pay for trans- The time delays, while significant, do not account for the portation services is the Value of Time (VOT), which is simply additional perceived costs of missed meetings, missed ground the amount that an individual is willing to pay to save a unit of connections, and general inconveniences associated with time. VOTs range considerably across individuals and individ- delayed arrivals. Those effects were measured separately in uals' circumstances. Generally, air travelers have higher VOTs the RSG survey using the FAA's standard on-time metric as a than do travelers of other modes, in part because they have surrogate. That study found that business travelers are willing already opted to use a faster but more expensive mode. to pay on average approximately $38 per flight segment for The RSG study found that the average VOT for domestic air each 10-point improvement in on-time performance (over the travelers is approximately $70/hour for travelers on business range of 5090%). The equivalent measure for non-business trips and $31/hour for non-business trips. For the air travel travelers is $6 for each 10-point improvement in on-time market, which is split roughly between 40% business and 60% performance. The several-fold difference in willingness of non-business, the weighted average VOT is approximately business travelers to pay for flights with high on-time per- $47/hour. That is, air passengers on average are willing to formance is not surprising given that they are (a) generally spend an additional $47 in higher fares to save an hour of travel traveling on much tighter schedules and (b) the economic time or, conversely, will be willing to accept an hour of addi- consequences of disruptions to those schedules are generally tional travel time for a fare reduction of $47. more direct than for non-business travelers. Using, as before, The FAA uses a value of time of $28.60/hour (in 2000 dol- a 40% business and 60% non-business weighting, the average lars) for regulatory and facilities cost-benefit analyses based on passenger-perceived value of 10 points of on-time perfor- guidance provided in the following documents: "APO Bulletin mance for a given flight is approximately $19. APO-03-1--Treatment of Values of Travel Time in Economic As noted previously, between the years 2003 and 2007, the Analysis," FAA Office of Aviation Policy and Plans, March, average on-time performance at the 12 largest coastal mega- 2003, and "Revised Departmental Guidance--Valuation of region airports decreased on average by over 10 points. Apply- Travel Time in Economic Analysis," Office of the Secretary ing the 2003 on-time performance benchmark, this means of Transportation Memorandum, February 11, 2003. This that the aggregate perceived cost across all boardings at the translates to $35/hour in 2007 dollars--still lower than the value 12 airports of the performance decline in 2007 is approximately used in this analysis. The primary difference is that the FAA $3.9 billion/year. The absolute cost of the delays (compared Table 1.3. 2007 Airport flight delay cost estimates (4, 5). 2007 Flight Costs 2007 Flight Costs On-time On-time 2003 2007 (2003 On-time (100% On-time Airport 2003 (%) 2007 (%) Boardings Boardings Benchmark) ($) Benchmark) ($) Baltimore, MD (BWI) 83 77 10,200,000 11,000,000 138,000,000 483,000,000 Boston, MA (BOS) 83 75 11,100,000 13,800,000 209,000,000 643,000,000 Las Vegas, NV (LAS) 85 76 17,800,000 23,100,000 379,000,000 1,030,000,000 Los Angeles, CA (LAX) 89 80 27,200,000 30,900,000 526,000,000 1,148,000,000 New York, NY (JFK) 83 69 15,900,000 23,600,000 633,000,000 1,377,000,000 New York, NY (LGA) 84 72 11,400,000 12,500,000 299,000,000 671,000,000 Newark, NJ (EWR) 83 68 14,800,000 18,200,000 519,000,000 1,104,000,000 Philadelphia, PA (PHL) 79 70 12,100,000 15,900,000 289,000,000 908,000,000 San Diego, CA (SAN) 88 83 7,700,000 9,400,000 98,000,000 307,000,000 San Francisco, CA (SFO) 89 76 14,400,000 17,600,000 438,000,000 805,000,000 Washington, DC (DCA) 88 77 6,900,000 9,100,000 183,000,000 392,000,000 Washington, DC (IAD) 82 74 8,200,000 11,900,000 182,000,000 577,000,000 157,500,000 197,000,000 3,894,000,000 9,445,000,000