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39
Software Quick Start
The Airport Forecasting Risk Assessment Program is a Microsoft® Excel spreadsheet; the user
will need Microsoft Excel 2000 or later to run the software, and Excel macros must be enabled.
Open the spreadsheet.
Go to the SelectLOCID worksheet, and select an airport from the pull-down menu (Ex-
hibit II-1).
Press Update Tables .
The program takes the user to the OAGHistory worksheet (Exhibit II-2) where he or she can
view 20-year trends for the airport including average domestic flight departures, domestic seat
departures, average seat size, and number of domestic destinations served. The pull-down menu
is used to focus on specific airlines at the airport or to compare the airport to others.
The user should also examine the TAFHistory worksheet (Exhibit II-3), which shows how ac-
curate recent TAF forecasts have been for the subject airport.
Exhibit II-1. SelectLOCID worksheet.
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40 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development
Exhibit II-2. OAGHistory worksheet.
The CurrentService worksheet (Exhibit II-4) shows the air services available in individual do-
mestic markets by identified airlines in 2009. The user can modify this information by adding
new cities in the first two columns and new average weekly departures and average seat size in the
last two columns labeled User Updates .
The user can also modify existing services information in the last two columns. All of the
modifications will show up in red font. To take account of these modifications in a new Baseline
Forecast, press Update Tables .
The software will then take the user to the Baseline&Scenarios worksheet (Exhibit II-5). If
modifications were made in the CurrentService worksheet, the Baseline Forecast at the top of
the page will reflect those changes. If modifications were not made in the CurrentService work-
sheet, the Baseline Forecast at the top of the page will be the TAF forecast.
The user can further modify the forecast directly in the columns labeled User Updates by typ-
ing in the numbers or using standard Excel commands. For the ACY example shown in Exhibit
II-5, the results of increasing future activity by 5 percent across the board (relative to the default
TAF baseline) are shown in Exhibit II-6. Changes will be shown in red font.
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Software Quick Start 41
Exhibit II-3. TAFHistory worksheet.
ACY Air Carrier + Air Taxi Operations: TAF Predicted vs. Actual
37,000
32,000
27,000
22,000
17,000
12,000
7,000
2,000
2004 2005 2006 2007 2008 2009
TAF 2003 TAF 2004 TAF 2005 TAF 2006 TAF 2007 TAF 2008 Actual
Exhibit II-4. CurrentService worksheet.
Exhibit II-5. Upper portion of Baseline&Scenarios worksheet.
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42 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development
Exhibit II-6. Results of user updates to ACY example scenario.
Default Baseline User Updates
Domestic Forecast (changes in red)
Domestic Domestic Domestic Domestic
Year Operations Enplanements Operations Enplanements
2009 14,406 520,470 14,406 520,470
2010 14,548 527,543 15,275 553,920
2011 14,692 534,712 15,427 561,448
2012 14,836 541,979 15,578 569,078
2013 14,983 549,350 15,732 576,818
2014 15,133 556,821 15,890 584,662
In the lower portion of the Baseline&Scenarios worksheet (Exhibit II-7), the user can
input ranges for key air service drivers, which in turn will create scenarios for the Baseline
Forecast.
In general, increases in these drivers will have the following impacts on air services:
· Jet fuel price: (-)
· Economic growth: +
· Inflation:19 +
· Average seats:20 +
· Airport concentration: (-)
· Other airport competition:21 (-)
The HerfindahlHirschman airport concentration index (shown at the bottom left of the
worksheet) is a measure of the level of market competition at the airport. It is computed as the
sum of the squared seat-departure shares of all the carriers at the airport, and ranges from 0 to
10,000, with higher values reflecting less competition. If an airport were served by only a single
monopoly carrier, the index would equal 10,000 (= 100 percent seat share squared).
This driver has a negative impact on air services, reflecting the fact that the higher the index,
the lower is the level of competition and therefore the lower the level of overall air service. The
user can compute the index for a given set of market shares by using the calculator shown at the
bottom of the Baseline&Scenarios worksheet.
The user can also create Confidence Bands around the Baseline Forecast taking account of jet
fuel price and economic uncertainty by pressing the buttons:
Set Jet Fuel Scenarios based Set Income Scenarios based
on Futures Uncertainty on EIA GDP Uncertainty
19
In the air services model, inflation is used to adjust nominal jet fuel prices to real prices; so high inflation results in lower
real prices for jet fuel and thus more air service.
20
Average seat size is a proxy for the cost of producing a seat departure; larger aircraft produce lower seat costs, which in
competitive markets result in lower prices and thus more air service.
21
Competition from large or medium hub airports within 50 miles tends to reduce air service.
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Software Quick Start 43
Exhibit II-7. Lower portion of Baseline&Scenarios worksheet.
Forecast Drivers for Domestic Scenarios (International Forecast is Fixed)
2005-2009 data are fixed; you may change the Baseline and/or Scenario assumptions below for 2010-2014.
If you entered updates to the Baseline Domestic Forecast above,
you should ensure that the Baseline assumptions below are consistent with those updates.
JetFuelValues Set Jet Fuel Scenarios based
View the latest Heating Oil futures
prices by clicking here
on Futures Uncertainty
Baseline
Price of Jet Fuel Baseline
Year (Current Yr $/gal) Scenario 1 Scenario 2 Year Inflation Rate Scenario 1 Scenario 2
2005 $1.622 2005 3.34%
2006 $1.906 2006 3.25%
2007 $2.025 2007 2.87%
2008 $2.938 2008 2.14%
2009 $1.844 $1.199 $3.227 2009 1.18%
2010 $2.174 $1.500 $4.000 2010 1.47% 0.00% 0.00%
2011 $2.258 $2.258 $2.258 2011 1.31% 1.31% 1.31%
2012 $2.499 $2.499 $2.499 2012 1.43% 1.43% 1.43%
2013 $2.719 $2.719 $2.719 2013 1.76% 1.76% 1.76%
2014 $2.888 $2.888 $2.888 2014 1.73% 1.73% 1.73%
(Default baseline from 2010 forward based on change in projected price of (Default baseline from 2010 forward based on projected GDP Implicit Price
jet fuel from EIA Annual Energy Outlook 2010.) Deflator from EIA Annual Energy Outlook 2010.)
Set Income Scenarios based on
EIA GDP Uncertainty
RealIncomeValu SeatsizeValues Not relevant for Small Hubs
Baseline Baseline
Local Real Airport Avg
Year Income Growth Scenario 1 Scenario 2 Year Seatsize Scenario 1 Scenario 2
2005 0.43% 2005 119.9
2006 0.73% 2006 126.7
2007 0.27% 2007 130.1
2008 0.34% 2008 140.2 140.2 140.2
2009 -2.83% #N/A #N/A 2009 141.9 141.9 141.9
2010 1.07% 4.00% -1.00% 2010 141.9 141.9 141.9
2011 3.52% 3.52% 3.52% 2011 141.9 141.9 141.9
2012 3.64% 3.64% 3.64% 2012 141.9 141.9 141.9
2013 2.80% 2.80% 2.80% 2013 141.9 141.9 141.9
2014 2.46% 2.46% 2.46% 2014 141.9 141.9 141.9
(Default baseline from 2010 forward based on projected US GDP from EIA (Default baseline from 2010 forward equal to 2009 value.)
Annual Energy Outlook 2010; 2009 value equal to US GDP growth.)
HHIValues Set50Values Not relevant for Small Hubs
Baseline
Baseline Airport Domestic Daily Seat-
Concentration Departures at
Index - HHI Lrg/Med Hubs within
Year (0-10,000) Scenario 1 Scenario 2 Year 50 Miles Scenario 1 Scenario 2
2005 8,189 2005 0
2006 8,450 2006 0
2007 8,804 2007 0
2008 9,715 9,715 9,715 2008 0 0 0
2009 8,333 8,333 8,333 2009 0 0 0
2010 8,333 8,333 8,333 2010 0 0 0
2011 8,333 8,333 8,333 2011 0 0 0
2012 8,333 8,333 8,333 2012 0 0 0
2013 8,333 8,333 8,333 2013 0 0 0
2014 8,333 8,333 8,333 2014 0 0 0
(Default baseline from 2010 forward equal to 2009 value.) (Default baseline from 2010 forward derived from TAF.)
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44 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development
The Baseline and Sensitivity Cases will be shown in the Projections and One-Page Report
worksheets (Exhibits II-8 and II-9).
Exhibit II-8. Projections worksheet.
Projected Annual Operations for ACY
22,000
20,000
18,000
16,000
14,000
Projected Annual Revenues for ACY
12,000
$30,000,000
10,000
2008 Act 2009 2010 2011 2012 2013 2014
Baseline 17,962 14,406 15,275 15,427 15,578 15,732 15,890
$25,000,000
Scenario 1 17,962 14,406 15,275 15,940 15,861 15,891 15,980
Scenario 2 17,962 14,406 15,275 14,589 15,076 15,418 15,679
$20,000,000
Projected Annual Enplanements for ACY $15,000,000
650,000 $10,000,000
600,000 $5,000,000
2008 Act 2009 2010 2011 2012 2013 2014
Baseline $21,809,615 $13,886,975 $14,587,270 $14,731,777 $14,877,321 $15,024,827 $15,174,229
Scenario 1 $21,809,615 $13,886,975 $14,587,270 $15,126,114 $15,095,449 $15,147,055 $15,244,057
550,000
Scenario 2 $21,809,615 $13,886,975 $14,587,270 $14,083,422 $14,489,700 $14,782,287 $15,011,764
500,000
450,000
2008 Act 2009 2010 2011 2012 2013 2014
Baseline 553,177 520,470 553,920 561,448 569,078 576,818 584,662
Scenario 1 553,177 520,470 553,920 580,140 579,441 582,641 588,000
Scenario 2 553,177 520,470 553,920 530,975 550,752 565,295 576,911
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Software Quick Start 45
Exhibit II-9. One-Page Report worksheet.
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46 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development
In creating the sensitivity cases, the user should keep in mind how the drivers affect air ser-
vices at an airport. Exhibit II-10 summarizes these impacts.
As with any forecasting process, the user is ultimately responsible for the assumptions used in
the analysis. The software provides a structured way to improve airport forecasts and create sen-
sitivity cases, but it is not a substitute for a well-thought-out analysis.
Exhibit II-10. Impact of drivers on air services.
Effect on Air
Service if
Driver is
Driver Higher Lower Explanation
If nominal fuel prices rise, air services decline, and
Jet Fuel Prices +
vice versa.
If real local income increases, air services increase,
Real Local Income +
and vice versa.
If inflation increases, it reduces real jet fuel prices
Inflation +
and air services rise, and vice versa.
Average Seat Size at If average seat size increases, airline costs fall and
+
Airport air services rise, and vice versa.
Airport Concentration If one or a few carriers dominate seat departures, air
+
Index services decline, and vice versa.
If average daily seat departures from an FAA large
Competition from
+ or medium hub airport within 50 miles grow, air
Large/Medium Hubs
services decline and vice versa.
