Impact of Jet Fuel Price Uncertainty on Airport Planning and Development (2011) / Chapter Skim
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Documentation for Airport Forecasting Risk Assessment Program P A R T I I
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, which shows how accurate recent TAF forecasts have been for the subject airport. Update Tables 39 Software Quick Start Exhibit II-1.
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Changes will be shown in red font. User Updates Update Tables User Updates 40 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development Exhibit II-2.
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CurrentService worksheet. Exhibit II-5.
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Default Baseline Domestic Forecast 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.
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Year Baseline Price of Jet Fuel (Current Yr $/gal) Scenario 1 Scenario 2 Year Baseline 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% RealIncomeValu SeatsizeValues Year Baseline Local Real Income Growth Scenario 1 Scenario 2 Year Baseline Airport Avg 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 HHIValues Set50Values Year Baseline Airport Concentration Index - HHI (0-10,000)
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44 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development Exhibit II-8. Projections worksheet.
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Software Quick Start 45 Exhibit II-9. One-Page Report worksheet.
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Effect on Air Service if Driver is Driver Higher Lower Explanation Jet Fuel Prices + If nominal fuel prices rise, air services decline, and vice versa. Real Local Income + If real local income increases, air services increase, and vice versa.
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47 This user manual is presented in the form of a guided tour of the software, using Atlantic City International Airport (ACY) as an example.
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provide an interesting history of air service at the subject airports. A user might test his or her own customized forecast against this history, or use a comparison airport to examine the possible future for the subject airport.
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Updating the Baseline Forecast in the CurrentService Worksheet In the CurrentService worksheet, an important feature allows users to update air service information by adding service to new cities and/or changing the number of weekly departures and average seat size in existing markets (in the right two columns)
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BaselineValues BaselineValues_Int Domestic Operations Domestic Enplanements Domestic Operations Domestic Enplanements International Operations International Enplanements International Operations International Enplanements 2009 15,084 545,516 15,084 545,516 2009 0 0 2010 15,233 552,930 15,233 552,930 2010 0 2011 15,384 560,444 15,384 560,444 2011 0 2012 15,535 568,060 15,535 568,060 2012 0 2013 15,689 575,786 15,689 575,786 2013 0 2014 15,846 583,617 15,846 583,617 2014 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Baseline Forecast for ACY (Based on TAF Air Carrier/Air Taxi Forecast and User Updates of Current Domestic Service) You can change the Default Baseline forecasts by entering new numbers in the User Update columns.
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You can change the Default Baseline forecasts by entering new numbers in the User Update columns. Year Year Default Baseline International Forecast User Updates (changes in red)
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Link to oil futures market in the Baseline&Scenarios worksheet. Jet Fuel Prices and Local Income The spike in jet fuel prices in 2007–2008 was largely unanticipated and caused a substantial reduction in air services (measured by average daily seat departures)
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Baseline Inflation Rate The air services model embedded in the software operates on real jet fuel prices. The model takes whatever jet fuel price assumptions are made and converts them to real dollars using the assumed Baseline Inflation Rate forecast.
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As the HHI increases, air services decline. The user should input any expected or feasible changes in competitive conditions.
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For the High case, assume $2.00 jet fuel and 3 percent annual income growth for all five years. Leave the other variables unchanged.
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If you entered updates to the Baseline Domestic Forecast above, you should ensure that the Baseline assumptions below are consistent with those updates. View the latest Heating Oil futures prices by clicking here JetFuelValues Reset User Updates to Baseline Defaults Reset All Scenarios to Baseline Defaults Set Jet Fuel Scenarios based on Futures Uncertainty Set Income Scenarios based on EIA GDP Uncertainty Exhibit II-24.
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Software User Manual 57 Projected Annual Operations for ACY 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 21,000 Baseline 17,962 15,084 15,995 16,153 16,312 16,473 16,638 Scenario 1 17,962 15,084 15,995 15,484 15,303 15,383 15,589 Scenario 2 17,962 15,084 15,995 16,288 16,573 16,951 17,369 2008 Act 2009 2010 2011 2012 2013 2014 Projected Annual Enplanements for ACY 450,000 500,000 550,000 600,000 650,000 700,000 Baseline 553,177 545,516 580,577 588,466 596,463 604,575 612,798 Scenario 1 553,177 545,516 580,577 564,097 559,593 564,544 574,160 Scenario 2 553,177 545,516 580,577 593,376 606,014 622,098 639,704 2008 Act 2009 2010 2011 2012 2013 2014 Projected Annual Revenues for ACY $7,000,000 $12,000,000 $17,000,000 $22,000,000 $27,000,000 Baseline $21,809,615 $14,419,394 $15,146,637 $15,296,747 $15,447,923 $15,601,112 $15,756,232 Scenario 1 $21,809,615 $14,419,394 $15,146,637 $14,783,759 $14,673,023 $14,762,465 $14,949,958 Scenario 2 $21,809,615 $14,419,394 $15,146,637 $15,399,595 $15,647,118 $15,964,795 $16,311,881 2008 Act 2009 2010 2011 2012 2013 2014 Exhibit II-25. Revised baseline and sensitivity example from the Projections worksheet.
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58 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development Exhibit II-26. One-Page Report worksheet showing confidence bands.
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What is the confidence band around this forecast given uncertainty of jet fuel prices and income growth? To create the confidence band, : This will overwrite any other assumptions that have been made about future jet fuel prices and income growth, and automatically create Low and High Cases that correspond to a 90 percent confidence band for these two drivers.
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60 Impact of Jet Fuel Price Uncertainty on Airport Planning and Development Exhibit II-27. Sample risk analysis for ACY.
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The example for ACY illustrates one of the key motivations for the creation of the software: unanticipated spikes in jet fuel prices accompanied by sudden and unanticipated slow-down in the economy can produce dramatic and unanticipated reductions in air services. Thus, examining the potential impact of sudden changes in jet fuel prices and in income growth is prudent for those interested in the consequences of changes in air services at airports.
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