Passenger Value of Time, Benefit-Cost Analysis and Airport Capital Investment Decisions, Volume 1: Guidebook for Valuing User Time Savings in Airport Capital Investment Decision Analysis (2015) / Chapter Skim
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4 EXAMPLES ILLUSTRATING TIME VALUATION To show how the five-step methodology and calculation process works in practice, three illustrative case studies have been developed. These cases are all drawn from real world examples of airport improvement projects, though they are not identified and the numbers have been altered to make them more generally applicable.
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runway extension would be to reduce airline costs (and potentially airfares) by accommodating larger aircraft.
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Table A-1: Passenger Volume and Share of New Nonstop Service (Boardings & Alightings) New Market (1)
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As shown in Table 1 in chapter 2, business passengers have an in-flight value of time of $51.00 per hour, while leisure travelers have an in-flight value of time of $34.90 per hour12. To calculate a composite value of time, the analyst uses the following equation: Composite Value of Time = Proportion of Business Travelers x Business Value of Time (VOT)
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As part of a comprehensive benefit-cost framework, the total passenger travel time savings can be added to other benefit categories, such as safety benefits or reductions in airline operating costs, and compared with capital and operating and maintenance (O&M) costs.
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Example B: Ground Access Project In this example, a metropolitan area transit system is proposing a rail connector system that links the existing rail transit service to a regional airport. Currently, direct shuttle bus service is provided between the nearest rail transit station and the airport.
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Step 1: Screen Project for Applicability. The first step in the process is to screen whether this guidebook is applicable to the project by using the Project Screener table (Table 4)
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of time it takes to walk to the terminal building entry from the point where the connector service drops off passengers. The reduction in travel delay can be estimated by comparing the two columns in Table B-1.
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Table B-3: Passenger Values of Time by Income for Ground Access and Terminal Access Time (in 2013 $) Component Individual Income Less than $75,000 $75,00 - $199,999 $200,000 and More Business Travelers Ground access time $13.90 $21.32 $38.49 Terminal access time $23.75 $36.35 $65.65 Leisure Travelers Ground access time $14.55 $16.65 $22.15 Terminal access time $22.10 $25.20 $33.60 The aggregate annual ground access time savings for business and leisure passengers will be calculated using the 7.05 minutes of ground access time saved per trip estimated in Step 3.
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Table B-5: Terminal Access Time Savings from the AGT Project (in 2020, in 2013 $) Income Level (2013)
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Year Number of Passengers Annual Travel Time Savings, in 2013 $ Undiscounted Discounted at 3% Discounted at 7% 2020 5,000,000 $7,253,719 $6,638,180 $5,921,195 2021 5,250,000 $7,616,405 $6,767,077 $5,810,519 2022 5,512,500 $7,997,225 $6,898,476 $5,701,911 2023 5,788,125 $8,397,086 $7,032,427 $5,595,333 2024 6,077,531 $8,816,940 $7,168,979 $5,490,747 2025 6,381,408 $9,257,788 $7,308,183 $5,388,117 2026 6,700,478 $9,720,677 $7,450,089 $5,287,404 2027 7,035,502 $10,206,711 $7,594,751 $5,188,574 2028 7,387,277 $10,717,046 $7,742,222 $5,091,591 2029 7,756,641 $11,252,899 $7,892,557 $4,996,422 2030 8,144,473 $11,815,543 $8,045,810 $4,903,030 2031 8,551,697 $12,406,321 $8,202,040 $4,811,385 2032 8,979,282 $13,026,637 $8,361,302 $4,721,453 2033 9,428,246 $13,677,969 $8,523,658 $4,633,201 2034 9,899,658 $14,361,867 $8,689,166 $4,546,599 2035 10,394,641 $15,079,960 $8,857,887 $4,461,616 2036 10,914,373 $15,833,958 $9,029,885 $4,378,221 2037 11,460,092 $16,625,656 $9,205,223 $4,296,386 2038 12,033,096 $17,456,939 $9,383,965 $4,216,079 2039 12,634,751 $18,329,786 $9,566,178 $4,137,274 Total 165,329,771 $239,851,131 $160,358,057 $99,577,058 As part of a comprehensive benefit-cost framework, the total passenger travel time savings can be added to other benefit categories, such as safety or emissions benefits, and compared with capital and O&M costs. Example C: Navigation Aid Upgrade Project In this example, a regional airport is proposing to upgrade an existing instrument landing system (ILS)
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For an aircraft to land on a runway using Category I ILS, visibility must be at least 0.5 mile and the decision height must be at least 200 feet. Decision height is defined as the lowest height at which the pilot must initiate a missed approach if the runway is not visible.
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With 400,000 annual passenger enplanements at this airport, the number of passengers expected to be impacted by the upgrade in ILS from Category I to Category III is calculated to be: 400,000 * 1.4% = 5,600 passenger per year Table C-1 shows the total annual time savings from the navigational aid upgrade.
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Step 5: Apply to Benefit-Cost Analysis. To use this estimate in a benefit-cost analysis, the analyst assumes that the navigational upgrade will be purchased in 2014 and operational in 2015 (year 2 of the BCA)
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