Addressing Uncertainty about Future Airport Activity Levels in Airport Decision Making (2012) / Chapter Skim
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Pages 74-101
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From page 74... ...
P a r t I I I Applying the Methodology Using Real Life Case Studies not realistic to expect that a decision maker could foresee the financial crisis and severe recession that occurred in 2008 and 2009. However, it is reasonable to assume that a recession of the type experienced in previous decades would be possible at some time in the future.
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79 12.1 Background The circumstances of BLI were described in Section 3.4. BLI is operated by the Port of Bellingham and is located in Whatcom County, Washington, 3 miles northwest of Bellingham, a city with a population of approximately 200,000.
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80 138 242 280 329 401 114 110 123 152 275 0 50 100 150 200 250 300 350 400 450 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Pa ss en ge r E np la ne m en ts (T ho us an ds ) Actual Traffic Master Plan Forecast 2004 Master Plan Development 68 Source: Bellingham International Airport Master Plan Update (URS et al., 2004)
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81 Therefore, the scenario applied adjustments to the forecasted growth rates to allow for different assumptions regarding economic growth and other factors. An alternative approach would be to use the Airport Forecasting Risk Assessment Program model produced as part of ACRP Report 48: Impact of Jet Fuel Price Uncertainty on Airport Planning and Development, available at http://www.trb.org/Main/Blurbs/165241.
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Risk Identification Risk Evaluation Comments Risk ID Risk Category Threat or Opportunity Event Probability/ Likelihood Description of Impact Magnitude of Impacts Direction Scale (1 = Low, 5 = High) Duration/ Permanence E1 Macroeconomic Fuel price spikes/ volatility 20% Rising fuel prices result in increased operating costs, which are either passed on to consumers through higher fares, which will lower demand, or result in carriers cutting back services (or a combination of the two)
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M1 Market Loss or failure of Horizon Air 10% The exit of Horizon Air due to economic conditions or other factors. Negative 5 Long-term Horizon Air was the largest carrier at BLI in the 2002–2004 period, accounting for over 80% of traffic.
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M7 Market High growth in international traffic 5% High growth in international traffic (e.g., services to Canada or the Caribbean)
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85 forecasts are critical to evaluating facility requirements under the scenarios. It should be made clear that the scenario forecasts are not designed to be better (more accurate)
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86 • Ensure that any related terminal design documents incorporate the features listed previously and that maximum flexibility is maintained by, for example, the use of nonload-bearing walls. • Recommend pursuing an air service development program.
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87 Scenario Mitigation Strategies Master plan forecast If traffic develops in line with 2004 master plan forecast, then implement master plan as defined. Extreme upside Develop High-Level Requirements Plan Develop high-level plan that identifies the facility requirements should high traffic growth occur.
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88 Scenario Mitigation Strategies The plan would also ensure that whatever cutbacks or postponements are made do not jeopardize the airport's ability to accommodate additional traffic if and when it arises. As with the previous scenario, an air service development program can also potentially mitigate the impacts of this scenario.
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89 mitigation with potential revenue and cost benefits. (The 2004 master plan does not address air service development -- in line with most master plans -- and it is not known what air service development was planned or undertaken by BLI at the time.)
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90 13.1 Background BWI is owned and operated by the State of Maryland, which purchased the airport from the City of Baltimore in 1972. Located about 30 miles north of Washington, D.C., it competes within the same catchment area as both Washington Dulles International Airport and Ronald Reagan Washington National Airport.
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91 In anticipation of future international traffic growth, it was decided to construct an international terminal, which was completed in 1997 at a cost of $140 million. The airport also extended Runway 10/28 to 10,500 ft (increased from 7,800 ft)
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92 3. Identification of risk response strategies based on information from the previous tasks, and formal and informal elicitation methods.
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93 modeled as deviations from the expected long-term economic growth trend. So, in some years economic growth will be 1% higher than expected in the 1987 master plan forecast, in other years 2% lower, and so on as randomly determined by the model.
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Risk Identification Risk Evaluation Comments Risk ID Risk Category Threat or Opportunity Event Probability/ Likelihood Description of Impact Impact On Magnitude of Impacts (on Traffic) Low Medium High Duration/ Permanence E1 Macroeconomic Fuel price spikes/ volatility 20% Rising fuel prices result in increased operating costs, which are either passed on to consumers through higher fares, which will lower demand, or result in carriers cutting back services (or a combination of the two)
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M3 Market Exit of new carrier after entry (only temporary increase in traffic level) 5% Linked to factor M2.
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agreements with countries around the world. This could stimulate traffic at BWI through increased feeder traffic or direct international service.
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97 model developed, there is 90% probability that future traffic will be between those two lines. Figure 43 shows the probability distribution of total traffic in a single year (2005)
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98 –8% –7% –6% –1%–5% –4% –3% –2% 0% 1% 2% 4%3% 5% 6% 7% 8% Pr ob ab ili ty Deviation from Long Term Economic Growth Rate 10% to 90% Range Figure 40. Assumed distribution for economic growth, BWI case study.
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99 associated probability of occurrence)
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100 • C: large to very large shift in traffic mix toward international traffic and, depending on the initial mix of traffic, either lower than expected or higher than expected total traffic; • G: large to very large shift in traffic mix toward domestic traffic and, depending on the initial mix of traffic, either lower than expected or higher than expected total traffic; and • I: high to very high total airport traffic relative to the master plan forecast. A situation similar to Scenario G actually occurred when US Airways moved its international operations to Philadelphia and Southwest Airlines increased its operations at BWI.
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101 traffic, but allowing for the potential use of the swing gates available in the international terminal. For simplification, the two planning options are assessed on the basis of total capital expenditures.
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102 Scenarios Proposed Mitigation Strategies A Lower end of the distribution for domestic traffic and lower end of the distribution for international traffic Modularity in design: introduce modularity in the design of the international terminal, to allow scaling down, slowing down, or postponing improvements. C Lower end of the distribution for domestic traffic and upper end of the distribution for international traffic Modularity in design and shared use: introduce modularity in the design of the international terminal to allow scaling up or accelerating improvements.
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103 • Domestic Traffic – Low growth: no new gates needed; – Midrange: five new gates; – High growth: 11 new gates. Table 15 summarizes the assumed number of domestic and international gates required under each of the nine traffic growth scenarios (A through I)
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104 multiplied by the estimated capital cost in each scenario. The probability of occurrence of each traffic scenario is shown in Table 17 and is based on output from the Monte Carlo simulations.
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From page 101... ...
105 13.2.5 Risk Tracking and Evaluation The final step in the methodology involves risk tracking. It is anticipated that traffic and events will be routinely monitored and will feed into a process of referencing against the plan and, where necessary, updating the plan.
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