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Due to Congestion Presented By: Alexander Knapp.

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1 Due to Congestion Presented By: Alexander Knapp

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3  Is the congestion short-term?  Would a tax or price increase mitigate the problem?

4  Is the congestion long-term?  Is an expansion need to solve the problem?  Input-output model  Production Function/ Growth Studies  Cost-Benefit Analysis

5  Tool that estimates the economic impact of a project on the surrounding community.  Can’t give a clear recommendation on whether a project should be undertaken or not.  Impact studies are “more political than analytical.” (Cooper 1990)

6  A tool to show the correlation between a project and surrounding economic growth.  Few studies have been done relating to airports themselves.  However, this study can’t show whether an expansion should be undertaken.

7  The FAA requires a very rigorous CBA before an expansion can be undertaken.  8 main steps in the CBA process

8  Reduce Delays  Improve efficiency of operations  Increase amount of traffic the airport can handle  Allow for new services  Larger aircraft  Flight school  Helicopters

9  Try to predict what demands the airport will incur in the future.  Growth  Technology  If predictions are too high then money will be wasted on unused facilities  If predictions are too low then the airport will likely incur further congestion.

10  A base case is another reasonable course of action aside from the project in question.  A non-action base case assumes the optimal use of current infrastructure.

11  Other modes of transportation  New replacement airport  Different runway alignments  Use of a smaller backup airport  More terminals

12  Amount of time over which the benefits and cost will be considered.  The FAA uses 20 years for major airport infrastructure projects.  Runways  Terminals  Changes in Layout

13  Benefits usually come from cost savings to airport users  Costs usually come from longer trip times.

14  Cost-Benefit Equation: B = Future annual benefits in constant dollars C = Future annual costs in constant dollars R = Annual real discount rate K = Evaluation Period T = Index representing number of years from base year

15  Tries to compensate for assumptions and estimates.  Usually done through a sensitivity analysis.

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17  Using all information gathered suggest whether or not to go ahead with the expansion.

18  Numerous Lawsuits involving:  Zoning laws  Displacement of nearby residents  Environmental Conditions:  Noise  Pollution

19  Cohen, Jeffrey. “Congestion at Airports: The Economics of Airport Expansions.” Federal Reserve Bank of St. Louis Review. May-June 2003. v. 85, issue 3, pp. 9-25.  Cooper, Ronald. “Airports and Economic Development: An Overview.” Transportation Research Record. 1990. No. 1274, pp. 125-33.


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