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Due to Congestion Presented By: Alexander Knapp
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Is the congestion short-term? Would a tax or price increase mitigate the problem?
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Is the congestion long-term? Is an expansion need to solve the problem? Input-output model Production Function/ Growth Studies Cost-Benefit Analysis
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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)
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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.
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The FAA requires a very rigorous CBA before an expansion can be undertaken. 8 main steps in the CBA process
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Reduce Delays Improve efficiency of operations Increase amount of traffic the airport can handle Allow for new services Larger aircraft Flight school Helicopters
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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.
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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.
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Other modes of transportation New replacement airport Different runway alignments Use of a smaller backup airport More terminals
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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
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Benefits usually come from cost savings to airport users Costs usually come from longer trip times.
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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
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Tries to compensate for assumptions and estimates. Usually done through a sensitivity analysis.
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Using all information gathered suggest whether or not to go ahead with the expansion.
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Numerous Lawsuits involving: Zoning laws Displacement of nearby residents Environmental Conditions: Noise Pollution
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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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