1. CENTER FOR AIR TRANSPORTATION SYSTEMS RESEARCH Air Travel at the Edge of Chaos George L. Donohue, Ph.D. Professor Systems Engineering and Operations Research Director of the Center for Air Transportation Systems Research Volgenau School of Information Technology and Engineering NEXTOR Workshop 28 Sept, 2007 © George L. Donohue 2007

2. CATSRCATSR 2 Outline How bad and widespread is the Problem Passenger QOS Economic Impact What are the Underlying Causes Too Many Scheduled Flights into Too Few Runways Why the Airlines cannot fix the Problem Themselves Prisoners Dilemma and Curse of the Commons Government (Congress/DOT/FAA) Measures Required to Fix the Problem Airport Arrival Time Slot Auctions NEXTGEN ATM system Larger Aircraft Fleet Implications for the Environment

3. CATSRCATSR 3 Air Transportation System (ATS) is a CAS Network with 6 Interacting Layers Government Regulatory Control Layer Physical Layer (i.e. Cities, Airports, Demographics) Weather Layer (Thunderstorms, Ice Storms) Airline Layer (Routes, Schedules, A/C size) TSA/FAA Layer (ATC Radar, Radios, Ctr’s, Unions) Passenger/Cargo Layer (Delays, Cancellations) The ATS is a Public - Private Partnership with conflicting objective functions: Public – Commerce and safety; interest groups Private – Profit maximization

4. CATSRCATSR 4 Background: Air Transportation System Passenger Tier Performance = f (Vehicle Tier Performance, Passenger Factors)

5. CATSRCATSR 5 Passenger Total Delay – Airports 29% of the OEP-35 airports  50% Total EPTD some airports significantly impact EPTD more than others (e.g. ORD, ATL, DFW and MCO) 50% Close Network of OEP35 Airport in 2004

6. CATSRCATSR 6 200 Routes generate 50% of Total EPTD 17% of the 1044 routes between OEP-35 airports  50% Total EPTD LGA, JFK, EWR, PHL connected Routes  11 out of top 20 routes 50% Close Network of OEP35 Airport in 2004

7. CATSRCATSR 7 Top 20 Worst Airports in the US: Passenger Quality of Service Metric D. Wang, GMU PhD. In Progress

8. CATSRCATSR 8 Many Highly Congested Airports can Shift Passengers to other Large Airports FAA 2006 NPIAS

9. CATSRCATSR 9 Airline Load Factors are Increasing

10. CATSRCATSR 10 GMU Model Projects Passenger Delays to Greatly Exceed 2000 delays by 2010 D. Wang 2007

11. CATSRCATSR 11 Annual Passenger Enplanements Predicted to be Lost: FAA Forecast to 2025 EWR ORD JFK FAA 2005 TAF & 2004 Benchmark LGA

12. CATSRCATSR 12 Estimated Annual Cost to US (Lost Consumer Surplus, 2005$) due to Expected Airport Capacity Limitations Shaver 2007 Assumes: $200/segment ticket Price Elasticity = -1

13. CATSRCATSR 13 Minimum Congestion Cost is a function of NEXTGEN Technology Effectiveness and Network Efficiency

14. CATSRCATSR 14 Outline How bad and widespread is the Problem Passenger QOS Economic Impact What are the Underlying Causes Too Many Scheduled Flights into Too Few Runways Why the Airlines cannot fix the Problem Themselves Prisoners Dilemma and Curse of the Commons Government (Congress/DOT/FAA) Measures Required to Fix the Problem Airport Arrival Time Slot Auctions NEXTGEN ATM system Larger Aircraft Fleet Implications for the Environment

15. CATSRCATSR 15 Severe Congestion at NY Area Airports: A 40-year-old Reality - Limited #IFR slots during specific time periods - Negotiation-based allocation 1969 HDR at EWR, LGA, JFK, DCA, ORD Perimeter rule at LGA, DCA 4.2000 Exempt from HDR at LGA, JFK, ORD certain flights to address competition and small market access AIR-21 1978 Deregulation Use-it-or- lose-it rule based on 80% usage 1985 Slot ownership Timeline recap of congestion management measures early 1970s Removal of HDR at EWR Introduction of Hub- and-Spoke Network System

16. CATSRCATSR 16 NYNJ comparison to Comparable European Airports Data taken from ACI-NA, EC PR2006 and FAA ASPM

17. CATSRCATSR 17 EWR a NYNJ Airport with No Slot Controls: Delays 2006 Passenger Quality of Service Metric that Includes Flight Cancellations & Missed Connections (D. Wang GMU 2007) 35 Airport BN Model Summer 2006 Data (N. Xie GMU 2007)

18. CATSRCATSR 18 EWR : DoT/FAA 2004 Capacity Benchmark Report

19. CATSRCATSR 19 EWR Free-Market Fleet Mix Appears to be Far from Optimum

20. CATSRCATSR 20 New York LaGuardia Airport: Case Study of a Slot Controlled Airport Data (2005): Throughput: 404,853 flights/yr Average flight delay: 38 min Revenue passengers: 26,671,787 Average aircraft size: 96 passenger Average inter-city fare: $133

21. CATSRCATSR 21 NYNJ Airport with Current Slot Controls: LGA 2004 – 2006 (DOT Data)

22. CATSRCATSR 22 Current Government Rules at LGA Lead to Poor Use of Runway Resources Inefficient use of resources Airports lose Airlines lose (Low load factor/Small Aircraft) Airports win Airlines win (High Load Factor/Large Aircraft)

23. CATSRCATSR 23 LGA High Frequency Flights: Current and 90% of Optimum

24. CATSRCATSR 24 Outline How bad and widespread is the Problem Passenger QOS Economic Impact What are the Underlying Causes Too Many Scheduled Flights into Too Few Runways Why the Airlines cannot fix the Problem Themselves Prisoners Dilemma and Curse of the Commons Government (Congress/DOT/FAA) Measures Required to Fix the Problem Airport Arrival Time Slot Auctions NEXTGEN ATM system Larger Aircraft Fleet Implications for the Environment

25. CATSRCATSR 25 Why do the Airlines Schedule beyond the Maximum Safe RW Capacity with Flights that Loose Revenue? There is no government regulation to limit schedules for safety or compensate passengers for delays and cancellations These were errors in the 1978 Deregulation Act Passenger surveys indicate that frequency and price are the most desirable characteristics of a flight Passengers are not told of consequences of schedule to travel predictability If any one airline decided to offer rational schedules, their competition will offer more frequency to capture market share Thus, still producing delays and cancellations for all In Game Theory, this is called the Prisoner’s Dilemma

26. CATSRCATSR 26 What would happen if schedules at major airports were capped by predictable runway capacity and allocated by a market mechanism? What markets would be served? How would airline schedules change? –Frequency –Equipment (#seats per aircraft) How would passenger demand change? –At airport –On routes How would airfares change? –What would happen to airline profit margins? How would airport and network delays be altered? A Natural Question? Is There an Optimal Allocation of Scarce Runway Resources?

27. CATSRCATSR 27 Outline How bad and widespread is the Problem Passenger QOS Economic Impact What are the Underlying Causes Too Many Scheduled Flights into Too Few Runways Why the Airlines cannot fix the Problem Themselves Prisoners Dilemma and Curse of the Commons Government (Congress/DOT/FAA) Measures Required to Fix the Problem Airport Arrival Time Slot Auctions NEXTGEN ATM system Larger Aircraft Fleet Implications for the Environment

28. CATSRCATSR 28 Modeling Approach and Assumptions Port Authority of NY&NJ has the ability to Determine and Set an Optimum Schedule to: Operate at Competitive Profit Margins Maximize Passenger Throughput Ensure an Airline Operating Profit (Max, 90%,80%) All Current Origin and Destination Markets are Considered 67 Scheduled Daily Serviced Markets Current Market Price Elasticity Remains Constant

29. CATSRCATSR 29 NY LGA Has 67 Daily Markets

30. CATSRCATSR 30 Network Flow Optimization Problem (Le, 2006) Demand-Price Elasticity $ # S1S1 S2S2 D ASPM, BTS databases Delay Network Simulation Flight schedules Fleet mix Average fare Flight delays Airline Competitive Scheduling: Modeling Framework Auction 32 Slots/Hr

31. CATSRCATSR 31 Model Estimate of Aircraft Gauge Change

32. CATSRCATSR 32 Unprofitable daily markets at LGA Three markets (13 Flights) that are not profitable to operate on a daily basis are identified to be: Lebanon-Hanover, NH (LEB), Roanoke Municipal, VA (ROA), Knoxville, TN (TYS).

33. CATSRCATSR 33 Airlines Reduced frequency with larger aircraft Most Markets Retained More Profitable (90% of Optimum) Passengers Markets served: Little change Airfares no change Improved Predictability Airports Increased passenger throughput Reduced delays (70%) Air Traffic Control Reduced delays –Demand within capacity –Reduced Prob. SRO Airlines adapt with aircraft size and frequency to congestion constraint: Positive impacts on passengers, airports, airlines, and ATC Research Results – Win Win

34. CATSRCATSR 34 Outline How bad and widespread is the Problem Passenger QOS Economic Impact What are the Underlying Causes Too Many Scheduled Flights into Too Few Runways Why the Airlines cannot fix the Problem Themselves Prisoners Dilemma and Curse of the Commons Government (Congress/DOT/FAA) Measures Required to Fix the Problem Airport Arrival Time Slot Auctions NEXTGEN ATM system Larger Aircraft Fleet Implications for the Environment

35. CATSRCATSR 35 The Predicted Growth in Aviation Demand is based on Passenger Demand NOT Aircraft Operations Larger Aircraft will be required to meet X2 or X3 demand Business Jet and VLJ Air Taxi Service will emerge to compete with Commercial aviation due to current System Failure May not be able to put the Geni back in the Bottle Environmental Implications? New Aircraft (e.g. B 787) should be Environmentally Friendly (Emissions/passenger/mi.?) US airlines are not currently ordering them due to poor financial position New Public Policy will be needed to Deal with these Complex Adaptive System Problems NEXTGEN System not addressing these issues

36. CATSRCATSR 36 Center for Air Transportation System Research Publications and Information http://catsr.ite.gmu.edu –Other Useful Web Sites http://mytravelrights.com http://gao.gov http://www.airconsumer.ost.dot.gov

37. CATSRCATSR 37 BACKUP Material

38. CATSRCATSR 38 Summary of European Passenger Bill of Rights - http://news.bbc.co.uk/1/hi/business/4267095.stm Overbooked Flights Passengers can now get roughly double the existing compensation if they are bumped off a flight. –Compensation must be paid immediately. –These passengers must also be offered the choice of a refund, a flight back to their original point of departure, or an alternative flight to continue their journey. May also have rights to meals, refreshments, hotel accommodation if necessary even free e- mails, faxes or telephone calls. Cancelled Flights Offered a refund of your ticket, along with a free flight back to your initial point of departure, when relevant. Or, alternative transport to your final destination. Rights to meals, refreshments, hotel accommodation if necessary, even free e-mails or telephone calls. –Airlines can only offer you a refund in the form of travel vouchers if you agree in writing Refunds may also be paid in cash, by bank transfer or cheque If the reason for your flight's cancellation is "within the airline's control", it must pay compensation. Compensation for cancellations must be paid within seven days. Delayed Flights Airline may be obliged to supply meals and refreshments, along with accommodation if an overnight stay is required. If the delay is for five hours or more, passengers are also entitled to a refund of their ticket with a free flight back to your initial point of departure if this is relevant.

39. CATSRCATSR 39 Air Transportation is Characterized as a Complex Adaptive System (CAS) Bengi Mezhepoglu, PhD in progress