Passenger Value of Time, Benefit-Cost Analysis and Airport Capital Investment Decisions, Volume 3: Appendix A Background Research and Appendix B Stated Preference Survey (2015) / Chapter Skim
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TABLE OF CONTENTS A.1 Annotated Bibliography and Literature Review ............................................................. A-1 General References: On Airport Capital Investment Planning & Finance .............................
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1 ANNOTATED BIBLIOGRAPHY AND LITERATURE REVIEW This appendix identifies published guidance concerning passenger value of time, benefitcost analysis and airport capital investment decisions. Literature is reviewed on the following topics: β’ U.S.
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(an airline or general aircraft owner) , and tend to focus on average operating costs with a broader definition that also includes fuel and maintenance costs, as well as full wage and overhead costs for pilots and crew.
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β’ determination of peak-hour traffic β’ financing, pricing, and demand management Horonjeff, R., F McKelvey, W
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the types of information and analysis that the FAA requires airport sponsors to submit along with their applications for funding.
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TransSolutions, Strategic Insight Group, Aviation Resource Partners and Kimley-Horn Associates, ACRP Report 55: Passenger Level of Service and Spatial Planning for Airport Terminals, Transportation Research Board, Washington, D.C.
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β’ Apply transportation impact evaluation tools to assess the incidence of effects on shippers, carriers and other parties. β’ Apply economic impact evaluation tools to assess wider effects on the economy.
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Executive Office of the President, Regulatory Planning and Review, Executive Order (EO)
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The Executive Order requires agencies to evaluate infrastructure investment at both the program level (e.g., Airport Improvement Program level) and individual project level.
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evaluating government programs and policies that have effects on private citizens or other levels of government. The Circular provides specific guidance on the discount rates to be used in evaluating federal programs whose benefits and costs are distributed over time.
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evaluations of, the methods, tools, and techniques available to assess them. These are: changes in travel time, safety, changes in vehicle operating costs, transportation choice, accessibility, community cohesion, economic development, traffic noise, visual quality, property values, and distributive effects.
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inconsistencies in how benefits are calculated. It also identifies aspects of the FAA BCA guidance that appear to have caused confusion among BCA practitioners.
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β’ To ascertain the net effect of a proposed policy change on social well-being, we must first have a way of measuring the gains to the gainers and the losses to the losers. Implicit in this statement is the central tenet of BCA: the effects of a policy change on society are no more or no less than the aggregate of the effects on the individuals who comprise society.
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analyses. The values have been assembled from a variety of sources and are expressed in euro at 2009 price levels.
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β’ Sample benefit-cost models and links to model sites β’ Case studies of benefit-cost analyses for transportation projects β’ References The guide provides guidance and suggestions on how to calculate the various benefits and costs attributable to transportation projects. In particular, it identifies and describes procedures for measuring the following benefits: travel time or delay reductions, accident reduction, emissions reductions, and vehicle operating cost reduction.
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Treasury Board of Canada Secretariat, Canadian Cost-Benefit Analysis Guide, 2007. [Online]
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β’ Chapter 6 deals with variability in benefit-cost estimates due to risk and uncertainty. β’ Chapter 7 describes techniques for measuring price level changes and treatment of inflation in benefit-cost analysis.
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steps involved in the BCA process. The FAA requires BCA on airport capacity projects for which airport sponsors are seeking AIP discretionary grants of $5 million or more and LOI funding in any amount over the life of the project.
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β’ Benefits analysis β’ Benefit-cost comparison The document provides a description of each of these sections, the items that should be included, potential data sources, various methods of analysis, and the like. Chapter 7 describes the framework for quantitative analysis of the following categories of damages similar to those caused by pollutant emissions from aircraft and vehicles operating at airports: β’ Direct damages to humans, including health damages and aesthetic damage.
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solutions to capital budgeting, as well as more advanced topics in capital investment decision making. Butler, S
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and changes in ground access to intermodal transportation ports and terminals. The documentation shows how impacts are calculated for costs savings, productivity and creation of income, jobs and business growth.
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measure, population characteristics, and analytical objective. Meta-analysis possibilities are described for nominal, categorical, ordinal, interval, and fuzzy cases.
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Miscellaneous Transportation BCA Applications Cook, A., G Tanner, and S
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safety, and lower vehicle operating costs β benefits that are also relevant airport capital investment projects. Hogarty, T
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operating costs with a broader definition that also includes fuel and maintenance costs, as well as full wage and overhead costs for vehicle operators. The longer-term choices of transportation service provider include further considerations of reliability and market pricing of the delivery services provided, and that pricing may be determined more by market supply and demand conditions than by operating costs.
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Gonzales, R M., "The value of time: a theoretical review," Transport Reviews, Vol.
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transit passengers. Miller's findings and recommendations serve as the sources of values for local travel in U.S.
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travel time by trip purpose per person-hour: personal, $32.60; business, $60.00; and all purposes, $43.70. The guidance also recommends ranges for hourly values of travel time to be used for sensitivity analysis.
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Small, K., C Winston, and J
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Koster, P., E Verhoef, and E
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conditions, or cancer, are willing to pay less to reduce their risk of dyingβ¦. If anything, people with these illnesses are willing to pay more." Aldy, J
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Bellavance, F., G Dionne, and M
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methods for determining VSL. After reviewing a number of previous studies, the authors determine that the average VSL for transportation, measured in 2000 Canadian dollars, is $5.183 million (median $5.369 million)
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Mrozek, J., and L Taylor, "What Determines the Value of Life?
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U.S. Department of Transportation, "Treatment of the Value of Life and Injuries in Preparing Economic Evaluations," Memorandum, Jan.
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Recent estimates are based on "willingness to pay" (WTP)
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Viscusi, W.K., and J Aldy, "The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World," The Journal of Risk and Uncertainty, Vol.
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losses)
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Generally, noise regulations will result in higher fares. Cumulative noise reductions are found to have greater overall social welfare than per-aircraft restraints.
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Lane, T., "The Impact of Airport Operations on Land Values: A Case Study of Seattle-Tacoma International Airport," Presented at the Thirty Second Annual Pacific Northwest Regional Economic Conference, 1998 Single family residential values are assessed for a number of neighborhoods in proximity with Seattle-Tacoma International Airport. Ordinary Least Squares Regression (OLS)
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that disturbance increases non-linearly with dB increases. The cost of pollutants is a function of emissions from various engine/aircraft types, the number of aircraft movements, the unit costs of pollutants, and flight mode (cruise, take-off, etc.)
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β’ Review of noise valuation studies β’ Potential for benefit transfer of existing studies β’ Cut-off point for valuing noise β’ Values to use beyond the cut-off point β’ Value for noise from different transportation modes β’ Should the value be the same for all member states and countries β’ Research gaps Environmental valuation methods, both stated preference (SP) and revealed preference (RP)
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Ogren, M., and H Andersson, "Noise Charges in Railway Infrastructure: A Pricing Schedule Based on the Marginal Cost Principle," Transport Policy, Vol.
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Van Praag, B
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studies of health costs from air transport, with damage costs estimated at 0.39, 0.01, and 0.18 cents per passenger-mile traveled. The first two also include freight, with estimated damages at 1.18 and 0.003 cents per ton-mile.
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Muller, N., and R Mendelsohn, "Measuring the damages of air pollution in the United States," Journal of Environmental Economics and Management, Vol.
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Pearce, D., "The Social Cost of Carbon and Its Policy Implications," Oxford Review of Economic Policy, Vol.
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The overall conclusion from the abstract is: "Using standard assumptions about discounting and aggregation, the marginal damage costs of carbon dioxide emissions are unlikely to exceed $50/tC, and probably much smaller." Tol, R., "The economic effects of climate change," Journal of Economic Perspectives, Vol.
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U.S. Environmental Protection Agency, The Benefits and Costs of the Clean Air Act, 1990 to 2010, EPA Report to Congress, Nov.
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Weisbrod, G., T Lynch and M
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2 EVALUATING AIRPORT CAPITAL INVESTMENT DECISIONS This appendix chapter presents four methodologies and associated techniques for evaluating airport capital investment decisions. These methodologies are: (1)
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analysis (BCA) β an economic analysis technique β to demonstrate a project's economic merit when requesting at least $5 million in discretionary grant funding for airport capacity projects under the Airport Improvement Program (AIP)
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Techniques for financial analysis are classified into two categories: (1) traditional investment decision rules in capital finance, and (2)
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Airport Capital Investment What is Capital Investment? Capital is defined as "accumulated goods devoted to the production of other goods." Investment is defined as "the outlay of money, usually for income or profit."5 In the airport context, the term "capital investment" is used less frequently than other terms β such as "airport development" or "capital improvement." Airport development is a statutory term in the context of the AIP β a significant source of funds for airport capital investment.
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which aircraft operations are carried out.10 Therefore, airside projects can include construction of new runways, reconstruction of existing runways, relocation of runways or taxiways, or acquisition of aircraft rescue and firefighting equipment. Landside facilities include parts of the airport serving passengers, including surface transportation.11 Therefore, landside projects would include construction, expansion and reconstruction of a passenger terminal; construction or reconstruction of ground access facilities; and construction of automobile parking facilities.
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β’ Environmental enhancement or mitigation β projects to satisfy environmental requirements associated with other airport capital investment projects or airport operations, or projects to reduce or mitigate the environmental impacts associated with the airport β’ Efficiency improvement β reducing operating costs by replacing old technologies and structures with current systems In many cases, a project may serve multiple objectives. For example, a runway rehabilitation project preserves capacity and may also enhance safety by reducing the risk that debris from deteriorating pavement will be ingested into an aircraft engine.
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Table A-2. Typical Landside Capital Projects and Objectives Capital Project Project Objectives Construct new terminal/expand existing terminal Capacity, customer service and efficiency Replace or reconstruct terminal, including major system replacement Customer service and efficiency Construct or expand parking garage Revenue generation and customer service Construct consolidated rental car facilities Revenue generation, customer service and environmental enhancement Construct, expand or rehabilitate airport access roadways Customer service and enhancing or preserving capacity Construct automated passenger movement systems Customer service, environmental enhancement, and enhancing capacity Construct or expand cargo facilities Revenue generation and enhancing or preserving capacity Construct central heating/refrigeration plant Customer service and efficiency Construct electrical substation Customer service and efficiency Sources of Funding A variety of funding sources are available for airport capital investments.
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β’ AIP grants are the second largest source of funds at 29 percent of funding for airport capital projects.14 For smaller airports, however, AIP grants are a more important source of capital funding because access to debt is limited. The bulk of grant funds used to finance airport capital investments come from the AIP administered by the FAA.
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airports collecting PFCs do so at the $3.00 or $4.50 level.19 The statute authorizing collection of PFCs (49 USC Β§ 40117) also specifies project eligibility and other standards for approval.
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airport, the lease and use agreement with carriers may specify the amount of net revenue the airport will generate each year and how that revenue will be distributed or used. Airport cash flow can be used to fund any type of project listed in Table A-1 and Table A-2.
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Table A-5. Typical Landside Projects and Funding Sources Capital Project Funding Sources*
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Order requires federal agencies to evaluate infrastructure investment at both the program level (e.g., AIP level) and the individual project level.
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While airport sponsors β usually with the help of consultants β typically prepare a BCA when applying to the FAA for AIP discretionary or LOI grant funding and a financial feasibility study when issuing bonds, they routinely employ financial planning techniques, such as rates and charges analysis and financial affordability analysis, as part of their CIP planning process. Part of this exercise is the identification of different capital funding sources for the different projects that make up the CIP, and airport sponsors typically perform financial planning for the entire CIP, rather than individual projects.
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β’ What is the best alternative for meeting the objective of the project? β’ What is the best funding source (or combination of funding sources)
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β’ Are other statutory and administrative requirements satisfied? 32 In evaluating AIP grant applications, the FAA will examine the following: β’ Whether sufficient funds are available to cover costs not covered by the grant (for all grants)
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β’ Have any carrier objections to the project been adequately addressed or mitigated? Is it reasonable to move forward with PFC funding in the face of the objections?
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useful.34 The FAA prepared guidance to promote uniform standards in performing BCA of airport capacity projects, and "to increase the airport sponsor's acceptance of the BCA as one of several useful methodologies, not merely a requirement imposed from outside."35 As presented in Appendix A1, the Annotated Bibliography for this research, the federal requirement, policies and guidance for economic analysis of federal infrastructure investment are contained in the following documents: β’ Executive Office of the President, Principles of Federal Infrastructure Investment, Executive Order 12893, Jan.
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airport sponsors for conducting project-level BCA for capacity-related airport projects. Economic analysis provides a systematic framework for documenting and comparing project costs and benefits, and comparing the net benefits of different project alternatives.
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BCA Guidance) addresses the BCA of capacity-related projects for AIP grant funding, economic analysis can be used to evaluate all types of airport capital projects, including those intended for safety, security, conformance with FAA standards, or environmental mitigation.
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The BCA Process The BCA process described here is consistent with the process prescribed in the FAA BCA Guidance and consists of the following steps: β’ Define the objective of the proposed project β’ Specify the assumptions about future airport and local market conditions β’ Identify the base case β’ Identify reasonable alternatives β’ Determine the evaluation period β’ Identify benefits and costs β’ Compare benefits and costs β’ Perform sensitivity analysis and address risks and uncertainties β’ Make recommendations Define the objective of the proposed project. The objective must be stated in a manner that does not prejudge the means to achieve the objective.
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β’ Future changes in airport facilities and capacity that are likely to occur independently of the proposed investment β’ Binding constraints on airport capacity that would not be affected by the potential investment β’ Improvements in regional air traffic management procedures (for example, anticipated improvements resulting from FAA's implementation of Next Generation Air Transportation System, if any, within the project evaluation period) Identify the base case.
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The FAA generally uses an evaluation period covering at least 20 years beyond the completion of construction for major airport infrastructure projects. The same evaluation period must be used to compare the benefits and costs of mutually exclusive alternatives.
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Make recommendations. Recommend (1)
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rates are updated annually and can be obtained from the OMB.41 BCAs submitted to the FAA to support AIP / LOI funding requests must use the OMB prescribed seven percent discount rate, until the OMB issues an update. The airport sponsor can present sensitivity analyses using other discount rates that might reflect better the long-term opportunity cost of capital under current market conditions.
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β’ Treatment of hard-to-quantify benefits and costs. There may be certain benefits and costs that cannot be measured in dollars.
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The decision rule can also be expressed as a ratio of costs to a nonmonetary quantitative measure of benefits -- for example, costs in dollars for each life saved. For most capital investments, the evaluation period typically spans many years over the investment's life-cycle.
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benefits. However, airport capital investment projects, like other transportation projects, often involve benefits (or costs)
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β’ Stated preference (SP) - When values cannot be inferred from market transactions, economists have devised measurement techniques based on stated-preference surveys.
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need periodic updates. In particular the values recommended for passenger travel time were last updated in February 2003, based on guidance from the DOT Office of the Secretary.
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These techniques are useful in deciding whether to accept or reject a proposed project, establishing investment priorities by ranking projects, and choosing among mutually exclusive alternatives. In airport capital investment, these techniques, applied strictly on cash flows, are appropriate when evaluating projects (1)
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that will maximize value, whereas the other techniques do not. It is also easy to implement and interpret, especially relative to the internal rate of return (IRR)
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arbitrary. When comparing alternatives, the payback period can lead to a wrong decision because: (1)
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As explained above, the NPV method is the only one among the four investment decision rules that always leads to an investment choice that will maximize value. The NPV method, however, has limited effectiveness when faced with capital rationing.
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significant scale differences, and (3) when considering mutually exclusive projects with significant differences in the timing of cash flows.61 Benefit/Cost Ratio The benefit/cost ratio (also known as profitability index or present value index)
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Financial Analysis: Airport CIP Financial Planning Techniques This section describes techniques of financial analysis with specific application to airport CIP financial planningβtechniques that are widely and routinely used by airport sponsors in evaluating airport capital investment decisions. These techniques address questions of financial affordability and feasibility in terms of how the project and its financing will affect the airport's rates and charges, cost per enplanement, and other financial performance metrics.
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fees; revenues generated from general aviation users, including fixed base operators (FBOs) ; revenues generated from air cargo facilities; and other sources, such as land and non-terminal building rents.
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methodology β specified in the lease agreement, or decreed through ordinance β and the capital program funding plan. It is usually best for an airport to maximize the amount of FAA AIP funds used for airfield projects, in order to minimize the impact of airfield capital project expenditures on the airline rates and charges.
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Sample calculations of terminal and airfield rates and charges, under residual and compensatory methodologies, are presented in Table A-7 through Table A-10. Table A-7.
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Table A-9. Sample Terminal Rental Rate Calculation β Compensatory Methodology Regular Compensatory Commercial Compensatory Passenger Terminal Costs $30,000,000 $22,500,000 Debt Service $6,000,000 $4,500,000 Amortization $2,000,000 $1,500,000 Reserve Fund Deposits $1,000,000 $750,000 Total Terminal Costs $39,000,000 $29,250,000 Divided by: Total Leasable sqft.
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Table A-11. Sample Terminal Rental Rate Calculation β Hybrid Methodology Passenger Terminal Costs $30,000,000 Debt Service $6,000,000 Amortization $2,000,000 Reserve Fund Deposits $1,000,000 Total Terminal Costs $39,000,000 Less Credits (50%)
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methodology (compare the sample compensatory rate shown in Table A-7 with the sample residual rate shown in Table A-9) , the landing fee would be higher under the residual methodology (see Table A-8)
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Table A-13. Illustrative Cash Flow β Residual and Compensatory Rate Methodologies Residual Compensatory Airline Revenue Airline Rent $5,200,000 $29,250,000 Landing Fees $37,000,000 $17,250,000 Total Airline Revenue $42,200,000 $46,500,000 Non-airline Revenue Parking Revenue $16,000,000 $16,000,000 Rental Car Concession Revenue $9,000,000 $9,000,000 Food & Beverage Concession Revenue $3,000,000 $3,000,000 Retail Concession Revenue $2,800,000 $2,800,000 Other Terminal Concession Revenue $3,000,000 $3,000,000 General Aviation Revenue $1,250,000 $1,250,000 Air Cargo Rentals $500,000 $500,000 Non-signatory Landing Fees $1,500,000 $1,500,000 Other Non-airline Revenue $750,000 $750,000 Total Non-airline Revenue $37,800,000 $37,800,000 Total Revenues $80,000,000 $84,300,000 O&M Expenses Terminal $30,000,000 $30,000,000 Airfield $15,000,000 $15,000,000 Other $20,000,000 $20,000,000 Total O&M Expenses $65,000,000 $65,000,000 Net Revenues $15,000,000 $19,300,000 Debt Service $12,000,000 $12,000,000 Net Cash Flow $3,000,000 $7,300,000 Debt Service Coverage 1.25 1.61 Financial Affordability Analysis and Financial Feasibility Analysis A key question to answer in the early stages of the capital program planning process is: How much can the airport afford to build?
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discretionary cash the airport can generate, and the level of airline rates and charges (expressed in terms of the airline cost per enplanement)
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to generate discretionary cash flow, PFCs, and AIP grant receipts, and develop an estimate of the entire CIP cost it could afford, based on the assumed funding sources and amounts. Once this affordability analysis has been performed, the airport would proceed with a bond financing strategy, which would include the commissioning of a financial feasibility analysis.
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bond underwriters, bond insurers, rating agencies, and prospective bondholders by evaluating the credit-worthiness of the bonds. If the various interested parties are not convinced of the credit-worthiness of the bonds, the airport will not be able to sell the bonds or will have to pay a higher interest rate to do so and, thus, will be unable to fund its capital program.
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terminal rental rates, O&M expenses, debt service, cash flow, cost per enplanement, and debt service coverage. The financial analysis is structured to simulate the financial operations of the airport.
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(and then charged to the airlines)
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Table A-15. Illustrative Summary Table β Financial Feasibility Report Year 1 Year 2 Year 3 Year 4 Year 5 Airline Revenue Airline Rent $29,250,000 $30,127,500 $38,250,000 $39,397,500 $40,579,425 Landing Fees $17,250,000 $17,767,500 $18,300,525 $18,849,541 $19,415,027 Total Airline Revenue $46,500,000 $47,895,000 $56,550,525 $58,247,041 $59,994,452 Non-airline Revenue Parking Revenue $16,000,000 $16,480,000 $16,974,400 $17,483,632 $18,008,141 Rental Car Concession Revenue $9,000,000 $9,270,000 $9,548,100 $9,834,543 $10,129,579 Food & Beverage Concession Revenue $3,000,000 $3,090,000 $3,182,700 $3,278,181 $3,376,526 Retail Concession Revenue $2,800,000 $2,884,000 $2,970,520 $3,059,636 $3,151,425 Other Terminal Concession Revenue $3,000,000 $3,090,000 $3,182,700 $3,278,181 $3,376,526 General Aviation Revenue $1,250,000 $1,287,500 $1,326,125 $1,365,909 $1,406,886 Air Cargo Rentals $500,000 $515,000 $530,450 $546,364 $562,754 Non-signatory Landing Fees $1,500,000 $1,545,000 $1,591,350 $1,639,091 $1,688,263 Other Non-airline Revenue $750,000 $772,500 $795,675 $819,545 $844,132 Total Non-airline Revenue 37,800,000 $38,934,000 $40,102,020 $41,305,081 $42,544,233 Total Revenues $84,300,000 $86,829,000 $96,652,545 $99,552,121 $102,538,685 O&M Expenses $65,000,000 $66,950,000 $68,000,000 $70,040,000 $72,141,200 Net Revenues $19,300,000 $19,879,000 $28,652,545 $29,512,121 $30,397,485 Debt Service $12,000,000 $12,000,000 $21,000,000 $21,000,000 $21,000,000 Net Cash Flow $7,300,000 $7,879,000 $7,652,545 $8,512,121 $9,397,485 Debt Service Coverage 1.61 1.66 1.36 1.41 1.45 Forecast Enplanements 7,500,000 7,650,000 7,803,000 7,959,060 8,118,241 Airline Cost per Enplanement $6.20 $626 $7.25 $7.32 $7.39 Limitations of Airport CIP Financial Planning The airport CIP financial planning techniques described above are an intrinsic part of airport capital investment planning because they address the questions of how capital investments can be funded, how they will affect rates and charges, whether the airport sponsor can afford them, and whether they are financially feasible based on a variety of airport financial considerations.
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Economic Impact Analysis Economic impact analysis63 estimates regional economic impacts. Though typically not included in BCA, economic impact analysis can influence airport capital investment decisions to the extent that airport sponsors need the support of state and local governments and local communities to develop the airport and implement capital projects.
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There are three basic categories of models used to derive regional multipliers for estimating total economic impact: (1) economic base models, (2)
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engaged in a broad range of business activities and employ workers in various occupations in order to provide aviation and related services at airports. Aviation Use Impact.
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greatest effect on the results, and how the results will change if the values of these variables change. The analyst needs to identify those variables that have the greatest effect on the decision outcome and perform sensitivity analysis to evaluate how the results would change if these variables change.
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and budgeting, beyond BCA risk analysis. Any type of planning and analysis that involves estimates and projections about input variables is a potential application.
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both the size of the investment and the potential consequences of making the wrong investment choice by failing to adequately account for the risks involved.
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3 EVALUATING AIRPORT CAPITAL INVESTMENT DECISIONS: SUMMARY TABLES This synopsis presents five reference tables that (1) summarize methodologies and techniques for use in evaluating airport capital investment decisions; and (2)
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Summary Tables on Methodologies and Techniques for Evaluation of Airport Capital Investment Decisions Table A-16. Methodologies and Techniques for Evaluating Airport Capital Investment Decisions (Page 1 of 2)
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Table A-16. Methodologies and Techniques for Evaluating Airport Capital Investment Decisions (Page 2 of 2)
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Table A-17. Methodologies and Techniques for Evaluating Airport Capital Investment Decisions: Measurements and Decision Rules (Page 1 of 2)
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Table A-17. Methodologies and Techniques for Evaluating Airport Capital Investment Decisions: Measurements and Decision Rules (Page 2 of 2)
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Summary Tables on the Identification, Measurement and Valuation of Benefits for Airport Benefit-Cost Analysis Table A-18. Airport Benefit-Cost Analysis: Airport Capital Projects and Benefits (Page 1 of 2)
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Table A-18. Airport Benefit-Cost Analysis: Airport Capital Projects and Benefits (Page 2 of 2)
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Table A-19. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefits and Measurement Units (Page 1 of 5)
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Table A-19. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefits and Measurement Units (Page 2 of 5)
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Table A-19. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefits and Measurement Units (Page 3 of 5)
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Table A-19. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefits and Measurement Units (Page 4 of 5)
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Table A-19. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefits and Measurement Units (Page 5 of 5)
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Table A-20. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefit Measurement Units, Relevant Economic Values and Data Sources (Page 1 of 6)
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Table A-20. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefit Measurement Units, Relevant Economic Values and Data Sources (Page 2 of 6)
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Table A-20. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefit Measurement Units, Relevant Economic Values and Data Sources (Page 3 of 6)
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Table A-20. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefit Measurement Units, Relevant Economic Values and Data Sources (Page 4 of 6)
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Table A-20. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefit Measurement Units, Relevant Economic Values and Data Sources (Page 5 of 6)
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Table A-20. Airport Benefit-Cost Analysis: Airport Capital Projects, Benefit Measurement Units, Relevant Economic Values and Data Sources (Page 6 of 6)
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4 IDENTIFYING CASE STUDIES The Research Team identified five cases for review of how airports make capital investment decisions. In the course of selecting the Research Team identified and screened multiple capital projects.
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Documentation of the methodologies and techniques (e.g., benefit-cost studies and financial analyses) used for each proposed case are available.
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Case Study Outline As part of the project, the Research Team developed case studies to illustrate how airports make capital investment decisions using benefit-cost analysis, financial analysis, capital investment financial planning, and economic impact analysis. To complete a case study, the Research Team interviewed airport management staff, consultants, FAA representatives and other parties involved in the decision process, and reviewed available reports to document the following: 1.
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Figure A-1. Runway 14/32 on Logan Airport Airfield Source: Lincoln Land Institute and the Federal Aviation Administration b.
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Figure A-2. Overview of Environmental Permitting, Legal, Construction Timeline Source: Leo, Flavio; Planning Constructing and Integrating a New Runway at Boston Logan International Airport; December, 2010.
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Table A-22. Project Budget for Runway 14/32 Item Cost Property Acquisition $9,237,000 Design $2,561,000 Construction & Construction Related $56,837,000 Legal & Environmental $14,373,000 OCIP (Owner Controlled Insurance Program)
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Table A-23. Sources and Uses of Funds for the LFMP LFMP Source of Funds (in millions)
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Lambert-St. Louis International Airport β Airport Development Program In 1999, the City of St.
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its service by approximately 50 percent, lowering total enplanements by over 30 percent. The airport responded to these challenges by reducing the scope of the program and adjusting the funding sources.
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Table A-27. Project Objectives Number Primary Objective Other Project Benefits 1 Reduce Runway 26L departure delay Reduction of Runway 27R departure delay 2 Reduce crossings of Runway 26L and exposure to incursions Reduced aircraft engine emissions 3 Clear up Runway 8R queueing problems at Ramp 1, 2, and 3 throats Greater controller flexibility 4 Expedite DAL Supertug Repositioning of aircraft from CPTC to TOC North and vice versa DAL = Delta Airlines; CPTC = Central Passenger Terminal Complex; TOC = Technical Operations Center (an existing airplane maintenance complex)
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Table A-28. Estimated EAT Budget Prior to Development Item Estimated Cost Planning $548,182 Design $1,230,099 Construction $37,331,689 Construction Management $972,675 Program Management $1,035,861 Insurance $732,169 Testing $244,056 Total $42,094,731 Birmingham-Shuttlesworth International Airport Terminal Modernization Project In February of 2006, the Birmingham Airport Authority commissioned a study to determine the future viability of the Birmingham-Shuttlesworth International Airport Main Terminal Building.
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Table A-29. Terminal Modernization Source of Funds Source Amount Series 2010 GARBs $116,075,430 PFC Pay-As-You-Go 15,603,206 AIP Entitlements Grants 22,337,976 AIP Discretionary Grants 18,386,540 VALE Grants 8,773,988 TSA Grants 14,303,230 Airport Discretionary Revenue 6,168,781 Total Sources of Funds $201,649,150 A financial feasibility study was prepared to support the recently issued Series 2010 GARBs, which account for nearly 58 percent of total capital funding requirements.
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5 CASE STUDIES Purpose of Case Studies Airport capital investment decisions may be conceived and implemented for either of two overarching reasons: β’ An airport may require more capacity to address congestion and delays, or β’ There may be a need to improve safety or environmental factors or passenger convenience. Because funding for projects is competitive, decision makers must evaluate projects on a number of factors when deciding what to fund, including a project's return on investment and the ratio of the project benefits to project costs.
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β’ A modernized terminal building, together with construction or reconstruction of runways, taxiways, and other infrastructure, at Dallas Love Field Airport (an automated people mover was considered but subsequently found to be infeasible due to cost) β’ A new parallel runway at Lambert-St.
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Table A-30. Overview of Case Studies Airport Airport Designation Project Description Date Completed Project Purpose BirminghamShuttlesworth International Airport Small Hub Main terminal building modernization Largely Complete Terminal modernization to update systems, make building improvements and improve passenger flow.
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Overview of Approaches to Decision Making and Passenger Value of Time Analysis methodologies and techniques used by the project sponsors for each of the case study projects followed the requirements of funding agencies and programs. Employment of methodologies was undertaken in part to promote the projects to potential funding sources.
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Table A-31. Studies Used to Define Capital Investment Programs Airport Terminal Modernization Plan Airport Master Plan Capital Improvement Plan/ Capital Development Plan Airport Development Plan Environmental Impact Statement Project Definition Report Birmingham-Shuttlesworth International Airport X Hartsfield-Jackson Atlanta International Airport X X X Boston Logan International Airport X X Dallas Love Field Airport X Lambert-St Louis International Airport X X X Page A-140
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Table A-32 lists the analytical tools used to evaluate the feasibility of each case study project. These methodologies include financial techniques and benefit-cost analyses, which are often employed after numerous scenarios have been vetted in the processes listed in Table A-31.
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Table A-33. Project Evaluation Techniques Analysis Measures Airport Benefit-Cost Ratio Net Present Value Value of Time Other factors included in BenefitCost Analysis Cost per Enplanement After Improvement Debt Coverage Ratio After Improvement BirminghamShuttlesworth International Airport NA NA NA NA $7.72 prior to project; $11.91 after project 1.96 prior to project; 1.68 after project Hartsfield-Jackson Atlanta International Airport 3.6-6.4 $91.5m - $194.3m net $26.70/hr for passenger time did not included value of time to insure a conservative estimate Capital costs, aircraft activity, and aircraft operating costs NA NA Boston Logan International Airport 5.0-7.5, for scenarios that cap delay at 20 min.
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Table A-34. Funding Mechanisms for Airport Improvements Funding Mechanisms Airport GARBs PFCs AIP grants TSA grants VALE Program grants Municipal Funds FAA Facilities & Equipment Fund Airline Funding SFB Interest Income Other Airport Revenues BirminghamShuttlesworth International Airport X X X X X X Hartsfield-Jackson Atlanta International Airport X X X Boston Logan International Airport X X X Dallas Love Field Airport X X X X X X Lambert-St Louis International Airport X X X X X X Funding Mechanisms: GARB - General Airport Revenue Bonds PFC - Passenger Facility Charge AIP - Airport Improvement Program TSA - Transportation Security Administration VALE - Voluntary Airport Low Emissions Program SFB - Special Facility Bonds.
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All of the airports except Boston Logan applied for and received permission to increase PFCs to help fund their projects. Two of the airports used GARBs to help fund their projects.
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airline operating cost reductions resulting from reduced delays on the benefit side of the equation. The sensitivity analyses for the various projects diverged on several factors to arrive at a range of benefit/cost ratios and net present values (NPVs)
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airport, the airport's consultant, the FAA, a St. Louis business association, labor unions, congressional members, local governments and the public.
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Figure A-3. Airside Map of Logan Airport Source: Airport Diagram of the Federal Aviation Administration ranked as one of the top 10 most delayed airports in the U.S.
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including increases in noise and emissions, detriments to economic growth and threats to endangered species.78 Project Description After evaluating several recommended solutions from numerous studies, the FAA issued their Record of Decision (ROD) in 2002, which approved three proposed recommendations to reduce travel delay: (1)
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Other studies from 1992-1995 included the following recommendations, in addition to ones accepted by the FAA in their 2002 Record of Decision (ROD)
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escalation for inflation in accordance with FAA BCA guidance. The actual cost of the project was $100 million dollars, which is listed in Table A-35 by component.
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Figure A-4. Project Timeline Note: MEPA stands for the Massachusetts Environmental Protection Plan Source: Leo, Flavio; Planning, Constructing and Integrating a New Runway at Boston Logan International Airport; Dec.
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Massport's 2002 planning forecasts were used to estimate future passenger growth and activity and a 7 percent real discount rate was used to calculate the present value of benefits and cost (in 2002 dollars)
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project implementation were postponed by 1, 3, and 5 years. Benefits were also reduced by 10 percent and 20 percent to model the potential variation in delay reduction.
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Figure A-5. Airside Map of Birmingham-Shuttlesworth International Airport Source: Airport Diagram of the Federal Aviaiton Administration Birmingham-Shuttlesworth International Airport β Terminal Modernization Program In February of 2006, the Birmingham Airport Authority (the Authority)
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September 16, 1986. The Authority is an independent authority of the City of Birmingham, governed by an eight-member Board of Directors (the board)
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HVAC system; (11) the construction of a Federal Inspection Service (FIS)
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experience and eliminate or reduce the safety concerns. Also, the TMP included building a pedestrian ramp from the third level of the parking deck to the second level of the new terminal.
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In response to the study, the Authority began working with the architecture firm KPS Group to design an improved terminal building that would address these issues. The airlines that serve BHM were involved in the planning process through their participation in several technical committees.
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Authority would not fit out the gates. The gates would be blocked from the rest of the terminal and would not become operational until the passenger traffic is anticipated to increase to a sufficient level to need them.
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Decision Outcome On February 10, 2011, construction officially began on the project and the first phase of airline moves was subsequently completed. In June 2011, the Authority completed negotiations with the airlines to complete a new Airline Use and Lease Agreement (AUA)
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Figure A-6. Airside Map of Hartsfield-Jackson Atlanta International Airport Source: Airnav.com In addition, the Research Team interviewed: J
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for landing aircraft to cross Runway 26L in order to access the terminal. The primary purpose of the EAT is to decrease delays caused by aircraft crossing Runway 26L, thus increasing the Runway 26L departure rate and reducing departure delays.
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The final project differed from the concept in the Master Plan in several ways. The master plan concept did not anticipate that the EAT would be able to handle the largest categories of aircraft and assumed that the existing lighting system would be retained.
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approve the proposed expenditure for the EAT.91 However, the airlines voted to deny the expenditure.92 The Assistant Director of Planning noted that if the benefit-cost had not been positive based on the inclusion of only operational cost savings in the BCA, the airport would not have pursued the EAT (at least not for funding by the airlines, according to the former general manager)
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through an LOI, awarded the airport $26 million for construction of the EAT, to be paid as follows: FY06 $7m FY07 $7m FY08 $2.5m FY09 $7m FY10 $2.5m Total $26m As the project unfolded, the total cost of the project increased to $44.8 million. It was also determined that the parking dislocation costs could be paid for by PFCs.
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consideration of adding passenger value of time in the benefit-cost calculation when preparing it for FAA review after the airlines turned down the EAT funding request. The Capital Development Program proposed for the airport was considered necessary, was not controversial within the Executive Committee, and was approved.
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Figure A-7. Airside Map of Dallas Love Field International Airport Source: Airport Diagram of the Federal Aviation Administration β’ Federal Aviation Administration, Letter of Intent, ASO-06-01, Atlanta HartsfieldJackson International Airport, Atlanta, Georgia, March 1, 2006.
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what is called the "Five Party Agreement," which formed the basis for the repeal of Wright Amendment restrictions by 2014. As concessions, the agreement also limits DAL to 20 gates (requiring demolition of 16 existing gates beyond that limit)
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ARFF equipment; (6) drainage and storm water projects; (7)
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o Renovate the existing West Concourse for Southwest Airlines (16 gates) o Renovate the existing North Concourse for American and Continental (4 gates)
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Gate Holdroom (avg.
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Automated People Mover. A 2008 feasibility study for the APM analyzed eight options for the DART Love Field station and ten options for the corresponding DAL terminal station.
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2018. With the exception of PFC revenues obligated to prior projects, all PFC revenues are applied to the PFC-eligible projects in the LFMP, CIP, and potentially the APM.
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Table A-42. Summary of Dallas Love Field LFMP Project Costs by Category and Funding Sources (millions)
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The 2007-2014 CIP totaled approximately $345.5 million and was funded by FAA AIP entitlement ($22.4 million) and discretionary ($16.3 million)
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The FAA reviewed the LOI application and provided feedback that resulted in submission of supplemental information,100 which included revised calculations of benefits (for three scenarios) and costs (for five scenarios)
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The first two benefits listed above result directly from the removal of the Wright Amendment, while the second two are the result of program construction and renovations. The other three benefit streams not related to passenger value of time were (a)
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Table A-44. Benefit-Cost Analysis Excluding Passenger Value of Time Benefit Scenario Benefits Excluding Passenger Value of Time Benefit/Cost Ratio Cost Scenario 1 ($47.1 million)
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Figure A-8. Airside Map of Lambert- St.
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dual independent aircraft arrivals during instrument flight rule (IFR) (bad weather)
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Commission) , the City Comptroller (Chief Fiscal Officer)
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Supplement Study recommended that the airport construct a new runway to increase airfield capacity and reduce air traffic delays.106 Table A-45 presents the historical and forecast traffic data for STL in the 1996 Master Plan Supplement Study. Table A-45.
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Investment Objective The objective of the ADP was to mitigate runway congestion and reduce aircraft delays at STL while providing capacity to accommodate forecast growth in aviation activity. This was perceived as necessary at that time to maintain the viability and attractiveness of STL as an airline hub airport and as an important link in the national aviation system.107 In 1997, the William J
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Phase III projects were beyond the 20-year planning period and were not programmed for implementation. Original ADP.
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service to and from St. Louis effective November 1, 2003.
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an interim basis with a CAT I approach to the west. This eliminated the need to relocate the hangar, as well as the MOANG munitions bunker and a U.S.
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would be completed sequentially -- one parallel runway to the west of the existing terminal, and then two parallel runways to the north of the existing terminal. β’ Programs of property acquisition more aggressive than Alternative W-1W required for three of the other seven build alternatives.
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Table A-47. Cumulative Delay Savings at the Airport and the National Airspace System (in 1996 dollars)
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Funding Plan Cost estimates for Phases I and II (1996-2015) of Alternative W-1W, as shown on The Master Plan Supplement Study identified sources and uses of funds for W-1W, as presented on Table A-51.
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Table A-50. Lambert-St.
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Table A-51. Lambert-St.
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Table A-52. Lambert-St.
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from interested stakeholders and the public. The participants in the discussions and meetings included the City of St.
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service) , and fund balances.
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terminal rental rates, O&M expenses, debt service, cash flow, cost per enplanement, and debt service coverage. In 2001, cost per enplanement was projected to increase from $3.99 in fiscal year (FY)
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for the Final EIS, in anticipation of a request for AIP funding.115 This BCA evaluated only one alternative, W-1W, against the no-action alternative. The initial BCA that narrowed the alternatives from eight to the preferred W-1W alternative did not explicitly consider passenger value of time as a project benefit.
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support the airport authority's LOI application, also prepared by Unison Consulting.116 This BCA calculated a total present value benefit of $4.967 billion, of which airline savings accounted for 39 percent and passenger value of time accounted for 61 percent. In this BCA, passenger value of time was set at $30.75 per hour, based on inflating the FAA's recommended values of passenger value of time from 1995 dollars to 1997 rates.
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β’ Lambert-St. Louis International Airport, Application for a Letter of Intent to Provide a Multi-Year Commitment of Airport Improvement Program Grant-in-Aid Funding, Feb., 1998.
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Conclusion The ACRP research project for which these case studies were performed is focused on evaluating how airports make capital investment decisions and how the passenger value of time is used to influence those decisions. The case studies examined capital investment decisions from a real-world perspective, and found that the tools and methodologies used were based on what was necessary to reach a decision.
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BCA (which was not submitted to the FAA) attributed 61 percent of all benefits to the passenger value of time.
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3) Performance and financial evaluation of project alternatives to reduce the number of alternatives for more detailed analysis.
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6 IDENTIFICATION OF GAPS IN ANALYTICAL TECHNIQUES AND REQUIRED STEPS TO FILL GAPS This appendix examines the extent to which gaps exist in the available guidance and information on how to apply the techniques for evaluating airport capital investments, as well as the steps required to fill those gaps. These gaps can take one of two forms.
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Appendix A.1 and the description of analytical techniques for airport capital investment decisions and associated guidance in Appendix A.2. The review examined four aspects of the application of analytical techniques to airport capital investment decisions, distinguishing between: β’ Procedural issues β’ Methodological issues β’ Treatment of non-linear factors, and β’ Data and information issues Procedural issues address which analytical techniques are used for given types of decisions, what constraints are placed on how those techniques are used, and what factors can or should be considered in the analysis.
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Similarly, the impact of delays on aircraft operating costs can vary with the way in which the delay is incurred. An aircraft that is held at the gate as part of a traffic flow management program is not incurring costs at the average operating cost per block hour, since it is not burning fuel and the flight crews are typically paid at a lower rate for time spent on duty but not flying.
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However, many of the current gaps in information and analytical techniques identified in this appendix will require a sustained program of research to improve the understanding of the issues involved and acquire the necessary empirical data, as well as expansion and updating of the guidance on evaluating airport capital investment projects published by the Federal Aviation Administration (FAA) and other governmental agencies.
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users of other modal facilities that result from changes in the use of aviation for travel; and β’ How to include local and regional economic development benefits of airport investments. In addition, several of the case studies of airport capital investment analysis undertaken as part of the current research project found that these analyses were scoped in a way that deliberately excluded some of the benefits of the project.
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Specification and Analysis of Base Case Typically, the benefit-cost analysis of a proposed project or set of project alternatives will compare the benefits and costs of the project or each alternative to a base case or noproject alternative (often referred to as the no-action alternative)
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The report on ACRP Synthesis 13 (Landau & Weisbrod, 2009) identifies a separate issue with the specification and analysis of the base case in performing a BCA of proposed airport capital projects, namely the appropriate treatment of avoided costs if the proposed project is constructed.
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Non-User Benefits and Costs Accounting for benefits accruing to aviation-dependent activities that are not direct users of the facility in question or benefits and costs incurred by users of other modal facilities that result from changes in the use of aviation resulting from the project in question involves two challenges. The first is identifying those activities and users and the second is determining the benefits and costs that result from the project.
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Required Steps to Address Gaps Assessing the travel time savings of airport landside projects to both users and non-users is usually fairly complex and involves the use of fairly sophisticated modeling techniques. Since these are generally the principal benefits of such projects, more detailed guidance on the use of the analytical tools involved would be helpful in achieving a consistent approach to evaluating such projects.
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to serve trips with an origin or destination in the region served by the airport. In the case of Hong Kong, what effect would this have on the tourist industry in Hong Kong?
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output models that arise from transfer of economic activity between regions should not be included in analysis prepared for consideration by the FAA, because such transfers generally provide no net benefit to society as a whole. Unfortunately, while the FAA guidance provides a number of cautions about aspects that should not be included in an analysis of non-aviation impacts, it provides very little guidance on what should (or could)
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However, while these effects can be described in qualitative terms, quantifying them is another matter entirely. This point brings up the reality that BCA does not recognize geography (in the sense that transfer payments are excluded from the analysis)
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techniques for explicitly addressing uncertainty in the projections of future benefits and costs can significantly increase the complexity of the analytical task. The reliability of travel times experienced by users of a project relates to the ability of those users to anticipate the time that a given trip will require.
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improvement in flight schedule reliability, as well the reduction in average delays. These benefits are likely to be valued differently by airport users.
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real operating and maintenance costs would tend to grow more slowly or even decline if the larger economy is stagnating. Unfortunately, the FAA guidance is silent on how an analyst might develop or obtain probability distributions for key variables in a BCA of an airport capital investment project.
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Required Steps to Address Gaps The future will almost certainly evolve in ways that are quite different from what is expected and once a capital investment has been made in constructing airport facilities, that decision cannot usually be reversed without a great deal of additional expense. One of the most important functions of performing BCA assessment of airport capital investment projects is to inform decision-makers of the economic risks inherent in a particular decision.
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To date, most of the empirical studies of the value assigned by travelers to travel time reliability have addressed urban commuting trips (e.g., Noland & Small, 1995; Small, Winston & Yan, 2005; Fosgerau & Fukuda, 2010)
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change in on-time performance from 60% of flights being on-time to 50% of flights being on-time. Required Steps to Address Gaps There are two aspects to the foregoing discussion that should be addressed in future research.120 The first is the inclusion of meaningful measures of travel time reliability in air traveler stated preference surveys performed as part of future research that can capture the asymmetry of travel time reliability as currently measured by aviation statistics.
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Many other federal agencies, including other modal administrations in the U.S. Department of Transportation, have since revised their recommended discount rates, reflecting changes in macroeconomic conditions and evolving thinking on appropriate discount rates for publicly funded projects.
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In July 2014, the U.S. DOT revised their recommended guidance on the valuation of travel time in economic analysis (U.S.
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will extend to the date at which the facility is no longer required, when benefits from the use of the facility cease. The FAA guidance on BCA assessments of airport capital investment projects (FAA, 1999)
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of preconditioned air and aircraft electrical power at terminal gates, treatment facilities for runoff from airfield pavements, or residential sound insulation programs β are designed explicitly to reduce airport environmental impacts, other projects may change the environmental impacts of airport activity, although that is not their intended purpose. The FAA guidance on BCA assessments of airport capital investment projects (FAA, 1999)
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that need to be considered in performing a BCA for a new airport (Section 10.7) , including the effect of changes in airport accessibility on the resulting air traffic demand.
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Non-Linear Factors The current state of practice of valuing air passenger travel time and the cost to the airlines of aircraft delay implicitly assumes that each minute of delay is equally costly and that delays can, therefore, be measured in terms of the total minutes of delay rather than considering the distribution of the length of the individual delays. Most airlines provide some margin in their flight schedules for expected delays.
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flight missing the last connecting flight of the day and having to spend the night in a hotel. Even if the airline covers the cost of the hotel, the additional travel time involved can be greatly disruptive.
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Data and Information Issues Data and information issues address the input assumptions and values used in the application of specific analytical techniques to evaluating airport capital investment decisions. These include such factors as the passenger value of time to adopt for a given analysis, the appropriate cost to assign to a given amount of aircraft delay, and the values to assign to environmental externalities where these are included in the analysis.
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a different extent, it would seem appropriate to use different values of travel time for each component. Changing communication technology is increasingly important in how travelers value the time spent in different components of their trip, particularly business travelers, due to the opportunities that such capabilities as wireless Internet access and cellular or smart telephones provide for spending time productively or more enjoyably.
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travelers was undertaken to develop updated measures of the value of air passenger travel time, structured in a way that allowed different values of time to be estimated for different components of the air trip. Sustainability and Climate Change In the past few years, there has been a growing awareness in the airport community of the need to give greater attention to issues of sustainability in making airport development, equipment acquisition, and operational decisions.
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Examining the joint outcomes of these two research projects, and considering them in conjunction with other on-going efforts by industry groups to address sustainability issues, will indicate if there is a need for additional research to explore how to incorporate sustainability and climate change concerns into project evaluation for airport capital investment decisions and to develop the necessary data and information to support these evaluation techniques. Summary and Conclusions The application of benefit-cost analysis (BCA)
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failing to address these issues in performing economic assessment of proposed projects is almost certain to lead to sub-optimal capital investment decisions and less productive use of limited public funds. To the extent that resources for capital investments in transportation infrastructure across all modes are constrained, it is clearly desirable that a consistent methodology for economic assessment of transportation projects be used across different modes.
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β’ Landau, S
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β’ U.S. Department of Transportation, "Revised Departmental Guidance on Valuation of Travel Time in Economic Analysis," Memorandum, Office of the Secretary of Transportation, Washington, D.C., Jul.
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7 ACRONYMS AND DEFINITION OF FINANCIAL TERMS Acronyms AIP Airport Improvement Program ASP Advanced Surveillance Program1 BCA Benefit-cost Analysis B/C Ratio Benefit-cost Ratio CEA Cost-effectiveness Analysis CFC Customer Facility Charges CIP Capital Improvement Program CPE Costs per Enplanement FAA Federal Aviation Administration FBO Fixed Base Operator FHWA Federal Highway Administration GA General Aviation GAO Government Accountability Office GARB General Airport Revenue Bond GO Bond General Obligation bond HVAC Heating, ventilating and air conditioning I-O Input-Output IRR Internal Rate of Return LCCA Life-cycle Cost Analysis LOI Letter of Intent2 MII Majority-in-interest NPIAS National Plan of Integrated Airport Systems NPV Net present value OMB Office of Management and Budget O&M Operation and maintenance O&D Origin and destination PFC Passenger Facility Charges (Also known as Pay-As-You-Go) 3 PMT Program Management Team SFRB Special Facility Revenue Bonds TSA Transportation Security Agency1 VALE Voluntary Airport Low Emissions Program WTP Willingness-to-pay 1ASP and TSA grants are separate and have separate departments within TSA that are responsible for them.
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Definition of Financial Terms β’ Airport Development Fund (ADF)
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public law and amended the PFC guidelines and allowed airports to request authority to charge a PFC of $1, $2, $3, $4 or $4.50 on all eligible passengers enplaned at their airport. On July 7, 2008, the Authority's application was approved, which allowed the Authority to begin assessing a $4.50 PFC charge.
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Appendix B: Stated Preference Survey Steve Landau Economic Development Research Group, Inc. Boston, MA Geoffrey Gosling Aviation Systems Consulting Berkeley, CA Thomas Adler Resource Systems Group, Inc.
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ACKNOWLEDGMENTS In addition to the Research Team principals noted on the cover, we want to acknowledge the staff of Economic Development Research Group, Inc. (EDR Group)
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TABLE OF CONTENTS B.1 Survey Screen Captures ................................................................................................. B-1 Screening and Trip Characteristics Questions .......................................................................
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1 SURVEY SCREEN CAPTURES Screening and Trip Characteristics Questions Survey Introduction Age 1 Page B-1
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Industry Recent Trip Page B-2
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Trip Date Ticket Acquisition Page B-3
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Ticket Payment Travel Rules β if company paid or reimbursed Page B-4
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Airfare Airfare Warning β if airfare reported was too high Trip Origin Location Page B-5
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Trip Departure Time Trip Origin Location Address Page B-6
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Origin Airport Destination Airport Page B-7
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Trip Destination Location Address Trip Purpose Page B-8
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Party Size Trip Duration Page B-9
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Access Mode to Airport Access Time to Airport Page B-10
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Access Cost β if didn't drive Type of Parking Lot β if drove and parked Parking Cost β if drove and parked Page B-11
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Terminal Access Time Anticipated Airport Time Flight Check-in Page B-12
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Checked Baggage Baggage Fee Time to Reach Security after Entering the Airport Terminal Page B-13
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Anticipated Security Time Security Time Time to Reach Gate Area after Clearing Security Page B-14
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Time after Reaching the Gate until Boarding Commenced Activities at the Gate Page B-15
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Departing Flight On-time Flight Arrived at Destination Airport On-time Flight Departure Time Page B-16
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From page 257... ...
Amount of Delay at the Departing Airport β if experienced delays Scheduled Arrival Time Amount of Delay at the Destination Airport β if experienced delays Page B-17
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Preferred Arrival Time Flight Connections Number of Connections β if had connection(s)
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From page 259... ...
Stops Number of Stops β if had stop(s) Name of the First Connecting Airport β if had connection(s)
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From page 260... ...
Connection Time at the First Connecting Airport β if had connection(s) Name of the Second Connecting Airport β if had connection(s)
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Airline Used from the Origin Airport to the First Connecting Airport Airline Used from the First Connecting Airport to the Second Connecting Airport Airline Used from the Second Connecting Airport to the Destination Airport Page B-21
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Most Preferred Airline Second Most Preferred Airline Page B-22
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Third Most Preferred Airline Stated Preference Choice Experiments Flight Itinerary Choice Experiments Stated Preference Introduction Page B-23
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Example Stated Preference Experiment I Page B-24
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Example Stated Preference Experiment II Page B-25
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Example Stated Preference Experiment III Page B-26
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Example Stated Preference Experiment IV Page B-27
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Example Stated Preference Experiment V Page B-28
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Example Stated Preference Experiment VI Page B-29
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Example Stated Preference Experiment VII Page B-30
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Example Stated Preference Experiment VIII Page B-31
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Airport Time Components Choice Experiments Stated Preference Introduction Example Stated Preference Experiment I Page B-32
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Example Stated Preference Experiment II Page B-33
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Example Stated Preference Experiment III Page B-34
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Example Stated Preference Experiment IV Page B-35
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Example Stated Preference Experiment V Page B-36
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Example Stated Preference Experiment VI Page B-37
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Example Stated Preference Experiment VII Page B-38
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Example Stated Preference Experiment VIII Page B-39
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Attitude and Air Travel Background Questions Air Travel Attitudes Air Travel Frequency Page B-40
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Membership Status on Preferred Airlines Missed Flight Connection Demographic Questions Gender Page B-41
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Adults in Household Children in Household Page B-42
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Individual Income Household Income Page B-43
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Employment Status Survey Comments Page B-44
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2 SURVEY TABULATIONS Trip Characteristics Recent air trip Business Leisure Total Count Percent Count Percent Count Percent In the past month 115 38.7% 243 27.8% 358 30.6% 1-2 months ago 79 26.6% 244 27.9% 323 27.6% 3-6 months ago 103 34.7% 387 44.3% 490 41.8% Total 297 100.0% 874 100.0% 1171 100.0% Where purchased or obtained ticket Business Leisure Total Count Percent Count Percent Count Percent Online - using the airline website 147 49.5% 672 76.9% 819 69.9% Online - from a site other than the airline 47 15.8% 140 16.0% 187 16.0% From a travel agent (in person or by phone) 18 6.1% 30 3.4% 48 4.1% By phone - directly from the airline 1 0.3% 13 1.5% 14 1.2% Company travel office or similar organization 82 27.6% 10 1.1% 92 7.9% Other, please specify: 2 0.7% 9 1.0% 11 0.9% Total 297 100.0% 874 100.0% 1171 100.0% Who paid for ticket Business Leisure Total Count Percent Count Percent Count Percent I paid personally 90 30.3% 806 92.2% 896 76.5% My company paid or reimbursed me 199 67.0% 16 1.8% 215 18.4% It was free through the airline (either through a frequent flyer program, a voucher or from getting bumped)
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Company rules when choosing the itinerary for the trip (multiple responses allowed) Business Leisure Total Count Percent Count Percent Count Percent No, I didn't have to follow rules 106 53.3% 7 43.8% 113 52.6% I had to use the company's preferred airline 26 13.1% 3 18.8% 29 13.5% I had to choose the lowest price 42 21.1% 5 31.3% 47 21.9% I had to follow other company rules 29 14.6% 1 6.3% 30 14.0% Total 199 16 215 One-way/round trip Business Leisure Total Count Percent Count Percent Count Percent One-way 21 7.1% 85 9.7% 106 9.1% Round trip 276 92.9% 789 90.3% 1065 90.9% Total 297 100.0% 874 100.0% 1171 100.0% One-way airfare Business Leisure Total Count Percent Count Percent Count Percent Up to $250 12 57.1% 56 65.9% 68 64.2% $250 to $500 8 38.1% 17 20.0% 25 23.6% $501 to $750 1 4.8% 7 8.2% 8 7.5% $751 to $1,000 0 0.0% 2 2.4% 2 1.9% More than $1,000 0 0.0% 3 3.5% 3 2.8% Total 21 100.0% 85 100.0% 106 100.0% Round trip airfare Business Leisure Total Count Percent Count Percent Count Percent Up to $250 29 10.5% 173 21.9% 202 19.0% $250 to $500 141 51.1% 424 53.7% 565 53.1% $501 to $750 63 22.8% 127 16.1% 190 17.8% $751 to $1,000 22 8.0% 40 5.1% 62 5.8% More than $1,000 21 7.6% 25 3.2% 46 4.3% Total 276 100.0% 789 100.0% 1065 100.0% Page B-46
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Trip origin location Business Leisure Total Count Percent Count Percent Count Percent My home 259 87.2% 779 89.1% 1038 88.6% My regular place of employment 26 8.8% 10 1.1% 36 3.1% Other 12 4.0% 85 9.7% 97 8.3% Total 297 100.0% 874 100.0% 1171 100.0% Departure time from origin location Business Leisure Total Count Percent Count Percent Count Percent 12AM - 12:59AM 0 0.0% 3 0.3% 3 0.3% 1AM - 1:59AM 0 0.0% 2 0.2% 2 0.2% 2AM - 2:59AM 0 0.0% 1 0.1% 1 0.1% 3AM - 3:59AM 3 1.0% 12 1.4% 15 1.3% 4AM - 4:59AM 18 6.1% 63 7.2% 81 6.9% 5AM - 5:59AM 32 10.8% 80 9.2% 112 9.6% 6AM - 6:59AM 43 14.5% 107 12.2% 150 12.8% 7AM - 7:59AM 33 11.1% 92 10.5% 125 10.7% 8AM - 8:59AM 23 7.7% 83 9.5% 106 9.1% 9AM - 9:59AM 30 10.1% 67 7.7% 97 8.3% 10AM - 10:59AM 20 6.7% 87 10.0% 107 9.1% 11AM - 11:59AM 19 6.4% 54 6.2% 73 6.2% 12PM - 12:59PM 15 5.1% 44 5.0% 59 5.0% 1PM - 1:59PM 15 5.1% 35 4.0% 50 4.3% 2PM - 2:59PM 10 3.4% 31 3.5% 41 3.5% 3PM - 3:59PM 13 4.4% 29 3.3% 42 3.6% 4PM - 4:59PM 5 1.7% 23 2.6% 28 2.4% 5PM - 5:59PM 10 3.4% 17 1.9% 27 2.3% 6PM - 6:59PM 5 1.7% 20 2.3% 25 2.1% 7PM - 7:59PM 3 1.0% 10 1.1% 13 1.1% 8PM - 8:59PM 0 0.0% 9 1.0% 9 0.8% 9PM - 9:59PM 0 0.0% 2 0.2% 2 0.2% 10PM - 10:59PM 0 0.0% 1 0.1% 1 0.1% 11PM - 11:59PM 0 0.0% 2 0.2% 2 0.2% Total 297 100.0% 874 100.0% 1171 100.0% Page B-47
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Trip purpose Business Leisure Total Count Percent Count Percent Count Percent Business 206 69.4% 0 0.0% 206 17.6% Attend conference 91 30.6% 0 0.0% 91 7.8% Vacation 0 0.0% 386 44.2% 386 33.0% Visit friends or relatives 0 0.0% 391 44.7% 391 33.4% Attend school/college 0 0.0% 9 1.0% 9 0.8% Other, please specify: 0 0.0% 88 10.1% 88 7.5% Total 297 100.0% 874 100.0% 1171 100.0% Number of people traveled together Business Leisure Total Count Percent Count Percent Count Percent 1 (traveled alone) 203 68.4% 306 35.0% 509 43.5% 2 (traveled with 1 other person)
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Ground access mode (multiple responses allowed) Business Leisure Total Count Percent Count Percent Count Percent Private vehicle and parked at/near airport for entire trip 178 59.9% 358 41.0% 536 45.8% Private vehicle and was dropped off at the airport (did not park)
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Type of parking Business Leisure Total Count Percent Count Percent Count Percent Short-term lot in airport terminal area 29 15.9% 44 11.3% 73 12.8% Long-term lot in airport terminal area 78 42.9% 130 33.3% 208 36.4% Remote airport lot 21 11.5% 61 15.6% 82 14.3% Off-airport parking lot 51 28.0% 141 36.2% 192 33.6% Other 3 1.6% 14 3.6% 17 3.0% Total 182 100.0% 390 100.0% 572 100.0% Reported parking cost Business Leisure Total Count Percent Count Percent Count Percent $25 or less 47 25.8% 90 23.1% 137 24.0% $26 to $50 85 46.7% 146 37.4% 231 40.4% $51 to $75 30 16.5% 71 18.2% 101 17.7% More than $75 20 11.0% 83 21.3% 103 18.0% Total 182 100.0% 390 100.0% 572 100.0% Reported terminal access time Business Leisure Total Count Percent Count Percent Count Percent 5 minutes or less 155 52.2% 498 57.0% 653 55.8% 6 minutes to 10 minutes 69 23.2% 173 19.8% 242 20.7% 11 minutes to 15 minutes 47 15.8% 106 12.1% 153 13.1% 16 minutes to 20 minutes 15 5.1% 46 5.3% 61 5.2% More than 20 minutes 11 3.7% 51 5.8% 62 5.3% Total 297 100.0% 874 100.0% 1171 100.0% Anticipated airport time Business Leisure Total Count Percent Count Percent Count Percent 30 minutes or less 10 3.4% 12 1.4% 22 1.9% 31 minutes to 60 minutes 88 29.6% 179 20.5% 267 22.8% 61 minutes to 90 minutes 119 40.1% 311 35.6% 430 36.7% 91 minutes to 120 minutes 64 21.5% 285 32.6% 349 29.8% More than 120 minutes 16 5.4% 87 10.0% 103 8.8% Total 297 100.0% 874 100.0% 1171 100.0% Page B-50
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Check-in for your flight before or after arriving at the terminal Business Leisure Total Count Percent Count Percent Count Percent Before 213 71.7% 653 74.7% 866 74.0% After 84 28.3% 221 25.3% 305 26.0% Total 297 100.0% 874 100.0% 1171 100.0% Check bags Business Leisure Total Count Percent Count Percent Count Percent Yes 156 52.5% 591 67.6% 747 63.8% No 141 47.5% 283 32.4% 424 36.2% Total 297 100.0% 874 100.0% 1171 100.0% Baggage fee Business Leisure Total Count Percent Count Percent Count Percent None 211 71.0% 568 65.0% 779 66.5% $25 or less 61 20.5% 219 25.1% 280 23.9% $26 to $50 19 6.4% 62 7.1% 81 6.9% More than $50 6 2.0% 25 2.9% 31 2.6% Total 297 100.0% 874 100.0% 1171 100.0% Reported time to reach security after entering the airport terminal Business Leisure Total Count Percent Count Percent Count Percent 5 minutes or less 100 33.7% 200 22.9% 300 25.6% 6 minutes to 10 minutes 74 24.9% 223 25.5% 297 25.4% 11 minutes to 15 minutes 48 16.2% 194 22.2% 242 20.7% 16 minutes to 20 minutes 28 9.4% 121 13.8% 149 12.7% 21 minutes to 25 minutes 14 4.7% 38 4.3% 52 4.4% 26 minutes to 30 minutes 18 6.1% 47 5.4% 65 5.6% More than 30 minutes 15 5.1% 51 5.8% 66 5.6% Total 297 100.0% 874 100.0% 1171 100.0% Page B-51
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Anticipated security time Business Leisure Total Count Percent Count Percent Count Percent 5 minutes or less 21 7.1% 31 3.5% 52 4.4% 6 minutes to 10 minutes 39 13.1% 125 14.3% 164 14.0% 11 minutes to 15 minutes 66 22.2% 165 18.9% 231 19.7% 16 minutes to 20 minutes 49 16.5% 151 17.3% 200 17.1% 21 minutes to 25 minutes 14 4.7% 59 6.8% 73 6.2% 26 minutes to 30 minutes 68 22.9% 185 21.2% 253 21.6% More than 30 minutes 40 13.5% 158 18.1% 198 16.9% Total 297 100.0% 874 100.0% 1171 100.0% Reported security time Business Leisure Total Count Percent Count Percent Count Percent 5 minutes or less 46 15.5% 80 9.2% 126 10.8% 6 minutes to 10 minutes 65 21.9% 208 23.8% 273 23.3% 11 minutes to 15 minutes 69 23.2% 240 27.5% 309 26.4% 16 minutes to 20 minutes 48 16.2% 151 17.3% 199 17.0% 21 minutes to 25 minutes 23 7.7% 59 6.8% 82 7.0% 26 minutes to 30 minutes 16 5.4% 58 6.6% 74 6.3% More than 30 minutes 30 10.1% 78 8.9% 108 9.2% Total 297 100.0% 874 100.0% 1171 100.0% Reported time to reach gate area after clearing security Business Leisure Total Count Percent Count Percent Count Percent 5 minutes or less 148 49.8% 375 42.9% 523 44.7% 6 minutes to 10 minutes 92 31.0% 300 34.3% 392 33.5% 11 minutes to 15 minutes 32 10.8% 128 14.6% 160 13.7% 16 minutes to 20 minutes 16 5.4% 49 5.6% 65 5.6% 21 minutes to 25 minutes 6 2.0% 9 1.0% 15 1.3% 26 minutes to 30 minutes 0 0.0% 10 1.1% 10 0.9% More than 30 minutes 3 1.0% 3 0.3% 6 0.5% Total 297 100.0% 874 100.0% 1171 100.0% Page B-52
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Time after reaching the gate until boarding commenced Business Leisure Total Count Percent Count Percent Count Percent 15 minutes or less 30 10.1% 54 6.2% 84 7.2% 16 minutes to 30 minutes 77 25.9% 183 20.9% 260 22.2% 31 minutes to 45 minutes 63 21.2% 211 24.1% 274 23.4% 46 minutes to 60 minutes 73 24.6% 221 25.3% 294 25.1% More than 60 minutes 54 18.2% 205 23.5% 259 22.1% Total 297 100.0% 874 100.0% 1171 100.0% Activities performed at the gate (multiple responses allowed) Business Leisure Total Count Percent Count Percent Count Percent Made telephone calls 104 35.0% 272 31.1% 376 32.1% Checked email 173 58.2% 382 43.7% 555 47.4% Used mobile device 172 57.9% 418 47.8% 590 50.4% Listened to music or podcasts offline 27 9.1% 73 8.4% 100 8.5% Used computer offline 15 5.1% 21 2.4% 36 3.1% Used computer online via Wi-Fi 48 16.2% 107 12.2% 155 13.2% Read a book, magazine, newspaper, business documents, etc.
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Departure time Business Leisure Total Count Percent Count Percent Count Percent 12AM - 4:59AM 0 0.0% 9 1.0% 9 0.8% 5AM - 5:59AM 8 2.7% 15 1.7% 23 2.0% 6AM - 6:59AM 29 9.8% 95 10.9% 124 10.6% 7AM - 7:59AM 32 10.8% 110 12.6% 142 12.1% 8AM - 8:59AM 36 12.1% 91 10.4% 127 10.8% 9AM - 9:59AM 25 8.4% 82 9.4% 107 9.1% 10AM - 10:59AM 34 11.4% 90 10.3% 124 10.6% 11AM - 11:59AM 22 7.4% 69 7.9% 91 7.8% 12PM - 12:59PM 23 7.7% 51 5.8% 74 6.3% 1PM - 1:59PM 18 6.1% 57 6.5% 75 6.4% 2PM - 2:59PM 13 4.4% 49 5.6% 62 5.3% 3PM - 3:59PM 18 6.1% 37 4.2% 55 4.7% 4PM - 4:59PM 13 4.4% 23 2.6% 36 3.1% 5PM - 5:59PM 9 3.0% 20 2.3% 29 2.5% 6PM - 6:59PM 7 2.4% 19 2.2% 26 2.2% 7PM - 7:59PM 3 1.0% 18 2.1% 21 1.8% 8PM - 8:59PM 4 1.3% 24 2.7% 28 2.4% 9PM - 9:59PM 0 0.0% 5 0.6% 5 0.4% 10PM - 10:59PM 2 0.7% 4 0.5% 6 0.5% 11PM - 11:59PM 1 0.3% 6 0.7% 7 0.6% Total 297 100.0% 874 100.0% 1171 100.0% Amount of delay at the departing airport Business Leisure Total Count Percent Count Percent Count Percent No delay 268 90.2% 791 90.5% 1059 90.4% Up to 30 minutes 10 3.4% 28 3.2% 38 3.2% More than 30 minutes 19 6.4% 55 6.3% 74 6.3% Total 297 100.0% 874 100.0% 1171 100.0% Page B-54
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Scheduled arrival time Business Leisure Total Count Percent Count Percent Count Percent 12AM - 4:59AM 2 0.7% 6 0.7% 8 0.7% 5AM - 5:59AM 0 0.0% 3 0.3% 3 0.3% 6AM - 6:59AM 1 0.3% 4 0.5% 5 0.4% 7AM - 7:59AM 5 1.7% 8 0.9% 13 1.1% 8AM - 8:59AM 11 3.7% 20 2.3% 31 2.6% 9AM - 9:59AM 18 6.1% 40 4.6% 58 5.0% 10AM - 10:59AM 17 5.7% 78 8.9% 95 8.1% 11AM - 11:59AM 32 10.8% 71 8.1% 103 8.8% 12PM - 12:59PM 22 7.4% 94 10.8% 116 9.9% 1PM - 1:59PM 32 10.8% 80 9.2% 112 9.6% 2PM - 2:59PM 37 12.5% 72 8.2% 109 9.3% 3PM - 3:59PM 32 10.8% 79 9.0% 111 9.5% 4PM - 4:59PM 15 5.1% 62 7.1% 77 6.6% 5PM - 5:59PM 15 5.1% 45 5.1% 60 5.1% 6PM - 6:59PM 16 5.4% 48 5.5% 64 5.5% 7PM - 7:59PM 11 3.7% 26 3.0% 37 3.2% 8PM - 8:59PM 9 3.0% 30 3.4% 39 3.3% 9PM - 9:59PM 11 3.7% 33 3.8% 44 3.8% 10PM - 10:59PM 9 3.0% 37 4.2% 46 3.9% 11PM - 11:59PM 2 0.7% 38 4.3% 40 3.4% Total 297 100.0% 874 100.0% 1171 100.0% Amount of delay at the destination airport Business Leisure Total Count Percent Count Percent Count Percent No delay 267 89.9% 795 91.0% 1062 90.7% Up to 30 minutes 5 1.7% 23 2.6% 28 2.4% More than 30 minutes 25 8.4% 56 6.4% 81 6.9% Total 297 100.0% 874 100.0% 1171 100.0% Page B-55
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Preferred arrival time Business Leisure Total Count Percent Count Percent Count Percent 12AM - 4:59AM 0 0.0% 1 0.1% 1 0.1% 5AM - 5:59AM 1 0.3% 0 0.0% 1 0.1% 6AM - 6:59AM 2 0.7% 5 0.6% 7 0.6% 7AM - 7:59AM 7 2.4% 2 0.2% 9 0.8% 8AM - 8:59AM 11 3.7% 26 3.0% 37 3.2% 9AM - 9:59AM 16 5.4% 56 6.4% 72 6.1% 10AM - 10:59AM 27 9.1% 77 8.8% 104 8.9% 11AM - 11:59AM 37 12.5% 108 12.4% 145 12.4% 12PM - 12:59PM 35 11.8% 131 15.0% 166 14.2% 1PM - 1:59PM 26 8.8% 77 8.8% 103 8.8% 2PM - 2:59PM 32 10.8% 78 8.9% 110 9.4% 3PM - 3:59PM 18 6.1% 82 9.4% 100 8.5% 4PM - 4:59PM 25 8.4% 37 4.2% 62 5.3% 5PM - 5:59PM 21 7.1% 57 6.5% 78 6.7% 6PM - 6:59PM 15 5.1% 36 4.1% 51 4.4% 7PM - 7:59PM 11 3.7% 24 2.7% 35 3.0% 8PM - 8:59PM 11 3.7% 33 3.8% 44 3.8% 9PM - 9:59PM 1 0.3% 25 2.9% 26 2.2% 10PM - 10:59PM 1 0.3% 10 1.1% 11 0.9% 11PM - 11:59PM 0 0.0% 9 1.0% 9 0.8% Total 297 100.0% 874 100.0% 1171 100.0% Flight connections Business Leisure Total Count Percent Count Percent Count Percent Yes 109 36.7% 297 34.0% 406 34.7% No 188 63.3% 577 66.0% 765 65.3% Total 297 100.0% 874 100.0% 1171 100.0% Number of connections Business Leisure Total Count Percent Count Percent Count Percent 1 connection 105 96.3% 281 94.6% 386 95.1% 2 connections 4 3.7% 16 5.4% 20 4.9% Total 109 100.0% 297 100.0% 406 100.0% Page B-56
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Made stops where respondent stayed on the same plane during the trip Business Leisure Total Count Percent Count Percent Count Percent Yes 12 4.0% 39 4.5% 51 4.4% No 285 96.0% 835 95.5% 1120 95.6% Total 297 100.0% 874 100.0% 1171 100.0% Number of stops Business Leisure Total Count Percent Count Percent Count Percent 1 stop 12 100.0% 36 92.3% 48 94.1% 2 stops 0 0.0% 3 7.7% 3 5.9% Total 12 100.0% 39 100.0% 51 100.0% Attitudes and Air Travel Background Agreement with: I regularly search websites for cheap flights and sometimes will fly if I see a bargain Business Leisure Total Count Percent Count Percent Count Percent Strongly disagree 51 17.2% 99 11.3% 150 12.8% Somewhat disagree 64 21.5% 153 17.5% 217 18.5% Neither agree nor disagree 68 22.9% 191 21.9% 259 22.1% Somewhat agree 82 27.6% 289 33.1% 371 31.7% Strongly agree 32 10.8% 142 16.2% 174 14.9% Total 297 100.0% 874 100.0% 1171 100.0% Agreement with: I generally shop for the cheapest flights and do not consider other factors Business Leisure Total Count Percent Count Percent Count Percent Strongly disagree 26 8.8% 65 7.4% 91 7.8% Somewhat disagree 90 30.3% 217 24.8% 307 26.2% Neither agree nor disagree 73 24.6% 140 16.0% 213 18.2% Somewhat agree 94 31.6% 373 42.7% 467 39.9% Strongly agree 14 4.7% 79 9.0% 93 7.9% Total 297 100.0% 874 100.0% 1171 100.0% Page B-57
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Agreement with: I try to fly without checked baggage whenever possible Business Leisure Total Count Percent Count Percent Count Percent Strongly disagree 38 12.8% 104 11.9% 142 12.1% Somewhat disagree 37 12.5% 156 17.8% 193 16.5% Neither agree nor disagree 32 10.8% 107 12.2% 139 11.9% Somewhat agree 89 30.0% 235 26.9% 324 27.7% Strongly agree 101 34.0% 272 31.1% 373 31.9% Total 297 100.0% 874 100.0% 1171 100.0% Agreement with: Recent changes to airport security have discouraged me from flying Business Leisure Total Count Percent Count Percent Count Percent Strongly disagree 86 29.0% 275 31.5% 361 30.8% Somewhat disagree 68 22.9% 198 22.7% 266 22.7% Neither agree nor disagree 86 29.0% 227 26.0% 313 26.7% Somewhat agree 42 14.1% 130 14.9% 172 14.7% Strongly agree 15 5.1% 44 5.0% 59 5.0% Total 297 100.0% 874 100.0% 1171 100.0% Agreement with: I am trying to fly less for environmental reasons Business Leisure Total Count Percent Count Percent Count Percent Strongly disagree 139 46.8% 421 48.2% 560 47.8% Somewhat disagree 73 24.6% 199 22.8% 272 23.2% Neither agree nor disagree 75 25.3% 215 24.6% 290 24.8% Somewhat agree 9 3.0% 28 3.2% 37 3.2% Strongly agree 1 .3% 11 1.3% 12 1.0% Total 297 100.0% 874 100.0% 1171 100.0% Business travel frequency Business Leisure Total Count Percent Count Percent Count Percent Up to 3 trips 118 39.7% 779 89.1% 897 76.6% 4-7 trips 86 29.0% 66 7.6% 152 13.0% 8-12 trips 43 14.5% 25 2.9% 68 5.8% More than 12 trips 50 16.8% 4 0.5% 54 4.6% Total 297 100.0% 874 100.0% 1171 100.0% Page B-58
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Leisure travel frequency Business Leisure Total Count Percent Count Percent Count Percent Up to 3 trips 238 80.1% 551 63.0% 789 67.4% 4-7 trips 46 15.5% 274 31.4% 320 27.3% 8-12 trips 12 4.0% 41 4.7% 53 4.5% More than 12 trips 1 0.3% 8 0.9% 9 0.8% Total 297 100.0% 874 100.0% 1171 100.0% Membership status in frequent flyer programs: most preferred airline Business Leisure Total Count Percent Count Percent Count Percent Not a member 44 14.8% 179 20.5% 223 19.0% Standard level 157 52.9% 574 65.7% 731 62.4% Elite β 1st (or only) level 96 32.3% 121 13.8% 217 18.5% Elite β highest level 0 0.0% 0 0.0% 0 0.0% Total 297 100.0% 874 100.0% 1171 100.0% Membership status in frequent flyer programs: second most preferred airline Business Leisure Total Count Percent Count Percent Count Percent Not a member 83 27.9% 298 34.1% 381 32.5% Standard level 183 61.6% 521 59.6% 704 60.1% Elite β 1st (or only)
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Membership status in each of these frequent flyer programs: airline used for recent trip (if not one of the three most preferred) Business Leisure Total Count Percent Count Percent Count Percent Not a member 19 30.2% 76 39.6% 95 37.3% Standard level 37 58.7% 107 55.7% 144 56.5% Elite β 1st (or only)
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Number of adults in household Business Leisure Total Count Percent Count Percent Count Percent 1 adult (I live alone) 52 17.5% 163 18.6% 215 18.4% 2 adults 199 67.0% 590 67.5% 789 67.4% 3 adults 29 9.8% 81 9.3% 110 9.4% 4 adults 15 5.1% 31 3.5% 46 3.9% 5 adults 2 0.7% 6 0.7% 8 0.7% 6 or more adults 0 0.0% 3 0.3% 3 0.3% Total 297 100.0% 874 100.0% 1171 100.0% Number of children in household Business Leisure Total Count Percent Count Percent Count Percent No children 233 78.5% 777 88.9% 1010 86.3% 1 child 33 11.1% 49 5.6% 82 7.0% 2 children 25 8.4% 36 4.1% 61 5.2% 3 children 6 2.0% 10 1.1% 16 1.4% 4 children 0 0.0% 2 0.2% 2 0.2% 5 children 0 0.0% 0 0.0% 0 0.0% 6 or more children 0 0.0% 0 0.0% 0 0.0% Total 297 100.0% 874 100.0% 1171 100.0% Individual annual income before taxes Business Leisure Total Count Percent Count Percent Count Percent Under $10,000 4 1.3% 37 4.2% 41 3.5% $10,000 - $19,999 4 1.3% 30 3.4% 34 2.9% $20,000 - $29,999 7 2.4% 37 4.2% 44 3.8% $30,000 - $39,999 10 3.4% 74 8.5% 84 7.2% $40,000 - $49,999 23 7.7% 83 9.5% 106 9.1% $50,000 - $74,999 66 22.2% 199 22.8% 265 22.6% $75,000 - $99,999 58 19.5% 161 18.4% 219 18.7% $100,000 - $149,999 70 23.6% 161 18.4% 231 19.7% $150,000 - $199,999 30 10.1% 44 5.0% 74 6.3% $200,000 - $249,999 10 3.4% 26 3.0% 36 3.1% $250,000 or more 15 5.1% 22 2.5% 37 3.2% Total 297 100.0% 874 100.0% 1171 100.0% Page B-61
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Household income (multiple-adult households) Business Leisure Total Count Percent Count Percent Count Percent Under $10,000 2 0.8% 6 0.8% 8 0.8% $10,000 - $19,999 2 0.8% 3 0.4% 5 0.5% $20,000 - $29,999 0 0.0% 12 1.7% 12 1.3% $30,000 - $39,999 8 3.3% 21 3.0% 29 3.0% $40,000 - $49,999 6 2.4% 28 3.9% 34 3.6% $50,000 - $74,999 37 15.1% 129 18.1% 166 17.4% $75,000 - $99,999 45 18.4% 157 22.1% 202 21.1% $100,000 - $149,999 64 26.1% 194 27.3% 258 27.0% $150,000 - $199,999 44 18.0% 73 10.3% 117 12.2% $200,000 - $249,999 25 10.2% 43 6.0% 68 7.1% $250,000 or more 12 4.9% 45 6.3% 57 6.0% Total 245 100.0% 711 100.0% 956 100.0% Household income (single-adult households)
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Employment status Business Leisure Total Count Percent Count Percent Count Percent Employed full-time 203 68.4% 309 35.4% 512 43.7% Employed part-time 23 7.7% 70 8.0% 93 7.9% Self-employed 39 13.1% 57 6.5% 96 8.2% Student 3 1.0% 27 3.1% 30 2.6% Retired 23 7.7% 356 40.7% 379 32.4% Homemaker 2 0.7% 30 3.4% 32 2.7% Not currently employed 3 1.0% 19 2.2% 22 1.9% Unable to work due to illness or injury 1 0.3% 6 0.7% 7 0.6% Total 297 100.0% 874 100.0% 1171 100.0% Industry of employment (if employed) Business Leisure Total Count Percent Count Percent Count Percent Airline 0 0.0% 0 0.0% 0 0.0% Arts 4 1.5% 5 1.1% 9 1.3% Communications 8 3.0% 4 0.9% 12 1.7% Construction 2 0.8% 5 1.1% 7 1.0% Education 38 14.3% 92 21.1% 130 18.5% Finance/insurance 15 5.7% 29 6.7% 44 6.3% Government 14 5.3% 41 9.4% 55 7.8% Health/medical 31 11.7% 80 18.3% 111 15.8% Manufacturing 34 12.8% 18 4.1% 52 7.4% Marketing/market research 0 0.0% 0 0.0% 0 0.0% Professional services 37 14.0% 34 7.8% 71 10.1% Retail trade 8 3.0% 26 6.0% 34 4.9% Technology 12 4.5% 25 5.7% 37 5.3% Transportation 7 2.6% 8 1.8% 15 2.1% Wholesale trade 6 2.3% 5 1.1% 11 1.6% Other 49 18.5% 64 14.7% 113 16.1% Total 265 100.0% 436 100.0% 701 100.0% Page B-63
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3 ADDITIONAL ANALYSIS Comparison of Reported Flights in Survey to National Data Chapter 3 documenting the stated preference (SP) survey and results showed the location of the origin and destination airports for the recent trip reported by each survey respondent graphically and compared the percentage of survey reported trips using the top five origin and destination airports in the reported trips with the corresponding distribution of originating passengers at those airports from the U.S.
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Table B-1. Date of Reported Recent Air Trip Survey Date February 22-23 April 1-20 When trip taken Responses Percent Responses Percent Third quarter 2012 13 13% 26 2.4% Fourth quarter 2012 41 42% 238 22.2% First quarter 2013 44 45% 648 60.4% Second quarter 2013 161 15.0% Total 98 100% 1,073 100% 8.4% 91.6% The analysis of the DB1B data was based on the "market" dataset, which reports travel itineraries in directional airport-pair markets, without considering whether a directional trip is non-stop or has any intermediate flight connections.
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The correspondence of the distribution of trips across airports between the SP survey responses and the DB1B data is fairly close. Origin airports with 10 or more air trips in the SP data accounted for 66% of the reported trips in the survey and 68% of the passengers in the DB1B data, while destinations with 10 or more trips in the SP data accounted for 72% of the reported trips in the survey and 69% of the passengers in the DB1B data.
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seen that more origin airports are under-sampled (and by a larger number of survey responses) than are over-sampled.
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Destination airports show a similar number of under-sampled and over-sampled airports, but several over-sampled airports have a greater level of over-sampling than the undersampled airports. As noted in Chapter 3, these over-sampled airports correspond to major vacation destinations, particularly in winter.
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than 5,000 reported passengers (less than 0.3% of all markets) , although these accounted for 18% of all reported passengers.
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Figure B-3. Distribution of Sampling Errors for SP Survey Trips β Markets with Over 5,000 DB1B Passengers Of the 146 directional markets with more than 5,000 reported DB1B passengers, only 100 had reported trips in the SP survey data, so the survey missed 32% of the markets.
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With the exception of DEN to LAX, these are all major vacation destinations, particularly warm-weather destinations. Even Southern California could be considered a vacation destination, and in fact two of the four SP survey respondents reporting a trip in this market were taking a vacation trip.
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median household income of residents of Southern California is somewhat higher than the median national income. According to the U.S.
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although this could be a reflection of the age profile of the SP survey respondents discussed below. It might also be partly influenced by the timing of the two surveys, since the first wave of the LAX survey took place in late August when many students would be returning to school.
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respondents may also reflect the timing of the LAX survey, with the first wave being conducted in late August, when it could be expected there would be a lower proportion of business trips than at other times of the year, as well as the importance of Southern California as a vacation destination. In comparing the trip purpose profile from the two surveys, it should be noted that the surveys used slightly different wording and trip purpose categories, so some of the differences may be due to this.
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Vacation 2.37 2.03 2.03 Visit friends/relatives 1.65 1.45 1.51 Attend school/college 1.11 2.04 1.99 Other 2.16 1.40 1.66 Business 1.57 1.41 1.53 Personal 2.01 1.78 1.82 Total 1.89 1.66 1.70 Overall, the average air party size for visitors to Southern California is slightly higher than for Southern California residents. However, Southern California residents attending a conference or convention have a somewhat higher average air party size than visitors, while the average air party size for those on vacation trips is the same for both residents and visitors.
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Table B-7. Distribution of Household Income β SP Survey Reported Trips Business Trips Personal Trips Household Income Survey Responses Percent Survey Responses Percent Under $10,000 2 0.7% 12 1.4% $10,000 - 19,999 4 1.3% 12 1.4% $20,000 - 29,999 2 0.7% 18 2.1% $30,000 - 39,999 12 3.9% 40 4.6% $40,000 - 49,999 14 4.6% 49 5.7% $50,000 - 74,999 50 16.4% 168 19.4% $75,000 - 99,999 57 18.7% 193 22.3% $100,000 - 149,999 73 23.9% 209 24.1% $150,000 - 199,999 48 15.7% 74 8.5% $200,000 - 249,999 27 8.9% 44 5.1% $250,000 or more 16 5.2% 47 5.4% Total 305 100% 866 100% The two distributions are shown graphically in Figure B-4.
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The corresponding distributions for LAX survey respondents compared to the SP survey respondents are shown in Table B-8. Table B-8.
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Thus overall it appears that a higher proportion of the SP survey respondents were reasonably well-off (household incomes between $50,000 and $150,000) compared to the LAX survey respondents, but the SP survey respondents whose recent trip was for business purposes included a smaller proportion of higher-income households ($250,000 or more)
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Table B-10. Age of Survey Respondents β SP Survey Reported Trips vs.
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WTP for Time Savings by Respondent Age The Research Team specifically looked at the effect of age on passengers' estimated values of willingness-to-pay (WTP) for various time components, given that the sample has a high proportion of respondents in older age groups.
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Table B-12. WTP Values by Age and Time Components for Leisure Travelers Time Components Respondent Age up to 34 35-44 45-54 55-64 >= 65 Ground access time $15.79 $16.55 $21.27 $19.07 $19.59 Terminal access time $21.92 $22.97 $29.54 $26.48 $27.19 Check-in and security time $24.98 $26.18 $33.67 $30.19 $31.00 Time to reach the gate area $20.08 $21.04 $27.06 $24.26 $24.91 Gate time $17.47 $18.31 $23.55 $21.11 $21.68 Flight time $31.65 $34.64 $34.50 $37.66 $34.88 Table B-13.
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First, the higher WTP values for flight time compared to other time components could, in part, be attributed to the scale differences as a result of the magnitude of times shown in the experiments, and experienced in actual air trips. There are significant differences in reported times for various time components with average reported flight time (including connections)
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Time Components Without Mode Constants With Mode Constants Ground access time $39.06 $18.60 Terminal access time $31.09 $33.85 Check-in and security time $34.53 $37.19 Time to reach the gate area $27.03 $32.25 Gate time $21.56 $20.48 Table B-16. WTP Values for Time Components With and Without Mode Constants for Leisure Travelers Time Components Without Mode Constants With Mode Constants Ground access time $25.05 $16.95 Terminal access time $23.39 $26.01 Check-in and security time $25.14 $28.45 Time to reach the gate area $18.13 $22.83 Gate time $15.59 $17.62 These results suggest that one possible reason for the relatively low estimated WTP values for ground access is because the modal constants have captured too much of the travel time disutility, reducing the estimated value of the ground access travel time coefficient and hence the implied WTP.
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components. The following form was used to capture the non-linear effects for different time and cost variables: ππππ = β―+ π½π½πΆπΆπΆπΆπΆπΆπΆπΆ β πΆπΆπΆπΆπΆπΆπΆπΆ + π½π½πππΆπΆπππΆπΆπΆπΆπΆπΆπΆπΆ β logπΆπΆπΆπΆπΆπΆπΆπΆ + π½π½ππππππππ β ππππππππ + π½π½πππΆπΆπππΆπΆππππππ β logππππππππ However, the Research Team was unable to find any significant and conclusive results from this analysis.
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results from this analysis. The estimated values of the Ξ² and Ξ» coefficients were found to be statistically insignificant.
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The results using this transformation, however, did not adequately reflect the pattern of WTP values estimated when separate WTP values were calculated for each individual income group.
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Less than $10,000 -0.00723 0.00151 $45.44 $10,000-$19,999 -0.01203 0.00231 $27.30 433 0.0761 $20,000-$29,999 -0.01120 0.00640 $29.34 156 0.0275 $30,000-$39,999 -0.01016 0.00266 $32.33 376 0.0661 $40,000-$49,999 -0.01163 0.00255 $28.24 392 0.0690 $50,000-$74,999 -0.00892 0.00141 $36.81 709 0.1247 $75,000-$99,999 -0.00619 0.00148 $53.06 676 0.1188 $100,000-$149,999 -0.00579 0.00070 $56.70 1439 0.2530 $150,000-$199,999 -0.00434 0.00106 $75.73 943 0.1659 $200,000-$249,999 -0.00463 0.00178 $71.03 562 0.0988 $250,000 or more -0.00250 0.00093 $131.35 It can be seen from the WTP values in Table B-17 that the estimated cost coefficient for the lowest income category gave a much higher WTP than would be expected from the pattern of WTP values for the other income categories. This coefficient was therefore omitted from the log-linear regression to avoid distorting the resulting function.
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Parameters Units Description Value Standard Error T-statistic Constant (ln B0) - Constant -4.43 0.0965 -45.9 Ξincome $000 Individual Income -0.00529 0.00077 -6.9 Fit Statistics Number of parameters: 2 Number of observations: 9 Rho-square: 0.871 Adjusted rho-square: 0.852 The predicted cost coefficients for each income category using the two separate functions and the combined function, together with the corresponding WTP values for the combined function, calculated at the mid-point of each income category except for the lowest and highest categories, for which representative values were assumed, are shown in Table B-20.
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$10,000-$19,999 $15,000 -0.01458 -0.01104 -0.01281 $25.44 339% $20,000-$29,999 $25,000 -0.01163 -0.01047 -0.01105 $29.49 236% $30,000-$39,999 $35,000 -0.01002 -0.00993 -0.00998 $32.66 187% $40,000-$49,999 $45,000 -0.00897 -0.00942 -0.00919 $35.44 158% $50,000-$74,999 $62,500 -0.00775 -0.00859 -0.00817 $39.88 128% $75,000-$99,999 $87,500 -0.00668 -0.00752 -0.00710 $45.88 105% $100,000-$149,999 $125,000 -0.00571 -0.00617 -0.00594 $54.88 88% $150,000-$199,999 $175,000 -0.00492 -0.00453 -0.00483 $67.51 77% $200,000-$249,999 $225,000 -0.00440 -0.00365 -0.00402 $81.11 72% $250,000 or more $400,000 -0.00341 -0.00144 -0.00243 $134.33 67% Note: Estimated flight time coefficient = -0.00543 (time in minutes) The estimated WTP values for the three broad individual income groups used in the Guidebook correspond reasonably well to the WTP values given by the combined function.
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factors that influence this. Such research could benefit from a larger sample survey that includes questions that obtain more detail on respondent incomes.
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Fit Statistics Parameters: 2 2 2 Observations: 8 9 7 Rho-square: 0.885 0.641 0.569 Adjusted rho-square: 0.866 0.589 0.483 It was found that while individual income generally gave a better fit to the choice models for business travelers, per-person household income generally gave a slightly better fit to the choice models for leisure travelers. This is not unreasonable, since business travel generally only involves the individual traveler, not other members of the household, while leisure travel often involves other members of the household, or even the entire household.
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$100,000-$149,999 $125,000 -0.0368 -0.0409 -0.0388 $20.92 33% $150,000-$199,999 $175,000 -0.0322 -0.0360 -0.0341 $23.84 27% $200,000-$249,999 $225,000 -0.0291 -0.0317 -0.0304 $26.74 24% $250,000 or more $400,000 -0.0231 -0.0202 -0.0217 $37.47 19% Note: Estimated airport ground access time coefficient = -0.01354 (time in minutes) In the case of the log-linear regression models of the business traveler airport time component cost coefficients, it proved necessary to combine the two lowest income ranges and the next two lowest income ranges in order to reduce large swings in the estimated value of the cost coefficients between successive income ranges.
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There are two ways to use the relationships shown in Table B-18, Table B-19 and Table B-21 in order to estimate the corresponding WTP value for any given income. The first is to use the relationships to calculate the estimated value of the cost coefficient and combine this with the estimated value of the flight time or ground access time coefficient to calculate the WTP.
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Comparison of Survey Ground Access Coefficients with Prior Airport Ground Access Models The estimation of choice models that attempted to explain the choices made by the stated preference (SP) survey respondents generated estimated coefficients for airport ground access cost and time (which give the implied willingness to pay for ground access travel time savings)
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Chicago models, low income was defined as a household income less than $100,000 (at the time of the survey)
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implied WTP values used in the average value were an average of the values for low- and high-income respondents. However, the median value treated the implied values for low- and high-income respondents as separate values.
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The range of WTP values implied by the models estimated in five prior studies is very large. The WTP values estimated from the SP data correspond to the lowest values in the range given by prior studies.
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minutes of travel time relative to drop-off by private vehicle, where a positive value means the mode provides a greater utility (i.e. is more attractive)
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Thus differences shown in Table B-27 between the modal constant for transit and those for other modes given by prior studies should be viewed with caution. In any case, the modal constants given by prior studies varied over a very wide range, most likely reflecting in part differences in model structure and the inclusion of other modes in the mode (including different public transport services)
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On balance, it appears that the modal constants given by the SP model show a greater disutility relative to drop-off trips for all three modes compared to the values found in prior studies, although the difference is much greater for taxi than the other two modes.
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Key Terms
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