CNS/ATM

Industry Level Economic Modeling

 CNS/ATM Focused Team
Analysis Process
Alternative
Regional
CNS/ATM Costs,
Priorities Timing,
Enhancements
Benefits,
Risks

Regional Constraints Benefit Mechanisms, Economic

Growth Constraints Analysis Transition Plan, Modeling
& Operational Costs Technology
Alternatives

- Market Forecasts
- ATA/IATA/NASA ATC Cost Studies
- System Performance Measurement
- Airport Capacity Studies Regional Plans
FreeFlight (U.S.)
EATCHIP
IATA Recommended
Independent Changes to
Plans

CNS/ATM Focused Team

 Outline

Industry level economic modeling

The economic modeling process
Risk
Cost
Benefits
Rules for modeling benefits
Model Outputs
Overview of Economic Modeling Workshop

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Industry Level Economic Modeling

Objectives for CNS/ATM

Economic Modeling Goals

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 Objectives for CNS/ATM
Sufficient world-wide civil aviation capacity
World-wide interoperability
Airline operations efficiency
Minimal airplane variability

consistent with regional differences

Traffic density
Economic conditions
Geography, etc.

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 Economic Modeling Goals

Industry - Find the incremental CNS/ATM improvement

plan that maximizes the economic contribution to civil
aviation and generates the capability to pay for the
infrastructure changes
Use Economics to build consensus among the
stakeholders

Airline - Maximize profitability and build capability to

grow and compete.

CNS/ATM Focused Team

 Achieving Agreement Among
Stakeholders is Difficult
Interest
R&D Groups
Local
Technical Community
Committees
Airline

Gov’t
ATC

CAA Airport

Manufacturers General
& Aviation
Suppliers &
Military
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 The economic modeling process

Process Diagram
Risk
Cost
Benefits
Rules for modeling benefits
Model Outputs

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 Economic Modeling Process Diagram

Assess
Problem statement Investment &
Alternatives Operations Cost Information
Assumptions Cost Impact

Convert
Assess Benefit Benefit Information Analyze
Risk & Mechanisms Model
Resolution Time to $$$$ Outputs

Probability of Success

Develop
Rules for Phasing of Benefits Recommended
Modeling changes to plans.
Benefits

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 Risk
Definitions
Risk is chance that a CNS/ATM improvement is denied, delayed, or
significantly degraded for a technical reason or because of opposition
from an interested party.
Risk mitigation cost is the expenditure of money and time to eliminate or
reduce the risk.

Examples of Risk
CAA fails to meet commitment to field a capability
Safety
Funding Uncertainty
An airline blocks an improvement for competitive reasons
Community blocks an improvement to an airport
Technical committee does not reach agreement on standards
Difficulty in validating system changes

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 Common Risks
Technical
Technical Risk Mitigation
Risk Cost/Time

Stakeholder Risk
State State Political
Political Risk Mitigation
Risk Cost/Time
Overall Total
Probability Risk Mitigation
of Success Cost/Time
Regulatory Regulatory
Risk Risk Mitigation
Cost/Time

Probability Stakeholder Cash Flows

of Success Stakeholder
Pressure Pressure
Risk Risk Mitigation
Cost/Time

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 Cost
Definitions
Investment is a one time charge to effect a CNS/ATM improvement. It
includes a credit for the decommissioning and sale of CNS/ATM assets
Operational cost is the recurring expenditure of money to maintain and
operate the CMS/ATM system

Examples of Cost
Investment
Airplane equipage
ATC procedure development
Controller work station
Decommissioning of VOR/DME
Operational cost
Avionics maintenance
Datalink use charges

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 Phasing of Cost Categories
Total Cost/Time

R&D Deployment Operations Net

Time Time Time
Investment Investment Cost/Time Decommission
Cost/Time Cost/Time Effect Cost/Time

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 Benefits
Definitions

Capacity is the maximum number of operations than can be accommodated

in a given airspace within a period of time
Efficiency is the cost per operation within a CNS/ATM system

Examples of Benefits
Capacity Related
Reduction in separation standards
Decision aids
Efficiency Related
Direct routing
Optimum trajectory

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 Converting Airline Benefit Mechanisms to $$$
CNS/ATM Constraint Removal

Efficiency Capacity
Improvement Improvement

Time Cost/Fee Fuel Fleet Management Revenue

Savings Savings Savings Flexibility Improvement

Predictable Non Predictable Non Predictable Predictable Passenger More

Satisfaction Flights

Block Time Increased Schedule Reduced Reduced Increased

Reduction Utilization Recovery Fuel Use Reserves payload

Increased Diversion Delay

Range Cost Cost
Legend:

$ Cancellation
Cost
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 Rules for Modeling Benefits
Rationale

Must account for the implementation assumptions

Examples of implementation assumptions for some regional plans

Benefits will be phased in over a five year period

Equipped aircraft will be qualify for preferred trajectories
Equipage during the first five years will be subsidized
Non equipped aircraft will be assigned to less efficient airspace

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 Model Outputs
Histogram of $
Cash
Key Economic Drivers
Flows

Time

Alternatives Comparison Sensitivity to an Uncertainty

Alt A
Crossover
Probability Point
$ NPV Assumption
Alt B
Probability
$ NPV
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 Afternoon End to End Examples

North Pacific
US Terminal Area

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 March 20 Economic Modeling
Seminar Overview
A closer look at industry level economic modeling
A step by step tour of the North Pacific Example
Overview of current models
Participation in model development & validation

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