impact of three hour tarmac delay rules and

O V E R V I E W P R E S E N TAT I O N

Impact of Three‐Hour Tarmac Delay Rules and Fines on Passenger Travel Time &WelfareFines on Passenger Travel Time & Welfare

Webcast Briefing

Full paper and supporting documentationavailable at wwwtarmaclimits comavailable at www.tarmaclimits.com

EMBARGOED UNTIL JULY 20

1

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Study AuthorsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

Darryl Jenkins Joshua Marksy [email protected]

[email protected]

• Associate Director, GWU Aviation Institute (2002‐2003)

• Research in airline revenue and o e atio a a e e t ai te a e

• Founder and Director of the GWU Aviation Institute (1991‐2003)

• Faculty at GWU, Embry Riddleoperations management, maintenance, safety and airspace management

• Aviation executive experience in finance, revenue, flight operations

• President, TheAirlineZone.com• Policy and operations expert with

extensive project background• Author Handbook of Airline Economics and information technology• Author, Handbook of Airline Economics

IMPACT OF THREE HOUR TARMAC DELAY RULES AND FINES | JULY 20, 2010 2

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Three Hour Rule & CancellationsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• Effective April 29, new rules limit tarmac time to 3 hours

• Punitive fines carry disproportionate risk

• Tarmac delays stopped and cancellations spikedy pp p

• Hundreds of cancellations already due to the tarmac rule, with the worst of summer yet to be reported.y p

• Public harm is significant: $3.9 billion over 20 years based on May 2010 reported data


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Only Focused on Three Hour Limit & FinesINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

We are only concerned with the three‐hour limit and its implications for cancellations and public harm.

Generally we think the other DOT rules are good ideasGenerally, we think the other DOT rules are good ideas

– Provide food and water after two hours– Respond promptly to consumer complaints– Provide information about chronically delayed flights– Publish delay data on websitesPublish delay data on websites– Audit adherence to their customer service plans


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Key FindingsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• Tarmac delays harmed 110,000 passengers per year

Fi f i l ti 200 300• Fines for violations are 200‐300x revenue

• Risk‐averse airlines are cancelling or diverting flights

• Passengers impacted who would not have had 3+ hour tarmac delay

• Tarmac rules driving a 4:1 ratio of cancellations to prevented delays(between 5 200 and 6 000 annual cancellations at current pace)(between 5,200 and 6,000 annual cancellations at current pace)

• In the short term, absence of transparent fines and enforcement is driving unnecessary cancellations

IMPACT OF THREE HOUR TARMAC DELAY RULES AND FINES | JULY 20, 2010 Slide 5

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First Month ResultsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

Why do cancellations matter?

• DOT assumed minimal cancellations (2.8%, or 41 flights per year)( , g p y )

• DOT claimed that tarmac rules benefited public welfare

Fi t th (M 2010) ltFirst month (May 2010) results

• Better weather year over year

• Cancellations +40%, Diversions +25%1,924

Year over Year ComparisonMay 2010 vs. May 2009

Cancellations 40%, Diversions 25%

• 140 cancellations of flights after extensive taxi‐out waits, prior to3 hour cutoff, with follow‐on

1,201

3 hour cutoff, with follow on cancellations (4:1 total ratio)

• Hundreds of other cancellations that airlines attribute to tarmac risks

140

(34)

Cancellations Diversions Taxi‐Out Tarmac Delays


that airlines attribute to tarmac risksCancellations Diversions Taxi Out Cancellations

Tarmac Delays

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Our ResearchINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

We demonstrate key assumptions by the public and DOT are wrong.

× Tarmac delays are predictable and controllable

× E fo ce e t a d fi es do ot cha ge ca cellatio decisio s× Enforcement and fines do not change cancellation decisions

× Gate resources exist to disembark and re‐board passengers

× Diversion strategies do not changeDiversion strategies do not change

× Cancellations have no follow‐on impact

× All passengers on cancelled flights can be re‐accommodated

We revise public welfare estimates using real‐world information.


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Need Clear Guidance on EnforcementINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

In the short term, enforcement is the key.

Threat of punitive fines drives extreme risk‐aversion and cancellations

If DOT does not intend to seek punitive fines for minor infractions, it needs to clarify its position immediately

If DOT does intend to seek punitive fines, it must acknowledgeIf DOT does intend to seek punitive fines, it must acknowledge the consequences on public welfare

Either way, DOT should update its regulatory impact estimatesto reflect real world cancellations and re booking timeto reflect real‐world cancellations and re‐booking time.


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Final Rule & FinesINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• 14 CFR Part 259 now prohibits tarmac delays of greater14 CFR Part 259 now prohibits tarmac delays of greater than three hours for domestic flights at most US airports.

– A tarmac delay is “the holding of an aircraft on the ground either before taking off or after landing with no opportunity for its passengers to deplane.”

– Exceptions for “safety‐related or security‐related” reasons, or by order of ATC

M i fi f $27 500• Maximum fine of $27,500 per passenger

• Complete background in Section Two of our paper


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Enforcement UncertaintyINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• DOT has not published specific enforcement guidance

• DOT Office of Enforcement: case by case analysis based on harm, compliance disposition, economic condition, ability to pay, etc. (April 28, 2010)ability to pay, etc. (April 28, 2010)

• Secretary LaHood: “We just leveled a $16 million fine which was the maximum fine we could level against i a e a i u i e e ou e e agaiToyota. So I don’t think anyone thinks that Ray LaHood is not going to have strong enforcement.” (April 27, 2010)


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Maximum FinesINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

Aircraft Type Potential Revenue Potential Fine Fine to Revenue Ratio

Regional Jet70 seats $75 per passenger

$4 253 fli ht$1.56 million 366:1

$4,253 per flight(81% load factor)

A320/B737144 seats $119 per passenger

$13,880 per flight$3.21 million 231:1

$ , p g(81% load factor)

Potential revenue based on airline year‐end reports. Revenue on a flight segment (not round‐trip) basis. l b d Sk d f Y


Regional Jet based on SkyWest reported revenue per passenger for FY2009. A320/B737 based on Southwest Airlines revenue per passenger for FY2009.

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Establishing Facts about Tarmac Delays (1)INTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

Lengthy Tarmac Delays Were Always Rare

40,000

50,000

Distribution of Taxi‐Out TimesMay 2009

250

300

Distribution of Taxi‐Out Times60 Minutes +, May 2009

2009

2009

10,000

20,000

30,000

50

100

150

200

Flights during May 2

Flights during May 2

• 546 832 total flights • 5 137 flights 60+ minute taxi out time

0

10,000

0 30 60 90 120 150 195

0

50

60 90 120 150 195Taxi‐Out Time (min) Taxi‐Out Time (min)

• 546,832 total flights

• 4,747 flights (0.87%) taxi‐out 1‐2 hours

• 355 flights (0.065%) 2‐3 hours

• 5,137 flights 60+ minute taxi‐out time

• 99.3% departed before 3 hour mark


• 35 flights (<0.01%) 3+ hours

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Lengthy Tarmac Delays Are Seasonal

Monthly Distribution of Three HourTaxi‐Out Tarmac Delays

Data Set May 2008 through April 2010

367

449

214

87 85 8149 67

214

32 476

134

ry ry ch ril ay ne ly st er er er er

Janu

ar

Febr

uar

Mar

c

Apr Ma

Jun

Jul

Aug

us

Sep

tem

be

Oct

obe

Nov

embe

Dec

embe

Source: Part 234 Reporting Data


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Tarmac Delays coincide with Diversions, but have been an alternative to Cancellations (until now)

0 05%

0.06%

0.45%

0.50%Diverted 3+ hour tarmac time0.06%6.00%

Cancelled 3+ hour tarmac time

Tarmac Delays vs. Cancellations Tarmac Delays vs. Diversions

0.02%

0.03%

0.04%

0.05%

0 15%

0.20%

0.25%

0.30%

0.35%

0.40%

0.02%

0.03%

0.04%

0.05%

2.00%

3.00%

4.00%

5.00%

0.00%

0.01%

0.00%

0.05%

0.10%

0.15%

Augu

st 2

008

ptem

ber 2

008

Oct

ober

200

8

ovem

ber 2

008

ecem

ber 2

008

Janu

ary

2009

ebru

ary

2009

Mar

ch 2

009

April

200

9

May

200

9

June

200

9

July

200

9

Augu

st 2

009

ptem

ber 2

009

Oct

ober

200

9

ovem

ber 2

009

ecem

ber 2

009

Janu

ary

2010

ebru

ary

2010

Mar

ch 2

010

April

201

0

May

201

0

0.00%

0.01%

0.00%

1.00%

Augu

st 2

008

ptem

ber 2

008

Oct

ober

200

8

ovem

ber 2

008

ecem

ber 2

008

Janu

ary

2009

Febr

uary

200

9

Mar

ch 2

009

April

200

9

May

200

9

June

200

9

July

200

9

Augu

st 2

009

ptem

ber 2

009

Oct

ober

200

9

ovem

ber 2

009

ecem

ber 2

009

Janu

ary

2010

Febr

uary

201

0

Mar

ch 2

010

April

201

0

May

201

0

Sep O

No De J F

Sep O

No De J F

Sep

No De F

Sep

No De F

• Correlation coefficient 0.24 (weak positive)

• Same events drive, but alternative strategies

• Correlation coefficient 0.83 (strong positive)

• Concurrent responses by airlines



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Tarmac Delays Are Clustered on Specific Days

i O l h h A il

120

140

3 Hour Taxi‐Out Delays By Day, May 2008 through April 2010

• 215 days total with tarmac delays (of 765)85 f h 215 h d l d l

80

100

• 85 of those 215 had only one delay• 20 days represented 55% of total delays

20

40

60

0

May

-08

June

-08

July

-08

Aug

ust-

08

Sept

embe

r-08

Oct

ober

-08

Nov

embe

r-08

Dec

embe

r-08

Janu

ary-

09

Febr

uary

-09

Mar

ch-0

9

Apr

il-09

May

-09

June

-09

July

-09

Aug

ust-

09

Sept

embe

r-09

Oct

ober

-09

Nov

embe

r-09

Dec

embe

r-09

Janu

ary-

10

Febr

uary

-10

Mar

ch-1

0

Apr

il-10



S S

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Tarmac Delays Are Afternoon Events During the Summer

Time of Day Tarmac Delays Occur, By Month

90

50

60

70

80

90

SEPOCTNOVDEC

10

20

30

40

JANFEBMARAPRMAYJUNJULAUG

0

6am 7am 8am 9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm 6pm 7pm 8pm 9pm 10pm 11pm



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Tarmac Delays Correlate to Severe Weather

T 3+ H E t 2009 (Bl C l )Tarmac 3+ Hr Events, 2009 (Blue Columns)Vs. National Weather Service Severe Events (Red Line)

Correlation Coefficient = 0.84

3007,000

150

200

250

4,000

5,000

6,000

,

Weather Events 3+ H

r Tarmac

0

50

100

150

0

1,000

2,000

3,000

Severe W

c Delays

00

Janu

ary

Februa

ry

March

April

May

June July

Aug

ust

Septem

ber

Octob

er

Nov

ember

Decem

ber

3+ Ta ac Se e e Weathe


Source: Part 234 Reporting Data, NOAA SPC Annual Summary 2009 (www.spc.noaa.gov)

3+ Tarmac Severe Weather

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Tarmac Delays Can Overwhelm AirportsCaused by (unpredictable) severe weather, tarmac delays occur in large numbers during

ifi i d f i G d d d d l l

3 Hour Taxi‐Out Delays on Peak Days, By AirportWith Start and End Time

specific windows of time. Gate resources are over‐taxed, extended tarmac delays result.

Date ofIncident

Airport Impacted

3+ Hour Taxi‐Out Delays

First Gate Departure

Last Gate Departure

December 11, 2008 Houston IAH 42 2:50 PM 9:20 PMJuly 24, 2008 New York JFK 42 12:25 PM 9:29 PMJuly 24 2008 Philadelphia PHL 38 12:09 PM 8:45 PMJuly 24, 2008 Philadelphia PHL 38 12:09 PM 8:45 PMJune 11, 2008 New York JFK 33 4:20 PM 8:40 PMJuly 15, 2008 New York JFK 32 3:59 PM 9:30 PM

February 12, 2010 Dallas DFW 31 6:25 AM 7:25 PMOctober 16, 2008 Houston IAH 28 2:40 PM 4:00 PMJune 27, 2009 New York JFK 25 3:10 PM 6:50 PM

Au u t 15 2008 Ne Yo k JFK 23 2 59 PM 5 20 PMAugust 15, 2008 New York JFK 23 2:59 PM 5:20 PMJuly 28, 2008 New York JFK 22 9:15 AM 1:57 PMJuly 14, 2008 Atlanta ATL 21 10:00 AM 11:31 AM

August 22, 2009 New York JFK 20 12:45 PM 4:10 PMJune 10, 2009 New York JFK 20 5:50 AM 8:15 AMMarch 2, 2009 Atlanta ATL 20 12:35 PM 8:20 PM



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Tarmac Delays Impact the Northeast Most Often More than 90% of tarmac delays occur in just 8 US markets, with the B W hi id h f l i f i

3 Hour Taxi‐Out Delays by Airport, May 2008 through April 2010

Boston to Washington corridor as the focal point for recurring events.

Date TOTAL ATL BOS CLT DFW IAH NYC PHL WAS OTHERJ l 24 2008 120 2 2 56 38 19 3July 24, 2008 120 2 2 56 38 19 3July 14, 2008 65 21 1 29 7 5 2July 27, 2009 62 35 26 1 0June 11, 2008 61 1 48 7 3 2July 28, 2008 59 3 4 38 4 1 9August 15, 2008 54 1 47 4 2 0June 15, 2008 43 41 1 1J 10 2009 42 1 27 3 9 2

• New York represents 8.2% share of departures and 44.3% share of tarmac delays

• The New York to Washington June 10, 2009 42 1 27 3 9 2December 11, 2008 42 42 0June 27, 2009 39 1 37 1 0March 2, 2009 36 23 11 2August 12, 2008 34 28 2 4February 12, 2010 33 33 0August 11, 2008 29 1 2 21 2 3

corridor has 16.5% share of departures and 62% share of tarmac delays

• Tarmac events tend to be regional with impact from DCMay 28, 2008 29 1 24 1 3

Other Dates 870 33 27 38 28 26 285 51 100 100Total in Data Set 1,618 84 36 50 64 68 716 143 144 131Share of Tarmac Delays 5.2% 2.2% 3.1% 4.0% 4.2% 44.3% 8.8% 8.9% 8.1%Share of Departures,Major Airports 10.2% 2.7% 2.8% 6.4% 4.4% 8.2% 2.3% 6.0% 56.9%

NYC New York JFK LaGuardia and Newark Liberty

regional with impact from DC to NY, with follow‐on effect across eastern United States



NYC = New York JFK, LaGuardia and Newark LibertyWAS = Baltimore/Washington, Dulles and Reagan

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Tarmac Delays are an Airspace ProblemTarmac delays are almost perfectly correlated to reported airspace congestion

2009 Departures, 2+ Hr Tarmac Delays, and Delays Caused by Airspace/NAS Factors

• New York represents:% of Flight % of 2+ Hr % of Flights % of Minutes • New York represents:

• 5.26% of departures

• 13.24% of ATC delays

gDepartures Tarmac Delays

gAirspace Delays Airspace Delays

Atlanta 6.50% 6.51% 12.15% 12.45%Boston 1.72% 2.41% 2.36% 2.85%Charlotte 1.82% 2.70% 2.41% 1.93%Dallas 4.11% 3.26% 3.60% 3.60%Houston 2.84% 3.19% 3.15% 2.81%

Y A• 19.24% of the total time spent

waiting for airspace to open.

• Narrow departure and arrival

New York Area 5.26% 29.27% 13.24% 19.24%Philadelphia 1.45% 5.67% 2.59% 3.09%Washington Area 3.84% 5.95% 2.86% 2.70%Other Areas 72.46% 41.04% 57.63% 51.33%System 100% 100% 100% 100%

corridors into NYC are susceptible to weather.

• Key Takeaway: antiquated FAA infrastructure is a driver of delays

Flight Departures

2+ Hr Tarmac Delays

Airspace Delayed Flts.

Minutes from Airspace Del.

Flight Departures 0.93 0.99 0.972+ Hour Tarmac Delays 0.93 0.97 0.99Airspace Delayed Flights 0 99 0 97 1 00

Correlation Coefficients


Source: Part 234 Reporting Data and DOT BTS

infrastructure is a driver of delaysAirspace Delayed Flights 0.99 0.97 1.00Minutes (Airspace Delays) 0.97 0.99 1.00

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Conclusions about Tarmac DelaysINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• Tarmac delays are unpredictable, seasonal and weather‐related

Limited options when they occur

• Tarmac delays occur in clusters and paralyze airports

Shortage of gates drives choice between tarmac delays and cancellations

• Tarmac delays are regional events and tied to ATC

Flight schedule reductions and re‐timing won’t solve the problem.Flight schedule reductions and re timing won t solve the problem.


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How have airlines responded?INTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

Tarmac Delay Procedures

• Formal approach (DL, UA): specific time checkpoints

bli h d i h i

Time from Push-Back Checkpoint Action

2:00 after

Pilots confirm that food and water has been distributed. Pilots and

y

established with rare exceptions

• Informal approach (AA, WN): case by case basis, with flights

2:00 aftergate push-back Food and water cabin crew inform passengers

of the DOT rule and Delta’s compliance strategy.

2:00 Flight return Delta’s operations center conducts a review of the delayed flight and

flagged for action at 2 hours

• Result of all approaches: mandatory return to gate

2:00 gassessment

y gflags the operation for further

action.

2:15 Flight return decision

Unless takeoff is certain within 30 minutes, the flight returns to gate.

y gby 2:30 after pushback

2:30 Mandatory return

The aircraft returns to the gateeven if departure is imminent

(few exceptions permitted)

Based on interviews with airline operations teams


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CancellationsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

P iti fi t di i ti

MAY 2009 COMPLETED FLIGHTS BY TAXI TIME > 120 MINUTES

• Punitive fines create disincentive to risk 3 hour tarmac delays

• Airlines recall aircraft to the gate,

139

Probable gate return after 2:15

Ai i es eca ai c a t to t e gate,starting at 2:15 after push

• Up to six times the number of gate t fli ht th t

87Mandatory gate return

after 2:30

Subject to fines returns now versus flights that would statistically have 3h delay

• A significant portion of gate

45

25

Subject to fines

g p greturns cancel due to weather, resource or gate availability

120‐135 135‐150 150‐180 180+

Taxi time interval


Taxi time interval (546,832 total flights in data set)

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ExampleINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

To illustrate: Pop‐up Storms over PA(62% of NYC tarmac delays cross this area) • Arrivals en‐route at time of event

from Florida, Caribbean, NortheastFLIGHTS ALREADY INBOUND AT 4PMPortland ME Fort Lauderdale

• Blocked corridors to the west

• Airport is open for landings

B f 3h Li i h d h ld

Portland ME Fort LauderdaleRaleigh Fort MyersPalm Beach AustinOakland San JuanLong Beach

BLOCKED WESTBOUND DEPARTURES 4‐6PM San Diego San Jose CA

NortheastInbound Flights

• Before 3hr Limit – push and hold

• Pushwestbound flights & hold on tarmac

San Diego San Jose, CAChicago Los AngelesOakland

Flights• Gates open for inbound flights

• Departwhen airspace clears

• Now – cancel and divert flightsblocked

CaribbeanI b d

Now cancel and divert flights

• Divert inbound to other cities

• Cancelwestbound flights and use aircraft for outbound


Florida Inbound Flights

Inbound Flights

use aircraft for outbound returns to Florida, Caribbean

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May 2010 ResultsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

MAY10 % MAY09 % Δ %

Flight Operations 542 747 546 832 (4 085) ‐0 7%

Year over year comparison:

Operations at similar levelFlight Operations 542,747 546,832 (4,085) 0.7%

On‐Time Arrivals 433,848 79.9% 440,151 80.5% (6,303) ‐1.4%

Late Arrivals 100,683 18.6% 100,688 18.4% (5) 0.0%

Weather‐Related 39,436 7.3% 47,329 8.7% (7,893) ‐16.7%

Non‐Weather‐Related 61,247 11.3% 53,359 9.8% 7,888 14.8%

p

Weather conditions improved

Cancellations up 40%

Di i 25%Cancelled Flights 6,716 1.24% 4,792 0.88% 1,924 40%

Diverted Flights 1,500 0.28% 1,201 0.22% 299 25%

Taxi Out Times (3hrs) * 1 nm 35 0.01% (34) ‐97%

Taxi Times (2‐3 hrs) 346 0.064% 355 0.065% (9) ‐2.5%

Prior to Cancellation 49 0.009% 14 0.003% 35 250%

Diversions up 25%

3 hour delays eliminated

Of flights with taxi out time between two and three hours:

Gate Return 86 0.016% 22 0.004% 64 291%

Taxi‐Out 171 0.032% 271 0.050% (100) ‐37%

Taxi‐In 10 0.002% 19 0.003% (9) ‐47%

Diversion Airport 30 0.006% 29 0.005% 1 3.4%

Taxi Times (1 2 hrs) 3 998 0 74% 4 747 0 87% (749) 16%

between two and three hours:

Cancellations up 2.5x

Gate returns up 3xTaxi Times (1‐2 hrs) 3,998 0.74% 4,747 0.87% (749) ‐16%

Prior to Cancellation 75 0.014% 40 0.007% 35 88%

Gate Return 335 0.062% 212 0.039% 123 58%

Taxi‐Out 3,143 0.579% 4,209 0.770% (1,066) ‐25%

Taxi‐In 269 0.050% 131 0.024% 138 105%

Of flights with taxi out time between one and two hours:

Cancellations up 88%


Diversion Airport 176 0.032% 155 0.028% 21 14% Gate returns up 58%* Delta Flight 2011 5/28/10 trapped on tarmac due to lightning for 182 minutes

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May 2010 (2)INTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

CANCELLATIONS MULTIPLE GATE DEPARTURESAIRLINE May 2010 May 2009 All 2009 May 2010 May 2009 All 2009

CANCELLATIONS & RETURNS TO GATEFOR FLIGHTS WITH 2‐3 HOUR TAXI‐OUT TIMES

BY AIRLINE FOR 2HR+ DELAYSAirTran Airways 41.67% 11.11% 4.88% 25% 0% 12.20%American Airlines 15.38% 2.67% 3.95% 15.38% 1.33% 6.22%American Eagle 30.77% 17.14% 9.30% 30.77% 8.57% 12.68%Atlantic Southeast 12.90% 0% 3.37% 22.58% 12.50% 13.48%Comair 13.64% 8.57% 9.57% 13.64% 5.71% 10.49%Continental 13.33% 0% 2.41% 33.33% 0% 13.90%

BY AIRLINE FOR 2HR DELAYSIncreased cancellations at every reporting airlineAirTran 4x cancel rateUS Ai 5 l tDelta 11.49% 0% 1.75% 26.44% 0% 6.83%

ExpressJet 13.64% 0% 3.10% 45.45% 0% 13.08%Pinnacle 35.29% 0% 13.42% 5.80% 16.67% 23.49%United 3.70% 0% 2.17% 22.22% 4.17% 9.49%US Airways 10.71% 2.22% 6.66% 28.57% 8.89% 8.87%Southwest 0% 0% 0% 30% 9.09% 4.04%

US Airways 5x cancel rateReturns to gate up 5xSignificant statistical departure from history

ALL AIRLINES 14.16% 3.94% 4.83% 24.86% 6.20% 10.29%

CANCELLATIONS MULTIPLE GATE DEPARTUREAIRPORT May 2010 May 2009 All 2009 May 2010 May 2009 All 2009Dallas Fort Worth 20.00% 8.00% 7.34% 20% 0% 3.95%Detroit 28.57% 0.00% 18.18% 28.57% 25.00% 12.12%

BY AIRPORTC ttWashington Reagan 12.50% 5.88% 9.74% 37.50% 17.65% 15.90%

Newark Liberty 20.00% 0% 1.80% 80.00% 0.00% 10.21%Philadelphia 11.76% 0.00% 3.10% 29.41% 6.67% 6.67%Washington Dulles 12.00% 8% 8.46% 28.00% 0% 13.93%Chicago O'Hare 15.63% 5% 7.87% 37.50% 11% 10.16%New York La Guardia 29.79% 14% 5.03% 25.53% 14% 8.88%

Common patterns across airports – all increasePronounced impact in New York area


New York Kennedy 8.33% 2% 2.61% 25.00% 1.11% 5.81%Atlanta 14.52% 0% 5.53% 14.52% 11.11% 14.07%ALL AIRPORTS 14.16% 3.94% 4.83% 24.86% 6.20% 10.29%

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May 2010 (3): Case Study DFW May 14, 2010INTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

SEVERE

MAY 14, 2010 CANCELLATIONS AA | DALLAS FORT‐WORTH AIRPORT

AIRPORT FLOW AND CAPACITY(Source: FAA ASPM)

15

20

25

30SE E E

WEATHER EVENT

0

5

10

10am

‐11am

‐12p

m

2‐1p

m

m‐2pm

m‐3pm

m‐4pm

m‐5pm

m‐6pm

m‐7pm

m‐8pm

m‐9pm

‐10p

m

‐11p

m

dnight

Before 10‐

11‐ 12

1pm

2pm

3pm

4pm

5pm

6pm

7pm

8pm

9pm‐

10pm‐

11pm‐M

id

ARRIVALS DEPARTURES

We estimate 75 departure cancellations were due to gate shortages and tarmac rules; 1:1 (or 75) arrival cancellations.rules; 1:1 (or 75) arrival cancellations.

Key lesson: tarmac‐related cancellations have at least a 1:1 impact on follow‐on cancellations due to aircraft availability

234 Re

ports

Sudden severe weather event that impacted the DFW airport

American Airlines cancelled 308 flights.


or network recovery

Source: D

OT Pa

rt 2

161 departures and 147 arrivals

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Key FindingsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• Cancellations and diversions up significantlyCancellations and diversions up significantly

• Airlines already cancelled hundreds of flights due to the rule impacting tens of thousands of passengers

– 140 flights based on reported data from May alone

– Prevented 35 tarmac delays (4:1 ratio)

– Does not include pre‐cancellations and cancellations to free gate resources

• On pace for between 5,200 and 6,000 annual cancellations due to rule

• Diversions are a material concern for passenger welfare

We now review the public welfare implications of these results.


THE RULE

DOT AssumptionsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

DOT projected public welfare gains of $69.1 million over 20 years.

• 2.8% incremental cancellations (41 per year) of three‐hour delayed flights.

• No follow‐on cancellations.

• No change to flights with less than 3 hour expected taxi time.

• Minimal taxi‐in and taxi‐out time for returns to gate.

G il bili d• Gate availability guaranteed.

• No material change in diversions.

• Passenger re‐accommodation time under 9 hours• Passenger re‐accommodation time under 9 hours.

Each of these assumptions must be updated.


p p

THE RULE

DOT Welfare EstimateINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

DOT assumed 2.8% cancellations of three‐hour flights.

Real‐world observations 14.16% and 4:1 overall cancellation ratio

Hundreds of flights cancelled already

• For flights that cancelled after 60 minutes of taxi, plus direct follow‐on cancellations, incremental 140 flights due to tarmac rule in May 2010.

• 140 flights to achieve 35 fewer taxi‐out delays (4:1)140 flights to achieve 35 fewer taxi out delays (4:1)

• May is not peak‐season for tarmac delays

• DOT’s analysis is based on 1,481 annual tarmac delays

• 1481 * 4 = 5,924 annual cancellations based on observations


THE RULE

Recalculating WelfareINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

Conservative Case Observed Case

DOT b li lf $69 1 illi (20 )DOT baseline welfare +$69.1 million (20 yrs)

Cost of flights returning to gate (using DOT costs)

All flights 2.5‐3.0 hours‐$12.6 million

Longer passenger re‐booking time

18.6 hours vs. 5.9 hours‐$30.8 million

14 16% cancellations 2:1 ratio of cancellations to

Incremental Cancellations

14.16% cancellations2.5 hour return to gateNo pre‐cancellations

No follow‐on cancellations315 cancellations

2:1 ratio of cancellations to prevented tarmac delays plus 1:1 indirect to direct ratio

1,481 prevented delays (DOT)5,924 cancellations

‐$210.3 million ‐$3.9 billion

Welfare Change ‐$253.7 million ‐$3.9 billion


Net public welfare change ‐$184.7 million ‐$3.9 billion

THE RULE

ConclusionsINTRODUCTION TARMAC DELAYS CANCELLATIONS WELFARE CONCLUSIONS

• Cancellations have gone up due to the rule, and it is a bad thing

• Range of public harm from $187 million to $3.9 billion

• Can’t schedule your way out of tarmac exposure – they are caused by unpredictable and prolonged events

• Is the cost to consumers in cancellations and di ersions worthwhile?• Is the cost to consumers in cancellations and diversions worthwhile?

• DOT Regulatory Analysis used to justify the action must be updated with real‐world data

• Public review is critical before any expansion or changes to the tarmac limits in the future


Detailed Calculations of Consumer Welfare ImpactAPPENDIX

CHANGE CHANGE OVERQUANTITY/ PRICE/ DURING 20 YEARS @ 7% SOURCE

KEY ASSUMPTIONS UNIT VALUE FIRST YEAR 2.6% INFLATION MATERIAL(millions) (millions)

Tarmac delayed flights (2007-2008) 1,481 DOT (RIA p42)Fli ht ith 2 5 3 0 h t i ti (07 08) 1 284 DOT (RIA 40)Flights with 2.5-3.0 hour taxi time (07-08) 1,284 DOT (RIA p40)Passengers on flights with 2.5-3.0 hour taxi 86,689 DOT (RIA p40)Average passengers per flight 68 DOT (RIA p40)Value of passenger time (per hour) $29.53 DOT (RIA p42)Passenger fee (per enplanement & deboarding) $1.37 DOT (RIA p42)Taxi cost (for each gate return or redeparture) $88.24 DOT (RIA p42)DOT assumed passenger rebook time (hrs) 5.9 DOT (RIA p42)Adjusted rebook time @ 83% load factor (hrs) 18.6 Marks and Jenkins (2010)Cancellations DOT estimate (2 75%) 41 DOT (RIA p42)Cancellations, DOT estimate (2.75%) 41 DOT (RIA p42)Passnegers on DOT cancelled flights above 3,176 DOT (RIA p42)Cancellations, observed rate of 4:1 5,924 Marks and Jenkins (2010)Cost per cancellation, airline $14,818.00 DOT (RIA p42)

STATED PUBLIC BENEFIT OF CHANGES $69.1 DOT (RIA p61)

Part One: New Returns to Gate & Re-DepartureFuel Cost Taxi-in 1 284 ($88 24) ($0 11) ($1 5) Returns to gate * taxi-in fuelFuel Cost Taxi-in 1,284 ($88.24) ($0.11) ($1.5) Returns to gate taxi-in fuelFuel Cost Taxi-out 1,284 ($88.24) ($0.11) ($1.5) Gate departures * taxi-out fuelPassenger disembarkation fee 86,689 ($1.37) ($0.12) ($1.5) Pax on 2.5-3.0 hr flights * feePassenger reboarding fee 86,689 ($1.37) ($0.12) ($1.5) Pax on 2.5-3.0 hr flights * fee

Part Two: Observed CancellationsAirline cost of incremental cancellations 5,883 ($14,818.00) ($87.17) ($1,125) (5,924 less 41) * Cost per cancelCredit for taxi-out fuel 5,883 $88.24 $0.52 $6.7 Fewer taxi-out because of cancelsCredit for passenger reboarding 397,190 $1.37 $0.54 $7.0 Fewer reboarding costsCredit for passenger reboarding 397,190 $1.37 $0.54 $7.0 Fewer reboarding costs

Part Three: Increased Passenger Travel TimeOriginal DOT passengers cancelled 3,176 Initial DOT projection of cancelled paxIncreased travel time, per passenger 12.7 Increase due to higher load factorsValue of increased travel time across group 40,335 ($29.53) ($1.19) ($15.4) (Pax) * (hours) * (value of time)Passengers on cancelled flights 397,190 Incremental passengers cancelledIncrease in hours travelled 18.6 Incremental hours to rebookValue of increased travel time across group 7,387,726 ($29.53) ($218.16) ($2,816) (Pax) * (hours) * (value of time)


g p ( ) ( ) ( ) ( ) ( ) ( )

CHANGE IN PUBLIC BENEFIT (millions) ($305.93) ($3,949)

NET PUBLIC BENEFIT (millions) ($3,880) $3.88 billion over 20 years

AirTran May 28, 2010APPENDIX

ASSIGNED PLANNED GATE GATE ULTIMATE

On May 28, AirTran had 2:1 cancellations due to gate returns

ASSIGNEDAIRCRAFT FLIGHT PLANNED

OPERATION DEPARTURE (FIRST)

DEMAND TIME

FLIGHT OUTCOME

N950AT FL432 ATL‐MCI 4:22 PM 5:40 PM REDEPARTED (AFTER GATE RETURN)N956AT FL434 ATL‐PNS 6:30 PM CANCELLED (BEFORE PUSH)N899AT FL415 ATL‐IND 6:48 PM CANCELLED (BEFORE PUSH)( )N603AT FL155 ATL‐TPA 6:50 PM CANCELLED (BEFORE PUSH)N986AT FL702 ATL‐DAY 4:32 PM 7:18 PM CANCELLED (AFTER GATE RETURN)N893AT FL380 ATL‐MLI 5:13 PM 7:19 PM CANCELLED (AFTER GATE RETURN)N309AT FL268 ATL‐BOS 5:53 PM 7:37 PM CANCELLED (AFTER GATE RETURN)N891AT FL781 ATL‐STL 5:53 PM 7:52 PM REDEPARTED (AFTER GATE RETURN)N891AT FL781 ATL STL 5:53 PM 7:52 PM REDEPARTED (AFTER GATE RETURN)N944AT FL65 ATL‐IAD 6:02 PM 7:53 PM CANCELLED (AFTER GATE RETURN)N930AT FL909 ATL‐PHF 5:38 PM 7:56 PM CANCELLED (AFTER GATE RETURN)N991AT FL333 ATL‐PHL 5:33 PM 7:58 PM REDEPARTED (AFTER GATE RETURN)N290AT FL104 ATL‐DFW 7:15 PM 8:15 PM CANCELLED (AFTER GATE RETURN)N947AT FL75 ATL FLL 7 13 PM 8 26 PM CANCELLED (AFTER GATE RETURN)N947AT FL75 ATL‐FLL 7:13 PM 8:26 PM CANCELLED (AFTER GATE RETURN)N292AT FL358 ATL‐LGA 8:55 PM CANCELLED (BEFORE PUSH)N989AT FL968 ATL‐ACY 9:00 PM CANCELLED (BEFORE PUSH)N942AT FL123 ATL‐TPA 9:00 PM CANCELLED (BEFORE PUSH)N337AT FL67 ATL‐SFO 10:05 PM CANCELLED (BEFORE PUSH)


N957AT FL995 ATL‐PIT 10:15 PM CANCELLED (BEFORE PUSH)N932AT FL395 ATL‐MLI 10:20 PM CANCELLED (BEFORE PUSH)

impact of three hour tarmac delay rules and

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