new york airport congestion costs report 2008

8/14/2019 New York Airport Congestion Costs Report 2008

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The High Cost o Air Trafc Congestion

February 2009


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With a mission to maintain the citys position as a global center

o commerce, culture and innovation, the Partnership or New

York City is an organization o the leaders o New York Citys top

corporate, investment, and entrepreneurial rms. working with

government, labor and civic groups, The Partnership provides

business expertise and resources to inorm public policy decisions

and to promote regional economic growth and job creation.

Through its aliate, the New York City Investment Fund, the

Partnership directly invests in economic development projects in

all ve boroughs o the city.

One Battery Park Plaza, 5th Floor

New York, NY 10004-1479

telephone: 212.493.7400

ax: 212.344.3344

www.pnyc.org

Partnership or New York City

Co-ChaIRMENI

Lloyd C. Blankein

K. Rupert Murdoch

vICE ChaIRsI

Candace K. Beinecke

Kenneth I. Chenault

Terry J. Lundgren

PREsIdENt aNd CEo

Kathryn S. Wylde

dIRECtoRs

Stephen Berger

William H. Berkman

Jefrey L. Bewkes

Kathy Bloomgarden

Kevin Burke

Russell L. Carson

Robert B. Catell

Stephen J. Dannhauser

James Dimon

Brian DuperreaultPeter L. Faber

Roger W. Ferguson

Laurence D. Fink

Alan H. Fishman

Jay Fishman

Thomas Glocer

Barry M. Gosin

Jonathan N. Grayer

Robert Greield

Glenn H. Hutchins

Jill Kaplan

Charles Kaye

Robert P. Kelly

Jefrey B. Kindler

Klaus KleineldHenry R. Kravis

William P. Lauder

Rochelle B. Lazarus

William M. Lewis

Martin Lipton

John J. Mack

Donald B. Marron

Harold McGraw, III

Dennis M. Nally

Duncan L. Niederauer

Vikram S. Pandit

Michael Patsalos-Fox

Jefrey M. Peek

Lynn Pike

Peter J. Powers

Vikki L. Pryor

Steven Rattner

James D. Robinson, IIIWilbur L. Ross, Jr.

Michael I. Roth

Steven Roth

Howard J. Rubenstein

Barry Salzberg

Linda S. Sanord

Stephen A. Schwarzman

Jerry I. Speyer

Sy Sternberg

Mary Ann Tighe

James S. Tisch

John B. Veihmeyer

Mark L. Wagar

Seth Waugh

Christopher J. WilliamsDeborah C. Wright

Robert Wol

Tim Zagat

Mortimer B. Zuckerman

FouNdINg

ChaIRMaN

David Rockeeller


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Introduction

The Partnership or New York City undertook this study in order toestablish the ull economic costs o air trac congestion at the threemajor airports serving the New York Metropolitan Region: John F.Kennedy International Airport (JFK), Newark Liberty InternationalAirport (Newark Liberty), and LaGuardia Airport (LaGuardia). The

Partnership wanted to determine whether investing in expansion o

regional airport capacity and upgrading the air trac control systemto reduce ight delays would pay o or the region and the nation.

The fndings o the study clearly show that such investment is morethan justifed by the cost burdens resulting rom inecient andunpredictable passenger and air reight service due to congestion.Moreover, the opportunity to correct these conditions is now when the ederal government is poised to invest in long-neglectedinrastructure as a means o stimulating recovery rom the globalrecession.

JFK, Newark Liberty and LaGuardia rank as the countrys mostcongested airports. According to the U.S. Department o

Transportation (DOT), only two-thirds o departures rom theseairports let on time in 2007, and even ewer arrivals met the schedule.Nearly three-quarters o nationwide delays are ultimately attributable

to problems originating in the New York regions airspace, whichhandles about one-third o the nations ights. These delays cascadeand aect ights at airports throughout the global system.

Air trac levels ell immediately ollowing the 9/11 terrorist attacks,but have increased steadily since then. Today, more travelers boardmore ights in and out o the New York regional airports than at anypoint in history. Air reight activity has also reached historic volumes.

This growth reects an expanding economy, more competitive airlinepricing and increased global interactions phenomena that have

slowed during the current recession but will rebound in the course orecovery.

New Yorks status as a thriving center o international business andfnance puts tremendous demands on its airports, making somelevel o congestion inevitable. But current and projected levels

o congestion in New York contribute to expensive delays, loss oproductivity, wasted uel, and pollution o the environment to adegree that should not be tolerated. This study concludes that air


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trac congestion is causing signifcant damage to the regionaleconomy and requires intervention.

It would not be practical to build enough runways, taxiways andterminals to eliminate delays altogether, but clearly some acilityexpansion is required. Similarly, cuts in service and restriction onroutes that connect New York to every corner o the world are

undesirable, but some service adjustments may have to be made.

Investment in the countrys inrastructure is a priority o the newFederal Administration and a component o the economic stimulusprogram. This investment should be targeted toward projects that willspur uture job growth, not just short-term fxes. A comprehensive

program to improve the eciency and saety o the nations airportsis an example o how public investment can contribute to economicrecovery and long-term growth. The Partnership produced this reportto document the high costs o air trac congestion, with the intento generating citizen awareness and government action ocused onupgrading the aviation system in this region and across the nation.


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Contents

Introduction .........................................................................................1

Contents ................................................................................................3

Executive Summary ...........................................................................4

Airport Congestion in the New York City Region ................... .7

The Scale o the Problem .................................................................9

The Cost o Delay to System Users ............................................18

The Cost o Congestion to Passengers ....................................19

The Cost o Congestion to Carriers ...........................................21

The Cost o Congestion to Shippers .........................................23

The Cost to the Regional Economy ...........................................24

Local User Costs ...............................................................................25

Congestion Losses to the Connected Regional Economy 26

Output Lost .......................................................................................... 26

Employment Lost .............................................................................. 27The Cost o Congestion-Caused Emissionsto All New Yorkers ...........................................................................28

Congestion as an Impediment to Doing Businessin New York ........................................................................................29

Policy Implications and the Search or Solutions ................30

The Federal Response ....................................................................31

The Regional Task Force Recommendations .................. ....... 33

Conclusion .........................................................................................35


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4 Partnership or New York City

The uture o the New York Metropolitan Region as a center o globalcommerce and culture requires an air transportation system that isecient and universally accessible. In 2008, New Yorks three majorregional airports served about 107 million passengers, including 32million business travelers. To accommodate continued economic

growth in the region, these numbers will need to increase in the years

ahead. Unortunately JFK, LaGuardia and Newark Liberty airports arealready over-utilized and suering rom severe conditions o air traccongestion.

Flight delays caused by air trac congestion at the three airportswere responsible or more than $2.6 billion in losses to the regionaleconomy in 2008. I no action is taken, losses attributable tocongestion will total a staggering $79 billion over the eighteen-year span rom 2008 to 2025. These are the conclusions o analysesconducted or this report by HDR | HLB Decision Economics, withinput rom Accenture, the Port Authority o New York & New Jerseyand other expert sources.

This report establishes the cost o congestion or three categories osystem users: travelers, the airline industry, and shipping companies.

The total value o lost time to the traveling public was$1.669 billion in 2008 and is projected to total over $50billion rom 20082025. For business travelers, the costo the travel time lost to congestion delays at the threeregional airports was $676 million in 2008, and is projectedto be over $18 billion rom 20082025. About hal this costis incurred by residents and businesses based in the region.

The loss to leisure travelers in 2008 was $993 million, withan estimated cumulative cost o over $32 billion rom20082025.

The airline industry incurred signifcant losses in uel andstang costs due to congestion, estimated at $834 million

in 2008, and a total o $25 billion rom 20082025.

Shipping companies that utilize both passenger and reightaircrat also suer losses rom excessive delays. These losseswere about $136 million in 2008, and would be about $4billion between 2008 and 2025.

In addition to costs incurred by system users, the report identifes

costs to the regional economy as a whole that result rom productivitylosses that are directly attributable to air trac congestion. Losses

Executive Summary


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5Grounded: The High Cost o Air Trafc Congestion

include 5,600 ull-time jobs that will not be created, over $16 billion inlost output and $5.5 billion in lost labor income over the next 18 years.

Finally, the entire region must bear the impact o additional emissionsgenerated by aircrat in on-the-ground delays. The long-term costo these emissions is estimated to be $1.7 billion in total or theeighteen-year period.

The ight delay estimates presented in this report are based on theull time loss resulting rom congestion, including delay time that theairlines have built into their published schedules. They do not include

delays due to unusual weather conditions or other extraordinaryevents. The fndings are signifcant. For passengers ying during the

peak season, delays at the regional airports due to congestion were 68minutes or departures and 53 minutes or arrivals, on average, acrossthe region in 2007.1 By the end o day, delays requently build up to130 minutes or more. Freight-only ights are delayed 34 minutes onaverage, but exhibit the most variability and least predictability o allschedules. I let unabated, on average, across all three airports, per-passenger time loss due to congestion will rise rom 60.6 minutes in

2008, to over 106 minutes in 2025.

Through 2025, the region will incur an aggregate loss o $23 billion inoutput, earnings and environmental costs simply as a result o ight

delays at three airports. This does not include the signifcant economicconsequences o delays within the rest o the national system that

are attributable to problems stemming rom congestion at JFK,LaGuardia and Newark Liberty. It does not calculate the opportunitycosts associated with regulatory ight caps and limitation on newroutes. But it is reason enough to take action on modernization o theairports and air trac control system.

Mitigating the negative impact o air trac congestion by cappingights or other regulatory intervention or assessments may reducedelays, but it also reduces the number o ights, creating potentiallygreater economic losses or the Metropolitan Region. A study

published by the Partnership or New York City in 2008 documentedthat 15 percent o economic growth in New York City between

20022004 was attributable to oreign companies setting up businessoperations here. One in twenty New York City workers was employedby a oreign company in 2004, and that number is likely to have risenover the past fve years. Continued oreign direct investment is a keyto uture economic growth and cannot be accommodated withoutincreased connections with locations in emerging markets around theworld.

Equally important to the Citys economy is tourism. In 2008, a record47 million tourists came to New York City, contributing $30 billion to

1 Congestion delays include both late arrivals and departures and time loss embedded in airline

schedule that is not immediately visible to travelers..


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the local economy. International tourists accounted or 21 percent(9.8 million) o the total but or almost 50 percent o the spending.Even more striking is that New York City is the destination o nearly athird o all international tourists coming to the U.S. Leisure travelershave exibility in planning their vacations and i airport delays beginto erode valuable vacation time, there is a distinct possibility thattourists will choose other destinations. Continuing to improve airtransportation to and rom the City is critical to maintaining thisimportant segment o the Citys economy. Similarly, thousands o New

York region businesses import goods rom international markets oruse air reight to ship goods overseas and rely on the regions airportsto maintain links with their customers and suppliers.

Solutions to congestion that allow or continued economic growthrequire a combination o capacity expansion, up-to-date technologiesand industry initiatives to maximize eciency.

The Port Authority has identifed initial actions at allthree airports to provide some improvements in airfelds,terminals and roadways that will create incrementalcapacity. More ambitious eorts will require leadershiprom business, civic and labor organizations in order tobuild political consensus in support o expansion in airportcapacity.

The Federal Aviation Administration has initiated a programto completely restructure air trac control services and airroutes, based on what can be achieved with modern airnavigation equipment and advances in technology. Stateo the art equipment could greatly improve air navigationaccuracy, allowing redesign o routes to permit closerspacing and more options or avoiding weather conditionsand accommodating peak aircrat trac ows. The costo modernizing the nations air trac control system andredesigning routes is estimated to cost $22 billion, butthis study proves that the cost is more than justifed bythe benefts that will come rom reducing delays andineciencies that are causing such damage to the regionaland national economies.

The airline industry has already equipped their newlydelivered aircrat with the advanced avionics and modernair navigation systems that would enable governmentinvestments in inrastructure to pay o. The remaining andar larger challenge will be convincing all aircrat owners tomake the investments to re-equip their existing eets. Thenext generation air trac control system envisioned by theFAA only creates the new capacity needed when most othe aircrat can participate in the system.


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New Yorks major airports [John F. Kennedy International Airport(JFK), Newark Liberty International Airport (Newark Liberty), andLaGuardia Airport (LaGuardia)] are at the top o the list o thecountrys most congested airports. According to the Department o

Transportation, only two-thirds o the aircrat at these airports had

an on-time departure in 2007, and only 60 percent o aircrat had on

time arrivals, a perormance decline o about 20 percent in ewer than4 years. These delays cascade and aect ights at various airports inthe system. Nearly three-quarters o nationwide delays originate inNew York area airspace, which handles about one-third o the nationsights.

The congestion problem at New Yorks major airports constitutesa crisis o national proportions. But it is also a major drag on theregional economy. Seventy-fve million passengers use the regionsairports or leisure travel, and about 40 percent o these stay, recreateand spend money within the region. Delays negatively impact theregions ability to attract tourists. In 2005, the Port Authority estimated

that airport operations, investment and tourists arriving by air

resulted in $57 billion in regional economic activity.2

The Port Authority o New York and New Jerseys Flight Delay Task

Force3 noted that Newark Liberty, LaGuardia, and JFK are the mostdelay-prone airports in the country, representing one-third othe nations delays. The Task Force ound that each delay in NewYork results in more than two delays elsewhere in the country.Additionally, the Task Force ound that nationally, all aircrat delayscost Americans over $9 billion each year.4 Our study estimatescongestion-caused delays on ights only with direct links (origins,destinations or connections) in the New York City region and fnds

that the delay cost totals about one sixth o the $9 billion annualnational cost.

Airport congestion in the New York region is largely a product o

space limitations, including acilities on the ground and limitedair space to accommodate the greatest concentration o aircratmovements in the world. Flight activity has increased by 20 percent inthe past fve years rom just over 1.2 million annually in 2002 to 1.45

2 The Port Authority o New York and New Jersey, The Economic Impact o the Aviation Industry

on the New York-New Jersey Region, 2005

3 See Port Authority o New York and New Jersey, Flight Delay Task Force Report, 2007.

4 Ibid.

Airport Congestion in theNew York City Region


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million in 2007, and has exceeded pre-9/11 levels every year since2005.

The fgure below illustrates annual ight volumes or the three

airports evaluated or the years 19882007. While the globaleconomic crisis has recently depressed demand, this is likely to be atemporary condition, assuming gradual national economic recovery.

Factors contributing to congestion problems include the level oshared airspace between the three major airports and smaller airportsin the region; portions o New Yorks airspace that were designedearly in the jet age to protect residents rom associated noise; useo obsolete ground-based air navigation technologies that can only

defne long and straight arrival paths as opposed to those that couldbe defned using upgraded on-aircrat equipment; and the variety oon-board equipment that prevents major portions o the airlines eetrom taking ull advantage o satellite-based air navigation.

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: Federal Aviation Administration

Thousands

ofFlights

Total Number of Flights(All Three NYC Airports)

0

300

600

900

1,200

1,500

1,2

40

1,2

42

1,2

72

1,1

86

1,2

33 1,3

05

1,3

07

1

,312

1,3

26

1,2

06

1,2

01 1

,286

1,3

53

1,3

70 1

,443

1,2

82

1,2

86

1,

296

1

,316

1,3

62

Figure 1: Annual Flight Volumes, New York City Airports, 1998-2007


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Previous attempts to quantiy the cost o air trac congestion have

substantially underestimated its economic impact. Determining thereal cost o delays is complicated by the act that airlines, competingto attract and retain customers, adjust their published schedules toaccount or expected delays when ying into or out o New York. Thiscomplicates eorts to quantiy the problem. Airlines have to careully

balance their need to keep published ight times as low as they can,with their eorts to avoid excessive delay statistics that scare ocustomers. The result has been a gradual lengthening o publishedight times reerred to as schedule padding or block times. Does a

ight that should be achievable in three hours, but is scheduled orthree and a hal hours, and actually takes our hours represent a halhour or ull hour delay?

Even though a passenger on such a ight may think they are onlyhal an hour late, the true time loss (and resulting loss in welareand, possibly, productivity) is the ull hour. This analysis, in seekingto understand the ull economic implications o congestion, ocuseson the ull time loss, regardless o schedule, when that time loss is

a result o congestion. It seeks to clariy the true scale o the airportcongestion crisis and estimate the economic costs congestion-relateddelays are imposing on the users o the air travel system and New

Yorks regional economy. To achieve this, the study looked at howmuch time is lost, how much worse the problem will get and whobears the costs when there is a delay.

This analysis indicates how ights throughout the day are perorming,under congested conditions, relative to a benchmark based onconsistently achieved best times, during normal operating hours,which are most likely achieved when air trac is lightest typicallyaround 6 or 7 a.m. or 11.p.m. The benchmark is established based onthe average astest time a ight route achieves across a season. Thebenchmark is not established based on the absolute astest time,which allows or a certain amount o congestion and queuing withinthe baseline. This widely accepted approach, based on work by Daniel

and Harback in the Journal o Economics5, accounts or congestiondelay irrespective o the padding built into airline schedules.

5 Daniel, Joseph I. and Harback, Katherine Thomas, (When) Do hub airlines internalize their sel-

imposed congestion delays?, Journal o Economics, March 2007. See also, the discussion o the

merits and detriments o various measurement approaches in the appendix to Your Flight Has

The Scale o the Problem


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For example, or the ight route LaGuardia to Chicago OHareInternational (ORD), using A320 aircrat, the peak season benchmarktime reects the average or the 6:10 a.m. departure period. Thisbenchmark route was routinely achieved in 126.5 minutes. The actualaverage ight time or this route using the same equipment was 176minutes. This represents 49.5 minutes o delay due to congestion.Using benchmarks or each route pair, or each equipment type across

seasons, and controlling or extreme weather, mechanical problems,and other non-congestion related delay actors, our study calculates acongestion delay or 2008 and then develops a orecast through 2025.

Because the method relies on a high number o observations, about385,000 passenger ights and over 36,000 reight-only ights, and

because the statistical technique boils those observations downto common experiences, the average delay estimates are reliablerepresentations o the delay eects o congestion.

This approach to delay estimation is appropriate or identiyingthe impacts o congestion. Delay estimates exclude randomdelays delays out o proportion with similar ights at similartimes typically caused by airline stang problems, mechanicalproblems, and unique weather events. Weather issues that causedelays requently, because the airspace is typically too crowded toaccommodate even routine deviations to deal with the weather, are

included in the delay estimates. Delay is measured or two, two-month

periods during the year an o-peak and a peak season, or bothweekdays and weekends during 2007.

As this study illustrates, peak season travelers are delayed about 70minutes per ight on average. End o day delays (which is when themost delayed ights depart on any given day) can reach averageso 130 minutes. Delays due to congestion were 68 minutes ordepartures and 53 minutes or arrivals, on average, across the regionin 2007. Freight-only ights were delayed 34 minutes on average, butexhibit more signifcant delay peaks and valleys across the day.

Been Delayed Again, Joint Economic Committee Majority Sta, May 2008.


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Figure 2 describes passenger delays or all three airports combinedacross the average day. It reports the combined three airport averagepassenger delay by hour o the day. Flights are recorded at thehour they actually depart or arrive (as opposed to when they werescheduled to depart), so ights departing at the end o the day aretypically the most delayed. As indicated in the fgure, passengerdelays are high, on average, and there are no delay-ree periods

during the middle o the day.

67am

78am

89am

910am

10

11am

11

12pm

12

1pm

12pm

23pm

34pm

45pm

56pm

67pm

78pm

89pm

910pm

10

11pm

11

12am

Minutes

Note: This figure presents arrival and departure delays inclusive of gate time, taxiway time

and flight time for all originating airports in the peak season.

0

50

100

150

200

Departures

Average Departure Delay (68.1)

Average Arrival Delay (53.3)

Arrivals

Passenger Delays(All Three NYC Airports)

Figure 2: New York City Airports Passenger Delays by Time of Day for 2007


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Figure 3 presents similar data, but segmented into each stage otravel or which congestion delays are estimated. Flights listed or theend o the day demonstrate the highest level o gate delay as mostlong-delayed ights will not board passengers or the majority o the

delay period. Aside rom the scale o delay (about 45 minutes duringmid-morning and about 55 minutes during mid aternoon), the chartreinorces the observation that there is not a signifcant opportunityduring mid-day to clear morning delays.

Minutes

67am

78am

89am

910am

10

11am

11

12pm

12

1pm

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45pm

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67pm

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910pm

10

11pm

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12am

0

50

100

150

200

Taxi-In

Airborne

Taxi-Out

Gate-Out

Passenger Delaysby Stage

Note: This figure presents delays by component as the sum of departures and arrivals, excluding gate delays

at originating airports for arriving flights in the peak season.

Figure 3: New York City Airports Passenger Delays by Travel Phase


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As Figure 4, below indicates, reight-ight departures are congestedthroughout the day, but show more variability than passenger ights.Arrival delays all o throughout the overnight period. Packagedelivery services typically have high volumes o ights departing or

cross-continent trips in the late evening period.

Figure 4: New York City Airports Freight Only Flights by Time of Day

01am

12am

23am

34am

45am

56am

67am

78am

89am

910am

10

11am

11

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12

1pm

12pm

23pm

34pm

45pm

56pm

67pm

78pm

89pm

910pm

10

11pm

11

12am

Minutes

Note: This figure is based on delays for departures and arrivals, excluding gate delays atoriginating airports for arriving flights in the peak season.

0

20

40

60

80

100

Departures

Average Departure Delay (47.1)

Average Arrival Delay (23.1)

Arrivals

Average Freight Delays(JFK and EWR)


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The analytical results in charts on previous pages are reinorced byFigure 5 below, which describes the number o ights by hour at eachairport and or all three airports combined. As the chart indicates,there are really no delay-clearing, low-activity times throughout theday at LaGuardia. Both JFK and Newark Liberty have limited additionalcapacity between 9AM and 2PM, which allows a portion o themorning delays to dissipate. As demand grows, this ability to dissipatemorning delays will gradually disappear and delays will increasethroughout the day.

Source: Federal Aviation Administration flight database for 2007

Flights

perHour

67am

78am

89am

910am

10

11am

11

12pm

12

1pm

12pm

23pm

34pm

45pm

56pm

67pm

78pm

89pm

910pm

10

11pm

11

12am

0

50

100

150

200

250

208

JFK Flights

Total NYC

LGA Flights

EWR Flights

Figure 5: Flights Per Hour at Newark Liberty, JFK and LaGuardia


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Likewise, demand or ight slots in the region does not varyhighly between seasons. Other than February, which experiencedcancellations due to bad weather, there was not a month withappreciably low ight activity in 2007. JFK has approximately aten percent increase in daily demand during the summer monthscompared to the rest o the year. Newark Liberty and LaGuardia haveless seasonal variability.

The peak tourism season should be the worst time or business travel,due to more ights and higher passenger load actors. However,evidence shows that New Yorks airports are consistently ully utilizedthroughout the day and throughout the year. Figure 6 below presentsight volumes throughout the year.

Source: Bureau of Transportation Statistics and Federal Aviation Administration flight databases.

FlightsperDay

January

Feb

ruary

M

arch

April

M

ay

June

July

August

Septem

ber

Octob

er

Novem

ber

Decem

ber

0

1000

2000

3000

4000 3,952

JFK Flights

Total NYC

LGA Flights

EWR Flights

Figure 6: Average Flights per Day by Month at Newark Liberty, JFK and LaGuardia, 2007


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Given the current delay levels, it is reasonable to conclude that allthree airports are currently operating near or at unctional capacityor many hours o the day. This study assumes that technological,policy, and organizational solutions may allow that unctional capacityto increase marginally, even i the absolute capacity o the acilitiesdoes not change. However, each airport does have an absolutecapacity the number o ights that can physically take o and landgiven separation requirements and runways. The closer each airportgets to that absolute capacity, the worse the delays become. Given

orecasts or uture increases in ight demand, these increases indemand should result in exponential increases in delays. Forecastso uture delay levels or this study were developed based on thisunderstanding, on FAA capacity orecasts by airport, FAA estimateso uture operations-to-capacity ratios based on historical data,enplanements and operations per airport, and current ight and delaylevels.

The delay orecasts reect the constraints placed on the capacity oeach o the airports, as well as expected improvements in the capacityo the runways.6 The Federal Aviation Administration (FAA) respondedin 2007 to the increasing delay levels that occurred between 2004 and

2007 by restoring and expanding the ight caps at John F. Kennedyand imposing a new cap at Newark Liberty. In early 2008, the FAAannounced that it would reduce the cap at LaGuardia rom 75 to 71operations per hour. This latest reduction in the cap is not part o this

analysis o the cost o delays. However, this analysis does recognizethe capacity constraints at each airport and modeled a reduction intotal ight activity in response.

The passenger orecasts are limited by the capacity o each airport.The orecasts assume no major changes to airspace availability orsignifcant navigational technology change aecting separationrequirements between aircrat. As expected, this orecast, presentedin Figure 7, demonstrates signifcant increases in delay through 2025,

even with the capacity limitations. Further, the delay analysis in thisstudy assumes that some incremental capacity gains could be madebetween 2008 and 2025 and that cap levels at JFK and Newark Libertywould be adjusted accordingly. Even with these actions to increasecapacity and anticipating that the ull orecast o uture ight activitywould not occur, delays are expected to rise as both JFK and NewarkLiberty would evolve towards being ully utilized across the entire day.

As a result o the limitations, the orecast suggests that a certainportion o the demand or air travel will go unserved. Estimates by

6 Data on capacity expansion plans and expectations were obtained rom the FAA Airport

Capacity Benchmark reports, and rom the Port Authoritys Regional Air Service Demand Study.


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Landrum & Brown or the Port Authority indicate passenger demandwill exceed supply o ights by 2012 and that the shortall o supplymay be as high as 39 million unserved passengers by 2025.7Regardless, ight delays will grow dramatically in the region i letunaddressed.

7 Landrum & Brown 2008, based on FAA Terminal Area Forecasts or 2007 and 2008.

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Note: Figure presents delay per passenger and is thereforeweighted by passenger volumes at each airport.

Minutes

0

20

40

60

80

120

100

60.6

62.1

63.7

65.4

67.2

80.8

83.6

86.7 9

0.0 9

3.5 9

7.4 1

01.7 1

06.5

69.2

71.2

73

.4

75.7

78.2

Average Forecasted Delays(All Three NYC Airports)

Figure 7: New York City Airports Flight Delay Growth Forecast


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The economic impact to aviation system users o congestion-generated delays at LaGuardia, JFK and Newark Liberty, is projected tobe $79 billion i let unaddressed through 2025. This represents time-loss costs or passengers, additional cost to airlines in stang and uelconsumption, and the cost to shippers o additional shipment transit

time, equating to an average annual cost o $4.4 billion through 2025.8

About 64 percent o the costs are related to the valuation o the timelosses to passengers, 31 percent represent operating costs to carriers,and 5 percent are losses experienced by shippers.

Figure 8: Airport Congestion Cost Forecast, 2008-2025

8 Unless otherwise noted, cost fgures in this report are cited as undiscounted, real values no

discounting is applied to uture values, and no ination is applied to the underlying present-

day values used to estimate uture costs.

Cost of Delay to: 2008 20082025

Travelers

Airlines

Shipping Companies

$1.7

$0.8

$0.1

$2.6

$50.7

$24.8

$4.0

$79.5Total

(in $Billions)

Passenger Time

Loss$50.7 billion 64%

Operating CostLosses

$24.8 billion 31%

Freight ValueLosses

$4.0 billion 5%

Total Costs of Delays in the Three Airports 20082025 ($79.5 Billion)

The Cost o Delay to System Users


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Figure 9: Travel Time Losses Economic Impacts by Passenger Type

O the $79 billion cost, it is estimated that $39.1 billion aectsresidents and businesses located within the region, and theremainder are losses to travelers and businesses rom outside oNew York. Because congestion eects are both local and nationalissues o signifcance, mitigation will require strong cooperation andcoordination between ederal and local policy makers.

The Cost o Congestion toPassengersPassenger time loss represents the single most signifcant economiceect o congestion. The congestion delay estimates rom this analysisindicate that in 2008 travelers using the three airports lost almost60 million hours in total, representing $1.7 billion in time value.

Locally-based travelers and travelers conducting business withinthe region represent $815 million o this total. Due to the orecast oincreasing delays over time, the time lost annually is expected to risecontinuously. The cumulative cost rom today to 2025 will be $50.7

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

MillionsofUS$

0

$1,000

$2,000

$3,000

$5,000

$4,000

Leisure

Business

$1,166

$1,232

$1,303

$1,380

$1,462

$1,551

$1,647

$1,750

$1,862

$1,983

$2,1

13

$2,256

$2,412

$2,583

$2,771

$2,979

$3,212

$3,467

$503

$524

$545

$56

8

$5

92

$617

$645

$674

$705

$738

$773 $

811

$853 $

897 $

946 $

999

$1,058 $

1,122


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billion, o which $25 billion represents costs to local residents andtravelers doing business in the region.

The theoretical starting point is that all travelers, other things being

equal, would preer to arrive at their destinations more quickly, andalmost all would be willing to pay something to make that happen.

The value o the time lost due to congestion delays is estimated byutilizing values o time by passenger type as published by the FAA.

To estimate the willingness to pay to save time, the FAA time valuefgures are used. These values o time are also segmented by trippurpose and calculated based on traveler profles and wage rates.

The cost to passengers grows at increasing rates through the period

2008 through 2025. Although business travelers do not accountor more than 30 percent o the total number o passengers, theyaccount or over 40 percent o the cost in 2008. Current orecasts outure passenger volumes indicate higher growth in leisure travel,

relative to business travel. Business travel is expected to increase ata lower rate as communication technologies become less costly andmore ecient.9 Nearly two thirds o the total cost o passenger delaysimpact leisure passengers.

9 A survey o New York City businesses conducted or this study by the Partnership or New York

City indicates that many businesses are investing heavily in travel-avoiding technologies and

systems. This is detailed urther in Section 3.


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Air carriers are also users o the aviation system a system composedo airport acilities, air trac control services, and usable air space and are the second most signifcantly aected users o New Yorksaviation system. Though air carriers have more direct control ocongestion levels than passengers, the majority o air carriers can do

little independently to impact congestion levels. Though reduced

congestion would beneft all air carriers, there is little incentive or anindividual air carrier to act, particularly in any way that increases costsor reduces revenues.

Delay negatively impacts airline operations in several ways. Delaysduring engines on periods require additional uel, all delays requireadditional crew time, delays require airlines to adjust ight plans,possibly impacting crews and schedules on subsequent ightsand airlines must maintain sucient logistics stang to respondto regular delays. All o these things impose expenses on airlines,

2008

2009

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2011

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2013

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2015

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2019

2020

2021

2022

2023

2024

2025

MillionsofUS$

$0

$500

$1,000

$1,500

$2,500

$2,000

Fuel

Crew

$508

$529

$552

$576

$602

$630

$660

$692

$726

$763

$802

$846

$893

$944

$1,00

1

$1,063

$

1,133

$1,212

$326

$345

$366

$388

$413

$

439

$467

$498

$531

$567

$606

$649

$696 $

747 $

804 $

868

$939

$1,019

Figure 10: Carrier Costs of Congestion by Cost Category

The Cost o Congestion to Carriers


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There is a lack o publicly available data on the residences o airlinecrew members ying in and out o New York. It also remains unclearwhat portion o uel transactions or ights rom New York actuallyoccur in New York, especially or short-haul ights. To estimatea regional share o operation cost impacts described above, it isassumed that hal o the crew ying to and rom New York arepaid within the region and that hal o the excess uel consumed ispurchased and delivered in New York. In truth, most airlines makebulk purchases o uel, so it is dicult to apportion these costs

geographically. Likewise, certain stang costs are local and some, likeederal employment taxes are less so. Since arrivals and departures arenearly equal, it is reasonable to apportion a regionally incurred shareo these operating costs. It is estimated that the local share is $12.4billion through 2025.

Crew costs account or almost 57 percent o total congestion coststo carriers. Crew costs are generally higher than uel costs becausecarriers have to maintain a crew during most delays, while excess uelconsumption costs are only accrued during engines-on delays. Thetotal uel costs or arrivals exceed the cost o maintaining a crew dueto the high uel costs o airborne delays. During departure delays,

which are dominated by gate delays, the cost o the crew is more thantwice the cost o uel.

The Cost o Congestion toShippersCongestion delays cost shippers over $135 million in 2008. Based onprojected congestion increases, the cumulative impact o regionalairport congestion on shippers will be $4 billion through 2025.

In 2007, 3.15 million tons o reight were moved by air through theregions three principle airports, o which almost 900,000 tons wereinternational shipments. The international portion o the shipments

through LaGuardia, JFK and Newark Liberty12 alone is valued at $175billion. This represents less than 0.25 percent o regional reightmovements, by ton, but over 10 percent by value.

The most common types o goods shipped through New Yorksairports are electronics, transportation equipment, manuactured

12 There is no reight service at LaGuardia, but reight is carried in the cargo hold (belly) o many

passenger ights. In act, belly cargo represents about 41 percent o air reight in New York.


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New York businesses will lose over $16 billion through 2025 due tocongestion, even those that do not use the system itsel. Airportcongestion is a drag on the regional economy. When system userslose revenue or ace increased expenses due to delay, this translatesinto losses or other regional businesses that are not directly using the

airport system. That is, when a shippers revenue is lowered because it

cannot reliably move goods as quickly, it has less revenue to spend onlocally produced goods and services. This loss is multiplied along thesupply chain. According to this analysis, the New York region will loseover $16 billion in potential output due to airport congestion. Over $7billion o this is related to a decrease in spending by system users.

Output LostThere are direct and indirect output losses associated with airportdelays, both in relation to the airlines and shippers. The totaleconomic impact o delays is presented in the ollowing pie chart,

classifed by airport.

The total output loss orecasted or the period 2008-2025 exceeds$16.1 billion, with 58.6 percent o these output losses related to

delays generated at JFK, 27.4 percent to Newark Liberty delays, and14 percent to LaGuardia delays. Direct impacts account or $8.7 billionand indirect impacts account or $7.4 billion.

Figure 13: Share of Economic Output Losses Due toCongestion by Airport

Congestion Losses to theConnected Regional Economy

EWR, $4.4 billion27.4%

LGA, $2.3 billion14.0%

JFK, $9.4 billion58.6%

Economic Impact of Delays on Total Output: 20082025 ($16.1 Billion)


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Employment LostLosses caused by congestion also reduce the number o jobs availablein the economy. Every year that congestion is not addressed, over

5,600 jobs that would otherwise exist are not created. Employmentlosses related to delays have a direct impact on the airline industryand additional impacts on other sectors as well. The ollowing chartsummarizes these eects.

The total employment losses during the period 2008-2025 reachedmore than 100,000 Full Time Equivalent (FTE) years, or an average oabout 5,600 jobs each year that would otherwise be available to jobseekers.

Figure 14: Share of Employment Losses Due to Congestion atEach Airport, Average Annual Impact

EWR

1,561 or 28%

LGA805 or 14%

JFK

3,234 or 58%

Economic Impact of Delays on Employment: 20082025


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Emissions are created during on-ground and in-air delays, but theimpact o emissions at altitude and on the ground is thought tobe quite dierent. Signifcant work has been done in New York tounderstand the relationship o air transportation and emissionsvolumes. In 2006, the Port Authority completed an inventory ogreenhouse gas emissions or aircrat and ground support equipment.

This inventory was estimated ollowing the guidelines established bythe EPA, and accounted or greenhouse gasses (GHG) generated byaircrat in a direct proportion to the number o landing and take-o

cycles. The greenhouse emission inventory estimates do not includethe environmental eects associated with extended taxi-in and taxi-out delays.

The taxi-in and taxi-out periods are those with the highest levels oCO

2generation, which constitutes the main component o aircrat

pollution. The valuation o congestion delay pollution eects onlyconsiders these two types o delays, since airborne pollution to thecity itsel is not highly signifcant in terms o direct health eectsand associated healthcare costs. To estimate these costs, taxi-waydelays were matched to an emissions rate average or all aircrat, andassigned costs representing the ull social cost o additional CO

2to

each additional ton o CO2

produced. CO2

production rates are takenrom the Port Authority study.

The cumulative cost o pollution is projected to be about $1.8 billion

or a little less than $100 million per year, a relatively small numbercompared to the direct costs to users described above. Departuredelays represent a higher portion o costs because taxi-out delaysare more extended than taxi-in delays. Because all o the measuredemissions costs represent local emissions (all occur at the New Yorkairports), 100 percent o this cost is locally incurred.

Congestion as anImpediment to DoingBusiness in New YorkIn an eort to assess the broader impact o ight congestion on theability o New York City frms to eectively and eciently do business,the Partnership conducted a survey o its membership. The surveyasked a series o questions about the impact o delays on businessand about decisions the frms had or would take in response toworsening delays.


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Almost all respondents reported experiencing some negative eectsdue to airport congestion, but not sucient to inuence businesslocation decisions. On the other hand, about hal o the respondentscould imagine a tipping point at which air travel became soproblematic that they would be orced to relocate at least somecurrent unctions out o New York City. Delays that would representa tipping point ranged rom as low as 40 minutes to greater than75 minutes. Most frms indicated that delays would need to be 60minutes or greater to inuence location decisions. Some frms noted

that actual delays and associated productivity losses were greaterthan published delay statistics due to schedule padding, an issuediscussed elsewhere in this report.

The most common impact o air travel delays cited by respondingfrms was decisions already made, or being considered, to reduceNew York-based meetings and either replace them with meetingsheld elsewhere or with video conerencing and conerence calls.Reduced meetings mean ewer hotel stays, restaurant meals and otherbusiness traveler purchases rom within the regional economy andthe ollow on economic activity that those purchases engender. Thesecomments suggest the regional economy is experiencing real losses

due to passenger time lost due to congestion. As discussed above,the regional impact assessment considered only economic losses toshippers o reight and operating losses to the airlines. Passenger timelosses were deemed to be largely absorbed into personal time and

not as a direct loss to the city economy. The survey responses suggestthat some portion o the passenger time loss does represent a realeconomic loss to the economy. While this study does not capture theimpact o passenger time losses on the regional economy, the surveysuggests that this is a source o additional loss.

Policy Implications and theSearch or SolutionsNew Yorks aviation congestion crisis has been widely discussed andconsidered, particularly as delays have mounted. A variety o solutionshave been proposed, including airport expansion, technologicalupgrades, changes in airspace policy management and additionalregulation.


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The Federal Response

During the 2007 holiday travel season, the U.S. Department oTransportation opened certain military ight routes to and rom the

region to relieve air travel congestion. The experience was deemedsuccessul enough to repeat or the 2008 Memorial Day and the

Thanksgiving/Christmas travel periods. Unortunately, this additionalairspace, while helpul, is insucient to address year-round, routine

ight delays and does little to reduce congestion at the take-o andlanding points.

The initial Federal response to the increases in congestion at JFKand Newark Liberty between 2004 and 2007 was to re-impose andextend the cap on hourly operations at JFK and to impose a similarcap at Newark Liberty. LaGuardia already has a system o caps in place,however in early 2008, the FAA announced that they would reduce

the cap at LaGuardia rom 75 to 71 operations per hour. This latestreduction in the cap is not part o this analysis o the cost o delays.However, this analysis does recognize the capacity constraints at eachairport and modeled a reduction in total ight activity in response.

Though caps at LaGuardia had eectively reduced crowding there,

JFK and Newark Liberty had previously served as a relie valve orpassenger ight demand.

The cap regulations contain provisions that allow the Federalgovernment to raise the cap in response to increases in capacity, orlower the cap in response to increasing congestion. FAA orecasts opassenger demand established prior to the introduction o caps at JFKand Newark Liberty and reestablished since the regulation indicate

that the FAA expects the caps to begin to constrain the expectedgrowth in passengers starting in 2012. By 2015, six million passengersthat would have own in the absence o caps will be displaced andthat number could rise to 39 million by 2025. Based on the PortAuthoritys 2005 study o the economic impact o airport operationsto the 26 county region, the annual cost o the caps to the regionaleconomy may rise to over $3 billion in 2015, $11 billion by 2020, and$21 billion by 2025. The cumulative impact o the caps or our studyperiod is estimated by Landrum & Brown to be over $130 billion.

Flight caps at the New York Regions airports limited the number oights available at the airports, orcing airlines to limit the number


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o destinations available or requency o service. Flight caps limitthe ability o new entrant airlines to initiate service to the New YorkRegion and provide new competition. Ultimately this could lead tohigher ares or air transportation to and rom the New York Region.

The Federal government continues to evaluate mechanisms thatwould create some turnover in airline marketplace at each airport andpromote competition. However, a fnal rule has not been made.

2002

2003

2004

2005

2006

2007

2008

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2011

2012

2013

2014

2015

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2018

2019

2020

2021

2022

2023

2024

2025

AnnualPassengers(Millions)

Source: Landrum & Brown 2008, based on FAA Terminal Area Forecasts for 2007 and 2008

Note: The 2007 TAF represents the FAA forecast of demand without cap restraints,

the 2008 TAF is FAAs forecast of passengers served with the caps in place.

2008 TAF

2007 TAF

2009Recession

Estimate of Unconstrained 2008 TAF

History Forecast

Operations cap limiting regional growth

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160

170

180

190

Comparison of FAA New York Region Forecasts

2007 versus 2008 Terminal Area Forecasts (TAF)

FIGURE 16: Passengers Served and Lost Because of Flight Caps


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The Regional Task ForceRecommendations

In July 2007, the Port Authority o New York and New Jersey convenedthe Flight Delay Task Force. The Task Forces Technical Working Groupdeveloped 77 recommendations aimed at improving throughput andcustomer service while reducing delay. These included procedural,technological and capital improvements.

The Task Force recommendations include15:

The improvement o ground trac movement1.

Improvements to ground surveillance systems would enableimproved mapping precision or controllers to plan andmove aircrat along ramps, gates, runways and taxiways. Iimplemented, this should result in improved ground tracmanagement, promote ewer conicts and ultimately reducedelay. In addition to improved surveillance, the task orceidentifed a variety o capital improvements at the existingairports aimed at improving ground trac ow.

Development and use o RNAV2.

Area Navigation or RNAV is an advanced point-to-pointnavigational technique that that allows an aircrat to chooseany course within a network o beacons and or satellites,rather than navigating directly to and rom the beacons. RNAV

could reduce controller interaction time and allow closerspacing o departure routes. At Dallas Fort Worth InternationalAirport, the implementation o RNAV has increased departurescapacity by 20 percent and improved overall airport capacityby 14 percent.16

Improvement o ight routes3.

The task orce issued a variety o recommendations or

improving the use o existing air space and opening upadditional routes to improve departure spacing, reduceconicts between airports and improve the ability to yaround weather.

15 Details on recommendations taken rom the Flight Delay Task Force Report, November 2007.

16 Ibid.


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Implementation o Data Link and Net-Centric4. technologies

The task orce believes that enhancing and improvingcommunications systems will improve operational decision-making and thereby reduce delay. They have proposed a non-voice communications system linking controllers and ightcrew (Data Link) and a network-wide communications systemlinking controllers, pilots and airlines (Net-Centric) to achievethis vision.

Reduction o excess spacing through improved5.satellite surveillance systems

Spacing requirements between airplanes on approach greatlyrestricts the number o planes that can land in a given hour.The task orce believes that spacing has increased beyondsaety requirements, and that implementation o satellitetechnologies, better pinpointing exact plane locations, couldenable a reduction in current spacing structures.

The Technical Working Groups recommendations are ramed by fvesimple objectives: improved ground movement o airplanes, bettertechniques or navigation, ight routes that respond to currentair trac demands, clearer communications between pilots andcontrollers, and improved departure and arrival capacity. All are likelyto contribute to improving eciency and reducing airport delays,

but all short o the expansion o airport capacity and replacing thenational ight control system that most experts consider essential tothe uture o globally competitive airports.


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Conclusion

This study spells out the costs and consequences o ailing to investin comprehensive modernization o the regional airport system.Current and projected delays are among the biggest threats tocontinued growth o the regional economy. Business and leisuretravelers lose valuable time, the already-ragile airline industry loses

money, shipping companies lose time and profts and pass on costs to

consumers, the regional economy as a whole loses productivity andjobs, and area residents eel the environmental impact in the orm ogreenhouse gas emissions.

The uture o New York City and the region depends on the ecientmovement o people and goods, the attraction o signifcant oreignbusiness investment, continued growth in international and nationaltourism, and expanding the export o regional goods and services todestinations throughout the globe.

Inaction, or short-term band-aid solutions, are no longer viableoptions. There is a high price or inaction, as documented in thisreport. What is required is bold action by policy makers to restructure

the way the system moves airplanes and passengers through theregion. Transportation ocials and state and ederal leaders mustwork cooperatively to update an antiquated twentieth-century

system, keep people and businesses moving through the region, andmaintain the regions position as a global center o commerce, fnanceand innovation.


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new york airport congestion costs report 2008

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