Aviation Fact Sheet #3. Capacity discussion.
By Guest Author- April 1, 1996
The concept of airport capacity connotes different meanings to people depending if they drive to (roadway capacity), park at (parking capacity), depart out of, arrive into, or connect through (terminal area capacity and airfield capacity) an airport. While road congestion, parking limitations, crowded terminals, fuller flights or more frequent flight cancellations all suggest capacity-related problems, the primary focus of this fact sheet will be on air capacity issues. Before attempting a working definition of this "supply-side" concept, it might first be helpful to discuss how passenger demand and the airlines serving that demand have changed since the deregulation of the airline industry in 1978.[1]
DEMAND FOR AIRLINE TRAVEL
The most significant impacts of airline deregulation have been a dramatic decrease in airfares and a restructuring of routes. Before airline deregulation, the federal government determined which airlines flew where and what fares could be charged. Thus, for example, it was not unusual for a person, traveling from the East coast to the West coast, to fly from Boston to Chicago on one airline, and then connect to the flight of another airline from Chicago to San Francisco because no single airline offered service between the two. The cost of air travel for the average American was prohibitively high; hence, buses, trains, cars or "not traveling" were an air carrier's biggest rival.
Between 1985 and 1993, the number of air carrier enplanements (persons boarding an airplane) increased by an annual average of 3.5%, from 375 million to 479 million over eight years. Following a period of stabilization in the early 1990s, enplanements grew in 1994 by 8% to 518 million passengers.[2] Growth in air travel roughly corresponds to periods of strong economic activity, and the 1994 economic spurt is a likely cause of the increased air travel according to the Federal Aviation Administration (FAA).
With the deregulation of the industry in 1978, the "hub-and-spoke" system, where an airline's routing structure radiates like spokes of a wheel from one or more major "hub" airports, became the industry norm. The hub-and-spoke approach is based on the principle of creating a facility which initially has a large local passenger base for departing and arriving travelers. Then, the airline makes more efficient use of a hub by funneling passengers from elsewhere in the carrier's routing system through the hub to flights connecting them with their desired destinations.[3]
The 1980s was a period of painful learning for the airline industry culminating in the industry's well-publicized "blood bath" in the early 1990s. Following a period of widespread route restructurings, bankruptcies, massive layoffs and mergers, key airlines are now emerging stronger financially. In 1994, commercial airlines posted operating profits of $2.6 billion compared to cumulative operating losses of $5.0 billion over the previous four years.[4] What has emerged appears to be a stronger, leaner industry, capable of meeting the unabated demand for passenger air travel. Figure 1 summarizes the eight largest domestic air carriers and their relative market shares.
A key element of the airlines' strategies has been to replace less fuel-efficient, older generation—and noisier—planes with newer, quieter models. In addition, the industry has made great strides to "right-size" fleet mix; that is, to match aircraft size to expected seat demand on a given route at a given time of day. Airlines employ capacity measures called "load factors" to judge their operational efficiency. A load factor gauges the percentage of occupied seats over a period of time. In practice, it is not likely that an airline will achieve 100% capacity on any given flight. Since airline deregulation in 1978, annual industry load factors have increased from the high 50s/low 60s to the high 60s in 1994 and continued to climb.[5]
In 1994, the FAA predicted a continued shakeout of the airline industry among the larger carriers. Airlines are expected to continue to implement efficiency strategies to lower their operating costs. Such strategies include: deferring aircraft delivery, restructuring routes, altering services at hubs, shifting routes to regional/commuter partners and containing labor-related costs.[6]
AIRPORT CAPACITY: A WORKING DEFINITION
Airport capacity is not an easy concept to define. For instance, when 18 million passengers traveled through O'Hare in 1965, the airport was thought to have reached capacity. Thirty-one years later, over 67 million people travel via O'Hare making it the world's busiest airport; again, its capacity is said to have been reached. A good way to judge the ability of an airport to meet the flight demands placed on its infrastructure is by measuring its annual number of aircraft operations (takeoffs and landings). For example, in 1995, O'Hare safely handled over 900,000 operations. Yet only a few years earlier, 868,000 was thought to have been maximum. How could this seeming threshold have been penetrated?
As defined by the Washington, D.C.-based Transportation Research Board, capacity is "the rate at which users of the facility can be accommodated." Thus, theoretically, capacity equals the greatest number of flights that can be handled by an airport under optimum conditions. Given the O'Hare example above, however, capacity should not be viewed as a static number since it involves many factors and conditions which can, and do, change over time. Capacity should reflect a relative range of outcomes. The five components determining airport capacity are:[7]
Airfield characteristics. The airport's surface airfield layout, including the number of runways and taxiways, their configuration, and their proximity to one another.
Airspace characteristics. Airports operating within close proximity may affect the operations of the other. Also, natural landscape features (e.g. mountains) or man-made obstacles (e.g. skyscrapers) may limit the number of paths for takeoffs and landings.
Air traffic control. Refers to the FAA operational rules and procedures that all airport and aircraft operators must follow. Certain airports have additional FAA constraints placed on their operations, such as noise abatement procedures for takeoffs and landings.
Meteorological conditions. On reasonably clear days, visual flight rules allow pilots to operate aircraft through visual reference. In weather conditions that limit or prevent aircraft from seeing each other, instrument flight rules are in effect which limits air traffic.
Demand characteristics. Relates to the characteristics of the aircraft mix using the facility. Each type of aircraft has different size, speed and pilot proficiency attributes that affect its runway occupancy time. At the same time, aircraft separation standards have an impact upon the scheduling of takeoffs and landings.
Every airport is unique. For instance, would two airports with an identical number of runways and the same layout configuration have the same capacity? No. Weather differences, local air space concerns and the aircraft mix combine to create varied capacity ranges. The Transportation Research Board suggests that it is impossible to predict capacity definitively at a point in time because of the multitude of factors involved. To provide some guidance on capacity, professional aviation planners use highly sophisticated computer models to estimate an airport's capacity range over a period of time.
OTHER CONSTRAINTS: THE HIGH DENSITY RULE
For the Chicago area, the federally-mandated "High Density Rule" (HDR), first implemented in 1969, has a significant impact on the number of operations at O'Hare during peak travel periods. Through the HDR, the FAA regulates the number of aircraft operations between the hours of 6:45 a.m. and 9:45 p.m. at four of the nation's busiest airports: O'Hare, New York's John F. Kennedy and LaGuardia airports, and Washington National.[8]
In June 1995, as directed by Congress, the FAA released its first comprehensive review of the HDR since its inception. The FAA reports that there are a number of reasons to rescind the limitation on operations that are imposed by the HDR, particularly citing that air travel safety would not be affected. Additionally, the FAA found that if the HDR was eliminated, O'Hare would be able to safely increase its daily number of aircraft operations during HDR-restricted hours by 221. On a yearly basis, this would increase O'Hare's theoretical capacity by 80,665 flights—nearly ten percent over existing operations. However, the FAA concluded that changing the HDR could have negative financial impacts on the other three airports and could result in additional travel delays throughout the system. The FAA chose not to alter the operations limitations imposed by the HDR at this time, but implied that it might consider incremental capacity-increasing changes in the future.
TRAVEL DELAY
There is not really a shortage of air travel capacity nationwide. A number of factors combine to create capacity shortages at certain hub airports during peak travel periods—resulting in travel delay. Delay is a practical measure of airport capacity and is observed when aircraft requesting to takeoff or land begin to queue for service.[9] Aircraft delay is an important indicator of the operational efficiency of the air system and individual airports, and has been exacerbated by the shift of the airlines to hub-and-spoke operations.[10] Delayed aircraft represents a major operating cost to the airlines estimated at more than $3.0 billion annually.[11]
Twenty-three airports nationwide, all major hub airports, including O'Hare, each experience over 20,000 hours of delay annually. Unfavorable weather is consistently the single largest factor causing delay. In 1993, weather-induced delays accounted for 72 percent of all delays over the fifteen-minute threshold. An additional 21 percent of delayed flights resulted from terminal volume overload, that is, an airport gate to deplane arriving passengers was not available within fifteen minutes of a flight's landing. This latter cause is most common at large hub airports, especially during peak early morning or late afternoon/early evening scheduled flight activity. Although delay is annoying and costly, the trend in delay nationally is downward. Forty out of 51 of the country's largest airports experienced a reduction in the number of flights delayed 15 minutes or more per 1000 operations between 1990 and 1993.[12]
Figure 2 outlines the range of strategies available for addressing delay that can be roughly categorized as either "demand management" or "capacity-increasing" strategies. In general, demand management refers to strategies that constrain the growth in operations or shift some operations to less busy times of the day. Capacity increasing strategies rely on improved technology and changes in operating procedures or infrastructure-building strategies, such as new runways and other facilities, to accommodate a growing demand for operations.
| Figure 2 |
| Options for Accomodating Growth in Air Travel Demand |
| Strategy | Cost Estimates
(1989 dollars) | Estimated Capacity
Increase |
| Demand Management | · administrative and regulatory actions (including air traffic control upgrades and related safety improvements already programmed) | No new funding | More efficient use of existing capacities |
| · shift demand through economic measures | No new funding | More efficient use of existing capacities and reduced delay in peak travel periods |
| Surface Technology | · advance surface technology as an alternative travel mode to air travel | no estimate | no estimate |
| Capacity-Increasing | · Incremental improvements at existing airports | $2 billion | 50% increase in traffic as of 1990 |
| · create new hubs at existing airports | $7 - 14 billion | 33% increase in hubbing capacity; system effect would be greater |
| · build new airports in high traffic volume metropolitan | $3 - 6 billion per site | If the ten largest metro areas constructed, system capacity could double |
| · develop new airports as transfer points | $2 - 3 billion per site | Could double the connecting passanger capacity |
DEMAND MANAGEMENT
To remain competitive and meet customer demand, airlines tend to schedule flights at the same time of the day. The traveling public and shippers can play a key role in addressing travel delays by shifting their demand for services to different times of the day. Pricing strategies can be effective in shifting non-business travelers to "off-peak" times freeing up "peak" period capacity for those who must travel during those periods.[13] Airport management can encourage airlines to use these pricing strategies by charging higher fees to airlines landing and taking off during busy times of the day. Boston Logan is looking into imposing higher "peak hour pricing" on aircraft operations during traditionally congested daily periods to reduce delay.
Another set of strategies that some recommend to free up airport capacity for commercial passenger travel is to shift cargo operations to other airports. This isn't as easy as it might appear. In the current shipping environment, passenger airlines play a key role in the air cargo market particularly to international destinations.
Capacity-Increasing Strategies
To accommodate the forecasted growth in air passenger and cargo travel, the FAA is facilitating technological and operational strategies that can be implemented systemwide and coordinating delay reduction strategies at airports throughout the country. There are numerous initiatives underway to increase the operating capacity of the air travel system. A few of the key technological and operational strategies are summarized here.
A new flight traffic and landing procedure is expected to be implemented by the FAA in the next five to ten years.[14] The "free flight" approach is a method that allows more flexibility in flight routes and in landing patterns. This approach is being pursued now that new technologies in air traffic control are further developed. The development of the "global positioning system" or GPS, the satellite-based navigation system developed by the U.S. Defense Department, is expected to significantly enhance the safety and the operating capacity of the air travel system. The FAA is currently investing in the development of a network of ground stations to receive the satellite information that will essentially replace the existing air traffic control computer system. The GPS is expected to be operational in the late 1990s.
Replacement and/or supplemental airports are being studied in sixteen different metropolitan areas including the Chicago area. Sixty of the top one hundred airports are considering new runways or runway extensions to increase airport capacity. Fifteen of the twenty-three airports exceeding 20,000 hours of air carrier flight delay in 1993 are in the process of constructing or planning runway projects. The new Denver airport is the first airport to have been built in the U.S. since the 1974 opening of the Dallas/Ft. Worth airport. It's important to note that both Denver and Dallas/Ft. Worth proceeded with new airport investments only after agreeing to close or limit operations at existing airports to assure adequate air traffic for the newly-constructed airports.
In recent testimony to the U.S. Congress, airport representatives reported that approximately $60 billion, or $10 billion annually, will be needed for "necessary and essential" projects at airports between the years 1997 and 2002. Airport executives estimate that there will be a shortfall in funding of more than $2.5 billion annually.[15]
NATIONAL AIR TRAVEL FORECASTS
The FAA periodically produces forecasts for airport activity five, ten and twenty years into the future.[16] The FAA continues to predict vigorous growth in the demand for air travel based largely on predictions of moderate economic growth. Passenger enplanement forecasts are summarized in Figure 3. Between 1994 and 2006, the FAA expects passenger enplanements to increase by 63 percent, or at an annual average of 4.2 percent, to 844 million passenger enplanements in 2006. Air carrier operations are expected to increase by an average of 1.9 percent annually over the same period. Slower growth in operations than enplanements is explained largely by the airlines' intention to address growing demand for travel by increasing passengers on planes (higher load factors) and putting larger aircraft in service (such as the new Boeing 777). The FAA has experienced mixed success in projecting national air travel trends. Between 1959 and 1965, it consistently overestimated growth by an average of 19 percent. Between 1966 to 1983, it consistently underestimated growth by an average of 21 percent. Since the early 1980s, its record of predicting national aviation travel has improved considerably with the introduction of more sophisticated economic modeling. In 1988, the FAA forecasted that overall U.S. passenger enplanements in 1994 would be 508 million, only 2% less than the actual 528 million actual passenger enplanements in 1994.[17]
While total forecasts have improved, the FAA's apportionment of total national passenger activity to individual airports continues to challenge the forecasters. FAA has experienced better success in forecasting the number of operations expected at regional airports.
CONCLUSIONS
Forecasted shortages of airport capacity have been with us for decades. But, airport capacity is a function of many variables and varies considerably with the individual airport. Since the deregulation of the airline industry in 1978, we have witnessed an almost complete restructuring of the airline industry and a growth in passenger travel that has placed enormous new demands on airport infrastructure. There is not a shortage of airport capacity nationwide, but the crunch of travel demand during certain travel periods at the hub airports results in delays which have led to calls for more airport infrastructure. At the same time, the political and financial obstacles to airport and runway construction remain formidable.
The country's aviation needs cannot be remedied solely by a massive infrastructure building program. The Transportation Research Board summarized it best, saying: "We cannot simply build, ration, manage, or research our way to a more effective aviation system. The approach must include new infrastructure, improved air traffic control, more efficient use of airspace and airport facilities, advanced air and ground system technology, and the research to make these attainments possible."[18]
1. The focus of this fact sheet is on passenger travel on commercial airlines. It should be noted that general aviation, cargo and military flight operations are significant, but are usually handled at different airport locations or during off-peak travel periods.
2. "FAA Aviation Forecasts: Fiscal Years 1995-2006", Federal Aviation Administration, 1994.
3. The reemergence of successful point-to-point air carriers (most notably, Southwest Airlines), is challenging the concept that the "hub-and-spoke" model is the only way to compete.
4. "FAA Aviation Forecasts: Fiscal Years 1995-2006", Federal Aviation Administration, 1994.
5. "The Crowded Skies of Sardine Airlines", The Washington Post National Weekly Edition, June 26-July 2, 1995 and FAA documents.
6. "FAA Aviation Forecasts: Fiscal Years 1995-2006", Federal Aviation Administration, 1994.
7. Alexander T. Wells, Ed.D., Airport Planning & Management, TAB/McGraw-Hill, 1992, pp. 190-6.
8. "Report to the Congress: A Study of the High Density Rule", U.S. Department of Transportation, May 1995.
9. Delay is said to have ocurred if a flight is more than 15 minutes late in arriving or departing. Delay statistics are compiled by air traffic controllers who use their discretion in determining if delay has occurred and why, a system with inherent problems. For example, a flight arriving late in Chicago because of a delay in departing from another airport is considered delayed in Chicago. Similarly, a flight cancelled by an airline for any reason is, under current procedures, considered delayed.
10. "Airport System Capacity: Strategic Choices", Transportation Research Board, 1990.
11. Excerpted from the report of the Industry Task Force on Airport Capacity and Improvement and Delay Reduction, Transportation Research Board, as reported in "Regional Airports Needed to Solve Capcity Problems", American City and County, June 1990.
12. "1994 Airport Capacity Enhancement Plan", U.S. Department of Transportation, 1994.
13. Peak travel periods are generally referred to as 6:30 a.m. to 9:00 a.m. and 5:00 p.m. to 7:30 p.m..
14. "Airplanes May Soon Crisscross the Skies Unfettered by FAA Lane Restrictions," Wall Street Journal, August 7, 1995.
15. Airports, March 26, 1996.
16. "FAA Aviation Forecasts: Fiscal Years 1995-2006", Federal Aviation Administration, 1995.
17. Ibid. and "FAA Aviation Forecasts: Fiscal Years 1990-2001", Federal Aviation Administration, 1990.
18. "Airport System Capacity: Strategic Choices", Transportation Research Board, 1990