Prof. V.G.

Narayanan EC: Management Control & Performance Measurement Winter 2002

input variables

Expected Average Arrival Rate Peak Off-Peak Total

50 50 100

Peak Delay (in minutes per plane) Off-Peak Delay Total Delay

6.545454545 6.545454545 13.09090909

expected delay time (in minutes per plane)

Expected Average Service Rate Number of Runways Expected Average Runway Capacity Total Expected Runway Capacity

2 30 60

expected delay time (in minutes per plane)

60 50 40 30
Off-Peak delay time Peak

20 10 0 13 17 21 average arrival rate 1 5 9

A (Planes/Hr.) (Planes/Hr.) (Utilization) 50 55 59 60 60 60 0.83333 0.91667 0.98333 Wait Time (Hr.) 0.10909 0.2087 1.0084 Wait Time (Min.) 6.5454 12.522 60.504 Turbo prop Wait cost ($/hr.) 348 348 348 Wait Plane Cost($) 37.96332 72.6276 350.9232 70% Load Factor 13.3 13.3 13.3

(Planes/Hr.) (Planes/Hr.) (Utilization) 50 55 59 60 60 60 0.83333 0.91667 0.98333

Wait Time (Hr.) 0.10909 0.2087 1.0084

Wait Time (Min.) 6.5454 12.522 60.504

150 Passenger Wait cost Wait Plane ($/hr.) Cost($) 1585 1585 1585 172.90765 330.7895 1598.314

70% Load Factor 105 105 105

(Planes/Hr.) (Planes/Hr.) (Utilization) 50 55 59 60 60 60 0.83333 0.91667 0.98333

Wait Time (Hr.) 0.10909 0.2087 1.0084

Wait Time (Min.) 6.5454 12.522 60.504

Regional Jets Wait cost ($/hr.) 640 640 640

Wait Plane Cost($) 69.8176 133.568 645.376

70% Load Factor 49 49 49

FAA define flights that arrive or departs 15 minutes or later is considered to be delayed. Based from this assumption and the data extrapolated above, the cost below 15 minute delays tend to be negligible and the impact is manageable. However, when plane delays are greater than 15 minutes and more, the cost impact tends to be exponential. I believe that less than 15 minutes can still be considered not a delay since it is manageable with predictable customers and operational impacts. With this scenario, delays are only experienced when planes arrives and depart at a rate of 56 planes an hour and greater. C Using our trend analysis that peak period pricing is a potential to control plane arrival and departure in Logan airport. With peak period pricing, logan airport can control traffic and airport demand. It is also obvious that the more traffic in the tarmac, the longer the delays and the larger the cost incurred for those delays. If the airport can manage to lower the arrivals from 59 planes per hour to 50 planes per hour during peak hours by implementing surcharges, it forgoes the revenue for more traffic but offsetted by the surcharges collected. Not only that the airline industry benefits from this move, but also the passengers that are willing to pay extra for meeting an expectations - not being delayed. This scenario saves money both the airline industry as well as the consumers.

Passenger Wait Cost ($/Hr.) 25.2 25.2 25.2

Cost per passenger ($) 2.749068 5.25924 25.41168

Wait Passenger Cost ($)

Total Cost per Delay

36.5626044 74.5259244 69.947892 142.575492 337.975344 688.898544

Passenger Wait Cost ($/Hr.) 25.2 25.2 25.2

Cost per passenger ($) 2.749068 5.25924 25.41168

Wait Passenger Cost ($) 288.65214 552.2202 2668.2264

Total Cost per Delay 461.55979 883.0097 4266.5404

Passenger Wait Cost ($/Hr.) 25.2 25.2 25.2

Cost per passenger ($) 2.749068 5.25924 25.41168

Wait Passenger Cost ($)

Total Cost per Delay

134.704332 204.521932 257.70276 391.27076 1245.17232 1890.54832

Peak

$100 Peak Fee Turboprop (40%) Regional (18%) Conventional (42%)

Total 8:00 a.m. - 12:00 p.m. 12:00 p.m. - 4:00 p.m. 4:00 p.m. - 8:00 p.m. No. Flights Peak Fee No. Flights Peak Fee No. Flights Peak Fee Peak Fees 138 $13,800 140 $13,960 158 $15,840 $43,600 62 $6,210 63 $6,282 71 $7,128 $19,620 145 $14,490 147 $14,658 166 $16,632 $45,780 Total 8:00 a.m. - 12:00 p.m. 12:00 p.m. - 4:00 p.m. 4:00 p.m. - 8:00 p.m. No. Flights Peak Fee No. Flights Peak Fee No. Flights Peak Fee Peak Fees 138 $20,700 140 $20,940 158 $23,760 $65,400 62 $9,315 63 $9,423 71 $10,692 $29,430 145 $21,735 147 $21,987 166 $24,948 $68,670 Total 8:00 a.m. - 12:00 p.m. 12:00 p.m. - 4:00 p.m. 4:00 p.m. - 8:00 p.m. No. Flights Peak Fee No. Flights Peak Fee No. Flights Peak Fee Peak Fees 138 $27,600 140 $27,920 158 $31,680 $87,200 62 $12,420 63 $12,564 71 $14,256 $39,240 145 $28,980 147 $29,316 166 $33,264 $91,560

$150 Peak Fee Turboprop (40%) Regional (18%) Conventional (42%)

$200 Peak Fee Turboprop (40%) Regional (18%) Conventional (42%)

A. The peak peiod landing fees economically impact the turboprop and conventional airplane types the most. If you look at exhibit 9 and the amount of peak operations and the tables with the corresponding landing fee's, you can see the increase as the landing fees increase. Turboprop airplanes increased $21,800 and conventional airplances have the highest increase at $22,890.

$100 Peak Fee Turboprop (20%) Regional (30%) Conventional (50%)

Total 8:00 a.m. - 12:00 p.m. 12:00 p.m. - 4:00 p.m. 4:00 p.m. - 8:00 p.m. No. Flights Peak Fee No. Flights Peak Fee No. Flights Peak Fee Peak Fees 69 $6,900 70 $6,980 79 $7,920 $21,800 104 $10,350 105 $10,470 119 $11,880 $32,700 173 $17,250 175 $17,450 198 $19,800 $54,500 Total 8:00 a.m. - 12:00 p.m. 12:00 p.m. - 4:00 p.m. 4:00 p.m. - 8:00 p.m. No. Flights Peak Fee No. Flights Peak Fee No. Flights Peak Fee Peak Fees 69 $10,350 70 $10,470 79 $11,880 $32,700 104 $15,525 105 $15,705 119 $17,820 $49,050

$150 Peak Fee Turboprop (20%) Regional (30%)

Conventional (50%)

173

$25,875

175

$26,175

198

$29,700

$81,750

$200 Peak Fee Turboprop (20%) Regional (30%) Conventional (50%)

Total 8:00 a.m. - 12:00 p.m. 12:00 p.m. - 4:00 p.m. 4:00 p.m. - 8:00 p.m. No. Flights Peak Fee No. Flights Peak Fee No. Flights Peak Fee Peak Fees 69 $13,800 70 $13,960 79 $15,840 $43,600 104 $20,700 105 $20,940 119 $23,760 $65,400 173 $34,500 175 $34,900 198 $39,600 $109,000

B. It seems that both typcial airplane mix and the future scenario airplane mix can have an impact. Conventional airplanes still have the highest impact at $27,250, but more so in the future scenario. Also, regional airplanes will also see an effect in the future scenario, but turboprop airplanes would see their biggest effect in the traditional Logan airplane mix. Furthermore, if you look at exhibit 10 in the case, you'll see the chart with the projected effect from peak pricing. The scenario is based off of 31% regional fleet, comparable to the future scenario. The chart shows the decrease in operations with peak pricing.

Difference $21,800 $9,810 $22,890

es the most. If you look s, you can see the airplances have the

Difference $10,900 $16,350 $27,250

t. Conventional nal airplanes will also raditional Logan ted effect from peak hart shows the