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NAS Resource Allocation: Economics and Equity Summary Observations

George Mason University University of Maryland NEXTOR. NAS Resource Allocation: Economics and Equity Summary Observations. Wye Woods Conference Center March 19, 29 2002. Summary Observations - 1. WHAT IS THE PROBLEM?

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NAS Resource Allocation: Economics and Equity Summary Observations

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  1. George Mason University University of Maryland NEXTOR NAS Resource Allocation:Economics and EquitySummary Observations Wye Woods Conference Center March 19, 29 2002

  2. Summary Observations - 1 • WHAT IS THE PROBLEM? • The Central US Public Carrier Air Transportation System has a Finite and Quantifiable Capacity • This Capacity is set by Federally Mandated Safety ATC separation standards and a Finite number of Runways near major Population Centers • Slot modification at LaGuardia led to Severe Congestion and System Wide delay increases • All slot controls are to be removed by 2007 • Current Wt. Based Landing Fees are not Market Based • FAA NPRM for LaGuardia Slot Auction Design is open for 90 days (June 12, 2001 Federal Register) Comment • http://api.hq.faa.gov/lga/index.htm

  3. Summary Observations - 2 • The Collaborative Decision Making (CDM) system has established a De-facto Market Trading in airspace slots at all US Airports under Weather Perturbation Events • General Aviation priority probably too high • Data accuracy essential to system performance • Airports are not represented in the market • System Works Best if NOT GAMED BY PLAYERS • The Government, Airline and Airport Property Rights are not well defined in this market and the value of the commodity has not been established • Current Government Regulations do not have a Value SignalingMechanism to Encourage Efficient Utilization of valuable and limited public and privately controlled transportation assets • No penalty for FAA over constriction of capacity • Estimates of Annual Delay cost are in excess of $1B/yr

  4. Summary Observations - 3 • Current Regulations Designed to Encourage use of Excess Capacity • circa 1978 • Outmoded and in need of revision • Change in Regulations requires a Strong Case for Change • Capacity Constraints, Publicly Unacceptable Delays and a Diminishing SAFETY relationship may be the Case • Increased Public Revenue? • How is the Revenue Allocated? • New Regulations should be Designed to Establish True Value of air transportation assets • Encourage Efficient Utilization • provide incentives for public and private investment to increase system capacity and safety • Equitably deal with Uncertainty

  5. Summary Observations - 4 • FCC Auctions provide political insights into how regulatory change can occur • Don’t repeat European Auction Mistakes • Federal Energy Auctions provide valuable insights into how the air transportation market may become more formalized and more efficient • Don’t repeat California Auction Mistakes • The Traveling Public ultimately Pays the Price for Cancellation, Delays and lack of Schedule Predictability • The Political Push for Reform?

  6. Summary Observations - 5 • Initial Proposal for Next Step • Define Current Stake holder's Property Rights • Utilize the CDM system for market clearing • Formulate an Incentive System that Encourages Investment in both public (i.e. airport, ATC telecommunications, etc.) and private (i.e. ADS-B, Data-Link communications, Enhanced Flight Management Systems, etc.) • Game/Simulate the System to help Answer the Question: “What Might Happen if DoT/FAA Enacts a New Regulatory Environment?”

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