FAA forecast 2015-2035 traffic; it would be well served to estimate future NextGen costs/benefits

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Nils Bohr, Nobel laureate in Physics, opined that prediction is very difficult, especially if it’s about the future.”

The FAA annually issues its numbers which forecast 20152035 in a detailed macro and micro analysis; the annual aviation forecast is 131 pages long. This prognosis establishes a basis for airlines, airports, economists and planners to guide their companies, entities, regions, etc. A statement by the FAA Administrator in the press release draws the attention to a collateral, yet related issue—the costs of NextGen.

Before that quote is analyzed, the highlights of the March 2015 report should be summarized:

  • 2015 FAA forecast calls for U.S. carrier passenger growth over the next 20 years to average 2.0 percent per year, slightly lower than last year’s forecast.

  • System capacity in available seat miles (ASMs) – the overall yardstick for how busy aviation is both domestically and internationally – is projected to increase by 2.4 percent this year after posting a 2.2 percent increase in 2014; it will then grow at an average annual rate of 2.5 percent through 2035.

  • The average size of domestic aircraft is expected to increase by 1.1 seats in FY 2015 to 128.2 seats. Average seats per aircraft for mainline carriers are projected to increase by 1.2 seats as network carriers 1 continue to reconfigure their domestic fleets.

Those observations and the supporting data are impressive and useful.

In the opening paragraph the Administrator ties these growth projections with the ability of the as-of-yet incomplete NextGen to absorb this demand:

The improving economy continues to bode well for the health of the U.S air transportation system,’ said FAA Administrator Michael Huerta. ‘The FAA and industry are continuing to deploy NextGen technologies and procedures to ensure that the nation’s aviation system can safely and efficiently meet our growing airspace demands.

The press release supplements this statement with a link to NextGen Priorities Joint Implementation Plan. That document when completely stripped to the real points of agreement is really a document in which four programs are to be pushed forward expeditiously. The FAA has a nice webpage which tracks the implementation of these key elements.

The Deputy Administrator and Chief NextGen Officer formed a committee to try to develop a consensus on the remainder of these ATC improvements. That group, as with RTCA, has expressed concerns about the cost data for the FAA’s developing, installing and operating the new system. They, particularly the user members of this group, are also focused on their own expenses of equipage and the operational benefits. The Office of Inspector General and the General Accountability Office have shown interests in those dollars, too. The debate over ADS-B is a great example of the substantive issues.

The FAA forecast is a monumental work which tracks global and national trends, examines in minute detail the data provided by the airlines (their historic traffic, schedules, aircraft, load factors, revenues, etc.) and then forecasts with some precision where the industry is going over the next 20 years. In contrast, the estimates of the costs of NextGen, its schedule of implementation, the operational benefits (i.e., PBN will increase landing precision/efficiency by X %), etc. are primarily, if not exclusively, within its control.

The FAA has been good about touting the specifics of improvements attained at an airport. It has unique knowledge of the future costs/benefits on a system level and has the analytical capabilities (one would assume from econometric expertise demonstrated in the annual aviation forecasts) to provide better SYSTEM numbers about NextGen.

If the Administrator wants to sell NextGen, he needs to set a realistic, credible “sticker price”.

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