ACRP Report No. 76 – Addressing Uncertainty about Future Airport Activity Levels in Airport Decision Making

By Ian Kincaid, Michael Tretheway – InterVISTAS Consulting LLC and Stéphane Gros, David Lewis – HDR Inc.

ACRP 76ACRP Report 76 provides a guidebook on how to develop air traffic forecasts in the face
of a broad range of uncertainties. It is targeted at airport operators, planners, designers,
and other stakeholders involved in planning, managing, and financing of airports, and it
provides a systems analysis methodology that augments standard master planning and
strategic planning approaches. This methodology includes a set of tools for improving the
understanding and application of risk and uncertainty in air traffic forecasts as well as for
increasing overall effectiveness of airport planning and decision making.

In developing the guidebook, the research team studied existing methods used in traditional  master planning as well as methods that directly address risk and uncertainty, and  based on that fundamental research, they created a straightforward and transparent systems  analysis methodology for expanding and improving traditional planning practices, applicable  through a wide range of airport sizes. The methods presented were tested through a  series of case study applications that also helped to identify additional opportunities for  future research and long-term enhancements.

Forecasting activity levels is an essential step in airport planning and financing, yet critical
parameters essential for preparation of air traffic forecasts (e.g., economic growth, fuel costs,  and airline yields) have recently become more volatile. For example, extreme fuel price rises  experienced in 2008 led air carriers to cut air service. Price increases were followed by a  sharp economic downturn, which, in turn, put additional pressure on airline yields, traffic  levels, and air carrier viability. Subsequent variations in fuel prices, both up and down, have  continued to result in uncertainty. In addition, continuing concerns around shock events  (e.g., terrorism or health pandemics) have magnified the degree of uncertainty involved in  producing reliable air traffic forecasts. The effects of changing economic conditions on air  cargo demand, airline mergers and bankruptcies, and airline decisions concerning routes  and hubbing activities have also affected the reliability of air traffic forecasts.

The traditional approach to handling uncertainty has been to supplement base-case forecasts  with high- and low-case forecasts to account for a range of potential outcomes. This  approach, however, provides only a cursory understanding of the risk profile and provides no detail on how unforeseen events and developments actually affect forecasts and resulting  decisions. A critical lesson demonstrated by this research is that forecasting must consider  what can happen in addition to what seems most likely to happen. Thus, the research  concludes that a forecasting process that is less prescriptive and more informative can be  effective in addressing future risk and uncertainty while responding accordingly. Forecasts  should provide more information on the type, range, and potential impacts of different  future outcomes because all airports face significant risks that can have different outcomes based on commercial decisions made by carriers. Another finding is that many of the planning  options that can mitigate air traffic risk are already in use today but have never been  developed into a systematic approach. Furthermore, these options can have benefits beyond  just risk mitigation. For example, configuring terminal space to handle different traffic flows  (such as domestic and international) can reduce the overall terminal space requirements.

The guidebook concludes with recommendations for further expansion of the systems  analysis framework, principally in relation to possible occurrence of rare, high-impact events and political risk. While the systems analysis methodology presented in this guidebook  reflects current approaches to deal with these two broad factors, additional research  offers the potential for continuing to advance the state of the art.

Foreword by Lawrence D. Goldstein, Staff Officer, Transportation Research Board

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