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The National Academies

ACRP 03-19 [Completed]

Passenger Value of Time, Benefit-Cost Analysis, and Airport Capital Investment Decisions

  Project Data
Funds: $350,000
Research Agency: Economic Development Research Group, Inc.
Principal Investigator: Steven Landau
Effective Date: 7/26/2010
Completion Date: 4/1/2015

BACKGROUND

Airports invest billions of dollars to enhance the passenger experience, yet they often lack specific knowledge of their customers' valuation of the physical improvements. Other major stakeholders, including the FAA and TSA, have limited knowledge of the value that passengers, shippers, meeters and greeters, and the companies that pay for air travel place on efficient and cost-effective air transportation services. The FAA uses a decade-old basis for valuing passenger time, and DOT has not revised this value for use in the required benefit-cost analysis for capacity projects funded via the Airport Improvement Program (AIP). The Office of Management and Budget requires use of benefit-cost studies, and FAA has incorporated this requirement in the evaluation of their discretionary grants for capacity projects. In too many cases, however, the data are neither current nor consistent. Airports have relied on past planning practices or more subjective surveys of passenger satisfaction, which do not yield information directly useful for rigorous investment evaluations. The estimation of capacity benefits relies principally on the service (value of time as a function of better and more reliable schedule and service patterns) and efficiency gains (reduced airline or operator costs), plus the informational value of understanding when the travel sequence will be accomplished, and in what steps. Airline operational and service practices have undergone major changes over the past two decades, technology is now available to passengers to enhance productivity, but little research has focused on how these changes affect air passengers and their decisions. 

OBJECTIVE

The objective of this research is to prepare a guidebook that assists airport planners, managers, and operators in using benefit-cost analysis and other analytical techniques to make airport capital investment decisions. Specific attention should be focused on improving the measurement of critical values that document benefits, especially the valuation of airline passengers’ time, while identifying additional measures that could be used to improve the decision-making process.

STATUS: The final report has been published in three volumes as ACRP WOD 22: Passenger Value of Time, Benefit-Cost Analysis and Airport Capital Investment Decisions.  Volume 1 is the Guidebook for Valuing User Time Savings in Airport Capital Investment Decision Analysis.  Volume 2 is the Final Report.  Volume 3 includes the Appendices covering Background Research and the Stated Preference Survey.

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