Logan Airport

Topics: Variable cost, Costs, Fixed cost Pages: 14 (4382 words) Published: June 6, 2012
Executive Summary2
Causes of Delay3
Assumptions and Facts4
Alternative 1: Regional Solution5
Alternative 2: New Runway 14/327
Alternative 3: Peak-Period Pricing10
Alternative 4: New Runway and Peak-Period Pricing12
Recommendation & Conclusion13

Executive Summary
This report aims to analyze and attempt to reduce Logan airport’s delay problem in the year 2000. The airport was experiencing unacceptable numbers of delays due to three main problems: 1) Weather conditions, 2) Mix of aircrafts, and 3) Overscheduling. Under normal weather, the three-runway configuration is sufficient to handle incoming and outgoing planes. However, the delay problem at Logan is the most acute during severe weather, as only one runway is allowed to operate. With annual operation expected to increase to 510,000 to 656,000 in 2015, it is imperative that Logan finds an effective solution to have enough capacity in the long run to handle this projected demand. This report examines four possible alternatives proposed to reduce Logan’s delay problems: 1) Divert demand to other regional airports, 2) Build a new runway, 3) Implement peak-period pricing, and lastly, 4) Combining peak-period pricing with the building of a new runway. Upon analysis, we found that while diverting demand to other regional airport may provide some short-term relief to throughput (average inflow rate of planes), it cannot be sustained in the long-term, as growth of demand is only to be delayed, not eliminated. Next, building a new runway was identified as an effective solution. Despite its initial fixed cost of $100 million, it can help Logan save $5,196.92 and $251,739.36 per hour of delay avoided under adverse and severe weather, respectively. Furthermore, peak-period pricing was also identified as a viable solution by decreasing the variability of inflow rates – as a result, its incremental benefit is projected to be $57,037,500 in 2015. Lastly, we find the most effective solution that yields the highest benefit is to combine peak-period pricing with the building of a new runway. In doing so, Logan can save on average 153,000 hours of delay per year, which provides an estimated total cost saving of $504,779,925 and $546,175,400 in 2000 and 2015, respectively. In conclusion, we recommend Logan to implement peak-period pricing with the building of a new runway – as a most effective solution to reduce delay hours, to save significant delay-related costs, and to accommodate increase in demand as projected in the near future.

Logan Airport, located at East Boston, was the fifth most significantly delayed airport in the United States in 2001 with an average of 47.5 delays per 1,000 flights. It is operated and managed by Massachusetts Port Authority (Massport). The airport served 27.4 million passengers in 2000, and there were 479,000 flights that arrived/departed from Logan Airport in 2001. Below is a process flow diagram of Logan Airport’s flight arrivals and departures under normal weather conditions.

Figure 1.1 Flow Diagram of Logan Airport









According to Federal Aviation Administration (FAA), the definition of delay applies to aircrafts that have waiting time exceeding 15 minutes (Research and Innovative Technology Administration, n.d.). And the causes of delays at Logan Airport include weather conditions, mix of planes and overscheduling. Causes of Delay

1. Weather Conditions
Adverse weather condition is a primary cause of flight delays. About 70% to 75% of delays in the U.S. can be attributed to weather-related problems. The Boston region frequently suffers from bad weather conditions, such as fog, snow and strong winds. The severe weather can cause 2/3 of Logan’s runways to be closed. 2. Mix of Aircrafts

40% of Logan’s airplanes are small and non-jet airplane, 16% to 19% are...
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