103372993 Logan Case Wirteup Final
Submitted by - James Sykes & Chandran V.E
IntroDELAYS AT LOGAN AIRPORT
Boston’s Logan airport is one of the busiest airports in the United States. In the late 90s, despite three runways in service, the airport was increasingly concerned about rising landing delays. The airport began to strategize on how to reduce the rising delay times and costs associated with them. Out of the few strategies that they developed, we believe that peak-period pricing will be the most effective way in reducing delay times in the short run.
Recommendation
In the short run, peak-period pricing will be an effective measure in managing runway demand and reducing delay times and costs. In our analysis, we found that when the arrival rate increased by merely five planes per hour in a system without peak-period pricing, large delay costs were incurred. These delay costs then rose exponentially as demand increased. When we applied peak-period pricing, and reduced the arrival rate by 5 planes, delay times and total costs were reduced drastically. However, we would like to note that the effectiveness of peak-period pricing also depends on the plane mix (percentage of planes using the runway) used by the airport. Computing this requires more data than is given in the case.
However, in the long run, after examining Logan’s projected operations for 2015, peak-period pricing will certainly not be enough to reduce the delays at the airport. Fuel and other operational costs will continue to rise in the coming years and Logan will be forced to raise its fares as well. This rise in price, as with peak-pricing, will never be enough to reduce the demand at Logan in the long run. As demand grows, the only way Logan Airport will be able to cope with demand it effectively will be by expanding its capacity by building more runways. Although community activists have contended that the addition of a new runway would increase noise, and decrease the appeal to waterfront development, this is the only
IntroDELAYS AT LOGAN AIRPORT
Boston’s Logan airport is one of the busiest airports in the United States. In the late 90s, despite three runways in service, the airport was increasingly concerned about rising landing delays. The airport began to strategize on how to reduce the rising delay times and costs associated with them. Out of the few strategies that they developed, we believe that peak-period pricing will be the most effective way in reducing delay times in the short run.
Recommendation
In the short run, peak-period pricing will be an effective measure in managing runway demand and reducing delay times and costs. In our analysis, we found that when the arrival rate increased by merely five planes per hour in a system without peak-period pricing, large delay costs were incurred. These delay costs then rose exponentially as demand increased. When we applied peak-period pricing, and reduced the arrival rate by 5 planes, delay times and total costs were reduced drastically. However, we would like to note that the effectiveness of peak-period pricing also depends on the plane mix (percentage of planes using the runway) used by the airport. Computing this requires more data than is given in the case.
However, in the long run, after examining Logan’s projected operations for 2015, peak-period pricing will certainly not be enough to reduce the delays at the airport. Fuel and other operational costs will continue to rise in the coming years and Logan will be forced to raise its fares as well. This rise in price, as with peak-pricing, will never be enough to reduce the demand at Logan in the long run. As demand grows, the only way Logan Airport will be able to cope with demand it effectively will be by expanding its capacity by building more runways. Although community activists have contended that the addition of a new runway would increase noise, and decrease the appeal to waterfront development, this is the only