Will ‘NextGen’ allow air carriers to be minimum cost producers?
In a free market economy, the most competitive providers of goods and services are generally the enterprises which create and capture the greatest margin between the cost of provision and the market-perceived value. Airlines are no exception.
To be successful, air carriers must offer to the market the commodity of air transportation with a perceived value which exceeds the cost of provision. And so it is important to understand what comprises the cost of provision.
If we focus solely on the costs associated with offering branded seat and freight capacity to the market, we would be missing other resources which aircraft consume for the purpose of generating air transportation throughput. These other resources would include the consumption of aviation infrastructure such as safe-separation airspace capacity and runway environment capacity. And it is important to bear in mind that the consumption of these government controlled resources is usually reconciled through federal taxation on stocks such as jet fuel or on ticket and freight fares.
And so, the federal provision of aviation infrastructure has a cost. But it is important to ask; is it provided at the minimum cost which in turn will allow air carriers or other airspace consumers to be minimum cost producers? Most observers, regardless of whether they are operators of general aviation aircraft, business aircraft, or commercial transports, would agree that it is not – simply because it is not provided by private enterprises which are economically incentivized to be low cost producers themselves.
This leads to the obvious next question. As a replacement for our post-WWII era ATC system, will the Next Generation Air Transportation System (NextGen) enable the systemic minimum cost operation of aircraft? Two points:
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Proponents of NextGen would point to the increased traffic-handling capacity which NextGen technology will make available as the foundation for providing minimum cost aircraft operations. However, the mere creation of more traffic-handling capacity does not mean that it will provide systemic minimum cost operations for aircraft operators. It is true that there will be more traffic-handling capacity to be consumed initially; and therefore there will be greater reserve for providing flexibility during peak periods of consumption. But, as currently proposed, NextGen will not include a market element for governing demand or enabling capacity supply. Therefore, it may merely displace into the future the very same over-consumption of traffic-handling capacity which currently exists. This is not a solution for providing systemic minimum cost aviation operations.
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In order to continuously provide aircraft operators with minimum cost routing from takeoff to landing, NextGen must make available optimal vertical and lateral trajectories based on aircraft type, load, and atmospheric conditions. And in order to do this systemically over time, NextGen must include a market element for allocating such routing. Otherwise, there will be no process for ensuring that the most efficient low cost producer of airborne capacity will be rewarded with the most efficient low cost routing. Instead, we will continue to operate under the same old ATC process of first come, first served, as determined by FAA controllers. In other words, as currently proposed, NextGen is merely an extension of the status quo of air traffic control. Its design and development is consistent with the idea that all airspace consumption must be predicted and rationed by the federal government. And that all aviation infrastructure capacity must remain ‘free’ for consumption by whom-ever, when-ever, regardless of the inefficiencies this introduces toward the consumption of resources. (See note 1, below.) As is the case with my first point, this is also not a solution for systemic minimum cost aviation operations.
V1invites the U.S. DOT, the FAA, the ATA, the JPDO, and all champions of NextGen to consider the following assertion:
The minimum cost operation of an aircraft requires the consumption of runway environment capacity and safe-separation airspace capacity which is consistent with the minimum consumption of fuel and/or time. This simple convention requires that the most efficient aircraft operators be able to consistently trace an optimal 4-dimensional trajectory (4DT) from takeoff roll to landing roll. The vertical component of the 4DT must be consistent with optimal engine and airfoil efficiency of the particular aircraft being operated, as adjusted for load. The lateral component of the 4DT must be consistent with great circle routing from the conclusion of a noise abatement or obstruction clearance departure procedure to arrival at the final approach fix. Both components must be adjusted for prevailing meteorological conditions. First come, first served air traffic separation (rationing) is a hindrance to achieving this level of efficiency.
Any future vision of aviation infrastructure which does not embrace the systemic market-based provision of 4DT’s to the minimum cost air transportation provider will not provide optimal efficiency of air transportation. Without this systemic optimal efficiency, air transportation consumers will continue to be at risk of over-consuming aviation infrastructure capacity and suffering the wasted economic productivity which results. Air transportation will not be able to achieve its true potential as a critical enabler of U.S. GDP expansion.
(1) For a discussion on how federal taxation of aviation resources induces the perception of ‘free’ over-consumption, please refer to The V1 Concept of Air Transportation Management, available for download from the V1 library. Readers are also invited to research Garrett Hardin’s economic concept, The Tragedy of the Commons, introduced in 1968.
