Delays at Logan Airport

Operations Management

MGCR 472

Case StudyReport: Delays at Logan’s airport

Desautels Faculty of Management

McGill University

As air travel demand increases, it becomes necessary to develop a strategy that will alleviate scheduling and delay issues, which will aid in the proper operations management of the airport and ensure adequate service and cut down travelers’ wait time. Boston’s Logan airport has been facing delays. In fact, in 2001, they were ranked the fifth most significantly delayed airport in the country. These delays can be attributed to 3 main issues: adverse weather conditions, a peculiar mix of aircraft, and over scheduling.

In order to remain competitive going forward, Logan Airport should introduce Peak Period Pricing (PPP) into their current strategy regardless of the issues with the smaller regional communities in the greater New England area. PPP and its associated fixed costs will discourage smaller planes from landing at Logan Airport due to financial inefficiency. Smaller planes are also the most affected by adverse weather conditions and represent a strong proportion of the aircraft at Logan Airport. Implementing PPP will spread demand more evenly throughout the period and lead to reduced arrival rates, diminishing delay times and lower costs.

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Calculations have shown that in basic terms, the more planes there are, the higher the arrival rate, which leads to more delays and therefore higher total costs. Assuming normal weather conditions and the designation of two out of the three runways at Logan Airport for arrivals, at an arrival rate of 50, 55 and 59 planes per hour for instance the delay times per plane are 6.55, 12.52 and 60.54 minutes respectively (see Figure 1). This demonstrates the massive rise in delay times attributed to only a few more planes landing per hour. Furthermore, the delay costs (operational and passenger costs) for all three types of planes differ depending on the arrival rates and the costs per customer are unequally distributed due to differences regarding the number of seats (see Figure 2). Nevertheless, it’s evident that as the delay time increases so do the associated costs.

According to the FAA, a flight is only considered to be delayed if it arrives or departs more than 15 minutes past schedule. Under this definition, when Logan airport is experiencing an arrival rate of 50 or 55 planes per hour, there are no official delays as the calculated delay times fall below the 15-minute threshold. The operational and passenger costs are therefore ignored. Only an arrival rate of 59 planes per hour would lead to delays under the FAA. The FAA’s definition for delays is clearly flawed as the cumulative costs add up to a significant amount over time and are being ignored. It could be more effective to speak of delay in terms of a certain cost amount per minute delayed per passenger (see Figure 2).

Logan Airport could use Peak Period Pricing as means of decreasing the arrival rate of planes, which would reduce delay times and consequently lower operational and passenger costs. Evidentially, and as mentioned earlier, smaller planes would be the most affected economically. On the flip side, the conventional jets can easily handle the fixed landing costs considering they represent less than 1% of their revenue.

Logan Airport has a very peculiar mix of aircraft. 40% of planes are Turboprops, 19% are Regional Jets and 41% are Conventional Jets. PPP is most effective in dealing with smaller aircraft, specifically Turboprops and Regional Jets, which represent more than half of Logan’s current airplanes. Implementing PPP will discourage these smaller planes from landing during peak hours due to the relatively high fixed costs. In terms of revenue generated, the smaller planes are highly inefficient compared to the bigger Conventional Jets, which can carry more passengers and bring in greater profits at the same fixed cost. This would help alleviate the excessive amounts of incoming planes, reducing delays and therefore costs.

Data suggests that landing fees of $150, $200, and $250 would reduce peak demand to 55, 45, and 40 planes per hour respectively. Unsurprisingly, the lowest fee of $150 at the highest arrival rate of 55 planes per hour is the most preferred when only considering this additional cost (see Figure 3) but not necessarily when we also deduce delay costs (which decrease with any increase in landing fees). Therefore, the most effective pricing would be at a fixed fee of $200 and a corresponding arrival rate of 45 planes per hour as it has the greatest efficiency in reducing the losses on revenue (see Figure 4) and as it demonstrates the lowest deviation to the mean when looking at delay time vis-à-vis arrival rates (see Figure 5). A problem occurs when service rates fall below the arrival rates. It is also important to note that the effect of PPP is dependent on the mix of aircraft at Logan airport. Under the normal combination of 40% Turboprop, 19% Regional Jet, and 41% Conventional Jet, PPP would imply a weighted average of a little more than 3% losses on revenue (see Figure 6). Waiting time would increase significantly for runways, delays would increase, and both the operational and passenger costs would increase dramatically threatening both the respective airlines and Logan Airport.

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                The most effective manner by which Logan Airport can limit the arrival rates, reducing delays and thereby decreasing operational and passenger costs is, in the short-term, by implementing Peak Period Pricing. The reason for this is two-fold. First, this will encourage a significant portion of travelers, especially leisure travelers, to look for flights during periods of low demand so as to avoid increasing prices. This will spread flights more evenly throughout a 24-hour period reducing demand and therefore congestion during peak hours. Second, PPP and the associated fixed costs have shown to be inefficient for smaller aircraft, discouraging them from flying during peak hours, which would decrease delays as well.

PPP can also serve as a long-term solution for Logan Airport if deemed successful. Over time, as the number of annual operations and traveler’s increase, more peak hours will develop. This can lead to the implementation of PPP during additional hours during the day as well as additional fixed costs. Furthermore, the inevitable transition from small to big planes will be pushed and encouraged as smaller aircraft find themselves less capable of keeping up with PPP and its associated inefficiency for them.