The total cost of all U.S. air transportation delays in 2007 was $32.9 billion, according to a new, ground breaking study conducted for the Federal Aviation Administration (FAA), including costs to the airlines of $8.3 billion in increased expenses for crew, fuel and maintenance.
The costs to passengers is even higher at $16.7 billion including passenger time lost due to schedules, delayed flights, flight cancellations, and missed connections. In addition, the study estimates $3.9 billion cost from lost demand “an estimate of the welfare loss incurred by passengers who avoid air travel as the result of delays. “
“Flight delay is a serious and widespread problem in the United States. Increasing flight delays place a significant strain on the U.S. air travel system and cost airlines, passengers, and society at many billions of dollars each year,” the study, reported in The Washington Post says.
In addition to these direct costs imposed on the airline industry and its customers, flight delays have indirect effects on the U.S. economy. “Specifically, inefficiency in the air transportation sector increases the cost of doing business for other sectors, making the associated businesses less productive,” the study reports, estimating that air transportation delays reduced the 2007 U.S. GDP by $4 billion.
The new report, The Total Delay Impact Study, analyzes a variety of cost components caused by flight delays, including cost to airlines, cost to passengers, cost of lost demand, as well as the indirect impact of delay on the U.S. economy. The FAA sponsored the study conducted by five affiliated universities and the Brattle Group. The goal: to conduct a comprehensive study on the total delay impact (TDI) in the United States.
“Growing delays threaten the competitiveness of the US in the world economy, by limiting the ability of the air transport system to serve the needs of the US economy. The growth in gross domestic product and air travel demand are closely linked; a recent multi-national study found a strong correlation between growth in economic productivity and growth in business travel,” the study reports.
The study also notes that business travel accounts for about half the dollars spent on domestic air transport and notes other research that estimates that a dollar spent on business travel earns a return of about $12 in increased revenue to the traveler’s employer.
“In addition to improving business performance generally, air transport impacts the economy through the jobs and revenue it directly creates in
related industries, the expenditures of air travelers on auxiliary goods and services, and the secondary impacts that result as these dollars recycle throughout the economy,” the study reports.
The FAA estimates the total economic impact from civil aviation at $1.3 trillion in economic output, nearly $396 billion in earnings, and 12 million jobs in 2007.
In there a solution? The study says that substantial investments are required in order to modernize and expand the U.S. aviation infrastructure so that it can accommodate anticipated growth without large increases in delay.
“The Next Generation Air Transportation System (NextGen) will deploy improved systems for communications, surveillance, navigation, and air traffic management and also require flight operators to invest in new on-board equipment. Substantial improvements in air transportation capacity will also require airport infrastructure enhancement. Estimates of these combined investments reach well into the 10’s of billions of dollars,” the report says. “The Federal Government together with the air transportation industry must decide on a level of investment to make in future system capacity. Other approaches to reducing delay, such as reducing incentives to over scheduling flights, might also be considered.” the report says.