Strategic Planning Prof. Richard de Neufville

Transcription

1 Strategic Planning Prof. Richard de Neufville Istanbul Technical University Air Transportation Management M.Sc. Program Airport Planning and Management / RdN Airport Planning and Management Module 23 January 2016

2 Outline The Vision for appropriate, effective process of airport planning The Context how it s generally done The Problem Fixed Master Plan Management Commitment to Plan Inflexibility ; Losses The Solution: Dynamic Strategic Planning Recognition of Risk as Reality of Planning Analysis of Situation Flexible, Dynamic Planning

3 The Vision A significantly improved approach to Airport Systems Planning that realistically accounts for rapid changes in the economy airline routes and alliances airport competitors (regional and local) and technology

4 The Context The Traditional Approach is a Master Plan e.g.: US Federal Aviation Advisory Circular 150/5070-6B Airport Master Plans, May 1, 2007 Or: ICAO Airport Planning Manual, Part 1, Master Planning The development of a Master Plan involves Defining the Forecast (pick one) Examining Alternatives ways of development for THAT FORECAST Recommending a SINGLE SEQUENCE OF DEVELOPMENT

5 Key elements of Master Planning Process Note focus on previously identified Requirements Source: FAA Master Planning Advisory Circular 150/5070

6 FAA Forecast Requirements Source: FAA Master Planning Advisory Circular 150/5070

7 Forecasts to be compatible with current FAA projections In this context, recall the track record of inaccuracy of the TAF forecasts! Source: FAA Master Planning Advisory Circular 150/5070

8 Results of a study of TAF Fregquency of Error (%) Errors in 5 year TAF Note: Average error ~ 11% Percent Error (Absolute value) Adapted from: Terminal Area Forecast (TAF) Accuracy Assessment Results Jerome Friedman, MITRE CAASD. Study dated Sept. 30, 2004, but data until Deliberate omission of 2001, 2002 when traffic dropped enormously

9 The Problem The Master Plan does not explicitly anticipate RISK of changes in market conditions, that is, of trend-breakers thus does not insure against those risks, tends to be inflexible, and inherently unresponsive to risks. Management furthermore may commit to plan concept leading to resistance to change when needed The consequences are losses or extra costs ; losses of opportunities

10 Examples of the Problem: DFW Source: DFW International Airport Dallas / Fort Worth Gate Arrival Plan The Concept was that passengers would park immediately in front of their departure gates and have a direct short walk to their aircraft and that they would return to same gate? Think also of costs staffing each gate!

11 Examples of the Problem: DFW Dallas / Fort Worth opened 1974 Gate Arrival Master Plan: No Provision for Transfer passengers, and huge unnecessary costs 1981, American Airlines shifted main base from Chicago and Created transfer hub [Why would they move?] To meet requirements, $ 2 Billion Skylink automated people mover built on tops of terminals, opened 2005

12 DFW Skylink People Mover Source: Wikipedia

13 Examples of the Problem: Denver Source: Flydenver.com Commitment to automated bag system; a $500 Million Loss Insufficient people mover Now that Southwest is in C, its traffic preempts space from United traffic in B

14 Examples of the Problem: Denver Construction Started Gulf War, Fuel prices increase, Continental Airlines goes into bankruptcy dropped commitment to one of terminals Management could stop construction on extra terminal (and save ~ $500 million), but refused to change its original commitment Also: stood by failed automated bag system This delayed airport opening 17 months, at cost of $1 million/day => another $500 million!

15 Comparing Master Plans and Reality Not only are forecasts always wrong But so are anticipations of the master plans! When we compare original master plans with what was later done extension of Forecast vs. Actual (F/A ratio): Only a few of the planned projects actually built as intended Many of the projects actually built were not in the Master Plan!

16 Forecast versus Actual Operations after 5 years Airport Base Year Forecast Actual F/A Ratio Bangor, ME Bedford, MA Beverly, MA Hyannis, MA (a) Hyannis, MA (b) Nantucket, MA New Bedford, MA Norwood, MA Portland, ME Providence, RI

17 Forecast versus Actual Operations after 10 years Airport Base Year Forecast Actual F/A Ratio Bangor, ME Bedford, MA Beverly, MA Hyannis, MA (a) Hyannis, MA (b) Nantucket, MA New Bedford, MA Norwood, MA Portland, ME Providence, RI

18 Forecast versus Actual Operations after 15 years Airport Base Year Forecast Actual F/A Ratio Bangor, ME Bedford, MA Beverly, MA Hyannis, MA (a) Hyannis, MA (b) Nantucket, MA New Bedford, MA Norwood, MA Portland, ME Providence, RI

19 Forecast versus Actual Projects after 5 years Airport Base Year Proposed Actual Projects F/A Ratio Forecast New Total Bangor, ME N/A N/A N/A N/A Beverly, MA Hyannis, MA Nantucket, MA N/A N/A N/A N/A New Bedford, MA Norwood, MA N/A N/A N/A N/A Providence, RI

20 Forecast versus Actual Projects after 10 years Airport Base Year Proposed Actual Projects F/A Ratio Forecast New Total Bangor, ME Beverly, MA Hyannis, MA Nantucket, MA New Bedford, MA Norwood, MA Providence, RI

21 Forecast versus Actual Projects after 15 years Airport Base Year Proposed Actual Projects F/A Ratio Forecast New Total Bangor, ME Beverly, MA Hyannis, MA Nantucket, MA New Bedford, MA Norwood, MA Providence, RI

22 Forecast Unreliability Increases for Longer Planning Horizon Planning Horizon F/A Ratio Characteristics Years Average - 1 Range Std. Dev. Error Range Five % Ten % Fifteen %

23 What to do? See ACRP (US Airport Cooperative Research Program) Report 76, 2012 Addressing Uncertainty about Future Airport Activity Levels in Airport Decision Making _rpt_076.pdf [free, as other ACRP reports] The purpose of this guidebook is to provide a methodology to assist airport management when making decisions

24 Outline of Solution Dynamic Strategic Planning 3 Phases (ACRP 76 gives 5 ) Recognition of Risk as Reality of Planning Analysis of Situation Flexible, Dynamic Planning -- designed to track real developments in air transport industry Compatible with Master Planning but Examine plans under various forecasts Analyze many development patterns, sequences Reallocate analytic effort: from in depth examination of an unlikely future; to quick reviews likely to include actuality

25 Process of Dynamic Strategic Planning Recognizes Risk opportunities and threats of many scenarios accepts that future cannot be known Examines Complex Possible Developments Pure plans PLUS combinations of these: HYBRID solutions Chooses Flexibility Plans responsive to market, industry conditions These are necessarily HYBRID Commits only one period at a time

26 Chess Analogy DYNAMIC STRATEGIC PLANNING IS LIKE PLAYING CHESS AS A GRAND MASTER -- YOU LOOK AHEAD MANY MOVES BUT ONLY DECIDE ONE MOVE AT A TIME. DYNAMIC STRATEGIC PLANNING COMPARES TO MASTER PLANNING AS GRAND MASTER CHESS COMPARES TO BEGINNER PLAY.

27 Phase 1: Recognition of Risk and Complexity Risk: Wide Range of Futures The Forecast is always wrong Extrapolations of past cannot anticipate the surprises that always occur somewhere Many good extrapolations are possible This the reality; This is what we need to deal with

28 Phase 1: Recognition of Risk and Complexity Complexity: Wide Range of Choices Number of Choices is Enormous Pure solutions favored simple concept for entire project (such as gate arrival for DFW) Yet pure solutions only small % of possibilities Most possibilities are hybrid solutions, that combine elements of pure solutions Hybrid choices provide most flexibility, they facilitate growth in a number of directions

29 Hybrid Designs Combine Pure Concepts New York/LaGuardia: Finger Piers and Gate Arrival Paris/de Gaulle: Gate Arrival, Busses, Finger Piers, Low-Cost Terminal, and Mid-field concourses Are Inevitable -- Pure concepts become inadequate for actual conditions London Heathrow: Fingers => Toast Rack Chicago/O Hare: Gate Arrival => Midfield Satellite Washington/Dulles: Transporters => Midfield

30 Hybrid Design: NY/LaGuardia Source: FAA Next Gen Airport Performance

31 Hybrid Design: Paris/de Gaulle Source: Aéroports de Paris

32 Hybrid Design: London/Heathrow Source: spotting-guides/lhr/lhr-approach-charts/

33 Hybrid Design: Chicago/O Hare Source: FlyChicago.com

34 Phase 2: Analysis Strengths, Weaknesses, Opportunities, Threats (SWOT) List and acknowledge them Identifying Risks and estimate their chance Decision Analysis of Possibilities List what may happen possible scenarios Identify choices you could make for each Calculate the value of each combination Choose the design that maximizes overall value Identification of Initial Phase and Potential Different Responses to Actual Events

35 The Choice Any Choice is a PORTFOLIO OF RISK Choices differ in their Likely benefits Performance over a range of futures The Plan Phase 3: Dynamic Strategic Planning Buys Insurance -- by building in flexibility Balances Level of Insurance to Nature of Risk Commits only to immediate first stage decisions Maintains Understanding of Need for Flexibility

36 The Best Choices Permit good Performance for range of futures Achieve Overall Best Performance by Building in Flexibility to adjust plan to actual situation in later periods -- this costs money Sacrificing Maximum Performance sometimes Buy Insurance in the form of flexibility; capacity to adjust easily to future situations Commit only to Immediate Period Decisions later on should depend on actual situation

37 Example of Flexible Plans: Paris/de Gaulle (Air France) Hybrid Design: Gate Arrival that permits Transporters Anticipation of Future Room for Expansion Provisions for Rail Access Investment according to need Easy to Change Design (as done)

38 Example of Flexible Plans: Sydney Second Airport Hybrid Strategy: Maintain and Enhance Principal Airport Acquire Major Site Anticipation of Future New Site is Insurance against Need Cost small compared to Major Construction Investment According to Need Future Plans Easily Tailored to industry Structure, Traffic Levels

39 Example of Inflexible Plans: Denver International Pure Design: Multi-Airline Super-Hub But United Dominates Phase-out of Continental Massive Immediate Commitment Could not adjust to actual traffic Disadvantages of High Costs per Passenger Reliance on Untested Technology Failure of High-tech baggage system No effective fallback position

40 Example of Inflexible Plans: New York / Newark Pure Design: Unit Terminals, Satellites Unsuited for actual Transfer, International Traffic Use of 1950s Terminal for LCC Premature Investments Terminal C Boarded up, unopened for decade Major changes required

41 Inflexible: NY /Newark-Liberty

42 Recommendation Evaluate Situation Strengths, Weaknesses, Opportunities, Threats Risks Analyze Possibilities Major Attention to Hybrid Options Match Physical Facilities to Industry Structure: Current Major and Possible Future Clients Dynamic Strategic Plan Define Initial Commitment How Plan Can Develop to Meet Range of Possible Future Market Conditions