Cook, A.J.

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Prof Andrew CookUniversity of WestminsterDelays in European aviation– building passenger cost modelsEngage summer school, virtual event, 21-25SEP202Delays in European aviationOverview• From 2000, to 2020, and beyond• Model elements• Focus on outputs• Challenges ahead• Examples of users and projects3Delays in European aviationTwo main sources (others variously cited)https://westminsterresearch.westminster.ac.uk/www.eurocontrol.int/libraryetc...4Delays in European aviationUoW consultation document Feeding major 2015 updateUoW consultation document AUG-OCT15; 400+ contacts (mostly airlines)EC Impact Assessment (Reg. 261)+ limited literature (e.g. claim rates)8.8% (inflationary) … pax densities => net = 20%From 2000, to 2020, and beyond56Delays in European aviationA brief history and context• Early 2000s• cost of delay• state of the art not very mature• no single, comprehensive study meeting industry needs• various values; lack of consensus• SES launched by Commission (2000-2004)• specifically in response to increasing delays • University of Westminster framework started from scratch• review of method: all minutes are not equal• 2002-2004 (260 page ‘summary’)• data sources: secondary & primary,extensive interviews7Delays in European aviationA brief history and contextKey objectives of the ‘new’ framework• Comprehensive, transparent approach• including margins of error • Consultation and industry agreement• common reference values• Operationally meaningful – aligned with airline mind set• bottom line in accounts (very challenging); interviews• Shifting focus away from fuel-only costs • Useful at network level, e.g. total and average ATFM delaysSo, how have delays developed since? ...Delays in European aviationLatest European punctuality performance• Highest-ever traffic levels in 2019 (2016 ≈ back to 2008)• Six years of growth (from 2014 incl.)• Lower growth in 2019 (0.9% cf. 2018)8• 2018: fifth consecutive annual fall• 2019: improvedAverage daily trafficSource: Network operations report 2019 (EUROCONTROL, 2020)Source: PRR 2019 (PRC, 2020)Delays in European aviationLatest European punctuality performance9• Average en-route ATFM delay, some recovery in 2019: 1.57 mins/fltcf. RP2 target: 0.50 (2015-19)• total ATFM delay split about 70% en-route, 30% airport• en-route: capacity is main cause; followed by staffing and weather• Reactionary (‘knock-on’) delay 44% (45-46% previous five years) – fairly stable ratio• Some delay improvements in 2019 due to re-routing measures (with longer routes)• SESAR ambition for 2035: average dep. delay: 6.5-8.5 mins/flt Average departure delay (mins/flight)Source: Network operations report 2019 (EUROCONTROL, 2020)0.73            0.86           0.88            1.73            1.5714.4 (PRR 2019)12.8 (PRR 2019)10Delays in European aviationLatest European punctuality performancemetric 2000 2019IFR flights 8.4M 11.1M% flights arr. > 15 mins late 27% 22%turnaround delay 33% 33%reactionary delay 39% 44%ATFM/ANS delay 23% 21%?Sources: Performance Review Report 2000 (EUROCONTROL, 2001)Performance Review Report 2019 (EUROCONTROL, 2020)Total cost of ATFM delay to airlines €2009 1.7bn in 2018,cf. ANSP delay penalties in SES Performance Scheme: €2009 4mSource: Performance Review Body: PRB Monitoring Report 2018 (PRB, 2019)11Delays in European aviationTraffic and delay as of end July 2020• Five years to recover to 2019 levels (i.e. by 2024)• Uncertainty range asymmetric – bias to more negative growth• Expected: some suppressed VFR re-bound, less re. leisure & esp. business• Passenger confidence (complex dimensions) and travel restrictions remain key to growth Source: IATA Tourism Economics Air Passenger Forecasts, 30 July 2020 (www.iata.org)Source: EUROCONTROL, 26 August 2020 (www.eurocontrol.int)20192020RPKs DelayModel elements1213Delays in European aviationModel elementsKey features• Tactical cost of delay• incurred on the day of operations, not planned in advance• e.g. aircraft waiting at-gate• mostly marginal costs• Strategic cost of delay (then a new concept)• incurred in advance, often difficult to recover later (‘sunk’ cost)• e.g. schedule buffer (‘opportunity’ cost) & route extension• mostly unit costs• Passenger cost of delay• ‘hard’ cost to airline• ‘soft’ cost to airline• internalised costs‘Reactionary’ delays may be defined as all delays which may be directly attributed to an initial, causal or primary delay, be they experienced by the causal aircraft, or by others. 14Delays in European aviationPassenger cost of delayloss of market sharedue to unpunctualitye.g. rebooking, cost of care, overnight accommodationinternalised costs(cf. US calculations)[see Cost of delay (2015)]15Delays in European aviationMethodology and refinements (2004, Ed.2)ground handling aircraft and passengers – penalty if late / delayed at gateairport charges various aeronautical charging manuals and policies consulteden-route ATC charges requires a significant re-route due to the delay to have a large effect CO2 considered allocated permits and CO2 price; small % fuel variationelement types of cost  (in-house models, except fuel)fleet all fleet costs (depreciation, rentals & leases)fuel Lido/Flight, BADA, manufacturerscrew schemes, flight hours, on-costs, overtimemaintenance extra wear & tear powerplants/airframe (using the aircraft more)passenger ‘hard’ & ‘soft’ (not internalised costs)16Delays in European aviationMethodology and refinements (2004, Ed.2)element strategic tacticalfleet = f (service hours) ≠ f (utilisation) = 0fuel = (e.g. no hedging between phases)crew unit marginal (0 … full overtime)maintenance unit marginal (e.g. fixed LTO cycles)passenger 0 dominate, non-linear17Delays in European aviationMethodology and refinements (2004, Ed.2)(✓)18Delays in European aviationMethodology and refinements (2004, Ed.2)Passenger costs modelling• Originally Austrian + ‘Airline Z’ (very close), single average value• Regulation (EC) No 261/2004 (17 February 2005)• Logit curve (soft), power curve (hard) – basic, but f (duration)Airline passenger Kano satisfaction model, Wittmer and Laesser (2008) [ZRH].In-house, bespoke surveys & airline models Regulation 261 + airline policy.Limited airline data & literature; care & reaccommodation modelleisure surveybusiness intol. (lit.)19• Difficult to establish consistent trends• crew and maintenance costs least volatile• fleet costs most dependent on particular a/c types • pax costs to airline most dependent on legislation• fuel prices most volatile  • Cost of fuel• Jet A1, into-plane; typical lag cf. spot prices• price (EUR/kg): 0.80 (2014), 0.60 (2010), 0.31 (2004)• vary strongly by phase(e.g. delay cost recovery – ‘DCI’) Delays in European aviationMethodology – review of elements(2020)(2014)Pre-Covid-19Focus on outputs2021Delays in European aviationFocus on outputsSource: Cost of delay (2015)22Delays in European aviationPax cost contributions – 15-minute delays 15-minute delay distributions (2015; very similar to 2010)Pax costs also dominate en-route at higher delaysSource: Cost of delay (2015)23Delays in European aviationPax cost contributions – higher delays en-routeCost (k€)B738 primary delay costs (en-route)Delay (mins)24Delays in European aviationPrimary cf. total cost  – higher delays en-routeCost (k€)B738 primary cf. total cost (en-route)Delay (mins)Underlying stepped mostly due Reg. 261Limited smoothing from buffers25Delays in European aviationPax hard costs – illustrative numbers€2014 costs (Excerpt from Pax cost consultation (2015))......• Regulation 261 – rules for compensation and assistance re. denied boarding, cancellation or delay (see Annex, with up to date refs)• 2013 proposed changes still on table; several hot issues, e.g. 90 minute missed connections cf. existing (IATA) interlining rules• Other rights exist (e.g. Montreal Convention, ICAO – typically used for baggage)• Airline may be more generous than Reg. 261• UoW consultation document AUG-OCT15• Claim rates and seat densities (plus inflation) drove cost changesIllustration (not how the value is actually calculated!)After a 3-hour delay, some 47% of passengers are paid the €400 compensation.The real calculation is a mixture of compensation and duty of care, plus some reimbursements/rebookings. 26Delays in European aviationPax soft costs – illustrative numbers......Illustration (not how the value is actually calculated!)After a 3-hour delay, around 10% of passengers fly with another airline next timeBased on average load factors and average (marginal) revenue per pax across IAG (BA, IB, VY) in 2014• Delay may impact directly (above) and indirectly (perception only)• poor punctuality -> poor perception -> loss of market share• Consolidation of Austrian + ‘Airline Z’ research, inter alia• these related to short-run costs• usually want network, long-run costs• Almost no published costs, but several papers in Cost of delay (2015)• UoW consultation document AUG-OCT15• debatable arguments for small increase or decrease• just applied inflationary increase€2014 costs (Excerpt from Pax cost consultation (2015))Challenges ahead2728Delays in European aviationPre- and post-Covid-19 modelsRPKs2040ER4 – BEACONER4 – Modus• Very difficult modelling anything inside the volatile ‘amber’ area• indeed, even knowing the duration and content of the amber area• pax confidence (complex) and travel restrictions key to growth • Raises questions from a passenger cost perspective (examples on next slides)• https://beacon-sesar.eu• https://modus-project.eu/how to deal with cost of delay and behavioural impacts?29Delays in European aviationPax hard costs – challenges aheadFigure sources: Pax cost consultation (2015)• Heavily driven by Reg. 261 (see Annex):• add costs of downstream hubs (2019) • UK probably not excluded post-Brexit (written into UK law)• impact on current rules of Covid-19 (already issues raised)• pending proposed changes (2013)• auto-compensation in future (rail precedents)• Impact of emerging ENV and intermodal (integration and) regulations• Some of these issues tackled in e.g. ER4 BEACON and Modus?Current rules, and changes proposed in 2013To be covered by EU law, flight must beoperated by an EU airline into EU airportOR operated by any airline from EUairport. (EU airports incl. Iceland,Liechtenstein, Norway & Switzerland.)Multiple explicit cost tables – DIY time order30Delays in European aviationPax soft costs – challenges ahead• Incorporating more into event-driven (cf. statistical) models• ABMS for ATM mechanism assessment (Uni. Westminster, Domino)• ABMS for UDPP mechanism assessment (Nommon, Engage CF)• Stochastic control of tactical airline ops (TU Dresden, Engage PhD)• Focus on consideration of uncertainty on cost models (e.g. UoW, TUD, ...)• Soft cost primary evidence remains somewhat tentative• very expensive to resolve• Effect of other factors (e.g. hygiene measures, ENV) on pax delay sensitivity?scaleEspecially stochasticSame challenges for hard(Excerpt from SESAR ER3  project Domino, D5.3)31• Further research needed• 2004, 2010, 2015 ... next edition (BEACON)?• reactionary delay and propagation; slot and aircraft swaps; cancellation costs• curfew costs (may dominate P2P costs, even at start of day); crew costs• mitigation/recovery costs (strategic/tactical); resilience metrics• Applications• Standard Inputs for EUROCONTROL CBA (etc.) – updated web tools?• integration with strategic and tactical tools • ANSP rostering – better predictions of airline demand w.r.t. route charges• airlines – scheduling, routing choices, airborne delay recovery• SESAR Solutions – cost-saving evaluations, e.g. for flight prioritisation tools• EU policy – supporting evidence-led decisions for planned Reg. 261 changesDelays in European aviationWider challenges aheadExamples of users and projects3233Delays in European aviationExamples of users and projectsStandard reference“The University of Westminster (UoW) report ... represents the most recent and comprehensive appraisal of the cost of delays in the air traffic management system in Europe”34Delays in European aviationSES Performance Scheme – RP2 dashboard (2019 provisional)Note 1. Various FAB performance plans have different planned contributions to the EU target. Note 2. PRB calculated (2010) that the economic optimum for delay is appx 0.35 min/flight.** Functional Airspace Block Europe Central: Belgium, France, Germany, Luxembourg, the Netherlands and Switzerland.35Delays in European aviationExamples of users and projectsSource: Performance Review Report 2000 (EUROCONTROL, 2001)Standard reference36Delays in European aviationExamples of users and projects• EUROCONTROL (Brussels (HQ), Experimental Centre, MUAC) and SESAR• tactical and strategic, planning and assessment levels; cost-benefit analyses; evaluating SESAR essential operational changes (e.g. UDPP)• Airlines (2-way process): delay recovery & buffer calcs• ANSPs, airports, national government• expansion and privatisation cases• Legal cases (large delay compensation claims) • Industry (e.g. aircraft delay management software)• Academia (more global reach cf. above); UoW project examples:• previous: POEM, SATURN, ComplexityCosts, Airport Economic Value, Vista• current/recent: Domino, ADAPT, CAMERA, Pilot3, Dispatcher3, BEACON, Modus250This network has received funding from the SESAR Joint Undertaking under the European Union’s Horizon 2020 research and innovation programme under grant agreement No 783287.The opinions expressed herein reflect the author’s view only. Under no circumstances shall the SESAR Joint Undertaking be responsible for any use that may be made of the information contained herein.cookaj@westminster.ac.ukThank youDelays in European aviation– building passenger cost modelsAnnexFurther resources on Reg. 2613839Delays in European aviationRegulation 261 – background• Establishes the rules for compensation and assistance to airline passengers in the event of denied boarding, cancellation or delay• Came into effect on 17 February 2005; implementation across Europe not consistent• Case law and national rulings have a decisive impact; legally binding European Court of Justice rulings (also interpretive guidelines)• Consultation: but lack of agreement on proposed changes• 2014: proposed strengthening (in 2013) passed first reading in European Parliament; still awaiting European Council (member states) agreement• 2019: ECJ stated that connecting flights (e.g. outside EU) on a single reservation originating from an EU airport, are subject to 261 as if they were one flight inside EU• Complicated in practice, especially regarding ‘extraordinary circumstances’, and reactionary delays – legal advice case law consultation often requiredReferenceshttps://eur-lex.europa.eu/ and search “261” for original Regulationhttps://westminsterresearch.westminster.ac.uk/ and search “passenger consultation” for major updates through to 201540Delays in European aviationRegulation 261 – updates and future proposalsReferenceshttp://www.eraa.org/policy/passenger-rights/passenger-rights – good at keeping an up to date list of key progress  https://www.caa.co.uk/Passengers/ – good on detailed rules, incl. for connection rightshttps://www.moneysavingexpert.com/travel-reclaiming/ – good on detailed rules, incl. Covid-19 and beyond EU (Montreal Convention etc.)• Enforcement: strengthening the oversight of airlines by national and European authorities, with more effective sanctions;• Right to care: introduction of a right to care for passengers after a delay of two hours, for all flights irrespective of distance (thereby removing the current dependency on flight distance);• Complaint handling: the introduction of a common complaint form; ensuring that passengers have a right to receive an acknowledgement within a week and a response to their complaint within two months (currently no time limit);• Right to information: ensuring passengers have a right to information about their situation 30 minutes after a scheduled departure (currently no time limit); contact points in airports to inform passengers on the circumstances of their travel disruption and their rights;• Re-routing: ensuring passengers have a right to be re-routed by another airline or transport mode in case of cancellation when the carrier cannot re-route on its own services; Parliament additionally suggested a lower limit of 8 hours compared with 12 hours proposed by the Commission;• Connecting flights: clarifying that rights to assistance and compensation apply if connecting flights are missed because the previous flight was delayed by at least 90 minutes;• Other rights: the right for passengers to correct spelling mistakes in their name without charge and giving national authorities enforcement powers over lost luggage rules.Source: Pax cost consultation (2015)

Delays in European aviation – building passenger cost models

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Delays in European aviation – building passenger cost models

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