Passenger

"Henry: But what if that 17% improvement is turned into dollars and cents:  1000 miles at 20 mpg is 50 gallons times lets say $2.75 = $137.50 while 1000 at 23.4 mpg is 42.74 gallons times $2.75= $117.54 or $19.96 savings.  Multiply that by millions of miles or tens of millions of miles and the dollar savings alone will add up handsomely."

Good point.  I think the NTSB report refers to a lot more miles than millions for autos. Supposedly in 2004  total miles driven for autos amd light trucks was 2.6 trillion.  So that's an annual savings of roughly $52 Billion.  ($20 X 2.6 tril./ 1000 =)   Chump change?

henry6:

But what if that 17% improvement is turned into dollars and cents:  1000 miles at 20 mpg is 50 gallons times lets say $2.75 = $137.50 while 1000 at 23.4 mpg is 42.74 gallons times $2.75= $117.54 or $19.96 savings.  Multiply that by millions of miles or tens of millions of miles and the dollar savings alone will add up handsomely. 

Rockefeller gave away nickles reminding the recipient that it represented the interest for one year on a dollar.  Wrigly sold gum at a nickle a pack, Astor sold subway rides at a nickle a ride.  They all became multimillionairs a nickle at a time.  We are not in such good shape today that we should be ignoring nickles.

You can't divorce the return from the investment.

Yeah, a lot nickels will add up, but what does it cost you to get those nickels?  If it cost you a buck to get a nickel, not so good, but if it only cost you a dime...

The problem with passenger rail as an environmental benefit is that we aren't going to get very many nickels for our $8B investment.

It helps, but don't hang you hat on it!

But look at the times...1890 through what, 1920 maybe?  Today, the value of a dollar is quite different and the rate of return is expected to also be different.  But, 5% return on investment back then should equal 5% return on investment today.  Back then $100 was a huge some, over a month''s wages for many, so five buck was a big deal.  Why isn't $500 on $10,000 a month or even $50,0000 on a million dollars worth the same?  Why does today's invesment have to yield up to 100% in a year to be the only profitable way of investing?   Therein lies the problems of today's money business!

Back to the car...I drive an average of 20,000 a year (one car) so the savings of almost $20 per thousand miles is $400 per year or almost 145.5 gallons or 3637.5 miles of savings.  Or about 1o weeks of groceries for my wife and me.  It does all add up!

I repeat:  If a paltry 17% saving translates into ~$50 Bil. per year, that is a lot of money for other uses, including HSR, etc.

schlimm:

According to the FAA in 2005, the Chicago O'Hare 20 year modernization plan is expected to total $13.3 Bil., second only to Boston's "Big Dig."   And that is just ONE airport, although the #1 or #2 in volume.  So air has a lot of funding, and they are not certainly paying for it all or they would be out of business.

In 2007 and 2008 the FAA allocated $3.5 billion and $3.5 billion for airport improvements.  For FY09 the proposed allocation was $2.8 billion. 

The only way to identify the airports that received the federal funding would be to plough through the FAA budget and actual expenditures line by line.  Suffice it to say, the money goes to many airports.  Most of it is for navigational aids, e.g. Doppler radar, ILS systems, tower radar, etc. 

As I pointed out in another post, the commercial airlines account for approximately 30 per cent of the FAA's operations, although it is greater at the relatively small number of the nation's hub airports, e.g. DFW, Kennedy, etc.  If all the monies in the airport improvement budget went to airports served by commercial airlines, which is unlikely, in the same ratio of airline operations to total operations, the airlines could have  realized an indirect benefit of approximately $1.1 billion in FY07, $1.1 billion in FY08, and $840 million in FY09.  But 81 per cent of the FAA's budget is covered by ticket taxes, fees, etc.  So the amount of the airport improvement benefits flowing from a federal subsidy that might have indirectly benefited the airlines would have been approximately $209 million in FY07, $209 million in FY08, and $159.6 million in FY09.  These numbers suggest that a relatively small portion of the O'Hare improvements will be funded by a non-user federal subsidy. 

I spent most of my career in the electric utility industry, which is a capital intensive industry not unlike the railroads.  Not once, when considering how to meet the growing needs of our expanding customer base, did we make our decision to expand the system, i.e. increase capacity, based on what other electric utilities were doing.  We implemented the best solutions for our company's key stakeholders.  

The federal, state, and local subsidies received by other modes of transportation are not relevant for deciding how much the U.S. should invest in passenger rail. 

It is true that the federal government fostered the development of airways and highways in the U.S., frequently to the detriment of the railways.  But the past, using the parlance of cost accountants, is a sunk cost.  It is irrelevant.  The key question is what to do now?  Where is passenger rail the best option for solving the here and now, as well as future passenger transport problems in America?   

Sam1:  Agreed.  Past subsidy questions are really irrelevant to the future.  But when calculating a cost-benefit analysis which drives decisions for the future, let's keep this in mind: Vision for the Future: U.S. intercity passenger rail network through 2050 Vision for the Future: U.S. intercity passenger rail network through 2050 WisDOT 9.3821 Normal 0

"User and non-user benefits that are best described as qualitative rather than quantitative can be measured in cost-benefit analysis if they are assigned monetary values that include both the associated costs and benefits. These benefits should be included in the evaluation of the costs and benefits of expanded intercity passenger rail in the U.S. along with financial considerations."   (from the 2050 Vision Study)

But I'm not at all clear how some of the non-user benefits get assigned monetary values.  Any ideas on this?

Sam1:

As I pointed out in another post, the commercial airlines account for approximately 30 per cent of the FAA's operations, although it is greater at the relatively small number of the nation's hub airports, e.g. DFW, Kennedy, etc

Sam: the other 70% is general aviation (private aircraft and corporate aircraft) which at the most only contributes 10% of the cost. How is that factored in?  

blue streak 1:

Sam1:

As I pointed out in another post, the commercial airlines account for approximately 30 per cent of the FAA's operations, although it is greater at the relatively small number of the nation's hub airports, e.g. DFW, Kennedy, etc

 

Sam: the other 70% is general aviation (private aircraft and corporate aircraft) which at the most only contributes 10% of the cost. How is that factored in?  

The 2009 FAA budget included a $2.7 billion transfer from the federal general fund to close the gap between the Aviation Trust Fund's receipts and the FAA's anticipated costs.  It is approximately 19 per cent of the FAA's budget.  How the $2.7 billion is allocated amongst the FAA's activities is a cost accounting issue.  It is not a revenue allocation exercise.

Costs are a function of their underlying drivers, which are the activities that give rise to the cost?  In the case of FAA Operations, the major driver is the number of flights controlled by the agency.  If there were no flights, no costs would be incurred for operations.    

The FAA controls thousands of flights every day. Approximately 30 per cent of them are airline flights.  This is a reasonable basis for the allocation of the $2.7 billion, i.e. 30 per cent of the transfer or subsidy is allocated to the airlines.    

The airlines claim that they pay more than 30 per cent of the cost of the FAA's operations, which they say is unfair because they use only 30 per cent of the capacity.  I have read several articles that support this view, although I have never seen any that claim the airlines pay 90 per cent of the cost of the FAA's operations.  If they pay substantially more than their fair share of the cost of supporting the system, as determined by the underlying cost drivers, then they are subsidizing the other users.  This has the net effect of reducing the benefit received by the airlines.

Many if not most people, including NARP, appear to believe that the airlines receive a large federal subsidy.  Like NARP, in many instances they don't differentiate between commercial airline, general aviation, and military operations.  They appear to think that the entire federal transfer benefits only the airlines, but this is not the case.  The subsidy per passenger and per passenger mile is relatively small.      

Approximately $810 million or 30 per cent of the budgeted federal transfer to the FAA will support operations and facilities that benefit the airlines.  In addition, Essential Air Services will receive a federal subsidy of $141 million, and TSA Passenger Screening will require an infusion of $1.6 billion in federal transfer funds to cover the gap between ticket taxes and costs.  This will bring the federal subsidy for activities devoted to supporting airline operations to approximately $2.6 billion, which is close to the amount of the transfer or subsidy in FY08.

In FY08 the average federal airline transfer (subsidy) was approximately $3.92 per passenger ($2.6 billion/253 million passengers).  However, for FY09 the number of passengers will probably decline, although by how much is unclear, since the fiscal year does not end until September 30^th, meaning that the subsidy could be somewhat higher.  By comparison, the FY08 per passenger subsidy for Amtrak was $48.50.  It too is on track to be higher in FY09.

Maglev:

But what is the FAA trying to keep the civilian and military planes from hitting?  Left alone, they would be a lot easier to manage.  We need our level of air traffic control mainly because of commercial aviation.

Each other! 

At least 70 per cent of aircraft operations in the United States are general aviation, which includes business aviation, and military aviation.  If there were no commercial airlines operating in the United States, there still would be a need for a positive air traffic control system.     

Most people are carried on commercial airline airplanes.  This is one reason the commercial airlines argue that they pay a higher percentage of the costs than is justified by the number of flights they operate.  They argue, rightfully so, that the FAA's workload is a function of the number of airplanes that they control.  It is not the number of passengers on each airplane.  The cost to control a Learjet is the same as the cost to control a Boeing 747.

If the entire federal subsidy transferred to the FAA was allocated to the commercial airlines, which would be bad accounting, the outcome per passenger and passenger mile would be nearly the same.  The amount of federal subsidy received by airline passengers, on average, is about 8 per cent of the federal subsidy received by an average Amtrak passenger.

I hold every FAA license (air and ground) except rotorcraft (helicopters).  I was a full time and part time instructor for more than 20 years.  I logged thousands of hours.  I know a little bit about airplanes, air traffic control, and the FAA.

I flew from tower controlled fields in Connecticut, North Carolina, and Texas.  Oftentimes I flew under an IFR flight plan, which means that I was controlled by arrival and departure control, Enroute control, and tower control.  Not one of these field hoisted commercial airline operations.  Of the airports that had commercial flights, they accounted for less than 15 to 20 per cent of operations.  It is only at the large hub airports, e.g. LAX, DFW, Kennedy, etc. that airline flights outnumber general aviation flights.  

Sam:

I, too, am an instrument rated commecial pilot in both airplane and helicopter and flew for a living for years.  General aviation is a bigger piece of the pie than you give them credit for.  There are more than 11,000 public use airports in the US and fewer than 200 of them are served by the airlines.  With the exception of instrument flights the only time I used ATC services was going into and out of large city airports.  Most of the airports I flew into had no tower or control.  Some of them didn't even have paved runways.  Most of my flights were under visual flight rules; even the flights with the State Governor on board.  I know several people who own airplanes that they keep in their back yards or other private facilities such as a airport community where the housing development is built around a community runway and people park their airplanes at their homes.  I know many corporate flight departments that keep their small jets and turboprops at uncontrolled airports.  It is, in fact, the airlines that push for controlled airports.

I've presented this before and never got any answers.  So again: in Europe they have private ownership and operations of airports...London's Heathrow I think is one, there is one in Spain and Italy and another in one of the Scandenavian countires.  Why aren't there private airlport operations on that kind of scale here?  I always hear private enterprise is the American and only way, not "socialism"!  Yet elsewehre there privatitized airports while ours are all owned by one government entity or another.

Phoebe Vet:

Sam:

General aviation is a bigger piece of the pie than you give them credit for.  There are more than 11,000 public use airports in the US and fewer than 200 of them are served by the airlines.....It is, in fact, the airlines that push for controlled airports.

According to the FAA Aerospace Fiscal Forecast for Fiscal Years 2006 - 217, in the base year 26.1 per cent of tower controlled take-offs and landings were by commercial carriers, whilst 35.1 per cent of center controlled traffic was attributed to commercial air.  The average of these two numbers is 30.6 per cent, which I rounded down to 30 per cent for simplicity purposes.  The 30 per cent refers to the proportional percentage of the total number of controlled operations; it does include all operations. 

As you point out, VFR flights, which on a clear day can outnumber controlled flights, are not controlled directly.  However, in many instances, especially if the flights operate near a designated airway or terminal control area, the FAA tracks them and warns controlled aircraft of their presence. 

I used 30 per cent as a conservative figure to allocate the $2.7 billion federal transfer (subsidy) attributed to the airlines.  If I use the percentage of commercial flights to total flights, including general aviation flights operating VFR, as well as military operations in civilian airspace, the percentage allocated to the airlines would be considerably less. 

General aviation pilots buy fuel, amongst other things, which is taxed irrespective of whether they fly in a positive control environment or just kick the tire, light the fire, and tool around VFR.  They help pay for the FAA irrespective of the extent to which they use it. 

This gets a bit a-field of the purpose of these forums.  However, many people seem to think that the airlines are heavily subsidized, which is not the case, and I think it is important to present the evidence showing that it is not so.