Uncertainties In Airport Cost Analysis And Their Effect On Site Selection PDF Download

In 2006, Ricondo & Associates created the "Airport Site Selection Program Decision Document" (Decision Document) for the San Diego County Regional Airport Authority (SDCRAA). The Team updated the Financial Benchmarking analysis in Ricondo report, using comparable airports to forecast operational metrics for a new San Diego airport. Using the forecasted operational metrics, the net present value (NPV) of the cash flows for the first five years was calculated. The construction and development costs were updated and forecasted out to 2030 for the five sites in the Decision Document. The analysis of opportunity costs from not replacing San Diego International Airport (SDIA) was updated to current dollars. SDIA operates at high efficiency levels compared to other large airports. They boast one of the best records for on-time departures & arrivals. Their average airfares are moderate and competitive. They charge airlines a comparatively low cost per enplaned passenger (CPEP). However, no amount of efficiency can compensate for the limitations of a single, 9400 ft. runway on 661 bounded acres. SDIA will reach maximum operational capacity of 275,000 operations around the years 2033-2034. This is at least 11 to 18 years later than Hamilton, Rabinovitz, & Alschuler (HR&A) predicted in their 2001 "The Impacts of Constrained Air Transportation Capacity on the San Diego Regional Econonomy" (ICATCSD). SDIA will reach maximum capacity for air cargo tonnage in 2013. This is 6 years later than HR&A predicted in their 2001 ICATCSD Opportunity costs to the San Diego region in the year 2030 if no action is taken would be: $3.9 to $7.2 Billion dollars in lost Gross Regional Product (GRP) (1997$), 20 to 38,000 jobs lost, and $1.7 to $3.1 Billion dollars of personal income lost (1997$). Construction costs are increasing at an exponential rate, leading to a development cost nearly 4 times higher in 2030. Construction costs have seen a sharper rise in skilled labor costs compared to materials costs. On the revenue side, baseline NPV of cash flows for 2025-2030 of new airport operations is $33 million (in 2013 dollars). Since 2008, San Diego's economy has been recovering from the global recession. The San Diego economy is currently growing faster than the California average, but slower than the national economy. San Diego's population is also growing at a very slow pace, due to cost of living and doing business being high. The following are economic justifications for building a new airport: tap into international market, continue benefitting from cargo market, capitalize on industry trend toward larger jets, increased number of longer routes, increased diversification of airlines, increased business travel, and increased tourism travel. A new San Diego airport will have the best chance for success if they work with the airlines to leverage their common interests in order to optimize return on investment.