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U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

INITIAL REGULATORY EVALUATION

Slot Management and Transparency for LaGuardia Airport, 

John F. Kennedy International Airport, and Newark Liberty 

International Airport

Office of Aviation Policy and Plans

Regulatory Analysis Division, APO-300

Nicole Nance and Esther Hernandez 

April 1, 2012

(Based on 2009 Data)
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Contents

Executive Summary................................................................................................................... 3

Background ................................................................................................................................ 4

Overview of Proposed Rule ...................................................................................................... 5

Use-or-Lose Requirement......................................................................................................... 5

Secondary Market...................................................................................................................... 6

Cost and Benefits ....................................................................................................................... 7

Methodology .............................................................................................................................. 7

Summary of Total Benefits...................................................................................................... 24

Reporting Cost for Use-or-Lose .............................................................................................. 24

Cost of Reservation System..................................................................................................... 25

Costs of Secondary Market...................................................................................................... 25

Conclusion................................................................................................................................ 28

Appendix .................................................................................................................................. 29
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Executive Summary

The purpose of this rulemaking is to replace the current temporary orders limiting scheduled 

operations at LaGuardia Airport (LGA), John F. Kennedy International Airport (JFK), and 

Newark Liberty International Airport (EWR) with a permanent rule. Under the existing Order 

the hourly scheduled operations are already limited to 81 at JFK, 81 at EWR, and 71 at LGA,

and unscheduled operations are limited to 3 at LGA. This proposal, if adopted, would replace 

those Orders and continue the existing limits on scheduled operations in addition to limiting

unscheduled operations to 2 per hour at JFK and 1 at EWR and establishing daily scheduled 

operations limits. As the daily limits are consistent with current allocations, the FAA expects no 

additional costs or benefits as a result of the daily operational limits.

The proposed rule would permit a secondary market for U.S. and foreign air carriers to buy, sell, 

trade, and lease slots amongst each other. This would allow carriers serving or seeking to serve 

the New York City (NYC) area airports to exchange slots as their business models and strategic 

goals require. Giving carriers the ability to exchange slots amongst themselves has the potential 

to increase the efficient use of these scarce slots as a more explicit value is placed on the slots. 

The FAA proposes alternatives for how the secondary market would operate. 

The rule also proposes changes to the use-or-lose requirement. Carriers would be required to use 

the allocated slot at least 80% of the time for which it is allocated during the scheduling season,

and a slot must be used for the same flight or series of flights throughout the period for which it 

is allocated. This is different from the current requirement where carriers have the ability to 

spread flights over a set of slots to achieve the 80% usage. The FAA believes that the majority 

of the costs and benefits from this proposed rule come from changes to the use-or-lose 

requirement, plus new administrative and reporting costs. Benefits are mainly consumer benefits 

(measured as consumer surplus) from additional flights at both JFK and EWR. Costs are 

attributed to the additional operating costs carriers would incur for these flights, the additional 

minutes of delay caused by the increase in number of operations and any administrative and 

reporting costs associated with the new rule. 

The FAA developed this analysis using 2009 data to model the behaviors of carriers based on 

meeting the minimum requirement of the proposed rule. Under this assumption, carriers would 

incrementally increase actual operations in year one to meet the new use-or-lose requirement and 

this new operating level would grow by the FAA’s Terminal Area Forecast (TAF) until it 

reached the daily limits. The analysis period begins in 2012 (first year) because compliance cost 

is the highest in that year, and if benefits exceed the cost in the first year, this relationship will 

continue until passenger demand forces operations up to 100% of the available slots. In the first 

year, carrier utilization of slots will be at least 80%. Thereafter, increases in operations and slot 

utilization are a result of an increase in forecasted demand. Total benefits and costs are 

estimated at $74,696,596 ($65,242,900 Present Value at 7%) for benefits and $53,056,768
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($46,341,836 Present Value at 7%) for costs, assuming the highest cost secondary market 

alternative 4 or alternative 5 is adopted. Moreover, the FAA believes that this rule would 

improve utilization of existing slots, possibly increase a carrier’s penalty for retaining slots of 

limited value and thus result in the return of some slots, and would result in net benefits over one 

year.

Total Cost and Benefits of Alternatives Four or Five of the Proposed Rule

First Year Benefits

Present Value

(Discount Rate 

7%) Costs

Present Value

(Discount rate: 

7%) Net Benefits

Regulatory Case $74,696,596 $65,242,900 $53,056,768 $46,341,836 $18,901,064

Background

The three New York City Area (NYC) airports John F. Kennedy (JFK), LaGuardia (LGA), and 

Newark-Liberty (EWR) have historically been among the most congested airports in the United 

States. These airports experience a heavy flow of traffic each day due to their proximity to the 

heavily populated NYC area. When unconstrained, the heavy flow of traffic has resulted in high

levels of congestion and delay that negatively affect the entire National Airspace System (NAS). 

In addition to affecting the NAS, congestion and delays at each of the three airports negatively 

affect each other. The FAA has attempted to manage congestion at the three airports through a 

series of rules and orders dating back to 1969, when the High Density Traffic Airports Rule 

(HDR) was implemented. In 2000, Congress passed the “Wendell H. Ford Aviation Investment 

and Reform Act for the 21st Century” (AIR-21). AIR-21 set an expiration date of 2007 for the 

HDR at JFK and LGA and provided a number of immediate exemptions from the rule. The 

immediate exemptions and eventual expiration of the HDR resulted in a high level of congestion 

and delay at the New York Area airports, forcing FAA to implement temporary orders and to 

propose a longer-term rule for LGA in 2006 (modified in 2008) and a longer-term rule for EWR 

and JFK in 2008. 

In the 2008 Congestion Management Rules the FAA examined the costs and benefits of 

implementing slot restrictions and auctions at these three airports. Consistent with AIR-21, the 

analysis assumed as a baseline that in the absence of these rulemakings, the FAA would not 

otherwise extend the temporary limits on aircraft operations at JFK, EWR or LGA. Therefore, 

the primary benefits of those rulemakings were the delay reduction from limits on operations and 

the improvement in the allocation of scarce slot resources. The FAA estimated that during the 

ten-year life of the rule, the rule would have resulted in approximately a 25 percent reduction in 

the average delay per operation at JFK relative to an unconstrained scenario. At EWR, this rule 

would have resulted in approximately a 23 percent reduction in the average delay per operation 

relative to no limits. In total, the net benefits from both the auctions and the limits on operations 
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as implemented would have resulted in $1.9 billion for JFK and $839 million for EWR over 10 

years. For LGA, when assuming no limits to limits, the net benefits over 10 years were 

estimated to be approximately $3.2 billion. These delay reduction benefits have largely been 

realized under the current FAA Orders and would be expected to continue with the proposed 

scheduling limits, including any additional operations expected from this rule.

These rules were stayed by the U.S. Court of Appeals for the District of Columbia Circuit prior 

to the rules’ effective date. The 2008 rules were rescinded in 2009. The temporary Orders 

limiting scheduled operations at the three airports, and unscheduled operations at LGA, have 

been extended until this proposed rule becomes effective.

Overview of Proposed Rule

This proposed rule would replace the Orders currently limiting scheduled operations at JFK and 

EWR and the Order currently limiting scheduled and unscheduled operations at LGA. If 

adopted, this proposed rule would apply to both scheduled and unscheduled operations every day 

at JFK and EWR between the hours of 0600 and 2259, local time. This rule would also apply to 

all operations at LGA Monday through Friday between the hours of 0600 and 2159, local time, 

and Sunday between the hours of 1200 and 2159, local time. 

The rule would maintain the current scheduled operation hourly limits of 81 at JFK and EWR, 

and 71 at LGA. It would maintain the current hourly unscheduled operations limit at LGA of 

three operations. The proposal also would limit hourly unscheduled operations to 2 at JFK and 1 

at EWR. 

Use-or-Lose Requirement

As with the HDR, the Chicago O’Hare International Airport (ORD) congestion management 

rule, and the Orders, the FAA proposes an 80% use-or-lose requirement. The FAA would 

change the way it applies the use-or-lose requirement by tying the 80-percent usage requirement 

to a “one slot per operation” standard. This is generally consistent with the International Air 

Transport Association’s Worldwide Slot Guidelines and encourages more efficient use of scarce 

airport slots. The current use-or-lose provisions, as applied by the FAA, allow a carrier to report 

its actual flights in any of its slots in the corresponding slot period. Carriers with multiple slot 

holdings can report flights on different days in any of its slots. Thus, a single flight can 

contribute to usage for more than one slot. While permitted under the current rules, this leads to 

inefficient use of the scarce resources and may preclude potential competitors from gaining 

access to those underutilized slots. The use-or-lose requirement, as proposed, would continue to 

allow carriers to cancel or not operate slots up to 20 percent of the time to allow for planned or 

unplanned cancellations but would require carriers to schedule operations that match the slots 

held. 
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The rule would define a slot as day-of-the week operation during a scheduling season at each of 

the three airports. At LGA, the proposal to calculate use-or-lose based on a full scheduling 

season would be a change from the way use-or-lose is currently applied. Under the existing 

order, slot usage is reported every two-months; however, the FAA is proposing to determine 

minimum usage for approximately a six-month period. The FAA is proposing this change to 

use-or-lose at LGA in order to be consistent with the use-or-lose and allocation requirements at 

the other two NYC area airports. 

Secondary Market 

The rule also proposes to allow a secondary market for U.S. and foreign air carriers to buy, sell, 

trade, and lease slots amongst each other. This would allow carriers serving or seeking to serve 

the NYC area airports to exchange slots as their business models and strategic goals require. 

Giving carriers the ability to exchange slots amongst themselves has the potential to increase the 

efficient use of these scarce slots as the value of the slots is more clearly established. Only 

certificated carriers that operate or plan to operate at the airport would be allowed to hold slots. 

If a slot holder that has ceased all operations at the airport for two corresponding scheduling 

seasons still holds slots (by leasing them to other carriers), it would be required to return its slots 

to FAA or sell them on the secondary market. 

There are several alternatives being considered for implementing the secondary market. 

Currently, there is no recommended alternative and the FAA is seeking comments on these 

variations. Specifically, helpful comments would include the pros and cons of each alternative, 

with respect to factors such as transparency, efficiency, and flexibility. Establishing a more 

transparent secondary market is intended to address a common concern expressed by new 

entrants and carriers with a limited presence at slot-controlled airports. In particular, these 

carriers complained that the secondary market at these airports lacked transparency and limited 

market participation. For example, under the 1985 Buy-Sell Rule new entrants and limited 

incumbent carriers argued that they did not have a systematic means by which to determine the 

availability or monetary value of slots. To the extent that slots did become available, trades 

frequently took place between the incumbent carriers. It was further argued that the exchange of 

slots between incumbent carriers was limited to ensure that such transactions did not jeopardize a 

carrier’s competitive position at these airports.

The system for the secondary market remains subject to further consideration. The alternatives

for the secondary market are summarized below:

i. Under this alternative, a carrier would be permitted to buy, sell, or lease a slot to another 

carrier or to trade a slot with another carrier for a slot at any U.S. or foreign slot-controlled 

airport. This alternative would permit privately-negotiated transactions between carriers. 

Moreover, it allows for privately-negotiated buy, sell, lease, and trades without prior public 

notice.
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ii. Under the second alternative, a carrier seeking to sell, lease, or trade a slot with another 

carrier would be required to follow a formal process to negotiate the terms of the transaction. 

This alternative would require a public notice on an FAA-managed bulletin board system. The 

carrier would have to submit a notice to the FAA that it intended to engage in a slot transaction, 

and the notice would include the carrier’s intended terms. The FAA would publish a bulletin 

board notice of buy, sell, lease, and trade. Bidding and negotiation would occur between seller 

and bidders after public notice.

iii. The third alternative is similar to the second alternative, except that carriers would be 

permitted to privately negotiate tentative terms of a transaction before publishing its intent to 

transfer slots on the bulletin board. The FAA would publish a bulletin board notice of buy, sell, 

lease, and trade. Negotiations may take place prior to public notice but bidding and negotiation 

would still occur between seller and bidders.

iv. For alternative four, a carrier would submit a notice to the FAA that it intended to 

engage in a slot transaction, and the bidding time frames would be the same as under the second 

alternative. The FAA would then publish a bulletin board notice of buy, sell, lease, and trade. 

Bidding carriers would post their bids, along with any counterbids, on the bulletin board. 

Therefore, negotiations in the form of iterative bids would be available to all registered interested 

parties.

v. The fifth alternative is similar to alternative four, except that bidding carriers would not be 

identified. The FAA would publish a bulletin board notice of buy, sell, and lease without 

identifying poster; cash-only bids would be posted on the bulletin board without identifying 

bidders; and request for FAA approval must include terms of transaction. The terms of the final 

transaction would be posted on the FAA website.

Cost and Benefits 

Methodology 

This section of the regulatory analysis estimates the costs and benefits of the proposed rule. The

rule would affect all operations at EWR, LGA, and JFK. The major changes from this proposed 

rule are driven by the proposed change in the use-or-lose provisions, with additional impacts 

from the secondary market and new reporting requirements. Key assumptions are identified 

below:

Who Is Potentially Affected By This Rulemaking

• Operators of scheduled and non-scheduled, domestic and international flights, cargo 

operators, and new entrants who do not yet operate at JFK, LGA, and EWR

• All communities with air service to JFK, LGA, and EWR

• Passengers of scheduled flights to JFK, LGA, and EWR
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• The Port Authority of New York and New Jersey, which operates the airports

• FAA Air Traffic Control

Assumptions

• All costs and benefits are in 2010 dollars.

• Costs and benefits estimated for 2012 (the first year)

• Additional flights added to meet new use-or-lose requirements excludes weekends 

(Saturday and Sunday) 

• Some flights are slightly re-timed to meet new use-or-lose requirement

• Present value discount rate of 7 percent is applied 

• Some unscheduled flights would be redirected

• Carriers that would need to add a large number of flights in less desirable hours (hour 6 

and 21) would return or sell those slots

Current Environment: The current Orders limit scheduled operations to 81 per hour at JFK and 

EWR and 71 at LGA. For LGA there is also a limit on unscheduled operations of 3 operations 

per hour and operators are required to obtain a reservation. There is a current use-or-lose 

requirement at all airports where carriers have the ability to spread flights over a set of slots to 

achieve the 80% usage requirement. The current Orders have a limited secondary market, where 

trades and leases, not extending beyond the effective dates of the Orders, are permitted but slot 

sales are prohibited. 

Regulatory Case: The NPRM proposes limits on scheduled operations at JFK and EWR to 81 

per hour and 71 per hour at LGA. The FAA proposes a daily slot limit of 1,205 at both JFK and 

EWR and 1,136 at LGA. This proposed limit would not result in any withdrawal of slots. This 

daily limit would apply to the slot-controlled hours at LGA and from hours 0600 to 2159 at JFK 

and EWR. A daily limit would provide flexibility to carriers scheduling flights because the FAA 

could approve new flights or retime existing flights to less congested hours while preventing a 

build-up of the schedule across the day that would result in significant increases in delays. 

Unscheduled operations would be limited to 3 per hour at LGA, 2 at JFK, and 1 at EWR and 

would require an advance reservation. Under the use-or-lose provision, carriers would also now 

be required to use the allocated slot at least 80% of the time for which it is allocated during the 

scheduling season and the slot must be used for the same flight or series of flights throughout the 

period. The proposal permits a secondary market where carrier can buy, sell, and lease or trade 

slots.

Given the static nature of the slot restrictions from the Orders to the proposed rule, the FAA 

believes that costs and benefits from this proposed rule are based on changes to the use-or-lose 

requirement, the secondary market, and new administrative and reporting costs. 

Calculation of Operations Impact

Under the proposed rule change, each slot, assigned by day of week and by hour, would have to 

be used at least 80 percent of the time to be maintained by a slot holder. The same flight or 
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series of flights would be reported as used for an allocated slot. The same series of flights would 

be at least five flights at approximately the same time on the same day-of-week, generally with 

the same flight number, generally serving the same market, and distributed regularly in the same 

season (for example, a 1035 JFK-LAX flight on every Monday of the summer season). This 

definition of same series of flights allows the FAA to see the intent to operate a series of flights 

but is not intended to preclude a carrier from changing the flight number, origin/destination, or 

flight time (within the same 30-minute slot time period) during the scheduling season. This is a 

change from the current rule where a carrier may optimize its flight operations over multiple 

slots to meet usage. Additionally, at LGA, usage would be calculated on a day-of-week basis 

over a scheduling season rather than on a weekly basis over a 2-month period. Changing this

regulation would require some operators to increase utilization of slots or alternatively require 

carriers to trade, sell, lease, or return the slots to FAA. In either case, operations at these airports 

would increase. Herein the FAA estimates the cost and benefits of this proposed change in slot 

utilization. This change is expected to generate benefits from increased flights, but those 

increased flights would also increase delays which would add cost. The analysis includes all 

carriers that hold slots at these three NYC airports including cargo. Additional detail is provided 

in an appendix at the end of this document.

The FAA modeled the current environment and the regulatory case. The regulatory case 

assumes that carriers would add enough additional actual flights to meet the minimum 80% 

usage requirement per slot. Moreover, the FAA makes no assumption on how carriers would 

schedule their flights but the FAA does recognize that a carrier would need to schedule at least 

80% of their slots to operate the minimum number of flights needed to meet the new 

requirement. Also, the FAA assumes that if a carrier requires a significant number of additional 

flights in a less desirable hour (hours 0600 and 2100) carriers would either return or sell those 

slots. 

To estimate how many additional actual operations would be needed to meet the proposed uselose requirements, the FAA analyzed the actual flights flown relative to the existing allocation of 

slots. For this analysis, FAA studied actual departures flown for August 2009 in comparison to 

the allocated slots. FAA selected the month of August for the analysis because that was the peak 

month of operations for 2009. The FAA decided not to analyze summer 2010 because a runway 

closure at JFK affected operations into and out of the New York region and a use-or-lose waiver 

at JFK was in effect during the runway construction. 

To analyze the impact of the proposed change to the use-or-lose requirement, each carrier’s 

allocated slots were matched with the actual flights scheduled and operated for that departure 

hour. The actual flights attributed to a specific carrier included matching operations from codeshare regional carriers to the marketing carrier holding the slot. The FAA observed all Monday 

flights for August 2009 since there were five Mondays in August 2009. For example, with a 

sample of five days, if a carrier had one allocated slot at hour 0900 and it flew a flight at least 
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four times for the 0900 departure hour, then the carrier would meet the 80% usage requirement. 

This process1 was done for each of the hours from 0600 through 2200. The actual flights flown 

that were scheduled to depart at that hour were subtracted from the minimum number of flights 

needed to meet the 80%. There was a positive difference whenever a carrier fell short of meeting 

the requirement and a negative difference if the carrier exceeded 80%. The next step was to 

smooth these differences across adjacent hours. The FAA assumed that carriers with slots in 

consecutive hours would reschedule flights between adjacent hours to minimize the number of 

additional flights needed to meet the new requirement. For example, if a carrier had a negative 

difference in the 0800 hour but a positive difference in the 0900 hour the FAA assumed that a 

carrier would use some of the flights from the 0800 hour to meet the new usage requirement in 

the 0900. After smoothing, for hours where there was still a positive difference, the FAA 

recorded the amount of additional flights needed to meet the minimum usage requirement.

In 2009, under the new definition of the same series of flights per slot, there are flights being 

flown in particular slots that would not meet the new use-or-lose requirement. Although the 

analysis looked at actual flights by scheduled hour, the analysis was not done by origin and 

destination pairs or by flight numbers. However, the FAA expects that carriers would modify 

the origin and destination pairs or make other adjustments to these flights to meet the new useor-lose-requirement. Moreover, this case assumes that carriers would meet the new 80% use-orlose requirement by adding the fewest number of operations. The FAA requests comments on 

the assumption that carriers will adapt these flights to meet the new use-or-lose requirement and 

there is a more detailed discussion of this assumption in the Appendix below.

Slot Utilization Analysis Findings

Using departure data, the FAA determined that carriers would need to fly additional departures 

to satisfy the proposed changes to the use-or-lose requirement. At EWR, an average of 5

additional departures per day would be needed, while an average of 10 additional departures per 

day would be needed at JFK and an average of 1 additional departure per day would be needed at 

LGA. It was assumed that an identical number of arrivals would be required at each airport, so

the number of required additional operations would be twice the number of additional departures. 

Furthermore, if carriers determine that such flights would be unprofitable, they have the option 

of either selling these slots or returning them to the FAA and that carriers would more likely 

return unused slots during off-peak hours. A chart of the hours showing the number of flights 

needed per airport for all five Mondays by hour is listed below.

 1 Although slots are allocated by half hours, the FAA summed slots to create hourly slot holdings for the purpose of 

matching hourly scheduled data reported by carriers.
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Proposed Rule 

Based on slot utilization analysis, under the proposed rule, the FAA forecasts an increase in the 

number of actual flights flown from the proposed rule versus the current Orders. In the first 

year, the FAA expects an additional 10 actual flights at EWR (arrivals and departures), 20 flights 

at JFK, and 2 at LGA above the current environment. After the first year, increases in demand 

are projected by the FAA Terminal Area Forecast (TAF), so fewer additional flights would be 

required after the first year to meet the use or lose requirement. Moreover, after the first year the 

FAA would expect slot utilization at these airports to be increasingly driven by forecasted 

demand rather than the use or lose requirement. Therefore, based on the TAF, eventually all 

additional flights would be a result of passenger demand and no longer a cost of this proposed 

rule. 

Unscheduled Operations

Under the proposed rule there would also be changes to unscheduled operations. Unscheduled 

operations in excess of the hourly limit at all three New York airports would be redirected to 

other airports. Moreover, according to the 2009 unscheduled flight data, there were a few hours 

where unscheduled flights exceeded the hourly limit. The FAA anticipates that some of these 

flights would be redirected or scheduled to other hours and would decrease the number of 

operations during those hours and also decrease the number of daily operations handled at these 

airports. These airports should receive a delay saving from the reduction in unscheduled flights 

however; these savings would be offset by increases in the number of scheduled operations from 
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tightening the use-or-lose provision. Using information provided by GRA based on 2009 

unscheduled traffic, the FAA assumed 4 daily unscheduled redirected flights at JFK, 6 daily at 

EWR, and 1.5 daily at LGA.2 These flights would be redirected to other NYC area airports such 

as Teterboro (TEB) and the FAA anticipates that those flights that were redirected to TEB would 

pay for a taxi or sedan to transport them to their desired airport or find local destinations at a 

minimal cost. 

Average Incremental Flights

The method used to estimate the benefits associated with these additional operations is based on 

the economic concept of consumer surplus. The net benefits of these additional operations 

resulting from changes to the use-or-lose requirement are equal to the change in consumer 

surplus accruing to the additional passengers in the affected markets, minus additional delay 

costs imposed on other existing flights and passengers at the airport.

The benefits of flying another flight depend on the characteristics of the market served. FAA 

cannot be sure how carriers will react to having to fly more to retain slots under the proposed 

rule. The opportunities for a carrier may range from transferring or returning the slot, adding 

mainline flights, adding regional or commuter flights to cover the slot (with limited benefits) or 

leasing out the slot to an international code share partner for additional flying internationally

(which may have substantial benefits). For analysis purposes, since the FAA does not know 

which markets a carrier will choose to serve, an assumption was made that carriers would add 

flights into random existing markets (regardless of the number of existing frequencies in those 

markets). The benefits of having another flight depend on the characteristics of the market 

served. FAA cannot be sure how carriers will react to shortfalls in the use of slots under the 

proposed rule. The opportunities for the carrier may range from selling or returning the slot, 

adding standard jet flights, asking its regional partner to fly a small aircraft to cover the slot (with 

limited benefits) or leasing out the slot to an international code share partner for additional flying 

overseas (which may have substantial benefits). For analysis purposes FAA calculated the 

incremental consumer benefit of adding one flight with a typical aircraft type for that market and 

then computed the average across all markets. This is an expected value of adding a flight, given 

the uncertainty of carrier response. FAA invites comments on this assumption.

 2 Although, unscheduled demand has declined since 2008 and there may be fewer unscheduled operations that could 

not obtain a reservation during the day, flights still may need to go to different airport in the busiest hours. This is 

also true for LGA. The increase in scheduled operations would likely lower the FAA’s ability to accommodate 

flights over the hourly limit of 3 operations. However, the FAA may authorize additional reservations at an airport 

under certain conditions and accommodate more flights. 
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To forecast the impact of changes to the use-or-lose requirement, at these airports, in terms of 

delays on actual operations the FAA employed the University of Maryland Delay Model (UMD) 

with help from GRA, Inc. A complete discussion of this model can be found in the Appendix.

Sample Calculations of Changes in Consumer Surplus

To illustrate the consumer benefits methodology, consider a hypothetical added flight from EWR

to Albuquerque (ABQ). The analysis is conducted in terms of the Full Price of Travel (FPT) 

framework. FAA observes the FPT (from available market data) as the money price plus the 

value of travel time plus the value of delay time. FAA then measures the willingness of 

consumers to pay more than the FPT, which corresponds to consumer surplus (the benefit that 

consumers gain from traveling in excess of their costs (measured in money and the value of 

time). The details on the sources and calculations can be found in the Appendix.

In the EWR-ABQ market, there are 91 PDEWs and the full price of travel is estimated at $390 

per passenger, so as shown in the following chart, consumer surplus is the shaded triangle under 

the full price of travel demand curve between 0 and 91 PDEWs. With one added flight, total 

passengers served increases to 182 PDEWS, and the corresponding incremental consumer 

surplus is the cross-hatched triangle between 91 and 182 passengers per day. (The chart is not 

drawn to scale.) Detailed data used in these calculations can be found in the appendix. This 

process is repeated for every market at EWR and JFK.

The logic for the consumer surplus calculation is as follows. The additional flight to ABQ

results in a reduction in the average money price paid by $76. On average, all of the regulatory

case passengers thus gain a transfer from the airlines of $76 (from $193 to $117), which is not a 

net gain in surplus. But, incremental passengers do get to fly to ABQ at a new time of day 

whereas previously they could not, and they are willing to pay an amount above the new full 

price of travel ($300) as indicated by the cross-hatched triangle. This is the incremental 

consumer benefit of the flight (above the money price and value of time).

It is also important to note that the consumer surplus for the incremental flight is net of the 

regulatory case level of delay at the airport. Thus, when calculating the increased delay costs for 

passengers due to incremental flying, the FAA needed to only calculate the change in delay for 

the regulatory case and new flights because both types of flights already accounted for the 

impacts of regulatory case delay on passengers.

Table 1: Example of Consumer Surplus Calculations
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The average incremental operation at EWR produces $5,982 in consumer surplus per day. The 

average for JFK (where international operations make up a larger share of scheduled services) is 

$10,071. The average incremental operation at LGA produces $971 in consumer surplus per day.

Airport Delay Costs of Incremental Flights

Based on the proposed rule, the delay costs of adding five additional arrivals and five additional 

departures at EWR are shown in the following table. The impact accounts for redirected 

unscheduled operations. These additional operations at EWR increase total departure delay by a 

little less than four total block hours. To estimate these delay impacts, FAA applied the UMD 

delay and cancelation model for scheduled operations. Following are the two equations applied:

• Cancellation : -.115824+ 0.000122 x Scheduled Operations

• Average Delay per realized operation: -76.864755+ 0.082185 x Total Realized 

Operations

The following table shows the calculations for EWR:

EWR Delay Impacts

Base Scenario

Incremental 

Delay

Scheduled Pax operations (OAG) 1142 1152

Cancellation Rate 2.4% 2.5%

Realized ScheduledOperations 1115 1124

Unscheduled pax 27 21

Freight (realized) 97 97

Total Realized operations 1239 1242

Airport Delay per Op (min) 25.0 25.2 0.19

The average realized operation at EWR experiences 0.19 of added delay as a result of the 

proposed rule. 
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Overall, departures experience an increase delay of 3.83 hours, consisting of the following:

• Added departures x Base Delay (5 x 24.98 minutes) + Scenario Departures x Incremental 

Delay (5+ 537) x .19

The daily costs of the added delays are estimated to be under $37,000 per day, including costs to 

passengers, airlines and downstream network effects. See the table below for an illustration of 

this calculation.

Table 2: Delay Cost of Incremental Flying at EWR per Day3

 3 The FAA in collaboration with MITRE Corporation developed a delay propagation multiplier for use in airport 

benefit-cost analyses. This multiplier is a measure of the change in system-wide delays as a result of a change in 

delay at a particular airport. The report is available on the following FAA website: 

http://www.faa.gov/regulations_policies/policy_guidance/benefit_cost/
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At JFK, the regulatory case assumes 20 total scheduled operations added daily, as a result of the 

use-or-lose proposal. After accounting for redirected unscheduled flights these additional flights 

result in about 12 hours of incremental aircraft block hours per day. The incremental delay costs 

per day at JFK are estimated to be under $161,000 per day, or about five times more than at 

EWR. In part, this outcome reflects both the need to add more flights and a higher proportion of 

larger aircraft delayed at JFK. See the table below for an illustration of this calculation. 

Table 3: Delay Costs of Incremental Flying at JFK per Day 
17

For LGA, 2 total scheduled operations were added daily, as a result of the use-or-lose proposal. 

After accounting for redirected unscheduled flights the total number of operations impacting 

LGA was less than one. These additional flights result in .2 hours of incremental aircraft block 

hours per day. The incremental delay costs per day at LGA are estimated to be under $804 per

day, much less than both EWR and JFK. See the table below for an illustration of this 

calculation. 

Table 4: Delay Costs of Incremental Flying at LGA per Day
18

Net Impacts of Additional Flying at EWR, JFK, LGA

In actuality, some added flights may be more valuable and others less valuable than the average 

incremental flight in existing markets. For EWR alone there are 150 markets. An important 

question is whether the average per flight consumer surplus should vary. Given that the actual 

outcome is not easily predictable, the average is the expected value of the consumer benefits 

(exclusive of increases in airport delay), regardless of the number of flights that need to be 

added. The FAA has assumed that the expected value per flight does not vary with the number of 

flights. The FAA invites comments on the expected benefits to consumers of incremental flying 

caused by the new use-or-lose provision.

The following table summarizes the daily and annualized net impacts of additional flying due to 

the change in the use-or-lose requirement at EWR for the first year, accounting for both 

changes in consumer surplus and additional airport delays. The data used for this analysis is 

from the 2009 summer schedule. The overall impact is positive. 

Table 5: Net Benefits of Incremental Flying at EWR 
19

 

The analysis of the net benefits of incremental flying due to a change in the use/lose rule at JFK 

is shown in the following table. Again the overall impact is positive. 

Table 6: Net Benefits of Incremental Flying at JFK 

Finally, the analysis of the net benefits of incremental flying due to a change in the use/lose rule 

at LGA is shown in the following table. The overall impact is positive. 

Table 7: Net Benefits of Incremental Flying at LGA 
20

Summary Calculation of Additional Operations

Below is a summary of the additional costs and benefits discussed above, from additional fights,

at all three airports. 

Table 8: Sum of Cost and Benefits of Additional Actual Flights for the First Year

(Regulatory Case)

Future Years

Under the regulatory case, the analysis is static. In the future, demand will grow at EWR, JFK,

and LGA even though the airports would remain under schedule limits. The characteristics of 

the incremental flights would change the consumer surplus per operation which is likely to 

increase as carriers find better uses for slots. In particular, US incumbents might be expected to 

add international flying and/or lease out more slots to their international partners. This change 

in the mix would tend to increase consumer benefits of the incremental flights attributable to 

the rule overtime. 

After the first year, additional operations would grow by the FAA unconstrained demand 

forecast. Future growth in operations are assumed to be from increases in passenger demand and 

are not compliance costs. Accordingly, the costs attributable to the proposed use or lose 

requirement would decrease over time until the point that the requirement no longer drives any 

carrier slot utilization behavior.

There would also be some additional benefits from changes to the reporting requirements 

associated with use-or-lose. Carriers would report four times a year at all three airports, which is 

the same as the current Orders for JFK and EWR but lessens the reporting requirement for LGA. 

Reporting for LGA would drop from 6 to 4 reports per year. The four reports include one interim 

and one final report for each season. However, prior to the start of each scheduling season, the 

FAA would require carriers at LGA, JFK, and EWR to submit its proposed slot requests for each 

airport. This seasonal slot report is currently required under the Orders at JFK and EWR, but it

would be a new requirement at LGA. Many of the carriers operating at LGA also operate at 

either JFK and/or EWR and are familiar with this reporting requirement. While there may be an 

initial learning curve for carriers at LGA that are unfamiliar with this report, the FAA believes 

that it would not be particularly burdensome since most carriers are likely to have a database that 
21

contains their airport slot information that they maintain for scheduling purposes. For this 

reason, the FAA has assumed that the addition of these seasonal reports, under this proposed

rule, would negate benefits that carriers would have received at LGA in cost savings from a 

reduction in reporting for use-or-lose (from six reports to four reports per year). 

Benefits and Costs of the Secondary Market 

Qualitative Benefits 

The FAA recognizes that slots have value in the secondary market. The FAA believes the 

development of a robust secondary market ultimately is the best way to maximize economic 

efficiency. Research shows that the creation of a secondary market improves allocation of 

products and services. 4 Among other things, it provides a secondary market for resellers to trade 

products and sets a market price. In a market where prices are transparent, the efficiency of the 

market is enhanced. Buyers and sellers have better information regarding the value of the item 

being sold (i.e., slots). 

From the perspective of developing an efficient secondary market for the buying, selling, and 

leasing of slots, there are a number of competing factors that need to be considered when 

evaluating the benefits and cost of the secondary market. A primary motivation for establishing 

a well-functioning secondary market is to provide opportunity for a robust exchange of slots. A 

robust exchange of slots will help ensure that slots are being used according to their highest and 

best use. A secondary market provides a market-solution, in an otherwise regulated 

environment, for carriers to exchange slots, which thereby encourages efficient use of these 

scarce resources. 

FAA has outlined 5 different secondary market alternatives under consideration in this proposed 

rule. While similar, there are nuances among these alternatives which may benefit or 

inadvertently chill the market. All five different versions of the secondary market summarized 

below are intended to encourage a more efficient exchange of slots, each has its own pros and 

cons. For that reason, FAA seeks comment on each of these alternatives and is particularly 

interested in each commenter’s view of the viability of each of these alternatives to produce an 

efficient and more competitive market. A summary of the five secondary market alternatives is

provided in the table below:

Secondary market (Alternative 1) Privately-negotiated buy, sell, lease, and trade; 

request for FAA approval must include terms of 

transaction. Public transparency is not required 

before a deal is approved.

 4 Hau Lee and Seungjin Whang. The Impact of the Secondary Market on the Supply Chain; Management Science, 

Vol. 48, No. 6 (Jun., 2002), pp. 719-731, INFORMS
22

Secondary market (Alternative 2) The FAA publishes a bulletin board notice of 

buy, sell, lease, and trade; bidding and 

negotiation between seller and bidders after 

public notice; request for FAA approval must 

include terms of transaction

Secondary market (Alternative 3) The FAA publishes a bulletin board notice of 

buy, sell, lease, and trade; carriers would be 

permitted to privately negotiate tentative terms 

of a transaction before bulletin board posting; 

bidding and negotiation between seller and 

bidders; request for FAA approval must include 

terms of transaction

Secondary market (Alternative 4) The FAA publishes a bulletin board notice of 

buy, sell, lease, and trade; bidding and 

negotiation through bulletin board between 

seller and bidders after public notice; all bids 

are posted to bulletin board during bidding 

period; request for FAA approval must include 

terms of transaction

Secondary market (Alternative 5) The FAA publishes a bulletin board notice of 

buy, sell, and lease without identifying poster; 

cash-only bids posted on bulletin board without 

identifying bidders; request for FAA approval 

must include terms of transaction; terms of final 

transaction posted on FAA website

For each of these alternatives, it may be necessary for the DOT to review a transaction for anticompetitive effects. The FAA believes that review may provide benefits by preventing potential 

anticompetitive behavior. Over the course of the last several years, the DOT has heard many 

market participants express concerns that incumbent slot holders have acted improperly to limit 

competitors’ access to slots. Arguments have been made that incumbent carriers have chosen 

not to transact with low cost carriers and other new entrants, preferring transfers to other 

incumbent carriers to preserve their competitive position in the market and forestall more 

rigorous competition from low-cost carriers. Similarly, there have been complaints that 

incumbent slot holders transfer slots for short periods to avoid losing slots under the application 

of use-or-lose requirements. As a result, some have sought more rigorous agency regulation of 

slot transactions, especially to ensure that all carriers interested in obtaining slots have an equal 

opportunity to acquire them.

While a transparent secondary market would encourage a more efficient use and allocation of the 

existing slots at the three New York airports, additional oversight may be needed. To ensure that 

competition remains robust and that the use of the secondary market does not unjustly increase 
23

industry concentration, DOT has authority to examine transactions on the secondary market. 

Accordingly, the DOT proposes §93.47 that contains procedures for reviewing slot transfer 

transactions. The DOT would be able to evaluate any transaction in which it has an interest based 

on the information provided by to the FAA for approval of a slot transaction. The DOT also may 

monitor bulletin board postings, if that option is adopted in a final rule, to determine whether it 

suspects anti-competitive behavior.

Quantitative Benefits

After comparing the current process for transferring slots to changes in the process presented in 

the proposed rule, the FAA anticipates savings across all three airports from the consolidation of 

slot transactions for carriers’ with unified marketing control. Unified marketing control would 

apply in cases where one carrier makes marketing decisions and sells the tickets while another 

carrier operates the flights on behalf of the selling carrier. Under the proposed rule, carriers with 

unified market control would have two options for ensuring the operating carrier has a slot for an 

operation. These carriers could continue to transfer slots among each other (as is currently be 

done under the Orders), or they could manage the slot inventory without formal transfers (unified 

marketing control option). 

If a carrier chose to manage its slot inventory without formal transfers, the carrier would need to 

provide advance information to advise FAA of the specifics of the planned flights. Advance 

information would include the airport, names of selling and operating carriers, carrier three letter 

designators, and flight number ranges to be used for ATC communications, effective dates, and 

responsibilities for each carrier for slot purposes. Detailed scheduled information would not be 

required in advance. If the carriers elect to use this proposed option, they would report the actual 

usage by carrier after the fact rather than transfer slots for each operation. The slot holder could 

submit one slot usage report breaking out the individual slot operators. This would streamline 

the transfer process for carriers that are commonly marketed and provide sufficient information 

for the FAA to monitor carrier operations and enforce the slot rules if needed. 

Based on historical use of the secondary market in New York, FAA estimates that there would 

be approximately 2,700 secondary market transactions per year for all three airports. Considering 

estimates of 2,700 annual slot transfer transactions, the FAA estimates that roughly 55% 

currently are transfers between carriers with unified marketing control. If transferred rather than 

managed under the unified marketing control option, costs would similar to other slot 

transactions except that outside attorney costs would not generally be incurred for these 

transactions. Moreover, for transactions processed by carriers under the unified marketing

option, the FAA assumes that a scheduler or an administrative service manager5 would handle all 

aspects of the documentation with an hourly estimated burdened wage of $52.70. Using this 

 5 http://www.bls.gov/oes/current/oes113011.htm; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics plus May 2009, the Employee Benefit Research Institute, using a Bureau of Labor Statistics Survey of 

employee benefits estimated the total 2009 benefit as a percentage of payroll at 30.2 percent
24

wage for about 1,500 (55%)of the 2,700 annual slot transfer transactions in place of an hourly 

burden wage for a lawyer6 of $89.89 gives an estimated yearly savings of $55,700 to carriers 

across all three airports. 

Summary of Total Benefits

Aggregating the consumer surplus benefits resulting from the additional flights at JFK, EWR, 

and LGA plus the cost savings resulting from the unified marketing control option for slot 

transfers benefits are estimated to be $74,696,596 ($65,242,900 Present Value) 7.

Reporting Cost for Use-or-Lose

Administrative costs associated with modifications to the use-or-lose requirement include the 

cost of record keeping and reporting. Although, this is a stricter adaptation of use-or-lose, which 

the FAA believes would increase flights; carriers can accommodate these changes with minimal 

costs. Carriers presumably already track and record slot usage on a daily basis under the current 

Orders but the FAA does recognize that larger carriers may require modifications to existing 

optimization software to track and report slot usage. Alternatively, smaller U.S. and 

international carriers have far fewer operations and slot holdings leading the FAA to believe that 

because of their size they are less likely to spread flights over a series of slots. These carriers are 

probably already recording and reporting one flight per slot which would result in no additional 

costs. Moreover, from the analysis above the FAA estimates that carriers would be reallocating 

the usage of existing slots and given the current method of tracking use-or-lose FAA anticipates

no additional reporting costs to meet changes in 80% slot usage requirement. The FAA also 

assumed no additional maintenance costs since carriers already pay for software maintenance. 

The FAA requests comments on these assumptions. 

 6 http://www.bls.gov/oes/current/oes532011.htm ; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics; Lawyer (May 2009); May 2009, the Employee Benefit Research Institute, using a Bureau of Labor 

Statistics Survey of employee benefits estimated the total 2009 benefit as a percentage of payroll at 30.2 percent

7 In this analysis, FAA has assumed that markets will become more competitive as a result of the rule change. Any 

losses to producers resulting from the rule would be losses in rents or transfers, which would not change economic 

efficiency.

The logic is as follows. Clearly carriers find the incremental flying unattractive in the regulatory case (under the 

current rule), otherwise they would fly it. Producer surplus is the return above normal returns, so it is reasonable to 

project that carriers would not be earning surplus on these incremental flights caused by the proposed rule. Some 

carriers might lose surplus as a result of the rule – e.g. their returns in the markets where they add flights would be 

less than normal. But, if carriers take the opportunity to minimize their losses (as they would in competitive 

markets), losses resulting from the rule become unlikely given the many opportunities they have to sell, lease out or 

return excess slot holdings. A more competitive outcome is consistent with the intent to change the use/lose 

provision to encourage more intensive and higher-valued uses of slots.
25

Cost of Reservation System

To operate during the slot-controlled hours, an unscheduled operator needs a reservation. The 

FAA does not expect the unscheduled reservations to require new capital or equipment by the 

FAA or the operators. These systems are already in place within the FAA for unscheduled flights 

under Special Traffic Management Programs, Washington’s Reagan National Airport, and LGA. 

Thus FAA expects no additional costs for LGA. For JFK and EWR the capability for an FAA 

reservation system already exists, and under the proposed rule unscheduled operations would 

now be required to obtain a reservation prior to operating at the airport. There are approximately 

34 unscheduled reservations available per day at JFK and 17 at EWR. From prior experience 

with the reservation system at LGA the reporting time per reservation is two minutes. The pilots 

of these unscheduled flights perform many non-flight duties, which include record keeping and 

scheduling. The FAA selected a burden labor rate8 of $75.60 per hour based on annual earnings 

of airline dispatchers, pilots, copilots, and flight engineers. This includes benefits that are 

estimated as a percentage of the payroll. The FAA estimates that it would cost $31,181 at JFK 

and $15,729 at EWR per years for pilots to make reservations for unscheduled operations. 

The FAA’s Airport Reservation Office (ARO) would receive and process all reservation 

requests. Although the FAA assumes that most reservations would be made through the 

automated system, staffing needed to handle any manual requests and maintain the system is 

incorporated into the analysis. Extrapolating from current experience at LGA, the FAA expects 

that the ARO personnel will spend roughly 1.5 hours a day handling phone calls or adjustments 

at JFK and EWR. The salary for this person is estimated at a GS-13 Step 5 for an hourly burden 

labor rate9 of $63.07. The FAA estimates yearly public costs of $34,528 for maintaining the 

unscheduled reservation system at both JFK and EWR. Combined cost of the reservation system 

to pilots and the federal government sums to roughly $81,438 per year for both JFK and EWR. 

Costs of Secondary Market 

Alternative 1 is the least cost secondary market alternative. This alternative is very similar to 

current practices for lease agreements under the existing Orders. This alternative does not

include the costs for a bulletin board, rather carriers would privately-negotiate buy, sell, lease, 

and trade. Alternatives 2, 3, 4, and 5 propose a bulletin board to post information on buy, sell, 

trade and leases. Costs include the reporting and maintenance of the board for both the FAA and 

carriers. All five alternatives, however, would incur the transaction costs associated with the 

agreements. 

 8 http://www.bls.gov/oes/current/oes532011.htm ; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics; 53-2011 Airline Pilots, Copilots, and Flight Engineers (May 2009); May 2009, the Employee Benefit 

Research Institute, using a Bureau of Labor Statistics Survey of employee benefits estimated the total 2009 benefit 

as a percentage of payroll at 30.2 percent 

(http://www.ebri.org/pdf/publications/books/databook/DB.Chapter%2003.pdf updated May 2009)

9 U.S. Office of Personnel Management, Salary Table 2010-GS plus mean burdened hourly labor rate from the 

Bureau of Labor Statistics, includes locality pay for DC-MD-VA-WV-PA
26

Alternatives 2, 3, 4, and 5 would require the FAA to develop and maintain a bulletin board. The 

bulletin board would be used to publish notices to buy, sell, lease, and trade. However, the FAA 

proposes some limited exceptions to using the bulletin board system. A carrier may trade a slot 

on a one-for-one basis with another carrier without submitting a bulletin board notice, but no 

consideration or promise of consideration must be offered for these trades. A carrier also may 

lease a slot to another carrier for a period of time no longer than one scheduling season. 

Additionally, trades among carriers with unified marketing control (marketing carriers) are 

permitted without using the bulletin board, thus effectively allowing those carriers to treat slots 

as one inventory because these transactions do not have the characteristics of a normal armslength transaction. Carriers engaging in these exception types of transactions still would submit 

a request to the FAA for approval of the transaction. 

There are costs associated with the creation of the bulletin board. For alternatives 2 and 3 the 

FAA envisions a simple webpage that would display notices submitted by carriers but bids 

would be submitted directly to the transferring carrier. The FAA maintains that such a bulletin 

board already exists and there would be no additional costs to develop this site. Alternative 4 

tries to encourage the greatest transparency by requiring bids to be posted on the bulletin board 

during the bidding period. A carrier would submit a notice to the FAA that it intended to engage 

in a slot transaction however, bidding carriers would post their bids, along with any counterbids, 

on the bulletin board. Therefore, negotiations in the form of iterative bids would be available to 

all registered interested parties. Cost for this bulletin board is estimated at $10,000. This is the 

estimated cost to develop and host the site. The fifth alternative is similar to the fourth 

alternative, but the identities of the offering carrier and bidders would not be revealed. Bids 

under this alternative would be cash only because non-monetary assets could reveal the identity 

of the parties. 

For all alternatives that require a bulletin board, a carrier would submit a notice to the FAA that 

it intends to engage in a slot transaction. The FAA would in turn post this information on the 

bulletin board. The FAA cost for uploading the notice is estimated at a GS-13 Step 5 for an 

hourly burden labor rate10 of $63.07. Using leasing information provided by FAA Slot 

Administration, the FAA estimates that each airport may have up to 25 requests for the bulletin 

board per year. Requests are estimated to take 30 minutes to upload for a yearly cost of $2,365 

for all three airports. 

Carrier costs related to the bulletin board include submitting the notice of intent to the FAA and 

under alternative 4 and 5, the cost to carriers for posting bids. The FAA estimates that carriers

would need at least one hour to report the buying, selling, or trading of a slot. As mentioned 

above the FAA estimates that carriers will post up to 25 trades per year. To estimate the annual 

reporting costs to carriers for buying, selling, or trading on the bulletin board, the FAA 

 10 U.S. Office of Personnel Management, Salary Table 2010-GS plus mean burdened hourly labor rate from the 

Bureau of Labor Statistics, includes locality pay for DC-MD-VA-WV-PA
27

multiplied the estimated number of annual reports by the number of hours needed per report and 

the wage. The hourly labor rate was for a scheduler or an administrative service manager11 at 

$52.70 for a total of $3,952. This should also include 1 hour for legal review of posting. The 

FAA expects that the public nature of these postings would lead carriers to seek legal review for 

an hourly burden labor rate for a lawyer12 of $89.89. Total yearly cost to carriers, at all three 

airports, is estimated to be $10,693. 

The bidding period would last 14 days and the FAA estimates that bidders would spend 

approximately 2 hours dealing with the bid over the course of 14 days. A scheduler or an 

administrative service manager13 would manage the bids at $52.70 an hour for 2 hour for a total 

of $105.40 per bid. The FAA estimates that there would be roughly 25 notices per airport a year 

with approximately 5 bids per notice for a total 125 bids a year. The 125 bids a year multiplied 

by $105.40 per bid sums to $13,175. Multiplying the $13,175 by 3 airports brings the total to 

$39,525. Given the public nature of the bid, carriers would also seek legal review before postings 

bids for an hourly burden labor rate for a lawyer14 of $89.89. The 125 bids a year multiplied by 

$89.98 of labor cost per bid for an attorney at 3 airports totals $33,743. Summing the $39,525 for 

a scheduler with the $33,708 for legal review totals $73,233 yearly at all three airports; however 

FAA requests comment on these assumptions since these options are new to both the industry 

and the FAA.

The chart below associates total costs with the relevant options. 

Options 

Year Costs Present 

Value Costs Present Value Costs Present Value Costs Present Value Costs Present Value

$0 $23,058

1

First Year $0 $85,851 

2 3 4 5

$23,058 $20,140 $20,140 $98,291 $85,851 $98,291 

Aggregating the cost of operating the additional flights, the value of the additional delay from 

those flights, reporting costs, the reservation system, and the bulletin board equals the total cost 

of the proposed rule. These costs are estimated to be $53,056,768 ($46,341,836 Present Value).

 11 http://www.bls.gov/oes/current/oes113011.htm; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics plus May 2009, the Employee Benefit Research Institute, using a Bureau of Labor Statistics Survey of 

employee benefits estimated the total 2009 benefit as a percentage of payroll at 30.2 percent

12 http://www.bls.gov/oes/current/oes532011.htm ; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics; Lawyer (May 2009); In May 2009, the Employee Benefit Research Institute, using a Bureau of Labor 

Statistics Survey of employee benefits estimated the total 2009 benefit as a percentage of payroll at 30.2 percent 13 http://www.bls.gov/oes/current/oes113011.htm; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics plus May 2009, the Employee Benefit Research Institute, using a Bureau of Labor Statistics Survey of 

employee benefits estimated the total 2009 benefit as a percentage of payroll at 30.2 percent

14 http://www.bls.gov/oes/current/oes532011.htm ; Bureau of Labor Statistics Occupational Employment and Wages 

Statistics; Lawyer (May 2009); In May 2009, the Employee Benefit Research Institute, using a Bureau of Labor 

Statistics Survey of employee benefits estimated the total 2009 benefit as a percentage of payroll at 30.2 percent

Table 9: Costs for Secondary Market (25 Notices)
28

Conclusion

The FAA modeled the behaviors of carriers in response to the proposed rule. Under the proposed 

rule carriers would incrementally increase operations in year one to meet the new use-or-lose 

requirement and this new operating level would grow by the FAA’s TAF until it reached the 

daily limits. The analysis period is one year because compliance cost is the highest in the first 

year, and if benefits exceed the cost in that year, this relationship will continue until passenger 

demand forces operations up to 100% of the available slots. In the first year, carrier utilization of 

slots will be at least 80%. After the first year, the increase in operations is due to an increase in 

forecasted demand and increased utilization of the slots. Total benefits and costs for the 

regulatory case are estimated at $74,696,596 ($65,242,900 Present Value) for benefits and

$53,056,768 ($46,341,836 Present Value) for costs, assuming the highest cost secondary market 

alternative 4 or alternative 5 is adopted. Under the regulatory case the FAA believes that this rule 

would improve utilization of existing slots that result in net benefits.

Table 10: Total Cost and Benefits of Alternative Four or Five of the Proposed Rule

First Year Benefits Present Value Costs Present Value Net Benefits

Regulatory Case $74,696,596 $65,242,900 $53,056,768 $46,341,836 $18,901,064 
29

Appendix

Detailed Description of Benefits Methodology and Data for ABQ Example15

The empirical analysis described above is based on estimating the full price of travel and 

social marginal costs for representative markets at New York Airports. Estimates are provided 

for domestic and international markets for services provided by legacy (standard jet), RJ, 

turboprop, and LCC16 operators, and for international and cargo17 operations. 

The consumer benefits can be estimated using the economic concept of consumer 

surplus, defined as the difference between what consumers must pay for a given level of service 

and what they would be willing to pay. In passenger transportation markets, consumer surplus is 

usually defined in the context of the full price of travel. The full price of travel includes the 

money fare that a consumer must pay and the value of his or her time in transit (including both 

the scheduled time and any expected delays) and the value of schedule delay (the difference 

between the ideal time of departure/arrival for the consumer versus the actual schedule offered 

weighted by the probability of being accommodated on the desired flight). The common sense 

interpretation of the full price of travel model is that consumers prefer to fly at a time closest to 

their desired departure (or arrival) time, at the lowest possible price, and in a manner that 

minimizes the expected time in transit, including the risk of delays and cancellations.

 

 15 The values of the charts in the appendix are 2008 values and have not been adjusted to reflect 2010 which is used 

throughout the document. 

16 LCC is low cost carrier. 17 Cargo operations are assumed to produce surplus and experience delays in the same way as legacy jet operations.
30

The analysis is carried out at the segment level, i.e., each non-stop destination from LGA, 

JFK and EWR is considered to be a separate market. To implement the analysis, estimates are 

needed for the full price of travel and social marginal costs as of August 2009. 

The full price of travel (FPT) in each case is defined as:

FPT = money fare + value of scheduled time in transit + value of airport delay and cancellations + 

value of schedule delay

For the sample schedule day , data are available to estimate each term in the above equation:

 Money fare: Average segment fare18 for each of the four types of service

 Average time in transit: Weighted average block time from the OAG sample day 

 Expected airport delay and cancellations19 

 Value of travel time applied to transit time, delay and cancellations: GRA, 

Incorporated“ Economic Values for FAA Investment and Regulatory Decisions, A 

Guide”, prepared for FAA Office of Aviation Policy and Plans, (October 3, 2007). 

Passenger value of time is for “all purposes,” reflecting a mix of business and leisure 

travel in the New York area, valued at $30.02 per hour

 Schedule delay: Computed from the OAG data using a method described below

 Value of time in schedule delay: $2.70 per hour from a study by Morrison and 

Winston20

 18 Based on DB1B third quarter 2009. The calculation includes "zero fare" observations (frequent flyers) and all OD trips with 2 or less connect points involving JFK,EWR and LGA as an endpoint or a connect point. It is important 

to include frequent flyers in order to avoid overestimating carrier revenues (calculated as total passengers x average 

fare). To derive the segment fare observations, the total itinerary fare for each DB1B record is first allocated to 

separate O-D trips using the DB1B trip break indicators and a weighting factor of W = 

exp(2.485+0.720668*ln(miles)) – this represents an approximation to ICAO formula prorates. The O-D trip fare is 

then further allocated to individual segments based on direct segment distance.

19 Passenger delay costs are estimated as the product of expected delay time and the value of time. Cancellation 

costs are calculated the same way. In estimating expected passenger time lost due to a cancellation, the FAA 

assumes that a passenger is reaccommodated on the next flight out with enough available seats, where available 

seats are estimated as (1- load factor) x seat capacity. In some cases, passengers can be reaccommodated on the next 

flight out; in others, they might have to wait for the second flight.
31

For each segment, there are data on the level of service by the six types of aircraft 

operations (legacy, LCC, RJ, turboprop, cargo, and international). These data are aggregated up 

to the segment level to estimate an average money fare, passengers per day each way, measures 

of travel time, airport delay, and schedule delay. The resulting sample day full price of travel 

and number of passengers together represent a point on the segment FPT demand curve. The 

corresponding point on the money demand curve can be found by substituting the money fare for 

the FPT. 

Estimating Schedule Delay

One of the important differences that need to be accounted for between the cases is the 

effect of frequency and average seat size on consumer benefits. In general, consumers prefer 

more frequent flight opportunities and larger aircraft so that they can more easily accommodate 

their own schedules. For valuation purposes, schedule delay is broken into two components –

frequency delay and stochastic delay. Frequency delay measures the average difference between 

a passenger's preferred departure time and the closest scheduled departure time. Frequency delay 

(FD) in minutes for a given market segment is parameterized as:

FD = 92F -0.456

 20 Morrison and Winston, “Enhancing the Performance of the Deregulated Air Transportation System,” Brookings 

Papers on Economic Activity, Microeconomics, 1989, p. 66, use the ratio of value of schedule delay/value of travel 

time applied to current estimate of travel time value. The results of this study suggest that consumers place a lower 

value on schedule delay than on travel time. The rationale is that while consumers will prefer to fly at precisely the 

time that fits their schedules, deviations from the schedule do not generally result in large losses of consumer 

benefits because they are able to use any deviations in other productive or leisure pursuits. For example, a business 

person who would prefer to leave at 4 PM but is forced to leave at 5 PM because of the schedule of available service 

may find ways to productively use the extra hour at work.
32

where F is daily flight frequency.21

Stochastic delay measures the expected delay due to the probability that a passenger 

would not be able to obtain a seat on his most preferred departure because of capacity limitations 

of the aircraft. Stochastic delay (SD) is parameterized as:22

0.5725 1.79 ( ) 12010 SD − = × P × S − P

F

where F = daily flight frequency

P = passengers per flight

S = seats per flight

The sum of frequency delay and stochastic delay yields total schedule delay. Estimates of 

schedule delay from these equations for various values of F and S are shown below in Exhibit 15 

below (using the observed average JFK system load factor of 68.6 percent):

Exhibit 15: Equation Estimates of Schedule Delay (minutes)

50 75 100 125 150

4 213 149 120 103 92

6 150 108 88 77 69

8 118 86 71 63 57

10 98 72 60 54 49

Average Seatsize Daily Frequency

 21 Douglas and Miller (1974). Economic Regulation of Domestic Air Transport: Theory and Policy, p. 105. 22 Morrison and Winston, op. cit., p. 63. This is based on a parameterization of the Douglas and Miller (op. cit.) 

schedule delay equation.
33

Schedule delay is valued at $2.70 per hour based on estimates developed by Morrison and 

Winston cited earlier.

The following Exhibit shows the individual calculations applied to data at the segment level for 

EWR. In the analysis, consumer surplus estimates are developed at the segment level and then 

summed across segments. The segment shown is EWR – ABQ. The general assumptions are 

shown at the top of the table; the calculations for the segment then follow below:

EWR INPUTS

% Leisure traffic 60% Source: EWR Fact sheet from www.jcdecauxna.com

Value of Travel Time per Ir $30.02 Source: .usiness and leisure values from FAA critical values

Value of Schedule Delay per Ir $2.63 Source: aorrison and Winston, "Enhancing the terformance...", .rookings 1989.

tassenger/Segment/A&I Tax wate 8% Source: G Ielledy, FY04 scheduled domestic pax svc (airline rev % ticket rev)

tFC and Security Fee per Segment $7.00 $4.50 tFC + $2.50 Security Fee

aoney Fare Arc Elasticity -1.372 Arc elasticity assumed to apply between current t,Q and that which would occur with 1 additional flight in the market

Downstream delay multiplier 0

Chg in LF with 1 pt incr in completion 0.14 T-100 LF and completion rates, Dec. 2000 vs. Apr 2001

Cancellation cost factor 50%

Lnclude cancellation effects? Y

Avg .lkcost per Iour for GA $1,108 Source: FAA critical values Table 4-10, avg. of aulti-Engine Turboprop 1-9 seats and Turbojet <=12,500 lbs variable operating costs

tassengers per GA flight 2.8 op. cit., Table 3-15

Annualization Factor 365.0
34

GROUP

Data LCC LEGACY JET PROP RJ INTL Grand Total

Sum of FLTCOUNT 0 2 0 0 0 2

Sum of SEATSIZE 0 228 0 0 0 228

Sum of TIME 0 546 0 0 0 546

Sum of TOTCOST 0 26708 0 0 0 26708

Sum of pax 0.00 182.86 0.00 0.00 0.00 182.86

Sum of totrev 0 35207 0 0 0 35207

LCC LEGACY JET PROP RJ INTL TOTAL

Scheduled Operations 0 2 0 0 0 2

Scheduled Roundtrips 0.0 1.0 0.0 0.0 0.0 1.0

Scheduled RT Seats 0.0 114.0 0.0 0.0 0.0 114.0

Avg Seatsize 0.0 114.0 0.0 0.0 0.0 114.0

Cancellation Rate 0.0% 3.7% 0.0% 0.0% 0.0% 3.7%

Realized Roundtrips 0.00 0.96 0.00 0.00 0.00 0.96

Realized RT Seats 0.00 109.76 0.00 0.00 0.00 109.76

Segment PDEWs 0.00 91.43 0.00 0.00 0.00 91.43

Pax per Operation 0.00 91.43 0.00 0.00 0.00 91.43

Avg Load Factor 0.0% 80.2% 0.0% 0.0% 0.0% 80.2%

BlkHrs/Operation 0.00 4.55 0.00 0.00 0.00 4.55

VarCost $0 $26,708 $0 $0 $0 $26,708

VarCost/Hr $0 $2,935 $0 $0 $0 $2,935

PASSENGERS

Avg Segment Fare $192.54

Money Fare Arc Elasticity -1.372

Travel Time Cost per Pax $136.59

Airport Delay Cost per Pax $10.46

Avg Time between Flights (hrs) 18.00

# Flights needed to Accommodate All Cancelled Pax 0.15

Total Passenger Hours Incurred 61.16

Cancellation Cost per Pax $20.08

Frequency Delay (min) 92.00

Stochastic Delay (min) 601.69

Schedule Delay Cost per Pax $30.38

Avg Full Price of Travel $390.06

With 1 Additional Scheduled Flight:

Segment PDEWs 0.00 182.86 0.00 0.00 0.00 182.86

Intermediate calculation -2.058

Avg Segment Fare $117.27

(ignore marginal changes in airport delay and cancellation costs)

Frequency Delay (min) 67.07

Stochastic Delay (min) 300.84

Schedule Delay Cost per Pax $16.11

Avg Full Price of Travel $300.52

Money slope -0.823

Money intercept $267.81

FPT Slope -0.979

FPT Intercept $479.60

 
35

Description of “UMD Model”

To project delay and cancellation levels at the study airports, a combination of historical data and 

prediction models were employed. Where available, it was deemed preferable to use historical data to 

approximate airport level of service, as this removes the necessity of modeling assumptions. For 

operation levels for which historical data were not available, scaled historical demand data was used as 

input to queuing and cancellation prediction models. Thus, the “UMD Model” represents a combination 

of these two sources. See Figure 1 for a graphical depiction of this division. Level of service for 

intermediate operational regimes can be inferred using a regression model on these data points. 

Figure 1 – Queuing curve for EWR

Historical Data

Historical data was used to quantify much of the curve representing the relationship between 

operations and performance. The data for this analysis was drawn from two sources. Scheduled levels 

of operation and flight delays came from the Aviation System Performance Metrics (ASPM) system. 

Cancellation data was drawn from the Bureau of Transportation Statistics (BTS) On-Time Performance 

Database of individual flight records. Data from January 2000 through September 2007 were examined.

The first step in quantifying these relationships was to identify historical periods wherein the level of 

operations was reasonably constant. This was done by plotting the number of daily operations against 

time, and then choosing regions where the data reached a plateau. These individual plateau regions 

were then sorted cumulatively and examined more closely. The flattest region of the plateau, subject to 

a minimum length, was identified heuristically, as shown in Figure 2. The data on the level of service for 

those days was averaged to create a single point on the curve shown in Figure 1.

Historical data

Projection
36

Figure 2 – Sorted data to locate plateau region (EWR, 9/2002-12/2002)

Projected Points

To develop a complete picture of airport level of service under various conditions, several predictive 

models were used to study these airports under demand levels higher than those currently experienced. 

To predict average delays, the MIT-developed DELAYS queuing model was used. The UMD network flow 

cancellation prediction model was applied to estimate cancellation levels. Each of these models 

requires as input only time-varying demand and capacity profiles for a single day. The aggregate nature 

of these models makes them well-suited for analyzing systems in which there is limited access to 

proprietary information and uncertainty about future operational paradigms.

The demand and capacity data for the projected points was drawn from the ASPM system. The 

published schedule for Thursday, August 2, 2007 was chosen as a representative demand day for each of 

the study airports. The level of scheduled operations in hour of this day was scaled up by a factor (110% 

and 115%) and then rounded down to the nearest integer to produce a hypothetical new schedule. To 

represent capacity variation throughout the year, the same scaled demand scenario was tested for the 

declared profile of Airport Arrival Rates for each day of 2004 for the study airports. The delay and 

cancellation levels resulting from these 366 runs were averaged to produce aggregate estimates of level 

of service for the specified higher level of operations.

Because demand and capacity may vary throughout the day, an equilibrium queuing model cannot be 

used. Rather, such a dynamic queuing system must be modeled using time-varying processes. The MIT 

DELAYS model was developed for precisely this situation. This stochastic queuing model closely 

approximates the M(t)/Ek(t)/n queuing system, in which demand is modeled as a time-varying Poisson 

process and service times conform to a time-varying kth order Erlang distribution.

The cancellation model used operates as a maximum flow network model with increasing marginal 

cancellation cost within each hour. The premise is to create a time-based network with the considered 

demand profile as input and some capacity profile to control the maximum number of arrivals permitted 

in any one hour. Cancellations are induced by enforcing a maximum delay length on the aggregate 
37

aircraft flows. See Mukherjee, et al. (2005) or (2007) for more information on the structure and 

calibration of this model.

Following are the data used in developing delay models at each airport. The data were drawn from 

2001-2007. Shown in the first column is the number of operations for each “plateau” in the data. The 

second column shows the number of sample days represented in the plateau. Entries with a star or * in 

the second column refer to estimates of delay and cancelations developed using the MIT DELAYS 

queuing model. The third column shows the average arrival delay. The fourth column shows the fraction 

of flights cancelled. 

EWR

Number of Ops Sample Days Average 

Arrival Delay

Fraction flights 

cancelled

1030 46 8.3 1.3%

1090 45 11.9 1.6%

1130 28 17.9 2.1%

1180 38 20.1 2.5%

1230 28 23.2 2.7%

1240 27 24.8 3.7%

1270 21 26.8 4.5%

1360 * 33.2 4.7%

1430 * 42.8 6.1%

JFK

Number of Ops Sample Days Average 

Arrival Delay

Fraction flights 

cancelled

660 159 11.6 0.9%

760 296 13.1 1.1%

880 93 16.4 1.4%

970 95 21.5 1.3%

1110 86 22.1 1.6%

1230 89 23.6 2.4%

1290 42 31.2 4.3%

1420 * 47.8 6.1%

LGA
38

Number of Ops Sample Days

Average Arrival 

Delay

Fraction of Flights 

Cancelled

1110 125 12.5 4.8%

1160 65 14.9 4.4%

1220 85 16.6 6.8%

1300 28 24.0 7.3%

1350 38 35.7 9.2%

1400 0 47.8 13.0%

References

Mukherjee, A., D. J. Lovell, M. O. Ball, A. R. Odoni, and G. Zerbib. (2005). “Modeling Delays and 

Cancellation Probabilities to Support Strategic Simulations.” Proceedings of the 6th USA/Europe Air 

Traffic Management R&D Symposium, Baltimore, MD.

Mukherjee, A., D. J. Lovell, M. O. Ball, A.M. Churchill, and A. R. Odoni. (2007). “Using Optimization and 

Queuing Models to Estimate Long-Term Average Flight Delays and Cancellation Rates.” Proceedings of 

the Sixth Triennial Symposium on Transportation Analysis, Phuket, Thailand.

Incremental Consumer Surplus per Operation at JFK, EWR and LGA23

 JFK EWR LGA

Market

Consumer 

Surplus 

due to 

Added 

Flight

Market

Consumer 

Surplus 

due to 

Added 

Flight

Market

Consumer 

Surplus 

due to 

Added 

Flight

ACC $26,830 ABQ $4,093 ACK $58 

ACK $2,558 ACK $371 ALB $63 

ALB $210 ALB $107 ATL $998 

AMS $8,396 AMS $8,352 BGR $791 

ANC $19,186 ARN $9,061 BHM $753 

ATH $17,599 ATH $16,626 BNA $1,243 

ATL $2,808 ATL $1,223 BOS $227 

AUA $2,666 AUA $7,054 BTV $48 

AUH $38,991 AUS $2,115 BUF $290 

AUS $3,320 AVL $720 BWI $452 

BAQ $10,381 BCN $14,259 CAE $762 

BCN $18,596 BDA $2,778 CAK $1,330 

 23 The values of the charts in the appendix are 2008 values and have not been adjusted to reflect 2010 which is used 

throughout the document. 
39

BDA $1,361 BDL $92 CHO $218 

BDL $349 BFS $12,686 CHS $424 

BGI$5,286 BGR $409 CLE $1,022 

BGM $421 BHM $935CLT $651 

BKK $32,772 BHX $14,018 CMH $60 

BNA $1,406 BNA $321 CVG $2,361 

BOG $12,184 BOG $8,165 DAY $394 

BOM $24,263 BOS $381 DCA $236 

BOS $1,145 BQN$5,645 DEN $2,312 

BQN $3,156 BRS $12,870 DFW $926 

BRU $9,323 BRU $18,243 DSM $1,395

BTV $723 BTV $149 DTW $1,968 

BUD $12,844 BUF $2,050 FLL $1,245

BUF$567 BWI $151 GRR $666 

BUR $1,808 CAE $663 GSO $204 

BWI $360 CDG$5,631 GSP $453 

CAI $30,786 CGN $11,578 HOU $1,923 

CDG $3,527 CHS$516 IAD $1,281 

CLE$594 CLE $837 IAH $477 

CLT $1,403 CLT $815 ILM $345

CMH $845CMH $1,966 IND $1,511 

CMN $11,010 CPH $9,503 ITH $91 

CUN $2,627 CUN $2,637 JAX $292 

CVG $3,486 CVG $219 LEB $71 

DCA $97 DAB $3,175 LEX $1,507 

DEN$5,537 DAY $468 MCI $817 

DFW $4,086 DCA $913 MCO $2,933 

DKR $18,439 DEL $38,654 MDW$592 

DTW $1,638 DEN $1,020 MEM $1,743 

DUB $9,504 DFW$540 MHT $49 

DUS $28,958 DTW $1,092 MIA $647 

DXB $25,562 DUB $9,516 MKE $699 

EZE $16,795 EDI $8,210 MSN $1,176 

FCO $6,366 FCO $10,195 MSP $1,266 

FLL $1,531 FLL $1,589 MSY $4,600 

FRA $7,390 FRA $11,645 MYR $1,800 

GCM $7,403 GLA $9,851 NAS $4,087 

GEO $8,589 GRR $721 ORD $259 

GRU $9,152 GRU $19,992 ORF $633 

GUA $8,696 GSO $235 PBI $3,488 
40

GVA $16,233 GSP $453 PHF $1,300 

GYE $13,256 GVA $13,729 PHL $317 

HAM $15,732 HAM $13,007 PIT $762 

HEL $26,090 HKG $36,688 PVD$55

HKG $67,414 HNL $14,356 PWM $203 

HOU $1,461 IAD $90 RDU$57 

IAD $857 IAH $760 RIC $101 

IAH $1,290 IND $3,333 ROA $264 ICN $31,233 JAX $2,423 ROC $420 

IND $633 LAS $1,258 RSW $3,201 

IST $15,544 LAX $1,046 SAV$595

JAX $1,111 LEX $1,285 SDF $684 

JED $36,992 LGW $7,193 STL $1,393 

KBP $15,412 LHR $7,877 SYR $279 

KEF $10,100 LIM $11,533 TPA $894 

KIN $4,263 LIS $6,907 TYS $1,498 

LAS $2,803 LIT $1,637 XNA $1,145

LAX$581 LTN$5,672 YHZ $1,152 

LGB $1,441 MAD $7,657 YOW $329 

LGW $7,623 MAN $8,153 YUL $269 

LHR $2,204 MBJ $3,180 YYZ $738 

LOS $35,037 MCI $4,177 

MAD $10,064 MCO $1,609 Average952

MAN $9,645 MDW $1,064 

MBJ $2,665 MEM $2,431 

MCO $1,450 MEX $3,784 

MDE $9,128 MHT $132 

MEX $1,199 MIA $742 

MHT$53 MKE $264 

MIA $1,426 MSN $1,362 

MSP $4,362 MSP $1,431 

MSY $2,549 MSY $1,630 

MUC $26,671 MUC$5,159 

MXP $14,228 MXP $13,905

NAP $38,586 MYR $3,043 

NAS $1,837 NAS $2,172 NCE $18,241 NRT $32,654 

NOC $16,632 OKC $1,739 

NRT $17,297 OMA $627 

OAK $2,072 OPO $29,246 
41

ONT$5,819 ORD $243 

ORD $1,061 ORF $121 

ORF$592 ORY $8,427 

OTP $22,743 OSL $14,413 

PAP $10,440 PBI $3,038 

PBI $2,201 PDX $2,864 

PDX $10,380 PEK $34,187 

PEK $41,788 PHX $1,016 

PHL $132 PIT $1,257 

PHX $3,350 POP $6,361 

PIT $728 POS $9,859 

PLS $7,285 PSE $4,953 

PMO $38,951 PTY $7,818 

POS $4,132 PUJ $6,240 

PPT $40,766 PVD $614 

PRG $17,233 PWM $171 

PSA $23,978 RDU $1,124 

PSE $4,923 RIC $147 

PTY $4,311 ROC $122 

PUJ$5,262 RSW $3,959 

PVD $43 RZE $28,791 

PVG$50,534 SAN $2,298 

PWM $638 SAT $2,342 

RDU $608 SAV$560 

RIC $724 SDF $481 

RIX $16,175 SDQ $9,433 

ROC $753 SEA $1,296 

RSW $1,274 SFO $1,184 

SAL$5,366 SIN $48,618 

SAN$5,647 SJC $6,144 

SAP $10,152 SJO $3,910 

SCL $17,795 SJU $1,565

SDQ $2,046 SLC $2,430 

SEA$5,709 SNA $2,623 

SFO $2,423 SNN $8,428 

SJC $3,548 SRQ $3,168 

SJO $7,718 STI $9,161 

SJU $2,950 STL $238 

SLC$5,285 STT $4,802 

SMF$5,808 SXM$5,056 
42

SNN $10,173 SYR $127 

SRQ $3,633 TLV $16,405

STI $1,782 TPA $2,738 

STL $552 TUL $1,808 

STN $5,221 TUS $4,266 

STT $6,972 TXL $13,365

SVO $16,041 TYS $655

SXM $7,288 WAW $23,720 

SYR $862 XNA $1,023 

TLV $15,984 YHZ $2,662 

TPA $2,066 YOW $207 

TUS $4,247 YQB $280 

TXL $15,911 YQM $1,338 

VCE $17,086 YTM $985

VIE $21,163 YUL $96 

WAW $19,464 YVR $6,426 

YHZ $692 YYT $1,137 

YUL $179 YYZ $1,358 

YVR $6,703 ZRH $7,067 

YYC $6,696 

YYZ $228 Average $5,865

ZRH $7,412 

Average $9,874 
43

Methodology to Determine Additional Flights needed to meet the Proposed Use-or-Lose 

Requirements

The FAA’s task in the data analysis was to determine how many additional flights, if any, would 

be needed for carriers at the 3 NY airports to comply with the proposed new use-or-lose 

requirements. If all flights assigned to a slot were actually operated at 80% over a season that 

would net a minimum of 995 flights at EWR for the 1,244 allocated slots, 1,026 flights at JFK 

for the 1,283 allocated slots and 908 flights at LGA for the 1,136 allocated slots. In aggregate, 

current traffic exceeds the minimum but when looking at slots by carrier by day of week and by 

hour the FAA found specific hours where carriers would need additional actual flights. The 

calculation of these additional flights is discussed below. 

For the purpose of this analysis the FAA reviewed flights from August 2009. Although 2010 is 

the most current data, the runway closure at JFK airport in 2010 affected all operations into and 

out of the New York region and a use-or-lose waiver at JFK was in effect during the runway 

construction.

In 2009, based on the new definition of a series of flights per slot, there are flights being flown in 

particular slots that would not meet the new use-or-lose requirement. Although the analysis 

looked at actual flights by scheduled hour, the analysis was not done by origin and destination 

pairs or by flight numbers. However, the FAA expects that carriers could modify the origin and 

destination pairs or make other adjustments to these flights to meet the proposed rule. Moreover, 

this analysis assumes that carriers would meet the new 80% use-or-lose requirement by adding 

the fewest number of operations to comply since the current allocation of flights provides the 

highest profit for the carriers under today’s regulatory scheme. 

The FAA looked at both scheduled flights and actual flights flown. A carrier’s schedule is 

indicative of a carrier’s intended usage of slots. However, although carriers are required to 

schedule a flight before a flight can be flown, a carrier has the ability to cancel flights making the 

analysis of scheduled data misleading. A carrier can schedule up to a 100% of their allocated 

slots and cancel 20% of those flights and still meet the 80% usage requirement of this proposed 

rule. Moreover, only flights that actually operate count toward the usage requirements. 

Therefore, the FAA looked at actuals for a more accurate estimate of the number of flights 

needed to meet the requirement of the proposed rule. 

To determine the additional flights that may be added by carriers to meet the 80% usage 

requirements for a slot, the FAA gathered a sample of actual flight data from the Aviation 

System Performance Management system (ASPM). The sample consisted of actual flights flown 

for all Mondays in August of 2009. The FAA selected the month of August because that was the 

peak month of operations for 2009 where each additional flight would result in the highest delay 
44

cost for that year. Monday was selected because there were 5 Mondays in August compared to 4 

days for all the other days of the week. By having five Mondays, a carrier’s flight that was 

scheduled for departure at 9 AM would need to actually operate at least four of the five Mondays 

to meet the proposed 80% usage requirement for that particular slot. Actual flight data was 

matched with allocated slot data for that scheduling season, by carrier, by day of week (Monday)

and by hour (the actual flight’s scheduled departure or arrival hour). However, regional and 

commuter operators and alliance partners also fly under contract to the seller and share the slots. 

Therefore, for a proper count of slot utilization, the FAA had to cross reference schedule data 

since the schedule data lists other operating carriers scheduled to fly on behalf of a seller carrier. 

These were generally alliances and code shares. After matching the operating carriers with the 

seller carriers, the FAA then matched the seller’s allocated slots with the actual traffic by hour. 

The next step was to extract each carrier’s actual flights for all Mondays in August 2009 by hour. 

An example of the actual flight data collected for each carrier can be seen in the table below 

under the column “Actual Flights Flown”. In that same table, the FAA also tracked each 

carrier’s allocated slots for all Mondays in August by hour. The FAA then calculated the number 

of actual flights needed based on the number of allocated monthly slots for each hour to meet the 

proposed 80% usage requirement. This was compared to the number of actual flights flown and 

where there was a surplus of actual flights above the 80% requirement the FAA recorded a 

negative number in the column labeled “Usage Needed to Meet 80%” reflecting an excess in 

flights. If there was a shortage of actual flights this was recorded as a positive number. 

The above process identifies those hours where there were insufficient flights. For those hours, 

the FAA looked at the adjacent hours—before and after—to see if there was an excess. If an 

adjacent hour had excess flights the FAA assumed the carrier would smooth their traffic activity 

levels across hours to meet the proposed 80% usage requirement. The FAA also assumed that 

carriers with a large number of flights needed in some less desirable hours (hour 0600 and 2100) 

would return or sell those slots.

After smoothing, the FAA summed up the remaining insufficient flights for hours where there 

were not enough excess flights in adjacent hours to smooth out the deficiency. The sum of the 

remaining flights which could not be smoothed were divided by five to obtain an average amount 

of additional flights that would be needed to be flown for carrier XXX on Monday to meet the 

proposed 80% usage requirement. In the Appendix, for the example of carrier XXX, there were 

an additional 2 flights that would be needed to meet the proposed 80% usage requirement, after 

smoothing, for all Mondays in August 2009. On average, this would require about an additional 

.4 flights per Monday for Carrier XXX to meet the proposed 80% usage requirement. Moreover, 

the FAA assumed that carriers with slots in consecutive hours could reschedule flights between 

adjacent hours to minimize the number of additional flights needed to meet the new requirement. 

The FAA continued the process for all carriers and for all three airports. Based on the 80% 

usage requirement the FAA calculated 10 additional flights for EWR, 20 for JFK and 2 for LGA.
45

Smoothing Example of Carrier XXX:

Example: EWR Allocated Departures Compared to Actual Departures. The sample includes all 5

Mondays in August 2009. The FAA assumed that Carriers will change their flights to meet the new useor-lose with the least amount of additional flights. The tan color rows represent the adjacent hours 

where carriers will smooth traffic to meet the new use or lose requirement. After smoothing, for the 

Month, Carrier XXX needs an additional 2 flights so it can keep all its slots. So, on an average Monday 

that equates to an additional .4 Flights.

Table Description:

YYYYMM: data is from August 2009

Day of Week: numerical code for Monday in the database

Dep. Hour: actual flights binned by their schedule departure hour

Carrier: Selling carrier 

Actual Flights Flown: actual flights that were flown for the seller carrier for all the Mondays in August 

2009

Monthly Slots: states how many slots were allocated for that seller carrier for that season for Monday 

for that hour for the month

Usage Needed to Meet 80%: states how many actual flights are needed to operate to meet 80% of the 

slots for Monday for that hour for the month

NET: a negative number signifies the number of flights in excess of the 80% minimum and a positive 

number signifies an insufficient number of flights to meet the 80% minimum
46