Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach

An important and challenging question for airport operators is the management of airport capacity and demand. Airport capacity depends on the available infrastructure, external factors, and operating procedures. Investments in Air Traffic Management (ATM) infrastructures mainly affect airside operat...

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Detalles Bibliográficos
Autores: Rodríguez Sanz, Álvaro, Rubio Andrada, Luis
Tipo de recurso: artículo
Fecha de publicación:2023
País:España
Institución:Universidad Autónoma de Madrid
Repositorio:Biblos-e Archivo. Repositorio Institucional de la UAM
Idioma:inglés
OAI Identifier:oai:repositorio.uam.es:10486/709475
Acceso en línea:http://hdl.handle.net/10486/709475
https://dx.doi.org/10.3390/aerospace10040383
Access Level:acceso abierto
Palabra clave:ADS–B
air traffic management
airport investments
behavioral economics
capacity and demand
cost–benefit analysis
Economía
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spelling Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approachRodríguez Sanz, ÁlvaroRubio Andrada, LuisADS–Bair traffic managementairport investmentsbehavioral economicscapacity and demandcost–benefit analysisEconomíaAn important and challenging question for airport operators is the management of airport capacity and demand. Airport capacity depends on the available infrastructure, external factors, and operating procedures. Investments in Air Traffic Management (ATM) infrastructures mainly affect airside operations and include operational enhancements to improve the efficiency, reliability, and sustainability of airport operations. Therefore, they help increase capacity while limiting the impact on the airport infrastructure itself. By reviewing the neoclassical valuation principles for Cost–Benefit Analysis (CBA), we find that it does not consider relevant behavioral economic challenges to conventional analysis, particularly: failure of the expected utility hypotheses, dependence of valuations on reference points, and time inconsistency. These challenges are then incorporated through practical guidelines into the traditional welfare model to achieve a new methodology. We propose a novel CBA behavioral framework for investments in ATM infrastructures to help policy makers and airport operators when faced with a capacity development decision. This is complemented with a practical example to illustrate and test the applicability of the proposed model. The case study evaluates the deployment of Automatic Dependent Surveillance–Broadcast (ADS–B) as an investment aimed at improving ATM operational procedures in the airport environment by providing advanced ground surveillance data. This allows airport operators to discover the causes of taxi congestion and safety hotspots on the airport airside. The benefits of ADS–B are related to enhanced flight efficiency, reduced environmental impact, increased airport throughput, and improved operational predictability and flexibility, thus reducing waiting times. At the airport level, reducing the waiting times of aircraft on the ground would lead to a capacity release and a reduction in delays. The results show that, following a traditional CBA, the investment is clearly viable, with a strong economic return. Including behavioral notions allows us to propose a new evaluation framework that complements this conclusion with a model that also considers inconsistencies in time and risk perception. A positive Net Present Value can turn into a negative prospect valuation, if diminishing sensitivity and loss aversion are considered. This explains the reticent behavior of decision makers toward projects that require robust investments in the short-term, yet are slow to generate positive cash flows. Finally, we draw conclusions to inform policy makers about the effects of adopting a behavioral approach when evaluating ATM investmentsMDPIDepartamento de Economía AplicadaFacultad de Ciencias Económicas y Empresariales20232023-04-20research articlehttp://purl.org/coar/resource_type/c_2df8fbb1VoRhttp://purl.org/coar/version/c_970fb48d4fbd8a85info:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10486/709475https://dx.doi.org/10.3390/aerospace10040383reponame:Biblos-e Archivo. Repositorio Institucional de la UAMinstname:Universidad Autónoma de MadridInglésengopen accesshttp://purl.org/coar/access_right/c_abf2info:eu-repo/semantics/openAccessoai:repositorio.uam.es:10486/7094752026-06-23T12:46:27Z
dc.title.none.fl_str_mv Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
title Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
spellingShingle Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
Rodríguez Sanz, Álvaro
ADS–B
air traffic management
airport investments
behavioral economics
capacity and demand
cost–benefit analysis
Economía
title_short Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
title_full Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
title_fullStr Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
title_full_unstemmed Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
title_sort Cost–benefit analysis of investments in air traffic management infrastructures: a behavioral economics approach
dc.creator.none.fl_str_mv Rodríguez Sanz, Álvaro
Rubio Andrada, Luis
author Rodríguez Sanz, Álvaro
author_facet Rodríguez Sanz, Álvaro
Rubio Andrada, Luis
author_role author
author2 Rubio Andrada, Luis
author2_role author
dc.contributor.none.fl_str_mv Departamento de Economía Aplicada
Facultad de Ciencias Económicas y Empresariales
dc.subject.none.fl_str_mv ADS–B
air traffic management
airport investments
behavioral economics
capacity and demand
cost–benefit analysis
Economía
topic ADS–B
air traffic management
airport investments
behavioral economics
capacity and demand
cost–benefit analysis
Economía
description An important and challenging question for airport operators is the management of airport capacity and demand. Airport capacity depends on the available infrastructure, external factors, and operating procedures. Investments in Air Traffic Management (ATM) infrastructures mainly affect airside operations and include operational enhancements to improve the efficiency, reliability, and sustainability of airport operations. Therefore, they help increase capacity while limiting the impact on the airport infrastructure itself. By reviewing the neoclassical valuation principles for Cost–Benefit Analysis (CBA), we find that it does not consider relevant behavioral economic challenges to conventional analysis, particularly: failure of the expected utility hypotheses, dependence of valuations on reference points, and time inconsistency. These challenges are then incorporated through practical guidelines into the traditional welfare model to achieve a new methodology. We propose a novel CBA behavioral framework for investments in ATM infrastructures to help policy makers and airport operators when faced with a capacity development decision. This is complemented with a practical example to illustrate and test the applicability of the proposed model. The case study evaluates the deployment of Automatic Dependent Surveillance–Broadcast (ADS–B) as an investment aimed at improving ATM operational procedures in the airport environment by providing advanced ground surveillance data. This allows airport operators to discover the causes of taxi congestion and safety hotspots on the airport airside. The benefits of ADS–B are related to enhanced flight efficiency, reduced environmental impact, increased airport throughput, and improved operational predictability and flexibility, thus reducing waiting times. At the airport level, reducing the waiting times of aircraft on the ground would lead to a capacity release and a reduction in delays. The results show that, following a traditional CBA, the investment is clearly viable, with a strong economic return. Including behavioral notions allows us to propose a new evaluation framework that complements this conclusion with a model that also considers inconsistencies in time and risk perception. A positive Net Present Value can turn into a negative prospect valuation, if diminishing sensitivity and loss aversion are considered. This explains the reticent behavior of decision makers toward projects that require robust investments in the short-term, yet are slow to generate positive cash flows. Finally, we draw conclusions to inform policy makers about the effects of adopting a behavioral approach when evaluating ATM investments
publishDate 2023
dc.date.none.fl_str_mv 2023
2023-04-20
dc.type.none.fl_str_mv research article
http://purl.org/coar/resource_type/c_2df8fbb1
VoR
http://purl.org/coar/version/c_970fb48d4fbd8a85
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv http://hdl.handle.net/10486/709475
https://dx.doi.org/10.3390/aerospace10040383
url http://hdl.handle.net/10486/709475
https://dx.doi.org/10.3390/aerospace10040383
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv MDPI
publisher.none.fl_str_mv MDPI
dc.source.none.fl_str_mv reponame:Biblos-e Archivo. Repositorio Institucional de la UAM
instname:Universidad Autónoma de Madrid
instname_str Universidad Autónoma de Madrid
reponame_str Biblos-e Archivo. Repositorio Institucional de la UAM
collection Biblos-e Archivo. Repositorio Institucional de la UAM
repository.name.fl_str_mv
repository.mail.fl_str_mv
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