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Intercity Air Transporation - Overview and Presentation of Alternative Policies for Intercity Air Transportation in Wisconsin - Wisconsin TransLinks 21
Click HERE for graphic. MISSION STATEMENT TRANSLINKS 21 - Wisconsin's 21st century transportation plan - will outline a comprehensive transportation system that will move people and goods efficiently, strengthens our economy, protects our environment, and supports our quality of life. Working with DOT, the public will identify Wisconsin's transportation needs - and help to make tomorrow's transportation choices. Tommy G. Thompson, Governor Charles H. Thompson, Secretary Intercity Air Transportation An overview of issues and a presentation of four alternative scenarios for intercity air passenger and freight transportation in the state of Wisconsin Wisconsin Department of Transportation July 1994 ACKNOWLEDGEMENT This paper was created by the Wisconsin Department of Transportation. The principal author was Lawrence Getzler, Multimodal Planning Unit. Editor/publisher of this document was Daniel Yeh, Multimodal Planning Unit. Others providing significant input for this document include the following: Franco Marcos, Multimodal Planning Unit; John Hartz, Supervisor of the Multimodal Planning Unit; Randall Wade, Chief of the Statewide System Planning Section; Robert Kunkel, Director of the Bureau of Aeronautics; Dan Finkehneyer, Chief of the Airport Program Section; Steven Coons, Airport Program Section. A number of contracted consultant teams have been retained by WisDOT to perform certain elements of intercity planning, including planning for the air transportation system. Their input was also used in development of air scenarios. These teams are as follows: The consultant team for intercity freight planning is comprised of Wilbur Smith Associates of Columbia, South Carolina; and Reebie Associates of Greenwich, Connecticut. The consultant team for intercity passenger planning is comprised of KPMG Peat Marwick of Vienna, Virginia; HNTB Corporation of Milwaukee, Wisconsin; and Thomas K. Dyer, Incorporated of Lexington, Massachusetts. The consultant team for the State Airport System Plan Update is headed by TAMS Consultants of Chicago, Illinois. Other consultant team members are The al Chalabi Group, Ltd. of Chicago; Coopers & Lybrand of Boston, Massachusetts; and Larsen Engineers, S.C. of Milwaukee. TABLE OF CONTENTS 1. BACKGROUND INFORMATION 3 2. PLANNING ACTIVITIES UNDER TRANSLINKS 21 13 3. TRANSLINKS 21 ALTERNATIVE SCENARIOS 17 ATTACHMENT A: SUMMARY OF SCENARIOS 20 1. BACKGROUND INFORMATION Introduction The Wisconsin Department of Transportation (WisDOT) is currently engaged in a long range transportation planning process called Translinks 21. Translinks 21 outlines a comprehensive transportation system which will move people and goods efficiently, strengthen our economy, protect our environment, and support our quality of life. Translinks 21 includes analysis of intercity, multimodal transportation, referring to longer-distance trips over a variety of different modes of transportation. Air services for both passengers and cargo are important components of intercity transportation. This document is one of a series of similar documents discussing the various freight and passenger modes of intercity transportation. The first part of this paper provides background information and key issues dealing with air transportation. The second part discusses the various planning activities undertaken by WisDOT for the air cargo and passenger modes. The final section of this document outlines specific alternatives to be considered for future planning. Defining air passenger service For the purposes of this Translinks 21 analysis, intercity air passenger service refers to scheduled commercial air service (as opposed to general aviation involving private flights). Commercial air service provides possibly the most definitive form of intercity transportation, as very few trips by air would be considered local in nature. Commercial air passenger service is the most heavily used form of intercity public transportation in Wisconsin, with almost 3.6 million passengers enplaning at state airports in 1993. About 375 commercial flights arrive and depart each day from Wisconsin at the fourteen airports offering scheduled passenger service. Defining air cargo service Air transportation is also used to ship freight, especially mail and small packaged shipments. Air cargo services are extremely important to Wisconsin businesses and consumers. Since air freight currently accounts for less than I % of the total revenue ton-miles of freight shipped nationally, the mode may tend to be overlooked. However, the availability of quality air cargo services are becoming increasingly important, for two key reasons: Cargo shipped by air tends to be low in weight, but high in monetary value, and also extremely time sensitive; and Air cargo provides key freight services to international markets, an important frontier for an expanding economy. Intercity air -- Page 3 The three methods of shipping freight via air are defined below: Packaged freight consists of hand loaded packages which are carried in the belly of aircraft. It is the most time consuming method of loading and unloading aircraft. Igloos are pallets onto which packages are loaded and held in place by a net, cover, or blanket. This system allows for fast loading and unloading, as the igloo shape fits the internal wall contours of a narrow body airplane. Containers are metal or fiberglass boxes into which freight is placed for fast loading and unloading. Containers are produced in a variety of sizes and are usually designed for a specific airplane. Placing freight in containers also reduces handling time for intermodal transport. Wisconsin airports In all, there are over 700 aircraft landing facilities in Wisconsin, including private, public, police and military facilities which handle airplanes, helicopters and/or seaplanes. However, relatively few of these facilities handle air cargo shipments of offer scheduled commercial passenger service. These airports are shown in Figure 1 (next page). Passenger air service -- historical overview In 1938, sixteen airlines operated scheduled passenger service in the United States. In that same year the Civil Aeronautics Board (CAB) was formed to stabilize the industry. CAB actions had several objectives: good service and convenience, stability in pricing, and above all, safety. Safety was paramount because it was believed that if airline profit margins were small, then competitive pressures would discourage full financial attention to safety. The CAB certified the existing carriers and reorganized route structures so that 90% of city-pair markets in the U. S. were monopolies. After World War 11, the CAB controlled entry into the main routes. While keeping out new entrants, it extended existing firms' routes until by 1970 nearly all routes had two or three airlines. The CAB did permit entry into local and feeder service routes. Before 1976, fares were mainly set collusively in order to assure uniform prices. The airlines would present the CAB with agreed prices. The CAB altered the proposed rate levels on occasion, but it enforced the uniform basis of the fares. Airlines could only compete by raising service quality, especially by offering more frequent flights. The diversion of competition to service tended to induce rises in costs. Planes flew more frequently, half empty, and with fancier services. Studies have suggested that costs were raised some 30% to 40% as a result. Unregulated intrastate airlines in Texas and California, by contrast, had costs and fares that were much lower. Deregulation and its effects In 1975, the CAB began permitting some fare discounting and market entry. Wholesale deregulation Intercity air -- Page 4 Click HERE for graphic. occurred with the Airline Deregulation Act of 1978, which provided for freedom of route choice and fares for airlines. The act also allowed for freedom of entry for new firms. New carriers only needed to be certified as qualified to provide common carrier service. In 1958, the CAB was dissolved. Consumer protection and international route award authority, formerly CAB responsibilities, were transferred to the U.S. Department of Transportation. Intercity air -- Page 5 Deregulation has resulted in a large scale restructuring of airline service in the U.S. and Wisconsin. Given the option to choose their own route structure, most major carriers have developed hub-- and-spoke systems. In such systems airlines establish a few large airports as their centers of operations and use connections to other cities to feed those hubs. Other smaller carriers often provide feeder service to the large airlines' hubs. Current air passenger service in Wisconsin As of 1994, there are thirteen airports in Wisconsin which offer scheduled commercial passenger flights (three offer service only on a seasonal basis). Passenger activity is dominated by Milwaukee's General Mitchell International General Mitchell Int'l Airport (GMIA) handling about 54% of all passenger flights and 63% of all enplaned passengers in the state. Table 1 (at right) provides the number of daily departures and indicates seasonal service enplaned passengers for Wisconsin airports in 1993. Table 1: 1993 Passenger activity at Wisconsin airports Airport Daily flights Pass. enplaned Austin-Straubel (Green Bay) 122 272,910 Central Wisconsin (Mosinee) 22 128,711 Dane County (Madison) 47 564,571 Eagle River 1* not available Eau Claire 8 25,977 General Mitchell Int'l. (Milwaukee) 204 2,264,402 La Crosse 15 107,574 Marinette/Menominee 8 not available Minocqua 2* not available Outagamie County (Appleton) 22 186,724 Rhinelander 13 30,943 Sturgeon Bay 1* 1,500 Wittman (Oskosh) 2 9,607 * indicates seasonal service Links to the nation While the hub-and-spoke system has provided some productivity gains for the airlines, the effect on many non-hub airports was a reduction in nonstop, direct flights. In Wisconsin, the only airport with medium hub operations as defined by the Federal Aviation Administration is GMIA. Aside from the limited hub operations at GMIA, most air service to an from Wisconsin is routed through major national air hubs. Key Midwestern hubs are Minneapolis/St. Paul, St. Louis, Detroit, and Chicago's O'Hare International Airport. As shown in Table 2 (next page), GMIA's status as a medium hub airport means that it offers nonstop service to a number of national origins and destinations. Nonstop flights from other state airports are almost exclusively to destinations in the Midwest. Passenger enplanements Scheduled air carrier enplaned passengers for 1993 totaled nearly 3.6 million for the state of Wisconsin. This is a 2.2 % increase over 1992 levels, and continues an overall increase in Wisconsin enplanements since 1984. Since this figure indicates enplaned passengers only, total Intercity air -- Page 6 Table 2: Nonstop destinations from Wisconsin airports, 1994 To/from GMIA (Milwaukee) To/from all other Wisconsin airports Atlanta Boston Chicago Cedar Rapids, Iowa Charlotte Cincinnati Chicago Cincinnati Detroit Cleveland Columbus Duluth, Minn. Dallas Denver Escanaba, Mich. Des Moines Detroit Indianapolis Flint, Mich. Fort Lauderdale* Ironwood, Mich. Fort Myers* Grand Rapids Kalamazoo, Mich. Indianapolis Kalamazoo, Mich. Marquette, Mich. Kansas City Las Vegas Minneapolis/St. Paul Los Angeles Memphis Muskegon, Mich. Miami* Minneapolis/St. Paul Pittsburgh Muskegon, Mich. Nashville Rochester, Minn. New York City Newark Rockford Orlando* Philadelphia Phoenix Pittsburgh Rockford Saginaw, Mich. San Diego San Francisco South Bend, Indiana St. Louis Tampa* Toronto Traverse City, Mich. Washington, D.C. *indicates seasonal nonstop service passenger traffic at state airports would be approximately double this number to reflect those passengers deplaning. Statewide enplanements for 1993 increased at six Wisconsin airports over 1992 levels. Milwaukee's GMIA, the busiest of the state's airports, registered a 3.4% increase in passenger enplanements over 1992. Future prospects for air passenger service A number of issues at the national, regional and state levels could affect the future of air passenger service in Wisconsin. National issues In August of 1993, the U.S. Commission on Airline Competitiveness outlines several recommendations to President Clinton and the U.S. Congress concerning the future of air passenger services. Among the recommendations issued by the Commission are these: Ticket and cargo waybill taxes should be reduced to their pre- 1990 levels. If implemented, the levels of demand for passenger service should increase. Intercity air -- Page 7 The Civil Reserve Air Fleet (CRAF), which provides civil transport to meet emergency airlift requirements, should be maintained and fostered, to help support charter flight firms. The goal of changing the present air traffic control (ATC) system to a satellite-based navigation system should be pursued. Also, implementation of a technology called Global Positioning System (GPS) should be accelerated. GPS will allow for more direct routes, savings in fuel, and safer navigation, and is already used by waterborne carriers and the trucking industry. Aviation should be exempt from any increase in federal fuel taxes; aviation did receive a two year waiver. Regional issues Certain airports in Wisconsin, especially Wittman Field in Oshkosh, have suffered cuts in service from ownership and operational changes by air carriers. Of particular concern is the practice of some airlines using slots at Chicago's O'Hare Airport -- the major national hub -- to service long distance routes, instead of servicing feeder routes from small Wisconsin airports and other regional airports throughout the Midwest. This trend may be reversed through national legislation. Lobbying by the state of Wisconsin to preserve and possibly increase commuter slots at O'Hare that are used for servicing Wisconsin may be advisable. Another alternative is the establishment of an essential service program. State issues Each individual airport in Wisconsin faces a number of local concerns and issues regarding commercial air service. On a statewide basis, however, the introduction of more direct or nonstop flights to national destinations may be desirable. The development of GMIA as an alternative to the congestion at O'Hare is also a strategy which may need further development. Air cargo service -- historical overview Air cargo services and regulation Air cargo did not become a significant competitor in the freight industry until after World War 11, when several new firms were formed. Trained pilots and surplus aircraft were abundant, making entry into the industry easy and inexpensive. Many of these entrepreneurs knew little about business, leading to several bankruptcies among the plethora of new firms. In 1948, the CAB imposed regulations upon air cargo similar to those that existed for the air passenger industry. The CAB controlled which firms could transport air cargo, the routes each firm could serve, and the rates charged. Regulation of the air cargo industry also extended beyond air carriers, as trucking companies were not allowed to transport cargo by air. Freight forwarders were not permitted to own and operate their own aircraft, and were required to contract with carriers to provide lift. Intercity air -- Page 8 The CAB regulations did allow a provision that exempted planes under 7,500 pounds from the various regulations. In 1973, Federal Express was formed and operated with planes meeting the size limit. However, the small aircraft had high costs per revenue ton of cargo and were unable to transport large items. Even with these limitations, Federal Express was able to implement routes and develop a hub-and-spoke system. Deregulation In 1977, the federal government lifted the CAB regulations on the air freight industry. Route choices, aircraft sizes, rates, as well as the participation of freight forwarders were no longer restricted. Many carriers benefitted greatly from deregulation. Federal Express bought larger planes, advertised heavily, and greatly expanded its business. Other freight forwarders such as Airborne, Emery, and Purolator purchased aircraft and became, like Federal Express, integrated air carriers. Freight forwarders Freight forwarders, such as those listed above, were impacted significantly by deregulation. Prior to deregulation, freight forwarding services fulfilled three primary functions: To pick up and distribute shipments within a 25-mile radius of an airport; To consolidate small shipments to take advantage of lower rates for bulk movements; and To market air cargo services within their geographic area. Although forwarders could charter cargo aircraft, they were not permitted to provide their own lift by owning and operating aircraft. Surface transport beyond a 25-mile radius was reserved for Interstate Commerce Commission (ICC) regulated motor carriers, which were often not accustomed to providing the quick and flexible response required for ground support of air cargo. Such motor carriers were also prohibited from owning and operating cargo aircraft. While under regulation, one freight forwarder, United Parcel Service (UPS), did receive authority from the ICC to extend service beyond the 25-mile limit. After deregulation, these service restrictions no longer hindered any freight forwarders. As a combined result of air cargo deregulation in 1977 and motor carrier regulatory reform in 1980, the distinctions among the participants in freight transportation were diminished. One result has been for some of the larger air freight forwarders to operate their own cargo aircraft. An emerging pattern for freight forwarders with their own lift is to operate aircraft in hub-and-spoke route networks similar to those of commercial passenger airlines. As examples, Airborne operates a hub at a former Air Force Base in Ohio; Purolator operates a hub in Indianapolis; Emery has a hub in Dayton; and UPS has established a hub in Louisville. Intercity air Page 9 For air cargo operators, and particularly for those operators offering package express service, such hubs offer advantages similar to those for passenger airlines. Specifically, with a hub- and-spoke network, more city pairs and lower traffic density markets can be served with the same fleet than could be served if only single-plane direct service were offered. Air cargo and air passenger services In 1978, deregulation also occurred for the air passenger industry, leading to a number of changes for passenger carriers. One change was a focus on boosting revenue by filling the bellies of passenger flights with cargo. The marginal cost of adding weight in the form of cargo to scheduled passenger flights is relatively small. In contrast, all- cargo carriers must cover the entire operational cost of a flight through cargo revenue. Hence, the passenger airlines can often undercut the all-cargo firms in price. Air cargo traffic statistics Over the last twenty years, air freight carried nationwide grew slowly during the years of regulation. Then, after sustaining a low period during the early 1980's, the amount of air cargo carried in the nation increased by 80% from 1985 to 1992 (as shown in Figure 2 at right) Throughout these years, U.S. Postal Service mail traffic showed very steady growth, with annual fluctuations being the result of changes in other freight movements. Click HERE for graphic. At the same time, air cargo activity in Wisconsin has been more volatile and has grown less than the nation as a whole (Figure 3, next page). After declines in the 1970's and early 1980's, Wisconsin saw tremendous growth in air cargo activity from 1985 to 1992. Wisconsin air cargo tonnage increased by 163 % between these years, primarily due to increasing activity at GMIA. As with the national trends, mail traffic remained relatively steady through the years, with the major increases and decreases being felt in the general freight services. Intercity air -- Page 10 Click HERE for graphic. There were a number of significant events that contributed to the rapid growth of the air cargo market in Wisconsin starting in 1986, including these: Integrated air express carriers such as Federal Express started serving Wisconsin in 1986. This new industry, which is even newer to Wisconsin, is creating its own demand for overnight freight and mail under 70 pounds. Air express services enable companies such as Land's End and other retailers in Wisconsin to compete nationally and internationally for consumer demand on a whole new basis of shopping and delivery. The growth of businesses in Wisconsin such as Land's End has affected the demand for air cargo. The advent of just in time strategies of product delivery, especially in such Wisconsin businesses as automotive parts and medical products. The greater operating efficiency and lift capacity of newer aircraft, and the increasing competition among air carriers for freight services in recent years has created additional demand. Likewise, trucking companies and railroads are still learning how to compete with air express and have fallen behind competitively especially in guaranteed and overnight delivery services. Also, long haul trucking has declined in competitiveness due to rising costs and a shortage of drivers. In 1992, over 32,000 tons of freight were enplaned at Wisconsin airports, according to the Federal Aviation Administration (FAA). Nearly 77% of this total was attributed to air cargo services using GMIA. Other important airports for air cargo in the state are Dane County (Madison), Outagamie County (Appleton) and Austin-Straubel (Green Bay). Future prospects for air cargo activity Continued growth in the industry Many indicators point to continued growth nationally for air cargo activity. Air freight ton-miles Intercity air -- Page 11 as reported by membership of the Air Transportation Association (ATA) were up by about 4.5% in 1993 compared to the same months in 1992 (reported in an ATA news release, April 2, 1993). UPS reports double digit growth in its small package air express business. Other key industry representatives foresee future growth in air cargo activity. Management at Boeing, a major airplane manufacturer, sees several factors indicating expansion of the market (reported in Jet Cargo News, February, 1993): The world gross domestic product is expected to grow at about 3% annually; fuel prices should remain level in constant dollars; airline costs are declining because of efficiencies in equipment and operation; competitive pricing (lower yields) will provide market stimulus; and airline and air express networks are cooperating better, which portends even higher standards for traditional air cargo. The rate of future air cargo growth in Wisconsin is contingent to some degree by the growth or arrival of industries within the state that manufacture time-sensitive commodities. Government actions Although re-regulation of the air cargo industry appears an unlikely prospect at this time, other government actions can have a significant effect on this transportation mode. Changes in federal taxes will affect operating costs in transportation, especially concerning any competitive relationships between modes. Also, government initiatives for airport construction or improvements could also have a direct impact on air cargo services. Continued role for air passenger carriers The trend of passenger carriers using air cargo services as a source of revenue may also continue or even grow. This change reflects the retirement of many freight-only planes, while the number of wide-body passenger planes -- with higher cargo hold capacities -- may increase during this time. Expanding international markets The advent of the North American Free Trade Agreement (NAFTA) will increase opportunities for products to be shipped to and from Canada and Mexico. The removal of trade barriers may also mean that firms primarily serving domestic consumers (a declining portion of firms) could be more likely to import inputs used to manufacture their goods. Modal shift toward air The forces that have led to rapid growth in air freight in Wisconsin since the mid 1980's are likely to continue for some time. The modal shift we have seen toward air freight for high value, time sensitive commodities, for mail, as well as for international shipments will not stop soon. The air express market itself is becoming heavily competitive which will drive down prices and increase services, creating an even larger shift in modal choices. Intercity air -- Page 12 2. PLANNING ACTIVITIES UNDER TRANSLINKS 21 Concurrent airport planning activities Translinks 21 includes air passenger and cargo services as part of its analysis of the statewide, multimodal transportation system. However, WisDOT also is currently engaged in concurrent planning activities focusing specifically on the airport system. The State Airport System Plan Update WisDOT is charged by state statutes with preparing an airport development plan and modifying the plan in recognition of changing conditions. In 1986, the Wisconsin Department of Transportation published a comprehensive State Airport System Plan (SASP) entitled, Wisconsin Airport System Plan: 1986-2010. A separate plan for the seven southeastern Wisconsin counties was completed concurrently in 1986 by the Southeastern Wisconsin Regional Planning Commission (SE@C) and was subsequently incorporated into the SASP by WisDOT. Since the preparation of the plans in 1986, factors affecting airport system development have changed significantly. These factors include projections of population growth, economic growth, scheduled air carrier operations, air cargo operations, critical aircraft, and new federal and state initiatives. In response to these changes, the SASP is being update with the following purposes in mind: to provide a long-range perspective for investment decisions; to examine the advantages and disadvantages of various levels of service; and to evaluate investment issues best addressed from a system's perspective, such as minimum funding requirements to maintain existing facilities. WisDOT has contracted a consultant team to perform certain elements of the SASP update. Some of the individual tasks and activities of the SASP update include an update of demographic, economic and aviation forecasts; an airport classification system review; a facility needs analysis; an internodal and multimodal analysis; an environmental evaluation; an air cargo study; and a reliever airport study. Southeast Wisconsin regional airport plan In addition to the elements of the SASP update being performed on a statewide basis, SEWRPC is developing elements of the plan specifically for the seven county southeastern region of Wisconsin. This regional focus includes analysis of commercial air passenger services, general aviation, system level facility needs, and a reliever airport study. The consultant team is preparing the four elements mentioned above for the non-SEWRPC counties, and is also conducting the air cargo study for the entire state. SE@C is using the descriptive Intercity air -- Page 13 air cargo data, forecasts, and facility recommendations provided by the consultant team for developing integrated system level facility recommendations for southeastern Wisconsin. Translinks 21 planning issues Passenger planning issues With respect to the air modes, the focus of Translinks 21 is on scheduled air carrier service to and from the state, with other aviation issues being addressed in the SASP update. Among the issues addressed under Translinks 21 are the role of air passenger service in the statewide, regional and national transportation of Wisconsin citizens; and potential methods to enhance air passenger service in the state, possibly through increasing the number of direct and nonstop flights serving Wisconsin airports. Cargo planning issues WisDOT's planning through Translinks 21 includes consideration of the state's air cargo activity, and whether there are any roles for state policies and programs for this industry. Many issues and questions have been raised and are addressed in Translinks 21: Current airport capacity and the ability to handle predicted growth in air cargo activity; The effectiveness of Wisconsin's air assistance programs in responding to needs based on air cargo activity, as opposed to general aviation or commercial passenger traffic; The ability of air passenger carriers serving Wisconsin to provide concurrent air cargo services, given the current shortage of nonstop and direct flights to national destinations; and The ability of Wisconsin airports to meet the needs of international air cargo, particularly in light of NAFTA or other events which could increase the potential for international traffic. Current state aid program for airports Translinks 21 will analyze these and other issues in the context of determining potential roles for the state in regards to air transportation. WisDOT's role in air assistance programs include administration of the federal Airport Improvement Program (AIP) and a state aid program for airports. These programs provide capital improvement funding for airports in the state. Through these programs, WisDOT provides assistance to airports for a variety airport-related improvement projects. The goals of WisDOT's airport development strategy are to: maintain existing facilities of the state's airport system; expand facilities to meet the needs of commercial passenger airlines, cargo carriers and companies doing business in the state; and Intercity air -- Page 14 provide a balanced state air transportation system. Airport owners must "petition" the Secretary of Transportation by formal resolution for participation in the state and/or federal aid programs for capital improvement projects. A priority ranking system is used to select specific projects for funding from the requests by the airports competing for state and federal funds. Publicly funded airport development in Wisconsin is financed by federal and state user fees and municipal airport owner funds. Municipal sponsors' funds are normally derived from a combination of general revenues and airport revenues. Federal entitlement funds (from the Federal Aviation Trust Fund) are designated to primary commercial service airports based on the number of passengers enplaned at the airport. Additional discretionary funds are also available to these airports. Non- primary commercial service airports can compete on a national basis for discretionary funding within their category. General aviation airports must compete for a share of funds allocated to the state under a weighted FAA formula based one-half on area and one-half on population. Reliever airports are eligible to compete on a national basis for funds allocated to reliever airport projects only (such airports may be privately owned, but must be open to the public). Funding of the state aid program comes from the unified state transportation fund, which includes revenues from registration fees, fuel taxes paid by general aviation users and property taxes paid by commercial airlines. Currently, Wisconsin allocates $10.4 million annually to the state aid program. The federal AIP is funded at approximately $24 million annually. Benefits and costs of air service The Translinks 21 analysis includes determination of the benefits and costs of public investment in the state's air transportation system. Benefits of investing in air services There are numerous benefits to improving cargo and passenger air service in Wisconsin. Local firms are more likely to expand and create new jobs in Wisconsin. New or national firms are more likely to locate within the state. National organizations are more likely to choose Wisconsin for their conventions and events. Wisconsin tourism is likely to benefit with easier access for distant potential visitors. The primary reason shippers use the air mode is for its speed in delivering their product. Many Wisconsin shippers currently send their freight by truck to O'Hare in Chicago. Increased air services in terms of number of flights and capabilities (size limitations, refrigeration, etc.) as well as easier and quicker access to those services at state airports will enable Wisconsin shippers to increase their use of Wisconsin airports and save time. Increased passenger service reduces travel time for Wisconsin passengers (both business travellers and tourists). Intercity air -- Page 15 Consistency in service is also of great importance for shippers. Modem aeronautic facilities with sufficient capacity are essential for reliable service. Investing in air infrastructure is needed to provide the reliability of service demanded by shippers. Costs and other impacts of investing in air services The actual monetary costs of constructing and improving air facilities are high. Greater state spending on aviation may reduce the funds available for other modes. In addition to the monetary costs, air service has impacts on other aspects of transportation and society. For example, increased air service can create more frequent noise problems for citizens who reside near airports. Also, increased air passenger service could compete with other intercity passenger modes, causing passengers to leave other modes. Intercity air -- Page 16 3. TRANSLINKS 21 ALTERNATIVE SCENARIOS Through the analysis of Translinks 21, four alternative scenarios have been developed Alternative #1: Maintaining current policies and programs -- this alternative essentially continues current state programs at current funding levels. Alternative #2: Taking new directions with current funding -- this alternative shifts a certain portion of transportation funds from their current allocation for the highway program to other modal programs. Alternative #3: Financing better transportation and more choices -- under this option, new revenue is generated to allow expansion of both highway and non-highway programs. Alternative #4: Paying for premium mobility -- for this final alternative, even more new revenue is generated in order to develop a broader array of highway and non-highway transportation services in Wisconsin. Each of these alternatives has specific implications for the air transportation system in Wisconsin. The air transportation portions of each alternative are discussed below. All of the costs for each alternative are discussed in terms of Wisconsin's share on an annual basis, and as a 25-year total to cover the Translinks 21 planning horizon (1995-2020). Following the text is a one-page summary outlining all of the air program-related actions along with their associated costs for Wisconsin (Attachment A). Alternative #1: Maintaining current policies and programs Under this alternative, the state would continue the state aid program, retaining present project eligibility requirements. The state would continue to fund the program at a level roughly equivalent to the revenues generated by the ad valorem tax on commercial air carriers. Currently, the state's annual budget for this program is $10.4 million, yielding a 25-year Wisconsin total cost of $260 million. No additional funds are provided under this alternative. This alternative also assumes that the state would continue to administer the AIP, and that federal funding for the AIP would remain at current levels. At $24 million annually, the 25-year federal total is $600 million. Alternative #2: Taking new directions with current funding Although Translinks 21 proposes a broad shift of funds from highway to certain non-highway modes under Alternative #2, Wisconsin's state aid program for airports would continue at present Intercity air --Page 17 funding levels and eligibility requirements, as described in Alternative #1. Again, this would require an annual cost of $10.4 million for the state of Wisconsin, and a 25-year total of $260 million. Again, the state would continue to administer AIP funds, with the $600 million federal commitment to the AIP over 25 years being assumed. Alternative #3: Financing better transportation and more choices Under Alternative #3, Translinks 21 proposes a number of new actions for the state in regards to promoting and improving air transportation: Preserve slots for air feeder service from key Wisconsin airports at O'Hare through proactive intervention at the national level; Increase direct air connections between Wisconsin and national and international markets through state marketing, lobbying and promotional activities; Continue to develop GMIA as the third regional airport for the Milwaukee-Chicago-Gary metropolitan area, and expand its facilities as appropriate; Work with the Department of Development to market and promote the contribution of Wisconsin's airports in fostering economic development; Improve the interface between air and surface modes to provide a seamless system; Assist in the development of noise abatement plans and measures. Develop air cargo service standards for use in airport master planning. Develop specific air cargo related criteria for classifying airports and establishing funding priorities in the SASP Update. Most of these initiatives involve administrative functions, and would generally not be funded through the state aid program or the AIP. However, for Alternative #3, the state aid program would be expanded to include improvements specifically related to air cargo needs. Examples of projects would include construction of entrance roads, terminals or storage structures, and acquisition of cargo handling equipment. To support this eligibility expansion, the state aid program funds would be increased to $11.4 million annually. Over the 25-year planning horizon, the total Wisconsin cost is $285 million, or a $25 million increase over the current 25-year allocation. State administration of the AIP would also continue, with federal AIP funding assumed to remain constant at $24 million annually, or $600 million over 25 years. Intercity air -- Page 18 Alternative #4: Paving for premium mobility Alternative #4 includes all of the proposed actions of Alternative #3. In addition, several new initiatives would also be pursued: An essential service program would be created to provide or expand commercial passenger service to areas not presently served, or areas with a perceived service deficiency. The state would fully fund an additional parallel runway at GMIA to facilitate its development as a national and regional hub. Over the long-term, the state would develop an intermodal facility to link GMIA to planned high speed rail passenger services in the Chicago-Milwaukee corridor. Again, expansion of state funding for air transportation would be required to achieve these initiatives. For the GMIA runway, an estimated $91.6 million would be required to cover onetime capital costs. The air/high speed rail connection at GMIA would also require capital expense, but an estimate of this cost has not yet been made. For the other program actions, annual state funding for air transportation would be increased from the present $10.4 million to $12.4 million. This results in a Wisconsin 25-year cost total of $401.6 million for Alternative #4 (not including the air/high speed rail station), a 25-year increase of $141.6 million over current funding levels. Again, the federal AIP is assumed to remain at $600 million over the 25-year planning horizon, with the state administering the program. Intercity air -- Page 19 Click HERE for graphic. WISCONSIN TRANSLINKS 21 FOR MORE INFORMATION ON THIS TOPIC 21, CONTACT: JOHN HARTZ SUPERVISOR, MULTI-MODAL PLANNING UNIT WISCONSIN DEPARTMENT OF TRANSPORTATION PO BOX 7913 MADISON, WI 53707-7913 608/267-7751 FOR ADDITIONAL COPIES, CALL: OFFICE OF PUBLIC AFFAIRS, 608\266-3581
