Across the board spirit of cooperation. Numbers Summary. N

1
Improved National Airspace Operations, Users
Making a Business Case for Equipage

• Dave Jones
• Daniel ODonnell
• Randy Kelley
• Larry Sein
• James Miller

2
The Business Case for Free Flight

• Whats the big deal - its intuitively obvious!
• With all those delays it must be a big number, so
  lets get on with it!
• Lets tie it to a marketing project!

3
Whats the big deal - its intuitively obvious!

• If we can just get on with Free Flight we will be
  able to go back to having the sky all to
  ourselves
• All we need is
• Everybody to agree on what has to be done when
• Need a new rule book for pilots and controllers
• New ground systems
• Changes to aircraft systems
• Training for pilots, controllers and dispatchers

4
What should be intuitively obvious is BIG CHANGE

• With change comes resistance
• Decreased Comfort level
• Fear for job
• Technical complexity of all the pieces
• This equates to risk of failure

5
With all those delays it must be a big number!

• The suppliers must think so as the prices sure
  add up - the costs are HUGE!
• And of course the equipment must be paid for up
  front - Terms - Due in 30
• And those big number benefits are WAY- WAY OUT
  THERE IN THE FUTURE

6
Business Case Development - Initial Steps

• Analyze the proposed technology by performing a
  written review - Identify
• Strengths - competitive advantage
• Weakness - create benefits for others
• Opportunities - future cost avoidance
• Threats - do nothing risk regulation
• Develop a clearly defined statement of work
• Schedules tie cost and time to resources

7
Business Case Development - Measure

• Essential to quantify proposed benefits before
  and after CBA is complete
• Reduction in pilot training foot print
• Reduced fuel consumption
• Improved asset utilization
• Traditionally projects with the highest NPV and
  shortest ROI are selected

8
Business Case Development - Big Picture

• True safety enhancements can be tied to the cost
  of doing business and often indirectly pay for
  themselves
• Fleet commonality to increase safety, reduce
  training, spares, and maintenance costs
• Take future fleet mix into account and useful
  life - benefits differ by fleet type

9
Business Case Development -Challenges

• No commitment by all stakeholders to a common
  overall schedule
• The pioneer is not rewarded for early equipage
• Implementation of new technology on current
  fleets is cost prohibitive

10
Business Case Development - Risk Mitigation

• Obtain commitments from service providers to
  grant incentive pricing for early equipage
• Negotiate new aircraft purchases with favorable
  terms for retrofitting current fleets
• Form a consensus among alliance partners to
  leverage purchasing power

11
An average day this summer at United

• 2,400 departures
• 7,400 minutes of extra taxi out time
• 700 extra taxi minutes due to Ground Delay
  Programs at DTW, EWR, IAD, LAX, ORD, BOS, SFO
• 30,000 minutes of extra air time planned over
  great circle mileage
• 4,400 minutes actually flown over planned
• 1,800 minutes of extra taxi in time
• 8,500 extra cushion minutes carried in the
  schedule

12
Summary of Required Benefits Needed

• The same or better safety as 1999 levels
• Enable annual demand growth of 4-5
• Individual user concerns must have a voice
• Flight planning must be unconstrained
• Transition period from MIT to free flight must
  produce computerized trajectory optimization as
  well as conflict free paths
• Descents, climbs and airport throughput must be
  optimized for fuel burn as well as for time
  efficiency and conflict resolution
• User option to spend fuel to find smooth FLs
• Across the board spirit of cooperation

13
Numbers Summary

• No accidents
• 1.5M/day extra cost
• 0.5B per year
• Less than 50 on time arrivals
• Broken connections

14
BIG NUMBERS - But out of Sync

• Classic infrastructure investment
• Huge up front costs
• Few early benefits
• Long Payback period
• Does not match up well with Finances typical
  alternative investments

15
Full Datalink Retrofit--Cash Flow Summary
16
VDLM2 - Program Objectives

• Prevent loss of AOC data communications ca. 2003
  due to saturation of available VHF frequencies
• Provide infrastructure for continuation of
  growth in AOC communications due to new message
  applications
• Provide infrastructure acceptable to FAA for
  ATC datalink services ca. 2004

17
DATALINK Program- Major Steps

• VDLM2 - Airline Operational Control
• 4Q99 - Start forward-fit of new upgradeable
  datalink computers and VHF radios on new Airbus
  aircraft in lieu of present units
• 3Q01 - Start VDLM2 upgrade to datalink computers
  and VHF radios for all forward-fit aircraft
• All VHF radios purchased since 1997 are
  upgradable to VDL Mode 2
• II. VDLM2 - Air Traffic Control
• 2003 - Start adding ATC Datalink capability to
  VDLM2 forward-fit aircraft.
• 2003 - Start retrofit of VDLM2 and ATC Datalink
  on glass-cockpit aircraft not covered by
  forward-fit

18
UAL Datalink Upgrades Estimated Timelines
00
01
02
03
04
05
06
07
08-15
Increase AOC Datalink Capacity
ACARS
VDL- 2 ATN
Approval
Add Domestic ATC Datalink
CPDLC-1A
Approval
Upgrade Oceanic ATC Datalink
FANS-1
CPDLC-2
Approval

19
INVESTMENT THREAT

• The World Radiocommunications Conference (WRC) is
  a bi-annual conference where all manner of global
  spectrum allocation decisions are made. It is a
  forum of the International Telecommunications
  Union (ITU), a specialized agency of the United
  Nations (UN). As such, WRC outcomes have
  international treaty status, with no recourse
  until the following WRC, when new proposals can
  be brought forward. There is no appeal process.
• Free Flight Investments are impacted by WRC
  decisions.
• WRC - 97 showed the airline industry that we can
  longer afford to look the other way.

20
WHY GET INVOLVED?

• A. Problem ATC Gridlock now!
• B. Solution Improved airline
  operations through emerging
• Free Flight
  technologies and procedures.
• C. Roadblock The ICAO CNS/ATM foundation is
  being destroyed,
  even as new solutions are being
  implemented.
• D. Bottom Line We must defend our spectral
  Real Estate in order to survive.
• E. Doing Nothing Penalty Costs???

21
AIRLINE OPERATIONAL IMPACT

• Sharing aviation bands with inappropriate
  services could impair emerging aviation
  applications, i.e., ADS-B, RNAV, LAAS, WAAS,
  FANS-1, ETOPS 207.
• Harmful interference to critical, safety-of-life
  aeronautical signals may prevent world CAAs from
  allowing critical operations, thereby impacting
  our equipage ROI.
• Spectrum intrusion may force costly upgrades to
  current equipment, and complicate future avionics
  certification processes.
• The foundation for our growth is based on safe,
  unimpeded access to SATCOM/SATNAV signals.

22
HOW COULD ALL THIS OCCUR?

• The aviation community has been using the same
  systems for over 50 years -- fostering
  complacency.
• Frequency protection is not a traditional airline
  concern -- Technology is galloping past
  governmental regulatory processes and airline
  industry expertise.
• The aviation industry had been forewarned of the
  potential attack on aviation bands, but
  unprepared to fight the multiple levels of
  economic and political powers hungry for
  spectrum.

23
CONCLUSIONS

• The results of WRC - 97 set the stage for
  debates at WRC - 00. This time aviation was well
  prepared.
• All bands will again be under scrutiny in the
  future.
• New technologies bring new capabilities and
  responsibilities for the airlines.
• We must use it or lose it, according to ITU
  rules, and we must ensure our government
  organizations appropriately advocate our
  requirements for the long term.
• We must build on our current success, and become
  a permanent player in aviation coalitions that
  are working to shape our evolving operating
  environment.

24
Lets Solve it as a marketing project!

• Now we are getting somewhere!
• Marketing is always looking to improve the
  product
• Getting there on time, in less time should be the
  best improvement we can give the customer

25
The Market is DEMANDING a better product

• Our product is our schedule and the last two
  summers it has been sorely lacking
• Our challenge is to define and agree on the
  pathway to an improved product
• Then the Business Case will come, FOR THE
  MARKETING PROJECT