Palomar Airport: How Gullible is the FAA?, Blog #46

The County wants to extend Palomar runway 900 feet east from 4900 to 5800 feet. 

The County says the runway extension costs $46 million.  And produces $115 million in “benefits.”  To receive FAA grants, the County plans to tell the FAA that the Palomar “benefit-cost ratio” is 2.47. [Kimley-Horn Feasibility Study Table 8D, page 8-6].  But the KH Study refutes the County’s contention. 

What is a BC Ratio and Why Does the FAA Need It?

The benefit-cost [BC] ratio is the value an airport improvement creates divided by the improvement cost.   Using the KH numbers, the Palomar 900-foot extension BC ratio = $115 million/$46 million = 2.47.  In other words, the County says the runway extension will produce two and a half times as much revenue as it costs.

An airport improvement value can be quite iffy.  But the cost equals the investment, operational, and maintenance costs over 20 years less any salvage value.

The FAA needs the BC ratio to decide which airports most deserve grants.  Palomar wants its BC ratio high to outrank other FAA grant applicants.  If Palomar miscalculates its ratio, the FAA wrongly diverts money from other airports.

Test 1: The KH Study Suggests the Palomar 900-Foot Extension BC Ratio is Less Than 1.0, Not 2.47

A BC ratio measures the added benefit of Palomar Airport with a longer runway.  Even without a longer runway, Palomar air traffic will grow.  Palomar operations (landings and takeoffs) in the late 1990s neared 300,000 per year.   Today, post-recession, Palomar has about half as many. 

Also, new air carriers want to fly Palomar.  If California Pacific Airlines [CPA] had FAA clearance, CPA would fly more than 10,000 annual Palomar operations.  CPA needs no runway extension.

Now compare KH Study Tables 8D and 8E on pages 8-6 and 8.7.   If the Alt B 900-foot extension is built but Palomar has no growth from the extension [only growth from the existing runway], then the Alt B Benefit/Cost ratio is 1.84.

Bottom Line: With this extension, the BC ratio is 2.47; without, the BC ratio is 1.84.  Subtracting 1.84 from 2.47, the BC ratio for the 900-foot runway extension added benefit is 0.63 or substantially less than 1.0.  In other words, the extension cost exceeds the added revenues generated.

Test 2: The KH Study Unrealistic “Additional Useful Load” Test

Petco Park, home to the San Diego Padres, holds about 66,000 fans.  Increase the stadium size by 18%, about the percent of a 900-foot Palomar runway increase.   The stadium now could hold 77,800 fans.

If the Padres play 80 home games, the added capacity = 80 x 11,800 = 944,000 more fans.   Tickets average $25.   Gee, the Padres make $23.6 million more per year.

Unlikely. The Padres will use the newly created capacity sporadically.  The Padres will be lucky to add $5 million annually.

Similarly, the KH Study numbers are unrealistic.  Look at KH Table 8B.  In 2011, Palomar had 5,116 corporate flights.  The Table says that if the runway were 5,800 feet, all 5,116 planes COULD carry more pounds. 

Based on such assumed increased payloads, KH Study Table 8D on page 8-6 says that the value of the 900-foot longer runway is about $64 million.  In other words, KH Table 8D assumes that all 5,116 corporate jets today and all future corporate jets at Palomar for the next 20 years will carry more cargo.

That ain’t gonna happen – unless perhaps the corporate jets are flying 944,000 new Padre fans to PetCo Park.  Why not?   See Blog #44 for reasons planes fly lighter.  Moreover, corporate jets mainly shuttle executives not cargo.

Can the County really sell its BC 2.47 ratio to the FAA?