Palomar Airport: Should the FAA & County Ignore the Kimley Study Economic Forecasts? Blog #56

As noted last week, the County Palomar Runway Extension Kimley Study, read closely, does not justify a longer runway.   Even if the extension assumptions were sound, the real FAA “benefit to cost” ratio of less than 1 does not satisfy FAA mandates.   Today we ask if the Kimley assumptions are sound.

Jan Hatzius the chief economist of Goldman Sachs gave his opinion of economic forecasting in 2012: “Nobody has a clue.  It’s hugely difficult to forecast the business cycle.” [”Why you should ignore economic forecasts,” by Larry Swedroe of Moneywatch, November 26, 2012.]  The same article notes:

"The majority of economists didn't 'predict' the three most recent recessions (1990, 2001 and 2007) even after they had begun.  … Since 1990 economists have forecasted only two of the 60 recessions that occurred around the world a year in advance."

Add to this perspective Palomar’s poor  financial performance recently.  You have to wonder when the Board of Supervisors will ask Kimley tough questions.  

Did Kimley Test its Assumptions?

Kimley says longer runways let corporate jets carry more payload (fuel, executives, and cargo).  In Kimley’s words, Palomar jets can operate at 90% rather than 60% capacity on longer runways.  Hence, when a 5800-foot Palomar runway replaces the 4897-foot runway, expect economic plenty.

Cargo Carriage.  As Kimley knows, ships, trucks, and trains carry 99% of cargo to, from, and within the U.S.  Air freight rates are simply too expensive.  (See “The Global Economics of Cargo by Elliott Morss, Nov. 30, 2013).  And, many challenges confront cargo air carriers, not the least of which is the high cost of fuel. (See “High 5: Air Cargo’s Top Challenges by Lisa Harrington,” Inbound Logistics, Oct/ 2006.)

Carrying Executives.  Will corporate jets carry more executives if Palomar has a longer runway?  Seldom.  Why?  How many executives does it take to deal?   Especially when executives can deal by video conferencing and simply avoid a business trip as corporate resources dwindle.  

Increasing Corporate Jet Distances.   What Kimley really says – its key assumption driving its economic “longer runway revenue” Study projections – is that longer Palomar runways permit planes to load more fuel and fly farther. To China. To South America. To far-off U.S. destinations.

No doubt, some jets would benefit from a longer Palomar runway.  But most would not.  As Blog 44 noted in part, a few reasons aircraft using Palomar will choose to carry less fuel and land within existing Palomar runway limits include:

• Heavier jets guzzle fuel and cost more to fly; carry less fuel, save money.
• Heavier jets create more pollution and greenhouse gases.
• Most flights to and from Palomar are well within the corporate jet fuel range.
• Many long distance jet  flights would require refueling even if fully fueled at Palomar.   Consider an analogy.  You drive from Palomar to Sacramento.  Fill up in Carlsbad if you want.  You will still have to refuel before you reach Sacramento.  The same is true for many corporate jets headed for China, Europe, or South America.

Kimley numbers assume all corporate jets COULD carry more payload at longer length runways.   Not how many jets WOULD carry more payload.  For this reason, the Kimley longer runway revenue projections are even worse than the “less than 1” benefit-cost ratio that Kimley seems to concede.

Should the FAA ignore the above factors when considering Palomar grant applications when other airports in and out of San Diego make far stronger cases for grant funding?