Lagon Airport Harvard Case Solution & Analysis



In September 1923, airfield was constructed at Jeffries, East Boston. In the year 1927, the first commercial flight from Boston to New York ran at the Boston’s airport. American Airlines offered daily service from Boston to New York as the demand for air travel increased in the late 1930s.  Logan was the 10th nosiest airport in the nation. Mass port was created by the state legislature to operate and manage the airport. In 1965, Boston’s port facilities and an international terminal were completed. Over the years for the rapidly growing demand for air travel, additional terminal, control towers and runway extensions were completed. Moreover, cargo was arranged in order to accommodate an expected increase in passengers. Further, renovation of terminals is being done according to the modernization program; runways and air traffic control facilities were also involved. In 2001, Boston’s Lagon airport was ranked as the fifth most significantly delayed airport in the country. Projected demand for the use of the Lagon airport is expected t increase from 510000 to 656000 passengers in 2015.


There is a problem faced at the Lagon airport that is delays in landing and take-off. Delays occurred due to the adverse weather conditions and delayed percentage of aircraft has increased from 5% to 12% and operations dropped down to 78-88 per hour; whereas in normal circumstances operations an hour is 118-126. When less than three runways were used; then delays generally occurred and in the winter the most serious problem was the strong winds from northwest. If the northwest winds were moderately strong then only two runways could remain in operation and if northern winds were serve then only one runway was in operation; consequently, the total operational capacity dropped to 40-60 per hour.

To overcome this problem, two options are being considered, which is that either we will go for the additional runway or we will go for peak period pricing. If Lagon airport will go for an additional runway then it will be able to expand its capacity and at least two runways will be in operation at all the times. If the Lagon airport chooses to go for the peak period pricing, then they will charge higher rates during the high capacity utilization in order to smooth the demand.



PART A: Under the assumption that there is normal, good weather capacity and load factor of the passenger is 70%; then we calculate the per plane delay times under the three arrival rates. For per plane delay times, we calculate the delay times by (60/50) and delay per plane using the average delays of 47.5 per 1000 flights through which we get how many plane delay on the arrival rate of 50 per plane per hour (i.e. 2.375); by multiplying the delay times with delay per plane, we will get the per plane delay times. For all the arrival rate of 50, 55, 59 per plane, delay time per plane is 2.85.

Along with the per plane delay time, delay cost is also incurred so in order to find the delay cost; we will calculate the operational and passengers delay cost. Operational and passengers delay cost is also calculated as per respective arrival rate of per plane for the 19 seats planes, 150 seats planes, regional jets of 50 seats planes and value of passengers. (Please refer Q1 of Excel sheet for operational and passengers delay cost).

PART B: The FAA’s definition states that in case the flight arrives or departs more than fifteen minutes then the flight is delayed. By using this definition, we can calculate the operational as well as passengers delay cost. The answer of operational and passengers delay cost for all the arrival rates that is 50, 55, 59 per plane is 0. So this represent that the FAA’s definition is less reasonable because even if the flight takes less than 15 minutes still the delay occur and cost incurred will also be associated with the delay.

PART C: There are two peak periods during which fixed landing fee jumped 780% and there are the four shoulders before and after peak hours in which fees jumped 700%; however, this policy is a dramatic one because in actual passenger setting capacity is increasing but the policy is resulting in 28% reduction in peak period flights. If we reduce the arrival rate during heavy demand then it will be an effective way to reduce the cost of over scheduling as in the peak period, demand will decrease and due to this associated cost of delay cost will decrease as well because if less ................................

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