CHAPTER 14

Step D: Develop Options for Improved Robustness

Generating Ideas for Improved Robustness

Although presented as a separate step, it is recommended that this part of the process be included as a follow-on to the engagement process in Step C. Having determined in Step C the issues arising from the scenario forecasts and areas of concern in current plans, the natural next step is to discuss how these can be addressed, including potential remedies. This should result in a more motivating and productive engagement process to focus on practical ideas to address the possible shocks. It will also reduce the time, resourcing, and scheduling required to bring the relevant participants together.

In much of the literature on strategic risk, responses are categorized into one of four categories:

• Avoid (or exploit for positive shocks),
• Transfer (or share for positive shocks),
• Mitigate (or enhance for positive shocks), and
• Accept.

These are elaborated further in Table 6, which draws on past research in ACRP Report 76 (Kincaid et al. 2012) with additional commentary added. The participants should consider whether the overall approach to the impacts of a shock event falls into one of the four categories, which can then guide further development of the response strategies. For example, the avoid and mitigate responses can involve a mix of planning, financial, marketing, and operational responses while transfer and accept are more likely to involve more corporate (e.g., joint ventures) or financial (e.g., insurance, build up of financial reserves for contingencies). Airport-specific avoid and mitigate responses are discussed in the following subsection. In some cases, the approach may not fall neatly into one of the four categories or may span more than one. For example, an insurance policy may have a significant deductible, so this option would be a combination of transfer (for the insured amount) and accept (for the deductible).

Another consideration is the characteristics and value-added of a response option:

• No- or low-regret options. Decisions or actions that will yield benefits regardless of which scenario materializes and generally make good business sense. For example, an open terminal design that allows great flexibility in the use of the space will provide benefits beyond just coping with the traffic impacts of shock events. Similarly, the use of swing gates or MARS gates (described first in Chapter 8) not only provides greater flexibility in managing different traffic mixes but could also reduce overall space requirements.
• Reactive options. These are actions that would be taken when the shock event occurs. Often, they are specific to one event or a type of event (e.g., the loss of a major carrier, a terrorist attack, etc.). Although reactive, they can be thought out ahead of the event and thus reduce implementation time if and when needed. Airports can develop response plans for specific

Table 6. Categories of risk and shock event responses.

• types of shock events similar to the emergency response plans that airports develop for runway incidents, fires, and other emergencies. These response plans are discussed in more detail in the next subsection.
• Preemptive options. These are options that require changes to the airport planning and strategy and may take considerable time to implement. They may also have substantial cost implications. For example, a modular terminal design that allows incremental development of the terminal in response to traffic growth and enables the pausing or acceleration of capacity growth may involve greater design and construction costs than if the terminal were to be built in one go.

To expand on the modular design, this approach may involve higher total costs as additional construction elements are required. A temporary end wall might be required at the end of the first phase of the building—a wall that would then need to be removed when the next phase is constructed. However, the present value of the construction costs of a modular design may be lower, as much of the expense is deferred to the future. Depending on interest rates, the present value computation of a modular design may be lower than building the entire terminal in one go. There are other advantages of modular design—such as the ability to incorporate new technologies and new nonaeronautical revenue opportunities—and to address future changes in regulations that would require an expensive refit of an all-in-one-go approach. The refit costs of new security regulations and required equipment after 9/11 are examples of how modular designs can better accommodate changing requirements for physical space planning compared to retrofitting existing facilities and the cost to change design plans not meant to be modular.

The no-regret and reactive options will generally be relatively straightforward and fairly low-cost to implement. The preemptive option may be more contentious with higher financial commitments, requiring further analysis and scrutiny. Such analytical approaches are set up in ACRP Report 76, including expected net present value and cost-benefit analysis, which weigh the cost of such mitigation measures against the benefits in conditions of uncertainty (Kincaid et al. 2012).

Airport-Specific Response Strategies

There are various strategies and actions airports can and do take to address uncertainty. While not specific to shock events, some of these apply to such events. Based on a review of previous research, observation at airports generally, and the experience of the research team, these strategies are summarized in Figure 37, ranging from strategic to technical. Further details on these approaches were discussed in Part II. The list is not exhaustive and is designed to act as a starting point for developing options. The specific circumstances of the airport and the shock risks it faces may lead to other solutions.

Preparedness and Response Plans

The development of shock event response plans has been raised in the previous sections and is discussed further in this section. The development of response plans is a relatively low-cost way of enhancing robustness to shock events and has parallels with the approach already used by airports to respond to emergencies and accidents.

Airports are already familiar with the development of emergency response plans (ERPs). Currently, these generally address safety and security issues, although there are other types of events that they have to address as well.

Some types of ERPs are a regulatory requirement. FAA 14 CFR § 139.325 – Airport emergency plan states the following.

The development of an ERP involves identifying the resources that will be needed, where these can be obtained, the staff needed, and clearly stating the duties and responsibilities of the individuals (and organizations) in the response team. It also identifies actions and their sequence. This is a method and process that addresses certain types of shock events. It is a process that could be used to address other types of potential shock events. Item b (5), natural disaster, which is listed in the regulation, is a type of shock event.

As currently constructed, most ERPs focus on operational and human resource issues and tend to be largely related to the immediate response required in an emergency. These have been very successful in preparing airports for various types of emergencies and have been invaluable in practice. While they are focused on an immediate response to certain types of shock events, they also address some medium-term issues. For example, to mitigate the harm from an emergency, the ERP development process may identify the need for human and physical capital. Management may recommend and the board approve procurement of emergency response equipment or may undertake certain changes to the physical layout of the airport. Of particular importance is identifying training and skill-maintenance needs. In some cases, additional staff positions may be identified and hired. These are resources that, hopefully, may never be used, but their positioning will be invaluable should the shock event occur.

For certain types of potential shock events, an ERP approach would be a familiar and appropriate starting point. Additional steps would be required. For example, an ERP to deal with a major earthquake that destroys key parts of the infrastructure is focused on immediate-term actions. The ERP, however, typically does not address the medium-term restoration of the infrastructure. Incorporating shock events into airport planning would need to address the medium-term needs.

Two other modes of transport guide some aspects of short- to medium-restoration of capabilities: highways and railroads. Railroads experience floods or other weather-related or natural disasters that destroy sections—sometimes large sections—of track infrastructure (earthworks, ties, rails, ballast), including bridges. This is also true of state, county, and local highway departments. A number of these organizations identify, as an advance contingency, lists of potential external contractors and suppliers and prequalify them so that they can quickly be engaged for remedial supplies and work. A complementary approach is to identify and track availability of certain premade structures. Some highway departments keep track of bridge truss sections, for example, which may have been surplus to a recent construction project or which have been fabricated but not yet deployed on new infrastructure. This provides a starting point for remedial resources. In the airport context, an example might be tracking items, such as loading bridges, that were replaced when a terminal expansion was undertaken. Such resources could be accessed quickly to allow full operations to resume.

An ERP generally does not address financial issues. A major earthquake that destroys an airport and its region may result not only in financial capital needs for restoring airport capacity but also may suppress passenger and cargo demand for a prolonged period. Hurricane Katrina in 2005 left Louis Armstrong New Orleans International Airport relatively unscathed, which allowed it to serve as critical infrastructure for the disaster response. However, the destruction of major areas of the city resulted in reduced passenger traffic for several years, as documented in Part II. Many major conventions, for example, could not be hosted, and important parts of the population relocated to other regions, in many cases for years, while housing stock was reconstructed. Other global examples are found in the earthquake in Christchurch, New Zealand, and a tsunami in Sendai, Japan.

Planning for shock events should go beyond the immediate-term scope of an ERP and address financial and human resource resiliency. Airport charging structures and policies may