AIRPORT RESEARCH

The Problem of Uncertainty in

Airport Master Planning
Airport strategic planning (ASP) focuses on the development of plans for the medium-term and long-term
development of an airport. Strategic planning is defined as ‘the managerial activities that produce fun-
damental decisions and actions that shape and guide what the organization is, what it does, and why it
does it’ (Bryson 1995: pp. 4-5, as cited in Bryson 2004). Strategic planning can be done in many differ-
ent ways. In airports, the dominant approach is airport Master Planning (AMP), which results in a Master
Plan that ‘presents the planner’s conception of the ultimate development of a specific airport’ (ICAO,
1987, pp. 1-2). In the US, the FAA has set up strict guidelines for an AMP study (FAA, 2005 and earlier
versions). Internationally, IATA reference manuals as well as books about airport planning by leading
scholars heavily influence AMP practices (e.g. ICAO, 1987; de Neufville and Odoni, 2003; IATA, 2004).

By J.H. Kwakkel

Uncertainty in Master Planning
A crucial challenge in ASP is how to deal
with uncertainty about the future. It is nec-
essary to take into account the future world,
which the organization will operate in, in
order to make decisions that shape and
guide what an organization is, what it does,
and why it does it. In case of ASP, uncertain-
ty is even more important, given the fact that
decisions made today can shape and influ-
ence the airport performance for many years
to come. For example, the decision to build
a new runway at a specific location will
likely influence the airport more than fifty
years from now. It is therefore necessary to
have a thorough assessment of potential
developments that influence the future in
which the airport will operate, if one wants
to plan effectively. In AMP, however, only
demand uncertainties are considered, which
are assessed through forecasting. Often,
only a single demand forecast is created, and
a Master Plan is designed based on that sin-
gle forecast.
Criticism of Master Planning
AMP and demand forecasting as the
approach for the treatment of uncertainty in
ASP has come under increasing criticism
(see for example, de Neufville, 1991a;
Walker, 2000; Flyvbjerg et al., 2003). The
demand forecasts are practically always
wrong, and Master Plans are often nearly
impossible to implement. As such, AMP
often has seriously negative consequences
for the long-term development of an airport,
including an inability to implement the plan,
severe capacity constraints due to unantici-
pated (noise) regulations, an inability to
meet aviation demand, and unnecessary
investments in airside and landside facilities.
Finding ways to deal with the many uncer-
tainties surrounding the future of the air
transport system is especially urgent in light
of the fact that, in the coming years, the con-
text in which airports operate is expected to
become even more dynamic. Demand for
air transport is expected to increase signifi-
cantly, but there is uncertainty regarding
numerous aspects, such as the extent of the

Picture 1: Artists impression of Berlin’s new BBI Airport. Courtesy Berlin Brandenburg Airport

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increase, on which routes, by which carriers,
what the noise contours will be, what the
regulatory regimes will be, etc. The United
States, which was the first country to liber-
alize its air transport market, is already fac-
ing these issues. Hub operations can move
from one airport to another, and airports are
increasingly called upon to comply with the
wishes of airlines (Dempsey et al., 1997; de
Neufville and Odoni, 2003). The European
Union started to liberalize its internal market
in the mid 1990s, and this resulted in dra-
matic changes in air traffic demand. In addi-
tion, airports and airlines are being priva-
tized, which introduces new stakeholders
(e.g. within the financial market) and new
requirements for airport performance. These
developments lead to uncertainties about the
future performance of the airport (e.g.
capacity, delays, noise and financial per-
formance), uncertainties about the robust-
ness of the policies airport decision-makers
want to implement, and uncertainties
regarding the implementability of these
policies. Together, these uncertainties ham-
per ASP and make the traditional AMP
approach even less appropriate.
The Challenge of uncertainty in ASP
A general definition of uncertainty is ‘any
departure from the unachievable ideal of
complete determinism’ (Walker et al.,
2003). Uncertainty is not simply a lack of
knowledge, since an increase in knowledge
might lead to an increase of knowledge
about things we do not know and thus
increase uncertainty ( ). The traditional way
to deal with uncertainty in airport planning
is through AMP. Based upon a limited num-
ber of forecasts of future traffic demand, a
static plan is designed that can accommo-
date the forecasted traffic demand in an ade-
quate way. It is assumed that the airport
authorities are able to independently imple-
ment the plan without any opposition from
other stakeholders (Dempsey et al., 1997;
Burghouwt and Huys, 2003).
Master Planning
Airport Master Planning (AMP) is the
process of developing a Master Plan.
According to ICAO, the United Nations
body for civil aviation, ‘an airport Master
Plan presents the planner’s conception of the
ultimate development of a specific airport’
(ICAO, 1987, pp. 1-2). This definition is
also used by the International Air Transport
Association (IATA) (IATA, 2004).
According to the FAA, the United States
regulator of aviation, ‘an airport Master Plan
is a comprehensive study of the airport and
typically describes short-, medium-, and
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long-term plans for airport development’
(FAA, 2005)’, which is almost identical to
the ICAO definition.
The goal of a Master Plan is to provide a
blueprint that will determine future airport
developments (Dempsey et al., 1997;
Burghouwt and Huys, 2003). As such, it
describes the strategy of an airport operator
for the coming years, without specifying
operational concepts or management issues.
A typical Master Plan, according to the
FAA, should contain (i) a technical report
containing the analyses conducted during
the development of the Master Plan; (ii) a
summary report that brings together facts,
conclusions and recommendations relevant
to a wider public; (iii) an airport layout plan
drawing set which contains a graphical rep-
resentation of the proposed developments in
the Master Plan; and (iv) a website and pub-
lic information kit for providing information
about the Master Plan to the public (FAA,
2005). The time horizon covered in a Master
Plan can vary, depending on the situation of
the airport for which a Master Plan is devel-
oped. A short-term Master Plan has a time
horizon of roughly five years, a mid-term
Master Plan has a time horizon of six to ten
years, and a long-term Master Plan has a
time horizon of 20 years (FAA, 2005).
AMP follows a strict linear process. The
most commonly used guidelines (e.g. FAA,
2005; ICAO, 1987; IATA, 2004) are funda-
mentally the same, although they differ in
detail (de Neufville and Odoni, 2003). The
key steps in an AMP process are:
> Analyze existing conditions;
Picture 2:Berlin Tempelhof will be closed-down in favour for the new BBI Airport
> Make an aviation forecast;
> Determine facility requirements;
> Develop and evaluate several alternatives;
> Develop the best alternative into a detailed
Master Plan.
Forecasting
The aviation forecast is the main premise for
a new Master Plan. By comparing the fore-
cast with the existing conditions, an assess-
ment can be made whether there is a need
for new or expanded facilities. As such, avi-
ation forecasting is the main way in which
uncertainties about the future context, in
which an airport operates, are handled. A
forecast is a statement, usually in probabilis-
tic terms, about the future state or properties
of a system based on a known past and pres-
ent. The basic concept of forecasting is sim-
ple: past trends, based on time series or the-
ories about underlying mechanisms, are
identified and extrapolated forward. In
mathematical terms, a relationship between
independent variables (X1, X2, …, Xn) and
the dependent variable (Y) is developed:
Y = f(X1, X2, …, Xn)
that correlates well with past performance.
This formula is then extrapolated to obtain a
forecast for the year of interest. According to
the FAA, forecasts should be realistic, based
on the latest available data, reflect the cur-
rent conditions at the airport, supported by
information in the study, and provide an
adequate justification for the airport plan-
ning and development (FAA, 2001).
How are forecasts made? The first step in
making forecasts is to identify the depend-
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ent variables (the Y’s) to forecast.
Depending on the relevant issues and poten-
tial problems of a particular airport, the vari-
ables to estimate through forecasting gener-
ally include aircraft operations, passengers,
air carrier enplanements, passenger
enplanements, air carrier and commuter
operations, tons of cargo, and aircraft oper-
ations by type of aircraft. The next step is to
gather and analyze the data on the related
independent variables (the X’s), which are
assumed to be necessary to forecast the vari-
ables of interest. Relevant data sources
include previous forecasts for the airport,
historical aviation data, forecasts of other
airports in the region, forecasts for air travel
in the region, and socio-economic data.
These data should be analyzed to see
whether they are appropriate to be used and
not ‘contaminated’ by unique events, such
as a major sport event that created a tempo-
rary major boost in air traffic. The final step
is to select a forecast method, such as regres-
sion and trend analysis or share analysis, and
apply it in order to obtain an aviation fore-
cast of Y for some future year.
Forecasting is based on the idea of identify-
ing trends and underlying mechanisms,
based on the past and the present, and
extrapolating them forward. However, it
might be that the phenomenon you want to
forecast has recently gone through changes,
or is expected to undergo changes (e.g. trend
breaks). In such situations, it is unwise to
simply extrapolate based on past trends and
known underlying mechanisms. In such sit-
uations, forecasters sometimes use trend
break scenarios to produce forecasts that
deviate from past trends (de Neufville and
Odoni, 2003).
The inadequacy of airport Master
Planning
AMP, as the main way to treat uncertainty,
has proven to be ineffective. There are many
examples of Master Plans that turned out to
fail in practice (e,g, Nelkin, 1974; Nelkin,
1975; Szyliowics and Goetz, 1995; Demsey
et al., 1997; de Neufville and Odoni 2003;
Cidell, 2004). One example will be dis-
cussed here.
An illustration: Amsterdam Airport Schiphol
In 1995, after a two year process, which is
known as the so-called physical planning
key decision Schiphol (PKB Schiphol), a
number of major decisions regarding the
future of Schiphol Airport were made. The
main objective was to facilitate the process
of Schiphol becoming a mainport, while at
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the same time improve the quality of living
in the area surrounding the airport.
Improving the quality of living should be
measured in terms of noise, emissions, and
third-party risk compared to the 1990 situa-
tion. Until 2003, only noise would be con-
sidered. Emissions and third-party risk
would become relevant after that. The plan-
ning period was 20 years, from 1995 till
2015. Forecasts were created based on three
scenarios in order to come to a decision. It
became clear during the development of the
PKB that in only one of the three scenarios
both objectives could be achieved. The final
PKB was based exclusively on the aviation
forecasts derived from this scenario. The
key decisions of the PKB were (Dutch
Parliament, 1998-1999):
> Schiphol would be allowed to grow into a
small hub airport, with KLM as its hub car-
rier that should serve roughly 40 to 45 mil-
lion passengers in 2015;
> A fifth runway would be built;
> Until 2003, which was the expected year
the fifth runway would open, the noise situ-
ation should not get worse than the situation
in 1990, which implies a maximum of
around 15,000 houses in the high noise con-
tour (the so called “stand still” principle);
> After 2003, the maximum number of
houses in the high noise contour would be
lowered to 10,000 houses;
> An insulation program for houses would
be implemented within the high noise con-
tour;
> A study into the development of Lelystad
airport to relieve Schiphol;
> A high-speed rail link from the
Netherlands to Belgium and France, and
from the Netherlands to Germany, would be
developed that would pass Schiphol, in
order to reduce the number of short-haul
flights from Schiphol.
As it turned out, the limits of the noise reg-
ulations were reached in 1999, leading to a
temporary shutdown of the airport, and the
passenger limit was reached in 2005. The
two-year costly process that aimed at devel-
oping a plan adequate for 20 years turned
out to have a lifetime of less than ten years.
How did this happen? The model used to
create the demand forecast was based upon
a relationship between GDP and traffic
demand that represented past experience
quite well. However, due to a number of
trend breaks that happened after the fore-
casts had been made; this relationship no
longer produced good predications, result-
ing in forecasts significantly lower than the
traffic demand actually experienced. The
unexpected high rate of growth of air traffic
demand was due to (i) an unanticipated
rapid growth of the hub network of KLM,
leading to an increase in transfer passengers;
(ii) an alliance between KLM and
Northwest Airlines, which fed passengers
from both airlines through Schiphol; and
(iii) The European Union’s liberalization
process of the air transport industry, which
increased competition among air carriers,
lowering air fares, and paving the way for
low-cost carriers.
The inadequacy of aviation forecasting
What is clear from the foregoing illustration
is that AMP does not succeed in reaching its
goals. Plans are quickly obsolete and are not
robust with regard to the future. In other
words, uncertainty (e.g. aviation demand,
regulatory context, technological break-
throughs, and stakeholder behavior) is a key
source of problems in ASP.
One reason that AMP does not achieve its
goals is that the only uncertainties that are
considered are demand uncertainties, which
are addressed through forecasting.
However, forecasting has come under
increasing scrutiny. Criticism can be split
into two categories: forecasting failure due
to bias, and forecasting failure due to uncer-
tainty. Forecasters’ bias contributes to fore-
cast failure in several ways.
> Forecasters have a tendency to misjudge
the relevance of (recent) data (Porter et al.,
1991);
> Forecasters often have a poor database
that has internal biases caused by the data
collection system (Flyvbjerg et al., 2003);
> Forecasters often integrate political wish-
es into their forecasts (Flyvbjerg et al.,
2003);
> Forecasters use data from their home
countries (instead of the local areas) for cal-
ibrating their models (Flyvbjerg et al.,
2003);
> Forecasts by project promoters may be
even more biased, since the promoter has an
interest in presenting the project in as favor-
able a light as possible (Flyvbjerg et al.,
2003).
Forecasting failure due to uncertainty man-
ifests itself in several ways. As pointed out
by Flyvbjerg et al. (2003), discontinuous
behavior of the phenomena we try to fore-
cast, unexpected changes in exogenous fac-
tors, unexpected political activities, and
missing realization of complementary poli-
cies are important reasons for forecasting
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failure. Ascher (1978) sees faulty core
assumptions as a prime reason for forecast-
ing failure. It refers to the fact that since the
phenomenon we are trying to forecast is not
completely understood, forecasters have to
make assumptions about the data they need,
the formula to be used, etc. (Porter et al.
1991). The use of historical data as a means
of testing the adequacy of a given formula
does not solve this problem, for there are an
infinite number of formulas possible that
can match the given historical data. Related
to this is the fact that, in order to forecast a
dependent variable Y based on a formula Y
= f(X1, X2, …, Xn), we need forecasts for
the future values of the n independent vari-
ables. Instead of forecasting a single vari-
able, we end up forecasting n variables.
Even if we were able to address the prob-
lems identified under the label of forecaster
bias, this category of forecasting failure, due
to uncertainty, implies that forecasting
always can go wrong. By looking at the past
and assuming that past behavior will contin-
ue in the future, we overlook a large part of
the uncertainty that, when it manifests itself,
will lead to trend breaks.
Closing Remarks
In conclusion, until now, a static reactive
approach, in the form of Master Planning, to
Airport Strategic Planning has dominated
the airport planning and design process. In
traditional AMP, the uncertainties are often
ignored, oversimplified, handled probabilis-
tically, or handled through the use of fore-
casts and scenarios. These methods have
Picture 3: Computer animation of BBI’s new terminal. Courtesy Berlin Brandenburg Airport.
e-zine edition, Issue 39
proven insufficient for handling the uncer-
tainties airports face, since they assume that
the future is known to a degree that is suffi-
cient for making appropriate decisions.
Hence, finding new ways to deal with the
different uncertainties surrounding the
future is a key issue in air transport research.
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About the Author
J.H. Kwakkel is PhD researcher at the Faculty of
Technology, Policy and Management of the
Delft University of Technology.
j.h.kwakkel@tudelft.nl
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