Decision Making Analysis to Assess the Silent Aircraft Project
University of Cambridge - Judge Business School
University of Cambridge, Judge Institute of Management Working Paper No. 13/2004
There is increasing concern about aircraft noise as a result of the rising demand for air transport. According to the US National Science and Technology Council, the environmental impacts of aircraft, including serious noise problems, are likely to limit air transportation growth in the 21st century. This paper presents a simple decision making model that examines whether it is worth trying to developing a silent aircraft in order to solve the current aircraft noise problems. The model is designed to capture a first approximation of all aspects of the decision, and the findings give a broad picture of the current state of silent aircraft development. The model is simple, but probabilistic and comprehensive enough to make a first estimate of the business case of this long-term project with huge uncertainty. The predicted mean cumulative net present value of the decision to develop a silent aircraft is US $13 billion, with 5th percentile, and 95th percentile cumulative net present values of US$ - 51, and 139 billion respectively.
Number of Pages in PDF File: 26
Keywords: Aircraft noise, CBA, net present value, uncertainty
JEL Classification: M10, Q5, Q53, R4, R41
Date posted: February 21, 2005