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Abstract
Infrastructure investment decisions in air transportation are diffi cult because of long lead times, large
capital expenditures and the technological, market and political uncertainties inherent in aviation.
In such an environment, a flexible investment strategy is a means of managing risk. The central idea
is to structure the investment so that it would benefi t from the upside potential if circumstances are
resolved favorably, but would be protected from downside losses otherwise. In this paper, an evaluation
methodology based on system dynamics and Monte Carlo simulation in a real options framework
is utilized to evaluate different flexible infrastructure delivery strategies.