Commentary

Budget & Tax News
September 1, 2005

Outsourced Flight Service Stations Save FAA $2.2 Billion
New technology, consolidation reduces costs 40 percent
By Robert W. Poole, Jr.

The Federal Aviation Administration (FAA) expects taxpayers to save $2.2 billion over the next 10 years, thanks to a contract with Lockheed Martin that goes into effect in October.

That's when Lockheed Martin begins taking over the FAA's Automated Flight Service Station (AFSS) program. The company's $1.9 billion bid reduces the cost of the program nearly 40 percent.

The AFSS program consists of 58 facilities that provide weather briefings, flight plan filing services, and other assistance to private pilots. The contract includes consolidation of facilities.

The program has been costing nearly $600 million per year, paid for as part of the FAA's overall budget. Though most of the FAA is paid for through user taxes (e.g., the 7.5 percent tax on airline tickets), private pilots pay $60 million per year in fuel taxes.

The discrepancy between program cost and taxes paid by private pilots prompted calls for competition to modernize the AFSS program.

'Will Absolutely Benefit Pilots'

"This will absolutely benefit pilots," said Kathleen Roy, spokesperson for the Aircraft Owners and Pilots Association, which represents private pilots. "This will accomplish modernization and be much more efficient. There obviously will be large savings in money, with no loss in safety."

Roy said the briefers at the flight service stations will be able to provide pilots "local knowledge" that includes weather patterns, closed runways, lights out on runways, and other items of importance to pilots.

"They will look at the same screen the pilot is looking at to share information," she said. "This new system will have a lot more technology."

The existing FAA workforce put in a bid with frequent FAA contractor Harris Corp. Other bidders in addition to Lockheed Martin were Computer Sciences Corp., Northrop Grumman, and Raytheon.

Technology, Consolidation Are Key

Lockheed Martin's winning proposal was able to achieve savings through the use of advanced technology and facility consolidation. Instead of the current 58 geographically dispersed facilities, there will be 20 under Lockheed Martin. The facilities will be equipped with more advanced technology, enabling each flight specialist to be more productive. Pilots will no longer be able to obtain walk-in briefings, but only about 2 percent of pilots used that service.

Consolidation of facilities will begin in April 2006 and end a year later. During that time, about half of the 2,500 AFSS employees will become eligible to retire, which will reduce the workforce without the need for layoffs. Until then, Lockheed Martin will offer jobs to all the employees, with no loss in salary and with comparable benefits.

In addition, about 400 of the existing staff have been certified as air traffic controllers and will be able to apply for transfer to the FAA's Air Traffic Organization.

Robert W. Poole Jr. is director of transportation studies and founder of the Reason Foundation.