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Reason Foundation

Air Traffic Control Newsletter #110

The ATC cross-subsidy dilemma, Controversy over controller hiring and training, Another real-time aviation weather project

Robert Poole
February 4, 2014

In this issue:

The ATC Cross-Subsidy Dilemma

With discussion increasing about moving the Air Traffic Organization out of FAA and allowing it to become self-supporting from fees and charges (like other ANSPs worldwide), the aviation community needs to grapple with the following question: Who will pay for various ATC services for which it is not feasible to charge enough in fees to cover their costs?

Two prominent examples come to mind immediately, and there are probably some others. One is the Flight Service Station program, which provides flight plan filing and weather briefings for general aviation (GA) pilots. The other is ATC services in Alaska, where GA is a critical part of doing business, but where charging transaction fees could have serious consequences for aviation safety. There are also various cross-subsidies built into the current aviation excise taxes, according to the FY 2005 FAA cost allocation study which compared the aviation tax revenue from each segment of aviation with the estimated cost of providing the ATC services it uses.

Many of the battles over previous US ATC corporation proposals—in the 1980s, the 1990s, and the 2000s—were fought mostly over questions of who pays what, versus who gets what ATC services. I'm greatly relieved that in all the current discussions over corporatization, just about everyone agrees that getting back into those battles would likely doom current corporatization prospects. We need to find a way to get to "yes" that all aviation stakeholders can live with. So what do we do about the cross-subsidies?

Successful, self-supporting ANSPs worldwide do not operate with pricing structures that charge each user group its fully allocated cost—though they do operate on the principle that total fees and charges must add up to total capital and operating costs. In Canada, to use a nearby example, this has been implemented as follows. High-performance aircraft that fly mostly IFR (and therefore fly in controlled airspace) pay en-route and terminal charges based on aircraft gross weight (terminal) and gross weight and great-circle distance flown (en-route). That means a Lear 35 pays far less than a 737 or 777 for the same trip length. This pricing approach acknowledges a difference in willingness/ability to pay, a principle accepted by ICAO and used in nearly all ATC charging systems. And piston GA planes do not pay transaction fees at all; instead they pay a modest annual fee proportional to aircraft weight, which in most cases is less than $100. This treatment of GA is also allowed by ICAO charging principles. This overall charging approach has worked very well for the past 17 years in Canada.

But what about Flight Service Stations and Alaska? The United States has by far the world's largest GA fleet, so voices are being raised urging that while the ideal of a self-funded ATO is all well and good, the need for cross-subsidies (including paying for towers at very low-traffic airports) should be met via a "general fund contribution" to the independent, corporatized ATO. This dispute will not be settled here, and it's a debate the aviation community must engage in during the coming months, as we work toward a consensus proposal for a corporatized ATO.

For what it's worth, here are my thoughts. The small point is that Canada, too, has huge expanses of remote settlements that depend on small planes for access. Yet that country has managed to internalize the cross subsidies, thanks in part to the efficiencies Nav Canada has brought to its provision of ATC services there. (Despite absorbing the cross-subsidies, Nav Canada charges exhibit a steady down-trend after adjusting for inflation.)

The much larger point is that in order to operate as a business, a corporatized ATO must be accountable to its customers, and not to the plethora of overseers that it must devote considerable attention to satisfying today. By that I mean at least six congressional committees, the GAO, the DOT IG, the DOT Secretary, and the Office of Management & Budget—all this in addition to safety regulation, which would continue under any conceivable corporatization strategy. A far better governance model is a board of directors representing all key aviation stakeholders. Under a nonprofit, stakeholder governance model, most of those stakeholders would be users of the system—the ones paying the fees and charges. Under the status quo system, of course we have that whole array of overseers because it is taxpayers' money they are safeguarding.

A system that mixes taxpayers money and ATC fees and charges could end up worse than the status quo. Instead of needing to be responsive just to its stakeholder board of directors, a mixed-funded ATO would still need to respond to all 10 of its current overseers. For this reason, I think aviation stakeholders should bite the bullet and agree that the less-bad alternative is to absorb the cost of cross-subsidies into their business model as Nav Canada has done.

And in point of fact, that is how the present U.S. ATC funding system already operates, contrary to common belief. In FY 2012 the capital and operating costs of the ATC system totaled $10.3 billion, as follows:

Operations (ATO portion of FAA Ops budget)

$7.443

billion

Facilities & Equipment

  2.731

 

Research, Development & Engineering

    .168

 

Total ATC

$10.342

billion

Revenues from aviation user taxes totaled $12.5 billion, which was $2.2 billion more than the ATC budget. Of course, not all of that $12.5 billion was spent on ATC. In FY 2012, $3.35 billion of it was allocated to AIP grants for airports of all sizes. Subtracting that from the revenue total would leave ATC $1.1 billion short. But today the general fund covers about a third of the ATO operating budget. Instead of doing that, those general fund dollars could be used to shore up AIP, if Congress decides to keep it at its current size. (And that would make better sense, since about $1 billion of AIP each year goes to subsidize small GA-focused airports.) The point is that the current amount paid by aviation users more than covers total ATC costs, as well as two-thirds of the airport grant program. So a corporatized ATO could easily be self-supporting with revenues from fees and charges totaling the same or less than current aviation taxes. There is no need for a "general fund contribution" to cover cross-subsidies that are already being paid for by the aviation community. The general fund should be paying for the remaining FAA in its roles as aviation safety regulator and airport grant-provider.

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Controversy Over FAA Controller Hiring and Training

Despite thousands of air traffic controllers being eligible to retire over the next few years, the FAA Academy in Oklahoma City has been closed for the past year due to FAA budget problems. As a result, several thousand graduates of two-year and four-year ATC courses at FAA-approved colleges and universities have bided their time on an FAA waiting list, waiting until the agency decided to resume training. But within the past month, FAA has shifted gears, dumped all those applications, and announced plans to recruit candidates "off the street." Needless to say, those graduates and their schools are up in arms over this—and thereby hangs quite a tale.

Back in 1997 FAA began a program called the Collegiate Training Initiative (CTI), under which it recruited colleges and universities to offer degree courses in air traffic control. Participating schools were told that their graduates would become the primary hiring source for new controllers. Prior to this, applicants were recruited "off the street," with the only requirements being a high school diploma or three years of work experience. With ATC becoming more and more high-tech, it made sense that FAA sought to increase the competence, knowledge level, and educational level of its NextGen-oriented controller workforce.

In 2005, the DOT Inspector General's office released a study titled "FAA Has Opportunities to Reduce Academy Training Time and Costs by Increasing Educational Requirements for Newly Hired Air Traffic Controllers" (AV-2006-021, Dec. 7, 2005). The idea was for FAA to shift portions of the coursework taught at the Academy to the CTI schools, and make those courses a prerequisite for employment as a controller. This was consistent with declared policy that CTI graduates would be the primary source of new controllers. The report also pointed out that many professional positions within the federal government require a degree in their area of expertise as a condition of employment. Several former senior officials of the Air Traffic Organization strongly supported this idea when I asked them about it.

But FAA did not take this advice, so in the 2012 FAA reauthorization act, Congress asked the GAO to review the potential cost savings and benefits of shifting basically all the Academy coursework to the 36 CTI schools. Its preliminary report (GAO-12-996R) found that a proper cost-effectiveness analysis of this proposal depended on several cost elements that were not known at that time. It promised further work, with FAA involvement, to be reported on in 2013. But GAO tells me that they stopped work on the project due to FAA plans to pilot-test shifting controller training from the Academy to CTI schools, a plan that FAA has apparently dropped, given what follows.

Due to the 2013 Academy shut-down, between 3,000 and 3,500 CTI graduates were on the FAA waiting list, hoping for the restart of hiring that would send them to the FAA Academy for (partly redundant) coursework, followed by several years of on-the-job training in a tower, TRACON, or en-route center. But in January, all hell broke loose.

Rumors had already been circulating in December that FAA was instead going to issue a general public ("off the street") announcement early in 2014. CTI schools and graduates were puzzled and upset over why the agency would do this when it already had thousands of college graduates ready to go. The answer turned out to be "diversity." In a rational world, the FAA Air Traffic Organization would define its controller selection and training requirements, and based on the events recounted above, would very likely have gone with the CTI graduates, even while resisting (for the usual bureaucratic reasons) substituting CTI coursework for Academy coursework. But thanks to the "one FAA" policy instituted in recent years, the ATO depends for its support services on the parent organization—in this case, the FAA Human Resources department.

Last month the FAA HR department informed various diversity organizations about its new FAA Air Traffic Controller Recruitment Campaign. Of course the news leaked and was soon common knowledge to all the CTI schools and their graduates. On Feb. 10th, a 10-day campaign will be launched inviting anyone with a high school diploma or three years of work experience to apply. CTI graduates must re-apply under this program in order to be considered. All applicants must pass two tests in order to be accepted—the normal ATC aptitude test (AT-SAT) and a "biographical test." The latter is widely believed to be an effort to identify indicators of minority group status.

Previous FAA reports have praised the CTI schools for recruiting and graduating minority candidates, but the resulting numbers graduating from the Academy apparently do not satisfy those running the FAA HR department. While I've been inundated with material that is circulating among CTI schools, I decided to see if their concerns about the HR department were shared by other knowledgeable people. I interviewed two retired senior officials of the Air Traffic Organization, both of whom confirmed the CTI assessment. Among the comments from one of them: "This has always been a huge issue for the ATO. HR has total control and generally ignored any ATO input. The atmosphere between HR and ATO was really bad when I was there. Sounds like it is not any different now."

Where this will end up I have no idea. But it appears to me that a very valuable contribution to better controller selection and training is at risk of being discarded. And that is yet another reason why we need an independent, self-supporting ATO with its own HR staff, accountable to its stakeholder board.

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Southwest and Weather Service Join the Real-Time Weather Trend

In previous issues I have written about two examples of companies that have worked with airlines to install devices that sense various key weather parameters during flights, especially at cruise altitudes where forecasts based on twice-daily weather balloon launches can be both out-of date and lacking in key parameters (such as icing and turbulence). One is Panasonic Weather Solutions (formerly AirDat), which has its sensors on several hundred subscribing airline planes, and Weather Services International, whose device to measure turbulence in real-time is now installed on 360 American Airlines planes.

Last month I learned of a third system, installed thus far on 87 Southwest 737s, that measures water vapor in real time. This is actually a joint project of Southwest and the National Weather Service, with support from device company Spectrasensors, Inc. and ARINC. Spectrasensors, a company that makes a variety of sensors based on laser diodes, was spun off from the NASA/Caltech Jet Propulsion Laboratory in 1999 to commercialize this technology, but it is not in the business of providing aviation weather data. They are merely the provider of the device that Southwest installs on planes during scheduled maintenance. The water vapor data, along with wind and temperature the airline was already collecting, are sent over the airline's ACARS data system, operated by ARINC, to the National Weather Service. In turn, NWS uses that information to update its aviation weather forecasts, which are made available to all US aircraft operators.

Unlike the other two cases I have written about, in this case it was NWS that initiated the project. Southwest's technical people said the agency approached them about hosting the Spectrasensors devices on a portion of their fleet, since they have a large number of daily operations dispersed widely across the country. They also told me that NWS has a similar program under way with UPS, chosen because of its extensive night flying. NWS refers to data gathered from Southwest and UPS as their "ACARS sounding data."

As I've written before, the NextGen vision calls for comprehensive, real-time weather information being provided to all those using US airspace. While we have yet to see any FAA procurements for such NextGen weather systems, I am encouraged to see airlines, private industry, and now NWS itself taking the initiative and making steady progress in this direction.

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Direct Pilot Warnings of Runway Incursions

Since 2000, the National Transportation Safety Board has recommended that data about an impending runway incursion be provided directly to the pilots of the aircraft (and ground vehicles, if applicable), rather than being routed through a controller in the tower. NTSB has called for such alerts to be available at all airports with commercial airline service. And it has suggested that they could feasibly be provided via the cockpit display of traffic information that is part of ADS-B/In. Canada's Transportation Safety Board, in a report on an "extremely serious" incursion at Montreal's Pierre Trudeau International Airport, called for safety systems that directly alert flight crews to an impending collision.

The FAA has resisted taking this path, in part because it has not mandated that anyone, including airlines, equip their planes with the "In" version of ADS-B. Yet the recent upsurges in both serious (Category A) incursions and total incursions bring new urgency to coming up with some way of directly alerting pilots. Instead of ADS-B/In, FAA has a program under way at 23 large airports to install runway status lights—red lights embedded in the pavement of runway entrance and threshold locations to warn pilots or ground vehicle operators that the runway is, or is about to be, occupied. But 23 airports is a small fraction of the more than 450 US airports with scheduled airline service. FAA has also been testing a Final Approach Runway Occupancy Signal (FAROS) that uses airport surveillance data (from a system such as ASDE-X) to flash the PAPI lights to warn the landing pilots that a runway is occupied. But again, such systems exist at only a small fraction of air carrier airports.

FAA did test ADS-B/In alerting system applications with Honeywell in Seattle and ACSS in Philadelphia. Aviation Week's John Croft reports that the algorithms worked in both cases, but both experienced "unexpected ADS-B signal dropouts" due to terrain and buildings, an issue FAA is still investigating. Those results did find use in a 2010 RTCA Requirements document for surface indicating and alerting. And that document, Croft reports, helped inform NASA Langley's current NextSafe 3 research program aimed directly at better alerting of pilots to impending events in the airport environment such as runway incursions. In a Sept. 2, 2013 article Croft describes Langley's full-motion cockpit simulator set up with the cockpit display of traffic information from ADS-B presented on electronic flight bags, one for each pilot.

From the outset, the business case for ADS-B in domestic airspace has always seemed to me to depend on the "In" function, the part that FAA has not mandated. It seems pretty clear that ADS-B/In available in all airline cockpits could happen sooner than a massive civil engineering project to add runway status lights to over 400 more airports. It would be very useful to have a more-comprehensive business-case analysis of ADS-B/In that included the safety benefits from avoiding runway incursions, in addition to its air traffic benefits.

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News Notes

ATC Innovation Study on Reason's Website. If you have not yet read the study I carried out for the Hudson Institute on how FAA's risk-averse culture and other factors are hindering the implementation of NextGen, you can download the study from the Reason Foundation website. Go to: http://reason.org/news/show/organization-and-innovation-in-atc.

NextGen GA Equipage Fund Nears Launch. A fund to help general aviation aircraft owners equip with NextGen-related avionics (such as ADS-B) is nearing a spring launch date. NexaCapital filed for FAA approval on Dec. 20th; approval will permit the fund to offer federally guaranteed loans, rather than either paying cash or mortgaging their planes. The NextGen GA Fund has announced a partnership with the Aircraft Electronics Association, which will set up a web portal to which AEA member repair stations can refer GA pilots to the fund.

ATCA Publishes a Case for Self-Supporting ATO. A feature story in the Winter 2013 issue of The Journal of Air Traffic Control, published by the Air Traffic Control Association, makes the case for adapting the nonprofit, self-supporting corporation model exemplified by Nav Canada. It answers a number of common questions or concerns about what it misleadingly calls "privatization." This is the strongest pro-corporatization article that I've seen in any ATCA publication in the 10 years or so that I've been a member. It was written by Edward H. Stevens, who I'm told recently retired from Raytheon.

NATS Avoids European Controllers' Strikes. Thanks to better working relationships with its controller workforce, UK air navigation service provider NATS provided full ATC services during two late-January "days of action" called to protest some of the plans for implementing the Single European Sky. The Air Traffic Controllers European Union Coordination (ATCEUC) strike took place on Jan. 29th, followed the next day by a walkout organized by the more radical European Transport Workers' Federation (ETF).

Third Tower Automation Suite Commissioned in Australia. A nationwide project that is upgrading control tower automation at the country's major airports commissioned its third tower last fall, in Adelaide. INTAS (Integrated Tower Automation Suite) adapts Nav Canada's popular NAVCANSuite to the requirements of Airservices Australia, the corporatized ANSP. Harris Corp. provides the voice communications system and Saab is providing project management and system integration. INTAS, of course, includes electronic flight strips, still absent from U.S. towers. Melbourne is the next tower to receive INTAS.

Avtech Wake Vortex Project in Dubai Expanded. Last month saw agreements on three extensions to the contract under which Avtech Middle East is studying wake vortex generation at Dubai International, now the world's second-busiest airport. The project is using Lockheed Martin LIDAR equipment to measure the vortices and meteorological data from Panasonic Weather Solutions (formerly AirDat). NATS is doing data analysis for the project, while Avtech Sweden is doing wake vortex Monte Carlo simulations.

FAA Gearing Up to Rebid Contract Towers. Easing fears about the future of the program under which 252 VFR (non-radar) control towers are operated by private companies, the FAA announced last month that it will issue a draft RFP in March, and a final RFP in the second quarter of 2014. The current five-year contracts expire Sept. 30th. Expectations are that some new entrants will join the three incumbent providers (Midwest ATC, Robinson Aviation, and Serco Management Services) in bidding for the contracts.

CANSO Releases Introduction to ICAO Block Upgrades. The Civil Air Navigation Services Organization last month released "Introduction to the Aviation System Block Upgrade Modules," to assist ANSPs in preparing for the global introduction of ATC modernization, coordinated with other providers, in the sequence agreed to by ICAO members last year. Besides participation of several CANSO members, the document was led by MITRE Corp., with inputs from RTCA, SERCO, and Thales Group.

FAA Information Sheets Now Online. The FAA announced last month that three new Get Smart information sheets are now online on its NextGen library page. The first three cover Data Communications, Metroplex Airspace and Procedures, and Performance Based Navigation. Go to www.faa.gov/nextgen/library.

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Quotable Quotes

"[W]ith the challenges presented by budget uncertainty, as well as the pace of technology change, this fundamental question of how our air traffic control system is organized must be rethought. Regardless of where this examination takes us in the end, the current approach just does not seem to provide the foundation that will take the aviation community where it needs to go. . . . It is also important to consider this large structural question for another reason: we have found a moment in time where the aviation community is remarkably aligned. Additionally, the community—while weakened by the economy—is politically strong, having elected officials today who are both supportive of and engaged with the aviation community in addressing [its] issues. At a time of strength and alignment, challenging questions should be asked, and big ideas should be explored. This is the time for organizations and their leaders to step out of their comfort zone and not fall into the panic zone where [new] ideas are shot at. This is the time to learn from other models where the operation of the ATC structure is outside of government agencies. It is time to question and examine old ways of doing things to determine if they are still the best ways of doing things."
—Craig Fuller, former president of AOPA, remarks at Hudson Institute ATC conference, Jan. 16, 2014

"An extended hiring freeze is of particular concern. The hiring freeze has been in effect since March 2013. It will continue into January 2014, perhaps longer depending on how the current budget impasse is resolved, and it couldn't be happening at a worse time for the National Airspace System (NAS). The NAS is already faced with a delicate balance of air traffic controllers who are fully certified, those who are in training and those who are eligible to retire. The NAS is only just adjusting to the mass exodus during the 2006 to 2009 period, and the subsequent mass hiring. At present, 2,000 controllers are in training, and over 3,000 are ready to retire. This imbalance means the NAS is facing a critical staffing problem right now. . . . We believe the debate over permanent, stable funding is a natural next step for lawmakers. It is obvious to everyone that our current funding system is no longer working. There's broad agreement within the aviation community that something needs to be changed."
—Paul Rinaldi, president of NATCA, "Decision Time," Air Traffic Management, Issue 4, 2013

"While the safety case for NextGen will remain primary, it then becomes a case of being affordable. We just have to be careful to acknowledge the differences between a government-subsidized versus a private corporatized system. I think the latter could work in the right circumstances, but the devil is in the details, and politics will remain the wild card."
—Capt. Rip Torn, IFALPA air traffic services committee chair, in Aimee Turner, "View from Above," Air Traffic Management, Issue 4 2013.

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Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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