Air Traffic Control Reform Newsletter #23

Topics include: FAA's controller workforce plan, next-generation air traffic management, entrepreneurial airservices in the Pacific, and ATC privatization in Germany.
In this issue:

Controller Workforce Plan: A Good Start, But...

The FAA last month unveiled its long-awaited plan to cope with the looming retirement bulge in the controller workforce. Since huge numbers had to be hired and trained to replace the more than 10,000 controllers fired by President Reagan after their illegal strike in 1981, and most of the replacements are approaching retirement age, the agency expects to lose over 11,000 controllers during the next 10 years. The report sets out a carefully justified plan for ramping up hiring and training to fill the gap.

Commendably, the plan sets annual staff-level targets that are 10% less than what its current staffing standards would call for. That's based on achieving modest productivity gains via such measures as better management of overtime, sick leave, and "official time" for union activity; making better use of "unused shift capacity"; introducing split shifts and part-time controllers to better handle peak periods; and not sending developmental controllers who can't handle the demanding en-route environment down to less-demanding terminal facilities unless there are actual vacancies there. Not included in these productivity assumptions are longer-term gains from larger-scale use of new systems such as ERAM, URET, TMA, etc.

Though the modeling projects the need to replace 11,024 controllers over the next 10 years, the plan actually calls for hiring 12,500. That's because developmentals (controllers in on-the-job training at facilities) are on the payroll but can't really be counted as full-fledged controllers until they are certified after several years. So between 2006 and 2014, the plan shows an average of 1,085 more controllers on the payroll than the staffing targets call for. That cushion is projected to go away by 2018, when the number on the payroll gets down to the staffing target for the first time.

Overall, this looks sensible and prudent... until you get to Chapter 8, on funding this ambitious project. Tellingly, this chapter takes up just three pages in a 95-page report, largely because it doesn't have a lot to say. To begin with, since FY2005 funding is already constrained, the projected hiring for this fiscal year is lower than required and has to be made up for the following year. But, "Continuation of hiring into FY2006 is dependent on receiving additional funding to support a higher staffing level."

So where might the money come from? Besides a few modest cost savings in training, the report proposes to:

  • Reclassify 12 terminal facilities where flight activity has decreased (so as to be able to go to lower pay bands there);
  • Use more-realistic (lower) new-hire pay rates during training;
  • Close 34 towers during the midnight to 5 AM shift when they have little or no activity;
  • Begin decommissioning some ground-based navigation aids.

It also tentatively suggests looking into consolidating some facilities and expanding the Contract Tower program.

No dollar numbers are provided for any of these, nor does the report quantify the increase in the Operations budget thanks to the expanded recruitment and training and increased payroll. I estimate that the increased training and payroll costs will be at least $300 million per year over the nine years following FY2005. That would add $2.7 billion to an Operations budget that is projected to be $5 billion short just between now and FY2009. In other words, the "perfect storm" funding crunch that I wrote about last issue has just gotten worse.


More than Meets the Eye in 2025 Aviation Plan--and Less

Let me confess at the outset to being skeptical of what sounds like a pie-in-the-sky description of a Buck Rogers aviation future: on-demand jet travel from your town to anywhere, hassle-free airport security, expanded airports with less noise and environmental impact... and all this somehow in place by 2025, thanks to a large-scale central planning effort by seven federal agencies (including DOD, DOT, and NASA). But after a second reading of the Next Generation Air Transportation System Integrated Plan, released on December 12th, I'm willing to concede some value to this effort. (Go here to download a copy.)

The underlying premise seems to be, first, that there's a great deal more that advanced technology could do to improve things like air traffic control and aviation security. But a lot of this is being worked on separately, by the different federal agencies and their contractors. There are obvious overlaps (e.g., military and civil aviation have many of the same needs for making better use of increasingly congested airspace), but without collaboration, agency-specific solutions may work at cross-purposes, and the overall cost may be greater if joint-use technologies aren't shared. Plus, when it comes to issues like making use of the airspace, somebody has to make the rules, and that somebody is going to be the feds. So an effort to think together about these kinds of issues makes some sense.

What I worried most before reading this report was that it would focus exclusively on technology and planning, without coming to grips with such difficult questions as the incentives shaping the behavior of the actual institutions, public and private, that deal with air transportation. The good news is that the report at least mentions such things as incentives and market mechanisms, even agreeing that where a congested airport simply cannot be expanded, the best approach is to get the most out of its existing capacity by using the price mechanism and that "flights requesting use of high demand airspace... will contract for these resources through a variety of mechanisms." But after setting forth this exciting vision for an "agile air traffic system," the report is silent on how an agency that has repeatedly failed to do even incremental modernization successfully could credibly succeed at the much more ambitious task of tripling capacity by 2025.

To be sure, there are a few nice phrases, such as that "business as usual will not succeed" (yes, we know that!) and that there will need to be "a shift in the distribution of public and private roles and responsibilities," while recognizing that "political pressure for the status quo" will be an obstacle to such necessary efficiency measures as facility consolidation.

I guess the best face one can put on this is that an expansive vision is a precondition for large-scale institutional change. If this report and subsequent efforts by the Joint Planning & Development Office (JPDO) generate broad support for the vision of next-generation air traffic management and the other systems, the next challenge will be to think through what kind of institutions are needed to implement and operate these new systems.


Entrepreneurial Airservices to Modernize Pacific Airspace

What could the FAA's Air Traffic Organization do if it were corporatized? How about offering its expertise worldwide, for a profit? That's what Airservices Australia is now doing, based on new commercial freedom it was granted in 2003. Its global business strategy targets airlines, airports, and air traffic control.

You may have seen its ads in aviation publications recently; for example, one showing an Airservices expert carrying a surfboard across the sand dunes of Dubai. The ad explains that he's part of a team helping Emirates Airlines design "flexible routes" between Australia and Dubai, with optimum flight paths selected each day to minimize fuel burn and emissions. Or you may have noticed the recent award to Airservices by FAA of a five-year contract to operate the contract towers in Area 6 (Hawaii, Guam, and Saipan).

But what I find most intriguing is the new Airservices joint venture with SITA Inc. to offer ADS-B air navigation services in the Asia-Pacific region. Automatic Dependent Surveillance-Broadcast (ADS-B) lets suitably equipped planes broadcast their GPS position and other information to other aircraft and to ground stations. In regions like the oceans and the Australian outback, where radar coverage is lacking, ADS-B can provide an accurate and low-cost alternative.

At home, Airservices is in the process of putting in 28 ADS-B ground stations nationwide. Some will replace 11 secondary surveillance radars, saving a fortune in maintenance cost (each $1 million ADS-B station replaces a $10 million radar that costs $1 million/year to maintain), while the others will provide coverage in airspace that has never had radar.

With this experience base, Airservices is teaming up with SITA, which owns 750 VHF radio towers in the Asia-Pacific region which can be used to transmit ADS-B data to the various air navigation service providers in the region. The joint venture is offering to finance the installation of the ADS-B equipment, recovering its investment via the sale of navigation services to these providers. Widespread use of ADS-B in the region has the potential to significantly increase air safety, since numerous information problems occur as planes transition from one flight information region (FIR) to another.

Aviation Week quotes MIT aviation expert John Hansman as noting that Australia is far ahead of the United States in deploying ADS-B and in using oceanic data link-based ATC in cooperation with New Zealand. Both Airservices Australia and Airways New Zealand were among the earliest ATC providers to be corporatized, in 1988 and 1987, respectively.


German ATC Privatization Plan Released

Germany will join the ranks of Britain and Canada in shifting its ATC system into the private sector in 2006. The plan released Dec.20th calls for the sale of 74.9% of Deutsche Flugsicherung (DFS), leaving the government with a "blocking minority" ownership stake.

DFS was corporatized in 1993, becoming a commercial, self-supporting government company. Military ATC was integrated into the company during 1994-97, with some 400 military controllers becoming part of the company. The company has reduced costs, partly by consolidating facilities: from three upper-airspace centers to one and from five lower airspace centers to three, plus going from 17 flight service stations to one. The result has been a series of reductions in service fees, with another reduction scheduled for this year (28% lower terminal charges and 20% lower overflight fees).

Who will bid for the 74.9% being offered is already the subject of much speculation. One possible bidder is Lufthansa , Germany's largest airline. Also talked about is Fraport, the privatized owner of Frankfurt airport. Fraport has speculated about forming a joint venture company with DFS to offer control tower services in Germany and abroad, but says it is not interested in buying shares in DFS.

Not yet revealed is the government's planned regulatory policy, and that uncertainty has led to concern by rating agency Standard & Poor's. While not changing DFS's AAA credit rating, it changed its "outlook" from stable to negative, in view of this uncertainty. Government-owned Airservices Australia has a rating of AAA, while Britain's part-private NATS is rated A- and private, nonprofit Nav Canada is rated AA- . (All are investment-grade ratings.)


News Note

Poland and Georgia Corporatize. The Polish Air Traffic Agency (PATA) and Sakaeronavigatsia-Georgia are the two newest air navigation service providers to be accepted as full members of the Civil Air Navigation Services Organization (CANSO), the membership organization for self-supporting ATC corporations. Sakaeronavigatsia was created as a state enterprise in 1993. PATA provides both en-route and terminal ATC services from a center in Warsaw , as well as providing approach and tower services at 10 other Polish airports. The addition of these two corporations brings the number of full members of CANSO to 38. (www.canso.org)

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





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