In this issue:
- ATC facility consolidation savings
- Congress holds ATC hostage to budget cuts
- Lower aviation growth forecast by FAA
- CANSO offering ATC billing service
- Major challenges to Single European Sky
- News Notes
- Quotable Quotes
Facility Consolidation Could Save ATO Billions
A new study, just released by the Reason Foundation, estimates that large-scale consolidation of TRACONs and Centers in the continental United States could yield one-time savings of $1.7 billion and ongoing savings of about a billion dollars per year. “Air Traffic Control from Anywhere to Anywhere: The Case for ATC Facility Consolidation,” was researched and written by Michael Harrison, Ira Gershkoff, and Gary Church of Aviation Management Associates. It is available online at https://reason.org/news/show/air-traffic-facility-consolidation.
The study relies on two underlying premises. The first is that the new paradigm of air traffic management, under way via NextGen, makes it possible to control air traffic anywhere in the country from any location, thus severing the link between ATC facility location and the geographical boundaries of airspace. Hence, instead of rebuilding the 187 mostly aging and obsolescing Centers and TRACONs, they could be replaced by a much smaller number of new, high-tech facilities in less-costly geographic locations.
The second underlying premise is economies of scale. The project team quantified this using FAA data to calculate the productivity of each of its Centers and TRACONs. New York Center is the most productive, averaging over 9,400 operations per controller; Denver Center is least productive, at just over 5,400 operations per controller. A similarly large variation in productivity was found among TRACONs.
The research team then used these data to estimate the potential savings from facility consolidation. For Center staffing they created a regression equation which posits that the number of controllers at a Center equals a constant plus a variable term based on the number of air carrier operations, air taxi operations, general aviation operations, and military operations. Using FAA data for those variables from each of the 20 Centers, the regression equation found that the constant term is 84.6. That means if you have a Center at all, it needs a minimum of 85 people, with the rest determined by the various amounts of traffic handled. A similar equation for TRACONs had a constant term of 8.56, with the rest being variable based on types and amounts of traffic.
When two Centers are combined, the workloads measured by the variable terms (based on traffic) are added together, but you now have only the one constant of 85 baseline people. The authors developed a large-scale consolidation plan to even out workloads among facilities, aiming for higher overall productivity. The plan they came up with replaces the 20 existing Centers with 5 high-altitude en-route facilities and 8 “Integrated Control Facilities” that combine en-route and terminal airspace in the largest metro areas. Smaller TRACONs would be consolidated regionally, ending up with 38 such facilities. Overall then, the plan reduces 187 existing en-route and terminal facilities to 51-just over one-quarter as many.
Because compensation practices call for higher pay in higher-activity facilities, the savings in operating costs are not as great as might be expected, and many controllers would end up with increased compensation. But some, needless to say, would be phased out or transferred to other FAA positions. The authors estimate that consolidation would save a net $314 million a year due to the lower staffing made possible by combining facilities. In addition, productivity gains due to NextGen technology and procedures might add between $540 and $680 million per year. Add another $109 million in maintenance savings due to fewer buildings and total annual savings could be in the $1 billion range. (This analysis does not address possible productivity gains with control towers, such as expanding the use of contract services and/or implementing remote towers.)
But the savings don’t stop there. Since a large fraction of the existing 187 Centers and TRACONs are nearing the end of their useful lives, the FAA is rapidly approaching the point at which it must either engage in large-scale rehabilitation of these facilities where they are today or replace them with a smaller number of consolidated facilities. Selling the land, buildings, and equipment associated with facilities recommended for closure would yield $1.7 billion toward the cost of the new facilities, based on analysis of data in two FAA property databases.
The Center consolidation approach outlined here is similar to the initial concept the FAA’s Air Traffic Organization (ATO) developed several years ago, when it began facing up to the need to replace aging facilities and the potential changes NextGen would make possible. Unfortunately, last year the agency changed focus. Instead of developing an overall consolidation plan, with a schedule and cost estimates, it will proceed one project at a time. For now it is focusing all its efforts on an initial Integrated Control Facility for the airspace in the Northeast.
That approach is high-risk since state and national elected officials in the affected areas are already mobilizing to fight the loss of jobs in their jurisdictions. In the view of the Reason study’s authors, a far wiser approach would be to follow the kind of comprehensive approach that has been used several times for large-scale military base closures and consolidations. An overall nationwide plan is drawn up, and Congress has a choice of either accepting it as a whole or rejecting it. This makes the battle one between winners (those gaining new or expanded facilities) and losers, rather than just between potential losers and everyone else who is not affected.
And if that approach seems too difficult for Congress to work out, the report suggests an alternative: separate the ATO from the FAA and from the federal budget process, by making it a self-supporting ANSP. That way, as shown in facility consolidations carried out successfully by such ANSPs in Australia, Canada, Germany, and the U.K., these decisions can be made as business decisions, rather than political decisions. That would allow Congress to avoid a decade or more of fighting over facility consolidations, as well as easing the ATO’s looming budget problems.
Congress Holds ATC Hostage to Budget Cuts
Despite bipartisan support for an amendment by Sen. Jerry Moran (R, KS) to ease the burden on the FAA, the Senate enacted its FY 2013 Continuing Resolution without the amendment-and the House quickly accepted and passed the Senate measure. As a result, 149 contract towers will be closed from April through September. And of even greater impact to aviation, all FAA Operations personnel (including controllers) will be put on furlough one day per 80-hour pay period. Since the 5% cut to the FAA FY 2013 Operations budget must be achieved over only six months, this means the cut in payroll must be 10%. And that could lead to serious cutbacks and delays in flights nationwide between now and Sept. 30th.
How on earth did we get to this outcome? Way back in 1970, Congress created something called the Airport and Airway Trust Fund (more commonly known as the Aviation Trust Fund). Modeled after the Highway Trust Fund created in 1956 to pay for construction of the Interstate Highway System, it was and is the repository of all aviation excise taxes-the taxes on passenger tickets, aviation fuel taxes, air cargo waybill taxes, etc. The purpose was to ensure that these user taxes would be spent only on America’s aviation infrastructure of airports and the ATC system-just as your electricity bills pay for the capital and operating costs of your electric utility.
So how come the FAA was subjected to the Sequester, like all other federal agencies providing domestic discretionary programs? Well, as interpreted by the Office of Management & Budget, only the $3.4 billion airport grant program was exempt, by reason of getting its funding from the Trust Fund. Even though FAA’s capital funding account (Facilities & Equipment) also gets all of its budget from the Trust Fund, it was not exempted. And the Operations account, which includes controllers and technicians, typically gets 40-50% of its budget from the Trust Fund but was not exempted.
The only fair-minded conclusion to be drawn from this sorry episode is that the Aviation Trust Fund model has failed to protect most of America’s vital aviation infrastructure from the first of what may be several decades of budget cuts. The model is broken and needs to be replaced. But with what?
As I wrote here last month, the United States is the only developed country in which the ATC system could be subjected to such damaging budget cuts. This could not happen in Australia, New Zealand, Canada, France, Germany, the U.K., or about 50 other countries. Their ATC operating and capital budgets are not part of the national government’s budget. Over the past 25 years, about 60 governments have de-politicized their ATC systems, converting them to self-funded ATC corporations (most of which are government corporations). Aviation users pay fees directly to the corporation; the money never enters the government’s treasury, and their national legislative body has no say in what the ATC budget is. Instead, those ATC corporations are directly accountable to their aviation customers. The ATC companies are regulated at arm’s length by the government’s air safety regulator, and many are also subject to some form of economic regulation. But there is complete separation between the government budget and the ATC company’s budget.
Everyone in aviation has a stake in protecting ATC from future budget cuts. That includes airlines, business jet operators, general aviation, and employees, including controllers and technicians. Previous attempts to create an ATC corporation-most notably the Clinton Administration’s USATS corporation proposal-never gained traction, mainly due to opposition from business and general aviation groups. They feared that “user charges” would drastically increase their cost of flying. The best current answer to those concerns is: Nav Canada. Its modest annual charge for GA planes and weight-based transaction fees for business jets have not only not harmed those sectors but have benefitted them due to cost-effective service provision and accelerated modernization.
The Aviation Trust Fund is broken. Congress has failed to protect most aviation infrastructure from damaging budget cuts. It’s time to forge an aviation consensus on ATC funding and governance reform and get it implemented.
FAA Again Forecasts Lower Aviation Growth
The FAA’s annual 20-year Aerospace Forecast, released in February, shows lower expected growth in ATC activity levels than last year’s forecast, which in turn showed lower projected growth than the year before. And when compared with the year in which aviation activity was at its highest level ever (2000), the projected growth by 2033 is even lower.
Before going into the implications for the ATC system, let’s look at the numbers. As I did last year, I extracted data from the Forecast‘s three ATC tables, which show annual levels for Tower, TRACON, and Center activity for four major categories of airspace users, with historical data going back to 2000, estimated totals for 2012, and yearly projections to 2033. This table shows the projected percentage change between 2012 and 2033.
| 2033 vs. 2012 ATC Activity Levels | |||||
| Airlines | Air Taxi & Commuter | General Aviation | Military | Total | |
| Tower | 66% | -5% | 9% | 0% | 21% |
| TRACON | 66% | -8% | 11% | 0% | 25% |
| Center | 55% | 36% | 16% | 0% | 42% |
The totals for all three categories continue the downward trend from 2011 (e.g., 20-year Tower growth was projected at 36% in the 2010 Forecast, versus 21% in the current forecast; Center growth was 58% in the 2010 report versus 42% now). As I pointed out last year, this is nothing like the “doubling” of ATC activity over the next 20-25 years that we kept hearing about when NextGen was being planned.
An even more dramatic contrast exists in comparing aviation’s peak year figures (from 2000) with the activity levels now projected for 2033-a period of more than three decades. The only portion of the system now projected to have higher activity in 2033 than occurred in 2000 is en-route activity handled by Centers. On an aggregated basis, Tower and TRACON activity will be about 10% less in 2033 than in that record year.
| 2033 vs. 2000 ATC Activity Levels | |||||
| Airlines | Air Taxi & Commuter | General Aviation | Military | Total | |
| Tower | 41% | -20% | -28% | -10% | -11% |
| TRACON | 32% | -26% | -28% | -33% | -9% |
| Centers | 47% | 50% | -14% | -56% | 26% |
These comparisons also show reduced growth levels compared to the 2011 and 2012 Forecasts. (And incidentally, the growth in Air Taxi/Commuter en-route activity evident in both tables, despite declines in Tower and TRACON activity, is due to the increased stage lengths flown by this segment, which means more interactions with Centers.)
This succession of ever-lower annual forecasts of aviation growth makes it ever-harder to justify spending $20 billion or so on NextGen based on the argument from capacity. On an aggregate basis, that case is simply not there, due to significantly reduced growth expected in all but the airline category. To be sure, there are still major problems with capacity in large metro areas served by major hub airports (sites of FAA’s Metroplex efforts). But it seems to me the primary case for NextGen now rests on efficiency and productivity gains attainable by replacing the old paradigm of detailed control of every aspect of a flight with the new paradigm of air traffic management of aircraft trajectories. New tools and procedures will make it possible for far more direct routes, optimal altitudes most of the time, and time-based flow management. All of this will reduce fuel consumption and reduce delays, especially for airlines and business jets. That is definitely worth doing.
CANSO to Offer ATC Billing Service
The global membership organization for air navigation service providers-CANSO-announced early this month that it has begun marketing an airport and ATC billing service worldwide. Under study for the past two years, the new service will offer the state-of-the-art Flightyield billing and yield management system developed by Airways New Zealand, already used by China, Saudi Arabia, Fiji, and Papua New Guinea, in addition to New Zealand (as I reported here in issue number 98 last year).
The key partner with CANSO is SITA, the airline-owned communications and information technology company which provides services to over 2,700 aviation customers in over 200 countries. ANSPs that sign up for the CANSO’s Flightyield won’t have to buy any hardware or software, or add staff. They will merely install an interface to transmit flight data every day to SITA’s operations center. SITA will operate the billing system for each ANSP, creating and issuing the invoices and handling payment and debt recovery services, remitting the payments to each ANSP or airport customer.
As one of the originators of this CANSO program told me, SITA will be a critically important part of this operation, since it already deals with about 90% of the world’s aviation business, including “just about every airline in the world.” The airlines are already SITA customers for other services, which should significantly reduce the risk of nonpayment of invoices. CANSO people believe this will give their service a competitive advantage over the ATC billing service offered by others.
While the initial marketing targets for CANSO Flightyield will likely be ANSPs in developing countries such as Central America and the Caribbean, as well as current customers of IATA’s and possibly Eurocontrol’s billing services, one can certainly speculate about larger applications. What if the U.S. Air Traffic Organization were to be converted into a self-supporting ANSP, charging for its services as about 200 other ANSPs do? Would the enormous scale of the U.S. transaction volume be too large for the SITA bureau service to handle? Evidently not, an informed source told me. Most of the work is done by software, and the transaction volume even with ATO transactions included, would be a tiny fraction of what is handled daily by financial institutions (e.g., for credit card and debit card transactions).
The need to create a “huge new bureaucracy” to create bills and collect revenues from ATC fees has long been portrayed as a major drawback by opponents of a self-funded U.S. ANSP. But it looks as if that argument no longer holds water, if it ever did.
Serious Challenges to Single European Sky
The lack of meaningful progress toward the goal of a “single European sky” came in for harsh criticism at last month’s World ATM Congress in Madrid. In preparing my remarks for the panel on cooperation among ANSPs, I’d expected to be the most radical presenter, calling for facility consolidation across European borders via ANSP mergers and acquisitions as the key to achieving the SES goal of cutting ATC costs in half. But I was upstaged, not only on that panel but beforehand.
The first upstaging came when Tony Tyler of IATA unveiled the airlines’ “Blueprint for the Single European Sky.” It calls for reducing the number of en-route centers from 63 to no more than 40, as well as reducing the ratio of back-office staff to controllers from 2.4 to 1.6. In addition, the nine Functional Airspace Blocks (FABs), thus far existing mostly on paper, would be required to centralize operations management, training, procurement, and support functions.
Then, at the panel on which I spoke, Eamonn Brennan, CEO of the Irish Aviation Authority, called for the European Commission to take over European airspace from the member governments, to facilitate cross-border mergers of airspace and ANSPs, since he doubts that any government or ANSP would take such actions on its own. During the Q&A, he suggested that a good first step would be to close 10 centers by 2020 and at least another 10 by 2030, echoing the IATA proposal.
The European Commission, meanwhile, has done more than talk about tougher cost-efficiency targets and making FABs fully functional entities. It has appointed Eurocontrol as the SES’s Network Manager, and set up its advisory board with only one member from each FAB. Its next set of performance targets will be applied at the FAB level, not the level of each member ANSP.
And Eurocontrol is taking its Network Manager functions seriously. In several recent interviews, Director General Frank Brenner has outlined the steps it is taking. In his Madrid speech, Brenner said that the SES project has identified about 300 specific functions to be implemented. Between 70 and 90 make sense to deploy at the FAB level, while about 10 should be implemented at the network level. His two examples of the latter were a 4-D trajectory calculation service and a Europe-wide information management service as part of SWIM (system-wide information management). He also added that Eurocontrol is open to competitive bidding to provide such centralized services, including from ANSPs and aerospace firms.
The most radical idea of all came from Eamonn Brennan, though others have made similar suggestions in recent years. If the entire European airspace were “Europeanized” and redesigned from scratch, then airspace services for the newly created regions could be put out to bid. Aviation Intelligence Reporter, in its post-Madrid issue, reminded readers that Boeing’s Neil Planzer had suggested three years ago, at ATC Global in Amsterdam, that Europe might need just three ANSPs, each competing for contracts to provide services in various regions.
Finally, it’s worth noting that CANSO pointed out in a March 15th news release that airspace sovereignty is often misunderstood. Under the 1944 Chicago Convention, while each government does have sovereignty over the airspace above its territory and the responsibility to ensure air traffic services there, “this responsibility can be delegated,” per Article 28 of the Convention. An excellent example is ASECNA, a multinational ANSP providing ATC services for 17 African countries with airspace 1.5 times that of Europe, via 10 centers and 57 control towers.
In my three decades of researching air traffic control, I have never seen such a proliferation of new ideas about governance and funding. The only thing we can be sure of is that the status quo is no longer an option.
Nav Canada Goes Eight Years without Rate Increase. The 2012 Annual Report of Nav Canada, the not-for-profit air navigation service provider (ANSP) for Canada, notes that fiscal 2012 was “our eighth consecutive year without a rate increase.” A graph on page 19 of the report shows that while Canada’s consumer price index has increased by 33% since 1999, Nav Canada’s rates are only 5% higher than they were in that year.
GPS Landing Systems Gaining Momentum. Honeywell’s SmartPath Ground-Based Augmentation System (GBAS) has been demonstrated at 25 major airports worldwide over the last several years. In the United States, it is operational at Newark and in testing at George Bush Intercontinental in Houston. It is also nearing certification at Sydney Airport in Australia and Bremen, Germany. Currently, the system is certified only for Category I precision approaches, but Honeywell and FAA are working on enhancements to enable more-precise Cat. II and III approaches.
Controller Cooperation Among European ANSPs. Two Scandinavian ANSPs are working together to alleviate a shortage of air traffic controllers. Norwegian ANSP Avinor will hire controllers from Sweden’s LFV to help staff its Oslo center. The initial agreement is for three years and was worked out between Avinor and LFV subsidiary LFV Aviation Consulting.
FAA Facing Acquisition Workforce Shortfall. A recent GAO report finds that impending retirements could require four modal administrations within the U.S. DOT to replace 50 to 80% of their acquisition workforce by the end of FY 2013. The FAA was projected to be 54% short of contract specialists. While a major short-term problem, it would present an unusually good opportunity for a reformed, self-supporting Air Traffic Organization to hire experienced people from the private sector. FAA has the largest acquisition workforce of the four DOT administrations.
Australia Implementing Nav Canada Tower Automation. Airservices Australia, the country’s self-supporting ANSP, has commissioned into service the first two Integrated Tower Automation Suites (INTAS) in the towers at Broome and Rockhampton Airports. INTAS is based on NAVCANatm technology, customized and installed by Saab Sensis and Harris Corporation. The current contract applies to four Australian airports.
U.K. CAA Assessing Control Tower Market. The Civil Aviation Authority has launched a review of how competitive the U.K. control tower market is. Under the Civil Aviation Act of 1982, the CAA must periodically assess whether airports can actually obtain real bids for control tower services. The terms of the review are laid out in “Single European Sky-Market Conditions for Terminal Air Navigation Services in the U.K.,” online at www.caa.co.uk/docs/33/CAP1004SESMarketConditionsforTerminalAirNavigationServices.pdf
CANSO Considering Safety Audit System for ANSPs. Aviation Daily reports that the Civil Air Navigation Services Organization is considering setting up a CANSO safety certificate program, which would involve an evaluation and audit of a requesting ANSP’s safety management systems and practices. The move has been urged on CANSO by ICAO, and was specifically mentioned by ICAO President Roberto Gonzalez at the ATM World Congress in Madrid last month.
Australia to Combine Civil and Military ATC. Under the rubric of oneSky Australia, the country’s ANSP Airservices Australia and its Defense ministry will jointly issue an RFP for a unified air traffic management system in the second quarter of this year, with a final selection to be made in 2015. Air Traffic Management reports that Lockheed Martin sees this procurement as the potential first sale of its Skyline Enterprise platform, developed in cooperation with Australia’s Adacel Technologies. Lockheed’s Sid Rudolph told the magazine that they have the FAA in mind as another possible customer.
TRB and DOT Inspector General Studying U.S. ATC Staffing. The Transportation Research Board has created a new committee on ATC staffing and FAA personnel needs, chaired by Amy Pritchett of Georgia Tech. Details may be found at http://www8.nationalacademies.org/cp/committeeview.aspx?key=49497. The DOT Office of Inspector General has a study of controller staffing under way, in response to congressional requests.
“The only expressed opposition [to the Moran amendment] has been from the administration. It is clear that saving air traffic control towers from closure does not fit their message that spending cannot be cut without disastrous consequences. I have serious concerns that we have arrived at a point where leaders in Washington care more about their own political futures than the safety and well-being of Americans.”
-Sen. Jerry Moran (R, KS), quoted in “New Strategies Considered As Towers Legislative Effort Rejected,” Aviation Daily, March 22, 2013
“Given the highly dysfunctional nature of our political system-which seems unlikely to be cured any time soon-the economic importance of commercial aviation and the importance of NextGen to the airlines, I think it’s time for the industry’s leaders to lead a charge to take the ATO out of the FAA and create an ANSP to develop and run the system like a business. In my view, this is the only one of many ways in which the changing interaction of the public and private sectors is going to require successful corporate leaders to be far more involved in public policy debates.”
-Robert Crandall, “Future Horizons for the Airline Industry,” speech before the Global Business Travel Association, Feb. 20, 2013
“The SES [Single European Sky] goal of a 50% cut in charges remains as elusive as ever. Notoriously, Europe’s ANSPs fought to water-down already weak cost-efficiency targets, and then failed to reach even these modest goals. More recently we have seen the resistance to a stronger performance scheme and more ambitious improvement targets for the period 2015-19. European aviation is in crisis . . . . Airlines need to reduce cost wherever possible, and European ATM is costing €5 billion extra a year in inefficiency. That is not sustainable and something needs to be done about it.”
-Tony Tyler, IATA General Director, in Aimee Turner, “WATM: Slash the Number of Air Traffic Control Centers to 40: IATA,” Air Traffic Management e-news, Feb. 12, 2013
“Performance Review Unit reports over many years show a wide variation of unit costs across Europe reflecting differing staffing levels, investment levels, and costs of borrowing. That may vary, but two things are consistent. Europe remains, by a long chalk, the back marker in most cost-efficiency measures. Moreover, despite variances in costs, the unit charge is the same. These two things may be related. Why are lower-cost ANSPs not allowed to charge less and become competitive? Why are higher-cost ANSPs cross-subsidized by their lower-cost colleagues? If we are to move to more customer-responsive service provision, the unit charge principle needs to be looked at afresh.”
-Paul Thomas, Fellow, Royal Aeronautical Society, “Competition in ATM-The European Unit Rate is Short-Changing Us All,” Aviation Intelligence Reporter, March 2013