Air Traffic Control Newsletter #121

Air Traffic Control Reform Newsletter

Air Traffic Control Newsletter #121

Addressing the alleged ATC funding gap, Eno Center's ATC reform principles

In this issue:

Addressing the “Funding Gap”

Claims have been circulating in Washington that converting the FAA’s Air Traffic Organization (ATO) to a self-supporting ANSP would lead to some sort of a funding gap, variously reported as being $1.8 billion or 18%. That is a serious misconception, and in what follows I will unpack some budget numbers to explain where this misconception comes from. These reports appear to stem from two briefings given to aviation stakeholders at the Business Roundtable (BRT), the first one last October and the second one in January. They reported on number-crunching carried out for BRT by respected aviation consultants GRA, Inc. GRA used FY 2013 data provided by the FAA to do its analysis, so I will use only FY 2013 figures in this discussion.

First, let’s get a few basics on the page. The total FAA budget for that year was $15.267 billion. BRT estimated that the full capital and operating costs of the ATO that year were $11.248 billion, which means the remainder of FAA (basically its safety regulation and the airport grants program called AIP) cost just over $4 billion. Existing aviation excise taxes that year totaled $12.85 billion, so it should be crystal clear that the existing tax revenue generated $1.6 billion more than needed to pay for all of the ATO. If the NewATO, as BRT calls it, were fully supported by fees and charges-the common practice in over 50 developed countries-that fee revenue would need to be $11.25 billion.

So where does the perception of a funding shortfall come from? Well, the airlines represented by A4A have let it be known that while they support converting the ATO into a self-supporting ANSP, the legislation that makes this possible should also abolish all the existing aviation excise taxes. That seems reasonable enough as far as air traffic control is concerned: the airlines and other users of ATC services should not be paying new ATC fees in addition to the current taxes. But because the largest single FAA budget item besides ATC is airport grants (AIP), the BRT number-crunching assumed that the ATC fees would have to support not only NewATO but also the $3.44 billion (as of 2013) cost of AIP.

As far as I’m concerned, that is a wholly unjustified assumption. I’m not aware of any self-supporting ANSP anywhere in the world that is, in effect, taxed to provide its government with a big fund to use for airport grants. It was only the inclusion of $3.4 billion in AIP costs in the total that GRA’s modeling sought to raise that led to the absurd idea that a corporatized ATC system would cost users more than its likely revenue.

So how should AIP be funded after NewATO is created as a self-funded ANSP separate from from FAA? This is part of the larger question of how to fund the remaining FAA, which includes its safety regulatory activities as well as AIP. In FY 2013 the total of these activities was $5.4 billion ($2.1 billion for safety and administration plus $3.3 billion in actual AIP grants). The first place to look is the general fund. In a review of FAA budgets from 2001 through 2013, GRA found that general-fund support for FAA has averaged 22.6% of its total budget. Applying that percentage to the FAA’s FY 2013 budget of $15.267 billion gives us $3.43 billion. That still leaves about $2 billion that has to come from somewhere if AIP is to be retained at its currently funded level.

My approach to addressing that “somewhere” is to encourage airports and airlines to come together to find a least-bad solution. Airport groups AAAE and ACI-NA are pushing hard for a higher federal cap on the passenger facility charge (PFC) that airports can levy to pay for capital expenditures, along with no reductions in AIP. Airlines want all existing aviation excise taxes to be abolished. Those positions are inherently in conflict. Some combination of increased PFCs and a new AIP-only aviation tax will be needed to generate that $2 billion a year, if Congress wants to continue AIP at its current level. But that $2 billion is a shortfall in AIP, not in NewATO. Airlines and other aviation users are already paying more in aviation taxes than it costs to provide ATC services, but if airlines want existing aviation taxes abolished, then they will have to agree to some way to at least maintain the current level of capital investment in airports. Whether that is a new AIP-only tax or an increase in PFCs (or some combination) should be worked out by the stakeholders involved and presented to Congress as their best (or least-bad) solution.

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Eno Center Principles Call for ATC Corporation

Beginning in 2013, shortly after the sequester led to furloughs of air traffic controllers and the near shutdown of more than a hundred contract towers, the Eno Center for Transportation created a NextGen Working Group to build stakeholder support for reforming the U.S. ATC system. Eno recruited as co-chairs former DOT Secretary Jim Burnley and former Sen. Byron Dorgan, both knowledgeable about aviation and symbolizing the bipartisan approach Eno intended to follow. Eno CEO Joshua Schank succeeded in attracting nearly all the major aviation stakeholder groups to take part as Working Group members, along with Reason Foundation (represented by me), Business Roundtable (represented by former ATO Chief Operating Officer David Grizzle) and the U.S. Chamber of Commerce, plus a number of distinguished individuals, including former Clinton White House economist Dorothy Robyn, former MITRE executive Jack Fearnsides, and Aaron Gellman, founder of GRA, Inc.

The working group has held meetings almost every month since mid-2013, and the discussions moved from an initial focus on FAA reforms to a serious examination of the growth and track records of self-supporting ANSPs overseas. A number of experts have addressed individual working group meetings, including former ATO Chief Operating Officer Russ Chew, FAA Administrator Michael Huerta, and Nav Canada CEO John Crichton. Extensive discussions have taken place on the merits of various forms of organization for an ANSP, with more recent reviews of the relative pros and cons of a government corporation and a federally chartered nonprofit corporation.

As the project nears its conclusion, it released its first consensus work product this week: a “Statement of Principles for Air Traffic Control Reform.” The 10 principles include the need to continue serving all parts of the country and all types of aviation, facilitate robust ATC research and development, and improve FAA’s performance in safety regulation and certification. But most aviation media attention has focused on the principles that support ATC restructuring. These are as follows:

  • Ensure a coherent, stable, and predictable funding structure for air traffic control;
  • Establish a self-sustaining funding mechanism for air traffic control;
  • Enable an efficient procurement system for ATC modernization;
  • Enable bonding authority;
  • Include aviation stakeholders in the governance of the ATC provider; and,
  • Create and carefully implement a plan to ensure a seamless transition to the new system.

You will recognize most of these as very similar to the unanimous recommendations of the FAA Management Advisory Council, released in January 2014.

Whether all 16 aviation stakeholder groups will agree on a specific corporation proposal-expected to be outlined in the project’s formal report to be released soon-remains to be seen. But the fact that such a broad array of stakeholders could agree on this set of principles is very encouraging.

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Another ATC Billing Service Enters the Market

The alleged high cost and cumbersome bureaucracy needed to collect ATC charges from customers has been a mantra of defenders of the ATC status quo. At last year’s U.S. Chamber Aviation Summit, NBAA’s Ed Bolen, on a panel with me, argued against creating a “SkyRS” to collect such charges. That sentiment plays well to an audience of independent pilots who tend to be individualists and skeptics of big government. But the reality of ATC billing is far different.

Earlier this month, at the World ATM Congress in Madrid, COMSOFT announced the launch of their new COMSOFT Automated Billing (CAB) system. It is offered worldwide to ANSPs wishing to automatically convert flight plan data to produce customer bills. It can also directly interface with Eurocontrol’sCentral Route Charges Office (CRCO), one of the oldest and best-known ATC billing services, which serves all 39 Eurocontrol members and is also available worldwide. Another service with a long pedigree is IATA’s Enhancement & Financing (E&F) Services, dating back to 1992 and available to ANSPs worldwide. When I wrote about it in 2012 it was collecting about $2 billion a year on behalf of some 55 ANSP customers, including the Airports Authority of India.

More recently, the billing system originally developed by Airways New Zealand (which was corporatized in 1987), known as FlightYield, has been further developed and marketed worldwide by the ANSP trade association CANSO in cooperation with SITA. The latter company already provides communications services for 90% of the world’s aviation business. ANSPs that sign up for FlightYield don’t have to buy any hardware or software, or add any staff. They merely install an interface that transmits flight data every day to SITA’s operations center. SITA operates the billing system for each ANSP, creating and issuing the invoices and handling payment and debt recovery services, and remitting payments to each subscribing ANSP or airport.

To get some idea of what it costs an ANSP to do these services, I contacted nearby Nav Canada. As of 2012, they told me, their 12-person billing department (backed up by significant data processing) was issuing about 50,000 bills per year. In a query last year, I was told that their billing costs work out to be 2/10 of 1% of total revenues (i.e., .002%). And the average cost per invoice is about C$51.

There is nothing very complex about automated billing systems that use digital data from flight plans to create invoices. Billing and collection systems have been mastered by credit card companies that operate worldwide and add very little to the cost of retail transactions, thanks to huge economies of scale.

I might have a few worries along the lines of Ed Bolen’s “SkyRS” phantom if the government itself were to be creating and operating an ATC billing system. But there is no reason to think that a corporatized NewATO would fail to use state-of-the-art billing and collection systems. Indeed, since several commercial ones already exist, the simplest initial course would be to seek competitive bids from existing providers, rather than creating such a system from scratch.

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Modest Progress on Single European Sky

“After more than 10 years of talks, a single airspace in Europe is no closer to reality.” That was the subhead of a feature article in Aviation Week (March 2-15, 2015). It recounted the widely perceived failure of the strategy of creating Functional Airspace Blocks as a key step toward making ATC independent of borders. Only two of the nine FABs have fulfilled all the criteria set forth by the European Commission-the Danish-Swedish bloc and the North European bloc. All the rest are facing infringement proceedings. And the 2015-2019 performance plans of eight ANSPs have been rejected by the EC’s Directorate-General for Mobility & Transport (DG Move), including those of Austria, Belgium, France, Germany, Italy, and the Netherlands. A set of aviation experts asked to comment on the FAB strategy by Air Traffic Management (Issue 1, 2015) were almost uniformly critical.

Yet there are some encouraging signs of increased cooperative efforts, both within FABs and between them. For example, Blue Med FAB has signed an MOU with space-based ADS-B provider Aireon to assess the requirements for and benefits of that service in the airspace covered by this FAB (Cyprus, Greece, Italy, and Malta). The impressive Borealis Alliance, which consists of three FABs (Danish-Swedish, UK-Irish, and Northern Europe) and nine ANSPs, last month announced the start of a program to deliver free route airspace across the whole of Northern Europe by 2020. Borealis covers the airspace of all nine countries, providing air traffic services for 3.5 million flights a year across 12.5 million sq km of airspace. And early this month, the nine air safety regulators of those countries announced an agreement to work together to facilitate the free route airspace goal.

Another encouraging sign is ANSPs working together to procure standardized air traffic management systems. The COOPANS Alliance was started in 2006 by the ANSPs of Denmark, Ireland, and Sweden to implement new systems developed by Thales. Austria’s ANSP joined in 2010, Croatia’s in 2011. And just this month, France’s DSNA agreed to work with COOPANS to achieve convergence of their respective air traffic technology systems. In a separate effort, the ANSPs of Germany, Netherlands, Spain, and the U.K. have signed an agreement to jointly develop the next generation of controller working positions (CWP). According to Aviation Daily (March 13), some “promising talks” are under way with other ANSPs, as well. A third effort just getting under way with EU funding is coordinated by the A6 Alliance of ANSPs (France, Germany, Italy, Spain, Sweden, and the U.K.). It will define the best model for providing two key Europe-wide services: Pan-European Network Services and Data Link Services. The project also has the support of the ANSPs of Belgium, Cyprus, Greece, Malta, Netherlands, Portugal, and Switzerland.

These may sound like fragmented efforts, but they are evidence of far more cooperation among FABs and ANSPs than existed a decade ago.

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More Remote Tower Progress

The idea that airport tower services can be provided safely from a windowless room filled with video and data screens (like TRACONs and Centers) is rapidly gaining increased credibility. FAA Administrator Michael Huerta mentioned the subject during House testimony on March 3rd, noting the upcoming demonstration project in Leesburg, Virginia. He told the Congress members that “If the results are promising, this is something that I want to move out very aggressively on-because it holds great potential to address the need [for new control towers].”

Two low-activity airports in Sweden now have tower services provided from a remote tower center in Sundsvall, developed for LFV by Saab, and Norway is testing such a center to provide tower services for remote helicopter services to offshore oil operations. CANSO, ICAO, and Europe’s SESAR program are all encouraging development of remote tower concepts of operation and pilot projects. An article in CANSO’s Quarter 1, 2015 issue of Airspace defined three remote tower applications (which it referred to as scenarios):

  • Single Remote Tower: one controller responsible for one airport from a remote location.
  • Multiple Remote Tower: one or more controllers responsible for more than one airport from a remote location
  • Contingency Tower: a separate facility to be used when an airport’s conventional tower is out of service.

Other sources, such as Saab’s Remote Towers website, add a fourth category: a single remote tower facility for a large multi-runway airport that would otherwise require more than one conventional tower (e.g., Frankfurt, Chicago O’Hare, DFW International).

Thus far, Saab and Searidge appear to be the market leaders. Saab this month announced that it has received a contract from LFV to develop a remote tower solution for Linkoping Airport. And HungaroControl has announced a project with Searidge and Indra Navia to develop a remote tower solution for Budapest Airport. Indra Navia will install an Advanced Surface Management Guidance & Control System and Searidge will provide a video wall and other equipment.

Searidge’s Alex Sauriol told Aviation Daily recently that “What we’re seeing is fully formed requirements coming out of a number of different ANSPs” in either of two categories: consolidating control for several low-volume airports and using a virtual tower to replace a conventional tower or towers at high-volume airports. “Any airport today that has a tower construction plan or program should be evaluating this as an option,” he said. “Probably within the next 6-12 months you’ll hear about 3-4 major ANSPs making announcements and awards.”

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Possible Help for General Aviation’s ADS-B Dilemma

The GA community continues to protest the high cost of the FAA mandate to equip with ADS-B/Out, by 2020, all GA planes that fly in airspace where a transponder is required. Some 14 GA organizations signed a January letter to the FAA making this case. So far, however, there are only two bright spots on the horizon.

The first is that FAA in February amended its ADS-B rule, to permit “experimental” aircraft to install equipment that meets the same performance requirements as equipment produced in accord with the agency’s TSO production standards. That will help a small fraction of GA pilots by letting them equip with less-costly units.

The second development comes from Nexa Capital and its NextGen GA Fund. In response to operator concerns over the high cost of ADS-B units, Nexa created its Jumpstart GA 2020 program, under which it invited five avionics firms to bid on a 10,000-unit order for low-cost ADS-B units. The winning bid, from L-3 Aviation, was for its Lynx NGT-1000 box, at a dealer price of $1,599 each. That should satisfy a small portion of the demand for low-cost boxes, and perhaps encourage other companies to do likewise.

What many in the GA community would really like is for FAA to permit them to install non-certified units that-because they have not had to go through extensive and costly FAA certification-could be produced for some hundreds of dollars, rather than several thousand. Something along those lines was announced by U.K. air navigation service provider NATS in late January, as a trial program. The trial is part of a project called Electronic Visibility via ADS-B, which NATS has developed in cooperation with AOPA UK, Eurocontrol, and several vendors. One part of the project includes allowing use of non-certified GPS receivers in GA planes, while the second part will involve a new prototype device called a Low Power ADS-B Transceiver (LPAT). It will be battery-powered and light enough to be compatible with gliders and hot-air balloons, in addition to very light aircraft.

So far, there is no indication that FAA would consider such a solution for the US GA community.

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News Notes

FAA Eases Way for Data Link Communications. Responding to industry concerns, the FAA has revised a former policy that would have required any airline installing the avionics package known as FANS (Future Air Navigation System) to upgrade or replace its cockpit voice recorder to also handle digital messages produced by FANS’ digital messaging capability. The expense of doing that was deterring numerous FANS retrofits that would add useful data link communications to the aircraft in question. ICAO has stressed the safety benefits of FANS in global aircraft tracking, which provided FAA with a safety justification for the revised policy. Aircraft produced since 2010 must have a voice recorder able to also record data link messages.

Aireon Signs Contracts in Africa and India. Spaced-based ADS-B provider Aireon has signed an agreement with the Agency for the Security of Aviation Navigation in Africa and Madagscar (ASECNA), which provides ATC services for 17 countries in Africa. ASECNA will collaborate with Aireon to evaluate the requirements for and benefits of space-based ADS-B in the six flight information regions (FIRs) in which ASECNA is the air navigation service provider. One of these is the Dakar oceanic FIR that provides ATC services for flights linking Western Africa to both Europe and South America. Aireon has signed a similar agreement with the Airports Authority of India (AAI) to identify requirements and benefits of space-based ADS-B in that country’s airspace.

Portugal Was First with Free Route Airspace. Last month’s issue reported the announcement by HungaroControl that it was the first ANSP in Europe to implement free-route airspace nationwide. Rui Neiva of the Eno Center for Transportation sent me a PowerPoint from Nav Portugal documenting the completion of its Free Route Airspace in the Lisbon FIR (above 24,500 ft.) in 2009. In its first year, the project reduced flight miles by 1.3 million nm, saved 12 million Euros due to reduced flight time and fuel burn, and reduced CO2 emissions by 27,000 tonnes.

Nav Canada’s Online Charges Summary-Corrected Link. Some readers of last month’s issue had trouble connecting to the Nav Canada website where the useful summary of its pricing structure is posted. The correct link is: www.navcanada.ca/EN/products-and-services/Documents/Service%20Charges-Eng.pdf

Four ANSPs Win Jane’s ATC Awards. During the CANSO ATM dinner, held during the World ATM Congress in Madrid earlier this month, four ANSPs were recipients of IHS Jane’s ATM Awards, presented by Ben Vogel, editor of Jane’s Airport Review. DFS, the German ANSP, won the Environment Award for its two-year Free Route Airspace Maastricht and Karlsruhe demonstration project with Eurocontrol and Lufthansa. The U.K.’s NATS won the Enabling Technology Award, for its Heathrow Cross-Border Arrival Management project, developed in cooperation with Eurocontrol, DSNA, and IAA along with Exelis and Snowflake Software. NATS and Nav Canada shared the Service Provision Award for their Collaboration on Oceanic Airspace Systems and Tools program. And the FAA Air Traffic Organization (ATO) won the Runway Award for its Converging Runway Operations project with MITRE Corporation.

CANSO Releases PBN Best Practices Guide. The Civil Air Navigation Services Organization has released its Performance-Based Navigation Best Practices Guide for ANSPs. CANSO Director General Jeff Poole told the ATM World Congress audience that the aim of the publication is to assist ANSPs worldwide to transition to PBN in a coordinated manner, “so that planes can fly across borders seamlessly.” CANSO developed the guide as a “practical and useful tool to assist in the implementation of PBN,” which is also a key part of the ICAO Aviation System Block Upgrades.

Airservices Australia Upgrades Sydney Tower. Frequentis last fall completed the installation and testing of a new communications and tower control system at the country’s busiest airport, Sydney. The system was put into operation in September 2014, just 12 months after contract award.

Iceland’s Trans-Atlantic ADS-B Corridor. The ANSP of Iceland, Isavia, has announced the operational status of its new ADS-B service in its far-north airspace. Comsoft provided ground stations in Iceland and a surveillance data system; that system also interfaces with ADS-B ground stations provided by Saab in Greenland and the Faroe Islands. The result is a trans-Atlantic surveillance corridor allowing reduced separation due to far more accurate real-time aircraft location data.

FAA’s New NextGen Website. The FAA this month launched a new website, NextGen Update 2015, with overviews from Chief NextGen Officer Mike Whitaker and Assistant Administrator for NextGen Edward Bolton. Separate sections enable a user to click on details of Progress and Plans, Collaboration, General Aviation, and Operator Investments and Airports. Quicklinks are also provided for individual programs such as ADS-B, ERAM, PBN, SWIM, and others. Go to: www.faa.gov/nextgen/update.

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Quotable Quotes

“My vision is that the market in which air navigation service providers (ANSPs) operate will consolidate, and the organizations will operate under market conditions. ANSPs will cooperate and at the same time offer and purchase services from each other as required. Only a few privatized enterprises will be able to provide the complete value chain of air navigation services. National borders will no longer determine the route network or service provision throughout Europe.”
-Klaus-Dieter Scheurle, CEO of DFS Deutsche Flugsicherung, “Competition Calls,” Air Traffic Management, Issue 4, 2014

“We expect virtual air traffic control centers and the European improvement projects (among which SESAR) to be the biggest game-changes in regard to innovation. The virtual consolidation of several sites into a single joint virtual center opens up a world of possibilities, but will also impose new challenges with regards to managing the ATC playing field as a whole. With the possibility of ANSPs not only providing additional services to other ANSPs, but competing among each other on service levels, the ATC landscape could change entirely.”
-Sascha Puetz, Quintik, “Innovation: Emerging Challenges,” Air Traffic Management, Issue 1, 2015

“This [NextGen] technology is complicated and novel, but that isn’t the problem. The problem is that NextGen is a project of the FAA. The agency is primarily a regulatory body, responsible for keeping the national airspace safe, and yet it is also in charge of operating air traffic control, an inherent conflict that causes big issues when it comes to upgrades. Modernization, a struggle for any federal agency, is practically antithetical to the FAA’s operational culture, which is risk-averse, methodical, and bureaucratic. Paired with this is the lack of anything approximating market pressure. The FAA is the sole consumer of the product; it’s a closed loop.”
-Sara Breselor, “Why 40-Year-Old Tech Is Still Running America’s Air Traffic Control,” Wired, Feb. 24, 2015

“We recognized the need to modernize our aging system decades ago, and the FAA has been working on some form of modernization since 1981. The FAA’s most recent modernization initiative, NextGen, is entering its second decade, but despite over $6 billion in taxpayer dollars spent, passengers, general aviation, and airlines have yet to realize any significant operational benefits. Cost and timetables for modernization continue to escalate. Last year, the Department of Transportation’s inspector general warned that NextGen implementation costs for government and industry-initially estimated at $20 billion each-could double or even triple, while taking an additional decade. . . . While Congress has tried on previous occasions to reform the FAA, now that passenger levels are rising again, it’s time to recognize that this massive bureaucracy is not organized to properly manage modernization. The time for half measures is over. Without bold action now, things will only get worse for passengers, shippers, general aviation operators, and airlines. The system will become even less efficient and reliable, passengers will experience longer delays and more cancellations, packages will be delivered later and at higher costs to customers and shippers, airlines will burn more fuel and emit more emissions unnecessarily, and billions of additional taxpayer dollars will be wasted on yet another failed air traffic control modernization initiative. . . . For these reasons, a transformative aviation bill is one of the highest priorities of the House Transportation and Infrastructure Committee this year.”
-Rep. Bill Shuster, “America Needs Modern Air Traffic Control Systems,” news release, Feb. 24, 2015

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Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.