Aviation Policy News #164
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Aviation Policy Newsletter

Aviation Policy News #164

Initial users of space-based air traffic control surveillance, need for GPS backup getting more attention, and more.

In this issue:

Three ANSPs Begin Using Aireon Space-Based ADS-B Data

The first air navigation service providers to make use of data from Aireon’s operational constellation of space-based ADS-B satellites are three of the original investors: Nav Canada, NATS (UK), and Enav (Italy). They are using these new signals for both domestic and oceanic airspace surveillance.

Nav Canada’s first use, beginning in late March, was in the Edmonton flight information region (FIR), the largest such region in the world, encompassing not merely Alberta but also portions of Saskatchewan and British Columbia, plus the Yukon and Northwest Territories. Much of this airspace lacks radar surveillance, so it has historically required “procedural” separation similar to what applies in oceanic and polar airspace. Phase one in this huge FIR began with the high-level airspace above Alberta and Saskatchewan, in the eastern part of the FIR, where there is already radar surveillance and ground-based ADS-B. Phase 2, a month later, is expanding to the western part of the FIR, which interfaces with FAA’s Anchorage airspace. The final phase will encompass the high-north portion of the FIR, using VHF or satellite-routed controller-pilot data link communications. In all three sectors, separations will be reduced due to the increased frequency of position updates (every 5 to 8 seconds).

Shortly after the Edmonton FIR start-up, two-phase implementation will take place across the North Atlantic, in Nav Canada’s Gander oceanic FIR and NATS’ Shanwick oceanic FIR. In the first phase, longitudinal separations will be reduced from 40 nm to between 14 and 17 nm. In the second phase, lateral separation between tracks will be reduced from 30 nm to 19 nm. Phase 2 will begin six months after Phase 1 starts, and will continue until November 2020.

To make full use of space-based ADS-B, Nav Canada has developed Fusion, which is replacing its legacy radar data processing system. Fusion takes all surveillance information from a target (such as radar, ADS-B, multilateration, etc.) to create the most-accurate possible position for each, in real time. It interfaces with the domestic air traffic management system (CAATS) and the oceanic system (GAATS). Across the North Atlantic, NATS is also using GAATS, allowing automatic hand-offs between FIRs. On these airline routes, Nav Canada estimates that flights will save 900 to 1400 lbs. of fuel per flight, with accompanying reductions in CO2 emissions.

Not yet quite as far along is the ANSP of Italy, Enav. It is responsible for airspace above Italy and significant portions of Mediterranean oceanic airspace. Mountainous northern Italy’s airspace lacks complete radar surveillance, so space-based ADS-B will be a major improvement. Like Nav Canada, Enav plans to merge space-based ADS-B data with data from radars, multilateration, and other sources, and is considering two different fusion systems for this purpose. It is also studying whether some of its legacy radars might be decommissioned (rather than being replaced) when they reach the end of their useful life. And as noted in a recent article in Air Traffic Management, “Space-based ADS-B is also an opportunity [for Enav] to provide low-cost coverage for low-traffic airports,” which would facilitate the introduction of remote tower services for such airports, currently in the planning stages.

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Newark and Some Others Called Out for Using Airports as Cash Cows

Last fall Bloomberg reported that several years after United Airlines complained to the FAA about Newark overcharging airlines and using some of the money for non-airport purposes, FAA replied that yes, “The Port Authority has routinely diverted airport revenue to non-airport activities.” In its complaint filed back in December 2014, United said the flight fees it has to pay at Newark are 75 percent higher than at JFK (which is also operated by the Port Authority). United cited diversion of airport revenues from Newark to roads and other non-aviation infrastructure in New Jersey, and Bloomberg reported that “The FAA agreed with the airline’s assessment on that point,” and quoted the agency’s Kevin Willis as saying FAA found “no established, consistent, clear, and fully justified method of establishing the rate base on a predictable schedule” of rates and charges at Newark.

FAA gave the Port Authority 30 days to identify how much airport revenue it has diverted since 2012, adjust Newark’s rates and fees to reflect those amounts, modify its accounting practices, and explain how it will apply that revised method at Newark. Instead of complying, the Port Authority said it would appeal.

What the article failed to explain is that the Port Authority is one of nine airport “sponsors” that are allowed to divert a certain amount of airport revenue to non-airport purposes—despite a regulation (applying to all other commercial airports) that they must devote all airport revenue to the capital and operating costs of their airports. This dates back to the creation of the federal airport grant program (AIP) in 1982, which required all airports to agree—as a condition of receiving the new AIP grants—that all airport revenues would be used solely for the capital and operating costs of the airport. But because nine airport sponsors (each operating one or more airports) had historically diverted non-trivial amounts of revenue to other purposes, they were given permanent “grandfathered” exemptions. That exemption was later slightly restricted by the 1994 FAA reauthorization bill, which limited the amount of annual diversion, to be the amount diverted in 1994, adjusted annually by the Consumer Price Index.

The Port Authority is one of those nine grandfathered airport sponsors; the others are the state-run airport systems of Hawaii and Maryland, Massport, City of Chicago, City/County of San Francisco, City/County of Denver, City of St. Louis, and Niagara Frontier Transportation Authority. Last year the DOT Office of Inspector General did an audit report on revenue diversion by the eight sponsors other than the Port Authority–with no explanation for excluding the Port Authority. (The report is AV2018041.) Altogether, the eight of them reported $5.34 billion in grandfathered payments from FY 1995 through FY 2015. But OIG auditors found that four of the eight did not report their revenue diversions accurately. Three of the four diverted more than the legal limit: Maryland, Massport, and Hawaii, while San Francisco diverted slightly less. The net over-diversion by those three was $2.34 billion. Also, although OIG did not audit the Port Authority for this report, its Exhibit E tallied up a reported $3.225 billion in PANYNJ grandfathered diversions over the same time period.

Given what Bloomberg reported about FAA and Newark back in November, it seems likely that FAA has a diversion analysis under way concerning Newark, which may be why OIG excluded the Port Authority from its 2018 audit.

I’d like to suggest that Congress back in 1982 missed the boat by grandfathering in perpetual revenue diversion from those nine airport sponsors. To be sure, in the real world cutting them off cold turkey would have caused near-term budget problems for the agencies receiving the diverted funds each year. But something like a five-year phase-out would have given those agencies plenty of time to adjust, and put the airports from which this diversion has continued on a level playing field with all other U.S commercial airports. It’s not too late for Congress to fix this mistake.

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PFC Battle Escalates Yet Again

In the normal course of congressional legislating, policy regarding airports and air traffic control gets made via periodic bills that reauthorize the FAA. Since a PFC increase did not make it into the 2018 FAA reauthorization, but a 2019 infrastructure bill is being seriously contemplated, airport groups are again pushing hard for Congress to increase the federally imposed cap on the passenger facility charge (PFC) that an airport sponsor is allowed to levy to pay for specific capital improvements to its airport(s).

Unfortunately, my friends at Airlines for America (A4A) are continuing their long-standing campaign to mislabel an increase in the federal PFC cap as a “federal tax increase”—hoping to continue deceiving conservative, low-tax groups so they will oppose this measure to increase airport self-help. Here are a few of the points A4A is making in its current campaign.

Claim: Airports cannot identify a single project that is not getting done due to lack of resources.
Fact: Projects that have been financed and are under construction are of course using existing resources, often including a PFC revenue stream for debt service on long-term revenue bonds. Most larger airports have fully committed those revenues, but still have other projects, not yet ready to proceed, but for which little or no PFC revenue is left for new bonds.

Claim: There is $7 billion sitting unused in the Aviation Trust Fund; airports should use that.
Fact: What counts is what Congress authorizes and then appropriates to be spent on AIP grants. That amount has been essentially flat for a number of years. The size of the Trust Fund balance is irrelevant.

Claim: Airports have $14.5 billion in cash on hand and have diverted $5.4 billion over the last 10 years.
Fact: In order to maintain investment-grade bond ratings, airports need to maintain cash reserves, rather than operating close to the edge (as airlines have sometimes done; remember all the bankruptcies last decade?). As for diversion, nearly all of that $5.4 billion is legal (see above article) but only for nine grandfathered airport sponsors. The vast majority of airports are not allowed to divert airport revenue (and if A4A knows of any that are illegally diverting, they should identify them).

Claim: Rural airports and families will be hit, making it far more costly to fly.
Fact: A4A claims that if the federal cap is doubled, every airport would increase its PFC by that level. But many small and rural airports either don’t charge PFCs or charge less than the current $4.50 cap. And FAA can only approve a PFC increase if the airport has projects for which increased PFC revenues are needed.

Underlying much of this campaign is the deliberate blurring of the difference between a user fee and a tax—which has been extensively litigated at the state and local level in a wide variety of situations, including highway and bridge tolls. A tax is a general levy by a government body that can be used for a wide array of purposes, with no necessary direct benefit to those subject to the tax. By contrast, a user fee is a charge to use a specific facility or service, with the revenues used to pay for that service or facility for the benefit of those who pay the fee when they use it.

Thus, a sales tax or an income tax is clearly a tax. And just as clearly, a toll or water bill or a PFC is a user fee. You only pay it if you use the facility in question, and the proceeds can only be used for that facility. A growing majority of conservative and free-market groups these days understand this difference, and support the PFC as a local user fee that is more consistent with limited-government principles than federal taxes that largely redistribute the proceeds around the country. Several leading taxpayer groups, unfortunately, still don’t get it.

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ADS-B Equipage Still Lagging, Especially in Europe

All the benefits of ADS-B surveillance, whether space-based or ground-based, depend on aircraft operators in the relevant airspace being equipped with ADS-B/Out. Otherwise, their more-precise and up-to-date position, etc. will not be known to the ATC system. But equipage is proceeding more slowly than ANSPs and air safety regulators expected.

In the United States, FAA reports that as of May 1st, a total of 83,189 US aircraft were equipped—out of several hundred thousand, including over 167,000 general aviation planes. By April 1st, only 56,248 fixed-wing general aviation aircraft had been equipped. At the current rate of about 1,400 GA aircraft being equipped per month, over the remaining nine months until January 1st, only another 12,600 would get equipped. By contrast, as of a February 2019 tally by FlightAware, 68 percent of business jets and turboprops were equipped. Airlines, which need access to the airspace where ADS-B will be required, will almost certainly meet the deadline.

But for those that don’t, FAA issued a policy statement on April 11th, explaining that while non-equipped aircraft will not be grounded after January 1st, to fly in any airspace where ADS-B is required they must request special permission each time, at least an hour before the proposed flight, and that such requests, of necessity, will be the lowest priority for controllers. In addition, 14 major airports were listed as capacity-constrained, where FAA will more than likely deny requests to operate by non-equipped aircraft.

Both Canada and Mexico also have ADS-B equipage deadlines. Canada’s first-phase deadline is January 1, 2021, for all airspace above 18,000 ft.; one year later, the covered airspace is expanded to airspace above 12,500 ft. Mexico’s deadline for much of its airspace is the same as FAA’s, Jan. 1, 2020. I was unable to find equipage information for either Canada or Mexico.

Things are worse in Europe, where the deadline for equipage is June 7, 2020. However, since only 20 percent of airline aircraft required to equip had done so by last spring, the European Commission is widely expected to offer various exceptions. Installation of ADS-B ground stations varies widely across Europe, which is leading to discussions in some countries of relying on space-based ADS-B rather than making sizeable investments in ground stations. Also, the European deadline applies not to specific airspace but to specific kinds of aircraft. For general aviation, it currently applies only to planes capable of a maximum cruising speed of 250 knots and 5700 kg gross weight. Light GA aircraft are not covered. As Mark Boguski dryly noted in an article in Air Traffic Management (Issue 1, 2019), “Without the inclusion of all aircraft, it will be difficult to realize the benefits of rationalizing radar to a minimum operating network.” So much for the promised ATC infrastructure cost savings.

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More U.S. Airline Competition on the Way

America’s large hub airports are crowded, and their growth rate has slowed. By contrast, the 31 medium hub airports grew 5.2 percent in 2017, twice the rate of the large hubs. While the big three airlines generally dominate the largest hubs, Southwest has between 50 percent and 93 percent of capacity at 10 of the busiest medium hubs. Where does that leave the most aggressive competitors—the ultra-low-cost carriers (ULCCs) Allegiant, Frontier, and Spirit? For the most part, serving smaller hubs and secondary airports.

The ULCCs continue to grow and are among the world’s most profitable airlines. Frontier, for example, last year signed a code-sharing agreement with Mexico’s Volaris, adding 12 more destinations in Mexico, as part of growing to 100 destinations (now including Calgary in Canada). This kind of growth has stimulated two very experienced airline veterans to plan new airlines, likewise aimed at price-sensitive travelers and smaller airports.

David Neeleman, a pioneer of JetBlue, WestJet, and Brazil’s Azul, last year announced plans for a new start-up US airline. He has already placed an order for 60 of the new Airbus A220 aircraft, with deliveries beginning in time to launch airline service in 2021. He points out that from 2014 to 2017, the US economy grew significantly, but the number of domestic airline seats remained unchanged. Airlines up-gauged to fewer, larger planes, with less service to smaller airports. Hence, Neeleman sees a significant market niche.

The other new-airline entrepreneur is Andrew Levy. He co-founded and managed Allegiant, the pioneer ULCC and more recently served as chief financial officer at United Airlines. His new ULCC will be based on a small charter airline, XTRA Airways, which he will convert into a serious airline targeting price-sensitive leisure and business travelers. Like Neeleman, Levy sees secondary airports as the key to success. They are not crowded, they charge low fees, and most have room to expand. Some offer an alternative to crowded large hubs—such as Mesa Gateway near Phoenix and Gary Chicago near O’Hare and Midway. Neeleman has also mentioned Providence, relatively near Boston. Levy, as far as is known, has not yet placed any aircraft orders, but an April 12th article on Skift.com says his business plan calls for five planes by the end of 2019, 14 by the end of 2020, and 45 by the end of 2023. He told NPR’s “Here and Now” that he will acquire “new or nearly new” planes, and Bloomberg News speculates that these might be Boeing 737-800s.

Periodic calls for some form of airline re-regulation ignore the reality that the US airline market remains open to new entrants—and that the newest of them, the ULCCs, are growing and thriving. More choices are good for air travelers. And the continued growth of low-fare competitors will also be good news for America’s smaller airports.

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Need for GPS Backup Is Ever-Greater

Here is a sampling of recent headlines concerning interference with GPS, a growing worldwide problem:

  • “2018: A Year of Serious GPS Disruption,” Guy Buesnel, RNT Foundation, Dec. 12, 2018
  • “Year-Long Ocean Cruise Finds GNSS Interference Everywhere,” GPS Editor, GPS World, March 14, 2019
  • “Norway Reacts to Russian Jamming By Listening Harder,” Editor, RNT Foundation, March 12, 2019
  • “Russians’ GPS Meddling Creates Navigation Threat with Far-Reaching Consequences,” Vishnu Rajamanickam, FreightWaves, April 15, 2019

This is just a handful of dozens of articles like this, citing extensive jamming and deliberate interference with GPS and similar GNSS systems around the globe. Air traffic control modernization, in Europe and the United States, depends in many ways on GPS being available. So does ocean navigation, individual drivers’ navigation, and countless other uses, including precision agriculture. And that’s just the navigation portion; GPS is also the near-universal source of precision timing signals used by utilities, the financial system, and numerous other industries. Indeed, modern economies depend critically on the position, navigation, and timing (PNT) signals provided by GPS and the other varieties of GNSS.

Ever since 2001, when a major report from DOT’s Volpe Center identified the vulnerability of GPS and its critical roles in transportation, expert bodies in both government and the private sector have been stressing the need for comprehensive GPS backup. A handful of congressional champions have pushed, prodded, and occasionally succeeded in getting legislation enacted, requiring relevant federal agencies—DOD, DHT, DOT in particular—to develop and test such backup capabilities. One such mandate, in 2017, called for DOT to conduct a GPS Backup Technology Demonstration project. On March 7, 2019, Rep. Peter DeFazio (D, OR), chairman of the House Transportation & Infrastructure Committee, sent a letter to DOT Secretary Elaine Chao asking for a progress report on this mandate. It was co-signed by ranking member of T&I Rep. Rick Larsen (D, WA), Rep. Sean Maloney (D, NY), and Rep. John Garamendi (D, CA). Also in March, Sen. Tammy Duckworth (D, IL) and Sen. Joni Ernst (R, IA) announced the formation of a bipartisan GPS Caucus. Other initial members include Sen. Jeff Merkley (D, OR), Sen. Maggie Hassan (D, NH), Rep. Dave Loebsack (D, IA), and Rep. Don Bacon (R, NE).

Late in March, the Department of Homeland Security announced that its National Risk Management Center is finalizing a strategic plan to address cybersecurity risks posed by PNT systems such as GPS. What this will cover remains to be seen, but at least it suggests that one agency in the federal government is taking this problem seriously.

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News Notes

Heathrow Third Runway Upheld by U.K. High Court
The highest court in the United Kingdom rejected a challenge to the government’s 2018 approval for Heathrow Airport to add a much-needed third runway at the country’s largest airport. Three environmental groups, five local councils, and the Mayor of London had argued that the runway addition would be contrary to government policy on climate change, air quality, and other environmental impacts. The High Court rejected all the claims, ruling that they had been adequately addressed in many years of studies. The airport company has already raised over £1 billion in initial funding for the third runway, and expects to announce its detailed master plan in June.

Bipartisan Senate Bill to Reform FAA Controller Hiring
Current law requires half of air traffic controller candidates to be recruited from the general public, rather than from graduates of Collegiate Training Initiative colleges and former military controllers. Sen. Jeanne Shaheen (D, NH) and John Hoeven (R, ND) last month introduced the Air Traffic Controller Hiring Reform Act of 2019. It would require FAA to give hiring preferences to CTI graduates and military veterans, removing the current 50 percent limitation.

Nav Canada Will Add Time-Based Spacing at Toronto Airport
Using technology successfully employed at London Heathrow by NATS, Nav Canada has announced plans to install the technology at Toronto Area Control Center. This will enable the same kind of time-based spacing of arriving aircraft at Toronto International. The Intelligent Approach system calculates needed separation between arriving planes based on their type and current wind conditions. It was developed jointly by Leidos and NATS, and has been used at London Heathrow since 2015.

Long Beach Reallocates JetBlue slots to Delta and Southwest
After LGB imposed its use-it-or-lose-it requirement on airline slots (at least 85 percent in use over the course of a year), JetBlue gave up 10 of its 34 slots. Four have now been allocated to Delta and six to Southwest, effective in October. No reasons were given for these choices, other than these two airlines wishing to expand service. One has to wonder who would have bid on them if they were offered for a specific number of years to the highest bidders.

More Remote Tower Projects Announced
The ANSP of Estonia—EANS—announced in March that it and software developer Cybernetica have developed a remote tower solution that can control traffic at several airports from a single remote tower center. Estonia has only one major airport and four regional ones. Separately, the ANSP of Saudi Arabia—SANS—has selected Frequentis to develop a mobile remote tower that can be used on a contingency basis and/or during control tower maintenance updates at various airports. These developments add two more countries to the growing number adding remote towers to their ATC systems.

Atlanta Airport Corruption Investigation Continues
The Atlanta Journal-Constitution reported (April 20th) that the secret legal settlement between former Mayor Kasim Reed and fired airport general manager Miguel Southwell has become a “major focus” of the federal grand jury corruption investigation. In December 2016 the City Council approved a settlement payment of $85,516 for Southwell. But investigations have revealed that another $147,000 was paid to the fired executive, from sources yet to be identified.

Hawaii Airport Authority Bill Fails Again
The fourth annual legislative attempt to de-politicize the management of Hawaii’s seven commercial airports failed. Senate Bill 666 would have created an airports corporation to take over all seven airports from the Hawaii DOT. The bill failed to make it out of the relevant House committee by the close of the 2019 legislative session. Sponsor Sen. Lorraine Inouye was disappointed but said she would try again next year.

French Court Questions Toulouse Airport Privatization
In April the administrative appeals court in Paris annulled the government’s 2015 sale of 49.99 percent of Toulouse-Blagnac Airport to a joint venture of Shandong Hi-Speed Group and Friedman Pacific. The court ruled that because another member of the joint venture (SNC Lavalin) dropped out before the sale was finalized, that violated rules set up for government approval of the deal. But the sale itself has not been overturned; the case now goes to the commercial court for a final decision under private law.

LAX Adding Two Terminals, Not One
Last month’s News Note on DFW and LAX terminal additions focused on the planned Terminal 9 at LAX. Thanks to several alert readers, I am glad to explain that an additional terminal project is planned: a major expansion of Terminal 1 (Southwest), to be called Concourse 0 with 11 more gates. Each of these projects is in the $1 billion range, and how they will be financed is still being discussed. Both Terminal 9 and Concourse 0 will include facilities for international as well as domestic flights.

Paine Field Doing Well After Start-Up
Based on its initial two months in operation, Paine Field in Everett, WA is doing well. With 24 flights per day by Alaska and United, the airport serves up to 15,000 departing passengers each week. The new passenger terminal, built and operated by Propeller Airports, is getting positive reviews as customer-friendly and hassle-free, with parking just a few steps away. Southwest had originally planned to start service at Paine, but sold its space to Alaska.

More Free Route Airspace for Northern Europe
With European aviation looking ahead to “summer 2019 chaos” (per Aviation Daily, May 3rd), several ANSPs have announced an expansion of free-route upper airspace in Belgium, Luxembourg, Netherlands, Germany, Denmark, and Sweden. This development links previous projects developed by the Swedish-Danish functional airspace block, Eurocontrol’s Maastricht Upper Area Control Center (MUAC), and the northeastern part of DFS’s German free route airspace. Aircraft using the upper airspace of this entire region will be able to do so this year regardless of traditional airspace boundaries—meaning time savings, fuel savings, and emission reductions.

Updates on Airport Parking and Ground Transportation
Two recent articles provide further thoughts on the potential impacts of new vehicle technologies and business models on airport revenues from parking and rental cars. “Changes in Vehicle Use Will Impact How Airports Handle Parking” is in the April 15th issue of Engineering News-Record, pp. 35-36. And “Current Trends in Airport Ground Transportation” is in the February/March issue of Airport Business.

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Quotable Quote

“Investors typically consider French airports to offer significant value upside potential. Arguably, this is best demonstrated in many regional airports and with particular focus on the commercial business lines (i.e., retail, food & beverage, car parking, real estate) where many regional airports in France are simply not market leaders when it comes to passenger experience and the depth and breadth of commercial service offerings. This is not unique to France. Many airports that have experienced a period of government ownership struggle to benchmark highly against airports that are owned and operated by the private sector.”
—Damian Stanley, quoted in Daniel Atzori and Ofelia Stroe, “Q&A: AMP Capital on the Future of European Airports,” Inspiratia Infrastructure, April 9, 2019

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