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Reason Foundation

Air Traffic Control Reform Newsletter #50

Topics include: FAA budget woes-again; the $25 modernization surcharge; a GPS backup plan; environmental benefits of ATC reform; runway capacity and ATC modernization; and other news.

Robert Poole
February 1, 2008

In this issue:


Aviation Trust Fund as a Stable Revenue Source—Not

Once again, Congress has failed repeatedly to reauthorize the aviation excise taxes on which the FAA and its Air Traffic Organization (ATO) depend. With the latest piecemeal extension of the old law running out at the end of this month—and with many policy issues still unresolved—Congress last week voted to extend the old law yet again, to June 30th. And if you think a serious reauthorization bill will get enacted between June 30th and Election Day, I'd say you're dreaming.

This is no way to run a railroad—or an air traffic control system. Defenders of the status quo (aviation excise taxes rather than direct user fees, a budget decided in painstaking detail by congressional committees every year, and an FAA of necessity focused more on satisfying Congress than on satisfying its aviation customers) claim that this system provides stable, predictable funding in amounts always sufficient for the job at hand. As this latest reauthorization circus plays itself out, those claims look weaker than ever.

One such claim is that projections of Aviation Trust Fund revenues show that there will be plenty of money for implementing NextGen, the complete revamp of today's ground-based ATC system. Critics (including me) have cautioned that the incentives driving the budget process make that a dubious proposition. Payroll costs, including the large cost of recruiting and training a nearly complete replacement of the controller workforce over the next decade, eat up the lion's share of the budget. And Congress's top priority always seems to be to expand the Airport Improvement Program, which gives members numerous opportunities to announce airport grants. That means the ATC capital investment portion of the FAA budget (historically called Facilities & Equipment) ends up getting short shrift. As one aviation trade group put it recently, "Because Congress has not yet provided either a dedicated source of revenue or suff icient annual appropriations, the Operations account continues to raid the capital accounts for funding."

One such group recently shared with me, on a confidential basis, the results of modeling runs done for it by an outside consultant. Making a range of assumptions about likely aviation excise tax growth and the size of the general fund contribution to FAA's budget, the consultant projected the cash balance, commitments, and uncommitted balance of the Trust Fund through 2020. Assuming an 18.6% general fund contribution (a realistic figure based on recent years) and the CBO's optimistic projection of 5.2% annual revenue growth, the Trust Fund's uncommitted balance over the next four years is only a few billion dollars; it's even worse if the general fund contribution is held constant at $2.6 billion. And using a more realistic 3.4% revenue growth (the historical 10-year average), the uncommitted balance would be only $500 million by the end of the four-year reauthorization period (2011), and would remain below a bi llion dollars over the subsequent four years. There's not much room there for the $20+ billion estimated FAA NextGen investment.

Even though Congress is unlikely to pick up on it, I'm glad the FAA has essentially resubmitted its previous reauthorization proposal, calling for (1) a shift to cost-based user fees in place of excise taxes, (2) bonding that user fee revenue stream, and (3) a board representing aviation customers to recommend priorities for the capital spending. The best we can hope for when Congress eventually gets around to dealing with the substance of reauthorization is the scaled-down Senate version of these provisions: a $25 user fee for each jet or turboprop IFR flight, bonding authority based on that revenue stream for up to $5 billion in modernization revenue bonds, and a user board to make those spending decisions. I hear that Sen. Rockefeller is still committed to these provisions, though it hurts that his Republican co-author, Sen. Lott, has retired. If these provisions can be implemented, at least there will be a s tart on a dedicated revenue stream for NextGen implementation, and an improved process for deciding what investments produce the greatest bang for the buck.

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Speaking of the $25 Modernization Surcharge . . .

General aviation groups, especially AOPA and NBAA, have portrayed the $25/IFR turbine flight modernization fee as the first step down the slippery slope to user fees for everything the FAA does. So even though it would not apply to any of the 165,000 piston planes owned mostly by AOPA members, and would be a trivial expense to anyone who can afford a turboprop or business jet, they continue to stir up fear, uncertainty, and doubt about this sensible plan. So let's take a deep breath and look more carefully at this proposal.

First, since the main cost drivers of the ATC system are high-performance jet and turboprop planes, it's fair that the burden of NextGen modernization should fall largely on that category of aircraft. For these planes, 90% of turboprop flights operate under instrument flight rules (IFR), as do 100% of jet flights. The hundreds of thousands of AOPA members in their single-engine piston planes, flying VFR, would not be touched by this fee. Second, in terms of the slippery slope argument, remember that the FAA cannot impose any fees on anyone without the consent of Congress. The GA community has considerable clout with Congress, and any broader applications of user fees (such as in the FAA budget proposal) could only be implemented after robust debate and a majority vote by both houses.

So with those issues out of the way, let's look at the actual impact of a $25/IFR flight fee on the high-performance jets and turboprops to which it would apply. (This fee would apply to all jets and turboprops, including those operated by airlines. My discussion here concerns only business aircraft.) The least expensive planes in this category are single engine turboprops, seating up to nine people. They range in price from $1.3 million to $3.3 million. The full cost to own and operate such a plane (including depreciation) averages $802 per flight hour. So a $25 per flight fee on a two-hour turboprop flight ($12.50/hour) is an added 1.6% cost. I don't think that's going to make anyone not buy the plane, or leave it in the hangar.

Here are the comparable numbers for other planes:

Reflecting on these numbers, I don't see how anyone could take seriously the claims by AOPA and NBAA that this new user fee would harm business or general aviation.

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Finally, a Back-up for GPS

The whole NextGen approach to revamping air traffic control depends critically on GPS as the basic navigational tool. But as has become increasingly evident over the past decade, the GPS signals are vulnerable to jamming and unintentional interference. In Issue No. 47 I reported on the findings of an ITT study (for the Joint Planning & Development Office), recommending that enhanced LORAN (eLORAN) be developed as the GPS backup system. And that's just what the President's budget has now proposed to do.

Specifically, responsibility for upgrading the existing LORAN-C system would be shifted from the Coast Guard to its parent Department of Homeland Security. That's because GPS has become far more than a navigational tool. Its precise timing signals are also critical to a host of other infrastructure, everything from telecommunications and electric utilities to banking and other financial transactions. Crippling all that infrastructure would have devastating consequences, so ensuring its protection makes sense as a DHS function.

Enhanced LORAN will be a major upgrade of the existing World War II-era navigational system used today primarily in maritime navigation (but also by some aircraft). The system uses several dozen ground stations to send out powerful long-range signals. An eLORAN receiver in the United States can pick up signals from any station within 1,500 to 2,000 miles. Since it uses triangulation to figure out location, that means having signals from something like two dozen sources—hence, the system's superb accuracy. It is extremely difficult to jam these powerful signals, and it also has a completely different failure mode than GPS. Even better, LORAN is used in Europe, too, and they also need a backup for their forthcoming Galileo GPS-like system.

The lack of an agreed-upon backup for GPS has been a roadblock for proceeding with NextGen, since no transition from a radar-based to a satellite-based system could go forward without addressing GPS's vulnerabilities. The decision to proceed with eLORAN solves that problem.

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Environmental Benefits of ATC Reform

It's increasingly looking as if a driving force for ATC reform will be reducing greenhouse gas emissions. Aviation is under worldwide pressure to do this, and advanced air traffic management offers meaningful reductions. And since nearly all such techniques reduce emissions by reducing fuel burn, airlines are eager for these changes to be made.

One of the most basic improvements comes from a shift from today's zig-zag "airways" to direct routings. Zig-zag routings are a big problem in both Europe and the United States. In both regions, airspace is carved up into numerous sectors and subsectors, dictated by the location of ground-based navigation aids and in Europe by the existence of 41 separate air navigation service providers (ANSPs), each managing the airspace above its own country. The Association of European Airlines estimates that direct routings there would lead to 10% fuel savings, valued at $4.4 billion per year. That means 10% less greenhouse gas emissions, as well.

Likewise, in this country the Aerospace Industries Association (AIA) estimates 12% savings from direct routings and other advanced ATC capabilities. But both major efforts at ATC reform--SESAR in Europe and Next Gen in the United States—are "lagging behind where we expected [them] to be," says Howard Aylesworth, AIA's Director of Civil Aviation Environment.

Not all environmental groups are impressed by these projected emission reductions. Jeff Gazzard, of the UK's Greenskies Alliance, told the Wall Street Journal that "Air-traffic management savings are illusory. Airlines will eat them up." By implying that demand for air travel is unlimited, this comment is economically illiterate. But a grain of truth in this statement could apply to the proliferation of smaller planes in the United States, which is encouraged by the unreformed U.S. system of paying for air traffic control via per-passenger taxes. For example, three 50-seat regional jets will provide 150 seats between city A and city B at the same ATC tax cost as one 150-seat 737, giving the airline that shifts to RJs a competitive advantage of offering a greater choice of frequencies—at the expense of more greenhouse gas emissions. But if airlines paid for ATC on a per-transaction basis, the shift from one 737 t o three RJs would mean up to three times the ATC expense. Hence, reforming the way we pay for ATC also serves "green" goals.

Commercialized ANSP Airservices Australia is going green in all phases of flight. For long-distance oceanic routes to and from Asia and the Middle East, it offers daily "flextrack" routes optimized for that day's winds and weather; flextracks save up to 8% of fuel burn on the en-route portion of such flights. Within the country, it has developed an ATM long-range optimal flow tool (ALOFT) that adjusts the cruising speed of aircraft en-route to Sydney; ALOFT will be extended to Melbourne this year.

Airservices Australia has also pioneered continuous descent approach (CDA) techniques, under which the plane's flight management system exchanges data with ATC and flies a precise approach track, at idle thrust, from the top of descent to the runway threshold. CDAs reduce fuel burn as well as noise, since this procedure avoids the need to increase and decrease engine thrust to make the normal stair-step descent. The other pioneer has been Sweden. SAS has flown more than 2,000 CDAs at Stockholm's Arlanda airport over the past year or two, using 737s. And in December it made the first CDA at Arlanda on a trans-Atlantic flight, an A-330 carrying 260 passengers. That CDA saved 330 lbs. of fuel.

The European Regions Airline Association and Airports Council International-Europe are pressing for Eurocontrol to accelerate the use of CDAs in Europe, for fuel-saving and emission-reduction reasons. To date, Eurocontrol has focused on major hub airports and larger aircraft, whose fuel savings are larger. But ERAA spokesperson Lesley Shepherd points out that because of complex and restricted arrival and departure routings at many large hubs, "the potential for implementing CDAs at regional airports is greater and easier than at hub airports."

Environmental benefits are one more reason why ATC reform should be put on a fast track, both in Europe and in the United States. Too bad most of Congress isn't paying attention.

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Runway Capacity and ATC Modernization

There's a persistent belief among many people that the "real" problem constraining aviation's growth is not an obsolete ATC system but the sheer lack of runway capacity. It will do no good, say these folks, for the Air Traffic Organization to spend $20 billion on NextGen and for aircraft operators to invest a comparable sum equipping their planes--if we're faced with huge runway bottlenecks on the ground.

One of the most eloquent presentations of this view came across my screen last month from the blog of retired air traffic controller Don Brown (http://gettheflick.blogspot.com/2008/01/air-traffic-safety-vs-capacity.html). Basically, Brown presents runway capacity as if it was a matter of the laws of physics. Under ideal conditions, he says, a runway can theoretically handle 60 planes per hour, period. Any deviation from ideal conditions reduces that amount. And there's nothing we can do about it, short of taking big safety risks.

Having heard many presentations on the technology behind NextGen, I knew this was not the whole story, but because (as my critics point out) I have never controlled air traffic or done hands-on work on any of the new technologies, I asked one of the best experts on this subject, Mike Lewis of Boeing ATM, to review Brown's post. I don't have the space here for Mike's full reply, but let me summarize the main points.

Most important, "runways have capacity limits only with respect to the operating assumptions used. The ‘limitations' cited [by Brown] are NOT laws of physics. They result from 1960s technology assumptions of a radar-and-pilot/controller eyeballs-based, voice-controlled, limited-information ATC system." These include the assumptions that the pilot doesn't know where other traffic is, where it's going, or where it's been; that the controller must see the runways and taxiways; that the pilot and autopilot don't know where hazardous wake vortices are; that only one plane can be on a runway at a time safely, etc.

The point of new technologies is to get past these assumptions. As Mike points out:

There's a lot more detail in Mike's response (which I'm happy to forward to you, if you're interested). But very clearly, this discussion needs to take place not just within the confines of Joint Planning & Development Office (JPDO) and Air Traffic Control Association (ATCA) meetings. If controllers genuinely believe the kinds of things Brown wrote, that's a big problem by itself, since they and their successors will be key participants in making NextGen a reality. And if they are not brought on-board and decide to oppose NextGen implementation efforts on safety grounds (the theme running through Brown's post), we will need a major educational communications effort to explain to reporters and editorial writers (and members of Congress) that the new paradigm not only increases airport and airspace capacity but does so simultaneously with increasing safety.

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News Notes

Important New Book. Just out from Ashgate is a book I've been waiting for. It's Managing the Skies, by Clinton V. Oster, Jr. and John S. Strong. They are the authors of the excellent comparative study of ATC reform in the United States, Canada, and the United Kingdom which I've referred to in previous issues (available at www.businessofgovernment.org). The book goes far beyond those case studies, looking at international ATC reform efforts in both developed and developing countries. Three chapters then focus on ATC problems and challenges in the United States, and apply lessons learned from other countries.

Correction from Last Issue. I'm embarrassed to say that I garbled the URL for my article in Professional Pilot's December 2007 issue, "Why Aviators—Not Congress—Should Be the ATC System's Board of Directors." The correct URL is www.propilotmag.com/December/OMI.pdf.

If the article is no longer on the site by the time you read this, I'll be happy to email you a text version.

Nav Canada Tower System in Denmark. Corporatized ANSP Nav Canada continues to export its in-house technology. The latest ANSP to make use of its Extended Computer Display System (EXCDS) is Denmark's corporatized Naviair, which has installed the "paperless" flight data system in the new control tower at Copenhagen. This is the fifth European airport to make use of EXCDS, the other four of which are in NATS towers at four London-area airports, including Heathrow.

ANSP Cooperation in Europe. As Europe moves (slowly) toward a Single European Sky, the more aggressive corporatized ANSPs are jockeying for position to become the main providers in the unified European airspace. Last November Germany's DFS and LVNL of The Netherlands signed a memorandum of understanding to cooperate on defining sensible Functional Airspace Blocks (FABs) across national boundaries. DFS and LVNL are jointly studying the feasibility of a central Europe FAB, and are inviting the ANSPs of Belgium, France, Luxembourg, and Switzerland to join in this effort.

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


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