Airlines should get gov’t loans, committee says

WASHINGTON — The government should help airlines install billions of dollars’ worth of equipment in their planes necessary to use a new air traffic control system through loans or loan guarantees, an industry-government advisory committee recommended Thursday.

Repayment of the loans, which could involve public-private partnerships, would be triggered by the Federal Aviation Administration achieving promised benefits from the new system, the committee said.

The financing recommendation was one of a half dozen related to FAA’s Next Generation Air Transportation System – also called NextGen – that were approved at a meeting of the committee.

The FAA is replacing World War II-era radar technology with a control system based on GPS technology, a process that is expected to take more than a decade to complete. The agency says planes will be able to safely fly closer together, reducing flying time, saving fuel and achieving better on-time performance. The program is forecast to be as revolutionary for civil aviation as was the advent of radar six decades ago. It is also critical to FAA’s plans to accommodate growth in airline traffic, which is expected to rise from over 700 million passengers a year to more than 1 billion a year in the next 10 years.

Although they have the most to gain, airlines are wary of FAA’s track record of changing directions after investments have been made. They point to cases where airlines have purchased new equipment at FAA’s urging and wound up never using it.

FAA Deputy Administrator Michael Huerta, the FAA’s top representative on the committee, cautioned that the agency needs industry to be much more specific about which benefits must be produced and how they would be measured before the government could act on the financing recommendation.

“We’re at the point right now where we have a very excellent teeing up of the issue,” Huerta told the committee. But specifics are needed, he said, before FAA can decide “how do we rearrange our work programs to deliver these things.”

Airlines and other aircraft operators may have different expectations of benefits, Huerta said. And benefits may vary by location, he said. For example, it may be more difficult to achieve NextGen benefits in the New York area, where a variety of factors make air traffic control extraordinarily complex, than in Atlanta, even though Hartsfield International Airport there is one of the world’s busiest airports.

Paying the tab for NextGen – estimated at as much as $22 billion for the government and another $20 billion for the airline industry through 2025 – is one of the program’s biggest hurdles.

The equipment and other expenses necessary to use the system are being put in place in layers. FAA hopes to complete the installation of most of its hardware on the ground by 2013.

About 40 percent of airliners and 30 percent of private planes already have the onboard equipment necessary to take off and land using more precise, fuel-saving procedures, said committee member Ed Bolen, president of the National Business Aviation Association. But none have the equipment necessary for a plane to continually broadcast to controllers and other aircraft its precise location because manufacturers aren’t making the equipment yet, he said.

Those two layers of NextGen equipment would cost aircraft operators about $6 billion if installed on all planes, said Bolen, who chaired a subcommittee on the “business case” for NextGen. Other layers of technology – including equipment for planes to receive continuous information on the location of aircraft and to get text messages from air traffic controllers – are also in the works, but will come later.

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