The USA needs to quickly modernise its air traffic control system and a new funding mechanism should be launched to make sure the costs are fairly distributed between corporate and airline users, writes Air Transport Association of America chief executive James May
US airlines are breathing a cautious yet long-awaited sigh of relief. Although mindful of the industry's financial fragility, we are guardedly optimistic that years of painful cost reductions, careful right-sizing of operations and a reprieve from skyrocketing fuel prices mean good news for 2007.
A healthy airline industry is indispensable, not just to the US economy, but to the global economy - today US commercial aviation drives $1.2 trillion in output and 11.4 million US jobs. Globalisation is here. The liberalisation of aviation treaties have opened emerging markets, such as India and China, adding even more opportunities.
As technology draws us closer together, the strength of the global economy becomes inextricably linked to the strength of individual economies. Aviation is a key driver of those economies and, if we are going to continue to grow and prosper, we must be able to meet the needs of our new world.
Outmoded ATC
The USA has been slow in recognising the immediate need to replace our increasingly outmoded air traffic control (ATC) system. Today our system is operating with technology developed in the 1940s and 1950s, which has reached its design limits. Without action, our ATC system simply will be unable to handle future demand for air transport. It is time to retire that outdated system to the Smithsonian Museum in Washington as a relic of the past, and transition rapidly to its 21st century replacement.
Other nations have already reacted positively to the need for change. For example, the UK, Canada and Australia have modernised their ATC systems. We too must make a similar leap from today's ground-based radar and analog radio technology to a digital, satellite, global-positioning, enabled, information-centric system capable of handling public demand for air transport in a "just-in-time" economy.
We must simultaneously address the issue of developing a fair, cost-based funding mechanism. In 1970, when Congress created the Airport and Airway Trust Fund, there were 1,800 business aircraft and 2,500 airline aircraft. Today, there are 17,000 business aircraft and 8,000 airline aircraft.
That is right. While roughly two-thirds of all aircraft today are corporate aircraft, they pay only 4% of aviation taxes. The world has changed and we no longer can force regular passengers to subsidise executives flying on corporate aircraft.
With reauthorisation of the Federal Aviation Administration (FAA) financing and programmatic structure now under consideration by the 110th Congress, the USA has an obligation to modernise its ATC system and establish fair, equitable cost-based funding.
The airlines have a plan designed to ensure that the US ATC system facilitates growth and prosperity so that we can continue to move people and freight efficiently around the world. We call that endeavour Smart Skies.
Traffic predictions are staggering. Given the current rate of growth, US system demand will expand from approximately 45,000 operations per day to more than 61,000 by 2016. According to the FAA, air traffic delays could increase 62% over 2004 levels, wreaking havoc for our economy and slowing our worldwide competitiveness.
Unfortunately, the anticipated introduction of thousands of very light jets, and a double-digit growth rate for business aviation operations, will only exacerbate airspace congestion. Today, the ATC system in the USA is constrained and simply cannot accommodate the anticipated traffic growth efficiently.
Rational funding
In addition to programmatic and technological transformation, the funding structure for the FAA must be modernised and made rational by creating a relationship between services used and the financing that various groups of system users provide in support. The array of taxes that fund the Trust Fund - primarily the 7.5% passenger ticket tax, the $3.30 "segment fee" and the 6.25% cargo waybill tax - must be replaced by a rational, fair, cost-based funding system that applies equitably to all users.
Today, commercial airlines use two-thirds of ATC services, but they pay well over 90% of the ATC system's costs. Meanwhile, the business aviation community uses 16%, but pays just 6%. That subsidy is hardly fair or rational.
Other major air traffic control providers long have used cost-based systems to fund ATC. Whether through user fees, taxes that dynamically reflect system use or some combination of the two, cost-based funding must be established to provide a stable revenue stream where those using the system pay for the services they use and that money is used to develop, maintain and enhance the system. As long as users pay their fair share, the collection mechanism is unimportant.
As 2007 runs its course, we will be reminded each day that it truly is a new world. Modernisation of the US ATC system is essential and fundamental to our ability to meet 21st century demands. The new world is here and we cannot afford to wait.
Source: Airline Business