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1AC – Aviation Advantage
Contention 1 --- Aviation
Airlines won’t equip NextGen technology because of lack of cash and confidence
Hinton 11 (Christopher, Reporter – MarketWatch, “Airlines Uneasy Over Costly Bid to Replace Radar”, MarketWatch, 5-19, http://www.marketwatch.com/Story/story/print?guid=D235C056-7D9A-11E0-915A-00212804637C)
Help was supposed to come by scrapping the 1950s-era ground-based air-traffic control system in favor of a 21st-century satellite-based tracking technology. GPS-assisted aircraft could then fly closer together, react faster to changing flight conditions and optimize their landing approaches.
It’s an upgrade that could save the airlines hundred of millions of dollars a year.
But the U.S. plan to achieve that, estimated to cost $40 billion, is stuck on the ground.
Poor planning and the politics of fiscal austerity have left the system only partially installed. Now, airline executives are so disillusioned that they’re balking at buying additional cockpit gear for a program they say isn’t delivering on its promise.
Even avionic suppliers with rich contracts at stake in the plan came up with a novel way of making their equipment more affordable, aircraft operators haven’t changed their position.
“Many carriers — Delta, Southwest, American, United — we have all made significant investments in equipage for our existing fleets that we are not using,” said Delta Air Lines (NYSE:DAL) Chief Executive Richard Anderson, during a recent conference call with reporters. “We want to leverage the technology we have today before we add more technology and more cost.”
For the Federal Aviation Administration, which is overseeing the so-called NextGen plan, the loss of confidence is another black eye for an agency still smarting from the furor over napping air-traffic controllers and a sharp rise in close calls of mid-air collisions.
In a watchdog report last week, the U.S. Department of Transportation’s inspector general criticized the FAA for not coming up with an “integrated master schedule” for NextGen, and highlighted design decisions that put the entire program’s cost and schedule targets at further risk.
In the long run, such uncertainty threatens to undermine the program and its broader economic benefits.
Local officials in the New York area have been hopeful that NextGen would not only drive down delay times, but also allow more aircraft to land at its airports and help spur more than $5 billion in growth by 2030.
For the FAA’s part, agency officials have shrugged off the concerns and defended NextGen phase-in as being on schedule since work began in 2004.
Once it’s online, NextGen is supposed to replace a radar system that first took shape in the aftermath of World War II.
Essentially a GPS system, NextGen is designed to be more accurate than radar and allow computers to track aircraft. Instead of flying in easy-to-monitor “skyways,” pilots could go “off road” and fly more efficient trajectories, supporters say.
The system would also help pilots plan their flight times and plot optimal landing approaches, and it allows dispatchers to narrow the space between arriving aircraft to less than a mile compared with the roughly three miles now maintained. Such optimizing is estimated to reduce flight delays by 35%, lowering fuel use and cutting pollution.
With the price for jet fuel up four-fold in the last decade, it’s a system the airlines can’t start using soon enough. But higher fuel prices have also squeezed profit margins, and some airlines say they can no longer stomach NextGen upgrades done haphazardly or subject to delay.
At the same time, the program’s potential $160 billion in build-out costs over 15 years represent a lucrative target for aerospace and avionics companies like ITT Corp. (USC:ITT) , Boeing Co. (NYSE:BA) , Lockheed Martin Corp. (NYSE:LMT) , Honeywell International Inc. (NYSE:HON) , and General Electric Co. (NYSE:GE) .
Last month, avionic companies acted to soften airlines’ hardened position by having Congressional allies propose a public-private partnership as part of an FAA funding bill. The arrangement aims to lease avionic equipment to aircraft operators, with options to buy.
Called the NextGen Equipage Fund, it would be financed with $1.5 billion in private capital, with ITT as the lead investor, and largely guaranteed by the federal government.
Backers say the fund’s advantage is that it can equip the airlines without a large cash outlay or taking on more debt, and payments would be deferred until the FAA delivers the related services, according to Russell Chew, managing partner of Nexa General Partnership Capital, which would manage the fund.
“The deferred payments are an important selling point to airlines that are short on cash, or have been burnt by the U.S. in past attempts to upgrade the traffic-control system,” Chew said.
Some of that equipment would include Automatic Dependent Surveillance-Broadcast, which gives pilots highly accurate data on an aircraft’s position in relation to others. That would allow pilots to fly more efficient trajectories between airports and closely line up their planes on final runway approaches, shortening the times between individual landings and saving fuel.
It could also include revamping communications with a data-exchange system between air traffic controllers and pilots, decreasing the reliance on voice communication and reducing the chance of error. It would also streamline departure clearances, airborne reroutes and taxiway information.
“The fund is enough to equip up to 75% of the retrofit-able aircraft,” Chew said. “And the airlines need the majority of other airlines to get equipped; otherwise you have a mix of planes that burdens air traffic control and reduces NextGen use.”
The House passed the FAA funding bill in April, and it now awaits reconciliation with a version cleared in the Senate.
“If the fund did pass, it would certainly benefit us significantly,” said Clay Jones, CEO of Rockwell Collins Inc. (NYSE:COL) , which builds some the cockpit equipment. “The fund would accelerate airlines’ move to NextGen.”
The ground equipment for Automatic Dependent Surveillance-Broadcast should be in place by 2013, the FAA says.