The FAA’s Next Generation Air Transportation System (NextGen) project proposes congressional investment of USD20.6 billion and industry financing of USD15.1 billion by 2030. The investment is planned as a response to the continued growth of the US aviation market, which currently records 15 million aircraft movements per annum. Already the world’s largest aviation market, the US aviation system will also have to endure a 65% increase in traffic over the next 20 years.
Since as far back as the 1980s, global economies have generally shifted from being led by government expenditure to more involvement by the private sector. Whether for infrastructure, research and development, financing or technology, the expansion of the private sector is still rampant in many facets of both developing and developed economies. Sales of state enterprises worldwide reached USD185 billion at the end of the 1980s and, more recently, privatisation revenues have risen from approximately USD110 billion in 2008 to USD266 billion in 2016, according to the Organisation for Economic Co-operation and Development.
For infrastructure, the need for substantial investment has been well documented. The McKinsey Global Institute estimates USD3.3 trillion should be invested p/a through 2030 just to support expected global rates of growth, though most countries are not investing nearly enough, with there being an expected annual global shortfall of USD350 billion.
The Trump Administration recently published ‘Delivering Government Solutions in the 21st Century’ on 21-Jun-2018, a sweeping reform plan and proposals for regulatory restructuring. Nestled within the document is a rebooted attempt to shift air traffic control (ATC) responsibilities from the Federal Aviation Administration to a private, non-profit entity.
The Trump Administration believes a 21st Century government is “fundamentally a services business, and modern information technology should be at the heart of the US Government service delivery model”.
While the Government believes the entirety of the Department of Transportation is not in need of a wholesale reorganisation, a spin-off of FAA’s ATC services is expected to enable the US aviation system to provide better response to consumer needs and be a driver of modernisation, and ultimately to achieve the goals of NextGen.
However, proposals to corporatise the FAA’s ATC services have been floated since the Reagan Administration, and have simply not been met with congressional support.
The Blue Swan Daily’s review of the latest issued FAA financing estimate to the US Government Accountability Office (GAO) finds that the FAA is actually in range of fiscal approximations made in 2007, when work on NextGen was initiated. GAO finds that USD7.4 billion from government funding has been invested for NextGen from FY2007 to FY2016.
While the GAO’s analysis of FAA financing suggests it is on track with forecasts, IATA claims NextGen is inherently delayed and could require investment two to three times more than initially envisaged. Declarations of the project being over budget have been echoed by both Airlines for America and the Trump Administration, along with the President himself.
In early 2017 Mr Trump referred to the US aviation system as “totally out of whack”, and NextGen as “way over budget… behind schedule… and when it’s complete it’s not going to be a good system”.
Despite the industry not agreeing on funding estimates, it has been established that while the FAA initially expected to complete roll-out of all NextGen platforms by 2025, this date is now only reserved for the main aspects of the system, with other technologies now targeted for deployment as late as 2030.
Ultimately, the question remains: would a move to a corporatised entity eventually be to the benefit of the US aviation system? And, if pursued, would the change be worth the inevitable costs and delay associated with it?
See previous CAPA – Centre for Aviation report: ‘European airspace control. The promise: delays. The need: action’