Posts Tagged ‘avionics’
NexGen Cockpit Upgrades: Who pays for it?
The airlines and congress can’t agree on who will pay for the cockpit upgrades that will be required to implement the NextGen Air Transportation System technology. While my belief that airlines create a lot of their own misery leaves me often unsympathetic, in this case, I believe that they seem to have a reasonable argument for help.
Melanie Trottman and Andy Pasztor of the Wall Street Journal write that “despite years of industry lobbying, the proposal contains no provisions to help cash-strapped airlines pay for billions of dollars in new cockpit technology, a gap that could slow implementation and delay benefits to passengers for years.
Like legislation previously approved by the House, the Senate bill aims to chart a course for transforming the current system of ground-based radars and controllers into a new generation of satellite-based technologies able to handle larger numbers of flights more efficiently and with less environmental impact.
Dubbed NextGen, the network is designed to allow aircraft to fly shorter, more direct routes with pilots taking over some of the core functions of controllers.
The government already has pledged to spend some $20 billion on the new system’s backbone. According to the latest FAA projections, the system essentially would pay for itself through 2018 by reducing total anticipated flight delays more than 20% and saving airlines 1.4 billion gallons of fuel.”
The article also says, “Gerard Arpey, the chairman and chief executive of AMR Corp.’s American Airlines, said at an FAA conference last week that he was “dumbfounded” that the stimulus bill didn’t provide financial help to install new aircraft equipment. Industry estimates peg such annual costs at $1.5 billion or so through the middle of the decade. If “we are willing to spend billions of general tax dollars for high speed rail,” Mr. Arpey asked, “why not a few for high speed aviation?”
The airline industry, with more than $30 billion of losses in the past three years, seems unwilling to bear the cost. “This is about the complete overhaul of an infrastructure, said Dave Castelveter, a spokesman for the Air Transport Association, a trade group continuing to lobby on the topic.
So far this government has been willing to save financial giants including AIG from their own incompetent and borderline fraudulent activity with a bailout which was big enough to have funded the NextGen system twice over! The government is also planning to spend billions on high speed rail which will be a direct subsidy to the companies providing passenger train service. How about helping the airlines who are already providing a critical component of our national transportation infrastructure?
As a small business, if our company was required to spend big money to upgrade our aircraft, it would be devastating to us coming out of a deep recession. Additionally, I don’t see too many banks willing to loan small businesses money to fund anything, much less something like aircraft avionics upgrades. So, where does the money come from? No one in any sector of the aviation industry has the ability to print money like the federal government!
Commercial aviation providers pay taxes into the system every day in the form of Federal Excise Taxes at the rate of 7.5% of the price of an airline ticket or 7.5% of the cost of a charter flight. For individuals or corporations flying their own aircraft, there is a fuel tax of $.24 per gallon. How about using some of that funding on NextGen cockpit upgrades as opposed to spending it on congressional pork projects?
Could the guys in D.C. at least offer some no-interest or low-interest loans to the airlines to fund their end of the deal? If the airlines profit from the new system they can and should pay it back.
