Cost-Benefit Case Lags Funding For NextGen Equipage

By Sean Broderick, John Croft, James R. Asker
Source: Aviation Week & Space Technology

“We have already invested in NextGen for RNP operations, but the procedure side of that has been very slow in coming,” says Horton. “It's starting to get traction now, but we've been equipped for several years.”

Southwest financed its own upgrades, but most other airlines will likely not be in such an enviable position. “We have really good credit compared to the other operators,” Horton says. “There's not a lot of advantage of going to the FAA for funds. We just need to make a business case for the investments.”

Dyment estimates that the cost of a NextGen package for a Boeing 737-800, including labor and avionics for ADS-B “in” and “out,” RNP 0.3, and pilot/controller data communications is about $550,000. A winglet package for the same aircraft costs $885,000, he says.

NEXA says the investment will pay off in less than a year, provided about 75% of the fleet is similarly equipped. Horton says 6,000-7,000 aircraft will require NextGen avionics modifications.

Winglets are a less controversial investment, and operators reap instant benefits from them, even though the return-on-investment cycle is longer. By contrast, a NextGen package will not do much good if you are the only one so equipped—or if the FAA does not follow through on its end of the infrastructure development bargain.

Dyment says the public-private partnership fund does not just provide cheap, government-backed loans, and NEXA also is working with the FAA to ensure specific NextGen targets can be met as part of operator commitments. For instance, a given carrier may commit to upgrade if NextGen capabilities are rolled out at its main hubs by a certain date. If the FAA fails to deliver, the carrier could defer payments until the agency meets its commitment.

Dyment says the fund, partially backed by ITT Exelis, is ready to cover $1.3-1.4 billion in retrofits as industry moves to meet deadlines for leveraging satellite-based air traffic management systems being deployed. A second fund for general aviation aircraft is prepared to back about $550 million in upgrades, and a third fund is being created for export aircraft.

Horton says the “biggest conundrum” about ADS-B

is how accurate the GPS navigation source will have to be to gain the best routes. The specification remains somewhat of a moving target, though the FAA is expected to release a draft Advisory Circular soon that will clarify what is needed.

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