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  • Making the Business Case for NextGen ATC Funding
    Posted by Frank Jackman 2:37 PM on May 13, 2011

    Given the expected operational efficiency and fuel saving benefits expected with the widespread implementation of NextGen air traffic management in the U.S., the decision to invest would seem to be a relatively simple one.

    But some excellent presentations at Aviation Week's NextGen Ahead ATC modernization conference here in Washington made clear that the decision is anything but simple.

    From an airline point of view, uncertainty around benefits and the amount of time before those benefits are realized are two primary impediments to building a business case for NextGen. The longer the lag between investing in NextGen equipage and seeing a return on that investment, the more difficult it is to make the business case, according to Ed Lohr, director, fleet strategy & analysis at Delta Air Lines. A better case for NextGen can be made if ROI is realized in the nearer term, even if that return is relatively modest. “Talking about benefits we’re going to see in 10 or 15 years is almost irrelevant from an airline point of view,” he said.

    Mark Bradley, chief technical pilot at Delta, echoed Lohr’s comments. “Airlines continue to struggle closing the business case for equipping for NextGen,” he said. “Although we’re creating an excellent vision for the future … airlines are looking for benefits in the near term.”

    Localized, narrowly defined NextGen initiatives are less influenced by user and FAA financially capability, Lohr said. But it's also important not to start too small, but rather focus NextGen implementation at large hubs and key airports. “Small implementations in small, easy to do places, don’t close the business case that well,” he said.

    Some carriers have been more aggressive than others in moving down the NextGen path, but it is not clear whether that works to their advantage. Right now, there doesn’t seem to be a first-mover advantage for NexGen, Lohr said. There seems to be a follower advantage. The benefits for early adopters aren’t obvious.

    Tags: tw99, NextGen, FAA

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