Surveillance and Broadcast Services (SBS) 

Program DO‐260 Business Case Analysis 

December 8, 2008 

Introduction

In response to the ADS-B Notice of Proposed Rulemaking (NPRM), the ADS-B Aviation 

Rulemaking Committee (ARC) provided a set of thirty six recommendations to the FAA in their 

report dated 26 September 2008. Two recommendations in particular referenced the 

consideration of utilizing DO-260 equipage to achieve near-term user benefits. Specifically, the 

ARC’s Recommendation #6 stated “the FAA should enable the use of DO–260-approved 

equipment for non-separation applications in the NPRM business case such as conflict probe in 

radar airspace.” Additionally, the ARC Recommendation #10 cited “to approve the use of DO–

260-like equipage, the FAA should adopt, for 5 nm separations in non-radar airspace to include 

at least the Gulf of Mexico, European Aviation Safety Agency (EASA) Acceptable Means of 

Compliance (AMC) 20–24, with appropriate measures to ensure ADS–B integrity.” 

As part of the FAA’s consideration of Recommendations #6 and #10, the SBS program 

developed a business case analysis to explore the associated economic trade-offs. An analysis 

was conducted for the following three alternatives: 

• Alternative 1 – Accept ARC Recommendation #6 

• Alternative 2 – Accept ARC Recommendation #10 

• Alternative 3 – Accept ARC Recommendations #6 and #10 

Equipage Assumptions

The magnitude of benefits associated with the alternatives is dependent on the level of DO-260 

equipage assumed. Benefits were estimated incrementally to those projected in the SBS Joint 

Resources Council (JRC) business case which estimated equipage according to the standards 

defined in the NPRM. To determine how sensitive the results are to the equipage assumptions 

and to provide a reasonable range, two equipage scenarios were considered. The first scenario 

represents a lower bound and assumes benefits for the current fleet of DO-260 equipped aircraft 

as well as any aircraft delivered prior to 2010. All new deliveries staring in 2010 were assumed 

to meet the NPRM requirements in the SBS JRC business case and, therefore, contribute to the 

baseline benefit claims. Based on data collected by Honeywell, approximately 1,300 air 

transport aircraft currently are equipped with properly functioning DO-260 avionics. This 

number was projected to grow to approximately 1,500 aircraft by 2010. The second scenario 
assumes the current fleet of DO-260 equipped aircraft plus acceleration in avionics upgrades for 

another portion of the fleet. More specifically, the second scenario assumes an additional 4,000 

aircraft beyond the baseline will receive an upgrade between 2011 and 2014. Given these 

aircraft require some type of upgrade to participate and would eventually need to meet the 

NPRM specifications, it was assumed that they would upgrade directly to DO-260A rather than 

upgrading twice: first to DO-260 and subsequently to DO-260A. These additional aircraft 

provide incremental benefits in the alternatives because they represent acceleration in equipage 

beyond the baseline. Figure 1 displays the percentage of the air transport fleet which achieves 

ADS-B Out benefits in the baseline as well as the two DO-260 equipage scenarios. 

ADS-B Out 

Air Transport Equipage

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Scenario 2

Scenario 1

Baseline

Figure 1: Air Transport ADS-B Out Equipage Curves 

Cost Analysis

There are two benefits identified and estimated in the SBS JRC business case analysis that could 

be accelerated based on the ARC Recommendation #6. Both involve improving existing 

decision support tools, URET and TMA, by providing more accurate and timely surveillance 

input data. The benefit mechanisms and estimating assumptions are documented in the SBS 

Benefits Analysis Basis of Estimate Report dated August 2007. In order to achieve the 

accelerated benefit with DO-260 equipped aircraft, each ARTCC would require a fusion tracker 
to integrate DO-260 ADS-B with other surveillance sensor inputs. The existing en route 

automation tracker would not track DO-260 for current safety functions or display. This separate 

fusion tracker would be required to accept ASTERIX formats and more frequent updates. One 

tracker at each ARTCC would interface with both URET and TMA. 

To accelerate the benefits documented in the SBS Benefits Analysis Basis of Estimate Report for 

the Gulf of Mexico, several investments need to occur to include automation upgrades, 

additional surveillance, RAIM prediction, and procedure updates. Automation upgrades include 

an ASTERIX interface, an aircraft certification list to ensure that DO-260 aircraft have been 

certified for 5nm separation, a flight plan to track association based on aircraft call sign and/or 

ICAO address, ability to select validated ADS-B targets for display, assessment of RAIM 

availability for flight operations, and a target selection filter. Embedded in the automation 

activities would be the level of effort to test the upgrades and to achieve separation standards 

approval. External to automation, an additional three ground stations would need to be procured 

and maintained to support robust validation ensuring it is complete and the validation function 

has a high availability. Additionally, a RAIM prediction capability would need to be deployed. 

Procedures to address the inaccuracies of the transponder 4096 code as well as changes to 

emergency codes would need to be developed and implemented. The procedure costs include 

the effort to train the air traffic control workforce. 

In addition to the investments specific to the individual ARC recommendations, the FAA would 

need to provide increased staffing to certify DO-260 avionics. The duration for this additional 

support varies depending on the equipage scenario assumed as previously discussed. Figure 2 

provides the main assumptions for the FAA costs as well as the estimates in present value dollars 

for both equipage scenarios. As noted, aircraft certification costs are the only FAA cost element 

to vary based on equipage scenarios. 

Figure 2: FAA Costs (PV $K) 

Avionics costs for existing DO-260 equipped aircraft are estimated to be $15K per aircraft for an 

STC or service bulletin. For equipage Scenario 2, the cost to upgrade additional aircraft is 
equivalent to the upgrade costs in the SBS JRC business case analysis. However, the upgrade is 

now assumed to occur in two increments, DO-260A and then GPS augmentation, with the first 

increment accelerated. As a result, the costs for the DO-260 business case are assessed based on 

the time value of money associated with expending the first upgrade increment earlier than the 

assumed baseline. 

Benefits Analysis

As mentioned, the benefits are a function of the difference between the baseline and equipage 

scenario levels. The baseline equipage curve from the SBS JRC business case varies for some of 

the individual benefit elements due to specific airspace or regional assumptions, however, the 

incremental improvement is assumed to be equivalent to the comparison of the NAS baseline 

equipage curve as presented in Figure 1 above. In addition to equipage, the timeframe when the 

application or benefit is operationally viable was varied for the DO-260 business case. In the 

SBS JRC business case, the benefits associated with improvements to URET initiated in 2017 

based on the tool being available to the R-side controller starting in 2016. Similarly, the TMA 

related benefits were assumed to begin in 2020 to be conservative in the estimate by not 

assessing benefits in a mixed equipage scenario. Given the late timeframe of these starting 

points for the benefits and that the opportunity for incremental benefits ends in 2020 when the 

baseline ADS-B Out equipage reaches full compliance, the starting point for these two benefits 

was accelerated to 2014 after NAS-wide deployment of ADS-B infrastructure. The capability 

acceleration was included for the baseline as well as across the alternatives in order to provide a 

window of opportunity to assess the potential benefits. The benefits within the Gulf of Mexico 

start in 2011 after the initial operating capability is achieved in 2010 both in the SBS JRC 

business case and in the DO-260 business case analysis. 

Economic Analysis

A comparison of incremental costs and benefits for all three alternatives across each of the 

equipage scenarios is presented in the figure below. It should be noted that the benefits are 

additive across Alternative 1 and 2 to determine the total benefits of Alternative 3 while the costs 

are not. The avionics costs and the associated FAA certification costs are equivalent for all three 

alternatives and would not be additive. 
Figure 3: Economic Analysis Results 

Alternative 1 or ARC Recommendation #6 to utilize DO-260 for non-separation applications is 

cost beneficial while Alternative 2 or ARC Recommendation #10 is not. The business case 

results improve when upgradeable aircraft are considered to further accelerate equipage in 

Equipage Scenario 2, however, not to the point where Alternative 2 becomes cost beneficial. 

Alternative 3 is also cost beneficial for both equipage scenarios. If it were assumed that ARC 

Recommendation #6 were to be adopted based on the economic results then the analysis should 

next consider the marginal costs and benefits of Recommendation #10 before determining 

whether or not there is an economic case for pursuing. The results for Alternative #2 indicate 

that it is not cost beneficial on its own merits. However, to determine if the benefits outweigh 

the additional costs over and above implementing Alternative #1, the net present value (NPV) 

should be compared between the combined investment of Alternative #3 and that of Alternative 

#1. Under Equipage Scenario #1, the NPV decreases approximately $10M indicating that the 

marginal costs of Recommendation #10 exceed the marginal benefits. Assuming Equipage 

Scenario #2, however, the NPV increases from Alternative #1 to Alternative #3 indicating that 

the increased equipage would be sufficient to result in the Gulf of Mexico becoming a cost 

beneficial incremental investment option. 

A major risk area is the ability to accelerate the applications in Alternative 1 as discussed in the 

benefits analysis description. Achieving URET benefits prior to the R-side deployment or TMA 

benefits in a mixed equipage environment was considered highly speculative and assumed for 

analysis purposes only. As mentioned, the SBS JRC business case analysis assumed later dates 
which would have greatly constrained the opportunity to achieve earlier benefits associated with 

DO-260 equipage. 

As mentioned, Alternative #1 requires a commitment by the airline industry to certify their 

existing DO-260 avionics in order for the FAA automation systems to receive and process the 

surveillance data. FAA would need to invest in a fusion tracker to provide the data to the nonseparation decision support tools to avoid additional costly upgrades to the automation systems. 

Given the uncertainty in the economic results, consensus on the airline investment could not be 

reached and remains an open action item within the Air Traffic Management Advisory 

Committee (ATMAC). 

Furthermore, in reviewing the results with the ARC membership, users were most interested in 

accruing early benefits in the non-radar airspace and were surprised at the poor economic results 

for Alternative #2. Based on the SBS JRC business case, the user benefits in the Gulf of Mexico 

were substantial. However, the benefits initiate at a low level and grow steeply over time as 

demand projections exceed current non-radar capacity. As a result, the opportunity for benefits 

is limited prior to 2020 and, therefore, accelerating benefits through the use of DO-260 doesn’t 

outweigh the costs to enable the operation.