A MES SAGE FROM THE AD MIN IS TRA TOR

I am pleased to present the FY 1998 Annual Report of the Federal

Aviation Administration (FAA). Along with our financial statements, 

it impressively sums up the year’s work of our 48,000 skilled and

dedicated employees — those responsible for managing the flow of air

traffic, enacting and enforcing aviation and space transportation

safety regulations, inspecting aircraft, maintaining equipment, and

safeguarding passengers’ security. 

Much of our work is behind the scenes, rarely noticed by the business

traveler or the family on vacation. But while often out of sight,

everything we do improves the three aspects of flying most important

to everyone—safety, security, and the efficiency of the airspace

system. These are the goals central to our mission and, in all three,

1998 has been a year of achievement. 

Safety

In April 1998, the FAA announced Safer Skies – a focused safety

agenda developed in concert with the aviation community. Safer

Skies is a data-driven approach to identify the leading causes of

accidents and the solutions that can make the biggest difference in

preventing them. Since announcing Safer Skies, the FAA has issued nine airworthiness directives to guard

against uncontained engine failure — the leading engine-related safety hazard to commercial aircraft. We

also adopted new measures to reduce potential ignition sources in Boeing 747 center wing tanks and issued a

Notice of Proposed Rulemaking on terrain awareness and warning systems. 

As we go forward with Safer Skies, we will be demonstrating exactly what we had in mind when we proposed

this focused and prioritized approach: that is, as we complete an item, we check it off and then move on to the

next priority item.

Security

For the past several years, the FAA has engaged in a massive campaign to provide additional security for the

Nation’s air travelers. To date, we have purchased 117 bulk explosive detectors for examining checked

baggage and 462 trace detection devices for screening carry-on bags. Thirty airports have already installed

the bulk explosive detectors, and 50 airports have trace detection devices. Many more of these security

devices will soon be in operation. We are also working with airlines and airports on a variety of ways to

improve the performance of checkpoint screeners. In May 1998, we introduced a computer-based training

program designed specifically for security screening personnel and have made this training available at the

Nation’s busiest airports. In separate actions, we issued a rule requiring employment background checks for

checkpoint screeners and their supervisors and proposed a new rule that would require airlines to apply

additional security to the checked baggage of some passengers. 

National Airspace System Modernization

Two years ago, the FAA restructured its approach for NAS modernization. Our new approach — fielding new

technology one building block at a time — continues to produce excellent results. At the same time, we have

refocused our efforts on three basic elements of modernization.

The first element of modernization is driven by the constant need to introduce new technologies that will

improve on our Nation’s excellent safety performance. Among the highest priorities of our Safer Skies agenda

are new capabilities to warn pilots of severe weather and to prevent runway incursions. The terminal Doppler 

weather radar (TDWR) program begun in 1994 is in the final stages of completion, and we are investing

hundreds of million of dollars in advanced weather radar, automated weather observation systems, and new

weather displays for controllers. We are aggressively pursuing our commitment to reduce runway incursions

by fielding ground radar and automated position reporting systems that aid controllers in safely moving

vehicles on the airport surface, especially at complex, high volume airports. 
Second, we must maintain the integrity and reliability of the system by replenishing our infrastructure. We

are doing this by replacing controller displays and computers in our en route centers and terminal areas, by

deploying new generations of radar, and by upgrading our communications systems and other vital NAS

components. In FY 1998, the FAA installed over 2,300 pieces of new equipment – from items as basic as radios

and distance measuring equipment to airport surveillance and long-range radar.

Our third element of NAS modernization is to increase flight efficiency and flexibility for those who use our

airports and airspace. The objective is to evolve to a system based on the “free flight” concept – where pilots

and airline operators have greater flexibility in choosing the route, altitude, and speeds to fly t heir aircraft.

We began the Free Flight Phase 1 (FFP1) program just over a year ago to deliver early benefits of f ree flight to

users. FFP1 concentrates on making a specific set of automated decisionmaking tools available to c ontrollers

by the end of 2002. A number of these tools are already in place. 

One change in the strategic plan is evident in this year’s annual report. We continue to shift the emphasis

from describing process to reporting results. What matters most is measurable success, and we are proud to

document in the following pages the achievements we have made this past year in meeting the very high

standards we set for ourselves. I am confident that these attainments will provide critical momentum for

even greater progress in the coming decade.

Jane F. Garvey

Ad min is tra tor
FY 1998 FAA ANNUAL REPORT

-iii- TA BLE OF CONTENTS

Ta ble Of Con tents

Mes sage from the Ad min is tra tor ...............................................................................i

CHAP TER 1. Man age ment Dis cus sion and Analy sis..........................................1

In tro duc tion.................................................................................................................1

FAA Or gani za tion........................................................................................................1

FAA Budget.................................................................................................................4

The FAA’s Stra te gic Goals ........................................................................................10

Pro gram Goals, Meas ures, and Per form ance...........................................................10

CHAP TER 2. Mes sage from the Chief Fi nan cial Of fi cer ..................................17

Fi nan cial State ment Audit Report...........................................................................19

Limi ta tions of The Fi nan cial State ment..................................................................37

Fi nan cial State ment..................................................................................................38

Notes to The Fi nan cial State ment............................................................................43

Re quired Sup ple men tary Stew ard ship In for ma tion ...............................................66

Re quired Sup ple men tary In for ma tion.....................................................................76

CHAP TER 3. Sup ple men tal Pro gram In for ma tion............................................78

Mission- Based Goals

Safety.....................................................................................................................78

Se cu rity .................................................................................................................92

Sys tem Ef fi ciency..................................................................................................94

Ena bling Goals and Strate gies

Peo ple ..................................................................................................................106

Re form .................................................................................................................109

The En vi ron ment................................................................................................112

Global Lead er ship...............................................................................................115

Glos sary of Ac ro nyms ..............................................................................................119

In dex............................................................................................................................125
MAN AGE MENT DIS CUS SION AND ANALY SIS

IN TRO DUC TION

The Federal Aviation Administration (FAA)operates the Nation’s air traffic control system

and regulates aviation safety, security, and the U.S.

commercial space industry. In its position on the front 

line of aviation safety, the FAA works with the air

transportation industry, other agencies at the

Federal, state, and local level, the academic

community, and with its international counterparts.

The goal of this wide-ranging collaboration is to

provide a technically advanced airspace system that

meets the highest attainable levels of safety, security,

and efficiency. 

In each year of its four-decade history, the FAA has

undergone significant change. An account of this

continuous change parallels the story of American

aviation, as this dynamic industry has rapidly evolved 

in response to calls for higher levels of safety,

technological innovation, and surging growth. These

events have given the FAA the organizational focus

and discipline that are necessary for an agency born in 

the mid-20th century to meet the challenges of

aviation in the 21st century. 

The 1998 Annual Report adds to the cumulative

record of the FAA’s progressive adaptation to the

demands of the time. Prepared in conformity with the

Chief Financial Officer’s Act of 1990, it contains the

financial statements of the agency and presents a

comprehensive overview of the FAA’s stewardship of

its resources. It also documents the FAA’s prodigious

workload — around the clock and border to border:

• in man ag ing the safe, ef fi cient flow of aircraft

through the Na tion’s air space;

• in per form ing the thou sands of regu la tory ac tions

and in spec tions which are nec es sary to main tain

the in teg rity and re li abil ity of the U.S. avia tion

sys tem;

• in carrying out aggressive security measures to

protect air travelers from acts of terrorism and

criminal misconduct;

• in promoting global aviation safety in

collaboration with the International Civil Aviation 

Organization (ICAO) and other civil aviation

authorities abroad;

• in upgrading facilities and expanding the capacity

of U.S. airports;

• in speeding the transition to the next generation of

air traffic control technology;

• in minimizing the environmental impact of

aviation; and

• in licensing and regulating the commercial space

industry.

FAA OR GANI ZA TION

The FAA team includes over 48,000 employees

concentrated in seven strategically focused lines of

business. Together, they administer the world’s

busiest civil aviation system. In FY 1998, over 643

million passengers flew in the Nation’s skies, and the

number continues to grow. The FAA annual aviation

forecast, released in March 1999, predicts that U.S.

commercial air carrier enplanements will reach

almost 1 billion in 2010 - an annual growth rate of 3.4

percent over the next dozen years. During the same

period, the number of aircraft operations handled is

forecast to grow 1.8 percent annually, for a projected

total of 81.2 million in 2010. 

In fulfilling its responsibilities to the American

people, the FAA is focusing its attention and

FY 1998 FAA ANNUAL REPORT

MAN AGE MENT DIS CUS SION AND ANALYSIS -1- CHAP TER 1

FAA Employment

(Permanent Employees)

Air Traffic

Services

74%

Commer cial

Space

Transpor tation

0%

Civil Aviation

Security

2%

Regulation and

Certification

12%

Staff Offi ces

1%

Airpor ts

1%

Resear ch and

Acquisitions

4%

Administration

6%
concentrating its resources on those opportunities

with the greatest potential to bring the greatest

benefits. One goal, in particular, takes precedence

over all others: by the year 2007, the FAA, in

collaboration with other Federal agencies and its

industry partners, aims to reduce the number of fatal

aviation accidents per 100,000 departures by 80

percent. 

Air Traf fic Serv ices

From the time pilots begin pre-flight activities until

they shut down the aircraft at their destination, Air

Traffic Services employees provide an integrated set

of services to ensure that each aircraft operation is

safe. Air traffic controllers at local airports direct

airplanes that are taking off, landing, or flying within

the visual range of their tower - usually about 5 miles.

Controllers in terminal radar control (TRACON)

facilities handle aircraft for one or more airports in a

large metropolitan area, generally within 30 to 40

miles of the area’s major airport. Controllers at 21 air

route traffic control centers (ARTCC) guide airplanes

in flight from one city to another. Flight Service

Stations (FSS) provide flight plan filing, weather

data, and aeronautical information briefings to pilots.

On a typical day, FAA controllers will handle over

200,000 takeoffs and landings, moving some 1.6

million passengers. Services are available 24 hours a

day, 365 days a year. A staff of highly skilled

engineers and system specialists maintain and

troubleshoot some 38,000 items of equipment,

software, and hardware; assign and protect more than 

50,000 aeronautical radio frequencies; and conduct

over 11,000 flight inspections annually to preserve

the safety, quality, and reliability of the National

Airspace System (NAS).

In FY 1998, FAA established the Free Flight Phase 1

(FFP1) program to speed the deployment of

automation and decisionmaking tools that will

increase system safety and capacity and bring

benefits to users in the form of fuel and crew cost

savings. These include tools to aid controllers in

aircraft sequencing, conflict detection, and

collaborative decisionmaking. The tools will be

introduced incrementally, at selected locations, from

the present to the end of 2002.

Regu la tion and Cer ti fi ca tion

The FAA oversees the safety of planes and the

credentials and competency of pilots and mechanics,

develops mandatory safety rules, and sets high

standards for civil aviation. Each year, the FAA

performs more than 347,000 inspections and

investigations and takes approximately 12,000

enforcement actions, helping to make air travel

among the safest modes of transportation. The FAA

also evaluates foreign governments’ oversight of their

airlines serving U.S. airports. These results are

published so that the public can know which countries 

meet international safety standards. 

Two initiatives were begun during FY 1998 to raise

the bar on safety. Safer Skies, a focused data-driven

safety agenda, seeks out the root cause of accidents,

then targets resources to find and apply the right

interventions. The Air Transportation Oversight

System (ATOS), complements the Safer Skies agenda

and will change how the FAA oversees and inspects

air carriers. As part of the Safer Skies agenda, the

FAA, in July 1998, provided expanded guidance for

passengers and airlines on carry-on baggage

regulations. The agency also announced that, at the

close of FY 1998, it had doubled the number of cabin

safety inspectors, assigning, for the first time, one for

each of the major carriers. Also, in July, the FAA

proposed eight airworthiness directives that call for

the industry to inspect engine parts more closely,

using new methods developed through FAA and

industry research. Early that month, the FAA

proposed new measures to reduce potential ignition

sources in Boeing 747 center wing tanks. And, in

August 1998, the FAA announced a proposed rule

that would require all airplanes with turbine engines

and six or more passenger seats to carry a terrain

awareness warning system. 

Civil Avia tion Se cu rity

The FAA works with local security, intelligence, and

law enforcement agencies to protect passengers,

personnel, aircraft, and critical national airspace

facilities against terrorist and other criminal acts.

Threats are monitored continuously and, when

necessary, the FAA orders heightened precautions.

As part of a massive overhaul of the U.S. aviation

security system, the FAA has deployed nearly 400

trace detection devices and 65 explosive detection and 

advanced technology systems at airports nationwide.

In addition, the number of canine teams, trained to

search out hidden explosives, has grown from 87

teams at 26 airports in 1996 to 140 teams at 38

airports. For the first time in the history of this

FY 1998 FAA ANNUAL REPORT

MAN AGE MENT DIS CUS SION AND ANALYSIS -2- CHAP TER 1
program, FAA K-9 explosive detection teams now are

stationed at each of the Nation’s largest airports. 

In January 1998, Secretary Slater announced

additional surveillance of commercial air courier

shipments. The announcement followed an intensive

inspection and tests of accompanied commercial air

courier shipments presented for flight aboard

passenger aircraft. In addition, in May 1998, the FAA

announced that the introduction of a new

computer-based tool to help airlines improve the

selection and training of employees who operate the

x-ray screening checkpoints at the Nation’s busiest

airports. The new system was available in up to 79

airports by year-end 1998. 

Along with these initiatives, the FAA has a cadre of

130 security inspectors who oversee the movement of

hazardous materials by air. Trained both in

hazardous materials regulations and cargo security

procedures, these agents work to prevent the

transportation of dangerous goods in a manner that

could jeopardize flight safety. 

Air ports

Airports, like the airlines, are vital links in the air

transportation network. The FAA works in

partnership with airport authorities, local units of

government, metropolitan planning organizations,

and states to revitalize and expand the Nation’s

airports. As part of its safety oversight mission, the

FAA certifies airports serving air carrier operations

and inspects those airports for compliance with

established safety standards. 

In FY 1998, FAA’s Airports personnel awarded an

estimated $1.7 billion in grants to eligible airports to

enhance capacity, improve safety and security, and

mitigate noise. The collection of passenger facilities

charges (PFC) provides an additional source of

funding for airport expansion and preservation.

PFC’s, which must be approved by the FAA, currently

produce revenue for airports totaling approximately

$1.2 billion each year. In order to increase the

investment options available to airports, the Clinton

Administration has proposed raising the cap on PFC’s

from $3 to $4. 

The level of noise at the Nation’s airports and

surrounding areas continues to decline as airlines

take older, noisier airplanes out of service. In a Report 

to Congress released in September 1998, the FAA

reported that the proportion of quieter airplanes used

by U.S. airlines increased from 75.5 percent to 79.8

percent during 1997. The improvement reflects

compliance by the airlines with legislation passed in

1990 requiring that older, noisier airplanes be

replaced by quieter airplanes by the year 2000.

Re search and Ac qui si tions

The FAA conducts research and invests in essential

infrastructure to meet the demand for higher levels of

safety, security, capacity, and efficiency. Research

priorities include explosive detection, weather,

aircraft structures, noise mitigation, human factors,

and satellite navigation. The FAA is in the midst of

major acquisitions to modernize the Nation’s air

traffic contro l(ATC) system. In FY 1998, over 2,300

pieces of new equipment were installed - ranging from 

basic equipment such as radios and

distance-measuring equipment to systems as new

and complex as the long-range and airport

surveillance radar. The agency also completed

ground-based hardware and software installations

for the wide area augmentation system (WAAS) and

has two leased geostationary communications

satellites in orbit operating successfully. This

milestone marks an essential step toward using the

global positioning system (GPS) for precision

approaches at U.S. airports. The replacement of aging 

display equipment at the FAA’s 21 ARTCC’s also

continued to move forward. At the close of FY 1998,

the display system replacement (DSR) had been

installed at 12 ARTCC’s.

Com mer cial Space Trans por ta tion

The Office of the Associate Administrator for

Commercial Space Transportation licenses

commercial space launches and sites to protect public

health and safety of property. During FY 1998, the

U.S. commercial space transportation industry

conducted its 100th DOT/FAA-licensed launch when

Boeing successfully launched its sixth Delta II vehicle 

of the year. The landmark launch carried five

satellites for the Iridium global wireless telephone

system into low earth orbit. Lockheed Martin

launched an Athena-2 carrying Lunar Prospector to

lunar orbit from Spaceport, Florida. The Athena-2

was the first FAA-licensed launch beyond earth orbit

as well as the first launch from an FAA-licensed site.

The office issued two launch site operator licenses: the 

Virginia Space Flight Center and the Alaska

Spaceport at Kodiak Island joined the Florida and

California spaceports as FAA-licensed facilities. Also

FY 1998 FAA ANNUAL REPORT

MAN AGE MENT DIS CUS SION AND ANALYSIS -3- CHAP TER 1
during FY 1998, the office monitored 22 licensed

launches, issued four license renewals, and issued five 

license amendments. 

Ad min istra tion

FAA strives to make its operations more efficient and

responsive by employing sound business practices,

introducing advanced information technology,

maintaining a highly skilled workforce, and operating 

a model workplace. An effort is underway to put in

place a comprehensive cost-accounting system.

Phased implementation of the system began on

October 1, 1998. In June 1998, the FAA began testing

an innovative compensation plan designed to provide

more flexibility in hiring, pay and placement, and the

recognition of employee contributions. The new plan

will replace the traditional grade-and-step base pay

method with a simplified structure of pay bands

whose value is determined by comparison with

similar jobs in Government and private industry. The 

test directly links compensation with the performance 

of employees and the success of the organization as a

whole. About 1,200 employees in the FAA’s Research

and Acquisitions organization were the first to

operate under the compensation pilot, which is

expected to run for 18 months.

FAA BUDGET

The greatest part of the FAA’s budget is used for

salaries and associated costs to operate and maintain

the air traffic control system and to carry out its safety 

inspection, regulatory, and security responsibilities.

The FAA budget also includes three capital

investment programs: (1) the Facilities and

Equipment (F&E) appropriation authorizes funds to

modernize and expand the air traffic control system;

(2) the Airport Improvement Program (AIP) provides

grants funding to expand and improve the Nation’s

public-use airports; and (3) the Research,

Engineering, and Development appropriation

provides funds to develop new aviation technology

and systems. 

Congress approves the FAA budget through annual,

multi-year, and no-year appropriations. The Airport

and Airway Trust Fund, maintained through the

deposit of aviation excise taxes, finances 100 percent

of the F&E, AIP, and R,E&D capital investment

programs. The Trust Fund also covers a portion of the 

costs to operate the air traffic control system. In FY

1998, the Trust Fund financed nearly 62 percent of

the FAA’s total budget. 

Airport and Airway Trust Fund. The Airport and

Airway Revenue Act of 1970 created the Aviation

Trust Fund to provide a stable source of funding to

finance investments in the airport and airway system

and, to the extent funds were available, cover the

operating costs of the airway system. The Act

provided for the deposit of aviation excise taxes into

the Trust Fund. Since its establishment, various

changes have been made to the rate structure

supporting the Trust Fund. The most recent changes

were centered in the Taxpayer Relief Act of 1997 (P.L.

105-34), effective October 1, 1997:

• Extends aviation taxes for 10 years (through

September 30, 2007).

• Retains existing freight weighbill, general aviation

fuel/gas taxes, and $6 departure tax on domestic

flights to and from Alaska and Hawaii. 

• Converts the 10 percent ad valorem tax on

domestic passenger tickets to a combination ad

FY 1998 FAA ANNUAL REPORT

MAN AGE MENT DIS CUS SION AND ANALYSIS -4- CHAP TER 1

FY 1998 FAA BUDGET

Distribution by Appropriation and Obligation Limitation

(Dollars in Millions)

F&E $1,901

R,E&D $199

Airports Grants

$1,700

Operations

$5,253

FY 1998 FAA Funding

by Source

(Dollars in Millions)

$3,351

$5,701

Airport

and Airway

Trust Fund

General

Fund
FY 1998 FAA ANNUAL REPORT

valorem/flight segment tax over 3 years beginning

October 1, 1997, where a domestic flight segment

is a flight involving a single takeoff and a single

landing. The timetable for these taxes is as

follows:

9% plus $1 per seg ment from Oct.1, 1997,

through Sept. 30, 1998;

8% plus $2 per seg ment from Oct.1, 1998,

through Sept. 30, 1999;

7.5% plus $2.25 per seg ment from Oct.1,

1999, through Dec. 31, 1999;

7.5% plus $2.5 per seg ment from Jan.1, 2000, 

through Dec. 31, 2000;

7.5% plus $2.75 per seg ment from Jan.1,

2001, through Dec. 31, 2001;

7.5% plus $3 per seg ment from Jan.1, 2002,

through Dec. 31, 2002.

• Imposes a new 7.5 percent tax on payments to

airlines for frequent flyer and similar awards by

banks and credit card companies, merchants,

frequent flyer program partners - other airlines,

hotels, or rental car companies, and other

businesses.

• Increases the current $6 international departure

tax to $12 per passenger and adds a $12

international arrival tax. If an intermediate stop

exceeds 12 hours, subsequent domestic segments

are taxed as domestic transportation. These taxes

were indexed to the Consumer Price Index as of

January 1, 1999.

• Lowers tax rate on flights to certain rural airports

to 7.5 percent, omits flight segment tax

component.

• Transfers revenues from the 4.3 cents-per-gallon

aviation fuel tax formerly dedicated to reduce the

national U.S. deficit from the General Fund to the

Airport and Airway Trust Fund.

The FAA’s three capital programs—Facilities &

Equipment (F&E), Research, Engineering &

Development (R,E,&D), and the Airport Improvement 

Program (AIP)—receive 100 percent of their funding

from the Trust Fund. These critical capital

investment programs are described in three regularly

issued plans: the Aviation System Capital Investment 

Plan (CIP); the FAA Plan for Research, Engineering

and Development; and the National Plan of

Integrated Airport Systems (NPIAS). In addition to

funding the capital programs, the Trust Fund pays a

portion of the FAA’s operating cost. Since 1995, the

Operations appropriation has received

approximately 57 percent of its funding from the

Trust Fund and the balance from the General Fund.

While held by Treasury, Trust Fund monies are

invested in Government securities. Any interest

earned is deposited into the Trust Fund. Amounts are 

withdrawn from the Trust Fund as it is needed and

transferred into each FAA appropriation to cover

necessary outlays. The uncommitted balance in the

Trust Fund, which was $4.34 billion at the end of FY

1998, is expected to increase to $6.76 billion in FY

1999.

Operations. Funds from the Operations

appropriation are used to pay salaries and other costs

required to operate and maintain the ATC system on

a 24-hour basis. Other mission-critical expenses

financed by this appropriation include salaries and

associated costs for: (1) the planning, direction, and

evaluation of FAA programs; (2) engineering for the

establishment of air navigation facilities; (3) the

development and enforcement of flight standards and

civil air regulations; (4) the promulgation and

enforcement of standards, rules, and regulations

governing the physical fitness of airmen; (5) the

administration of research and development

programs; (6) the protection of the traveling public in

commercial U.S. air transportation against terrorist

and other criminal acts; (7) regulating commercial

space transportation industrie;snd (8) national

integrated airport planning and the supervision of

grants-in-aid for airport construction. 

MAN AGE MENT DIS CUS SION AND ANALYSIS -5- CHAP TER 1

Operations Appropriation

(By Budget Activity)

Administration

5%

Research and

Acquisitions

2%

Airports

1%

Staff Offices

1%

Regulation and

Certification

11%

Civil Aviation

Security

2%

Commercial

Space

Transportation

0%

Air Traffic

Services

78%
Facilities and Equipment (F&E). Funds from the

F&E appropriation are used to modernize, expand,

and replenish the ATC infrastructure. Examples of

F&E programs include the deployment of the next

generation air/ground communications system to

provide digital communications capabilities between

pilots and air traffic controllers; the replacement of

aging ATC computer hardware and software; the

installation of advanced radar for airport surveillance 

to help prevent runway incursions and to warn of

hazardous weather; the augmentation of GPS; the

fielding of automated decision support tools that will

enable controllers to allow users greater freedom to fly 

more direct routes; deployment of explosive detection

systems and devices to ensure passenger safety; and

sustaining current infrastructure facilities. 

The CIP is the agency’s primary mechanism for

documenting current and future F&E requirements.

It describes some 100 near-, mid-, and long-term

capital investment projects that will require funding

from the Airport and Airway Trust Fund.

Implementation of the projects defined in the CIP will

improve safety, security and efficiency while

accommodating increased demands on the NAS.

Research, Engineering and Development

(R,E&D). The FAA’s R,E&D programs are directed

toward improving safety, security, capacity, and

efficiency in the NAS. Areas of primary focus include

advanced air traffic management systems, human

factors and aviation medicine research to improve

efficiency and reduce the risk of human error by

agency personnel and air crewmembers; development 

and testing of aircraft safety and fire protection

methods; aviation weather research to develop

advance forecasting and weather dissemination

products; development and testing of explosive and

weapons detection devices, and studies to improve the 

environment through quieter engines and reduced

aircraft emissions. In FY 1998, Congress authorized

$199 million for the R,E&D program. 

The obligation rate was 98 percent. The FAA

publishes an annual R,E&D Plan which describes

initiatives for NAS service improvements and

development of the next generation air traffic

management system. The NAS Architecture is the

principal framework of NAS infrastructure

investment decisions. This rationale includes criteria 

for selection of R,E&D programs that exploit

technologies and techniques compatible with

validated architectural alternatives.

Airport Improvement Program (AIP). Section

47104 of Title 49, U.S.C., authorizes the Secretary of

Transportation to make project grants for airport

planning and development under the AIP to maintain

a safe and efficient nationwide system of public-use

airports that meets both present and future needs of

civil aeronautics. The payment of user taxes to the

FY 1998 FAA ANNUAL REPORT

MAN AGE MENT DIS CUS SION AND ANALYSIS -6- CHAP TER 1

Operations

Obligation Trends

Fiscal Years 1989 - 1998

(Dollars in Millions)

5,248

4,931

4,531 4,580 4,573 4,641

4,361

4,036 3,825

3,450

0

1,000

2,000

3,000

4,000

5,000

6,000

FY '89 FY '90 FY '91 FY '92 FY '93 FY '94 FY '95 FY '96 FY '97 FY'98

Obligations*

* Includes only unexpired direct appropriations

Facilities and Equipment

Obligation Trends

Fiscal Years 1989 - 1998

(Dollars in Millions)

2,491 2,541

1,346

1,551

1,895

2,137

2,160

2,345

2,093 2,036

-

1,000

2,000

3,000

FY '89 FY '90 FY '91 FY '92 FY '93 FY '94 FY '95 FY '96 FY '97 FY '98

Obligations*

 * Includes only unexpired direct appropriations

Research, Engineering and Development

Obligation Trends

Fiscal Y ears 1989 - 1998

(Dollar s in Millions)

202

209

181

263

256

229

212

199 198

137

0

50

100

150

200

250

300

FY '89 FY '90 FY '91 F Y '92 F Y '93 FY '94 FY '95 F Y '96 F Y '97 F Y '98

Obligations*

 * Includes only unexpired direct appropriations
Federal Government by air travelers and shippers

contributes to the Airport and Airway Trust Fund and 

makes it possible to fund one-fourth to one-third of all

capital development at the Nation’s public-use

airports. Consequently, no Federal monies are

withdrawn from the General Fund for federally

assisted projects to maintain and enhance airport

safety, preserve existing airport infrastructure, and

expand capacity and efficiency throughout the airport

system.

The National Plan of Integrated Airport Systems

(NPIAS) draws selectively from local, regional, and

state planning studies to estimate the costs associated 

with establishing a system of airports adequate to

meet the needs of civil aviation. Costs identified in the 

NPIAS are nominally eligible for Federal

grants-in-aid. Over the next 5 years, airport

development to keep pace with growing aviation

demands will cost $30 billion.

In FY 1998, FAA’s Office of the Associate

Administrator for Airports awarded approximately

$1.70 billion in new AIP grants-in-aid obligations to

improve and expand the Nation’s airports. New

grants awarded this fiscal year included the following: 

503 grants totaling $1,036.7 billion for primary

airports; 48 grants and $39.1 million for nonprimary

commercial service airports; 122 grants totaling

$127.8 million for reliever airports; 304 grants and

$185.5 million for general aviation airports; 43 grants

worth $9.3 million for airport system planning; and

$105 million in 20 State Block Grant Program grants.

In addition, $211.9 million was awarded for 81 grants

to achieve noise compatibility for communities near

airports. This amount included $84.2 million for the

purchase of noise-impacted land adjacent to airports,

$89.2 million for soundproofing residences and

schools, and $38.5 million for other efforts to reduce

noise.

The Passenger Facility Charge (PFC) Program,

authorized by the Aviation, Safety and Capacity

Expansion Act of 1990, provides an additional source

of capital funding for the expansion and preservation

of airport infrastructure in the national air

transportation system. This legislation allows public

agencies controlling commercial service airports,

after receiving approval from the FAA, to charge

enplaning passengers a $1, $2, or $3 facility charge.

PFC collections and AIP funds are complementary in

the overall funding of airport improvements. The

majority of PFC approved projects are also eligible for

further funding under the AIP. As of September 30,

1998, authorized collections for the 296 approved

locations since 1992 totaled over $21.9 billion. As of

September 30, 1998, 69 percent of those primary

airports eligible to collect PFC’s were approved to do

so. Collections, which first began on June 1, 1992,

now produce revenue for airports at a rate exceeding

$1.3 billion per year.

Although these revenues are not considered Federal

funds, the public agency’s application to impose a PFC 

must be approved by the FAA. During FY 1998, the

FAA’s airport personnel processed over 100 PFC

applications, approving over $5.8 billion in PFC

collections to fund approximately 900 projects.

FAA Budget Request for FY 1999. The Fiscal Year

1999 budget agreement reached on October 15, 1998,

included more than $7.3 billion for aviation, including 

air traffic operations, capital improvements, and

research and more than $1.9 billion for airport

improvement grants. The agreement included a

short-term reauthorization of some FAA programs to

improve aviation safety and security, to modernize

the air traffic control system, and to improve airports.

It is hoped that the Congress will act swiftly to send a

bill to the President to ensure that these crucial

programs are continued.

YEAR 2000 (Y2K) COMPLIANCE

FAA Y2K Readiness

The FAA has established an aggressive program to

ensure that all its computer systems will properly

recognize the year 2000 data codes. The FAA has

identified 645 systems, 430 mission critical and 215

nonmission critical, all of which have been assessed. 

The FAA determined that 226 of the 430 mission

critical systems did not require renovation, 48 will be

replaced with compliant systems, 5 will be retired,

and 151 require renovation. As of December 31, 1998,

FY 1998 FAA ANNUAL REPORT

MAN AGE MENT DIS CUS SION AND ANALYSIS -7- CHAP TER 1

Grants-in-Aid for Airports

Obligation Limit Trends

Fiscal Years 1989 - 1998

(Dollars in Millions)

1,700

1,450 1,450 1,460

1,690

1,800

1,900

1,800

1,400 1,425

0

500

1,000

1,500

2,000

FY '89 FY '90 FY '91 FY '92 FY '93 FY '94 FY '95 FY '96 FY '97 FY '98

Obligations
100 percent of FAA systems had successfully

completed the renovation phase. Of the 215

nonmission critical systems, 99 were found to be

compliant, 6 will be replaced, 16 will be retired, and 94 

needed repair. All of the 94 nonmission critical

systems that were found to be noncompliant had been

renovated as of the end of December 1998.

Independent validation and verification of the

renovated systems are underway.

The FAA is currently in the fifth phase of the project,

which is implementation. As of March 31, 1999, all

FAA systems completed the validation phase which

was the largest single effort within the Y2K

five-phase repair process. This was due to the need to

test all applications and the complex interactions

between scores of converted or replaced computer

platforms, operating systems, utilities, applications,

databases, and interfaces. The FAA has developed an

overall end-to-end testing strategy and will oversee

its implementation. The agency is on schedule to

complete the implementation phase by June 30, 1999.

The Costs to Address the Agency’s Y2K Issues:

The FAA’s Y2K program cost estimates (data as of

December 31, 1998) are as follows: 

The Risks of Y2K Issues to the Agency,

Including Any Anticipated Effects on Agency

Operations: 

The Y2K problem could have an impact on the

following major business processes:

Air Traffic Services (such as navigation, surveillance,

flight services, weather, air traffic control and

management, and communications)

Industry Regulation and Certification

Airport Regulation and Certification

Administrative Services

Commercial Space Transportation

Research and Acquisition

Civil Aviation Security and

System and Safety Analysis.

The worst-case scenario is wide-area loss of

communications. Business impact analysis indicates

that loss of communications has the greatest

potential for disruption of national airspace system

(NAS) operations because so many of the NAS air

traffic control systems are dependent on

communications, especially ground-to-air

communications.

Impact of Nonreadiness of Third Parties

The FAA could be impacted by systems that use

commercial off-the-shelf (COTS) software or

hardware which, according to the information

provided by the manufacturer, are not fully compliant 

(e.g., compliant with minor issues, not tested, no

statements at all). In the instance of Microsoft, the

impact of compliance with exceptions could create

extra effort during the validation phase to ensure that 

there are no Y2K-related impacts to systems or

application-based exceptions declared by the

manufacturers.

The Agency’s Contingency Plan(s), Including

How the Agency is Preparing to Handle Most

Likely Worst-Case Scenarios

Because communications systems are so important to 

the NAS, there are several backup communication

alternatives available. The figure below presents the

proposed coordination and communication structure.

As stated earlier, the existing structure for

responding to a contingency has proven to be effective

and efficient for reporting and resolving system

interruptions. This structure will be utilized to

communicate and resolve year 2000 contingencies as

well. Since the Year 2000 Program Office is

responsible for all year 2000-related events, it will

participate with problem restoration and return to

normal procedures for all year 2000 contingencies.

When a trigger occurs such as a communications

interruption, Air Traffic (AT) and Airway Facilities

(AF) personnel are usually the first to become aware

of the interruption. They will communicate the

interruption to their respective Traffic Management

Unit (TMU) and Maintenance Control Center (MCC).

The Regional Operations Center (ROC) is also made

aware of the interruption by either AF or AT. The

ROC communicates the interruption information to

the Washington Operations Center (WOC). Also, the

TMU and the MCC will notify the Air Traffic Control

Systems Command Center (ATCSCC) and National

Maintenance Control Center (NMCC), respectively.

FY 1998 FAA ANNUAL REPORT

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Program Cost

Estimates, by

Fiscal Year

FY

1997

FY

1998

FY

1999

FY

2000

Total

$6.3 M $105.8 M $184 M $4 M $300.1 M
The NMCC will notify Aviation System Standards

(AVN). Once systems are repaired, AVN is available

to perform rapid response flight checks. The ATCSCC 

and the NMCC also contact the WOC to ensure

headquarters-level coordination is complete. The

WOC, in turn, informs the emergency operations

center of the problem. For interruptions that

are believed to originate from year 2000

problems, the appropriate Business

Resumption Team (one for each core business

process) is responsible for invoking the

contingency plan, monitoring problem status,

and declaring return to normal operations.

For NAS outages, the CCP informs the Year

2000 Program Office of the problem. For

non-NAS outages, the Business Resumption

Team manager is responsible for informing

the Year 2000 Program Office of the problem.

The Year 2000 Program Office will track

problems and assist in reporting information

on outages to upper management.

The Year 2000 Program Office has developed

an FAA-wide Y2K Draft Business Continuity

and Contingency Plan (BCCP) that builds on

existing local facility contingency plans,

system Y2K contingency plans, and agency

emergency operations plans. The

development of the BCCP involved the efforts

of dozens of FAA subject matter experts to

brainstorm and identify specific Y2K

vulnerabilities, mitigating strategies, and

modifications to current contingency plans. The

resulting risk matrices comprise 176 pages of the

draft BCCP. Special attention was paid to problems

perceived to be characteristic of Y2K events, such as

widespread power and communications failure and

simultaneous failure of identical systems.

FY 1998 FAA ANNUAL REPORT

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Triggering

Event

AT

POC

ROC

AF

POC

TMU MCC

ATCSCC WOC NMCC

CCP

AVN

Office of the

Administrator

Public

Business

Resumption

Team

Invoke

contingency if

cannot

communicate

with HQ

Invoke

contingency

AOA-4

Legend:

New lines of communication

Proposed coordination and communication structure for

responding to a NAS Year 2000 event.
Special Challenges: The fatal accident rate is very

low, as most of the major causes of accidents have

been identified, and FAA has either issued

regulations or provided system improvements to

reduce the accident risk.

Strategies: FAA will continue to work with the

aviation community and other governmental

agencies to identify root causes of accidents and

intervene accordingly to prevent potential causes of

future accidents. 

Current/Ongoing Activities:

• Safer Skies - conduct further research into the

causal factors of accidents and identify and

implement intervention strategies.

• Implement the new Air Transportation Oversight

System (ATOS), which changes how the agency

oversees and inspects air carriers.

• Issue a final rule on the terrain awareness and

warning system (TAWS).

• Issue a policy statement for Flight Operations

Quality Assurance (FOQA) programs. 

FY 1998 FAA ANNUAL REPORT

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THE FAA’S STRA TE GIC GOALS

In May 1998, the Administrator and her senior management team completed work on the goals that will carry the

FAA and aerospace into the next century, from 1998 through 2003 and beyond. The 1998 FAA Strategic Plan lays

out these goals, areas for strategic focus, projects to implement them, and outcome measures. The Strategic Plan is

focused around three mission goals: focused around three mission goals:

MISSION GOAL

Safety

Reduce U.S. aviation fatal accident rates by 80 percent from 1996 levels by

2007.

Security Prevent security incidents in the aviation system.

System

Efficiency

Provide an aerospace transportation system that meets the needs of users and

is efficient in the application of FAA and aerospace resources.

The 1998 Strategic Plan also includes four enabling goals that are not directly a part of the core FAA mission but are

critical to accomplishing the mission. These enabling goals and the strategic focus areas supporting them cut across all

three of the mission goals:

People: The foundation of accomplishment.

Reform: The framework for accomplishment.

The Environment: Our responsibility.

Global Leadership: Commitment to worldwide improvements.

In FY 1998, the FAA continued to channel its resources in directions dictated by its strategic plan and efforts by both

the FAA and the Department of Transportation (DOT) under the Government Performance and Results Act of 1993.

The performance measures on the next pages underscore the agency’s commitment to each of its mission-based goals.

PRO GRAM GOALS, MEAS URES, AND PER FORM ANCE

Air Car rier Fa tal Ac ci dent Rate

Goal: By 2007, reduce the number of fatal aviation accidents by 80 percent.
FY 1998 FAA ANNUAL REPORT

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Special Challenges: Over the past two years,

aviation operations at FAA and contract towers

increased, on average, by 2.7 percent each year. With

an increased tempo of operations, the risk of

incursions increases. Runway incursions are most

likely to occur at complex, high volume airports.

These airports are characterized by multiple parallel

or intersecting runways, multiple taxiway/runway

intersections, complex traffic patterns and the need

for traffic to cross active runways.

Strategies: FAA aims to reduce incursions by

providing technologies that use multiple sensors

including ground radars and automatic position

reporting systems to detect the location of aircraft and 

vehicles, airport surface navigation aids, and

enhanced software for detecting conflicts between

aircraft on the runway and approaching aircraft, and

signals at key points to warn pilots and ground

equipment operators not to cross active runways.

Current/Ongoing Activities:

• Complete deployment of airport surface detection

radar (ASDE)

Runway In cur sions

 Goal: Reduce the number of runway incursions by 15 percent in 1999 from a 1997 baseline of 318 total.

Op era tional Er rors and De via tions (Air Traf fic)

Goal: Reduce the rate of operational errors and deviations to 0.496 or less and 0.099 or less, respectively, in

1999, from a 1994 baseline of 0.541 (errors) and 0.108 (deviations). 

Special Challenges: Operational errors and

deviations are a result of human error. Studies have

shown that five factors are significant: traffic

management relationships, quality assurance

programs, training, management involvement, and

control room environment. 

Strategies: One of the major approaches to reducing

operational errors and deviations is to provide a

common level of understanding of procedures and

policies among controllers and users. Training for

controllers and pilots is central to this and will

continue to be the focus of the Air Traffic Services’

safety strategy. Technological improvements such as

deployment of modern displays, new software

automation and decision tools, and improved

communication systems will support better

determination of aircraft location and resolution of

potential conflicts between aircraft. 

Current/Ongoing Activities:

• Continued focus on training for controllers and

cross-educational programs between pilots and

controllers to provide a common level of

understanding of procedures and policies among

NAS operators and users that ensure safe

operations.

• Con duct op era tional er ror work shops to ad dress

those ar eas where per form ance trends show

in creases. 

• Deployment of modern displays, automation tools,

decision support tools, and communications to

support better determination of aircraft location

and resolution of potential conflicts both in the air

and on the airport surface. These include the User

Request Evaluation Tool (URET) — one of the first

phases of a conflict probe capability, and the

deployment of the airport movement area safety

system AMASS to provide information on airport

surface safety hazards.
FY 1998 FAA ANNUAL REPORT

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Special Challenges: Technology and human

vigilance must keep pace with the increasing

sophistication of explosive devices and other

dangerous articles and techniques terrorists or

criminals may use to threaten a flight. At the same

time, the speed of processing passengers and baggage

through screening checkpoints and other security

measures must improve to accommodate the rapid

growth in passenger traffic. These challenges must be

met while protecting civil liberties.

Strategies: FAA will conduct research to develop

better technology and procedures to prevent weapons

and explosive devices from being taken aboard

aircraft. FAA will continue to purchase and deploy

advanced aviation security equipment and monitor

its use (and airline and airport security performance)

through testing and assessments. The planned

certification of screening companies is expected to

increase levels of screener professionalism. A new

performance-based approach to industry compliance

with security requirements will encourage partnering 

to improve aviation security 

Current/Ongoing Activities:

• In cooperation with the airlines, plan and deploy

additional aviation security equipment, including

trace detection devices, explosive detection

systems, automated operator-assisted x-ray

devices and advanced passenger screening units.

• Continue efforts leading to the purchase and

installation of second-generation FAA-certified

explosive detection systems to scan for explosives

in checked baggage.

• Implement automated passenger profiling and bag 

match using the computer-assisted passenger

screening (CAPS) system. 

• In cooperation with the airlines, purchase and test

hardened cargo containers designed to withstand

bomb blasts. 

Avia tion Se cu rity

Goal: Increase the detection of explosive devices and weapons that may be brought aboard aircraft.

(Detection rates are sensitive information protected under 14 CFR Part 191. The 1998 baseline and targeted

increases will be made available to appropriate parties upon request.)

Run way Pave ment Con di tion

Goal: Maintain at least 93 percent of runway pavement in satisfactory condition.

Special Challenges: Airport budgets are often not

adequate to meet all maintenance and rehabilitation

requirements. 

Strategies: FAA gives a high priority to AIP grants

for pavement rehabilitation, and requires all grant

recipients to have an airport maintenance

management plan that includes pavement.

Current/Ongoing Activities:

• Based on past years’ averages, approximately 24

percent of available AIP grant funds will be

directed toward runway construction projects. 

• An AIP demonstration program is underway to

fund crack sealing at nonprimary airports.
FY 1998 FAA ANNUAL REPORT

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GPS Land ing Ap proaches

Goal: Increase the number of landing approaches using GPS technology by 500.

Special Challenges: Developing the approaches

requires accurate survey information for airport

runway location and any obstacles near the flightpath

for approach. To use the approaches, aircraft will have 

to be equipped with GPS receivers and pilots will

require appropriate training. To maximize the

benefits to aviation users, FAA will need to develop

approaches for airports that have electronic aids and

those that do not.

Strategies: FAA is using automated tools to

incorporate airport and obstruction data into the

printed approach plates used by pilots. A large

number of approaches are being developed each year

to ensure that precision approach guidance can be

used. 

Current/Ongoing Activities:

• In 1998, 531 GPS procedures were developed, 528

were successfully flight inspected, and 516 were

published for operational use, bringing the

nationwide total to 1484 published standard

instrument approach procedures (SIAPS). 

• The FAA has identified approximately 4,100

runway ends for which satellite-based approaches 

will be developed through a combination of GPS,

WAAS, and local area augmentation systems

(LAAS). 
Note 1. Summary of Significant Accounting

Policies

A. Basis of Presentation

FY 1998 FAA ANNUAL REPORT

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Avia tion De lays

Goal: Reduce the number of volume- and equipment-related delays to 30.7 per 100,000 flight operations, from 

a 1994 base level of 36.9.

Special Challenges: Capacity-related delays are

most prevalent at large hub airports that have

significant constraints on increasing runway

capacity. Equipment failures, volume of air traffic,

and runway closures are other significant causes of

delays.

Strategies: With Free Flight Phase I, FAA is aiming

to improve the spacing of traffic streams into major

airports and maximize the use of available capacity.

FAA is also developing improved weather reporting.

Current/Ongoing Activities:

• Bring on-line and make operational air traffic

control (ATC) and aeronautical navigation

equipment now being delivered as part of the

modernization of the NAS. 

• Replace the aging computer equipment at all en route

centers with the display system replacement

(DSR) and in terminal facilities with the standard

terminal automation replacement system

(STARS). This new equipment will further reduce

the number of outages, reduce delays, and allow

optimum use of capacity to accommodate growth in 

operations.

• GPS satellite navigation. 

• Implement, at various locations, new procedures

that take advantage of additional runway and

airport capacity increases.

• Deploy prototype automation tools, such as the

passive final approach spacing tool (pFAST), to

provide sequencing of arrival aircraft and increase

airport acceptance rates. 

• Replace obsolete long-range radar with an all

solid-state system that offers enhanced range,

extended coverage, and vastly improved weather

detection.

• Develop the integrated terminal weather system

(ITWS) to link all relevant weather data available

in the terminal area. 

• Deploy improved weather systems, such as the

terminal Doppler weather radar (TDWR),

automated surface observing system (ASOS), and

the weather and radar processor (WARP) to detect

and mitigate the impacts of weather.
FY 1998 FAA ANNUAL REPORT

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Flight Route Flexi bil ity

Goal: Increase the number of flights flown off ATC-preferred routes to 80 percent from a 1996 baseline of 75

percent. The 2000 goal is 80 percent.

Special Challenges: Airport budgets are often not

adequate to meet all maintenance and rehabilitation

requirements. 

Strategies: FAA gives a high priority to AIP grants

for pavement rehabilitation and requires all grant

recipients to have an airport maintenance

management plan that includes pavement. 

Current/Ongoing Activities:

• Implement, by the end of year 2002, the core

capabilities of Free Flight Phase 1 in partnership

with the users and FAA labor organizations.

• Begin evaluation of two-way probe capability at

both Indianapolis and Memphis Centers. 

• Award the hardware procurement contract for the

pFAST to aid controllers in making decisions more

efficiently regarding the sequencing and runway

assignment of terminal arrival aircraft. 

• Award the hardware procurement contracts for

the traffic management advisor (TMA) to aid

controllers in the sequencing and spacing of en

route arrival aircraft.

• Deploy the surface movement advisor (SMA) at

Detroit Metro and Philadelphia Airports to

facilitate the sharing of information to airlines and 

to enhance airline decisionmaking regarding the

surface movement of aircraft.
FY 1998 FAA ANNUAL REPORT

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Air craft Noise Ex po sure

Goal: Reduce by 60 percent the number of residents exposed to significant aircraft noise (65 dB or greater),

from an estimated baseline of 1.7 million in 1995.

Special Challenges: Much of the recent progress

has been achieved by legislatively mandated

transition of airplane fleets to newer-generation

aircraft that produce less noise. Most of the gains

from this change will have been achieved by FY 2000.

The Airport Noise and Capacity Act of 1990 set

December 31, 1999, as the deadline for elimination of

Stage 2 (older, noisier) aircraft weighing more than

75,000 pounds. Growth in aviation activity also

works against easy progress.

Strategies: FAA pursues a program of aircraft noise

control in cooperation with the aviation community

through noise reduction at the source (development

and adoption of buildings near airports, operational

flight control measures, and land use planning

strategies. 

Current/Ongoing Activities:

• Administer the grants-in-aid program to make

funds available for projects mitigating the impacts 

of air transportation on communities. 

• Continue research programs with the National

Aeronautics and Space Administration to achieve

significant noise reduction technology advances.

• Monitor compliance by the airlines with

legislation passed in 1990 requiring that older,

noisier (Stage 2) airplanes be replaced by quieter

(Stage 3) airplanes by the year 2000
FY 1998 FAA ANNUAL REPORT

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MAN AGE MENT RE PORT OF THE CHIEF FI NAN CIAL OF FI CER

This past year, 1998, has been a year of significant progress toward

improved financial management at the Federal Aviation Administration

(FAA). While the FAA has received another disclaimer opinion from the

Office of the Inspector General this year, FAA has taken major steps

toward meeting the challenges necessary to bring this financial

statement in compliance with the Chief Financial Officer’s Act and

implement full costing to enhance cost-effective mission performance.

The FAA has made significant progress in substantiating property,

plant, and equipment since the last reporting period. We have developed

a comprehensive schedule and are aggressively working to clean up our

backlogs in Work in Process and document or model other assets by

September 30, 1999. The success that we now can foresee is the result of

efforts by hundreds of people across the FAA regions, centers,

headquarters, and lines of businesses (LOB), as well as the result of a

joint, collaborative, working partnership between the FAA, the

Department of Transportation’s Office of the Secretary (OST) and Office

of the Inspector General (OIG), and the General Accounting Office

(GAO). In the atmosphere of tight Federal funds, we have established

three separate teams and are closely monitoring progress against

assigned monthly goals. During FY 1998, we reduced our Work in Process accounts by $1.7 billion and have

targeted another $1.3 billion for cleanup by March 31, 1999. Great strides were made in our inventory accounts,

because we have conducted physical inventories of depot and field spares and changed our inventory pricing

methodology to weighted average cost.

The FAA improved its financial management reporting and processes. In addition to the Balance Sheet, the

agency included four new financial statements—the Statement of Net Cost, the Statement of Financing, the

Statement of Budgetary Resources, and the Statement of Changes in Net Position and required supplementary

stewardship information on investments for non-Federal physical property and research and acquisitions in the

annual report. During FY 1998, the agency implemented a new off-the-shelf procurement system, ACQUIRE,

which will enhance financial management reporting with its integration and conversion to the agency accounting

system. We also initiated a project team to support the Office of the Secretary’s implementation of a new

off-the-shelf financial management system, DELPHI.

During FY 1998, FAA also made significant progress in implementing the Cost Accounting System (CAS). In

acknowledgement of the size and complexity of the project, we enhanced and restructured CAS project

management. After reassessing the project schedule and funding, we substantially increased both personnel and

financial resources and adopted a phased approach to implementing the CAS FAA-wide. Programmatic

accomplishments included implementing labor distribution in one of our major LOB’s on a pilot basis, completing

one full allocation cycle, and providing data in support of the Statement of Net Cost by LOB’s. We also developed a 

project plan and methodology to ensure implementation within all LOB’s by the end of FY 2001. 

By the end of FY 1999, FAA anticipates charging for overflight services, i.e., flights which cross U.S. controlled

airspace but which neither takeoff nor land in the United States. Unlike FAA’s previous attempt to charge for

overflights, the new fees will be based on the costs required to provide this service based upon financial

information provided by the FAA’s new CAS. The implementation of overflight fees is one of the first steps in

making the agency more responsive to user needs and more accountable to our stakeholders.

The accompanying financial statements for FY 1998 have been prepared in accordance with the Chief Financial

Officer’s Act of 1990 with the form and content guidance provided by the Office of Management and Budget

(OMB) and the Federal accounting standards provided by the Federal Accounting Standards Advisory Board
FY 1998 FAA ANNUAL REPORT

MAN AGE MENT RE PORT OF THE CFO -18- CHAP TER 2

(FASAB). Questions regarding this annual report may be directed to the Financial Statements, Analysis, and

Control Branch, AFM-310, 800 Independence Avenue, S.W., Washington, D.C., 20591

Carl B. Schellenberg

Chief Fi nan cial Of fi cer
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LIMITATIONS OF THE FINANCIAL

STATEMENT

• The financial statements have been prepared to

report the financial position and results of

operations of the Federal Aviation Administration, 

pursuant to the requirements of 31 U.S.C.,

3515(b).

• While the statements have been prepared from the 

books and records of the FAA in accordance with

the formats prescribed by the Office of

Management and Budget (OMB), the statements

are in addition to the financial reports used to

monitor and control budgetary resources which

are prepared from the same books and records.

• The statements should be read with the

realization that they are for a component of the

U.S. Government, a sovereign entity. One

implication of this is that liabilities cannot be

liquidated without legislation that provides

resources to do so.

FY 1998 FAA ANNUAL REPORT

LIMITATIONS OF THE FINANCIAL STATEMENT -37- CHAP TER 2
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -38- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED BALANCE SHEET

As of September 30, 1998

(Dollars in Thousands)

Assets

Entity Assets:

Intragovernmental

Fund Balance with Treasury (Note 2) $ 1,569,560

Investments (Note 3) 8,752,638

Accounts Receivable, Net (Note 4) 54,894

Other Assets (Note 5) 160,330

Total Intragovernmental Assets $ 10,537,422

Accounts Receivable, Net (Note 4) 26,318

Loans Receivables and Related -

Foreclosed Property, Net (Note 6) 394

Cash and Other Monetary Assets (Note7) 59,710

Inventory and Related Property, Net (Note 8) 819,580

General Property, Plant, and Equipment, Net (Note 9) 8,375,113

Other Assets (Note 5) 8,462

Total Entity Assets: $ 19,826,999

Total Assets $ 19,826,999

Liabilities

Liabilities Covered by Budgetary Resources:

Intragovernmental Liabilities:

Accounts Payable $ 179,788

Other Intragovernmental Liabilities (Note 11) 69,097

Total Intragovernmental Liabilities 248,885

Accounts Payable 505,979

Lease Liability (Note 12) 687

Other Liabilities (Note 11) 189,008

Total Liabilities Covered by

Budgetary Resources $ 944,559

Liabilities Not Covered by

Budgetary Resources:

Intragovermental Liabilities:

Debt (Note 10) $ 24

Other Intragovernmental Liabilities (Note 11) 181,065

Total Intragovermental Liabilities 181,089

Lease Liabilities (Note 12) 103,532

Environmental and Disposal Liabilities (Note 13) 3,244,300

Federal Employees and Veterans Benefits Payable (Note 14) 926,780

Contingent Liabilities (Note 15) 465,394

Other Liabilities (11) 408,072

Total Liabilities Not Covered by

Budgetary Resources $ 5,329,167

Total Liabilities $ 6,273,726

Net Position Balances:

Unexpended Appropriations (Note 16) $ 336,470

Cumulative Results of Operations (Note 17) 13,216,803

Total Net Position $ 13,553,273

Total Liabilities and Net Position $ 19,826,999
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -39- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED STATEMENT OF NET COST

For the year ended September 30, 1998

(Dollars in Thousands)

Costs: (Notes 18 and 19)

Programs

Air Traffic Services

Intragovernmental $ 449,742

With the Public 5,299,603

Total 5,749,345

Less Earned Revenues (21,149)

Net Air Traffic Services Costs $ 5,728,196

Regulation & Certification

Intragovernmental $ 25,571

With the Public 664,827

Total 690,398

Less Earned Revenues 25

Net Regulation & Certification Costs $ 690,423

Research and Acquisition

Intragovernmental $ 14,888

With the Public 1,076,509

Total 1,091,397

Less Earned Revenues (47,015)

Net Research and Acquisition Costs $ 1,044,382

Airports

With the Public

Grant Program $ 1,384,466

Administration 52,075

Net Airports Costs $ 1,436,541

Civil Aviation Security

Intragovernmental $ 4,144

With the Public 152,714

Total 156,858

Less Earned Revenues (819)

Net Civil Aviation Security Costs $ 156,039

Commercial Space

Intragovernmental 132

With the Public $ 6,895

Net Commercial Space Costs $ 7,027

Other Programs

Intragovernmental $ 26,513

With the Public 23,398

Total 49,911

Less Earned Revenues (33,950)

Net Other Program Costs $ 15,961

Costs Not Assigned to Programs $ 16,631

Less Earned Revenues Not Attributed to Programs $ (13,388)

Deferred Maintenance, unaudited (Note 20)

Net Cost Of Operations $ 9,081,812
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -40- CHAP TER 2

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

For the year ended September 30, 1998

(Dollars in Thousands)

Net Cost of Operations $ (9,081,812)

Financing Sources

Appropriations Used 3,312,612

Taxes and Other Non-Exchange Revenues (Note 21) 8,725,972

Donations (Non-Exchange Revenue) (774)

Imputed Financing (Note 22) 355,732

Transfers-In 11,691

Transfers-Out (64,268)

Total Financing Sources $ 12,340,965

Net Results of Operations 3,259,153

Prior Period Adjustments (Note 23) (5,528,065)

Net Change in Cumulative Results of Operations (2,268,912)

Increase (Decrease) in Unexpended Appropriations (Note 24) (380,032)

Change in Net Position (2,648,944)

Net Position Beginning of Period 16,202,217

Net Position End of Period $ 13,553,273
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -41- CHAP TER 2

FEDERAL AVIATION ADMINISTRATION

COMBINED STATEMENT OF BUDGETARY RESOURCES

For the year ended September 30, 1998

(Dollars in Thousands)

Budgetary Resources (Note 25)

Budget Author ity $ 11,184,553

Unobligated Balances - Beginning of Period 7,229,820

Spending Author ity From Offsetting Collec tions 2,033,195

Adjustments 114,148

Total Budgetary Resources $ 20,561,716

Status Of Budgetary Resources

Obligations Incurred $ 11,338,673

Unobligated Balances-Available 522,739

Unobligated Balances-Not Available 8,700,304

Total Status of Budgetary Resources $ 20,561,716

Outlays

Obligations Incurred $ 11,338,673

Less: Spending Authority From Offsetting

Collections and Adjustments (2,161,115)

Obligated Balance, Net Beginning of Period 5,074,554

Obligated Balance Transferred, Net -

Less: Obligated Balance, Net - End of Period (5,038,337)

Total Outlays $ 9,213,775
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -42- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

COMBINED STATEMENT OF FINANCING

For the year ended September 30, 1998

(Dollars in Thousands)

Obligations and Nonbudgetary Resources

Obligations Incurred $ 11,338,673

Less: Spending Authority for Offsetting

Collections and adjustments (2,161,115)

Donations not in the Budget (774)

Financing Sources for Cost Subsidies 355,732

Transfers-in (out) (52,577)

Exchange Revenue not in the Budget (40)

Other 20,736

Total Obligations as Adjusted, and Nonbudgetary Resources $ 9,500,635

Resources That Do Not Fund Net Cost of Operations

Change in Amount of Goods, Services, and Benefits

Ordered but not yet Received or Provided $ (95,987)

Change in Unfilled Customer Orders (26,288)

Costs Capitalized on the Balance Sheet (Note 26) 2,995,785

Financing Sources that Fund Costs of Prior Periods (Note 27) (85,504)

Other - Identified Prior Period Adjustments (3,517,446)

Reconciling Difference (876,930)

Total Resources That Do Not Fund Net Cost of Operations $ (1,606,370)

Costs That Do Not Require Resources

Depreciation and Amortization $ 180,059

Revaluation of Assets and Liabilities (483,498)

Loss on Disposition of Assets 511,737

Cost of Goods Sold 133,222

Total Costs That Do Not Require Resources $ 341,520

Financing Sources Yet To Be Provided (Note 27) $ 846,027

Net Cost Of Operations $ 9,081,812
These consolidated financial statements have been

prepared to report the financial position, the net cost

of operations, the changes in net position, the status

and availability of budgetary resources and the

reconciliation between proprietary and budgetary

accounts of the Federal Aviation Administration

(FAA), as required by 31 U.S.C. 3515, as added by the

Chief Financial Officer’s Act of 1990, and as amended

by the Federal Financial Management Act of 1994,

which is Title IV of the Government Management

Reform Act of 1994. They have been prepared from

the books and records of FAA in accordance with the

hierarchy of accounting principles and standards

approved by the principals of the Federal Accounting

Standards Advisory Board, The Office of

Management and Budget (OMB) Bulletin 97-01,

Form and Content of Agency Financial Statement, the 

Department of Transportation (DOT) and the FAA’s

accounting policies which are summarized in this

note. These statements, with the exception of the

statement of Budgetary Resources, are, therefore,

different from the financial management reports also

prepared by the FAA pursuant to OMB directives that 

are used to monitor and control the FAA’s use of

budgetary resources.

The FAA applies accounting principles and standards

and complies with operating policies and procedures

established, issued, and implemented by the General

Accounting Office (GAO), the OMB, and the

Department of Treasury, as recommended by the

Federal Accounting Standards Advisory Board

(FASAB). The financial statements have been

prepared in accordance with the following hierarchy

of accounting principles and standards, which

constitutes another comprehensive basis of

accounting:

1. Individual Standards agreed to by the Director of

OMB, the Comptroller General, and the Secretary of

the Treasury and published by OMB and the General

Accounting Office.

2. Interpretations related to the Statement of Federal

Financial Accountings Standards (SFFAS) issued by

OMB in accordance with the procedures outlined in

OMB Circular A-134, “Financial Accounting

Principles and Standards.”

3. Requirements contained in OMB Bulletin 97-01,

Form and Content and its amendments in effect for

fiscal year 1998.

4. The DOT accounting policies and reporting

requirements

5. FAA accounting policies summarized in this note

and FAA Order No. 2700.31, Uniform Accounting

Systems Operations Manual, and related

documentation containing the FAA-specific

accounting policy.

6. Accounting principles published by authoritative

standard-setting bodies and other authoritative

sources (1) in the absence of other guidance in the first 

five parts of this hierarchy, and (2) if the use of such

accounting standards improve the meaningfulness of

these financial statements.

B. Reporting Entity

The FAA was created in 1958. The FAA’s mission is to

operate the Nation’s air traffic control system and to

regulate the aviation’s safety and security. FAA is

responsible to provide U.S. air travelers with an

efficient, safe, secure, and technically advanced

airspace system. 

The FAA activities as per Treasury designation can be 

grouped into four funds. 

Entity

Title

1. Trust Fund

Airport and Airway Trust Fund 

 Cash and Investments

Grants-in-Aid

Facilities and Equipment

Research and Development

Programs Administered by Other 

Agencies

2. Revolving

 Fund Aviation Insurance Program

3. Franchise 

 Fund Administrative Services 

4. All Others Operations

(Unsegmented) Facility and Equipment

Development

FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -43- CHAP TER 2
Aircraft Purchase Loan

 Guarantee 

 - Borrowing Authority for

 Program Expenses

 - Appropriation to Liquidate

 Borrowed Funds and 

 Accrued Interest

General Fund Miscellaneous

Receipts 

Suspense Clearing Accounts

Items Not Classified by Financing 

Source

The Airport and Airway Trust Fund (Trust Fund)

financed approximately 62 percent of the fiscal year 

(FY) 1998 total budget. The only appropriations

receiving General Fund financing are the Operations

appropriation and, when enacted, the appropriation

to liquidate debts to the Treasury incurred for the

Aircraft Purchase Loan Guarantee Program. (No

such liquidating appropriation was enacted in FY

1998.) Approximately 37 percent of the FY 1998

funding of the Operations appropriation was financed

by the General Fund, and the remainder was funded

by the Trust Fund. Infusing funds from the Trust

Fund to the Operations appropriation is accomplished 

by periodic transfers. Once a transfer is made, the

corresponding portion of the Operations account

derived from the Trust Fund is accounted for under

the General Fund Operations appropriation symbol,

thus losing the identity of the source. 

C. Budgets and Budgetary Accounting

Congress annually enacts appropriations to permit

the FAA to incur obligations for specified purposes.

For FY 1998, the FAA was accountable for Trust Fund 

appropriations, General Fund appropriations, a

Revolving Fund, a Franchise Fund, and borrowing

authority. The FAA recognizes budgetary resources

as assets when cash (funds held by Treasury) is made

available through Treasury General Fund warrants

and Trust Fund transfers. See paragraph B above.

D. Basis of Accounting

Transactions are recorded on an accrual accounting

basis and a budgetary basis. Under the accrual

method, revenues are recognized when earned, and

expenses are recognized when a liability is incurred,

without regard to receipt or payment of cash. Trust

Fund revenues derived from excise taxes are treated

differently. They are recorded on the basis of cash

transferred from the General Fund to the Trust Fund. 

Transactions are also classified by fund account. This

is accomplished by assigning to each transaction a

unique attribute (Treasury symbol) identifying the

corresponding appropriation and its period of

availability. 

Budgetary accounting facilitates complying with

legal controls on the use of Federal funds.

E. Revenues and Other Financing Sources

Congress enacts annual, multi-year, and no-year

appropriations to be used, within statutory limits, for

operating and capital expenditures. Additional

amounts are obtained from service fees (e.g., landing

and registry fees) and through reimbursements for

services performed for domestic and foreign

governmental entities.

The Trust Fund is sustained by excise taxes collected

by the Internal Revenue Service (IRS) from airway

system users. The IRS records excise tax revenues

deposited in the General Fund on a cash basis;

Treasury transfers an equivalent amount from the

General Fund to the Trust Fund. The Trust Fund also 

earns interest from investments in Treasury

securities. Interest income is recognized as revenue

on the accrual basis.

Appropriations are recognized as a financing source

when expended. Revenues from service fees and

reimbursements are recognized concurrently with the 

recognition of accrued expenditures for performing

the services. 

F. Fund Balances with the U.S. Treasury and

Cash

The U.S. Treasury processes cash receipts and

disbursements. Funds at the Treasury are available

to pay agency liabilities. The FAA maintains petty

cash (imprest funds) outside the Treasury to facilitate 

small purchases. The FAA does not maintain cash in

commercial bank accounts. The FAA does not

maintain any foreign currency balances. Foreign

currency payments are made either by the Treasury

or the Department of State and are reported by the

FAA in the U.S. dollar equivalent. 

FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -44- CHAP TER 2
G. Investment in U.S. Government Securities

Unexpended funds in the Trust Fund and Aviation

Insurance Revolving Fund are invested in U.S.

Government securities. A portion of the Trust Fund

investments is liquidated semi-monthly in amounts

needed to provide cash for the FAA appropriation

accounts. The Revolving Fund investments are

usually held to maturity. Investments, redemptions,

and reinvestments are controlled and processed by

the Treasury. 

H. Accounts and Loans Receivable

The FAA’s financial statement includes the activities

and balances of relevant Treasury General Fund

Miscellaneous Receipt accounts. The FAA maintains

accountability for defaulted loans under the Aircraft

Purchase Loan Guarantee Program. Upon default,

the FAA established accounts receivable in the

General Fund Miscellaneous Receipts account to

reflect the amount due from the borrower for principal 

and interest. The FAA also established an

intragovernmental liability to offset the accounts

receivable which represents an asset of the Treasury,

not the FAA.

I. Operating Materials and Supplies

Operating materials and supplies consist primarily of

unissued materials and supplies that will be

consumed in normal operations. In FY 1998, the FAA

discontinued the use of standard cost and began

valuing materials and supplies using moving

weighted average. Other classifications of materials

and supplies are valued on the basis of actual prices

paid.

Adjustments for the proper valuation of reparable,

excess, obsolete, and unserviceable items are made to

the appropriate allowance account at fiscal yearend.

The allowance for reparable items is recognized as a

current period expense. The allowance for excess,

obsolete, and unserviceable items is recognized as a

gain or a loss. Operating materials and supplies are

reclassified as expenses or work in progress when

consumed or issued. 

J. Property, Plant and Equipment (PP&E)

In FY 1998, the FAA increased the capitalization

threshold from $5,000 to $25,000 for all PP&E.

Acquisitions with costs exceeding $25,000 and a

useful life exceeding 2 years are capitalized.

Acquisitions not meeting these criteria are recorded

as operating expenses. Capitalization thresholds

differ from the thresholds for classifying property as

accountable or sensitive. The FAA currently reports

general PP&E at original acquisition cost.

In FY 1998, FAA fully implemented the depreciation

of general PP&E. The depreciation expense is

calculated using the straight-line method; except for

aircraft that is depreciated to a 25 percent salvage

value, the FAA does not recognize residual value for

its PP&E. No depreciation expense is recognized on

an asset during the fiscal year it is put in service. A

full year’s depreciation will be recognized during the

asset’s final year of use. The useful life classifications

for capitalized assets are as follows:

Asset Classification

Useful Life

(Years)

Offices, Buildings, Warehouse

Buildings, Residential Properties,

Air Traffic Control Towers, and Air

RouteTraffic Control Centers

40

Mobile Homes, Aircraft 20

Original Roads, Sidewalks, Parking

Lots, and All Other Structures 15

Printing, Photographic and

Projection equipment 13

Capital Improvements, Facility

Modifications, Leasehold

Improvements (or expiration of lease

whichever comes first), Portable and

Installed Communications

Equipment Excluding Air Navigation 

and Air Traffic Control Facilities and 

Avionics Equipment

10

Office Furniture and Equipment

including the following categories:

Prototype and Experimental,

Research and Development Test,

Shop, Emergency Readiness,

Training, Portable Test and Rack

Mounted Test equipment for Air

Navigation and Air Traffic Control

Facilities, Aircraft Test Equipment

and Other nonclassified Equipment

7

Vehicles and Automatic Data

Processing Equipment 5

FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -45- CHAP TER 2
The FAA has established two categories of economic

service life for some of its personal property and

facilities and equipment assets. The two categories

are based on whether the assets were in service prior

to the full implementation of the depreciation policy or 

they were put in service in the year of the depreciation

implementation, as follows:

Buildings acquired under capital leases are amortized 

over the lease term. If the lease agreement contains a

bargain purchase option or otherwise provides for

transferring title of the asset to the FAA, the building

is depreciated over a 40-year service life. 

Construction in progress is valued at direct (actual)

costs, plus applied overhead and other indirect costs

as accumulated by the regional project materiel

system. 

The General Services Administration (GSA) receives

payment for real property that is under its control and 

is used by the FAA. Payments are made from an

appropriation to the Office of the Secretary of

Transportation (OST), part of which (corresponding to 

the FAA costs) is derived from the Trust Fund. 

K. Prepaid and Deferred Charges

Advance payments are generally prohibited by law;

there are some exceptions, such as subscriptions.

When permitted, payments made in advance of the

receipt of goods and services are recorded as prepaid

charges at the time of prepayment and recognized as

expenses when the related goods and services are

received.

L. Liabilities

A liability represents the amount to be paid by the

FAA as the result of a transaction or event that has

already occurred. However, the FAA, absent of an

appropriation, cannot liquidate any liabilities.

Liabilities for which an appropriation has not yet

been enacted are, therefore, classified as unfunded

liabilities, and there is no certainty that such

appropriation will be enacted.

M. Borrowing Payable to the Treasury

Borrowing involves loans from the Treasury to fund

expenses in the Aircraft Purchase Loan Guarantee

Program. Treasury renews the debt obligation until

the FAA receives an appropriation to liquidate the

principal and interest. No such appropriation was

enacted for FY 1998.

N. Interest Payable to the Treasury

The FAA owes interest to the Treasury based on its

debt to the Treasury as a result of borrowing for the

Aircraft Purchase Loan Guarantee Program.

O. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the

accrual is reduced as leave is taken. At each biweekly

pay period, the balance in the accrued annual leave

account is adjusted to reflect the latest pay rates and

unused hours of leave. Funding will be obtained from

future financing sources to the extent that current or

prior year appropriations are not available to fund

annual leave earned but not taken. Sick leave and

other types of nonvested leave are expensed when

taken.

In FY 1998, under the National Air Traffic Controller

Association (NATCA) agreement, Article 25, Section

13, Air Traffic Controllers covered under the Federal

Employees Retirement System (FERS) became

eligible, upon retirement, for a sick leave buy back

option. 

P. Accrued Workers’ Compensation

A liability is recorded for estimated and actual future

payments to be made for workers’ compensation

pursuant to the Federal Employees’ Compensation

Act (FECA). The liability consists of the net present

value of estimated future payments calculated by the

U.S. Department of Labor (DOL) and the

unreimbursed cost paid by DOL for compensation

paid to recipients under FECA. The actual costs

FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -46- CHAP TER 2

Economic Service

Life (Range)

Functional Area

Existing New

Decision Support

Systems

4-20 2-20

Communications 10-20 10

Weather 15-20 10-20

Navigation/Landing 20 15-20

Surveillance 20 10-20

Facilities 40 40

Facilities’ Support

Equipment

20 20

Mission Support 20 20

User Equipment 10-20 7-10
incurred are reflected as a liability because FAA will

reimburse DOL 2 years after the actual payment of

expenses. Future appropriations will be used for

DOL’s reimbursement.

Q. Retirement Plan

The FAA employees who participate in the Civil

Service Retirement System (CSRS) are beneficiaries

of the FAA’s matching contribution equal to 7 percent

of pay to their annuity account in the Civil Service

Retirement and Disability Fund. 

On January 1, 1987, the Federal Employees

Retirement System (FERS) went into effect pursuant

to Public Law 99-335. FERS and Social Security

automatically cover most employees hired after

December 31, 1983. Employees hired prior to January 

1, 1984, could elect either to join FERS and Social

Security or to remain in CSRS. FERS offers a savings

plan to which the FAA automatically contributes 1

percent of pay and matches any employee

contribution up to an additional 4 percent of pay. For

FERS participants, the FAA also contributes the

employer’s matching share for Social Security. 

Beginning in fiscal year 1997, the FAA began to

recognize the cost of pensions and other retirement

benefits during the employees’ active years of service.

The Office of Personnel and Management (OPM)

actuaries determine pension cost factors by

calculating the value of pension benefits expected to

be paid in the future and communicate these factors to 

the FAA for current period expense reporting. OPM

also provides information regarding the full cost of

health and life insurance benefits. The FAA

recognized an offsetting revenue as imputed

financing sources for the extent of these additional

expenses that will be paid by OPM.

R. Contingencies

The FAA recognizes losses for contingent liabilities

when such losses are probable and reasonably

estimable. The FAA recognizes material contingent

liabilities in the form of claims that have been brought 

to the attention of the Office of Chief Counsel (OCC)

and: (1) have been asserted, or, if not yet asserted, in

the opinion of the OCC are more likely to be asserted

than not; (2) in the opinion of the OCC are more likely

to be paid than not; and (3) for which the OCC can

estimate the probable payment. 

FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -47- CHAP TER 2

Note 2. Fund Balances with Treasury

Unobligated and restricted fund balances represent balances of appropriations for which the period of

availability for (voluntary) obligation has expired. These balances are only available for upward adjustments of

obligations incurred during the period for which the appropriation was available for obligation or for paying

claims attributable to the appropriation. Pursuant to 31 U.S.C. 1552, appropriation accounts are c anceled at the 

close of the fifth fiscal year following the last fiscal year for which they were available for obligation. Fund

balances in the amount of $27.6 million in canceled appropriations at fiscal yearend were removed from the

balance sheet.

(Dollars in Thousands)

Unobligated Unobligated

Obligated & Available & Restricted Total

Trust Fund $2,174,366 $ (1,049,195) $ (276,524) $ 848,647

Operations General Fund 676,299 (6,699) 30,753 $ 700,353

Franchise Fund 3,954 2,178 - 6,132

Revolving Fund 189 73 - 262

Other Funds 390 13,776 - 14,166

Total $2,855,198 $ (1,039,867) $ (245,771) $1,569,560
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -48- CHAP TER 2

The amount withdrawn biweekly from the Trust Fund is based on cash outlays, not on obligational authority, to

minimize interest costs. Negative unobligated balances are covered by invested funds in the Airport and Airway

Trust Fund.

Note 3. Investments

A total of $8.5 billion was invested in U.S. Treasury Certificates of Indebtedness as of September 30, 1998, at a

rate of 6.5 percent, maturing June 30, 1999. 

(1) Nonmarketable par value Treasury securities are special series debt securities, issued by the Bureau of the

Public Debt to Federal accounts, and are purchased and redeemed at par (face value) exclusively through

Treasury’s Finance and Funding Branch. The securities are redeemed at face value on demand; thus, investing

entities recover the full amount invested, plus interest. The Trust Fund investments are made by the Fund’s

trustee, the Secretary of the Treasury.

(2) Nonmarketable, market-based Treasury securities are debt securities that the Treasury issues to Federal

entities without statutorily fixed interest rates. Although the securities are not marketable, their terms (prices

and interest rates) mirror the terms of marketable Treasury securities. FAA amortizes premiums and discounts 

on market-based Treasury securities over the life of the security using the interest method. The following

amounts are invested in market-based Treasury securities: 

Effective

Maturity Interest

Date Rate Amount

1 12/10/98 5.17% $ 13,505

2 4/01/99 5.07% 23,565

3 6/24/99 5.12% 16,000

4 9/16/99 4.46% 17,959

$ 71,029

Amorti- Unamortized Market

zation (Premium) Investments Other Value

Cost Method Discount Net Adjustments Disclosure

Intragovernmental

Securities:

Nonmarketable, Par Value

Trust Fund (1) $ 8,549,630 $ - $ 8,549,630 $ -

Nonmarketable,

Market-Based

Aviation Insurance Straight

Revolving Fund (2) 71,029 Line (2,149) 68,880 - -

Subtotal 8,620,659 (2,149) 8,618,510 - -

Accrued Interest 134,128 134,128 -

Total $ 8,754,787 $ 8,752,638 $ -

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -49- CHAP TER 2

Other Entity Assets Intagovernmental

Advances and Prepayments $ 106,203 (1)

Undistributed Foreign Costs 191

Undistributed Costs - Treasury Clearing 1,098

Other Assets - Undistributed 52,838 (2)

Total Intragovernmental $ 160,330

Advances and Prepayments $ 8,462 (3)

Total Other Entity Assets $ 168,792

(Dollars in Tousands)

Note 4. Accounts Receivable

Delinquency notices are sent to debtors when billings remain uncollected for 30 days. Followup notices are sent

if the debtor does not respond. Additional actions, such as salary or retirement offset (when the debtor is a

current or former Federal employee), as well as tax refund offset, consumer reporting, and referral to collection

agencies may be taken, depending on the circumstances of each case. An allowance for uncollectible accounts

receivable is established when, based upon a monthly review of outstanding accounts and the failure of all

collection efforts, management determines that collection is unlikely to occur. Accounts receivable in

appropriations canceled pursuant to 31 U.S.C. 1552 on September 30, 1998, are no longer FAA assets. An

accounts receivable balance in the amount of $235,000 for canceled appropriations at fiscal yearend was

removed from the balance sheet.

Note 5. Other Assets

Gross Allowance for Net

Accounts Uncollec tible Amount

Due Amounts Due

Intragovernmental Receivables $ 54,894 $ - $ 54,894

Other Receivables 32,186 (5,868) 26,318

Total Rec eivables $ 87,080 $ (5,868) $ 81,212

Reconciliation of Un collectible Amounts:

Intrag overnmen tal Other

Beginnin g Balance $ - $ (5,012)

Addition s - (3,151)

Reductio ns - 2,295

Ending b alance - (5,868)

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -50- CHAP TER 2

(1) Represents advance payments to other Federal Government entities under the 31 U.S.C., 1535 for agency

expenses not yet incurred or for goods or services not yet received. 

(2) Includes assets transferred between FAA regions. Transferred items remain in the undistributed asset

account until removed by the recipient region. Transfer transactions may include some expenses.

(3) Represents advance payments to employees for agency expenses not yet incurred. 

Note 6. Loans and Loan Guarantees, Non-Federal Borrowers

FAA has no direct loan programs, but FAA administers the Aircraft Purchase Loan Guarantee Program.

Authorization for issuing new loan guarantees expired in 1988. The only remaining program function is to

maximize recoveries from defaulted loans. 

Accounts receivable from debtors on account of defaulted guaranteed loans are reported net of an allowance for

estimated uncollectible amounts. The Federal Credit Reform Act was enacted after the authority to issue new

guarantees expired and, therefore, does not apply to FAA’s loan guarantees.

Administrative expenses to maintain residual values in this program are minimal. FAA has no full-time

employees administering the program.

Note 7. Cash, Foreign Currency and Other Monetary Assets

(Dollars in Thousands)

Defaults on Pre-1992 Guaranteed Loans:

Aircraft

Purchase

Loan

Guarantee

Program

Defaulted

Guaranteed

Loans

Receivable,

Gross

Interest

Receivable

Allowance

for Loan

Losses

Foreclosed

Property

Defaulted

Guaranteed

Loans

Receivable,

Net

$ 496 $ 235 $ (337) $ - $ 394

Imprest Fund Cash $ 60

Undeposited Collection 59,650

Total Cash, Foreign Currency, and Other Monetary Assets $ 59,710

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -51- CHAP TER 2

Note 8. Inventory and Related Property

Inventory and related property consist of general operating material and supplies, aircraft parts, and spare

parts located at field facilities. Effective in FY 1998, FAA began using the moving weighted average cost method

to value operating materials and supplies. This change resulted in $64.7 million decrease in the value of

inventory. In FY 1998, FAA conducted an inventory of 100 percent of its spare parts, which resulted in an

increase of $118 million in spare parts recorded as a prior period adjustment. FAA currently expenses operating

materials and supplies as issued or consumed. 

(1) In FY 1998, FAA recognized a $21.9 million gain as a result of a decrease in the allowance for excess, obsolete,

and unserviceable items.

(2) Items are considered for repair based on condition levels and if the maximum repair cost does not exceed

65 percent of the original cost. The allowance method is used to account for operating materials and supplies

held for repair, reducing the net carrying value of such items to 35 percent of their original cost. Current period

expenses are recognized for the amount of the annual increase or decrease to the allowance account. In FY 1998,

FAA recognized $11.2 million decrease in the allowance for items held for repair.

(3) FAA increased its operating material and supplies as a result of an adjustment of a $146 million in its

inventory clearing accounts. FAA is assessing the clearing account process and will modify the process based on

its evaluation.

Scrap and salvage items are written down to zero value and may be sold for nominal amounts. FAA transfers

excess items for disposal into the Governmentwide automated disposal system. Disposal proceeds may go to the

General Fund or to an FAA appropriation, depending on the nature of the item and the disposal method. FAA

may not donate items. 

Operating Materials and Supplies:

(Dollars in Thousands )

Value Allowanc e Net Value Valuation Method

Items H eld For Use $ 732,137 $ - $ 732,137 Moving Weighted Average

Excess, Obsolete, and Unserviceable 18,553 6,417 12,136 Moving Weighted Average

Items H eld for Repair 215,160 139,854 75,306 Moving Weighted Average

Total Inventory and Related Property $ 965,850 $ 146,271 $ 819,579
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -52- CHAP TER 2

Note 9. Property, Plant and Equipment, Net

(1) In FY 1998, FAA changed its real property capitalization threshold from $5,000 to $25,000. This resulted in a

prior period adjustment of $238.8 million. In addition, FAA made a $104.6 million prior period adjustment as a

result of the change in the personal property capitalization threshold. 

(2) In FY 1998, FAA fully implemented depreciation of general PP&E. This implementation resulted in a prior

period adjustment of $3,171 million. The depreciation of aircraft and assets acquired under capital lease was

implemented in FY 1996.

(3) In FY 1998, a reconciliation of the property systems to the general ledger was performed. This reconciliation

resulted in a prior period adjustment of $228 million for real property and a $13.9 million adjustment for

personal property.

(4) Currently, FAA is in the process of reconciling its construction in progress accounts. This requires extensive

reconciliation that includes identifying those items that are actually work in progress and those t hat have been

commissioned. It also involves reconciliation of the purchases-in-transit account.

(5) In FY 1998, FAA recognized a loss on fixed assets of $14.8 million for excess and surplus property in the

Utilization Screening and Disposition (USD) system.

(6) Documentation to support the historical costs of real property assets that were placed in use between 1960

and 1980 were not readily available, and what was available was inconsistent. Alternative methods t o estimate

historical costs, such as the use of modeling techniques, will be used when actual documentation cannot be

found. Real property records will be adjusted in FY 1999 to reflect results of modeling/documentation efforts.

(7) Personal property is understated by a significant amount as a result of FASAB requirements and change in

the capitalization policy. Adjustments to personal property will be made in FY 1999, based on an analysis of

related contract costs, e.g., common contract costs that were previously expensed because there was no

applicable FAA capitalization policy. The understatement of personal property will also have a corresponding

impact on accumulated depreciation. 

Depreciation Service Acquisition Accumulated Net

Classes of Fixed Assets Method Life (yrs) Value Deprec. Book Value

Land None None $ 76,742 - $ 76,742

BLueailsdeihnoglsd and Structures SL 15-40 $ 2,480,938 (1,232,989) 1,247,949

Improvements SL * 27,861 - 27,861

Aircraft SL 20 320,827 (69,159) 251,668

Aircraft Engines SL 7 2,761 - 2,761

ADP Software SL * 33,419 - 33,419

Equipment SL 5-13 4,149,372 (2,100,470) 2,048,902

Assets Under Capital Lease SL Term-40 192,008 (91,888) 100,120

Construction in Progress None None 4,497,220 - 4,497,220

Property Not in Use * * 88,471 - 88,471

Total $ 11,869,619 $(3,494,506) $ 8,375,113

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -53- CHAP TER 2

Note 10. Debt

Note 11. Other Liabilities

Beginning

Balance

Net

Borrowing

Ending

Balance

Other Debt:

Aircraft Purchase Loan

Guarantee Program

Debt to the Treasury $ 21 $ 3 $ 24

Total Debt $ 21 $ 3 $ 24

(Dollars in Thousands)

Other Liabilities Covered by Budgetary Resources

Noncurrent

Liability

Current

Liability Total

Intragovernmental:

Advances from Others $ - $ 24,315 $ 24,315

Accrued Payroll & Benefits to Other Agencies - 38,504 38,504

Proceeds From Replacement of Property - 12 12

- 6,266 6,266

Total Intragovernmental $ - $ 69,097 $ 69,097

Other Liabilities

Advances from Others, Unclassified $ - $ 7,747 $ 7,747

Accrued Payroll & Benefits to the Employees - 165,462 165,462 (1)

Liability for Unapplied Collections - 15,933 15,933

Other (134) (134)

Total Other Liabilities $ - $189,008 $189,008

(Dollars in Thousands)

Other Liabilities Not Covered by Budgetary Resources

Noncurrent

Liability

Current

Liability Total

Intragovernmental:

Federal Employees Compensation Act $ 102,978 $ 78,087 181,065 (2)

Total Intragovernmental Liabilities $ 102,978 $ 78,087 $181,065

Accrued Unfunded Annual Leave & Assoc . Benefits $ 351,646 $ - $351,646 (3)

Sick Leave Compensation Benefits for Air Traffic Controllers 56,426 - 56,426 (4)

Total $ 408,072 $ - $408,072

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -54- CHAP TER 2

(1) Accrued payroll and employee benefits represent the unpaid pay period September 23 through

September 30, 1998.

(2) An unfunded liability is recorded for unreimbursed actual cost to be made for workers’ compensation

pursuant to the Federal Employees’ Compensation Act (FECA) to the Department of Labor (DOL), that

administers the Federal Employees’ Compensation Fund. Funding for the amount charged to FAA is normally

appropriated for the fiscal year ending 2 years after the FAA accounting period in which the expense was

incurred. Therefore, FAA’s FY 1998 accrued liability includes workers’ compensation benefits paid by DOL for

the periods July 1, 1996, through June 30, 1997; July 1, 1997, through June 30, 1998; and July 1, 1 998, through

September 30, 1998.

(3) The estimated liability for accrued wages includes annual, home, and military and compensatory hours plus

the agency’s cost of employee benefits associated with such compensated absences for the period ending

September 30, 1998.

(4) In FY 1998, under the National Air Traffic Controller Association (NATCA) agreement, Article 25, Section

13, Air Traffic Controllers covered under the Federal Employees Retirement Systems (FERS) became eligible,

upon retirement, for a Sick Leave Buy Back Option. Under this option, an employee who attains the required

number of years of service for retirement shall receive a lump sum payment for forty (40) percent of the value of

his or her accumulated sick leave as of the effective date of his or her retirement. The total estimated sick leave

buy back contingency for FAA for those air traffic controllers eligible for retirement, based on current sick leave

balances, for FY 1998 is $56.4 million.

Note 12. Leases

FAA as Lessee:

Capital Leases:

(Dollars in Thousands)

Summary of Assets Under Capital Lease:

Land and Buildings: $192,008

Accumulated Amortization (91,888)

Net Assets Under Capital Lease $100,120

Future Payments Due: Land and

Fiscal Year Buildings

Year 1 (FY 1999) $ 19,452

Year 2 (FY 2000) 14,308

Year 3 (FY 2001) 12,862

Year 4 (FY 2002) 12,867

Year 5 (FY 2003) 12,735

After 5 Years (FY 2004 to Contract End) 78,813

Less: Imputed Interest (46,818)

Total Capital Lease Liability $104,219

Liabilities Covered by Budgetary Resources $ 687

Liabilities Not Covered by Budgetary Resources $103,532
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -55- CHAP TER 2

Capital leases cover land and buildings at the Mike Monroney Aeronautical Center (MMAC) in Oklahoma City,

Oklahoma, and at the William J. Hughes Technica Center ( WJHTC) in Pomona, New Jersey. (Operating leases

discussed in the following section cover other real property.) FAA leases the MMAC land and buildings from the

Oklahoma City Airport Trust at $12 million per year. FAA leases real property, including the WJHTC technical

building, from the Atlantic County Improvement Authority at $4.8 million per year.

FAA’s capital lease payments are funded annually. The following represents capital lease accounting treatment 

under generally accepted accounting principles:

(1) Capital lease assets are recorded at the net present value of the total minimum lease payments over the lease

duration, valued at the lease inception.

(2) In FY 1996, FAA implemented the depreciation/amortization provision of Statement of Federal Financial

Accounting Standards (SFFAS) No. 6, which is applicable to assets acquired under capital lease. In FY 1998,

FAA identified and recorded capital leases that represented a $12.1 increase in Assets Under Capital Leases.

 (3) Amounts due within the current fiscal year corresponding to the principal portion of the lease payments are

recorded as current year obligations. The remaining principal payments are recorded as unfunded lease

liabilities. The imputed interest is funded and expensed annually. Interest amounts imputed to subsequent

years (aggregating $46.8 million) are not recorded as unfunded liabilities in the Departmental Accounting and

Financial Information System (DAFIS).

Operating Leases:

FAA leases property, aircraft, equipment, and telecommunications under operating leases. Such leases are

funded annually and expensed as recurring charges in DAFIS. Unfunded liabilities and future funding

requirements for operating lease payments due in future years are not recorded in DAFIS.

(1) The cumulative amount due on operating leases after 5 years does not include estimated payments for leases

with annual renewal options. Estimates of the lease termination dates are subjective, and any projection of

future lease payments would be arbitrary. 

(Dollars in Thousands)

Future Payments Due:

Land & Mach. &

Fiscal Year Buildings Equipment Other Total

Year 1 (1999) $ 44,762 $ 322 $ 2,708 $ 47,792

Year 2 (2000) 39,038 228 1,909 41,175

Year 3 (2001) 32,628 235 1,905 34,768

Year 4 (2002) 27,465 242 1,877 29,584

Year 5 (2003) 21,495 249 1,885 23,629

After 5 Years (2004 to Contract End) 56,446 3,643 11,772 71,861 (1)

Total Future Operating Lease Payments $ 221,834 $ 4,919 $22,056 $ 248,809
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -56- CHAP TER 2

FAA as Lessor:

Capital Leases:

In March 1998, FAA entered into a capital lease agreement with the South Jersey Transit Authority (SJTA) for

the sum of $1 for a term of 50 years. The properties under the lease will be transferred to SJTA at the end of the

lease term or upon compliance with the Comprehensive Environmental Response, Compensation and Liability

Act of 1980 (CERCLA), Section 120. FAA recognized a loss $27.4 million for buildings and other structures and

$.7 million for equipment as a result of this capital lease.

Operating Leases:

FAA leases Ronald Reagan Washington National Airport and Washington Dulles International Airport to the

Metropolitan Washington Airports Authority, the airports’ sponsor. The lease took effect in March 1987 at

$3 million per year for a 50-year term. Subsequent annual rental payments are adjusted by applying the Implicit 

Price Deflator for the Gross National Product published by the Department of Commerce. Additionally, the

parties may renegotiate the level of lease payments attributable to inflation costs every 10 years.

Upon lease expiration, the airports and facilities, originally valued at $244 million, together with any

improvements thereto, will revert to the Federal Government. In addition, FAA leases equipment to foreign

governments and leases parcels of Government-owned land, generally for agriculture. 

Note 13. Environmental and Disposal Liabilities

(1) Environmental remediation includes fuel storage tank program and environmental cleanup, associated with 

normal part of operations or as a result of an accident, e.g., the superfund cleanup.

(Dollars in Thousands)

Future Projected Receipts:

Land & Mach. &

Fiscal Year Buildings Equipment Other Total

Year 1 (1999) $ 4,193 $ 90 $ 2 $ 4,285

Year 2 (2000) 4,279 90 2 4,371

Year 3 (2001) 4,297 90 2 4,389

Year 4 (2002) 4,712 90 2 4,804

Year 5 (2003) 5,169 90 2 5,261

After 5 Years (2004 to Contract End) 170,750 90 2 170,842

Total Future Operating Lease Receivables $ 193,400 $ 540 $12 $ 193,952

(Dollars in Thousands)

Environmental Remediation $ 828,900 (1)

OSHA & Environmental Compliance 512,200 (2)

Decommissioning Cleanup 1,900,000 (3)

Air Traffic Control at Closed DOD Bases 3,200 (4)

Total Environmental and Disposal Liabilities $ 3,244,300
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -57- CHAP TER 2

(2) Occupational Safety and Health Administration (OSHA) and environmental compliance includes

environmental, occupational safety and health compliance, and energy conservation. In FY 1996, OSHA and

environmental compliance were combined with environmental remediation.

(3) SFFAS #6 defines cleanup costs as the “cost of removing, containing, and/or disposing of (1) hazardous waste

from property, or (2) material and/or property that consist of hazardous waste at permanent or temporary

closure or shutdown of associated property, plant, or equipment. As of September 30, 1998, the total liability for

the estimated cleanup costs was $1.9 billion that will result from future decommissioning of FAA facilities and

equipment. Of that amount, $1.5 billion was recorded as prior period adjustment, and $376 million was

previously recognized as a liability in FY 1997. FAA complies with the Federal Facilities Compliance Act, 40

CFR, specifically the Comprehensive Environmental Response, Compensation and Liability Act of 1980

(CERCLA) and RCRA, as well as all state and local environmental regulations.

(4) Providing air traffic control (ATC) services, where needed, is FAA’s responsibility under 49 U.S.C.

44502(a)(1)(B). FAA will continue providing ATC functions for civilian users of the National Airspace System

near certain DOD bases scheduled for closure. FAA’s costs include those for national air space equipment, real

property, and personnel relocation.

Note 14. Federal Employee and Veterans Benefits Payable

The liability consists of the net present value of estimated future payments calculated by the DOL. The liability

estimates include death, disability, medical, and miscellaneous costs for approved compensation cases.

Note 15. Contingent Liabilities

(1) In FY 1997, FAA recognized contingent liabilities of $438.3 million associated with claims that had been

brought to the attention of the OCC and that: (a) had been asserted, or, if not yet asserted, in the opinion of the

OCC were more likely to be asserted than not; (b) in the opinion of the OCC were more likely to be paid than not;

and (c) for which the OCC could estimate probable payment. Such claims represent a variety of administrative

proceedings and legal actions against which the OCC was then defending or then expected to defend.During FY

1998, contingent liabilities for legal claims decreased by the amount of $4.8 million.

Other Post-Employment Benefits

Federal Employees Compensation Act:

Actuarial Liabilities $ 926,780

Total $ 926,780

(Dollars in Thousands)

(Dollars in Thousands)

Noncurrent

Liability

Current

Liability Total

Contingent Liabilities for Legal Claims $ 433,444 $ - $ 433,444

Contingent Liabilities for Return Rights Program 22,150 9,800 31,950

Total Contingent Liabilities $ 455,594 $ 9,800 $ 465,394
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -58- CHAP TER 2

Of the contingent liabilities recognized, approximately $96.1 million could be payable from agency

appropriations, and approximately $337.3 million could be payable from the permanent appropriation for

judgments, awards, and compromise settlements (Judgment Fund) administered by the Department of Justice.

OMB issues official interpretations to provide agencies clarification on the SFFAS’s. OMB has issued

Interpretation No. 2, on SFFAS Nos. 4 and 5 (effective for fiscal years beginning after September 30, 1996),

which requires agencies to recognize an expense and a liability for the full amount of an expected loss, whether

payable from agency appropriations or from the Judgment Fund. In accordance with Interpretation No. 2, “once

the claim is either settled or a court judgment is assessed against the Federal entity and the Judgment Fund is

determined to be the appropriate source for the payment of the claim, liability should be removed from the

financial statements of the entity that incurred the liability and another financing source amount (which

represents the amount to be paid by the Judgment Fund) would be recognized.” The amount of the legal

liabilities recognized by FAA during FY 1998 known to be paid or payable from the Judgment Fund is contingent 

upon a final claim settlement or court assessment. FAA did recognize other financing sources in the amount of

$39 million for claims paid by the Judgment Fund during FY 1998.

(2) Contingent liabilities for the Return Rights Program decreased by $9.6 million from $41.5 million i n FY 1997

to $31.9 million in FY 1998. The program covers temporary assignments for 2 to 4 years. At the beginning of FY

1998, approximately 854 employees who previously had accepted transfers to overseas or certain domestic

locations were contractually entitled to a future return move at Government expense. The typical cost per move

is $50,000. The liability may be overstated because not every employee remaining in the program w ill exercise

his or her right. If every employee in the program did exercise his or her right, the liability would be as follows:

 FY 1999 9,800,000

 FY 2000 8,600,000

 FY 2001 13,550,000

 $31,950.000

Note 16. Unexpended Appropriations

The differences represent the amount of undelivered orders and accounts payable that exceeds the total amount

of unrequisitioned cash authority, the Treasury cash balance and the unobligated authority, and other

differences carried forward from prior years.

Operations

General Other

Fund Funds Total

(1)Unobligated

(a) Available $ 4,014 $ 1,878 $ 5,892

(b) Unavailable 42,853 - 42,853

(2) Undelivered Orders 302,992 77 303,069

Sub-total $ 349,859 $ 1,955 $351,814

Less: Other Differences (15,841) 497 (15,344)

Total Unexpended Appropriations $ 334,018 $ 2,452 $336,470

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -59- CHAP TER 2

Note 17. Cumulative Results of Operations

FAA’s Cumulative Results of Operations is $13,216,803,000 which includes unexpended appropriation a mounts 

associated with the Trust Fund activity. Appropriations were issued for the Airport Improvement Program

(grants) in the amount of $1,640,000,000 for paying (liquidating appropriations) claims resulting from

authorizations to enter into agreements (contract authority). Appropriations were also issued for the Facilities

and Equipment, Research, Engineering and Development, and Operations programs in the amount of

$11,616,412,486. The unexpended appropriations included undelivered orders for $4,080,237,911 and

unobligated balances of $9,176,174,575. Of the unobligated portion, $518,724,722 is unavailable for obligation

and $8,657,450,053 is available for obligation.

Note 18. Total Cost and Earned Revenue by Budget Functional Classification

Note 19. Net Cost by Programs

FAA’s six lines of business represent the programs reported on the Statement of Net Cost. Assigned cost centers

to each line of business permit the direct accumulation of costs. Other costs that are not directly traced to each

line of business, such as agency overhead, are allocated by applying ratios representing the cost for each line of

business’ cost compared to total expenses excluding grants expenses.

Note 20. Deferred maintenance (unaudited)

Information on FAA’s deferred maintenance is based on condition assessment survey (annual inspection).

Standards (orders) are provided for evaluating the fixed assets condition. These standards are combined with

FAA’s technicians’ knowledge, past experiences, and judgment to provide the following:

• Minimum and desirable condition descriptions

• Suggested maintenance schedules

• Standard costs for maintenance actions

• Standardized condition codes 

There have not been material changes in the standards in recent years.

FAA recognizes maintenance expense as incurred. However, maintenance was insufficient during the past

several years and resulted in deferred maintenance on Buildings and Other Structure and Facilities. The

following table presents information on deferred maintenance on major categories of the FAA’s PP&E:

(Dollars in Thousands)

Total Cost Earned Revenue Net Cost

Functional Classification:

Transportation Programs $ 9,197,759 $ (116,296) $9,081,463

Community and Regional Development Programs 302 - 302

General Government Programs 47 - 47

Total Cost $ 9,198,108 $ (116,296) $9,081,812
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -60- CHAP TER 2

(1) No material maintenance was deferred on land. 

(2) Maintenance was not deferred on the FAA aircraft. The aircraft maintenance was insured through the

aircraft maintenance, inspection, preventive maintenance, and alteration programs of the Flight Inspection

Maintenance Division programs.

(3) The FAA did not defer maintenance on NAS equipment. The maintenance of the Airway Facilities (AF)

systems, subsystems, and equipment in the NAS is guided by the general principle of ensuring availability and

reliability of air traffic control, navigation, and communication services. In order to minimize the quantity and

duration of service interruption and outages, both planned and unplanned, AF does not generally defer the

maintenance of the electronic equipment. Various reasons may cause a maintenance cycle to be skipped, but the

maintenance is performed during the next cycle. FAA Order 6000.30 states the minimum standards for

reliability and availability of NAS equipment. AF’s following initiatives ensure the highest possible levels of

performance of NAS equipment:

• Periodic and preventive maintenance programs

• Maintenance of backup equipment for key services in case of equipment interruption or missed maintenance 

• Competent technical maintenance staff

(4) The amount recorded as FAA’s general-purpose equipment was not material; therefore, no material

maintenance was deferred on this equipment. 

*Condition Rating Scale

1: Excellent

2: Good

3: Fair

4: Poor

5: Very Poor

Asset Cost to Return to

Category Method Condition * Acceptable Condition

Land (1)

Buildings Condition Assessment Survey 4 &5 18,214

Other Structures and Facilities Condition Assessment Survey 4&5 1,231

Aircraft and Aircraft Engines - (2)

National Airspace System

(NAS) Equipment - (3)

General Purpose Equipment - (4)

Assets Under Capital Lease -

Total 19,445

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -61- CHAP TER 2

Note 21. Taxes and Other Nonexchange Revenue

Taxes are collected by the Department of the Treasury (Treasury), Internal Revenue Service, for FAA’s Airport

and Airway Trust Fund. These taxes can be withdrawn only as authorized by various FAA appropriations. The

amounts reflected above are taxes reported to FAA by Treasury. Treasury estimates taxes to be collected each

quarter and adjusts the estimates by actual collections. The Taxpayer Act of 1997 (P.L. 105-34) delayed the

collection date of excise taxes for the Airport and Airway Trust Fund until the first quarter of FY 1999. Because

of the delayed deposit rule, these receipts, otherwise due in the fourth quarter of FY 1998, were not included in

the tax receipt amounts reported for FY 1998. The Treasury, Office of Tax Analysis (OTA), estimated the tax

receipt amount as approximately $1.1 billion for the tax quarter ending September 30, 1998, that would be due

in October 1998. 

Note 22. Imputed Financing: 

(1) In FY 1998, FAA recognized as imputed financing the amount of accrued pension and post-retirement benefit 

expenses for current employees. The assets and liabilities associated with such benefits are the r esponsibility of

the administering agency, OPM. 

(2) In FY 1998, amounts paid by the Judgment Fund in settlement of claims or court assessments against the

FAA were recognized as imputed financing. 

Office of Personnel Management 316,853 (1)

Dept. of Justice Judgment Fund 38,879 (2)

Total Imputed Financing 355,732

Dollars in Thousands

Passenger Ticket Tax $ 6,190,226

Waybill Tax 313,503

International Departure Tax 947,775

Fuel Taxes 702,336

Tax Refunds and Credits (43,191)

Investment Income 582,273

Other Nonexchange Revenue 33,050

Total Taxes and Other Nonexchange Revenue $ 8,725,972

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -62- CHAP TER 2

Note 23. Prior Period Adjustments

In FY 1998, FAA recorded the following prior period adjustments:

Note 24. Increase (Decrease) in Unexpended Appropriations

Upon receipt of the Apportionment and Reapportionment Schedule, SF-132, the Trust Fund activity is recorded

in the FAA general ledger as appropriations. The Department of Treasury, which requested agencies not to

report these amounts as unexpended appropriations, is in the process of working with OMB and FASAB to

resolve the issue. In FY 1998, as directed by OMB and Treasury FAA reclassified these amounts from

unexpended appropriations to cumulative results of operations. However, the year-to-date accounting of the

Trust Fund activity (excluding closing entries) is included in the increase (decrease) of the unexpended

appropriation amount. 

Note 25. Statement of Budgetary Resources Disclosures

FAA reclassified $8.5 billion of Unobligated Balances-Available reported by the U.S. Department of Treasury for 

the Airport and Airway Trust Fund (Corpus) to Unobligated Balances-Not-Available. These invested amounts

cannot be utilized by FAA for program purposes unless appropriated by Congress. 

As of September 30, 1998, FAA recorded $337.3 million as the net amount of budgetary resources obligated for

undelivered orders.

The Aircraft Purchase Guarantee Program is funded under the authority to borrow from the U.S. Treasury

granted by Congress in the DOT and Related Agencies Appropriation Act, 1983. Borrowing authority is

implemented through a blanket promissory note, which provides FAA with a line of credit for the full amount of

borrowing authority granted by Congress. Because authorization for issuing new loan guarantees expired in

1988, FAA has not issued any new guaranteed loans. In FY 1998, FAA had an outstanding loan which it

refinanced through an advance from Treasury, which is payable with interest on September 30, 2000.Although

FAA does have borrowing authority, it is seeking a liquidating appropriation to pay off the remaining note with

Treasury and end the program.

Under Congressional legislation in FY 1998, FAA was authorized $1.7 billion in contract authority and

liquidating authority for $1.6 billion, which is derived from the Airport and Airway Trust Fund and available

until expended, for the Grants-in-Aid Programs. The contact authority available as of September 30, 1998, was

$75 million.

Congress mandated permanent indefinite appropriations for the Facilities and Equipment, Grants-in-Aid, and

Research, Development and Engineering in order to fully fund special projects that were ongoing and spanned

several years.

Implementation of Depreciation $ (3,171,304)

Change in Capitalization Threshold (343,389)

Reconciliation of Property Systems to General Ledger (241,955)

Operating Materials and Supplies Price Adjustment (32,479)

Operating Materials and Supplies Field Spares Inventory 265,604

Cleanup Cost Implementation (1,524,000)

Correction of Airport Improvement Program Grants (145,602)

Judgment Fund Correction (38,879)

Other (296,061)

Total Prior Period Adjustment $ (5,528,065)

(Dollars in Thousands)
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -63- CHAP TER 2

FAA does not have any differences between the information reported on the statement and the amounts

described as “actual” in the Budget of the United States Government for FY 1998.

FAA incurred several adjustments to its budgetary resources in FY 1998. Contract authority for Grants-in-Aid

program was reduced by a $412 million rescission (PL 105-66), and $295 million rescission for the Emergency

Supplemental Bill (PL 105-174). The Operations appropriation was reduced by $.9 million for services

associated with the Transportation Administration Service Center and $50 million for funds transferred to the

Essential Air Service and Rural Airport Improvement Program Fund.

In an effort to accurately reflect the status of budgetary resources, FAA compiled data from the SF-132,

Apportionment and Reapportionment Schedule, and the SF-133, Report on Budget Execution, to prepare the

Statement of Budgetary Resources. Some of the budgetary account balances from the general ledger were not

accurate or were incomplete because the processes to record specific transactions were not available in the

accounting system. 

Note 26. Costs Capitalized on the Balance Sheet

In FY 1998, FAA reported a decrease of $2.9 billion in costs capitalized on the balance sheet. This decrease

resulted from the implementation of the depreciation policy, the change in capitalization threshold,

reconciliation of the property systems to the general ledger, and the operating materials and supplies price

adjustment. 

Note 27. Financing Sources Yet to be Provided

(Dollars in Thousands)

Liabilities Not Covered By Budgetary Resources (FY98) $ 5,329,167

Liabilities Not Covered By Budgetary Resources (FY97) 3,061,782

Financing Sources Yet to be Provided: $ 2,267,385

Decreases:

Federal Employee Compensation Act (FECA Actuarial) $ (67,129)

Contingent Liability for Legal Claims (4,807)

Contingent Liabilities for Return Rights (9,600)

Voluntary Separation (3,968)

Total Decreases $ (85,504)

Increases:

Debt $ 3

Federal Employee Compensation Act (FECA Actual) 5,811

(Includes Prior Period Adjustment of $19,138)

Accrued Unfunded Annual Leave 7,373

SickLeave Buy- Out for Air Traffic Controllers 56,426

Capital Lease Liability 1,876

Environmental and Disposal Liability 2,279,400

(Includes Prior Period Adjustment of $1,524,000)

Total Increases (Prior Period Adjustment Included) $ 2,350,889

Prior Period Adjustment (Cleanup Cost Implementation) $ (1,504,862)

Financing Sources Yet To Be Provided (Increases less Prior Period Adjustment) $ 846,027
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -64- CHAP TER 2

Note 28. Custodial Activity

Note 29. Other Disclosures

Legal Proceedings. FAA recognized contingent liabilities of $433.4 million for certain claims. This represents 

a decrease in the amount of $4.8 million from FY 1997. Such claims are those that have been brought to the

attention of the OCC and that (a) have been asserted, or, if not yet asserted, in the opinion of the OCC are more

likely to be asserted than not; (b) in the opinion of the OCC are more likely to be paid than not; and (c) for which

the OCC can estimate the probable payment. The maximum exposure associated with such claims is $81.4

billion. Therefore, FAA’s exposure to loss for such contingent liabilities in excess of the amount recognized is $81 

billion.

Contract Negotiations. FAA had a total of $73.1 million in commitments (funds reserved for possible future

obligations) under unexpired Facilities and Equipment and Research, Engineering, and Development

appropriations for purchases of goods and services for which contract negotiations have not been completed (i.e.,

agency obligations had not been incurred) at the end of FY 1998.

Contract Options. As of September 30, 1998, FAA had $2.8 billion in contract options that, if exercised, would

require the obligation of funds in future years. 

Letter of Intent. FAA has authority under 49 U.S.C. 47110(e) to issue letter of intent (LOI) to enter into AIP

grant obligations; but, LOI’s do not create obligations. FAA has issued LOI’s covering FY 1988 through FY 2010

in the aggregate amount of $2.930 billion. FAA had obligated $1.655 billion of this total from FY 1988

Revenue Activity:

Sources of Cash Collections:

(Dollars in Thousands)

Miscellaneous Receipts $ 1,102

Fines 17,873

Penalties 59

Total Cash Collections 19,034

Accrual Adjustment 1,105

Total Custodial Revenue $ 20,139

Disposition of Collections:

Transferred to Others (by Recipient):

Treasury (General Fund) $ 19,034

Increase (Decrease) in Amounts Yet to be Transferred 1,105

Collections Used for Refunds and Other Payments -

Retained by the Reporting Entity -

Total Disposition of Custodial Revenue $ 20,139

Net Custodial Activity $ -
FY 1998 FAA ANNUAL REPORT

FI NAN CIAL STATEMENT -65- CHAP TER 2

through FY 1998, leaving $1.275 billion unobligated as of September 30, 1998. FAA anticipates obligating $183

million of this total in FY 1999.

AIP Grants. The FY 1998 AIP grant authority totaled $1.7 billion, including $989 million in entitlements to

specific locations. The sponsors of these entitlements claimed all but $66 million. This amount will be available

from unused or newly enacted contract authority to those sponsors through FY 2000, or 2001 in case of non-hub

primary airport locations.

Aviation Insurance Program. FAA may issue aircraft hull and liability insurance under the Aviation

Insurance Program for certain air carrier operations. FAA’s authority to issue insurance is limited to situations

where commercial insurance is not available on fair and reasonable terms and where the operation to be insured

is necessary to carry out the U.S. Government’s foreign policy. No claims for losses were pending as of

September 30, 1998.

The categories of insurance issued by FAA are: (1) premium insurance, for which a risk-based premium is

charged to the air carrier; and (2) nonpremium insurance. Nonpremium insurance, which represented all of the

insurance issued by FAA in FY 1998, is issued for air carrier operations under contract to or on behalf of a U.S.

Government agency, provided that the agency has an agreement with FAA to indemnify FAA against all losses

covered by the insurance. FAA maintains standby nonpremium war-risk insurance policies for 48 air carriers

having approximately 936 aircraft available for Defense or State Department charter operations.

FAA normally insures only a small number of air carrier operations at any time. Airspace and airport capacity

in areas where FAA insurance coverage would apply is usually very limited, so that FAA expects to be able to

terminate insurance coverage and/or insured air carrier operations in high-risk areas after the loss of no more

than two aircraft. Thus, probably no more than two FAA-insured aircraft could be lost before the FAA exercises

its regulatory authority to stop flights to the area of loss. FAA establishes maximum liability for losing one

insured aircraft at the limit of commercial insurance that applied to that aircraft before FAA issued its

insurance. This liability covers third party losses. In many cases, FAA’s maximum liability is $1 billion; usually

it is less. Assuming a loss of not more than two aircraft per year, the maximum expected insurance liability for

any year would be $2 billion. Therefore, the range of possible liability to FAA is assumed to be between zero and

$2 billion. Since inception of the program (including the predecessor Aviation War Risk Insurance Program,

dating back to 1951), only four claims, ranging from $626 to $122,469, respectively, have been paid.
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -66- CHAP TER 2

U.S. Department of Transportation

Federal Aviation Administration

Stewardship Investment

Non-Federal Physical Property

Airport Improvement Program

Current Year Expenses

For the Fiscal Year Ended September 30, 1998

(Dollars in Thousands)

Alabama -------------- 15,556

Alaska -------------- 77,949

Arizona -------------- 47,243

Arkansas ------------- 19,291

California ------------- 101,896

Colorado -------------- 44,768

Connecticut ------------- 1,348

Delaware--------------- 284

District Of Columbia ---------- 206

Florida -------------- 60,752

Georgia -------------- 41,604

Hawaii --------------- 7,142

Idaho --------------- 12,532

Illinois -------------- 74,514

Indiana -------------- 21,213

Iowa --------------- 16,983

Kansas -------------- 11,250

Kentucky ------------- 43,116

Louisiana ------------- 20,338

Maine --------------- 5,505

Maryland -------------- 9,765

Massachusetts ----------- 22,615

Michigan ------------- 47,890

Minnesota ------------- 23,430

Mississippi ------------- 9,788

Missouri --------------- 35,996

Montana -------------- 13,367

Nebraska ------------- 13,015

Nevada -------------- 30,420

SUBTOTAL--------------- 829,777

New Hampshire ----------- 11,743

New Jersey ------------- 9,918

New Mexico ------------- 5,327

New York ------------- 67,664

North Carolina ----------- 31,226

North Dakota ------------ 10,980

Ohio --------------- 33,843

Oklahoma-------------- 5,240

Oregon -------------- 17,682

Pennsylvania ------------ 63,025

Rhode Island ------------ 2,692

South Carolina ----------- 15,419

South Dakota ------------ 10,112

Tennessee ------------- 34,885

Texas --------------- 98,154

Utah --------------- 12,910

Vermont -------------- 5,219

Virginia -------------- 21,733

Washington ------------ 18,405

West Virginia ------------ 19,564

Wisconsin ------------- 30,406

Wyoming -------------- 9,337

American Samoa ----------- 1,329

Guam --------------- 1,260

North Mariana Island --------- 3,272

Puerto Rico------------- 10,482

Trust Territory of Pacific -------- 479

Virgin Island ------------ 2,384

Administration ----------- 52,075

SUBTOTAL ------------ 606,765

GRAND TOTAL --------- 1,436,541

State/Territory State/Territory

STEWARDSHIP INVESTMENT 

Non-Federal Physical Property.

Airport Improvement Program. The FAA makes project grants for airport planning and development to

maintain a safe and efficient nationwide system of public-use airports that meets both present and future needs of

civil aeronautics. The FAA works in partnership with airport authorities, local units of governmen t, metropolitan

planning organizations, and states.

In FY 1998, FAA awarded a total of 1,040 new grants to improve and expand the Nation’s airports. In FY 98 the FAA

focused on award of grants to eligible airports to enhance capacity, improve safety and security, and mitigate

noise.
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -67- CHAP TER 2

STEWARDSHIP INVESTMENT 

Research and Development.

Research. The FAA conducts research and invests in essential infrastructure to meet increasing demands for

higher levels of system safety, security, capacity, and efficiency. Critical areas of research and development

include explosive detection, weather, aircraft structures, noise mitigation, human factors, and satellite

navigation. For air traffic control, the FAA is introducing new technologies such as satellite navigation using the

global positioning system (GPS), data link communications, and collaborative decisionmaking tools.

U.S. Department Of Transportation

Federal Aviation Administration

Stewardship Investment

Research and Development

For the Fiscal Year Ended September 30, 1998

(Dollars in Thousands)

Expenses

Applied Research $ 103,274

Development 48,237

Research and Development Plant 11,254

Administration 54,179

Total $ 216,944

The classification of Applied and Development expenses were

calculated using percentages from the National Science

Foundation's fiscal year 1997 Survey of Federal Funds .

for Research and Development Table II.
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -68- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SUPPLEMENTARY STATEMENT OF BUDGETARY RESOURCES

As Of September 30, 1998

(Dollars in Thousands)

Airport & Airway Trust Fund Trust Fund Trust Fund

Trust Fund Grants-in-Aid Facilities & Research, Eng.&

Corpus to Airports Equipment Development

Budgetary Resources

Budget Authority $ 2,191,405 $ 1,640,000 $ 1,900,477 $ 199,183

Unobligated Balances - Beginning

of Period 6,358,301 72,333 638,660 8,035

Spending Authority From

Offsetting Collections - - 32,494 9,312

Adjustments - 24,279 79,587 2,659

Total Budgetary Resources $ 8,549,706 $ 1,736,612 $ 2,651,218 $ 219,189

Status Of Budgetary Resources

Obligations Incurred $ 75 $ 1,661,227 $ 2,201,874 $ 211,249

Unobligated Balances-Available - 75,385 361,099 7,940

Unobligated Balances-Not Available 8,549,631 - 88,245 -

Total Status of Budgetary Resources $ 8,549,706 $ 1,736,612 $ 2,651,218 $ 219,189

Outlays

Obligations Incurred $ 75 $ 1,661,227 $ 2,201,874 $ 211,249

Less: Spending Authority From Offsetting

Collections and

Adjustments - (36,612) (112,081) (11,971)

Obligated Balance, Net Beginning of Period 2,388,645 1,780,526 187,647

Obligated Balance Transferred, Net - - -

Less: Obligated Balance, Net - End of Period - (2,502,678) (1,643,899) (184,340)

Total Outlays $ 75 $ 1,510,582 $ 2,226,419 $ 202,584
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -69- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

SUPPLEMENTARY STATEMENT OF BUDGETARY RESOURCES

As Of September 30, 1998

(Dollars in Thousands)

Aviation

Insurance Franchise Other Combined

Revolving Fund Operations Funds Total

$ - $ - $ 5,253,488 $ - $ 11,184,553

69,111 426.348 81,423 1,531 7,229,820

3,672 22,292 1,965,425 - 2,033,195

- - 8,121 (498) 114,147

$ 72,782 $ 22,719 $ 7,308,458 $ 1,032 $ 20,561,716

$ 355 $ 21,767 $ 7,242,015 $ 111 $ 11,338,674

72,428 951 4,014 921 522,739

- - 62,428 - 8,700,304

$ 72,783 $ 22,719 $ 7,308,458 $ 1,032 $ 20,561,716

$ 355 $ 21,767 $ 7,242,015 $ 111 $ 11,338,674

(3,672) (22,292) (1,974,486) (2) (2,161,115)

94 1,414 715,911 318 5,074,554

- - - -

(189) (3,953) (702,892) (385) (5,038,337)

-

$ (3,412) $ (3,065) $ 5,280,549 $ 42 $ 9,213,775
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -70- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

AVIATION INSURANCE REVOLVING FUND

BALANCE SHEET

As of September 30, 1998

(Dollars in Thousands)

Assets

Entity Assets:

Intragovernmental

Fund Balance with Treasury $ 262

Investments 68,880

Total Intragovernmental Assets $ 69,142

Total Entity Assets: $ 69,142

Total Assets $ 69,142

Liabilities

Liabilities Covered by Budgetary Resources:

Accounts Payable $ 3

Other Liabilities 21

Total Liabilities Covered by

Budgetary Resources $ 24

Total Liabilities $ 24

Net Position Balances:

Cumulative Results of Operations $ 69,118

Total Net Position $ 69,118

Total Liabilities and Net Position $ 69,142
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -71- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

AVIATION INSURANCE REVOLVING FUND

STATEMENT OF NET COST

For the Fiscal Year Ended September 30, 1998

(Dollars in Thousands)

Costs:

Programs

With the Public $ 288

Less Earned Revenues -

Net Program Costs $ 288

Net Cost Of Operations $ 288
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -72- CHAP TER 2

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

AVIATION INSURANCE REVOLVING FUND

STATEMENT OF CHANGES IN NET POSITION

For the Fiscal Year Ended September 30, 1998

(Dollars in Thousands)

Net Cost of Operations $ (288)

Financing Sources

Taxes and Other Nonexchange Revenues 3,704

Net Results of Operations 3,416

Net Change in Cumulative Results of Operations 3,416

Change in Net Position 3,416

Net Position Beginning of Period 65,702

Net Position End of Period $ 69,118
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -73- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

BALANCE SHEET

As of September 30, 1998

(Dollars in Thousands)

Assets

Entity Assets:

Intragovernmental

Fund Balance with Treasury $ 6,132

Accounts Receivable, Net 57

Total Intragovernmental Assets $ 6,189

General Property, Plant, and Equipment, Net 910

Total Entity Assets: $ 7,099

Total Assets $ 7,099

Liabilities

Liabilities Covered by Budgetary Resources:

Intragovernmental Liabilities:

Accounts Payable $ (250)

Other Intragovernmental Liabilities 615

Total Intragovernmental Liabilities 365

Accounts Payable 440

Lease Liability 687

Other Liabilities 1,053

Total Liabilities Covered by

Budgetary Resources $ 2,545

Total Liabilities $ 2,545

Net Position Balances:

Cumulative Results of Operations $ 4,554

Total Net Position $ 4,554

Total Liabilities and Net Position $ 7,099
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -74- CHAP TER 2

U. S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

STATEMENT OF NET COST

For the Fiscal Year Ended September 30, 1998

(Dollars in Thousands)

Costs:

Programs

Multi-Media Services and Information Technology

Intragovernmental $ 1,253

Less Earned Revenues (1,353)

Net Multi-Media Services and Information Technology $ (100)

Duplicating

Intragovernmental $ 5,345

Less Earned Revenues (5,429)

Net Duplicating $ (84)

Financial Services

Intragovernmental $ 9,771

Less Earned Revenues (13,003)

Net Financial Services $ (3,232)

International and Management Training

Intragovernmental $ 2,261

Less Earned Revenues (2,448)

Net International and Management Training $ (187)

Net Cost of Operations $ (3,603)
FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TARY STEW ARD SHIP INFORMATION -75- CHAP TER 2

U.S. Department of Transportation

FEDERAL AVIATION ADMINISTRATION

FRANCHISE FUND

STATEMENT OF CHANGES IN NET POSITION

For the Fiscal Year Ended September 30, 1998

(Dollars in Thousands)

Net Cost of Operations $ 3,603

Financing Sources -

Net Results of Operations 3,603

Prior Period Adjustments (685)

Net Change in Cumulative Results of Operations 2,918

Change in Net Position 2,918

Net Position Beginning of Period 1,636

Net Position End of Period $ 4,554
RE QUIRED SUP PLE MEN TARY

IN FOR MA TION

ADMINISTRATIVE SERVICES FRANCHISE

FUND

Background/Fund Establishment

The franchise concept is designed to create

competition within the public sector for the

performance of a variety of support services. This

allows for the establishment of an environment to

maximize the use of internal resources through the

consolidation and joint-use of like functions and to

gain the efficiencies and economies of scale associated

with the competitive offering of services to other

Government agencies.

The Government Management Reform Act (GMRA) of 

1994, Public Law 103-356, provided for the

establishment of six franchise fund pilot programs.

The six pilots were authorized by the President’s

Chief Financial Officers (CFO) Council prior to

submission of the FAA Franchise Fund proposal.

However, the CFO Council’s Franchise Fund Working 

Group strongly endorsed the FAA proposal and

recommended submission to Congress as a

franchise-like operation. This endorsement resulted

in congressional approval, and the Administrative

Services Franchise Fund was established in FY 1997.

Services

The Administrative Services Fund offers a wide

variety of services. These include international

training, accounting, payroll, travel, duplicating,

multimedia, information technology, and

management training. In addition, new services are

planned for subsequent years including logistics

support in FY 2000.

The customer base for Franchise Fund services

includes DOT and non-DOT Government agencies.

The FY 1998 revenue percentages by customer is

identified in the pie chart.

Benefits/Accomplishments

Benefits from the franchise environment occur

incrementally over time through efficiencies and

economies of scale associated with development of

partnerships and consolidation of like functions plus

the addition of new customers. During the first 2

years of operation, activities within the

Administrative Services Franchise Fund have

identified a number of advantages, benefits, and

results from participation in the Fund. The general

impacts/benefits are:

• A more business-like orientation

• Customer-driven decisions

• Emphasis on the cost of doing business and the full 

recovery of costs

• Reduction in the delivery price of some products

and services

• Flexibility of the revolving fund environment

including reduction of yearend crunch

• Use of retained earnings to build a base for

equipment upgrades, improved services, etc.

• Renewed employee enthusiasm and the sense of

challenge

• Development and refinement of specific measurement

processes

• Identification of partnering/consolidation opportunities

• Development of a set of operating principles for

entrepreneurial activities

Specific accomplishments include:

• Centralized/consolidated international training

activities at the FAA Academy at no additional

cost.

• Increased FAA influence on global aviation system 

and improvement of overall safety through

advancement of the international training

program.

FY 1998 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -76- CHAP TER 2

Customer Base

FAA

87.08%

OST

3.12%

Non-DOT

4.92%

USCG

4.72%

Other-DOT

0.16%
• Absorption of a reduction in the printing budget

allocation with no commensurate reduction in

service level.

• Consolidation of two services (multimedia and

printing) into one division with a single manager

(instead of two) resulting in ability to shift

resources to the working level.

• Purchase of equipment upgrades in printing and

multimedia to improve technology, increase

capability, and replace worn-out units through use 

of the retained earnings provisions of the revolving 

fund. This resulted in improved service delivery

and would not have been possible using the annual

appropriation cycle alone.

• A cost avoidance of approximately $2.8 million

annually due to significantly lower prices than

local quick print competitors ($0.025 versus $0.07

per impression.

• A proposed reduction in cost per impression

from $0.025 to $0.023 (8 percent) in FY 1999

resulting from efficiencies gained through new

technology and economies of scale associated

with new customers and increased product

output.

• Projected savings of $40,000 in FY 1999

maintenance costs through movement of

mainframe printing to the printing and

distribution team from another organization. 

• Reduction of payroll technician personal

compensation and benefit cost per payroll

account by 17.5 percent over 2 years.

• Addition of a new customer for permanent change

of station (PCS) processing and laid the

groundwork for centralization of PCS processing

within the agency.

• Negotiated an agreement with a new customer for

collections processing.

FY 1998 Fund Activity

The fund provided services totaling $21,667,000 in FY 

1998. The following is a graphic presentation of the

distribution of customer reimbursement by service

activity for FY 1998.

In addition, collections of $615,000 were made during

FY 1998 for services to be performed in FY-99. The

breakdown of this $615,000 deferred revenue is:

$274,000 deferred revenue collected by International

& Management Training; $204,000 deferred revenue

collected by Multimedia & Information Technology,

and $137,000 deferred revenue collected by Financial

Services.

FY 1998 FAA ANNUAL REPORT

RE QUIRED SUP PLE MEN TARY IN FOR MA TION -77- CHAP TER 2

FY-98 Services Provided

Financial

Services

(Accounting,

Travel,Payroll)

58%

Duplicating

25%

Multimedia &

Information

Technology

6%

International &

Management

Training

11%
SUPPLEMENTAL PROGRAM INFORMATION

This chapter summarizes how the FAA investedits FY 1998 resources to advance the three goals

central to its mission: safety, security, and system

efficiency. Attaining each of these goals commits the

agency to simultaneous action on several fronts and at 

many levels. Pursuing each of these objectives

confronts the agency with complex issues involving

our workforce, the reform of our regulatory

procedures, our international role, and our

responsibility to safeguard the environment. The four 

enabling goals - people, reform, global leadership, and

the environment - support the broader effort and

contribute to overall success. 

From one perspective, the strategic plan is a

simplifying vision of the FAA’s future, defining the

areas of activity where the agency will concentrate its

efforts over the next 5 years. But from another

perspective, it is a multidimensional master plan for

coordinating the impressive diversity of the FAA’s

involvement in virtually every aspect of modern

aviation. 

This year’s annual report allows the FAA to be viewed

from both perspectives. It emphasizes the FAA’s

disciplined focus on its three mission-critical goals,

while highlighting its wide-ranging contributions to

the vitality of aviation around the world.

MISSION BASED GOALS

REGULATORY REFORM

Rulemaking Process is Reengineered. Vice

President Gore’s National Performance Review

directed the FAA to streamline its regulatory process

to make it more responsive to public needs. Recent

congressional action also required the FAA to issue a

final rule 24 months after the publication of an

Advanced Notice of Proposed Rulemaking (ANPRM)

and 16 months after the comment period closes on a

Notice of Proposed Rulemaking (NPRM). As a result,

the FAA reengineered its rulemaking process in

January 1998 to ensure that the agency meets these

statutory requirements. 

Terrain Awareness and Warning System

(TAWS) NPRM is Published. Controlled flight into

terrain (CFIT) remains one of the major causes of

accidents. TAWS uses a computer database which

can compare the aircraft’s position with a database of

the world’s terrain, create a display, and sound a

warning far sooner than the standard ground

proximity warning system. An NPRM that proposed

requiring the installation and use of TAWS on

turbine-powered airplanes with six or more

passenger seats was published in the Federal

Register on August 26, 1998.

Low End Avionics to Become More Affordable.

An NPRM published in the Federal Register on

September 8, 1998, intends to make low-end avionics

more affordable for small personal, business, and

commuter airplanes. It is expected that the newly

developed versions of two advisory circulars, AC

23.1309 and AC 23.1311, will provide more realistic

standards for certification of this equipment in these

airplanes, resulting in more widespread usage and

safer operations of these airplanes.

Safety Regulation of Commercial Space

Transportation. The Commercial Space Act of

1998, signed by President Clinton on October 28,

1998, provides explicit authority for the FAA to

license reentry operations. The FAA is continuing

research on public safety issues relating to reentry

operations and issued an NPRM on April 21, 1998.

Also, on April 21, 1998, the FAA published a final rule

on licensing requirements and for the launch of

expendable vehicles from Federal launch sites. In

August 1998, the FAA published a final rule on

Financial Responsibility. The FAA is also developing

NPRM’s for licensing of commercial and

state-sponsored launch sites and for launches from

such sites. 

Commercial Passenger-Carrying Operations in

Single-Engine Aircraft Are Clarified. On May 4,

1998, the FAA issued a final rule revising and

clarifying certain conditions and limitations in part

135 of the Federal Aviation Regulations (FAR) for

instrument flight rule (IFR), passenger-carrying

operations in single-engine aircraft. The rule will

remove any ambiguity concerning the required power

sources for the gyroscopic instruments required for

flight under IFR for single-engine aircraft involved in

commercial, passenger-carrying operations.

FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TAL PRO GRAM INFORMATION -78- CHAP TER 3

SAFETY: By 2007, reduce U.S. aviation fatal

accident rates by 80 percent from 1996 levels. 
FAA Orders Fire Detection and Suppression

Systems for Aircraft Cargo Compartments. The

FAA issued a final rule on February 2, 1998, requiring 

fire detection and suppression systems in aircraft

cargo compartments. The rule affects nearly 3,700

passenger aircraft and all newly manufactured

aircraft. Most wide-body passenger aircraft have fire

detection and suppression systems in inaccessible

compartments. This rule requires that the remainder

of the passenger fleet be equipped with the same

systems. Approximately 300 all-cargo aircraft will

also be required to have detection systems and a

means to shut off the flow of air to the compartment.

The rule meets a recommendation of the White House

Commission on Aviation Safety and Security, which

urged the installation of both fire detection and

suppression systems in all aviation cargo holds. 

The airline industry, through the Air Transport

Association (ATA), announced in December 1996 that

the industry would voluntarily speed the installation

of these systems in commercial aircraft. The FAA

continues to work in partnership with the airline

industry to ensure that all affected aircraft are

retrofitted within the next 3 years. 

Prohibition on the Transportation of Devices

Designed as Chemical Oxygen Generators as

Cargo in Aircraft. NPRM 98-13 issued on August

21, 1998, proposes to ban, in certain U.S. air carrier

operations, the transportation of devices designed to

chemically generate oxygen, including devices that

have been discharged and newly manufactured

devices that have not yet been charged for the

generation of oxygen. These devices could, if

inadvertently transported when charged, initiate or

provide a secondary source of oxygen to fuel a fire.

This proposed ban would enhance aviation safety by

reducing the risk of human error in recognizing

whether such a device is charged or has been

discharged.

FAA Acts To Increase Center Fuel Tank Safety.

New measures have been adopted to reduce potential

ignition sources in Boeing 747 center wing tanks. The

airworthiness directive (AD) proposed in July 1998

and issued in March 1999 requires operators of

U.S.-registered Boeing 747 aircraft to take the

following actions: 

• Inspect the center fuel tank to detect damage,

disbonding or incorrect installation of wiring and

components.

• Test the electrical bonding of center fuel tank

components to the aircraft’s structure to ensure it

is within limits, reworking them if necessary. 

• On certain 747’s, measure the insulation

resistance of the fuel quantity indication system

(FQIS) to ensure that it is within limits, replace

FQIS components with new hardware, and replace 

silver-plated FQIS wires with new nickel-plated

wiring.

• In certain airplanes, install a flame arrestor into

the inlet line of the scavenge pumps of the center

fuel tank. 

The rule is one of the latest proactive efforts by the

FAA to reduce, or even eliminate, sources of ignition

in aircraft fuel tanks. Since the TWA 800 accident in

July 1996, the FAA has issued or proposed 13

separate AD’s related to fuel tank systems in Boeing

737, 747, and 767 aircraft.

For example, in January 1999, the FAA issued an AD

to enhance the protection of the FQIS on Boeing 737

aircraft against transient electrical voltage spikes or

short circuits. The AD requires installing transient

suppression components and/or shielding and

separating the fuel system wiring that is routed to the

fuel tanks from adjacent wiring. A transient

suppression device is a current-protective component

that limits amounts of electrical energy. The AD also

requires installation of flame arrestors and pressure

relief valves in the fuel vent system to prevent

external flames from entering the fuel vent system

through the overboard vent in the wing tip. 

Child Restraint Systems. The FAA issued an

Advance NPRM seeking public comment on issues

relating to the use of child restraint systems (CRS) in

aircraft during all phases of flight. Specifically, the

agency sought crash performance and ease-of-use

information about existing and new automotive

CRS’s, when used in aircraft, as well as the

development of any other new or improved CRS’s

designed exclusively for aircraft use. This responds to 

a recommendation made by the White House

Commission on Aviation Safety and Security and is

intended to gather information about the technical

practicality and cost feasibility of requiring small

children and infants to be restrained in CRS’s in

aircraft. After reviewing the comments, the FAA may

issue an NPRM with specific regulatory proposals

that respond to the Commission’s recommendations

regarding the use of CRS’s.

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Guidance for Carry-On Baggage is Issued. As

part of its Safer Skies agenda, the FAA provided

expanded guidance for passengers and airlines on

carry-on baggage regulations. The new advisory

circular (AC) recommends that airlines’ individual

carry-on baggage programs contain descriptions of

carry-on baggage, including the size and number of

bags, how child safety seats should be treated, and the 

procedures for ensuring proper stowage. 

FAA/Air Force National Launch Safety

Requirements and Standards. Using the FAA’s

ongoing launch safety rulemaking as a vehicle, the Air 

Force and the FAA will develop common flight safety

requirements that will be promulgated through FAA

regulations. The Air Force will be able to reference

these regulations in its own safety requirements, thus 

dispensing with duplicative requirements, easing the

administrative burden for both Government and

industry, and achieving one standard for industry.

The FAA will benefit from its access to the Air Force’s

expertise and experience, and the public will benefit

from the opportunities that a rulemaking offers for

participating in the development of the standards

that govern launch activities.

SAFETY INFORMATION SHARING AND

ANALYSIS

Flight Operations Quality Assurance (FOQA)

Program . The FAA has issued a policy statement

that provides a means for the airlines to share with

the FAA the routine flight operations data collected

from flight data recorders as part of their FOQA

programs. The FOQA data, combined with

information from the FAA’s databases, will present a

comprehensive picture of flight operations that can

then be analyzed to identify problems before they

result in an accident. Demonstration programs with

United, Continental, USAirways, and Alaska Airlines 

have all shown promising results. For example, based 

on FOQA analysis, the safety of approaches to more

than a dozen airports in the United States and

elsewhere in the world has been improved. Evidence

of unstable approaches, collected through FOQA,

gave airlines the information necessary to take

effective corrective action. Under the new policy,

which was published in the Federal Register on

December 4, 1998, airline participation would be

voluntary, and the FAA will not use safety data

generated in an FOQA program for enforcement

actions except in egregious cases. 

Global Aviation Information Network (GAIN).

The FAA continued to facilitate the development of

GAIN as part of its Strategic Plan and the Safer Skies

agenda. GAIN is designed to improve worldwide

aviation safety through the collection, analysis, and

dissemination of aviation safety information. The

industry-led GAIN Steering Committee met

throughout the year to develop strategies and

prototypes to begin the implementation of GAIN. In

addition, FAA supported the International Civil

Aviation Organization (ICAO) in its efforts to

implement the GAIN concept as the unified mode of

global aviation safety information sharing.

FAA is in the process of publishing several NPRM’s

that will encourage GAIN implementation by

protecting safety information voluntarily provided by

industry. The FAA is also collaborating with NASA

on research initiatives involving safety data sharing,

analysis, and systemwide monitoring.

Safety Performance Analysis System (SPAS).

The FAA is currently deploying SPAS, an automated

risk-based analytical tool that enables aviation safety 

inspectors (ASI) to better target their surveillance

and analyze critical safety performance indicators. At 

the end of FY 1998, over 2,300 ASI’s, supervisors, and

analysts had received training. SPAS continues to be

enhanced with additional data sources and improved

strategies for risk analysis and targeting. These

enhancements, as well as technology and related

developments, will allow SPAS to provide even more

precise front-line support to the safety inspector work

force, thus facilitating a greater degree of safety for

the flying public. 

Safety Training Outreach. The FAA’s Civil

Aeromedical Institute (CAMI) offered aeromedical

safety courses in aviation physiology and global

survival to 2,129 pilots and provided practical

demonstrations of spatial disorientation to 2,732

pilots. Practical demonstrations of hypoxia in an

altitude chamber were provided to 1,611 airmen

through an FAA/USAF training agreement. A

first-of-its-kind, virtual reality spatial disorientation

demonstrator was designed by CAMI to support the

National Accident Prevention Program throughout

the United States. Also, 89,120 aeromedical safety

brochures, 4 issues of the Federal Air Surgeon’s

Medical Bulletin, and 25 new Office of Aviation

Medicine Technical Reports were distributed to civil

aviation pilots, aviation medical examiners, pilot

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schools, and others in the civil aviation community

interested in safety.

Pilot Information Video. The FAA’s Office of

System Safety, in partnership with the Experimental

Aircraft Association (EAA), released an informational 

video for pilots flying to the annual EAA Fly-In in

Oshkosh, Wisconsin. The 1998 Oshkosh Visual Flight 

Rules procedures video was used to promote aviation

safety for the world’s premier general aviation event.

The video was designed to help pilots follow special

arrival and departure procedures that were in effect

during the air show. The video was provided to pilots

free of charge, along with a quick reference booklet for

use in-flight. An electronic version was available for

viewing on the Internet. Similar products were also

provided for the Sun ‘n Fun Fly-In 1998. Sun ‘n Fun is

the largest of EAA’s regional fly-ins.

Safety Risk Management Order. In June 1998,

the FAA established a formal safety risk management 

policy through Order 8040.4. The new policy provides

for a formal but flexible approach for managing safety

risks associated with high consequence decisions.

Steps in the safety risk management process include

case-specific safety risk management plans, hazard

identification and analysis, risk assessment, and risk

management decisions. The order establishes an FAA 

Safety Risk Management Committee to support its

implementation.

Expansion of Safety Information Website.

During FY 1998, the FAA incrementally expanded the 

sources of safety information available to air travelers 

via the Internet (www.faa.gov). By the end of the year

the public could find, at a single website, press

releases about significant FAA enforcement actions,

quarterly reports of closed enforcement actions,

searchable aviation accident and incident databases,

the results of FAA assessments of foreign aviation

authorities, and the preliminary edition of an airline

resume database. The website recorded high levels of

utilization, experiencing almost 100,000 “hits,” or

4,500 user sessions a week.

NAS Modernization Safety Assessments. In

order to build safety in at the beginning, the FAA has

established and incorporated a comprehensive safety

assessment process into the modernization of the

NAS. Safety assessments will identify and address

potential safety hazards through front-end analysis

tied to investment decisions.

SURVEILLANCE AND INSPECTION

Aircraft Certification Systems Evaluation

Program (ACSEP) Resource Targeting. The

resource targeting model is an analytical tool that will 

be used by the Aircraft Certification Service to

prioritize workload requirements associated with the

ACSEP program. Its use is expected to improve both

the effectiveness and efficiency of work program

activities through the targeted allocation of resources

against the Aircraft Certification Service’s highest

safety priorities. The primary objective of the

program is to improve current levels of safety while

maintaining or reducing overall ACSEP resource

requirements. Any resource savings resulting from

this approach will be devoted to other priority

aviation safety functions, such as general certificate

management. The model will be applied to all

production approval certificate holders on an annual

basis by the principal inspector. The notice that the

FAA will implement ACSEP resource targeting was

signed October 1, 1998.

Air Transportation Oversight System (ATOS) is

Implemented. ATOS is a new air carrier oversight

process developed by the FAA Flight Standards

Service with the support of its labor partner,

Professional Airways Systems Specialists, and

Sandia National Laboratories. It embodies a systems

approach to FAA certification and surveillance

oversight, using system safety principles and risk

management to ensure that air carriers have safety

built into their operating systems. 

The FAA implemented ATOS Phase 1 on October 1,

1998. This initial phase includes oversight of the ten

airlines that carry approximately 90 percent of all

U.S. passengers and new entrant air carriers, if any,

certificated through the FAA’s Certification,

Standardization, and Evaluation Team process. The

ten carriers having the largest number of passenger

enplanements are Alaska, American West, American, 

Continental, Delta, Northwest, Southwest, Trans

World Airlines, United, and USAirways. The training 

of approximately 900 employees who will be members

of the certificate management teams for these air

carriers began on September 15, 1998. Following

training, each team will develop and implement a

dynamic comprehensive surveillance plan for the

carrier for which they have oversight. 

Inspection of Boeing 737 Horizontal Stabilizers

Ordered. In January 1998, the FAA issued an AD

requiring operators of certain Boeing 737 aircraft to

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check the horizontal stabilizers — a wing-like

structure on both sides of an aircraft’s tail — to make

sure that all fasteners and elevator attachment fitting 

bolts were properly in place. The order affected 211

Boeing 737-300, -400 and -500 series aircraft

delivered after September 20, 1995. The AD was a

precautionary measure prompted by preliminary

data from a Boeing 737-300 accident in Indonesia on

December 19, 1997. The AD required a one-time

detailed visual inspection of the horizontal stabilizers

on these aircraft within 24 hours or five flights. 

Improved Engine Inspections Are Proposed. In

July 1998, the FAA proposed eight AD’s which would

require the aviation industry to inspect engine parts

more closely, using new methods developed, in large

part, through FAA and industry research. The

enhanced inspections focus on certain high-energy

components used in commercial aviation.

Uncontained engine failure is the leading

engine-related safety hazard to commercial aircraft.

The failure of these parts can release high-energy

fragments that can penetrate the cabin or otherwise

damage the aircraft. The enhanced engine

inspections could result in a reduction of up to 40

percent in the number of failures of high-energy

components over the next decade. 

FAA Calls for Inspections for Fatigue Cracks on

Boeing 737’s. The FAA issued an NPRM on October

8, 1998, to order inspections of Boeing 737-100, -200,

-300, -400, and -500 series aircraft to detect and repair 

fatigue cracks on the forward pressure bulkhead. The

proposed rule is prompted by reports of structural

fatigue cracks in the fuselage bulkhead that could

result in rapid decompression of the aircraft. 

The FAA proposed that those aircraft with 60,000 or

more total flight cycles be inspected within 1,500

flight cycles. Aircraft with less than 60,000 total

flight cycles would receive initial inspection prior to

the accumulation of 15,000 total flight cycles or within 

3,000 flight cycles, whichever occurs later. All aircraft 

would then undergo repetitive inspections every 3,000 

cycles. In addition, the proposed rule requires

operators to modify the bulkhead prior to the

accumulation of 75,000 total flight cycles or within

12,000 flight cycles, whichever occurs later. The

modifications consist of replacing portions of the

bulkhead center web area and installing certain

angles and straps to strengthen the side and vertical

chord areas. These modifications would eliminate the

need for repetitive inspections on some bulkhead

areas.

Boeing 737 Fuel Pumps, Wiring Inspection. In

May 1998, the FAA ordered airlines to expeditiously

inspect the wiring of fuel pumps in the Boeing 737

series after a check discovered fuel leakage, worn

insulation on wires passing through metal conduits,

and signs of electrical arcing. The order affected older

planes (models 100 through 500) with between 30,000 

and 50,000 flight hours. This action follows the FAA’s

decision in 1996, following the TWA 800 tragedy, to

examine fuel tank wiring issues in greater detail

throughout the commercial aviation fleet. Prior

inspection notices were issued for the 747 and 767

aircraft, which have similar fuel pump wiring

designs. In coming months, the FAA will propose a

regular inspection schedule for these electrical

circuits.

As part of its continuing efforts to ensure fuel tank

safety, the FAA, on September 28, 1998, ordered

airlines to inspect, within 60 days, fuel boost pump

wiring on Boeing 737-100 through 500 series aircraft

with 20,000 to 30,000 flight hours. The inspections

are necessary to ensure that the aircraft do not have a

problem with chafing and electrical arcing between

the fuel boost pump wiring and the surrounding

conduit.

Inspections of Boeing 737-700 and -800 Engine

Gearboxes Ordered. On July 2, 1998, the FAA

ordered the immediate inspection of Boeing 737-700

and -800 series aircraft equipped with CFM

International CFM56-7B turbofan engines for

problems with the engine accessory gearbox. CFM

International is a joint venture of General Electric

Company and Snecma, France. The agency’s

telegraphic AD followed two in-flight engine

shutdowns on June 26, 1998, one on Transaero

Airlines, Russia, and the other on Braathens Airlines, 

Norway. There were no injuries. 

In both incidents, the accessory gearbox starter

gearshaft failed due to inadequate fatigue capability

caused by high stresses introduced during the

manufacturing process. The AD requires immediate

inspection of the magnetic chip detector on the No. 2

engine on all Boeing 737-700 and -800 aircraft prior to 

further flight. The operator was required to remove

and replace the starter gearshaft if the detector found

abnormal magnetic particles. Worldwide, there are

94 engines installed on 47 aircraft affected by the AD.

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Of those, there are 46 engines on 23 U.S. registered

aircraft. 

Airworthiness Directive on General Aviation

Aircraft Engines. The FAA issued an AD in

February 1998 requiring general aviation operators

to inspect their aircraft’s piston engine crankshaft in

Textron Lycoming engine models 320 with 160

horsepower or greater and 360 series engines with

fixed-pitch propellers. If pits in the metal are found, a

fluorescent penetrant inspection must be performed

to determine if a crack is present that could result in

engine failure, propeller separation, forced landing,

and possible damage to the aircraft. 

Ensuring Airport Safety. For the past 25 years, the 

FAA has managed a national airport certification

program for air carrier airports. Through this

certification program, a successful partnership has

been established between the FAA and the airport

community. This partnership strengthens safety by

ensuring consistent application of safety measures

and by providing a forum to address national safety

concerns and priorities.

One component of this certification program is

inspections. Most airports serving air carriers are

subject to Federal regulations that require

compliance with minimum safety and operational

requirements. The FAA’s Airport Certification Safety 

Inspectors (ACSI) conduct annual inspections to

ensure that these airports comply with regulatory

requirements. As time permits, ACSI’s also conduct

courtesy safety inspections of general aviation

airports. In 1998, ACSI’s inspected over 500 airports.

FAA Industry Substance Abuse Prevention

Program. Approximately 6,600 aviation industry

companies employing more than 442,000

safety-sensitive employees are affected by the FAA’s

drug and alcohol misuse prevention regulations.

Safety-sensitive employees include flight

crewmembers, flight attendants, flight instructors,

aircraft dispatchers, aircraft maintenance personnel,

aviation screeners, ground security coordinators, and

contract air traffic controllers. Drug testing for

safety-sensitive employees has been required since

1989 and alcohol testing since 1995. 

In FY 1998, six notices of proposed certificate action

(suspensions or revocations) and 156 notices of

proposed civil penalty were initiated. Forty-five

orders assessing civil penalties were issued for

violations of the drug and alcohol misuse prevention

regulations. Refusals to submit to drug and alcohol

testing are resulting in a rising number of emergency

revocations of airman certificates. 

In another action, letters of investigation were sent to

over 200 companies after a database search and

comparison was conducted, at the request of the

Inspector General, to identify U.S. air carriers that

did not have FAA-approved programs for drug and

alcohol misuse prevention.

Aircraft Fuselage Panel Tests. The WJHTC

teamed with the NASA Langley Research Center to

conduct fracture tests on 40-inch-wide sheets of

0.063-inch-thick 2024-T3 aluminum alloy.

Researchers conducted the tests on panels containing

a variety of crack damage and took measurements on

load, crack extension, applied end displacement,

strain, and displacement fields. In a related research

effort, researchers conducted tests on full-scale,

stiffened, curved panels to test the residual strength

of aircraft panels with multiple cracking

configurations. 

In FY 1998, the FAA also completed construction of a

full-scale fuselage panel test system, capable of

testing curved panel specimens under conditions

representative of those seen by an aircraft in actual

operation. The FAA developed this test system under

contract with the Boeing Company. The system

features a unique adaptation of mechanical, fluid, and 

electronic components, which will be capable of

applying pressurization, longitudinal, hoop, and

shear loads to a curved panel test specimen. 

Enhanced Turbine Rotor Structural Integrity.

The FAA has a major, ongoing, multiyear program

through an FAA cooperative grant to Southwest

Research Institute, in partnership with major U.S.

engine companies, to develop a standardized, damage

tolerance-based, probabilistic code that addresses

structural integrity issues relative to the failure of

critical turbine rotors. Researchers have developed a

methodology and computer software to assess rotor

design, such as the uncertainties in titanium material 

defects, operational stresses, crack growth,

inspection effectiveness, and shop visit time. During

FY 1998, the agency completed Version 2 of the

DARWIN (Design Assessment of Rotors with

Inspection) code. The code integrates finite element

stress analysis, defect growth analysis,

nondestructive inspection simulation, and

probabilistic analysis to assess the risk of rotor disk

fracture with inservice inspection. In its final version, 

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the code will be the basis for an approved design and

lifting method, specified in an advisory circular, that

engine companies can incorporate into their design

systems. 

Joint FAA/NASA/DOD Aging Aircraft

Conference. In September 1998, the FAA teamed

with NASA and the Department of Defense to sponsor

the Second Joint Conference on Aging Aircraft. Over

600 representatives of Government, military, and

industry attended the conference, held in

Williamsburg, Virginia. The FAA will host the Third

Joint Conference on Aging Aircraft, scheduled for

September 1999 in Albuquerque, New Mexico.

Finite Element Modeling of Cracks Emanating

from Rivet Holes. The FAA conducted two

extensive finite element modeling efforts to predict

the stress intensity factors of cracks emanating from

rivet holes. To predict crack growth and residual

strengths of riveted joints subjected to widespread

fatigue damage (WFD), accurate stress and fracture

analyses of corner and surface cracks at a rivet hole

are needed. The first modeling effort calculated the

boundary correction factors for elliptical surface

cracks emanating from countersunk rivet holes. A

second modeling effort compared boundary correction

factor solutions for two symmetric cracks in a straight

shank hole.

Software for Damage Tolerant Aircraft Repair.

A critical issue identified by the aviation industry is

the need to examine the effects of repairs on the

structural integrity of aircraft. The incorporation of

damage tolerance methodologies in the maintenance

and repair practices of aircraft is required in order to

insure their continued airworthiness and operational

safety. In conjunction with the U.S. Air Force, the

FAA has developed a new user-friendly software tool,

repair assessment procedure and integrated design

(RAPID), capable of static strength and damage

tolerance analysis of fuselage skin repairs. In

April 1998, the FAA made available RAPID 2.1

software and supporting documentation, which

may be downloaded from the web at:

www.asp.tc.faa.gov/RAPID.

Flight Loads Data Collection Program. The FAA

has reestablished a flight loads data collection

program for large transport airplanes. The FAA

system is operational, and the analysis procedures

have been established and verified by industry.

Presently, data from 21 B-737 airplanes, 6 MD-82

airplanes, and 12 B-767 airplanes are being received.

The FAA published a Technical Report on the B-737

data, DOT/FAA/AR-98/28, “Statistical Loads Data for 

Boeing 737-400 Aircraft in Commercial Operations.”

This report, containing a summary of 11,721 flights,

19,105 flight hours of typical service for 17 B-737/400

airplanes, reported new and improved methods and

criteria for processing and presenting large transport

airplane flight and ground loads data. 

FAA Landing Parameter Survey Facility. The

WJHTC established a permanent video landing

parameter data collection facility at Atlantic City

International Airport, New Jersey, to collect

operational landing impact parameters year round

under a wide variety of weather conditions. In

addition to the regular commercial airplane arrivals,

frequent U.S. Air Force KC-10’s and cargo jets

conduct touch-and-go training operations at the

airport. Inclement weather data collected at this

facility will supplement regular survey data from

high activity airports that were collected during prior

surveys

ACCIDENT PREVENTION

Safer Skies – a Focused Safety Agenda. In April

1998, the FAA adopted a focused priority safety

agenda called Safer Skies, designed to achieve a

five-fold reduction in fatal accidents over the next 10

years. Safer Skies will concentrate FAA resources on

the most prevalent causes of aircraft accidents and

use special teams of technical experts to identify the

leading causes of aviation disasters and recommend

safety advances. In partnership with industry, Safer

Skies will use the latest technology to help analyze

U.S. and global data to find the causal factors in

commercial and general aviation accidents and

recommend ways to break the chain of events that

lead to accidents. 

Now nearing completion are efforts to reduce

uncontained engine failures and controlled flight into

terrain – instances in which planes are

unintentionally flown into the ground. (See also:

Regulatory Reform.) Among other issues on the

agenda are hazardous weather, loss of control,

approach and landing, survivability, and runway

incursion. 

Safer Skies relies on sophisticated analytic tools to

detect trends and patterns in databases maintained

by the FAA and National Transportation Safety

Board (NTSB), as well as the industry and

international groups. The FAA is also introducing

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major improvements in the collection and analysis of

general aviation safety data.

The FAA’s Role in Accident Investigation.

Accident investigation is essential to the FAA’s efforts 

to identify and eliminate hazards to air travel. During 

1998, air safety investigators from the FAA’s Office of

Accident Investigation conducted 31 on-scene

investigations of major or significant aircraft

accidents; 21 in the United States and 10 elsewhere in

the world. The office also performed 429 limited

investigations and provided assistance on over a

thousand accidents and incidents involving general

aviation aircraft. 

During 1998, information gathered through accident

investigations and subsequent safety analyses was

critical to initiating many corrective actions

undertaken by the agency to improve safety. For

example, as a result of the investigation of the Fine

Air Flight 101 accident in Miami, Florida, on August

7, 1997, the FAA made significant improvements in

its surveillance program for cargo transport

operations. Also, during the year, the FAA performed

extensive reviews of aircraft certification standards

for in-flight icing conditions for Embraer EMB-120RT

aircraft following the investigation of the Comair

Flight 3272 accident near Monroe, Michigan, in 1997.

Based on findings of these investigations, many

corrective steps were taken by the agency. For

example, the surveillance of cargo transport

operations was tightened following the Fine Air

Flight 101 accident in Miami, Florida, on August 7,

1997. Another accident — the crash of Comair Flight

3272 near Monroe, Michigan, also in 1997 — led to

extensive reviews of certification standards for

in-flight icing conditions for Embraer EMB-120RT

aircraft. 

As the FAA’s liaison with the NTSB, the Office of

Accident Investigation acted upon more than 140

NTSB safety recommendations. FAA employees also

made a large number of recommendations (about 350

last year) that were reviewed by the office.

Flightcrew/Vehicle Interface and Interaction.

The FAA has identified safety issues and associated

recommendations for flightcrews interacting with

flight deck systems (FAA Human Factors Team

Report). Implementation of recommendations is

underway in design, training, crew qualification, and

the associated regulatory material and processes.

The first meeting of the Autopilot Review Team took

place in July 1998. A set of accident and incident

data, where the autopilot may have played a role in

the event, was disseminated to team members. These

data, coupled with expert opinion and experiences,

will lay the foundation for the review of specific types

of autopilot vulnerabilities. Coordination of the

interim autopilot policy with the Flight Guidance

System Harmonization Working Group of the

Aviation Rulemaking Advisory Committee (ARAC) is

underway to ensure standardized guidance and

actions regarding autopilot certifications and

airworthiness. Meetings with autopilot

manufacturers will begin shortly. 

Airport Surface Detection Equipment

(ASDE-3). This equipment provides radar

surveillance of aircraft and airport surface vehicles at

high activity airports, aiding the air traffic controller

in the orderly movement of these vehicles during

periods of low visibility. The FAA is purchasing 40

ASDE’s for installation at 34 airports and two support 

facilities. In FY 1998, ASDE-3 systems were

commissioned at Memphis, Tennessee; Dallas/Fort

Worth, Texas (second system); and Dulles

International Airport, Virginia. This brings the total

commissioned to 30 out of 40. A system was also

accepted at Andrews Air Force Base, Maryland. At

the close of FY 1998, 37 ASDE-3 systems had been

delivered with the three remaining systems

scheduled for delivery between January and June

1999.

Airport Movement Area Safety System

(AMASS). This system uses ASDE radar data and

flight information from the automated radar terminal 

system (ARTS) to enhance surface movement safety

by visually and aurally prompting tower controllers to 

respond to situations which potentially may

compromise safety. A pre-production AMASS was

installed at San Francisco International Airport

(SFO) in May 1996 for operational testing. The FAA

has aggressively pursued its commitment to field

AMASS and, in January 1997, awarded a production

contract with options for the remaining systems.

Subsequently, the product team successfully

delivered full-scale development systems to Detroit in 

August 1997 and to St. Louis in January 1998. A

production option was also exercised in January 1998. 

A total of 40 AMASS’s are scheduled for deployment

by August 2000.

Next Generation Weather Radar (NEXRAD)

Deployment. The FAA, the National Weather

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Service, and the Department of Defense have pooled

their resources to install a nationwide network of 164

weather radar that greatly enhances weather

detection capabilities for aviation and a wide range of

other services. As part of this program, the FAA

installed 12 of the new radar units at offshore sites:

four in Hawaii at Molokai, Kauai, South Hawaii, and

Kohala; seven in Alaska at Anchorage, Fairbanks,

Bethel, King Salmon, Biorka Island (Sitka),

Middleton Island, and Nome; and one in San Juan,

Puerto Rico. As of September 1998, 11 of the 12

systems had been placed in service. 

The FAA developed new software algorithms to help

alleviate anomalous propagation (false echo)

problems with NEXRAD. Efforts are also underway

to install enhanced algorithms in future NEXRAD

builds that will better detect aviation weather

hazards. The revised algorithms are expected to

improve the effectiveness of data for aviation users

and extend the radar’s useful life. Sequential

upgrades to NEXRAD are also planned to reconfigure

the product generator (RPG) processor and the radar

data acquisition (RDA) unit to a state-of-the-art, open

system architecture that will have greater processing

capacity and improved logistics support.

Weather and Radar Processor (WARP). WARP is

a weather information processing and display system

located in the FAA’s 21 ARTCC’s and the David J.

Hurley Air Traffic Control Systems Command Center

(ATCSCC) in Herndon, Virginia. In FY 1998, the

program continued Stage 0 operational service and

Stage 1/2 development. WARP Stage 0 provides

meteorologists and air traffic management personnel

with improved weather information and graphical

displays. WARP Stage 1/2 will further enhance en

route weather information by providing controllers

with next generation (NEXRAD) radar data via their

display system replacement consoles. The program

completed Stage 1/2 interoperability testing,

including NEXRAD interface certification testing,

completed the writing of software code, and began

preparation for the testing phase to be completed in

1999. Deployment of Stage 1/2 will occur in the year

2000.

Weather Systems Processor (WSP) Contract

Awarded. The FAA has awarded a $14.2 million

contract to Northrop Grumman to develop equipment

that will warn air traffic controllers and pilots of

hazardous windshear and microburst conditions. The 

WSP forecasts the arrival of wind gust fronts and

tracks storm motion, providing a complete picture of

current and projected hazardous weather conditions

that may jeopardize aircraft. The equipment, which

is an enhancement to the airport surveillance radar

(ASR-9), has been operationally evaluated in

Orlando, Florida, and is currently operating in

Albuquerque, New Mexico. The FAA plans to

complete full-scale development activities in 1999,

followed by full production deployment at 34 airports

in years 2000 through 2001.

Terminal Doppler Weather Radar (TDWR)

Deployment Nears Completion. This radar

detects windshear, microbursts, gust fronts, and

precipitation that could endanger landing or

departing aircraft and reports that information to

pilots and controllers. All 47 TDWR’s purchased by

the FAA have been delivered (43 to operational sites,

2 to support sites, and 2 are in storage until siting

problems are resolved). Thirty-one of these have been

commissioned. Deployment of all units will be

complete by July 2000.

Low-Level Windshear Alert Systems (LLWAS)

are Upgraded. LLWAS provides windshear and

microburst detection similar to TDWR, although less

comprehensively. The equipment, which is located at

110 airports, is between 15 and 20 years old. Eight

airports have been upgraded to the LLWAS-Network

Expansion (LLWAS NE) configuration, and

installation of LLWAS-NE at LaGuardia Airport is

scheduled for completion in FY 1999. The upgrade

increases the probability of detecting microbursts and 

windshear on the airport and along the runway

corridors. An additional 39 LLWAS’s will receive the

upgrade, which is expected to extend the life of the

systems by 15 years.

Automated Surface Observing System (ASOS).

This equipment supports aviation operations and

weather forecast activities by measuring and

reporting windspeed and direction, visibility,

precipitation type and accumulation, cloud height

and sky condition, temperature, dew point, pressure,

and other conditions such as variable cloud height.

These observations provide pilots with takeoff, en

route, approach, and landing weather conditions

enabling pilots to avoid severe weather conditions.

The FAA commissioned 164 ASOS’s in FY 1998 for a

total of 352 commissioned systems. The FAA also

completed purchase of 30 additional systems. All 569

ASOS’s will be installed and accepted by November

1999. 

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The ASOS-to-automated terminal information

service (ATIS) interface has completed prototype

testing and is in the process of deployment. The FAA

has deployed four low rate initial production ASOS

controller equipment systems that display weather

and airport information to tower controllers and

TRACON personnel. This display system is in the

process of being upgraded with improved software

and will be deployed at four additional facilities.

Snowfall Rate System. The FAA and the National

Center for Atmospheric Research (NCAR) have

teamed up to develop a snowfall rate and forecast

system to provide data to aircraft deicing, airline

station control, and airport operations

decisionmakers. After successful demonstrations at

three airports over the last 4 years, the weather

support to deicing decisionmaking (WSDDM)

initiative has been technologically transferred to a

cooperative research and development agreement

(CRDA) partner for operational implementation in FY 

1999. 

Turbulence Detection. FAA research at the

National Center for Atmospheric Research (NCAR)

has developed software that can transform

commercial aircraft into in-flight “sensing platforms”

to measure and report turbulence to help pilots steer

clear of bumpy air. ICAO has selected the algorithm

used for this measurement as the international

standard. It is anticipated that this software will be

deployed on United, Northwest, and American

Airlines over the next year.

Engineered Materials Arresting Systems

(EMAS). FAA standards call for a 1000-foot extended 

safety area beyond the end of transport category

runways. Due to geographic and other limitations,

however, this is not always possible at runways built

before the standard was adopted. In August 1998, the

Office of Airport Safety and Standards issued an

advisory circular entitled “Engineered Materials

Arresting Systems (EMAS) for Aircraft Overruns.”

This advisory circular is the culmination of years of

research and development that has led to a method of

stopping a transport category aircraft that has rolled

beyond the end of such a runway. The advisory

circular provides guidance to airport operators and

designers in installing materials in the available

extended runway safety area that will bring the

aircraft to a safe stop.

Aircraft Rescue and Firefighting (ARFF)

Research. The FAA has completed the first phase of

construction on the Full Scale Cabin Fire Research

Facility, and tests are now underway in the Full Scale

Interior Fire Suppression and Cabin Skin

Penetration Facility located at the WJHTC. This

facility will be utilized to perform interior cabin

suppression tests exploring new technologies for

better distribution of water into aircraft cabins using

elevated booms and aircraft cabin skin penetration

devices mounted on heavy rescue firefighting

vehicles. Phase II construction will include a second

level passenger-seating cabin configured like the very 

large transport aircraft (VLTA) designs being

proposed. This same facility will allow simulated

cargo-based container fires to be studied.

Aircraft Rescue and Firefighting Vehicles.

Emergencies on airports occur frequently in

conditions of low visibility. ARFF personnel need to

get to the sites of such emergencies quickly and safely. 

FAA research and development has led to the

development of a system known as the driver’s

enhanced vision system (DEVS). The various

components of the system allow navigation via a

forward-looking infrared (FLIR) camera and GPS.

The system is such a revolutionary improvement that

all future ARFF vehicles purchased with Federal

funds will be equipped with an FLIR.

Jet Fuel Safety Research. As an outcome of the

TWA Flight 800 investigation, the FAA began two

studies of aviation fuel in FY 1998. The first is a

survey of the volatility characteristics of Jet A from

incoming aircraft and fuel suppliers and distributors.

The second study, conducted at Arizona State

University, is designed to determine the fundamental 

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ASOS, such as this one at Salinas, CA., provides pilots with

vital information about current weather conditions
ignition characteristics of Jet A vapor inside a fuel

tank as a function of altitude and pressure. The

results of these studies will be reported in FY 1999

and are part of a larger effort to minimize or eliminate

the possibility of fuel tank explosions. Another

question concerns the safe use of fuel containing red

dye. Certain diesel fuels contain red dye to comply

with IRS taxation requirements. The system of fuel

distribution in the United States makes it possible for

this fuel to be mixed inadvertently with turbine fuel,

to which the addition of coloring agents is not

permitted. Ongoing studies by the FAA, in

collaboration with the industry, will determine the

possible long-and short-term effects of red dye

contamination on the operation of turbine engines.

HUMAN FACTOR RESEARCH

Eliminating Human Factors as a Causal Factor

in Accidents and Incidents. While advanced

technology has reduced or eliminated many of the

hazards of air travel, new technology has also created

new types of risks. In recent years, human error has

been cited as a factor in between 60 and 80 percent of

all aviation accidents. A clearer understanding of the

human element in aviation is essential to future gains 

in safety. Consequently, in FY 1998, the FAA

invested approximately $26.5 million on human

factors research projects such as described below:

Shift Work and Fatigue Among Controllers. Human

factors researchers at CAMI, the U.S. Air Force, and

from Japan continued their assessments of the effects

of bright lights as a potential fatigue countermeasure

for personnel working midnight shifts. CAMI

researchers gathered data from field facilities (en

route and terminal) to better define the types of shift

schedules utilized at ATC facilities. Work was also

dedicated toward development of a CD-ROM for

training of ATC and other personnel regarding the

effects of shift work and fatigue on performance and

the development of countermeasures to reduce the

effects of fatigue associated with rotating shift

schedules.

Measuring the Effects of Fatigue on Pilot Performance. 

The FAA completed a collaborative study with the

U.S. Coast Guard and the U.S. Army, using activity

monitors, an electroencephalograph (EEG), cognitive

performance, a sleep and activity log book, and

subjective measures to assess the effects of fatigue on

flight operations at the Miami Air Station. Research

findings suggested several ways to counter fatigue,

including schedule modification.

Air Traffic Control Operational Incidents. Based on

human factors principles, CAMI scientists developed

a revision of air traffic’s Final Operational

Error/Deviation Report software. The system uses a

more flexible and user-friendly platform. The next

phase of the project will involve human factors

assessments of the operational error database to

improve overall categorization of incidents.

Controller Teamwork. A personal computer-based,

multisector, air traffic control simulation developed

by CAMI to assess the impact of teamwork on safety

and efficiency performance measures was transferred 

to the FAA Academy for use in the air traffic team

enhancement program (ATTEP). It will be used to

provide an orientation on teamwork for new air traffic 

students. Research with the device has demonstrated 

that different team strategies significantly influence

safety and efficiency measures.

Visual Scanning by Controllers. Vision is the primary 

source of controller information in the dynamic flow of 

traffic in the airspace. Research has learned a great

deal about how controllers search their displays. For

example, radar controllers spend most of their

available search time scanning the radar and

timesharing on other data displays. Scanning

patterns develop which appear to be driven by traffic

flow and airspace structure. Controller fixations on

little-used airspace diminish over time, explaining, in

part, why they may miss targets that appear

unannounced in such airspace. Further, controllers

are unaware of how frequently they scan adjacent

airspace, and they do use some of their limited scan

time checking targets over which they do not have

control. 

Systematic Air Traffic Operations Research Initiative

(SATORI). Developed at CAMI, the en route SATORI

system uses radar, weather, and voice data recorded

at air traffic control facilities to graphically recreate

operational errors and other events that occur within

the NAS. This system provides a valuable new tool for 

assessing the dynamics of ATC situations at the

ARTCC’s. Deployment of SATORI to 20 ARTCC’s in

the continental United States, 8 regional offices,

Washington headquarters, and the WJHTC has now

been completed along with Intranet connections.

En Route Display Concepts. Based on previous

research on air traffic control complexity, human

factors specialists are exploring several display

concepts designed to improve the quality of

information available to the controller. It is expected

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that these concepts will reduce cognitive demands

and assist with managing complex air traffic

situations. Using airspace and traffic data drawn

from SATORI, prototype displays highlighting

weather information, special use airspace,

transitioning aircraft, and equipment outages have

been created. Human factors researchers

demonstrated these to en route controllers at

Jacksonville Center. A simulation experiment will

determine the objective benefits of the concepts.

Air Traffic Workload. FAA researchers are

conducting development of a PC-based tool to

compute sector and facility-level workload and

performance measures. Data gathered from two

ARTCC’s were used to compare and contrast changes

in various workload and performance indices.

Baseline data will be used to assess changes in

workload and performance associated with the

implementation of new technologies and procedures.

General Aviation Human Factors. The FAA

completed expansion of the CAMI advanced general

aviation research simulator (AGARS) to host the

multifunction displays planned for the future general

aviation glass cockpit. The “pathway in the sky”

display is operational and is being used to assess pilot

performance gains using this format as compared

with more traditional formats. A multiaxis flight

performance controller is also functional, and

preliminary evaluations of performance using the

fuzzy-logic controller compared with performance

involving conventional controls have been

undertaken. Following completion of the assessments 

in the CAMI simulator, the displays and controls will

be transferred to the test bed aircraft Raytheon’s

Bonanza. This research is in support of the Advanced

General Aviation Technical Experiments project

sponsored by NASA/FAA and a coalition of

manufacturers. AGARS was also recently equipped

with both head-up and head-mounted displays

designed for human factors assessments in 1999.

GPS User-Interface Design. The FAA completed

human factors assessments of standard GPS

functions to (a) assist in the development of an

enhanced GPS menu structure that would be based on 

cognitive factors and (b) determine GPS

user-interface design problems associated with

existing devices. Researchers completed surveys of

pilots in Oklahoma and Alaska to evaluate current

usage of GPS receivers and document human factors

issues that impact overall performance. They

combined this information with data from flight tests, 

flight simulations, and ASRS database reports that

reveal similar human factors issues associated with

GPS receiver usage. Combined information will be

used to enhance current human factors supplements

to certification materials for GPS receivers.

Free Flight. Researchers assessed human factors

impacts of proposed Free Flight avionics devices on

general aviation pilot functions (i.e., communication,

navigation, and surveillance). Function analyses

illustrated that, under certain Free Flight conditions,

general aviation pilot workload may increase

sufficiently to affect overall performance. Human

factors specialists developed a research protocol to

guide the collection of pilot performance data during

AGARS flight simulations at CAMI as a means of

evaluating the costs/benefits of selected avionics

devices.

Evaluation of Digital Ground to Air Communications.

Vocoders are devices that compress speech and

provide more frequency spectrum for

communications. This is especially vital in crowded

metropolitan areas where aviation frequencies are

very busy. Researchers at the WJHTC completed two

studies comparing the performance and acceptability

of several vocoder devices and current analog radio.

The studies found that controllers could use both

vocoders and analog radio.

Post Operations Flight Evaluation Tool (POET).

POET is a software tool developed by the FAA and

NASA as part of a study of information flow in the

ATC system. POET merges flight information from

three different sources (airline operations data,

ETMS data, and weather data) in a unique and highly 

flexible manner to provide a more complete

understanding of the nature and impact of traffic flow

bottlenecks in the ATM system. The application of

POET pinpoints flow problems and traffic delays

attributable to the lack of timely and accurate

information at key decision points in the traffic

management system. Subsequent human factors

analyses of POET generated data will precisely

identify information critical to the successful

implementation of collaborative decisionmaking

among the operators and users of the ATC system.

Researchers made POET available to a number of

domestic air carriers where it will be used to enhance

operational efficiency.

Flight Strip Reduction. Scientists from CAMI and the 

University of Oklahoma teamed with an ATC work

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group to develop a plan to reduce the use of paper

flight progress strips by controllers in ARTCC’s. The

work group developed a procedure that would reduce

the requirement to mark flight strips and allow

removal of flight strips from the strip bay after taking

the handoff and establishing communications with

the pilot, if no special aircraft handling is required.

CAMI tested the procedure at three en route centers

during FY 1998. Researchers ran baseline and

experimental scenarios in the centers’ DYSIM

laboratories by individual controllers and controller

teams working at high and low altitude sectors. This

research prepares for the future NAS Concept of

Operations where strips are expected to be replaced

by some electronic representation of flight data.

Research on Auditory Alarms. Researchers conducted 

an auditory symbology study to review alerting and

status sounds now used in NAS equipment.

Researchers digitally recorded and analyzed over 80

alarms for their sound characteristics. Further

research is underway to evaluate the urgency of the

alarms, develop samples of new alarm sounds, and

create human factors recommendations for the use of

alarms in FAA systems.

Advanced Crew Resource Management. Researchers

designed a guidebook, based on research with a

regional carrier, which provides techniques and

procedures to increase safety through improved pilot

performance. This guidebook aids carriers in

developing advanced crew resource management

training tailored to their particular operations. The

research behind the guidebook involved analyzing

specific airline operations to target specific areas for

developing human factors training, developing the

training for pilots and instructor pilots, and

redesigning all company manuals to incorporate

human performance improvements. This training

development system and the resulting pilot

assessment system are incorporated into the

guidebook for other airlines to follow.

Rapidly Reconfigurable Event-sets. Researchers

completed the first phase of a system that will allow

the air carrier industry to develop unique training

scenarios. In the past, development of scenarios was

complex, expensive, and time-consuming, limiting the 

number of scenarios used by any particular training

organization. Because of the limited number of

scenarios, researchers suspected the validity of the

pilot assessment. The new system to allow for rapidly

reconfiguring event sets into scenarios will remedy

this situation. The FAA will approve each event set

used by the carrier. The carrier will use the system to

develop unique training scenarios. This system will

also be used to specifically target a deficiency in a

particular crew and allow for additional training in

the specific area of weakness. All event sets are rated

for difficulty and for specific content. This allows the

carriers to assess pilots in a more standardized way.

Automated Performance Measuring System (APMS).

Human factors researchers developed the capability

to compare flight data and simulator training data so

that air carriers will be able to determine if training

standards are being actually transitioned to line

operations. The system is designed to assess the

extent to which line and simulator performance are

consistent with analytically developed training

standards. This systematic view of both segments of

pilot performance can reveal training deficiencies

requiring attention before a safety threat emerges.

Advanced Qualification Program (AQP) Model

Improvements. The FAA developed software to help

air carriers create an AQP program to improve

flight-crew performance. It provides an analytical

framework that guides carriers in integrating

technical performance requirements and crew

resource management into their pilot training

programs. The original model, a training analysis

system, has been distributed to the airlines and is in

wide use. The FAA is developing advanced data

collection and analysis systems for inclusion in the

model. This entire system will allow air carriers and

FAA oversight offices to monitor the effectiveness of

the pilot training systems. When weaknesses are

identified, subsequent training will be designed to

areas of concern. 

The completed model will be able to track a specific

training requirement from task analysis through

performance measurement and back to the

curriculum. This will provide the feedback loop

necessary to continuously monitor pilot performance

and training effectiveness. The APMS is aligned with

this project in identifying simulator parameters that

reflect these AQP qualification standards. The two

systems provide objective and subjective evaluations

of pilot performance. Used together, they provide air

carriers with an accurate assessment of pilot

proficiency.

Debriefings in Flight Training. Much of the

effectiveness of line-oriented flight training

simulations depends on the debriefing that occurs

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afterward. Discussion by the crew is necessary to

determine what happened and to consolidate learning 

so that lessons transfer to line operations. To identify

the most effective techniques, researchers examined

airline debriefing data. They also determined the

extent to which the debriefing techniques are

consistent with FAA guidelines, evaluated the

practicality of the guidelines, and pinpointed the

difficulties in trying to teach to them. On the basis of

these findings, new training guidelines have been

written. The FAA has also developed specific

debriefing tools for instructors and is evaluating these 

tools in the air carrier community. The tools are being

evaluated for their effectiveness in improving the

quality of the debrief session.

Safe Practices in General Aviation (GA). Following

the successful introduction of a videotape for training

GA pilots in the development of a personal checklist

that incorporates personal minimums to reduce risk,

the FAA produced a CD-ROM that provides training

on this topic in a computer-based format. While the

FAA primarily designed the videotape for use in a

seminar setting, this new product will be made

available to pilots who do not attend safety seminars,

thus ensuring the maximum exposure of GA pilots to

this important safety training.

Maintenance Resource Management (MRM). Human

factors researchers developed and produced a

handbook that provides guidelines on MRM, with a

prototype curriculum for use by airline maintenance

personnel and training organizations. The

philosophy of the MRM curriculum is to integrate

maintenance personnel technical skills with

interpersonal skills and basic human factors

knowledge to improve communication and safety in

aircraft maintenance operations. In conjunction with

the MRM handbook, human factors specialists

developed a computer-based training (CBT) program

which provides consistent, flexible training for

individual maintenance personnel to improve

communication and effectiveness in maintenance

operations. CBT provides concentrated instruction on 

selected MRM concepts and skills such as human

error, communication, teamwork, and performance

management. The MRM handbook and CBT are

available on CD-ROM and via the Internet.

Human Factors in Acquisition. The FAA promoted

standardization and consistency of human factors

approaches within integrated product teams and

across different phases of acquisition. These efforts

are demonstrated by enhanced use of and compliance

with design conventions, direct support of programs

(e.g., STARS), integration in NAS planning (e.g., NAS 

Architecture), human factors best practices, and

human factors processes. Other activities include

development of reference tools, job aids, rapid

prototyping techniques, and training course

presentations. Examples of human factors initiatives

include: 

Human Factors Design Guide. The FAA distributed

over 1,000 copies of the CD-ROM version and released 

an updated version of the guide. This guide is a

comprehensive compilation of design practices and

principles integral to the procurement, design,

development, and testing of FAA systems, facilities,

and equipment. Although its primary focus is FAA

Airway Facilities systems, it has general

applicability.

Human Factors in the Design and Evaluation of Air

Traffic Control Systems. This handbook is an

extensive compendium of human factors reference

information directly related to the design and

evaluation of ATC systems. Developed by Volpe

Transportation Systems Center, the handbook comes

with an electronic checklist and is available in both

book and CD-ROM format. It is currently being

updated to incorporate new information developed

under the FAA ATS Human Factors Research

Program. 

STARS Computer-Human Interface (CHI). A

multidisciplinary team of air traffic controllers,

airway facilities specialists, human factors scientists,

and engineers participated in a number of activities to 

improve the STARS CHI. The various development

teams worked directly with the user community to

address concerns with the STARS early display

configuration (EDC) air traffic terminal controller

working position. Additional activities are underway

to evaluate specific human factors issues in the tower

environment and to select a display. 

Reducing Acquisition Risk. Human factors

researchers developed emulation prototypes of the

next generation en route and terminal ATC systems.

The prototype ATC systems will be linked to the

micro-target generation facility (TGF) at the William

J. Hughes Technical Center. The TGF provides

realistic simulated air traffic that is dynamically

manipulated by pseudo-pilots. An advanced battery

of human-performance and workload measures will

be collected in real time during simulations. These

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emulation DSR and STARS platforms provide FAA

program offices an early opportunity to examine

human interface issues for future ATC functionality

and other pre-planned product improvements.

Human Factors Training Courses. The Human

Factors Program staff offered several 2-day human

factors awareness courses for FAA personnel

interested in learning more about the discipline of

human factors. One hundred people attend the

courses. The FAA also presents a course on the

Fundamentals of the Acquisition Management

System (FAMS). The purpose of this course is to

introduce the concept, scope, and application of FAA

acquisition principles. More than 300 people

attended these courses in 1998.

NEW SECURITY BASELINE

Airport Vulnerability Assessments. TheFAA has

contracted with several private sector firms to

conduct several vulnerability assessments supported

by onsite FAA agents, using various models and

methodologies. In FY 1998, 8 contractors were

assigned to assess 15 major airports, but one contract

(2 airports) subsequently was cancelled. Teams have

completed onsite data collection activities and final

results briefings at all 13 airports. A panel of experts

is evaluating the results and developing

recommendations and guidelines for future airport

vulnerability assessments, using the best

methodologies and tools demonstrated in the FY 1998

assessments. Further recommendations from the

panel will focus on automated tool suitability,

readiness, and fielding considerations.

Computer-Assisted Passenger Screening

(CAPS) and Passenger-Bag Match. In December

1997, the FAA announced that checked baggage

security would be expanded for domestic flights, a

recommendation of the White House Commission on

Aviation Safety and Security. CAPS is the automated

passenger screening system being used to select

passengers whose checked baggage will be screened

by explosives detection systems or bag-matched to

make sure that the passengers are on aircraft with

their bags. Five major air carriers fully implemented

CAPS by the end of FY 1998, with two more scheduled

to be online within a few months. In October 1997, the 

Department of Justice completed a review of CAPS

and found that the automated profiling system did not 

violate individuals’ civil liberties.

Team Deploys Advanced Technology. In October

1996, the FAA formed a Security Equipment

Integrated Product Team (SEIPT) of acquisition and

security experts representing the FAA, airport

authorities, and air carriers. The team’s objective is

to plan, purchase, and install explosives detection

devices and other advanced security equipment at

many of the largest and busiest U.S. airports. In

1998, the team continued to deploy equipment

purchased with $144 million provided by the

Omnibus Consolidated Appropriations Act of 1997

and reprogrammed FY 1998 funds.

Explosives Detection Systems (EDS). The FAA,

through the SEIPT, awarded a contract in December

1996 for an initial delivery of 54 FAA-certified

explosives detection systems (EDS) to screen checked

baggage. Another 15 EDS’s were purchased with

reprogrammed FY 1998 funds. In line with the

Commission’s recommendations, the SEIPT is

supplementing the deployment of certified EDS’s

with deployment of 20 other explosives detection

devices for checked baggage screening. A total of 65

EDS’s and advanced technology devices were

deployed by the end of FY 1998. 

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SECURITY: Prevent Security Incidents in the

Aviation System.

Bulk explosive detection devices for screening checked bags are

being deployed at the Nation’s busiest airports.
Explosives Trace Detectors (ETD). Throughout

FY 1998, the SEIPT continued to deploy ETD’s

purchased with FY 1997 funding. This equipment is

used for screening baggage and electronic items for

traces of explosives. The SEIPT had deployed 324

trace explosives detection devices to 48 airports by

September 1998. 

PERFORMANCE AND PROCEDURES

Certification Standards for Screening

Companies. The FAA has withdrawn an advanced

notice of proposed rulemaking (ANPRM) on

certification of screening companies that was

published in March 1997. The delay will allow the

FAA to gather enough data from automated testing

with threat image projection to develop performance

standards for screeners. The FAA expects to publish

an NPRM that includes certification standards in FY

1999.

Aggressive Testing. Using the increased staffing

provided by the Omnibus Consolidated

Appropriations Act of 1997, the FAA continued to

build its inspection and testing program. In addition

to scheduled inspections of air carriers, indirect air

carriers, and airports, the FAA conducts special

emphasis assessments to address areas of potential

concern. In FY 1998, civil aviation security special

agents conducted about 8,000 unannounced screener

evaluation tests as well as tests of other security

measures for cargo, checked baggage, carry-on

baggage, and people. The FAA also doubled its

resources for assessments by anonymous teams of

special agents. These assessments were conducted at

over 25 international and domestic airports with a

focus on the international operations of U.S. carriers

and the use of advanced technology screening

equipment.

Airport Screener Rule. The FAA published a final

rulemaking in September 1998 extending

background check regulations to screeners and their

supervisors. The rule requires that these employees

undergo an employment history investigation and, in

some cases, fingerprint-based criminal records

checks. Under the new rule, airport operators and air

carriers must audit criminal history investigations. 

Improvements in Air Cargo Security and

Hazardous Materials Transportation Safety. FY 

1998 was the first full year that the FAA’s dangerous

goods and cargo security oversight efforts were

reorganized into a dedicated program within the Civil

Aviation Security organization. All of the 118 agents

authorized in FY 1997 were hired, and most have

completed 5 weeks of specialized training. These new

agents, together with the 12 newly hired dangerous

goods attorneys and the 12 previously assigned

dangerous goods agents, comprise the cadre of 142

full-time specialists dedicated to the program. In July 

1998, the DOT Office of Inspector General completed

an audit of the FAA’s new Dangerous Goods and

Cargo Security Program. The audit found that the

FAA has made progress in developing and redefining

policies, procedures, and controls for implementing

the new program.

On May 26, 1998, the Secretary of Transportation

submitted a report to Congress concerning air cargo

security as required by the Federal Aviation

Reauthorization Act of 1996. This report described

the FAA’s program to implement the White House

Commission’s recommendations on cargo security.

The FAA continued to revise a security proposal to

strengthen the cargo standards of the FAA’s approved 

security programs for all passenger air carriers and

indirect air carriers (air freight forwarders) issued

during FY 1997. The FAA expects to issue the revised

cargo standard security program in early FY 1999. 

Technology for Improving Screener

Performance. The Screener Proficiency Evaluation

and Reporting System (SPEARS) is an automated

system to improve human performance at the

screening checkpoint through innovative methods of

selection, training, and evaluation. SPEARS

comprises three parts: screener selection for selecting

job applicants with the aptitude to be successful

FY 1998 FAA ANNUAL REPORT

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Computer-based training designed specifically for security

screening personnel is now available at the Nation’s busiest

airports.
screeners, computer-based training (CBT) to train

airport preboard screeners, and threat image

projection (TIP) systems to increase screener

vigilance and measure system detection performance. 

By the end of FY 1998, the FAA had deployed 36 CBT

components and 37 TIP systems to the Nation’s

largest and busiest airports. The FAA plans to deploy

almost 250 more TIP systems by the end of FY 1999.

PARTNERSHIPS TO STRENGTHEN AVIATION 

SECURITY 

Airport Consortia. The FAA convened parties with

responsibility for aviation security to form consortia

at 41 major U.S. airports by October 1996. Forming

additional consortia was delayed during much of 1997

to resolve some compliance and enforcement policy

issues. The FAA’s amended advisory circular,

Voluntary Reporting Program, which encourages

people to come forward, reveal problems, and fix

them, became effective on May 4, 1998. The new

policy cleared the way for expanding airport

consortia. The FAA had formed 74 consortia by the

end of FY 1998 and expects to invite voluntary

security consortia to form at over 100 airports by the

end of 1999. 

National Academy of Sciences Panel. In response 

to a requirement in the Federal Aviation

Reauthorization Act of 1996, an agreement to create a

National Academy of Sciences Panel on Assessment of 

Technologies for Aviation Security was signed by the

FAA and the Academy on May 19, 1997. The panel

will assess the results of advanced security equipment 

tests and deployments and then recommend how to

more effectively deploy explosives detection systems

and hardened containers to improve security. The

first panel meeting was held on January 29, 1998.

National Safe Skies Alliance. On January 30,

1998, the FAA and the National Safe Skies Alliance

(NSSA) reached a cooperative research agreement

providing NSSA with $1 million to assist the FAA in

the development and testing of aviation security and

safety technologies. NSSA included Oak Ridge

National Laboratory, the Metropolitan Knoxville

Airport Authority, the Metropolitan Airports

Commission, the University of Tennessee, the

Tennessee Air National Guard, the Honeywell

Corporation, and a number of private companies, each 

with its own expertise in related technologies. This

effort includes a national test bed at McGhee Tyson

Airport for operational evaluation and testing of

newly developed technologies for checkpoint

screening and operation and other aviation security

research and development projects.

SEMTEX-98 Seminars. The White House

Commission recommended that the Bureau of

Alcohol, Tobacco, and Firearms (BATF) provide

explosives training to the aviation community. BATF

and the FAA entered into a partnership to produce

training videotapes and to present seminars on

terrorism and explosives in three locations across the

country. SEMTEX-98 seminars and exercises were

held at Seattle, Washington; Dallas, Texas; and

Atlanta, Georgia, in August and September 1998,

with a total of 475 students from airports, air carriers, 

and law enforcement. The extremely positive

response to the seminars from the attendees has

prompted the FAA and BATF to plan three additional

seminars at new locations for FY 1999.

NAS MODERNIZATION

Standard Terminal Automation Replacement

System (STARS). STARS is a joint FAA and

Department of Defense (DoD) program to replace the

existing terminal automation systems at 172 FAA

TRACON’s and up to 199 DoD facilities. This modern, 

commercially based, fully digital system will provide

the platform and open architecture necessary to meet

increasing air traffic demands, while maintaining

safety and improving efficiency of the NAS. 

Under a revised implementation plan, the FAA’s first

STARS will go into the Syracuse, New York, and El

Paso, Texas, TRACON’s. Initially, these facilities will 

receive the early display configuration (EDC) of

STARS. In parallel, development will continue on the

full STARS, which will include a new computer

system. The revised STARS plan calls for the

Syracuse and El Paso TRACON’s to receive EDC

equipment in late 1999 and early 2000, respectively.

Once STARS has the capabilities to handle the need of 

higher-level facilities, it will be deployed throughout

the country. In the meantime, the FAA will buy

off-the-shelf color controller displays to respond to

critical requirements for new displays at the New

York and Reagan Washington National TRACON’s.

These stop-gap displays will be installed in the

summer and fall of 2000. Schedules are being

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SYSTEM EFFICIENCY: Provide an aerospace

transportation system that meets the needs of

users and is efficient in the application of FAA

and aerospace resources. 
developed to install color displays in the Dallas-Fort

Worth and the new Northern California and North

Georgia TRACON’s.

Progress in Display System Replacement (DSR)

Commissionings. DSR will replace the aging

display equipment at each of the FAA’s 21 ARTCC’s.

The first operational site, Seattle ARTCC, was

commissioned on January 20,1999. Twelve

operational sites have received their DSR equipment,

and the FAA has accepted the first eight systems.

DSR replaces the very old computer channel display

(CDC), the display channel complex rehost (DCCR),

and the plan view display (PVD) equipment. DSR will 

provide a display infrastructure that makes more

information available to each air traffic control

position, including improved weather data soon to be

available. (See also: WARP and other

weather-related articles.) Each site receiving DSR

also will receive a full fidelity training system that

allows dynamic simulation (DYSIM) problems for

controller training and currency. Simultaneous with

DSR installation and checkout, the contractor is

installing the appropriate suite of voice switching and

control system (VSCS) components and the VSCS

training and backup switch (VTABS) which will

provide emergency communications and

nonoperational training links for communications at

DYSIM positions. 

DSR users at each site and the national teams used

for operational testing and evaluation have worked to

identify and document every discrepancy and

operational shortcoming of DSR during the past few

months. Many hardware revisions and software

modifications have been completed since mid-year

and are currently being delivered to each DSR site.

Minor adjustments to DSR milestone dates were

necessary at some DSR sites because of the critical

nature of replacing Host computers at each ARTCC.

(See also: HOCSR.) Operational training of the entire 

controller staff is now underway at the first few DSR

sites. The final DSR site is expected to complete

commissioning by May 2000.

Voice Switching & Control System (VSCS).

VSCS has been operational in most ARTCC’s for the

past 2 years. Because the DSR is being installed in a

new control room, each DSR console must be outfitted

with the appropriate VSCS equipment. As DSR

installation occurs, the VSCS equipment is integrated 

and tested once again. Every site where DSR has been 

installed this year, VSCS is close behind. At a few

sites, VSCS is being slowly removed from the older

M-1 consoles and most components are being

reinstalled in later DSR sites. As DSR is

commissioned, the old control room at each site will be 

decommissioned, and the remaining VSCS

equipment will be removed. 

VSCS Training and Backup Switch (VTABS). 

VTABS is being deployed at the same time as the DSR

to satisfy the operational requirement for a backup

communications system to VSCS. Nine VTABS were

delivered in FY 1998, including one to the FAA

Academy, which will serve as a training device. The

commissioning schedule for VTABS matches exactly

the DSR commissioning schedule. The first

operational site was December 1998, and the final site 

is May 2000. 

Host and Oceanic Computer System

Replacement (HOCSR). The FAA created the

HOCSR program to resolve serious support problems

and year 2000 concerns for the aging processors and

peripherals used for flight plan and radar processing

in both the en route and oceanic domains. Investment 

analysis was completed in May 1998, and

congressional reprogramming was accomplished to

permit the agency to fund this effort outside the

normal planning cycle. Eleven site deliveries have

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Air traffic controllers in the Seattle ARTCC were the first in the

Nation to begin using DSR.
been completed since June. The FAA has accepted

four suites at operational sites: Oakland, Boston, New 

York, and Los Angeles ARTCC’s; and two suites at

nonoperational sites, FAA Academy and the WJHTC.

The first HOCSR system was commissioned in

February 1999, and the last ARTCC system is

expected to be operational by September 29, 1999. 

During FY 1998, the FAA opened the En Route

Integration and Interoperability Facility (EI2F)

located at the WJHTC. The EI2F represents an

ARTCC equipped with both the HOCSR and the DSR.

The centralized facility provides an en route system

environment that can be used to perform

experimentation, prototype evaluation, system-level

integration, and verification without the risk of

impacting live air traffic control operations or

requiring site personnel to operate and/or maintain

additional subsystems. 

Common Automated Radar Terminal System

(ARTS) Deployment Begins. The agency began

operational testing and deployment of the new

common ARTS during FY 1998. Two versions of the

system are being deployed: common ARTS IIIE for

large TRACON’s and common ARTS IIE for

medium-sized facilities. The new common ARTS will

provide improved air traffic control automation

capabilities at five of the largest TRACON’s and at

over 135 medium-sized TRACON’s until these

systems are replaced by STARS. During FY 1998, the

ARTS IIIE became operational at Denver, New York,

Southern California, Chicago, and Dallas/Fort Worth

TRACON’s. Sixteen ARTS IIE began operations

during the year. Deployment of the ARTS IIE will

continue at a rate of approximately six per month.

GPS Approach Procedures Increase. In FY 1998, 

531 GPS procedures were developed, 528 procedures

successfully flight inspected, and 516 procedures

were published for operational use, bringing the

nationwide total to 1,484 published instrument

approach procedures. This includes 266 approaches

developed in 1998 to runways that never previously

had instrument flight rule (IFR) capability. In the

course of the program, 766 airports now have new IFR 

capability. The FAA has identified approximately

4,100 runway ends for which satellite-based

approaches will be developed through a combination

of GPS, wide area augmentation systems (WAAS),

and local area augmentation systems (LAAS).

Emergency Medical Service (EMS) GPS

Approaches Published. GPS procedures enable

EMS helicopters to continue operating in IFR

conditions. The FAA anticipates that approximately

2,000 EMS helicopter GPS approaches will be needed

within the next 8 to 10 years. In order to meet this

growing need, the FAA now accepts preliminary

procedures packages submitted by outside sources.

These packages are submitted to the FAA for

development, review, and flight inspection.

Twenty-seven procedures were published during FY

1998.

GPS Ground-Based Differential Augmentation

Technology. A GPS LAAS Test Prototype (LTP) has

been produced at the WJHTC and is being used for the 

validation of LAAS concepts and flight testing. The

LTP has been utilized to evaluate the multipath

limiting antenna developed by Ohio University. The

LTP was taken to several airports to evaluate any

peculiar siting requirements that the LAAS may

require. Future research using the LTP will involve

integration of pseudolites into the LAAS architecture, 

flight test of pseudolites, and validation of the LAAS

ground station specification.

New GPS Routes Created with Industry

Support in Northeast. Seven new GPS routes in

the northeast are now available to GPS-equipped

aircraft flying between Washington, New York, and

Boston Air Route Traffic Control Centers. The new

routes, developed in coordination with the Regional

Airlines Association and member carrier Atlantic

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Controllers at ARTCC’s guide airplanes en route from one city to 

another
Coast Airlines, support overlaying and redesigning

the current airway system to provide direct flight

paths on designated GPS advanced navigation routes, 

and eliminate “doglegs”— which occur when

navigation facilities are not conveniently aligned

along a desired route. Upgrading the Host computer

with the capability to recognize aircraft equipage in

the assignment of routes was critical to this activity.

In addition, over 90 new routes have been designed

and coordinated that will be implemented

incrementally in 1999. 

WAAS Completes Important Milestone. WAAS is

a major component of the FAA’s commitment to

deliver to the aviation community a safer and more

dependable air navigation system based on next

generation navigation technology. Its function is to

improve GPS accuracy, availability, and integrity for

en route, nonprecision, and precision approaches. In

June 1998, the FAA, in conjunction with the prime

contractor, Raytheon Systems Corporation,

completed the hardware and communications

installations for WAAS. The installations include 25

wide area reference stations and 2 wide area master

stations at 25 FAA facilities. The FAA and Raytheon

also completed the installation of 4 ground uplink

subsystems at COMSAT Mobile Communications

facilities. In addition, the FAA completed the

connection of the required terrestrial communications 

to support the WAAS network. 

FAA Publishes MOPS for WAAS. In June, the FAA 

published minimum operational performance

standards (MOPS) for airborne navigation equipment 

using GPS/WAAS (RTCA/DO-229A, Change 3).

These standards are also applicable to other

space-based augmentation system providers, such as

the European Geostationary Navigation Overlay

System (EGNOS) and Japan’s Multifunctional

Transport Satellite Space-based Augmentation

System (MSAS). Eventually, a single piece of

equipment in the cockpit will enable users to take full

advantage of satellite navigation during all phases of

flight. 

The FAA also published two technical standard

orders for WAAS. The first, TSO C-144, Airborne

Global Positioning System Antenna, applies to

antennae that will be used to receive and provide

signals to a GPS (or WAAS) sensor or system that

provides flightpath deviation commands to the pilot

or autopilot. The second, TSO C-145, Airborne

Navigation Sensors Using the Global Positioning

System Augmented by WAAS, applies to equipment

intended to provide position information to a

navigation management unit that outputs deviation

commands referenced to a desired flightpath.

WAAS Category C Standard Instrument

Procedures Data Collection is Completed. The

NAS Implementation Team successfully completed a

major flight test effort that will lead to the design and

publication of satellite-based precision instrument

approach procedures. The FAA’s Flight Procedures

Standards Branch, in conjunction with the WJHTC

Navigation Branch and the University of Oklahoma,

completed preliminary Terminal Instrument

Procedures (TERP) validation flight testing for the

GPS/ WAAS on June 1, 1998.

Initial evaluation of the test data indicates that the

current precision approach obstacle clearance areas

and surfaces may be used when establishing

GPS/WAAS precision instrument approach

procedures. The completed analysis of the test data

will lead to finalizing GPS/WAAS precision approach

TERP’s criteria. 

WAAS Surveys Completed. Under an agreement

with the National Geodetic Survey (NGS), the

aeronautical survey program completed 479 area

navigation approach (ANA) aeronautical surveys in

FY 1998. The survey assists in accurately

determining weather minimums for instrument

approaches and provides obstacles clearance

information for specific runways. These data are

critical to the design of GPS-based instrument

approach procedures. The first 78 WAAS obstacle

clearance surveys were among the 479 surveys

completed in FY 1998. These surveys will support the

development of the first operational WAAS

instrument procedures for public use. 

Mode S Deployment Nears Completion. Mode S

is an advanced secondary radar, which provides

accurate surveillance and a built-in data link. Mode S 

is a cornerstone of the ICAO Future Air Navigation

System (FANS) concept, and the United States is

leading its full-scale deployment. In FY 1998, the

FAA deployed 4 Mode S systems, bringing the total to

147 fielded from the procurement of 148 systems.

Ninety systems have achieved full Mode S capability,

while 39 systems are operating in the interim beacon

interrogator mode. 

Next Generation Air Ground Communications

(NEXCOM). The NEXCOM program upgrades the

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existing air-to-ground communications

infrastructure that supports all phases of flight.

These communications systems are used, for example, 

to ensure aircraft separation, transmit instructions

and clearances, negotiate handoffs, provide weather

services and pilot reports, contact automated flight

service stations, coordinate movements on the ground

at airports, and control arrivals and departures in the

terminal areas. The first phase of NEXCOM replaces

the current system without significantly changing

NAS operations. Future enhancements, to be

incrementally introduced, will permit direct data

communication between aircraft, ground facilities,

and airport surface vehicles.

Controller-Pilot Data Link Communications

(CPDLC). This “airborne e-mail” will improve

communications and information sharing between air 

traffic controllers and pilots. It will be implemented

initially at an FAA en route center. The introduction

of CPDLC will enhance safety by improving the

effectiveness of both controllers and pilots in the

performance of their jobs and increase overall system

capacity and efficiency. In July 1998,

recommendations were provided to the RTCA Select

Committee on Free Flight on a “path” to

incrementally provide CPDLC capability over a

digital communications link at all ARTCC’s. The

Select Committee accepted the recommendations in

September 1998. 

Air Traffic Control Radar Beacon Interrogator

Replacement (ATCBI-R) Contract is Awarded.

The ATCBI provides aircraft position, altitude, and

identification information to controllers. Following

an extensive source selection, a contract for

acquisition of ATCBI-6 was awarded to Raytheon

Systems Corporation in August 1998. The program

will replace aging ATCBI-4/5 equipment at 124

operational sites and leapfrog 25 Mode S radar to

ASR-9 sites. Three additional ATCBI-6 radar will be

purchased as support systems.

Flight Data Input/Output (FDIO) Thermal

Printer Deployment is Completed. New thermal

printers were delivered to five ARTCC’s and two

combined center radar approach controls (CERAP)

during the year. These deliveries complete the

thermal printer deployment and will increase the

reliability and availability for FDIO at the en route

facilities. The older FDIO printers removed from en

route facilities will be used to replace worn-out

printers at some terminal facilities. This will allow

some parts salvage, which can extend the useful life of 

the older printers. Future FDIO upgrades are

planned for the remote control units and keyboards.

Airport Surveillance Radar Commissionings.

Air traffic control radar surveillance of aircraft by

ground-based equipment will be required well into

the next century. The FAA is upgrading its radar

with the latest modern equipment and installing new

systems where needed. The ASR-9, for example, lets

air traffic controllers see weather and aircraft

simultaneously, with better accuracy and less

interference from other sources than with the existing 

radar systems. In FY 1998, ASR-9’s were

commissioned at Newark, New Jersey; Phoenix,

Arizona; and Ronald Reagan Washington National

Airport. Systems were also delivered to Martinsburg,

West Virginia; Islip, New York; and White Plains,

New York. All of the 134 ASR-9’s ordered have been

delivered and 127 have been commissioned. Also in

FY 1998, ASR-8 systems were commissioned at Sioux

Falls, South Dakota, and Palm Springs, California.

In FY 1999, the FAA expects to begin acquisition of

the next generation of terminal radar, the ASR-11.

The ASR-11 is a joint FAA and DOD acquisition

program through which the FAA plans to purchase

112 systems. In addition to replacing the current

ASR-7/8 systems, this solid state, digital radar will

provide the necessary digital data for use with the

STARS. The ASR-11 also includes an integrated

monopulse secondary surveillance radar. 

Long Range Radar Replacement Program. The

FAA, in a joint program with the U.S. Air Force, is

replacing older air route surveillance radar at 44

locations with ARSR-4. The new all solid-state

system offers enhanced range, extended coverage,

and vastly improved weather detection. Eleven

ARSR-4’s were commissioned in FY 1998, bringing

the total number commissioned to 37. Of the 44

ARSR-4’s being installed, one is a DoD only

installation and one is a training facility. 

Microprocessor En Route Automated Radar

Tracking System (Micro-EARTS). This system

replaces a 1970 mainframe-based radar data

processing and display system. In FY 1998,

additional Micro-EARTS were installed and made

operational at Nellis Air Force Base and the San Juan

CERAP. 

FAA Telecommunications Satellite (FAATSAT)

Program. FAATSAT provides communications in

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geographically isolated areas where terrestrial

alternatives are not available or satellite service is

more cost effective. FAATSAT also can be used to

achieve required overall service availability for

selected unreliable circuits. The FAATSAT System is

comprised of satellite ground equipment, referred to

as earth stations (ES), of various sizes, and the

necessary leased satellite transponder space. The

FAATSAT Program Office has installed ES-hubs at

ARTCC’s and other major FAA facilities and

ES-remotes at selected FAA facilities such as en route

radar and remote air-to-ground radio sites.

Transportable and portable earth stations are also

provided for contingency applications. The FAATSAT 

vendor’s Network Management Center provides the

FAA with a system management terminal at

designated locations to provide FAA personnel with

real time operational and maintenance status of the

FAATSAT system. 

The FAATSAT contract, a requirements contract for

leased telecommunications services, was awarded to

MCI in June 1996 for a period of 5 years with five 1-

year options.

Accomplishments in FY 1998 include: 

• 130 site surveys completed.

• 20 hubs installed and operational.

• 57 remotes installed and operational.

• 90 circuits installed and operational.

ATC Facilities Modernization. Many of the FAA’s

air traffic control towers and terminal facilities are

two to four decades old. As part of its capital

investment plan to modernize the NAS, the agency is

refurbishing, upgrading, or replacing these facilities

to meet growing demands and maintain efficient

service. In some cases, additional towers are needed.

The following are examples of projects completed or

undertaken during FY 1998:

Lambert-St. Louis International Airport, Missouri.

Construction of the new St. Louis Airport Traffic

Control Tower (ATCT) was completed during FY

1998. Electronic installations are in progress

Springfield, Missouri. FY 1998 saw the completion of

the base building. 

Klamath Falls, Oregon. Construction of a new ATCT

began in July 1997. Electronics equipment

installation began in September 1998.

Commissioning is scheduled for August 1999.

Portland, Oregon. A new, taller ATCT is under

construction with a planned commissioning date of

January 2000. Total cost for the new tower is $21M.

A terminal expansion project is underway which

includes new interior roadways, an expanded parking 

structure, and an additional 60,000 square feet of

terminal space. The PDX Runway 28L MLS was

decommissioned in August 1998 to allow for the

establishment of a new ILS approach to this runway.

The ILS is scheduled for commissioning in November

1999. 

Salt Lake City, Utah. Construction of the new ATCT

was completed in January 1998. ATCT/TRACON

electronics equipment installation is in progress.

Commissioning of the ATCT/TRACON is anticipated

in the summer of 1999.

Seattle-Tacoma, Washington. Design has begun for a

new 265-foot-tall ATCT and 16,000-square-foot-base

building at Seattle-Tacoma International Airport. A

team including FAA, Port of Seattle, HNTB (design

firm), and the City of Sea-Tac developed the ATCT

initial concept design. URS Griener is performing the

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Air traffic controllers at local airports direct airplanes that are

taking off, landing, or flying within the visual range of their

tower
final design for the ATCT. The new ATCT is the

preferred site for the ASDE relocation as part of third

runway project. Commissioning of the new ATCT is

scheduled for May 2003. The estimated cost is $32

million for the ATCT.

Teterboro Airport Runway 19—Establish ILS. The

FAA was directed by the Congress to install a localizer 

directional aid (LDA) at Teterboro Airport. The

maximum benefit of this facility would be to support

approaches from the north. After further study, it was 

determined that a straight-in ILS would provide the

lowest possible minimums. The planned

commissioning date for the ILS is April 1999.

Newark International Airport Runway

22R—Establish ILS. The FAA was directed by the

Congress to install an ILS at Newark International

Airport. The only remaining runways that do not

already have an ILS are 29 and 22R. Because of

obstructions in the approach, Runway 29 was not a

feasible candidate for an ILS. Current plans call for

the commissioning of an ILS on Runway 22 in April

1999.

Flight Service Stations (FSS) Upgrade. The FAA

and the leased-service contractor, Harris

Corporation, entered the solution and

implementation phase of the operational and

supportability implementation system (OASIS)

acquisition. OASIS will replace the current, aging

model 1 full capacity (M1FC), integrated graphic

weather display system (IGWDS), and the legacy

direct user access terminal (DUAT) system, which

provide weather briefings, pre- and in-flight planning

and emergency services to the general aviation

community. This upgrade will affect approximately

1,500 workstations at the FAA’s 61 automated FSS’s,

the WJHTC, and the Mike Monroney Aeronautical

Center.

During FY 1998, three initial operating capability

(IOC) systems were installed (two at the WJHTC and

one at the key site, Seattle) and are supporting

systems testing required to move into final operating

capability (FOC) status.

AFSS at Chesterfield, Missouri. The Spirit of St.

Louis Airport AFSS, which was destroyed in the 1993

flood, is being rebuilt at Chesterfield, Missouri. It

should be ready for installation of the second fully

operating capability OASIS site in of FY 1999.

FAA Prepares to Introduce Digital

Transmissions for General Aviation. The FAA

announced a new policy in June that paves the way for 

the introduction of Flight Information Services (FIS),

a general aviation initiative that will provide digital

information directly to the cockpit. FIS will provide

pilots with weather graphics and text, special use

airspace information, notices to airmen, and other

particulars. Currently, these data are provided to

pilots through voice radio communications by air

traffic controllers and flight service station

specialists. The new digital transmissions will be

provided by digital radios via the NEXCOM program

and allow pilots to anticipate, plan, and request

changes to their flight plans. The new initiative was

developed in collaboration with the general aviation

community and the industry. 

Dynamic Ocean Track System Enhanced (DOTS 

Plus). This multipurpose traffic management tool

generates flexible aircraft route tracks based on wind

and weather conditions. This enhanced DOTS – with

off-the-shelf workstations, an improved processor,

and up-to-date operating systems — was successfully

commissioned at the ATCSCC and all three of the

oceanic air traffic control facilities — Oakland, New

York, and Anchorage.

Oceanic Controller Automation Support.

Automation support to controllers was enhanced in

several ways in FY 1998. First, automated controller

tools on the interim situation displays (ISD) were

developed, tested, and implemented. These aids

include the highlighting of aircraft experiencing

emergencies or needing controller action to preclude

separation violations. Additional support

implemented between the West Coast and Japan

included the air traffic services interfacility data

communications system (AIDC). This system

provides digital, ground-to-ground satellite data

communications for the exchange of information

about flights flying in or out of FAA-controlled

airspace. This enhancement replaces less positive

voice communications over telephones. Additionally,

the air-to-ground data link communications system,

which has been operational in one Pacific sector, was

the model for an expanded oceanic data link (ODL)

system. This expanded ODL was successfully

developed and tested in FY 1998. At year’s end, it is

undergoing shakedown at the Oakland oceanic

facility.

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New Routes in the Gulf of Mexico. The FAA is

responsible for providing air traffic service to aircraft

operating in the Gulf of Mexico within the Houston

and Miami control areas. There are over 600

helicopters operating in this area, carrying 3.7 million 

passengers per year to over 2,000 offshore heliports.

To support these operations, a new air traffic route

structure was developed and implemented in October

1998. This new route structure, which is based on

GPS navigation, will greatly ease delays. In addition,

installation of eight joint-use (DOD/FAA) ARSR-4’s

along the Gulf of Mexico and the Mexican border was

completed in FY 1998 with the commissioning of the

final two systems.

FAA Staffing Standards Program. Staffing

standards are mathematical tools used to compute the 

number of personnel required to perform a job or a set

of tasks. They are used as a management aid to

manage, plan, and forecast human resources; and to

evaluate the impact of proposed program changes,

new facility configurations, and new equipment. The

Air Traffic Services, Civil Aviation Security, and

Regulations and Certification lines of business each

have very active staffing standards programs

covering their workforces.

From the mid-1960’s to 1998, primary FAA

responsibility for the agencywide staffing standards

program resided in a single organization, the last of

which was the Office of Business Information and

Consultation. In 1998, as a result of the FAA

appropriations bill, this office was abolished and

responsibility for the individual staffing standards

programs devolved to the appropriate associate or

assistant administrator. Of the seven employees in

the agencywide program, five were assigned to the

Associate Administrator for Air Traffic Services and

two were reassigned to the Associate Administrator

for Regulation and Certification.

Revised staffing standards for civil aviation security

field personnel and the update of the ARTCC staffing

standards were completed in 1997. The Flight

Standards Service under the Associate Administrator 

for Regulation and Certification is continuing

development of the flight standards holistic

integrated staffing model that will reflect the flexible

options available through personnel reform,

Challenge 2000, and the priorities of the National

Performance Review. Under the auspices of the

Associate Administrator for Air Traffic Services, new

staffing models for the air traffic control tower cabs

are in the planning stages.

ISO-9002 Quality Certification. On August 12,

1998, the FAA Logistics Center achieved ISO-9002

quality certification, making it one of less than a

dozen Federal organizations to achieve this status.

National Operations Control Facility for

System Maintenance is Completed. The NAS

Infrastructure Management System (NIMS) Premier

Facility (NPF), located with the ATCSCC in Reston,

Virginia, was completed on June 15, 1998. The NPF is 

one of several operations control facilities that the

FAA is building to implement new maintenance

concepts, centralize the monitoring of NAS

equipment, and to act as dispatching hubs for

maintenance specialists. The NPF will be used to

evaluate human factors, validate various

commercial-off-the-shelf (COTS) products and

interfaces that comprise NIMS, develop and verify

initial operational procedures, and refine Airway

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Airway system specialists maintain and troubleshoot over

38,000 equipment items to ensure the safe and efficient

operation of the NAS.
Facilities (AF) and Air Traffic (AT) concepts of

operations. 

In the evaluation of any new AF system, it will be

important to quantify human-in-the-loop

performance. Human factors researchers embarked

on a project to define and validate a set of AF system

performance measures. In consultation with subject

matter experts, the FAA is developing a set of

variables that could be used to evaluate the efficiency

and safety of AF monitoring and control systems.

These metrics will be validated in a simulated AF

environment, similar to that proposed for NIMS.

National Airspace Redesign Underway.

Airspace management functions historically have

been widely dispersed. Action is necessary to ensure

that airspace studies and proposed airspace changes

that result from those studies have a national

perspective. A comprehensive efficiency review of

airspace within the United States has been initiated,

based on requirements established by an

FAA-industry task force. The task force will also

participate in finding solutions to the technical

challenges that will arise as the FAA redesigns

airspace for efficiency. The FAA conducted a

technical session in July 1998 to establish goals and

milestones directed at defining airspace issues in

airspace located primarily east of the Mississippi

River. Regional Air Traffic Divisions also conducted

follow-on sessions to begin defining inefficiency

problems associated with operations within their

assigned airspace. Additional sessions will be held for 

regions west of the Mississippi throughout the 1999

timeframe, to start addressing airspace efficiency

issues for the remainder of the United States.

FREE FLIGHT

Free Flight Phase One (FFP1) Program Office is

Established. The FAA, in partnership with the

aviation community, is developing free flight: an air

traffic management concept that will ultimately give

pilots operating under instrument flight rules the

freedom to select their path and speed in real time. In

FY 1998, the RTCA Select Committee on Free Flight,

which represents all sectors of aviation, endorsed a

strategy that calls for the limited deployment of

selected capabilities that will provide early benefits of

free flight to users by the close of 2002. The strategy,

known as Free Flight Phase 1 (FFP1), encompasses

five core capabilities:

• User request evaluation tool (URET) 

• Surface movement advisor (SMA)

• Passive final approach spacing tool (pFAST)

• Traffic management advisor (TMA), single center 

• Collaborative decisionmaking (CDM)

The goal of FFPI is to deliver early benefits to users

through the fielding of low-risk capabilities at

specified locations throughout the NAS. The FFP1

Program Office serves as the single point of

accountability within the FAA for FFPI issues.

User Request Evaluation Tool Core Capability

Limited Deployment (URET CCLD). URET

CCLD will provide four key capabilities in ARTCC’s

and sectors:

• Aircraft-to-aircraft conflict detection.

• Aircraft-to-airspace conflict detection.

• Evaluation of user or controller requests for flight

plan amendments or route changes.

• Increased flight data management capability,

including auto-coordination.

The conflict detection features of URET CCLD will

provide controllers with a strategic lookahead to

detect possible conflicts between aircraft (20 minutes) 

and between aircraft and airspace (40 minutes).

Dynamically updated special use airspace (SUA)

status information will be available to controllers,

and URET CCLD will automatically check flight

trajectories against that data to determine possible

airspace conflicts.

A URET prototype was installed at Indianapolis

Center in January 1996 for operational evaluation.

Feedback obtained from controllers was used to

incrementally incorporate new functionality and

computer-human interface enhancements into the

tool. A second prototype system was installed at

Memphis Center in October 1997 to expand

operational evaluation. In addition to Memphis and

Indianapolis, URET CCLD will be installed at Kansas 

City, Chicago, Cleveland, Washington, and Atlanta

Centers, with initial daily use scheduled to begin at

the first site in November 2001 and at the final site in

February 2002.

Surface Movement Advisor (SMA). SMA will

provide aircraft arrival information to airlines to

augment decisionmaking regarding the surface

movement of aircraft. Aircraft arrival information

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was made available to airlines at Detroit

Metropolitan and Philadelphia Airports in December

1998. The research and development SMA prototype

at Hartsfield Atlanta International Airport continues

to be used daily.

Passive Final Approach Spacing Tool (pFAST).

This tool maximizes takeoffs and landings by helping

controllers schedule incoming aircraft and assign

runways according to users’ preferences and system

constraints. The pFAST prototype at the FAA’s

Dallas/Fort Worth TRACON has demonstrated an

increase in arrival throughput ranging from 4.2

percent to 13 percent during peak periods.

Traffic Management Advisor. TMA lets en route

controllers and traffic management specialists

develop arrival sequence plans for selected airports.

Prototypes have been installed at the Denver, Miami,

Los Angeles, Atlanta, and Fort Worth en route

centers. Preliminary assessments show that TMA

reduces delay by an estimated 1 to 2 minutes per

aircraft during peak periods. TMA and pFAST are

components of the Center/TRACON Automation

System (CTAS) which provides automated decision

support tools for planning and controlling arrival

traffic within 200 nautical miles of a destination

airport. Both tools provide controllers with aircraft

advisories directly on their displays, assisting them in 

delivering aircraft to the TRACON’s at efficient and

accurate intervals. 

This past summer, the agency established an ATM

Software Evaluation and Demonstration Facility in

Washington, D.C. This facility is using pre-recorded

air traffic control and interfacility data to evaluate

and demonstrate TMA and pFAST. The facility

provides near real-time independent metric analysis

of CTAS application software as it is developed, as

well as evaluation of system performance, user

documentation, and software development

configuration management processes. The agency is

now making the TMA and pFAST prototypes ready for 

national deployment on an accelerated basis as

components of FFP1.

Collaborative Decisionmaking (CDM). This tool

provides specific traffic flow management (TFM)

functional enhancements that improve the accuracy

of projected air traffic demand, allow for an exchange

of operational data between the FAA and industry,

increase the operational flexibility of both FAA and

industry traffic managers, and allow for distributed

decisionmaking. During 1998, the initial set of

ground delay program enhancements was completed,

tested, and made operationally available nationwide.

Also, the architectural infrastructure for the

collection and redistribution of NAS status

information was established at both the TFM hub and 

the ATCSCC.

Traffic Flow Management (TFM) Incremental

Improvements. The TFM system enables FAA

traffic flow managers to monitor current and

projected operational demand on the air traffic

control system and provides the decision support tools 

they need to effectively and efficiently manage that

demand. During FY 1998, the TFM Infrastructure

was successfully converted to a UNIX-based open

system hardware platform. It was also renovated and

tested for year 2000 compliance. New systems were

installed at Los Angeles, San Francisco, Kennedy,

and Newark Towers and Portland TRACON. Future

sites could include: Atlanta, Cleveland, Indianapolis,

Louisville, Nashville, Northern California, and

Dallas-Fort Worth TRACON’s.

SYSTEMS INTEGRATION

FAA/NASA Partnerships. Now in its second full

year of operation, the FAA/NASA Interagency Air

Traffic Management Integrated Product Team

(IAIPT) provides integration of research investment

in air traffic management goals. The IAIPT, created

under a joint FAA/NASA Memorandum of

Understanding (MOU), integrates inputs from NASA

stakeholders with guidance form the FAA’s Research, 

Engineering, and Development Advisory Committee

and NASA’s Aeronautical Advisory Committee to

establish programmatic and technical goals and

working procedures for the strategic management of

the interagency research program. The IAIPT

strategically coordinates the transfer of air traffic

management research technology from concept

exploration and development to full-scale

development. IAIPT efforts led to the successful

transition of TMA and FAST to full-scale

development and the successful completion of SMA

concept demonstration and benefits assessment. All

three capabilities are being implemented as part of

FFP1. Also, the WJHTC and NASA Ames signed a

Memorandum of Agreement (MOA) to collaborate on

R&D and implementation of automation tools.

Air Force Range Integrated Product Team. The

FAA actively participated in the Air Force Range

Integrated Product Team (IPT) organized by the Air

Force Space Command. The IPT includes

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representatives of commercial launch providers and

Air Force contractors as well as NASA and FAA. The

objectives of the IPT are to streamline range

operations at Cape Canaveral Air Station and

Vandenberg Air Force Base, to enhance the

cost-effectiveness of those operations, to reduce costs

and personnel, and to increase capacity.

Hybrid Vehicles Integrated Product Team. The

FAA established an IPT to evaluate new, reusable

space launch vehicles whose designs are not

uniquely spacecraft or aircraft but, rather, a

combination. The IPT consists of representatives

from the Associate Administrators for Commercial

Space Transportation, Aviation Regulation and

Certification, and the Chief Counsel. This IPT will

provide a corporate approach to handling new space

launch vehicles and assure that FAA evaluates these

vehicles fairly and consistently.

Space and Air Traffic Management System

(SATMS). The Associate Administrators for Air

Traffic Services and Commercial Space

Transportation have developed an initial concept of

operations for an integrated space and air traffic

management system (SATMS). The integrated

system will deal with transportation to, from, and

within space as well as transportation within

airspace.

Integrating Airport Capacity Needs into the

NAS. A number of steps were taken in FY 1998 to

integrate airport capacity and operational issues into

the NAS modernization process:

• The latest draft of the NAS Architecture addresses

airport concerns, highlighting the need for coordination

between FAA and airport operators. 

• The new “Blueprint for NAS Modernization”

emphasizes the interdependence of the NAS and

airport system and the need for new runways, as

well as improved air traffic procedures to add

capacity to congested airports.

• The Associate Administrators for Airports and

Research and Acquisitions chartered a Satellite

Navigation (SATNAV) Airport Facility

Enhancement Team to help airports realize the

benefits of SATNAV technology. The team is

reaching out to operators of thousands of airports,

explaining how to obtain satellite-based

instrument approaches. The team is also working

within FAA to update and streamline procedures

related to instrument approaches, such as

obstruction surveys, airport layout plan approval,

and instrument runway designations. 

• The Airports organization has identified major

new runway projects and maintains an up-to-date

estimate of commissioning dates.

Working with other FAA lines of business, Airports

will continue to quantify the capacity enhancements

expected from new runways and NAS modernization,

develop a strategy for meeting ILS requirements, and

determine the ideal application of satellite navigation 

to smaller general aviation airports. Development of

a full operating concept for airports, comparable to air 

traffic control concept of operations, is also being

considered. 

Austin-Bergstrom International Airport. The

new Austin-Bergstrom International Airport is on

schedule to open in May 1999. The new ATCT and

TRACON facilities have been constructed, and

equipment installation is underway. The airspace

and air traffic control procedures for the terminal

area have been completed, and the charting date was

December 1998.

Dallas/Fort Worth International Airport. The

Dallas/Fort Worth Metroplex Air Traffic System

Plan, a major capacity enhancement program, was

implemented on October 6, 1997. The increase in

system capacity is exceeding the forecast projections.

Phase III of the plan is on schedule with construction

of the TRACON completed in September 1998.

Electronic installation was begun in September 1998,

and completion is scheduled for the second quarter of

FY 1999.

JFK International Airport Light Rail System

People Mover. The FAA approved the use of a

passenger facility charge to fund the construction of a

light rail system to provide an automated rail

alternative for passenger circulation between the

terminals, to Howard Beach subway station, and

Jamaica Long Island Railroad transportation center.

The project will balance passenger access capacity

with terminal and airside capacity.

Monitoring Compliance with Grant

Obligations. Federally assisted airports must

comply with certain grant obligations or assurances,

including the requirement for airport-generated

revenue to be used for airport and airport-related

purposes. Commercial service airports are required

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to submit financial reports detailing annual

payments of airport revenues to state and local

governments. A number of steps were taken by the

Airports organization in FY 1998 to help make

airports more aware of these restrictions and to

improve the FAA’s monitoring of airport revenue use: 

• The FAA issued two advisory circulars: one

addresses annual airport financial reports filed by

commercial service airports; the other addresses

special review and opinions on the use of airport

revenue required as part of an airport operator’s

audit.

• New procedures were developed for FAA Regional

Airports Divisions to improve the on-time filing

rate for airport financial reports. These and other

actions contributed to an increase from 83 percent

to 98 percent in the filing rate of airport financial

reports.

• During the fiscal year, decisions were issued or

otherwise completed on 41 formal airport

compliance proceedings. These included 21

Determinations of the Director, Office of Airport

Safety and Standards, under Title 14, Part 16, of

the Code of Federal Regulations (CFR); one

decision of the Associate Administrator on appeal

from a Determination of the Director; and 15 final

agency decisions under Title 14, Part 13, CFR.

Three investigations under Title 14, Part 13, CFR,

were closed following judicial review of the final

agency decisions. In addition, two investigations

were initiated under Title 14, Part 16, CFR.

Resolution of Disability Complaints. FAA

informally resolved or closed 23 of 45 complaints filed

under the Americans with Disabilities Act or

Rehabilitation Act. Three complaints filed under

Title VI of the Civil Rights Act of 1964 were closed.

Each instance of noncompliance discovered by the

agency led to a settlement agreement requiring the

airport operator to take appropriate corrective

actions. No formal enforcement procedures were

required.

Disadvantaged Business Enterprises (DBE)

Participation. During FY 1998, DBE’s received over 

$346 million in AIP prime and subcontract awards,

equal to 20.6 percent of the total awarded. This is the

eleventh consecutive year that the DBE participation

in AIP projects has exceeded the goal set by legislation 

of “at least 10 percent.” DBE concessionaires at

primary airports earned over $1 billion in gross

receipts, equal to 9.7 percent of the total gross receipts 

by all concessionaires, approximating the statutory

10 percent goal. Actual dollars earned by DBE’s

increased by $121 million.

1998 FAA Commercial Aviation Forecast

Conference. The 23rd Annual FAA Commercial

Aviation Forecast Conference, co-sponsored by the

Airports Council International-North America, was

held in Washington, DC, on March 12-13, 1998. The

day-and-a-half conference, attended by a record 527

participants from both Government and industry,

provided a forum for the exchange of information

regarding current issues impacting the future

direction of commercial aviation. Featured speakers

included Senator Wendell Ford, Secretary of

Transportation Rodney Slater, Administrator Jane

Garvey, and Richard Branson, Chairman of Virgin

Atlantic Airways. 

1998 FAA General Aviation Forecast

Conference. The 8th Annual FAA General Aviation

Forecast Conference, co-sponsored by the National

Business Aviation Association (NBAA), was held in

Houston, Texas, on March 24-25, 1998. The

day-and-a-half conference, attended by 230

participants from both Government and industry,

provided a forum for the exchange of information

concerning current and future actions and/or

programs designed to stimulate and revitalize the

general aviation industry. Thirty-four speakers

discussed a wide variety of topics centering on the

conference theme “Opportunities and Challenges for

the 21st Century.” Featured speakers included Guy

Gardner, FAA Associate Administrator for

Regulation and Certification; John Alcott, President,

NBAA; Ed Bolen, President, General Aviation

Manufacturers Association; Phil Boyer, President,

Aircraft Owners and Pilots Association; and

Jeremiah Creedon, Director, NASA Langley

Research Center. 

2002 Winter Olympic Games. The FAA produced

and distributed a program master plan to guide

preparations for the 2002 Winter Olympic Games,

which will be held in Salt Lake City, Utah. The FAA

has ongoing representation on many customer-based

Olympic Committees working to make the Olympics a 

safe and enjoyable experience. FAA teams are

working hard to prepare the many temporary and

permanent facilities which will be required to support 

the additional air traffic generated by the Olympics.

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These facilities include temporary ATCT’s, airport

surveillance radar, and communication facilities.

Airport Pavement Test Facility Nears

Completion. The airport pavement test facility at

the WJHTC is nearly complete. The facility will be

capable of testing airport pavements with simulated

full-scale aircraft loads of over 1 million pounds. Test

pavements are being constructed inside a building

that is nearly 1⁄4 mile long, 100 feet wide, and 40 feet

high. Simulated aircraft loads will be applied to nine

different test pavements over a 900-feet by 60-feet

area. Scientists and engineers from the United States 

and other countries will use this unique facility to

explore and validate new pavement design,

construction methods, and paving materials. The

facility is being developed in collaboration with the

Boeing Company and will be placed in service during

FY 1999.

Military Airfield Joint-Use and Conversions.

The FAA is pursuing a series of initiatives with the

DOD, states, and local governments for joint civil and

military use of existing military airfields and the

conversion of military airfields being closed by DOD.

There are about 50 military airfields closing as a

result of the DOD’s Base Realignment and Closure

(BRAC) programs. FAA anticipates that up to 36 of

these airfields will be converted to civil airport use.

Each airfield represents a Federal investment of

about $1 billion – or a total infrastructure investment

of $36 billion. A number of large parcels of surplus

military property, adjacent to existing civil airports,

are also under consideration for transfer to civil

airports for expansion projects. As these military

airfields are determined to have a civil aeronautical

demand, they are being placed in the FAA’s National

Plan of Integrated Airport Systems (NPIAS). This

makes them eligible to receive capital development

funding from the AIP.

National Airport System Potential Capacity Gains. To 

date, 20 of 36 airfields have been converted to civil

airports and conveyed to civil airport sponsors

through the use of long-term leases. joint-use

agreements, or deeds. Six are now operating as

primary commercial service airports, 8 as reliever

airports, and 6 as general aviation airports. Roughly

one-third of the 36 converting airfields have the

potential to become commercial service airports,

one-third to become reliever airports; and a number of

the remaining one-third airfields could become

general aviation airports. It is estimated that the 36

closing military airfields will provide about 50

runways for civil use with the potential to add over 6.5 

million aircraft operations to the national airport

system. These airfields provide runways lengths

ranging from 3,000 to 13,000 feet, and the majority

can handle large civil aircraft operating on long-haul

routes.

Metropolitan Areas Potential Airport Capacity Gains. 

Nineteen of the closing military airfields are located

in or near congested commercial service airports that

experience aircraft delays of 20,000 hours or more.

Nine airfields, located in six congested metropolitan

areas, have already been converted to civil use. These

nine airfields have the potential to add over two

million aircraft operations to these metropolitan

airport systems. In some metropolitan and rural

areas, the closed military airfields are being used to

replace the existing civil airports serving the area.

The most significant example is the former Bergstrom 

AFB, Texas, which is replacing Austin-Muller

Municipal Airport as the primary airport in the

metropolitan area. 

Funding of Current, Former, and Converting Military

Airfields. FAA has issued AIP grants to about 30

states and local airport sponsors to evaluate civil

aeronautical feasibility and airport master planning

at former and closing military airport locations.

Through FY 1998, the FAA has issued AIP capital

development grants for almost $320 million for these

closing military installations. Over $237 million was

made available from the Military Airports Program

(MAP) funding category of the AIP for safety,

conversion-related, and capacity-related projects.

1998 Program. The 1998 MAP provides a grant

funding set-aside of $26 million for capital

development of eligible current (joint-use) and former

military airfields under AIP. This compares to $18.5

million in FY 1997. Twelve military airfields received

grants under the MAP in FY 1998. The participating

airfields and their civil counterparts are:

• Norton AFB, California/San Bernardino International

• Bergstrom AFB, Texas/Austin-Bergstrom International

• Homestead AFB, Florida/Homestead Regional Airport

• Memphis NAS, Tennessee/Millington Municipal

• Williams AFB, Arizona/Williams Gateway Airport

• England AFB, Louisiana/Alexandria International

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• Rickenbacker AFB, Ohio/Rickenbacker International

• Sawyer AFB, Michigan /Sawyer Airport

• George AFB, California/Southern California International

• Kincheloe AFB, Michigan/Chippewa County International

• Pease AFB, New Hampshire/Pease International

Tradeport

• Myrtle Beach AFB, South Carolina/Myrtle Beach

International

Low Visibility Taxiway Lighting Systems. Two

AC’s were revised and a new AC was issued in FY

1998 to establish specifications for the use of newly

developed, improved low visibility taxiway lighting

systems. The new lighting systems operate

automatically and lead pilots to and from runways

during periods of low visibility. The AC’s specify the

lighting fixtures, lighting configurations, and control

systems for the new lights.

New Procedures Reduce Vertical Separation.

Air traffic operations over the oceans differ from those

in the domestic airspace in several respects. For

example, a key difference is that the oceanic

environment has no radar coverage and navigation is

accomplished using aircraft onboard systems. To

compensate, aircraft traveling oceanic routes are

required to maintain wide separation and to follow

designated tracks. In FY 1998, the FAA completed

testing, deployment, and release of upgraded flight

data processing software that allowed the vertical

separation requirement to be reduced from 2,000 to

1,000 feet in North Atlantic oceanic airspace. The use

of this reduced standard allows increased air traffic

capacity without compromising safety.

FAA/National Association of State Aviation

Officials (NASAO) Partnership. The FAA and

NASAO have entered into a long-term partnership to

advance and encourage the development of aviation

within their respective areas of responsibility. In

1998, four additional initiatives were added to the

FAA-NASAO Partnership Agreement. These

initiatives covered Use of State Construction

Standards for Airfield AIP Projects at Small Airports,

Cooperative Partnership to Ensure Compatible Land

Use Near Airports, Cooperative Partnership to Help

Resolve Aircraft Noise Problems, and Coordination of

Airway F&E Navigational Aid Project Proposals.

Accomplishments in 1998 included coordination of

airport training requirements with block grant states

and the completion of a FSDO-State model safety

program agreement.

ENABLING GOALS AND STRATEGIES

THE MODEL WORK ENVIRONMENT

FAA Continues and Creates Model Work

Environment Initiatives. Every line of business

within the FAA now has in place initiatives to

promote the key objectives of the Model Work

Environment ideal — an organizationwide culture

that welcomes diversity in all its aspects, recognizes

and rewards achievement, encourages individual

career development, values family life, aggressively

roots out acts of sexual harassment, and prevents

violence. Throughout the agency, every work group

this year surveyed and interviewed employees to

pinpoint difficulties and concerns, conducted

extensive training courses at all levels of the

organization, and conducted recruitment outreach to

women and minorities. (See also: Employee Attitude

Survey, page 107.) Among the most important

achievements for the year have been innovative

approaches for handling sexual harassment

complaints and arbitrating disputes.

Alternative Dispute Resolution. In FY 1998, the

FAA increased its use of alternative dispute

resolution (ADR) techniques as a tool in resolving

internal and external conflicts. In recent years, the

use of ADR has been strongly encouraged by the

White House and the Congress. ADR is defined as a

range of problem-solving processes for resolving

conflict in lieu of traditional adversarial methods,

such as litigation. ADR processes foster open

communication, creative interest-based solutions,

flexibility and partnering, while limiting the negative

impact of discord upon ongoing relationships.

The Administrator and the Chief Counsel created the

position of Associate Chief Counsel for ADR and

began staffing the Office of Administrative and

Alternative Dispute Resolution that reports to that

position. This office is responsible for overall ADR

policy and training within the FAA. The office works

with the various elements of the FAA, other

Government agencies, and private organizations to

promote and foster the effective use of ADR. 

In April 1998, the Office of Civil Rights implemented

a headquarters mediation program. The goal of this

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People: The Foundation of Accomplishment.
program is to use third-party neutrals to assist in the

resolution of Equal Employment Opportunity (EEO)

allegations while they are still in the pre-complaint

process. In its first 6 months of operation, the

headquarters EEO mediation program mediated 10

cases, of which 8 were resolved successfully. Also, in

April 1998, the Associate Administrator for Research

and Acquisitions inaugurated an early resolution

system (ERS). The ERS uses neutrals to help

nonbargaining unit employees resolve workplace

disputes, of any kind, at an early stage – before they

escalate towards more serious complaints and inhibit

positive performance. The Associate Administrator

for Civil Aviation Security is currently considering an

ERS also. Under all of these programs, employees

still have access to the agency’s EEO and other legal

processes. In addition, many of the FAA’s regions and

centers have implemented or enhanced their own

ADR initiatives.

Another accomplishment in this area was the

development of a prototype course in mediation

techniques for conflict resolution. This course was

designed by the FAA Center for Management

Development (CMD) in collaboration with the

Associate Chief Counsel for ADR and the Office of

Civil Rights. The class exposes supervisors and

managers to mediation techniques such as effective

listening and interest-based facilitation. The goal is

not to create mediators, but to give managers

additional skills to assist them in avoiding or

resolving disputes.

During the year, the Associate Chief Counsel for ADR

also assisted external stakeholders, such as airports,

in their dispute resolution efforts. Moreover, the FAA

is working with DOT on current and future ADR

initiatives and is actively involved with the

interagency ADR working group established by the

President and chaired by the Attorney General. (See

also: Acquisition Reform, page 108.)

Inclusion of Sexual Orientation as a Basis for

Discrimination Complaints. The signing of

Executive Order 13087 on May 28, 1998, extended the

EEO compliant process for Executive Branch

employees to include sexual orientation. FAA trained

its counselors in how to handle discrimination

complaints based on sexual orientation and how this

extension would impact the complaint process, their

duties, and protect employees from discrimination

and harassment. DOT had issued a departmental

policy for processing complaints of discrimination

based on sexual orientation on November 7, 1997.

The White House had encouraged Federal

departments to issue their own policy. The 1998

Executive Order created a uniform Federal policy.

INTELLECTUAL CAPITAL

Intellectual Capital Investment Plan.

Intellectual capital represents the knowledge assets

of an organization in terms of data, information, and

wisdom, as well as the tools that augment the use of

this information/knowledge. Just as physical assets

require maintenance and investment in order to be

fully productive, the FAA provides education and

training to develop and maintain its intellectual

capital. In FY 1998, the Office of the Associate

Administrator for Research and Acquisitions (ARA)

published an initial ARA Intellectual Capital

Investment Plan (ARA ICIP). The plan recognizes

that the FAA’s new Acquisition Management System

requires significant changes in the acquisition

workforce. These changes involve a wide spectrum of

competencies essential to the efficient management of 

complex systems, software, facility, and service

acquisitions, as well as thousands of small

procurements. The ARA ICIP, which will be updated

annually, guides the implementation of a

comprehensive education, training, and development

program for the ARA workforce. It also established a

high-level ARA ICIP Council to focus on workforce

issues.

College Accreditation. The FAA Academy received 

college credit recommendations for 60 courses from

the American Council on Education. In addition, the

North Central Association of Colleges and Schools

(NCA) accredited The Academy for the current school

year. The Academy was found to meet or exceed all

NCA standards for educational excellence. 

Air Traffic Selection and Training (AT-SAT). In

collaboration with the Civil Aeromedical Institute,

the Air Traffic Division in the FAA Academy set in

motion a series of programs that will affect the way

future air traffic controllers are hired and trained. A

new, computerized selection test was developed and

validated and will become operational in FY 1999.

The FAA Academy also developed an Air Traffic

Basics course that will be taught in residence and by

colleges that are members of the College Training

Initiative, permitting significant savings in training

costs. New technical training courses that follow the

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Air Traffic Basics course incorporate the latest

teaching techniques and technology to simulate the

real work environment. 

Curriculum Modernization System (CMS). CMS

is a systematic process to identify and prioritize

training needs. Using standardized criteria, the CMS

identifies new and existing resident training that

meets the criteria for conversion, in part or in whole,

to distance learning media. In FY 1998, five Airway

Facilities courses were approved for development,

and five existing courses were approved for revision.

Total cost for the development and revision is

$1,005,706 compared to $1,500,000 if the courses are

conducted in residence. The estimated payback time

is 7 years after the courses are fielded.

Interactive Video Teletraining (IVT). The IVT

Program completed 28 IVT training broadcasts to

over 1,650 FAA students in FY 1998. Additional

expansion in FY 1999 will give the FAA a total of 60

IVT receive sites, covering over 70 percent of the FAA

workforce. 

Technical Training for ATOS. The FAA’s new air

carrier oversight program, ATOS, uses risk analysis

tools and a dynamic, comprehensive surveillance

planning process to target surveillance system

elements. FAA Academy instructors began training

for all aviation safety inspectors, in the field, on

September 15, 1998. The training will continue as a

resident course after the initial cadre of 800-900

inspectors is trained. The FAA Academy has also

assigned instructors and supervisors to observe and

assist in the development and implementation of

national policies and procedures used in the process.

New Training Facilities at the FAA Academy.

Construction of the Landing Systems Training

Complex (14,650 square feet) and the Mark 20

Training Facility (4,200 square feet) was completed at 

the Mike Monroney Aeronautical Center. These

facilities will provide training for Airway Facilities

technicians in the maintenance and repair of various

Category I/II/III navigational landing systems and

Category II/III Mark 20 ILS’s.

Aeronautical Center In-Service Symposium. In

September 1998, eleven FAA/DOT organizations

joined forces to conduct the first Aeronautical Center

in-service symposium. The 2-day event, delivered by

employees for employees, offered 26 2- and 4-hour

training sessions ranging from stress management to

cost analysis. The symposium filled over 750 seats.

Due to the high demand for some of the courses

offered and the quality of instruction, the symposium

will become a recurring event.

MANAGING THE DIVERSE WORKFORCE

Accountability Board Oversees Handling of

Sexual Harassment Complaints. In July 1998, the 

Sexual Harassment Accountability Board began its

duties. Established by Administrator Garvey, its

purpose is to take “a hard look and hard line” on the

issue of sexual harassment and other forms of

discrimination in the agency. It is the Board’s

responsibility to provide timely responses to

complaints while making senior officials accountable

for their workplace environments. Once management 

has received a report of harassment, it must notify the 

board within 2 days. Within 50 days, the allegations

must be addressed. The Board, chaired by the

Regional Administrator of the Southern Region,

follows procedural guidelines developed by a

16-member working group earlier in the year. The

Associate Administrator for Civil Aviation Security is

represented on the Board to ensure that ACS

investigators are available to look into complaints, if

needed.

Garrett A. Morgan Initiative. The Garrett A.

Morgan Technology and Transportation Futures

Program was established in 1997 to honor the

African-American inventor of the traffic signal. The

purpose of the program is to promote an interest in

transportation among the Nation’s youth. More than

100 students from the Washington metropolitan area

spent a day at Dulles International Airport and at the

Smithsonian facility that houses the Space Shuttle

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New landing system training building at the Mike Monroney

Aeronautical Center
Enterprise. The event, hosted by Secretary of

Transportation Rodney E. Slater and FAA officials,

featured talks by shuttle astronauts Frederick Hauck

and Rick Hieb and presentations by commercial space

and aviation industries. In the New England Region,

over 3,000 Boston-area students attended the fifth

annual transportation/aviation career exposition on

May 6, 1998, at Logan International Airport. The

day-long program was sponsored by the FAA in

partnership with United Airlines, Massport, and the

Massachusetts Pre-engineering Program. The

program featured an essay contest inviting students

to write about their ideas for improving

transportation through technological innovation.

Throughout FY 1998, Garrett Morgan events,

promoted through an agencywide aviation outreach

program, attracted thousands of school-age young

people across the country.

Summer Internships Attract Minority College

Students. Thirty-five African-American, Hispanic,

and Native American/Alaskan students participated

in a 10-week summer internship program. The

Hispanic Association of Colleges and Universities,

American Indian Science and Engineering Society,

and the Historically Black Colleges and Universities

were responsible for placing the students in positions

related to their majors. While most worked at

Washington headquarters, nine found positions at

CAMI, gaining experience in such specialties as

aeromedical certification and education, human

factors research, and occupational health. The FAA

accepts the third highest number of interns in the

Federal Government and actively recruits from this

group. 

Welfare-to-Work Program. The FAA has

committed to assist 162 individuals in making the

transition from welfare to work by the end of FY 2000.

As of June 30, 1999, the FAA had hired 120 former

recipients and plans to hire another 42. With the

cooperation of state and local employment agencies,

the FAA has conducted workshops to help candidates

complete application forms and prepare for job

interviews. In addition to hiring for targeted

vacancies, applicants are also referred for general

open vacancies. Several have now secured permanent 

positions and received awards, training, and

promotions. Most workers have been assigned a

mentor and several have received formal and

on-the-job training. One region has partnered with

other federal agencies to present a seminar for new

hires, their supervisors, and mentors. A focus group

drawn from new employees hired through the

Welfare-to-Work program was established to help

ensure that the seminar met the needs of the new

hires.

QUALITY OF WORK LIFE

Employee Attitude Survey. Results from the

employee attitude survey (administered to more than

48,000 FAA employees in October and November

1997) were analyzed and more than 800 specialized

reports describing the survey outcomes were

prepared and distributed to senior managers. While

areas in need of improvement were identified as

action items, employees are largely satisfied with the

work they do, and, overall, they expressed high levels

of satisfaction with their supervisors and their pay

and benefits. FAA managers will use the outcomes to

develop action plans as a means of furthering

progress toward a model work environment within

the FAA.

Telecommuting. The FAA actively supports and

promotes the use of telecommuting throughout the

FAA. Employees are eligible to telecommute as long

as their duties and responsibilities are suitable for

performance away from the normal office

environment. Currently, 310 employees

telecommute. Positions dedicated to safety and

security or those that require the use of specialized

systems and equipment are not considered

appropriate for telecommuting. Such positions are

typically found at ATC facilities, including air traffic

controllers, airway facilities engineers, and certain

specialists.

Quality Child Care. Since the late 1980’s, the FAA

has established childcare centers at 21 work sites

nationwide. Seven of the centers have been

accredited by the National Association for the

Education of Young Children, a distinction accorded

to about 5 percent of the country’s early childhood

programs that meet high standards of excellence.

Another ten FAA childcare centers have begun the

accreditation process and the remaining four will be

eligible to apply during FY 1999.

Improving the Work Environment for People

with Disabilities. The Central Region installed text 

telephone devices in workstations and HRM offices as

an aid to hearing-impaired employees. The region

also publishes ACCESS, a newsletter to reporting

ideas, issues, and trends on employees with

disabilities.

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ACQUISITION REFORM

Acquisition Reform Scores Well in Evaluation. 

In 1996, legislation freed the FAA from restrictive

regulations that once hampered the agency in

acquiring new technology in a timely, efficient

manner. The second annual evaluation of the FAA’s

Acquisition Management System (AMS) found strong

evidence that the reform is moving in the right

direction. The study concluded that: 

• cross-functional, multidisciplinary teams were

working well together;

• major procurements were more timely;

• FAA Investment Analysis Teams were beginning

to function;

• The Joint Resources Council (JRC) was keeping

better records of its decisionmaking;

• the percentage of F&E-funded programs which

had JRC-approved baseline documentation

increased from 13 percent in the first year to 54

percent in the second year;

• the FAA is making progress in achieving

socioeconomic goals, after an initial decline

immediately following the implementation of

AMS;

• the FAA had increased the percentage of major

procurements awarded through competition.

• The second year evaluation also found areas in

need of improvement, including:

• the overall planning of funding needs;

• the establishing, compilation, and tracking of

baseline information;

• giving full consideration to lifecycle funding (in

F&E and Operations and Maintenance);

• strengthening the implementation of the

Integrated Product Development System (IPDS).

An internal evaluation is currently underway to

assess the third year under acquisition reform. In

addition, an evaluation of the AMS will be conducted

externally and results reported to the Congress in

July 1999.

Prompt, Efficient Dispute Resolution Process is 

Established. During FY 1998, the Office of Dispute

Resolution for Acquisitions (ODRA) became fully

funded and staffed, and offices were established in the 

DOT headquarters building. These steps were taken

in direct response to recommendations developed in

earlier reviews of the AMS. Major accomplishments

during the fiscal year included: (1) hiring staff

attorneys/dispute resolution officers; (2) eliminating

a backlog of older unresolved disputes and protests;

(3) implementing procedures for prompt resolution of

new disputes and protests; (4) developing an ODRA

website; and (5) publishing a Notice of Proposed

Rulemaking of Procedures.

• ODRA established offices at the DOT

headquarters building in December 1997, and a

permanent director was appointed. Two staff

attorneys/dispute resolution officers with

extensive procurement experience in the private

and public sectors were hired the first quarter of

1998. In addition, an adjunct staff

attorney/dispute resolution officer at the WJHTC

continued working for the ODRA during 1998. The 

combined procurement experience of the ODRA

Director and staff totals approximately 80 years. 

• The office published an NPRM in the Federal

Register on August 25, 1998, which proposed

detailed procedures for resolution of bid protests

and disputes arising under the AMS. The NPRM

embodies the procedures employed by the ODRA

during FY 1998 to promptly resolve disputes.

• The procedures implemented by the ODRA place a

strong emphasis on the use of ADR techniques in

resolving disputes. ADR techniques such as early

neutral evaluation, mediation, and arbitration

were the chief means employed by the ODRA to

resolve disputes during FY 1998. Streamlined

adjudication procedures also are used to provide

sufficient due process to ensure fair consideration

of contract disputes and protests.

• The default adjudication process at the ODRA is

used if the parties are unable to fully resolve their

differences via ADR. Under that process, the

director or staff attorneys serve as dispute

resolution officers and make formal Findings of

Fact and Recommendations to the Administrator

of the FAA. The Administrator makes the final

agency decision in such cases. Qualified

applicants who prevail in adjudication under the

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Reform: The Framework for Accomplishment
default process may seek to recover attorneys’ fees

pursuant to the Equal Access to Justice Act.

• During FY 1998, more than half of all cases filed

with the ODRA were resolved through some form

of ADR. The average duration of bid protest cases

settled through ADR has been 34 calendar days

from filing to completion. Those bid protests

resolved through the default adjudication process

averaged 57 calendar days. These resolution

timeframes compare favorably with those of

similar cases filed in traditional procurement

forums, such as the General Accounting Office and

Boards of Contract Appeals.

• In order to supplement the ODRA procedures and

the NPRM, Administrator Garvey formally

delegated to the Director of the ODRA specific

administrative authority over cases. The

delegation included, among other things,

authority to dismiss protests or disputes that have

been settled or withdrawn and issue procedural

orders relating to case management, scheduling,

and discovery.

• Another recommendation that was implemented

in FY 1998 concerned publicizing ODRA

procedures and decisions. In that regard, the

ODRA developed and made available a website

that can be reached through the FAA Homepage at

www.faa.gov. The website provides easy access to

ODRA case decisions and a user-friendly guide to

the ODRA disputes resolution process.

New Acquisition Management System Benefits

Small or Disadvantaged Businesses. The FAA

has awarded 14 information technology contracts

worth up to $1.25 billion to small or disadvantaged

businesses. The contracts, awarded under the FAA’s

Acquisition Management System, represent the

largest such outreach effort by the agency.

The contracts, which cover a wide array of computer

services ranging from help desk operations to

investment analysis support, were awarded less than

3 months after the May 22, 1998, solicitation date.

Without the Acquisition Management System, which

was launched in April 1996, the contract process could 

have lasted 15 months. The initial value of each

contract is $25 million to $50 million. Each contract

has the potential to double, based on performance.

Improved Vendor Selection Process. In FY 1998,

a list of qualified vendors was created for electrical

construction projects, which allows for very quick

contract awards at competitive prices for quality

contractors. A new process was also developed for

evaluating architect/engineer firms to determine

which firm offers the best combination of expertise

and price. 

PERSONNEL REFORM

Historic Labor Agreement for New

Partnership. In June 1998, the FAA and the

National Air Traffic Controllers Association (NATCA) 

completed negotiations on an important labor

agreement for air traffic controllers employed by the

FAA. A key feature of the 5-year pact is the

reclassification of ATC facilities to ensure that

compensation better reflects the different degrees of

complexity in controlling airplanes at vastly different

airports throughout the country. The existing five

classes of facilities will be replaced by a 12-category

system. The agreement also baselined the number of

controllers at 15,000 through the year 2001 and then

permits increases of two percent annually in the

fourth and fifth years of the contract. Controller

productivity will be increased by allowing them to

perform additional duties, such as training and

quality assurance, when not controlling traffic.

Incentives and rewards will be offered for increasing

the productivity and efficiency of FAA operations.

The ratio of controllers to supervisors will be

gradually adjusted to 10-to-1 from its current 7-to-1

level. The agreement is the first reached under

landmark FAA personnel reform legislation that

became effective in April 1996. 

FAA Tests Innovative Compensation Plan. On

June 17, 1998, the FAA unveiled a major step forward

in its congressionally authorized personnel reform

efforts — a test of an innovative compensation plan

for about 1,200 agency employees. 

The new plan will replace the traditional

grade-and-step base pay method with a simplified

structure of pay bands whose value is determined by

comparison with similar jobs in Government and

private industry. The test directly links

compensation with the performance of employees and

the success of the organization as a whole. It also

provides flexible employment and promotion

guidelines. Employees’ current base pay will not be

reduced when they convert to the new system.

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Nonbargaining unit employees in the FAA’s Office of

Research and Acquisitions are the first group to

operate under the compensation pilot, which is

expected to run for 18 months. During that time, the

agency will evaluate how well the new system

supports employees in achieving the agency’s

organizational goals as well as their own individual

goals and will make any changes necessary to ensure

the plan’s success.

As part of the test, senior executives in the Office of

Research and Acquisitions also will work under a new

total compensation approach linked to the

achievement of agency goals. The new approach will

include base salary, short- and long-term incentives

and supplemental benefits, of which only base salary

and short-term incentives will be included in the test. 

The FAA’s new compensation system combines the

best practices of compensation programs in the

Federal Government with those in the public and

private sector to create a system that supports the

agency’s unique needs. The new system is designed to

provide more flexibility in hiring, pay ,and placement;

recognize employee contributions, increase

productivity, and enhance the organization’s

intellectual capital while ensuring fairness to

employees.

Job-Based Questionnaires. Written knowledge,

skills, and abilities historically used to evaluate

applicant job experience have been replaced by

job-based questionnaires for a number of job titles.

Fifty-two different job-based questionnaires are

available for use reflecting different series, pay levels,

and selective placement factors within jobs.

Online Job Applications. An automated rating,

ranking, and referral system which streamlines the

application and hiring process for FAA was developed

and is being used for external and internal hiring for

technical and systems specialists responsible for

maintaining equipment in the NAS. The system

allows applicants to complete scannable

questionnaires that are available through the

Internet.

Automation Support of Compensation Reform.

The Aeronautical Center developed and implemented

the necessary system enhancements needed for the

compensation reform pilot initiated in July for the

Associate Administrator for Research and

Acquisitions. The Consolidated Uniform Payroll

System (CUPS), the Integrated Personnel and Payroll 

System (IPPS), and the Consolidated Personnel

Management Information System (CPMIS) were

modified to support the project.

FINANCIAL REFORM

Air Traffic Services Improvement Act of 1998.

In April 1998, the Clinton Administration forwarded

draft legislation to the Congress, built upon the work

done by the National Civil Aviation Review

Commission. Established by Congress and comprised 

of experts from both the aviation and financial

communities, this commission was tasked to prepare

recommendations on aviation funding and aviation

safety. The draft legislation included five key

elements. All five are keyed from, and support, the

Commission’s recommendations:

1. The FAA’s budget treatment must change. Under

the proposed legislation, the FAA’s funding and

financing system would receive a Federal budget

treatment that ensures that fees from aviation users

and spending on aviation services are directly linked.

This is accomplished by exempting air traffic services

from discretionary caps and by creating a third

budget category that links user fees and spending.

This was recognized by the Commission as the

foundation for all the remaining recommendations.

2. FAA management must become performance

based. The Commission wanted the FAA to operate

its air traffic services in a more business-like manner.

Therefore, it recommended a performance-based

organization. Under the Administration’s proposal,

daily operational air traffic services activities would

be centralized in a performance-based organization

(PBO) supervised by a chief operating officer. This is

also in keeping with National Performance Review

objectives and creates a performance-based entity

that is responsive to the needs of the air carrier,

private aircraft, and public aircraft users. 

3. FAA’s revenue stream must become more cost

based. Under the draft legislation, new user fees

would only be used in support of the air traffic services 

PBO. Air carriers would pay cost-based user charges

to be initiated by May 15, 2000. General aviation

would continue to pay fuel taxes with taxes

transferred to the PBO. In addition, excise taxes will

continue at reduced rates to fund non-PBO aviation

costs, covering safety, security, and airport

improvement. The Aviation Trust Fund will also

cover any additional costs imposed on the aviation

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system by public use aircraft, including military and

general aviation. 

4. The FAA must control its operating costs and

increase capital investments. The FAA is already

addressing this by putting into place a comprehensive

cost-accounting system. Phased implementation of

this effort began on October 1, 1998. Coupled with the

new budget treatment, we should be able to better

manage our operating costs while increasing our

capital investments.

5. Airport capital financing needs must be met. As the

FAA handles more operations and passengers in the

air, capacity must be available, on the ground, to

handle increased traffic. The FAA called for a strong

investment in the Nation’s airports at a level of $1.7

billion a year.

The Administration also transmitted reauthorization

legislation to extend the FAA’s broad range of aviation 

safety, security, and efficiency programs for fiscal

years 1999 – 2002.

The proposal called for funding FAA operations to

increase by 5.5 percent to $5.6 billion in FY 1999.

Consistent with the President’s budget, this will allow 

the agency to hire 185 more air traffic controllers and

150 additional aviation inspectors, as well as to keep

pace with modernization efforts. In order to provide

opportunities for increased infrastructure

investment, the FAA also proposed permitting an

increase in the cap on passenger facility charges, or

PFC’s, from $3 to $4. Together, the changes proposed

in the Airport Improvement Program and in higher

PFC’s will ensure increased investments at airports of 

all sizes. 

The Logistics Center Reinvention Laboratory.

The FAA Logistics Center is designated as one of the

National Partnership for Reinventing Government’s

“Reinvention Laboratories.” Reinvention labs are

Federal Government organizations and activities

across the United States that have volunteered and

been recognized to lead the transformation of

Government into the next century. In FY 1998, the

FAA Logistics Center operated with 20 percent less

funding yet increased its performance and its service

to customers. Over the past year, the average unit

cost to repair an airway system component has

declined approximately $25 per item.

Lease Savings. The Mike Monroney Aeronautical

Center has dramatically cut lease costs in FY 1998

and beyond. Working with the Oklahoma City

Airport Trust, the Center was able to create a

reduction of the lease payment for bond principal and

interest. First-year savings are estimated at

$287,000 with projected savings of $9.8 million

through 2010.

Understanding Aerospace Environmental

Impacts. In FY 1998, with the contribution and

participation of FAA, NASA continued research

activities under the Atmospheric Effects of Aviation

Project (AEAP). Results indicate that aviation

emission’s present influence on climate and the ozone

layer is small compared to that of all human

activities, although its role may increase in the future

due to traffic growth. During FY 1998, there has been

a steady improvement in characterizing the potential

impacts of aviation emissions on the upper

atmosphere. The areas of continued uncertainty

include the influence of aircraft emissions on contrail

formation and increased cloudiness, the role of oxides

of nitrogen emissions in affecting the chemistry of the

upper troposphere and lower stratosphere, and the

dynamical processes controlling transport of

emissions in the upper troposphere/lower

stratosphere. Better observations of key atmospheric

constituents and better modeling of atmospheric

dynamics and chemistry in the region of aircraft flight 

corridors will be crucial for an improved

understanding and better quantification of aircraft

effects on ozone and climate change. 

Progress made under the AEAP has been factored

into a special report on “Aviation and the Global

Atmosphere” being prepared by the

Intergovernmental Panel on Climate Change (IPCC).

Progress made under the AEAP was also taken into

account by the FAA during the development of the U.

S. position on the subject of engine exhaust emissions

standards, which was debated at the fourth meeting

of the Committee on Aviation Environmental

Protection (CAEP), under the International Civil

Aviation Organization. The research results

indirectly influenced the main outcome of the CAEP

meeting related to increasing the stringency of the

international standard for nitric oxide (NOx)

emissions and provided information upon which to

build a future work program for CAEP.

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The Environment: Our Responsibility
Reducing Aerospace Environmental Impacts.

In FY 1998, NASA, with FAA support, continued

research activities under the Advanced Subsonic

Technology (AST) program to develop combustor

technology to reduce aircraft engine exhaust

emissions. Critical low-emission combustion

technologies are being developed, and flame tube and

sector tests both at NASA and by contractors are

showing promise of achieving the AST NOx low

emission combustion goals. The completed low

pressure sector combustor tests indicate that more

than the 50 percent NOx reduction goal may be

achieved. Additional full annular combustor and

engine system tests, which will occur in 1999 and

2000, are still required to develop viable combustors

with the 50 percent NOx reductions. Progress made

under the AST program was taken into account, by

the FAA, during the development of the U. S. position

for the fourth meeting of the Committee on Aviation

Environmental Protection (CAEP), under the

International Civil Aviation Organization. The

research results and plan provided information upon

which to build a future work program for CAEP.

Aircraft Noise Reduction Research. FAA and

NASA will submit the annual joint report to Congress

on the progress of the FAA-NASA subsonic noise

reduction technology program. In February 1992,

FAA and NASA initiated a cosponsored, multiyear

program focused on achieving significant noise

reduction technology advances. Recent

accomplishments have included the confirmation of

the achievement of near-term program objective,

which is to identify technology that will reduce

uninstalled engine noise levels by three decibels. 

Several ongoing projects continue to verify the

effectiveness of active and passive noise control for

engine noise reduction, along with the development of

the first integrated fan noise source and propagation

prediction code to be used to identify, analyze, and

optimize engine noise reduction technology concepts.

Airline Noise Levels Continue to Drop. The level

of noise at the Nation’s airports and surrounding

areas continues to decline as airlines take older,

noisier airplanes out of service and replace them with

newer, quieter ones or retrofit the older aircraft with

“hush kits” or new engines. In the Report to Congress

released in September 1998, the FAA documented

that the number of noisier aircraft had declined from

2,048 in 1995 to 1,453 by the end of 1997. During

1997, the proportion of quieter airplanes used by U.S.

airlines increased from 75.5 percent to 79.8 percent.

The number of airplanes with reduced noise levels

rose from 5,165 to 5,719 during the year. The

improvement reflects compliance by the airlines with

legislation passed in 1990 requiring that older,

noisier (Stage 2) airplanes be replaced by quieter

(Stage 3) airplanes by the year 2000.

Airport Noise Compatibility Planning Program

(14 CFR Part 150). The Part 150 program assists

airport operators in developing individual

comprehensive noise compatibility programs (NCP)

to reduce noise and help achieve compatible land uses

in the areas surrounding their airports. As of

September 30, 1998, 194 airports have FAA-approved 

NCP’s in place. Last year, the FAA approved nine

NCP’s including six revisions/updates of existing

programs. It is expected that, over the next several

years, a major area of Part 150 activity will continue

to be the revision and updating of previously approved 

NCP’s to reflect the compatibility gains from the

phasing out of large Stage 2 airplanes.

To assist in this effort, the FAA has entered into an

MOU with the National Association of State Aviation

Officials (NASAO) to promote land use compatibility

around airports and to reduce the effect of noise on

areas surrounding airports. Joint FAA/NASAO

teams are developing a number of products to meet

the challenges of these two areas.

Environmental Compliance. FAA continued to

progress in its environmental compliance

assessment. At the regional level, compliance orders

were developed, such as Northwest Mountain

Region’s Facilities Environmental Compliance Order, 

and the Eastern Region’s Safety, Health and

Environmental Compliance Order. The Office of

Environment and Energy held regulatory compliance

training to provide personnel with an overall

understanding of Federal environmental liabilities

and requirements. 

The National Airspace System (NAS) Transition and

Integration Program, in conjunction with the regions,

developed a model Environmental Compliance

Implementation Plan covering 19 program areas.

This plan will support the development of a

systematic technical approach for implementing

regional environmental compliance programs. In

addition, the NAS Transition and Implementation

Office (ANS) and its regional counterparts manage

implementation of the environmental compliance

program at FAA facilities. This includes managing

outages at these facilities related to hazardous

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materials. On average, approximately 15 to 25 such

outages occur each month.

Commercial Space Launches and the

Environment. The FAA’s Commercial Space

Transportation Office has licensed the first

commercial launch site, not located within the

boundaries of a Federal installation. The license was

issued on September 24, 1998, to the Alaska

Aerospace Development Corporation for the Kodiak

Launch Complex (KLC). A critical component of the

licensing of the Kodiak site was the lengthy and

complex environmental evaluation that required

intense coordination and cooperation among various

Federal and state offices. As part of the FAA’s

environmental finding, a biological baseline

improvement plan and a biological monitoring plan

was developed to address several identified species of

threatened or endangered fauna. The environmental

staff of the Commercial Space Transportation Office

participated in the monitoring activities during the

first launch from KLC. With the first successful

launch at KLC, the FAA has reached a major

milestone in its commercial space regulatory mission

while continuing to pursue its environmental

protection responsibilities.

Airports and the Environment. Airports, though

essential to local economic growth, can create

environmental problems. This year saw two potential 

problems move toward resolution. The FAA worked

with the U.S. Fish and Wildlife Service to proceed

with the approval of a new runway at Minneapolis-St.

Paul International Airport with the assurance of

adequate mitigation of noise on a nearby wildlife

refuge. FAA also worked with the Department of the

Interior to address the concern that an expanded

airport on Maui might lead to the introduction of alien

species of plants and animals into the island’s highly

sensitive ecosystem. For the first time, the FAA, other 

Federal agencies, and the State of Hawaii entered into 

an MOU to take necessary protective measures.

Reducing Wildlife Aircraft Strikes. Over 3,300

wildlife strikes were reported to the FAA in 1997.

FAA estimates that wildlife strikes annually cost the

U.S. civil aviation industry over $237 million in direct

damage, over $77 million in associated cost, and in

excess of 500,000 hours of aircraft down time.

Through its national certification program, FAA’s

Airport Safety and Operations Division provides

guidance and on-site assessments to help both

domestic and foreign airports identify and resolve

wildlife hazards. During FY 1998, the FAA, working

closely with the U.S. Department of Agriculture

Wildlife Services, conducted on-site evaluations and

provided technical assistance at over 200 airports.

Similar assistance was also provided to the Mexican

Government. A wildlife hazard assessment was

conducted at the Mexico City International Airport.

Evaluations were also made at proposed locations for

Mexico City’s new international airport. 

The FAA also co-sponsored the 8th annual meeting of

the Bird Strike Committee, USA, at Cleveland’s

Burke Lake Front Airport. Over 330 airport

managers, aircraft operators, and wildlife specialists

attended. In addition, the FAA is chairing an

interagency work group to develop an MOU

addressing habitat attractive to certain wildlife

species that are hazards to aviation. The MOU is

intended to ensure that actions taken by the FAA or

agencies responsible for protecting wildlife do not

create or exacerbate habitats near airports that

attract hazardous wildlife.

Environmental Management Reviews. The

Airway Facilities Management Consulting Staff

conducted a comprehensive management process

oriented review of the FAA’s environmental and

occupational safety and health programs. The review

focused on program performance and resource

utilization. The Office of Environment and Energy

completed a Programmatic Environmental

Evaluation and Review (PEER) of the PCB and NEPA 

programs in FAA headquarters and two selected

regions. These projects are consultative and

technically focused reviews to provide reasonable

assurance that the facility environmental programs

sustain regulatory compliance. They include policies,

guidance, resources, recordkeeping, and reporting

systems. ANS conducted indepth reviews of the Fuel

Storage Tank Program (for compliance with 40 CFR,

Part 280) at each region. In addition, ANS conducted

an indepth program review of the Superfund Program 

at the William J. Hughes Technical Center.

Hazardous Materials and Toxic Substance

Release Reduction. FAA directs and promotes

pollution prevention and the elimination of releases of 

toxic substances. The Great Lakes Region’s

Hazardous Materials and Pollution Prevention Guide

and FAA headquarters’ Spill Prevention, Control and

Countermeasure (SPCC) Plan Guidance are but two

examples of FAA’s commitment to this effort. FAA’s

Environmental Substitution Guide was developed to

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identify manufacturer information on

environmentally preferred products. In addition, the

Eastern Region created a database to track chemical

inventories and environmental compliance. In

addition, ANS continues to incorporate

environmental compliance requirements into the

FAA’s acquisition system to reduce hazardous

materials usage and/or possible releases in future

FAA equipment and systems to be deployed.

Environmental Justice. The agency has

established environmental justice contacts in

environmental and Civil Rights offices in each region,

center, and service. During FY 1998, FAA has been

incorporating the provisions of the DOT order on

environmental justice into its procedures and

training to assure compliance under the National

Environmental Policy Act. This requires

consideration of the environmental effects of FAA

actions on the human environment, Title VI of the

Civil Rights Act, prohibiting discrimination by

recipients of Federal financial assistance and various

statutes and Executive Orders governing Federal

facilities environmental management. The agency

has also drafted a Native American policy that

includes provisions for Government-to-Government

consultation.

INTERNATIONAL SAFETY OVERSIGHT

FAA International Aviation Safety Assessment

(IASA) Program. FAA continued to conduct the

IASA program to determine if civil aviation

authorities of air carriers who conduct, or propose to

conduct, operations to the United States are providing 

safety oversight in accordance with applicable ICAO

Annexes. As of July 2, 1998, the results of 92

countries have been released to the public. Feedback

to FAA indicates the IASA program continues to

facilitate worldwide improvements in aviation safety

oversight.

ICAO Safety Oversight Program (SOP). The FAA 

focused on strengthening the SOP to make it more

assertive and effective. This goal was significantly

advanced at a November 1997 ICAO worldwide

conference on safety oversight. Subsequently, during

the 32nd ICAO Assembly in September 1998, general

agreement was reached to make the SOP a universal,

mandatory audit program with more detailed and

meaningful results to be made available in a timely

manner.

Global Safety Action Plan. The United States and

Canada presented a resolution at the 32nd session of

the ICAO Assembly, proposing that the Assembly

adopt the primary objectives of the ICAO Global

Aviation Safety Plan. The goals of the plan are to:

• Achieve a significant decrease in the worldwide

accident rate;

• Enhance the identification of shortcomings and

deficiencies in the air navigation field and to

achieve a significant degree of improvement,

• Increase and improve ICAO’s own capability to

compile, assess, and disseminate safety-related

information.

• The FAA gave strong backing to several

significant measures intended to raise the level of

safety standards worldwide:

• Implementation of Airborne Collision Avoidance

Systems (ACAS). The Minimum Operational

Performance Standards for the latest version

(Version 7) of the traffic alert and collision

avoidance system II (TCAS II) were completed.

Version 7 fully complies with the ICAO Standards

and Recommended Practices for the Airborne

Collision Avoidance System II (ACAS II). In

addition to providing improved collision avoidance 

protection, TCAS II, Version 7 will: correct known

shortcomings in the present TCAS II; minimize

the number of unnecessary alerts to flightcrews;

and provide positive guidance to flightcrews to

minimize system impacts on the air traffic control

system. (See also: Terrain Awareness and

Warning System (TWAS), page 78.

• Increased Use of Standard Air Traffic Control

Phraseology. FAA participated in the Multi-Agency

ATS Procedures Coordination Group (MAPCOG),

which also includes permanent members from

EUROCONTROL and NAV CANADA. MAPCOG’s

goal is to globally harmonize procedures, radiotelephony

phraseology, and flight planning. Plans are to submit

a new phraseology document to ICAO in the fall of

1999.

• ICAO Workshop on Cross-Cultural Human

Factors Issues in Aviation Safety. FAA

participated in this international workshop to

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Global Leadership: Commitment to

Worldwide Improvements
discuss development of an ideal safety process.

Focus was on “best practices” in terms of training,

operations, and design; how compatible “best

practices” are with existing industry practices; and 

strategies to enable compatibility. Findings and

conclusions were provided to all participating

organizations for appropriate action.

• Joint Transport Canada, United Kingdom Civil

Aviation Authority (CAA), FAA Symposium.

Through a formal working agreement with

Transport Canada and the CAA, FAA participated

in a joint symposium addressing human factors

issues in aircraft maintenance, and inspection.

This forum allowed all three nations to share the

results of their latest human factors research in

the area of maintenance, and to identify possible

solutions and “best practices” which could improve

safety in this important area. The conference also

elicited additional research needs from industry. 

• FAA Cooperation with General Administration of

Civil Aviation of China (CAAC). FAA continued

work with the CAAC focusing on air operator

recertification and CAAC inspector training.

During the past year, the CAAC, with support

from FAA, completed operational certification

validations (OCV) of its three major airlines that

serve the United States. FAA also provided FAA

Academy courseware as a basis for CAAC

development of its own introductory inspector

courses and subsequent on-the-job training (OJT)

in FAA field offices.

• FAA Cooperation with the Federal Aviation

Authority of Russia (FAAR). FAA has installed a

direct digital satellite communication circuit for

air traffic control between Alaska and

Petropavlovsk-Kamchatsky in the Russian Far

East (RFE). A similar project is nearly complete

for Anadyr, Russia. These circuits provide for

safer, more reliable communications and will

enable increases in traffic along the more

fuel-efficient RFE routes, which provide airlines

significant savings in time and cost. FAA

continued to work through the Russian/American

Coordinating Group for Air Traffic Control

(RACGAT) to develop and implement additional

cost saving RFE and Polar routes through

Chinese, Japanese, Korean, Mongolian, and

Russian airspace. The RACGAT forum also

continued work to enhance monitoring of volcanic

eruptions impacting these routes. FAA conducted

and participated in several joint U.S./Russian

aviation safety, general aviation, and airport

management seminars. These seminars served to

enhance safety oversight, stimulate the

development of a general aviation sector in Russia, 

and assist Russian airports in transitioning to a

market economy.

GLOBAL CNS/ATM DEVELOPMENT AND

IMPLEMENTATION

Global Air Traffic Management. The FAA

planned and organized a Global Air Traffic Flow

Management (ATFM) Seminar, which convened in

November 1998. The purpose of the seminar was to

share ideas and philosophies on ATFM and to

promote the concepts of global air traffic services and

the development of international air traffic flow

management. Participants at the seminar included

Australia, Brazil, Canada, EUROCONTROL, Japan,

Mexico, Russia, South Africa, and the United States.

The goal of the seminar was to harmonize ATFM

philosophies and begin the work of creating a

seamless global ATFM environment for the near

future.

Flight Demonstrations of GPS Technology. The

FAA continued its international efforts to inform and

educate countries on the benefits of GPS and

transitioning to satellite-based technology. In

conjunction with Icelandic and Chilean civil aviation

authorities, WAAS flight tests/demonstrations were

conducted in Keflavik and Santiago airports,

respectively. In direct cooperation with the FAA,

Chile has begun to establish a functional test-bed for

internal flight trials and performance analyses of

ionospheric disturbances. The flight trials and

subsequent analyses will lay the groundwork for a

potential additional augmentation located in South

America with the potential for cost sharing of

communication satellite signal broadcasts.

In December 1998, the FAA and the Republic of

Chile’s Director General of Civil Aeronautics (DGAC)

successfully completed the first test flights in Chile

demonstrating the capabilities and benefits of WAAS. 

The test flights were conducted at the Arturo Merino

Benitez International Airport in Santiago, Chile, on

December 9, 1998. For this demonstration, an FAA

Boeing 727 aircraft conducted a series of Category I

precision approaches (down to approximately 200

feet) using a navigation signal generated and

FY 1998 FAA ANNUAL REPORT

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broadcast by the National Satellite Test Bed master

station in Atlantic City, New Jersey. 

The WAAS demonstration showcased the flexibility of 

satellite navigation technology for tailored or unique

precision approaches in situations where current

ground-based precision approach technologies are

limited. The Arturo Merino Benitez International

Airport is surrounded by the Andes Mountain range

and requires very flexible and precise navigation

systems. 

Cooperative Agreement with Canada. The FAA

finalized the WAAS/CWAAS (Canadian WAAS)

concept of operations and maintenance document to

incorporate CWAAS into the WAAS National

Airspace System in 2001. Under this agreement, the

FAA will provide differential calculations in exchange 

for reference station data from Canadian sites along

the U.S./Canadian border, which will save U.S.

ground procurements and operational costs. The

broadcast of a correction message over the U.S. and

Canadian airspace will provide the first seamless

application of augmented GPS signals.

Cooperative Agreement with Iceland. The FAA

and the Director General of the Icelandic Civil

Aviation Administration established agreements for

the development of global navigation satellite system

technologies. The agreements also provide for

continuing cooperation and testing and evaluation of

the WAAS performance at remote sites and at

northern latitudes. Iceland has also stated that it will

participate in the U.S. WAAS network with one or two 

reference stations. This will provide increased

integrity for transatlantic flights of all air carriers.

Cooperation with Japan. On September 22, 1998,

President Clinton and Japanese Prime Minister

Obuchi issued a joint statement regarding

cooperation in the use of the Global Positioning

System (GPS). This joint statement culminates 2

years of discussions between the Governments of the

United States and Japan on issues related to

expanding civil use of GPS. This effort is a key portion 

of a broader U.S. diplomatic effort to promote

international acceptance of GPS as a global standard

for satellite-based navigation, to ensure adequate

radio frequency spectrum allocations for GPS and to

prevent misuse of GPS timing, navigation, and

positioning signals. The FAA and the Japanese Civil

Aeronautics Board (JCAB) also continued to work

closely on augmentation system interoperability

issues through the development of the MSAS

(Multifunctional Transport Satellite-based

Augmentation System) and the WAAS. 

INTERNATIONAL REGULATORY

HARMONIZATION

FAA-JAA Harmonization. The FAA-JAA

Harmonization Work Program continued into its 15th 

year in 1998, focusing on harmonizing to the

maximum extent possible U.S. and European

aviation safety regulations. In the aircraft

certification area, the FAA and JAA have harmonized

about 80 percent of their regulations, including small

aircraft, engines, and helicopters. Maintenance

requirements are largely harmonized, and operations 

and related licensing standards received increased

attention. FAA and JAA have agreed to broaden the

scope of the initiative to include human factors

research and development cooperation as well as

cooperative bridges between the FAA and JAA’s

safety improvement efforts with industry.

ICAO Regional Projects – Latin America and

South Asia. The FAA continued its work with ICAO

regional safety oversight and harmonization projects

in Latin America and South Asia. The purpose of

these projects is to build a sound aviation

infrastructure in the participating States that will

enable these States to carry out their safety

regulatory obligations under the Chicago Convention

and ICAO Annexes. These projects are designed to

systematically address basic aviation laws,

regulations and guidance materials, civil aviation

authority organization, and training of safety

personnel. Additionally, regulations will be

harmonized, to the maximum extent possible, among

the participating States. In Latin America, FAA

completed its fourth year of participation in this

regional project and provided financial assistance and 

inspectors to teach flight operations, aircraft

maintenance, and flightcrew licensing courses to

inspectors within the region. In South Asia, FAA has

provided planning guidance, financial assistance, and 

office equipment donations to enable the project to get 

underway this year.

Model Law/Regulations and Related TRAINAIR 

Course Development. The FAA continued its

efforts to develop a set of model aviation documents

that include an aviation law and regulations as well

as implementing standards for flight operations and

continuing airworthiness of aircraft. FAA intends to

provide these model aviation documents to ICAO for

FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TAL PRO GRAM INFORMATION -119- CHAP TER 3
use in its regional safety oversight and harmonization 

initiatives. Work has progressed to the point where

FAA could begin work on development of aviation

safety inspector indoctrination courses based on the

model aviation regulations. This course material is

being developed for the ICAO Trainair Program and,

once completed, will be available for teaching at any

ICAO Trainair facility.

Bilateral Aviation Safety Agreements (BASA).

BASA’s will allow the FAA to cooperate closely with

other competent aviation authorities to assure

aviation safety even if relevant regulations are

harmonized. BASA’s permit the FAA to meet its

statutory safety mandate and to work efficiently

across national boundaries by facilitating data

exchange from competent aviation authorities on

which the FAA may base its safety findings. Entering

1998, the U.S. Government had concluded eight

BASA’s and two technical implementation

procedures. In 1998, the United States signed

BASA’s with Sweden and Russia, the latter a

significant achievement capping several years of

work with Russian airworthiness authorities. The

FAA also signed a set of simulator implementation

procedures with the United Kingdom, providing for

reciprocal acceptance of data for simulator

qualifications.

Translation of Federal Aviation Regulations

and Inspector Handbooks. The FAA’s Flight

Standards Service is coordinating the translation of

U.S. aviation regulations into Russian for use in the

ongoing development of safety regulations in the

Russian Federation. Also, copies of FAA orders and

inspector handbooks are being translated for

adoption and use by Russian FAAR aviation safety

inspectors.

FY 1998 FAA ANNUAL REPORT

SUP PLE MEN TAL PRO GRAM INFORMATION -120- CHAP TER 3
FREQUENTLY USED ACRONYMS

A

AATF Airport and Airway Trust Fund (also 

Trust Fund)

AC advisory circular

ACSI Airport Certification Safety Inspector

AD advisory directive

ADR alternative dispute resolution

AEAP Atmospheric Effects of Aviation Project

AF airway facilities

AGARS advanced general aviation research 

simulator

AIP Airport Improvement Program

AMASS airport movement area safety system

AMS acquisition management system

ANPRM Advanced Notice of Proposed 

Rulemaking

ANS FAA NAS Transition and 

Implementation Office

APMS automated performance measuring 

system

AQP advanced qualification program

ARAC Aviation Rulemaking Advisory 

Committee

ARFF aircraft rescue and firefighting

ARSR air route surveillance radar

ARTCC air route traffic control center

ARTS automated radar terminal system

ASCEP Aircraft Certification Systems 

Evaluation Program

ASDE airport surface detection equipment

ASI aviation safety inspector

ASOS automated surface observing system

ASR airport surveillance radar

AT air traffic

ATA Air Transport Association

ATC air traffic control

ATCBI air traffic control radar beacon 

interrogator

ATCSCC Air Traffic Control Systems Command 

Center

ATCT airport traffic control tower

ATFM air traffic flow management

ATOS Air Transportation Oversight System 

ATS Air Traffic Services

AVN Aviation System Standards

C

CAEP Committee on Aviation Environmental 

Protection

CAMI Civil Aeromedical Institute

CAPS computer-assisted passenger screening

CAS cost accounting system

CBT computer-based training

CCLD core capability limited deployment

CDC computer display channel

CDM collaborative decision making

CERAP center radar approach control

CFO Chief Financial Officer

CHI computer-human interface

CIP Aviation System Capital Investment 

Plan

CMD FAA Center for Management 

Development

CMS curriculum modernization system

COTS commercial off-the-shelf

FY 1998 FAA ANNUAL REPORT

FRE QUENTLY USED ACRONYMS -121-
CPDLC controller-pilot data link 

communications

CRS child restraint system

CSRS Civil Service Retirement System

CTAS center/TRACON automation system

D

DAFIS Departmental Accounting and 

financial Information System

DBE disadvantaged business enterprise

DCCR display chananel complex rehost

DOD Department of Defense

DOL Department of Labor

DOT Department of Transportation

DOTS dynamic ocean track system

DSR display system replacement

DYSIM dynamic simulation

E

EAA Experimental Aircraft Association

EDS explosives detection system

EEO equal employment opportunity

EMS emergency medical service

ERS early resolution system

ETD explosives trace detector

F

F&E facilities & equipment

FAA Federal Aviation Administration

FAATSAT FAA telecommunications satellite

FANS Future Air Navigation System

FASAB Federal Accounting Standards 

Advisory Board

FDIO flight data input/output

FECA Federal Employees’ Compensation Act

FERS Federal Employees’ Retirement 

System

FFP1 Free Flight Phase 1

FLIR forward-looking infrared

FOQA flight operations quality assurance

FQIS fuel quantity indication system

FSS flight service station

FY fiscal year

G

GA general aviation

GAIN global analysis and information 

network

GAO General Accounting Office

GLS global positioning landing system

GPS global positioning system

GSA General Services Administration

H

HOCSR host and oceanic computer system 

replacement

I

IAIPT FAA/NASA Interagency Air Traffic 

Management Integrated Product Team

IASA International Aviation Safety 

Assessment

ICAO International Civil Aviation 

Organization

IFR instrument flight rules

ILS instrument landing system

IPT integrated product team

IRS Internal Revenue Service

ITWS integrated terminal weather system

FY 1998 FAA ANNUAL REPORT

FRE QUENTLY USED ACRONYMS -122-
IVT interactive video teletraining

J

JRC FAA Joint Resource Council

L

LAAS local area augmentation system

LLWAS low level windshear alert system

LOB lines of business

LOI letter of intent

LTP LAAS test prototype

M

MAP Military Airports Program

MCC maintenance control center

MLS microwave landing system

MMAC Mike Monroney Aeronautical Center

MOA memorandum of agreement

MOPS minimum operational performance 

standards

MOU memorandum of understanding

MRM maintenance resource management

N

NAS national airspace system

NASA National Aeronautics and Space 

Administration

NASAO National Association of State Aviation 

Officials

NATCA National Air Traffic Controller 

Association

NEXCOM next generation air ground 

communications

NEXRAD next generation weather radar 

NIMS NAS Infrastructure Management 

System

NMCC National Maintenance Control Center

NPIAS National Plan of Integrated Airport 

Systems

NPRM Notice of Proposed Rulemaking

NSSA National Safe Skies Alliance

NTSB National Transportation Safety Board

O

OASIS operational and supportability 

implementation system

OCC Office of Chief Counsel

ODL oceanic data link

ODRA Office of Dispute Resolution for 

Acquisitions

OIG Office of the Inspector General

OMB Office of Management and Budget

OST Office of the Secretary of 

Transportation

OTA Office of Tax Analysis

P

PFAST passive final approach spacing tool

PFC passenger facility charge

POET post operations flight evaluation tool

PP&E property, plant and equipment

PVD plan view display

R

R,E&D research, engineering & development

RAPID repair assessment procedure and 

integrated design

RFE Russian Far East

FY 1998 FAA ANNUAL REPORT

FRE QUENTLY USED ACRONYMS -123-
ROC regional operations center

S

SATMS space and air traffic management 

system

SATNAV satellite navigation

SATORI systematic air traffic operations 

research initiative

SEIPT Security Equipment Integrated 

Product Team

SFFAS Statement of Federal Financial 

Accounting Standards

SIAPS standard instrument approach 

procedures

SMA surface movement advisor

SOP Safety Oversight Program

SPAS safety performance analysis system

SPEARS Screener Proficiency Evaluation and 

Reporting System

STARS standard terminal automation 

replacement system

T

TAWS terrain awareness and warning system

TDWR terminal Doppler weather radar

TERP terminal instrument procedures

TFM traffic flow management

TGF target generation facility

TIP threat image projection

TMA traffic management advisor

TMU traffic management unit

TRACON terminal radar control

U

URET user request evaluation tool

USAF United States Air Force

USCG United States Coast Guard

V

VLTA very large transport aircraft

VSCS voice switching and control system

VTABS VSCS training and backup switch

W

WAAS wide area augmentation system

WARP weather and radar processor

WJHTC William J. Hughes Technical Center

WOC Washington Operations Center

WSP weather systems processor

FY 1998 FAA ANNUAL REPORT

FRE QUENTLY USED ACRONYMS -124-
INDEX

A

accident prevention

 accident investigation, 85

 aircraft rescue and firefighting, 87

 airport movement area safety system, 11, 85

 airport surface detection equipment, 11, 85

 automated surface observing system, 14, 86-87

 engineered materials arresting systems, 87

 flightcrew/vehicle interface, 85

 jet fuel safety research, 87-88

 low-level windshear alert systems, upgraded, 86

 next generation weather radar, deployment, 85-86

 Safer Skies agenda, 2,10, 80, 84

 snowfall rate system, 87

 terminal Doppler weather radar, deployment, 14, 86

 turbulence detection, 87

 weather and radar processor, 14, 86

 weather systems processor, 86

accident rate, 10

Acquisition Management System

 benefits for small or disadvantaged businesses, 112

 reform, 111

 vendor selection process improved, 112

acquisitions

 Acquisition Management System, 111, 112

 dispute resolution, 111-112

 Fundamentals of the Acquisition Management

 System course, 92

 human factors research, 91

 reducing risk, 91-92

 reform, 111

administrative services franchise fund

 financial statements, 73-75

 services and benefits, 76-77

advanced general aviation research simulator, 89

advanced qualifications program

 model improvements, 90

Aeronautical Center in-service symposium, 109

aging aircraft

 FAA/NASA/DOD joint conference, 84

Air Force Range Integrated Product Team, 104

air traffic control radar beacon interrogator

 replacement, 98

air traffic management

 Air Traffic Basics course, 109

 FAA/NASA partnerships, 103

 Global Air Traffic Management Seminar, 118

 operational errors and deviations, 11, 88

 Space and Air Traffic Management System, 94

 traffic management advisor, 15, 103

air traffic services, 2-4

Air Traffic Services Improvement Act of 1998,

 113-114

air transportation oversight system, 2,10, 81

 technical training, 109

Airborne Collision Avoidance Systems, 117

aircraft certification systems evaluation program

 resource targeting, 81

aircraft inspection

 aging aircraft, 84

 air transport oversight system, 4, 9, 81

 aircraft certification systems evaluation program,

 resource targeting, 81

 Boeing 737 horizontal stabilizers, 81-82

 engine gearboxes, Boeing 737, 82

 engine parts, 82

 fatigue cracks, Boeing 737, 82

 fuel pump wiring, Boeing 737, 82

 fuselage panel tests, 83

 fuselage skin repair, assessment tool, 84

 general aviation engines, 83

 rivet hole cracks, 84

 turbine rotors, 83-84

aircraft maintenance

 computer-based training program, 91

 guidebook, maintenance resource management, 91

aircraft noise control, 3, 16, 115-116

aircraft rescue and firefighting research, 87

aircraft rescue and firefighting vehicles, 87

airfield conversions, 106-107

Airport and Airway Trust Fund

 and airport improvement program, 4-6

FY 1998 FAA ANNUAL REPORT

INDEX -125-
 changes to rate structure, 4-5

airport capacity needs, 104

airport consortia, 94

airport grants, monitoring compliance, 104-105

Airport Improvement Program, 6, 7, 8-9, 12, 66-67

airport movement area safety system, 11, 85

Airport Noise Compatibility Planning Program,

 115; see also environmental initiatives

airport pavement test facility, 106

airport safety

 certification and inspection program, 83

airport screeners

 Screener Proficiency Evaluation and Reporting

 System, 93-94

 selection and training, 2, 93

airport surface detection radar, 11, 85

airport surveillance radar, 98

alternative dispute resolution, 107-108

AQUIRE, procurement system, 17

Atmospheric Effects of Aviation Project, 114-115

automated performance measuring system

 in pilot training, 90

automated surface observing system, 14, 86-87

 interface with automated terminal information

 service, 14, 86-87

aviation delays, 14

aviation safety

 accident prevention, 84-88

 bilateral agreements, 120

 global leadership, 117-118

 cooperation with China, 118

 cooperation with Russia, 118

 ICAO Global Aviation Safety Plan, 117-118

 ICAO Safety Oversight Program, 117

 International Aviation Safety Assessment Program,

 117

 human factors research, 88-92

 National Civil Aviation Review Commission

 recommendations, 113-114

 regulatory reform, 78-80

 safety information sharing and analysis, 80-81

 surveillance and inspection, 81-84

aviation security

 airport consortia, 94

 airport vulnerability assessments, 92

 checkpoint screeners, selection and training, 4, 93-94

 explosives detection, 2, 3, 6, 12, 92-93

 Security Equipment Integrated Product Team, 92

 National Academy of Sciences Panel on Assessment

 of Technologies, 94

 National Safe Skies Alliance, 94

 passenger screening, 12, 92

 passenger-bag match, 92

 SEMTEX-98 seminars, BATF/FAA, 94

Aviation System Capital Investment Plan, 5

aviation system efficiency, 94-107; see also national

 airspace modernization

C

cargo containers, hardened, 12

child care centers, 110

Civil Aeromedical Institute

 air traffic selection and training, 108

 human factors research

 air traffic controllers

 flight strip reduction, 89-90

 teamwork, 88

 shift work and fatigue, 88

 publications, 80

 safety courses, 80

Civil Aviation Security, 2

collaborative decision making tool

 for traffic flow management, 103

Commercial Space Transportation, 3, 78

 environmental initiatives, 116

 FAA/Air Force national launch safety standards, 80

controller-pilot data link communications, 98

crew resource management, guidebook, 90

curriculum modernization system, 109

D

DELPHI, financial management system, 17

disabilities complaints, resolution, 105

disadvantaged business enterprises, participation,

105

display system replacement installations, 5, 14, 95

driver’s enhanced vision system, 87

E

employee attitude survey, 110

FY 1998 FAA ANNUAL REPORT

INDEX -126-
En Route Integration and Interoperability Facility, 96

engineered materials arresting systems, 87

Environmental Compliance Implementation Plan,

 116; see also environmental initiatives

environmental initiatives, 114-117

 aircraft noise reduction, 3, 16, 115

 at airports, 115-116

 Atmospheric Effects of Aviation Project, 114-115

 combustion technology research, 115

 commercial space launches, 116

 compliance assessment, 115-116

 environmental justice, 117

 hazardous materials, toxic substances, 117

 management reviews, 116-117

 wildlife aircraft strikes, 116

Equal Employment Opportunity at FAA, 108

Experimental Aircraft Association

 pilot video, 81

explosives detection, 2, 12, 92-93

F

FAA Academy

 air traffic selection and training, 108-109

 college accreditation, 108

FAA budget, 4-7

FAA Commercial Aviation Forecast Conference, 105

FAA courses

 Aeronautical Center in-service symposium, 109

 Air Traffic Basics course, 109

 curriculum modernization system, 109

 for air transportation oversight system, 109

 human factors training, 92

 Intellectual Capital Investment Plan, 108-109

 interactive video teletraining, 109

 maintenance, computer-based training program, 91

 model aviation documents, for Trainair program, 120

FAA General Aviation Forecast Conference, 105

FAA lines of business

 Administration, 4

 compensation plan, 4, 112-113

 cost-accounting system, 4

 Air Traffic Services, 2

 Airports, 3

 Civil Aviation Security, 2-3

 Commercial Space Transportation, 3

 Regulation and Certification, 2

 Research and Acquisitions, 3

FAA Logistics Center

 financial reform reinvention laboratory, 114

 ISO-9002 Quality Certification, 101

FAA partnerships

 integrated product teams, 103-104

FAA Plan for Research, Engineering, and

 Development, 6, 7

FAA publications

 ACCESS newsletter, for people with disabilities, 111

 Civil Aeromedical Institute reports, 80

 crew resource management, guidebook, 90

 human factors guides, 91

 maintenance resource management, 91

 maintenance, computer-based training program, 91

 regulations handbooks, Russian translation, 120

 safe practices in general aviation, 91

FAA rulemaking

 cargo compartments, fire detection and suppression

 systems, 79

 carry-on baggage, 80

 center fuel tank ignition sources, Boeing 747, 2, 79

 chemical oxygen generators as cargo, ban, 79

 child restraint systems, 79

 commercial space transportation, 78

 FAA/Air Force national launch safety standards, 80

 fuel quantity indication system, Boeing 747, 79

 low end avionics, certification standards, 78

 reengineered, 78

 single-engine aircraft, passenger-carrying

 operations, 78

 terrain awareness and warning system, 2, 10, 78

FAA staffing standards program, 101

FAA strategic plan, 10-16

FAA summer internships, 110

FAA Telecommunications Satellite Program, 99

FAA websites

 acquisition dispute resolution process and cases, 112

 online job applications, 113

 safety information, 81

FAA-JAA Harmonization Work Program, 119

FAA/NASA Interagency Air Traffic Management

 Integrated Product Team, 103

FY 1998 FAA ANNUAL REPORT

INDEX -127-
FAA/NASAO Partnership agreement, 107

Facilities and Equipment appropriation, 4-6

Figures and Tables

 aviation delays, 14

 FAA employment, by lines of business, 1

 facilities and equipment, obligation trends, 6

 fatal aviation accident rate, 10

 financial reports, 17-77; see also Financial

 Statements and Notes

 franchise fund activity, 77

 franchise fund customer base, 76

 FY 1998 FAA budget, 4

 FY 1998 FAA funding, by source, 4

 GPS landing approaches, 13

 grants-in-aid for airports, obligation trends, 7

 operational errors and deviations, 11

 operations appropriation, by lines of business, 7

 operations, obligation trends, 6

 proposed coordination and communication structure

 for responding to a NAS Year 2000 event, 9

 research, engineering, and development, obligation

 trends, 8

 runway incursions, 11

 runway pavement condition, 12

 Y2K program cost estimates, 2

final operational error/deviation report software, 88

financial reform

 Air Traffic Services Improvement Act of 1998,

 113-114

 lease savings, 114

 Logistics Center reinvention laboratory, 114

Financial Statements and Notes

 aviation insurance revolving fund balance sheet, 70

 aviation insurance revolving fund statement of

 changes in net position, 72

 aviation insurance revolving fund statement of net

 cost, 71

 combined statement of budgetary resources, 41

 combined statement of financing, 42

 consolidated balance sheet, 38

 consolidated statement of changes in net position, 40

 consolidated statement of net cost, 39

 franchise fund balance sheet, 73

 franchise fund statement of changes in net position,

 75

 franchise fund statement of net cost, 74

 limitations of, 37

 notes

 accounting policies, 43-47

 accounts receivable, 49

 cash, foreign currency, and other monetary assets,

 50

 contingent liabilities, 57-58

 costs capitalized on the balance sheet, 63

 cumulative results of operations, 59

 custodial activity, 64

 debt, 53

 deferred maintenance, 59-60

 environmental and disposal liabilities, 56-57

 federal employee and veterans benefits payable, 57

 financing sources yet to be provided, 63

 fund balances with Treasury, 47-48

 imputed financing, 61

 increase/decrease in unexpended appropriations, 62

 inventory and related property, 51

 investments, 48

 leases, 54-56

 loans and loan guarantees, nonfederal borrowers, 50

 net cost by programs, 59

 other assets, 49-50

 other disclosures, 64-65

 other liabilities, 53-54

 prior period adjustments, 62

 property, plant, and equipment, net, 52

 statement of budgetary resources disclosures, 62-63

 taxes and other nonexchange revenue, 61

 total cost and earned revenue by budget functional

 classification, 59

 unexpended appropriations, 58

 OIG audit, 19-36

 stewardship investment

 airport improvement program, 66-66

 research and development, 67

 supplementary statement of budgetary resources,

 68-69

fire suppression and containment, 87

Flight Information Services

 for general aviation, 100

flight loads data collection program, 84

flight operations quality assurance programs, 10, 80

flight route flexibility, 15; see also free flight phase 1

FY 1998 FAA ANNUAL REPORT

INDEX -128-
free flight avionics devices, 89

Free Flight Phase 1 program, 3, 14, 15, 102-103

 collaborative decision making tool, 103

 passive final approach spacing tool, 14, 15, 103

 surface movement advisor, 15, 103

 traffic flow management system, 103

 traffic management advisor, 15, 103

 user request evaluation tool, 11, 102

Fundamentals of the Acquisition Management

System

 FAA course, 92

fuselage skin

 repair assessment procedure and integrated design

tool, 84

Future Air Navigation System

 Mode S, 97

G

Garret A. Morgan Technology and Transportation

Futures Program, 109-110

Global Air Traffic Management Seminar, 118

global aviation information network, 80

global positioning system, see also wide area

augmentation system, local area augmentation

system

 cooperation agreements with Canada, Iceland,

 Japan, 119

 emergency medical service procedures, 96

 flight demonstrations, 118-119

 ground-based differential augmentation technology,

 96

 landing approaches, development, 13, 96

 new routes in Northeast, 96-97

 satellite navigation, 13, 14

 use in aircraft rescue and firefighting vehicles, 87

 user-interface design, 89

grants-in-aid for airports, 8-9

H

host and oceanic computer system replacement, 95-96

Human Factors Design Guide, 91

human factors research

 accident prevention, 88

 acquisition, 91

 reducing risk, 91-92

 air traffic controllers

 digital ground to air communications, 89

 en route display concepts, 88-89

 Final Error/Deviation Report software, 88

 flight strip reduction, 89-90

 shift work and fatigue, 88

 teamwork, impact on performance, 88

 visual scanning, 88

 workload and performance measures, 89

 auditory alarms, 90

 flightcrew/vehicle interface and interaction, 85

 general aviation, advanced research simulator, 89

 GPS user-interface design, 89

 maintenance resource management, 91

 pilots

 advanced qualification program, model

 improvements, 90

 automated performance measuring system, 90

 crew resource management, 90

 debriefings in flight training, 90-91

 fatigue, 88

 free flight avionics devices, 89

 general aviation safe practices, 91

 training with rapidly reconfigurable event-sets, 90

 post operations flight evaluation tool, 89

 publications, 91

 STARS computer-human interface, 91

 systematic air traffic operations research initiative,

 deployment, 88

 training courses, 92

Hybrid Vehicles Integrated Product Team, 104

I

integrated terminal weather system, 14

Intellectual Capital Investment Plan, 108

interactive video teletraining, 109

International Aviation Safety Assessment Program,

117

International Civil Aviation Organization

 Global Aviation Safety Plan, 117-118

 harmonization projects, Latin America and South

 Asia, 119-120

 Safety Oversight Program, 117

 Trainair course development, 120

 workshop on cross-cultural human factors in

 aviation safety, 118

FY 1998 FAA ANNUAL REPORT

INDEX -129-
J

jet fuel safety research, 87-88

L

landing parameter survey facility, 84

local area augmentation systems, 13

low-level windshear alert systems, 86

M

microprocessor en route automated radar tracking

system, 98

military airfields

 joint-use and conversions, 106-107

Mode S, deployment, 97

Model Work Environment

 alternative dispute resolution, 107-108

 child care, 110

 employee attitude survey, 110

 Equal Employment Opportunity

 headquarters mediation, 108

 inclusion of sexual orientation, 108

 FAA Center for Management Development,

 mediation course, 108

 for people with disabilities, 111

 Garrett A. Morgan initiative, 109-110

 sexual harassment complaint-handling, 109

 summer internships, 109

 telecommuting, 110

 workforce training, 108-109

N

NAS Infrastructure Management System Premier

Facility, 101

National Air Traffic Controllers Association

 five year pact with FAA, 112

national airspace modernization

 air traffic control facilities, 99

 air traffic control radar beacon interrogator

 replacement, 98

 airport capacity needs, 104

 airport surveillance radar, 98

 common automated radar terminal system, 96

 controller-pilot data link communications, 98

 digital transmission, general aviation, 100

 display system replacement, 3, 14, 95

 dynamic ocean track system enhanced, 100

 efficiency review, 102

 emergency medical service, GPS approaches, 96

 En Route Integration and Interoperability Facility,

 96

 FAA Logistics Center, quality certification, 101

 FAA Telecommunications Satellite Program, 99

 flight data input/output thermal printer, 98

 flight service stations, upgrades, 100

 GPS approach procedures, 13, 96

 emergency medical service, 96

 GPS ground-based differential augmentation

 technology, 96

 GPS new routes, 96-97

 Gulf of Mexico, new routes, 101

 host and oceanic computer system replacement,

 95-96

 long range radar replacement, 98

 microprocessor en route automated radar tracking

 system, 98

 Mode S deployment, 97

 NAS Infrastructure Management System Premier

 Facility, completed, 101

 next generation air ground communications, 98

 oceanic controller automation support, 100-101

 rebuilding of airport at Chesterfield, Missouri, 100

 staffing standards program, 101

 standard terminal automation replacement system,

 14, 94-95

 voice switching and control system, 95

 VSCS training and backup switch, 95

 wide area augmentation system, 97

 aeronautical surveys, 97

 minimum operational performance standards, 97

 terminal instrument procedures, 97

National Civil Aviation Review Commission

 aviation funding and safety recommendations,

 113-114

National Plan of Integrated Airport Systems, 6, 7, 8-9

National Safe Skies Alliance, 94

next generation air ground communications, 98

next generation weather radar

 deployment, 85-86

FY 1998 FAA ANNUAL REPORT

INDEX -130-
O

oceanic routes

 vertical separation requirements, 107

Office of Dispute Resolution for Acquisitions

 established, 111-112

 website for process and case information, 112

Olympic Games, winter of 2002

 FAA plan, 105-106

Operations appropriation, 5

P

Passenger Facilities Charge Program, 7

 to fund JFK International Airport light rail system

people mover, 104

passenger screening, computer-assisted, 12, 92

passive final approach spacing tool, 14, 15, 103

personnel reform

 compensation plan, 4, 112-113

 automation support, 113

 job-based questionnaires, 113

 online job applications, 113

 pact with National Air Traffic Controllers

 Association, 112

pilot debriefing techniques, 90-91

post operations flight evaluation tool, 89

R

rapidly reconfigurable event-sets

 in pilot training, 90

regulation and certification, 2

 international harmonization, 119-120

 model aviation documents, for Trainair program, 120

research and acquisitions, 3

Research, Engineering, and Development

 appropriation, 4, 5, 6

runway incursions, 11

runway lighting systems, 107

runway pavement, upgrading, 12

S

Safer Skies agenda, 4, 9, 84

safety information

 aeromedical safety courses, CAMI, 80

 assessment, NAS modernization, 81

 flight operations quality assurance program, 80

 global aviation information network, 80

 pilot video, 81

 safety performance analysis system, 80

 safety risk management policy, 80

 website, 81

safety performance analysis system, 80

Safety Risk Management Committee, established, 81

Screener Proficiency Evaluation and Reporting

 System, 93-94

Sexual Harassment Accountability Board, 109

snowfall rate system, 87

Space and Air Traffic Management System, 104

standard terminal automation replacement system,

 14, 94-95

 computer-human interface, early display

 configuration, 91

strategic goals, 10-16

substance abuse prevention program, 83

surface movement advisor, 15, 103

systematic air traffic operations research initiative,

 88

T

telecommuting at FAA, 110

terminal Doppler weather radar, 14, 86

terrain awareness warning system rule, 2, 10, 78

traffic flow management system, 103

traffic management advisor, 15, 103

turbulence detection, 87

U

uncontained engine failure

 as safety hazard, 82, 94

user request evaluation tool, 11, 102

V

vertical separation requirements

 oceanic routes, 107

vocoders

 comparison with analog radio, 89

voice switching and control system, 95

VSCS training and backup switch, 95

W

weather and radar processor, 14, 86

FY 1998 FAA ANNUAL REPORT

INDEX -131-
weather detection, 85-87

weather support to deicing decision-making, 87

weather systems processor, 86

Welfare-to-Work Program, FAA participation, 110

wide area augmentation system, 5, 13, 97

 cooperation with Canada,Iceland,Japan, 119

 flight demonstrations, 118-119; see also global

 positioning system

workforce training, 108-109

Y

Y2K Compliance

 contingency plans, 2-3

 costs, 8

 impact of third party systems, 8

 readiness, 7

FY 1998 FAA ANNUAL REPORT

INDEX -132-