Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

1

Public Announcement

The U.S. Department of Transportation (DOT), Office of the Secretary of Transportation, told the 

public of this Future of Aviation Advisory Committee (FAAC) Subcommittee on Financing meeting in 

a Federal Register notice published August 5, 2010 (75 FR 47344).

Subcommittee Members in Attendance

Name Affiliation(s)

Jack J. Pelton, 

(Subcommittee Chair)

Chairman, President, and 

Chief Executive Officer

Cessna Aircraft Company (Cessna)

Severin Borenstein1Professor Haas School of Business,

University of California, Berkeley

Thella F. Bowens President and 

Chief Executive Officer

San Diego County Regional Airport Authority

John Hennigan 

(Designated Federal 

Official (DFO))

Federal Aviation Administration (FAA)

Joseph Kolshak Attended for 

Mr. Glenn Tilton

United Airlines

Steve Litty 

(Alternate DFO)

DOT

Daniel McKenzie U.S. Airlines 

Research Analyst 

Hudson Securities, Inc.

Stan Van Ostran1 Attended for 

Mr. Raul Regalado

Metropolitan Nashville Airports Authority

Christopher Williams Chairman, Founder, and 

Chief Executive Officer

The Williams Capital Group, L.P.

Committee Members Not in Attendance

 

1

 By phone.

Name Affiliation(s)

Raul Regalado President and 

Chief Executive Officer

Metropolitan Nashville Airports Authority

Glenn Tilton Chairman, President, and 

Chief Executive Officer

UAL Corporation (United)
Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

2

Other Persons Present

Name Affiliation(s)

Chris Benich Honeywell

David Berg1 Air Transport Association of America (ATA)

Chris Bertram DOT

Chris Brown United

Patty Clark Port Authority of New York and New Jersey

Dan Elwell Aerospace Industries Association (AIA)

Christa Fornarotto DOT

Steve Giles MITRE Corporation (MITRE)

Jens Hennig General Aviation Manufacturers Association (GAMA)

Jamie Hunter GAMA

Susan Kurland1 DOT

Kate Lang FAA

David Lee1 ATA

Debby McElroy ACI–NA

Olga Ogban Office of Governor Ted Strickland

Gabriel Okolski DOT

Rick Pittaway DOT

Lisa Piccione National Business Aviation Association

Joseph Post FAA

Chad Rheingans FAA

Cortney Robinson AIA

Mike Romanowski FAA

Melissa Rudinger1 Aircraft Owners and Pilots Association

Roger Schaufele FAA

Ken Shapero Naverus/General Electric (GE) Aviation

Nan Shellabarger FAA

Michael Wells FAA Air Traffic Organization

James Wetherly FAA Chief Operating Officer Air Traffic Organization

 

1

 By phone.
Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

3

BACKGROUND AND WELCOMING REMARKS

This is the record of the second meeting of the Subcommittee on Financing of the Future of Aviation 

Advisory Committee (FAAC), a federal advisory committee formed pursuant to and subject to the 

requirements of the Federal Advisory Committee Act (FACA).

Mr. Jack Pelton, Subcommittee Chair, Cessna, called the meeting to order at 9:02 a.m. He welcomed 

the subcommittee members and members of the public in attendance. Mr. Pelton opened the meeting 

by introducing the members of the subcommittee. He also expressed his appreciation to GAMA for 

hosting the meeting.

Mr. John Hennigan, FAA, read the formal statement required under FACA, and asked the 

subcommittee if there were any suggested edits or revisions to the June 29, 2010, subcommittee 

meeting minutes. There were none offered, and the meeting minutes were ratified after a motion to 

approve by Mr. Chris Williams, The Williams Capital Group, L.P., that was seconded by 

Mr. Daniel McKenzie, Hudson Securities, Inc. Mr. Hennigan reminded members of the public in 

attendance that comments may be submitted to the subcommittee for consideration, and that more 

information was available at the FAAC’s Web site at http://www.dot.gov/faac. He then turned the 

meeting back over to Mr. Pelton to open substantive discussion.

DISCUSSION AND PRESENTATIONS

Mr. Pelton outlined the subcommittee’s agenda for the meeting. He noted there would be several 

presentations to help the subcommittee gain a better understand of topics identified as potential issue 

areas at the first meeting, including a basic understanding of the Next Generation Air Transportation 

System (NextGen) and costs associated with equipping aircraft for NextGen. Mr. Pelton reminded the 

subcommittee that while the presentations were educational in nature, they would need to develop 

consensus topics to present to the FAAC at the August 20, 2010, meeting as potential actionable items 

for the Secretary of Transportation. He then introduced Dr. Michael Romanowski, Director, 

NextGen Integration and Implementation, FAA, for a presentation on NextGen, and encouraged the 

subcommittee to offer questions to Dr. Romanowski after his presentation.

NEXTGEN PRESENTATION

Dr. Romanowski stated his presentation would provide an overview of NextGen and the equipment 

needed for operation in the modernized air transportation system. He noted his presentation, 

titled “Business Case for NextGen,” can be found at http://www.regulations.gov, docket number 

DOT–OST–2010–0074. Slide 2 of Dr. Romanowski’s presentation noted the aviation industry’s impact 

on the U.S. economy. Slide 3 stated that reducing the environmental impact of the aviation industry is 

a top priority. Dr. Romanowski noted this is a very visible issue that is not going away, and has the 

potential to limit the growth of aviation in the future. He added NextGen primarily will bring 

environmental benefits through greater system efficiency.
Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

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Slide 4 highlighted NextGen as a tool for safety and security improvements to the aviation system. 

Dr. Romanowski stated most people focus on the benefits that NextGen will bring to the 

air traffic system. He added NextGen encompasses much more, including benefits for the 

airport infrastructure, aircraft, and a powerful new tool to the U.S. aviation system, known as 

Aviation Safety Information Analysis and Sharing (ASIAS). Dr. Romanowski noted other 

enhancements for security, such as the ability to monitor and track suspicious aircraft, environmental 

benefits through reduced emissions and noise, alternative fuels, and new engine technologies. Slide 5 

showed dollar amounts budgeted to NextGen since fiscal year (FY) 2007, and included the budget 

requested for FY 2011. Dr. Romanowski pointed out NextGen is an effort that is very important to the 

President of the United States and Congress. He noted this fact is shown by the increased amount of 

funding that has been allocated each year.

Slide 6 highlighted the need to continue the development of NextGen, despite a present downturn in the 

economy and air traffic. Dr. Romanowski cautioned the subcommittee that NextGen consists of 

long-term improvements to the aviation system, rather than short-term implementation items and time 

will be needed for implementation. Slide 7 highlighted a number of near-term actions taken by the 

FAA in response to recommendations from the Radio Technical Commission for Aeronautics, Inc.

(RTCA, Inc.) Task Force. Dr. Romanowski stated the task force identified multiple strategies that 

could be taken to accelerate implementation of NextGen using the existing technologies on many 

aircraft. He noted virtually all of the task force’s recommendations have been integrated into the FAA’s

NextGen Strategic Plan.

Dr. Romanowski covered examples of the integrated nature of NextGen on slide 8. He highlighted it as 

a complete system beginning with the flight planning stage, continuing through all phases of flight, 

through completion of a flight at its destination. Dr. Romanowski covered potential challenges to 

NextGen implementation on slide 9, stating a mixed equipage environment (that is, some aircraft are 

equipped for NextGen while others are not) will likely exist for the foreseeable future due to economic 

pressures and the time required for new equipment installation. He noted the FAA could fully 

implement NextGen infrastructure, but the system may not realize full benefits if a high number of 

aircraft are not equipped to utilize the system. Dr. Romanowski added the FAA and U.S. government 

are considering a variety of incentives that could encourage aircraft operators to equip early for 

NextGen rather than wait for a mandatory deadline for installationin the case of ADS-B or when the 

operators believe the investment is justified. Mr. Joseph Kolshak, United, asked if Dr. Romanowski 

could expand on the topic of incentives. He stated it would be covered in more detail in a presentation 

given by Ms. Nan Shellabarger, FAA, in the meeting.

Dr. Romanowski briefly covered slide 10, noting NextGen will affect all users in the 

National Airspace System (NAS). He highlighted the incremental deployment of NextGen on slide 11, 

and stated all of the system’s capabilities cannot be introduced simultaneously. Dr. Romanowski noted 

the FAA is partnering with private industry to introduce operational demonstrations on a number of 

NextGen technologies. He noted this will allow private industry to realize the benefits from NextGen 

technologies while providing the FAA with valuable feedback to further develop the system.
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Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

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Mr. Pelton asked how the FAA is collecting data and communicating the results from these operational 

demonstrations. Dr. Romanowski stated there is a need to better aggregate the results and 

communicate them to industry to illustrate the benefits of NextGen. Mr. Pelton responded if 

introduction of a portion of NextGen was going to be accelerated that the FAA needed to communicate 

the intent to do so and demonstrate what benefits it will bring to industry. Mr. McKenzie added the 

FAA needed to quantify the benefits of equipping early for NextGen, and the efficiencies that will be 

realized by operators that equip. Dr. Romanowski stated benefits would be covered later in the 

presentation, but noted that safety enhancements and a reduction in flight delays were the 

primary benefits being touted by the FAA.

Mr. Joseph Post, FAA, remarked the FAA is studying a number of NextGen benefits, including 

enhancements to aviation safety and cost savings to the FAA. He noted data was being collected on 

helicopter operations utilizing recently introduced Automatic Dependent Surveillance–Broadcast 

(ADS–B) navigation in the Gulf of Mexico, on airport surface movements at Memphis International 

Airport, and John F. Kennedy International Airport (JFK), and the FAA is working with MITRE in the 

realm of required navigation performance (RNP) airspace procedures.

Dr. Romanowski added the FAA needs to move toward aggregated metrics accepted by private industry 

and government. Mr. Pelton noted the data on ADS–B is compelling and asked which FAA office is 

responsible for aggregating, analyzing, and identifying the benefits of prioritization. Dr. Romanowski 

replied a new organization within the FAA was focusing on the metrics with the intent of identifying 

high-level areas for action. He added the areas for action should be shared with industry, and a new 

advisory committee was being formed on how to measure metrics and identify what should be tracked.

Dr. Romanowski continued to slide 12 and highlighted two international partnerships (the Asia and 

Pacific Initiative to Reduce Emissions and the Atlantic Interoperability Initiative to Reduce Emissions)

underway to demonstrate NextGen benefits. He noted a 3 to5 percent improvement in the efficiencies 

of international flights had been achieved, resulting in reduced fuel burn and fewer carbon emissions, 

which in turn, resulted in cost savings for operators. On slide 13, Dr. Romanowski highlighted tailored 

arrivals that were demonstrated at airports in Miami, Florida, Los Angeles, California, and 

San Francisco, California; optimized profile descents in Los Angeles, California; and the benefits 

realized from these procedures. He stated these procedures would be introduced nationwide next year, 

and a compounded benefit should be noted throughout the NAS when they become commonplace.

Mr. McKenzie inquired about the difference in fuel savings realized through the two different 

procedures being used at Los Angeles International Airport. Dr. Romanowski explained a tailored 

arrival was an optimized navigation procedure, whereas the optimized profile descent was essentially a 

standard descent with less time at intermediate altitudes. He noted an optimized profile descent can be 

performed by any aircraft, while a tailored arrival is dependent upon the navigation equipment in the 

aircraft.
Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

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Dr. Romanowski continued to slide 14, which explained new navigation procedures as part of 

NextGen, including area navigation (RNAV), RNP, and Wide Area Augmentation System 

(WAAS)/localizer performance with vertical guidance (LPV). He highlighted the ability of 

RNP procedures to deconflict the airspace around airports in close proximity to each other, such as 

New York LaGuardia Airport (LGA) and JFK. Dr. Romanowski added the general aviation (GA) 

community was benefiting from the introduction of WAAS/LPV at a number of airports across the 

United States. He noted it added the capabilities of an instrument landing system (ILS) without the 

required ground infrastructure of an actual ILS installation, which can be cost-prohibitive for 

smaller airports.

On slide 15, Dr. Romanowski highlighted benefits from performance-based navigation (PBN) 

procedures implemented at the Dallas/Fort Worth International Airport and Hartsfield-Jackson Atlanta 

International Airport, which consists of both RNAV and RNP procedures. On slide 16, he noted PBN 

would be expanded to a number of U.S. cities with major airports and/or several busy airports within 

their airspace in a process known as “metroplexing.” Mr. Kolshak asked how cities selected for 

metroplexing are being prioritized. Dr. Romanowski responded the FAA has done internal modeling, 

but is also seeking assistance from the aviation industry through the previously mentioned new 

advisory committee that has been formed.

Mr. McKenzie expressed concern the FAA approval process for new navigation procedures takes 1 to

3 years. He questioned if some of the work involved with approving procedures for metroplexing 

could be outsourced to contractors. Dr. Romanowski replied the FAA currently has an internal team 

working to identify methods to streamline the FAA’s approval process. He also noted Naverus, a part 

of GE Aviation, was involved in metroplexing efforts. Mr. McKenzie asked if there was a limit to the 

amount of work that could be contracted out, and stated air carriers were experiencing delays in 

approval of procedures. Dr. Romanowski responded he was unaware of significant bottlenecks in the 

approval process, and noted these are complex navigation procedures and approval can take an 

extended amount of time. Mr. Kolshak asked if the measurement of environmental impacts was

slowing the approval process. Dr. Romanowski replied it does, and noted it was a significant time 

constraint in the process, but must be undertaken.

Dr. Romanowski continued to slide 17, which showed the number of WAAS/LPV approaches that have 

been introduced across the United States. He noted over 20,000 aircraft are now equipped for 

WAAS/LPV and currently additional aircraft are being equipped. On slide 18, Dr. Romanowski 

highlighted a number of airport improvements completed during FY 2009–2010. He noted the FAA 

was leveraging airport surface detection capabilities with airport improvements, and stated one of the 

most visible projects involving this NextGen concept was a runway closure at JFK for a reconstruction 

project during the spring 2010. Mr. Romanowski cited the project as a good example of cooperation 

among the FAA, air carriers, JFK, and the sharing of airport surface data during a crucial project with 

the potential to cause extreme flight delays. He added building new runways helps reduce delays, and 

the FAA will continue to add new infrastructure to the aviation system.
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Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

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Dr. Romanowski covered surface surveillance and data sharing on slide 19. He explained air carriers 

can save 1 to 4 minutes per flight by receiving real-time surface movement information from 

Airport Surface Detection Equipment–Model X (ASDE–X) from FAA facilities. Mr. Romanowski 

stated this allows each individual air carrier to judge whether or not to dispatch their aircraft or hold 

them at the gate if an extended queue of aircraft are awaiting departure or otherwise experiencing 

taxi delays. He noted this technique is currently being used at JFK; the actual queue at the departure 

runways stay relatively low, even though a larger number of aircraft are awaiting departure at various 

points on the airport but elect not to taxi into a large queue. Mr. Kolshak asked if this was leading to a

gate shortage at JFK, with inbound flights delayed because outbound flights did not depart their gates 

to avoid a long queue. Ms. Patty Clark, Port Authority of New York and New Jersey, replied it was 

happening at certain terminals at JFK, but generally was not a problem.

On slide 20, Dr. Romanowski covered airports that either have or will have ASDE–X installations. On 

slide 21, he discussed ADS–B, and provided a brief explanation of the system and benefits to users. 

Mr. Romanowski cited a 47 percent reduction in fatal accidents in Alaska for aircraft that are equipped 

with ADS–B. He showed areas of the United States that contain ADS–B coverage, including areas to 

be introduced in FY 2011. Dr. Romanowski discussed the types of aircraft equipment that will be 

needed for NextGen, the approximate number of aircraft in various segments of the U.S. aviation fleet, 

and the approximate costs for equipage in slides 22 through 25. He pointed out a wide variation of 

costs for equipage based on aircraft type, and noted installation of equipment in older aircraft can be 

quite expensive.

Dr. Romanowski noted on slide 26 that a mixed equipage environment would exist for the 

foreseeable future, and that this is a global issue. He provided a summary of NextGen equipage needs 

and benefits on slide 27, and noted if more aircraft that equipped, the U.S. aviation industry will benefit 

as the NAS approaches an optimum performance level. Mr. Romanowski noted FAA estimated users 

would need to invest $5 to $7 billion in equipment to realize significant benefits from NextGen 

mid-term capabilities.

Mr. Severin Borenstein, Haas School of Business, University of California, Berkeley, questioned the 

$5 to $7 billion estimate for needed equipment, stating he has seen estimates as high as $20 billion. 

Dr. Romanowski stated the $20 billion estimate is from the Joint Planning and Development Office, 

and is an estimate for end state NextGen equipage, while the $5 to $7 billion estimate is for mid-term 

equipage. Mr. McKenzie asked if the estimate included general and commercial aviation, and military 

aircraft, and what percentage of the costs would be paid by commercial aviation users. 

Dr. Romanowski replied it did, though only a portion of the GA fleet, since not all aircraft in that 

segment would need to equip. He noted the majority of the estimated costs would be incurred by 

commercial aviation users.
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Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

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Dr. Romanowski continued to slide 28, which provided a yearly estimate of investment costs for users 

through 2018. He noted the smaller percentages for GA were due to equipage primarily being needed 

by turbine-powered aircraft, which represents a small portion of the GA fleet. Dr. Romanowski 

continued to slide 29, which provided estimates for reductions in flight delays, fuel consumption, and 

carbon dioxide emissions in 2018, and future forecasts to 2030. He noted NextGen would provide 

significant benefits to users in these areas.

Ms. Thella Bowens, San Diego County Regional Airport Authority, asked how airports fit into the 

estimate, because it seems they would have equipment needs. Dr. Romanowski replied airports would 

need infrastructure for ADS–B, particularly for approach procedures. Ms. Bowens asked about the 

number of ASDE–X installations planned, and also if the FAA was concerned about a lack of 

gate space at airports. Dr. Romanowski gave an approximate number of 35 ASDE–X installations that 

are currently in place and a near equal amount planned for installation. He agreed the lack of gate of 

space was a concern for the FAA.

Ms. Clark noted the lack of gate space at airports could become a factor as the U.S. aviation system 

expands. Dr. Romanowski agreed and stated the FAA is studying whether NextGen funding should be 

applied to ramp and gate areas at airports. He continued his presentation with slide 30, which 

estimated costs for NextGen through 2030, though he noted the estimates beyond 2018 were less 

certain. Mr. Pelton asked why there were continuing equipage costs in the estimates, and whether new 

aircraft were assumed to be already equipped upon delivery. Dr. Romanowski replied equipment 

installed in new aircraft was considered an indirect cost to keep estimates conservative.

Mr. McKenzie noted some air carriers have invested in equipment on their aircraft that is currently not 

needed. He questioned whether air carriers would be required to invest in replacement equipment. 

Dr. Romanowski clarified that Mr. McKenzie was referring to ADS–B equipment, and noted new 

standards were released in the spring of 2010. He added some ADS–B equipment will need 

modification or replacement, particularly if it was a very early version of ADS–B out equipment.

Mr. Kolshak asked if an assumption for cost savings from decommissioning older equipment was 

included in the estimates. Dr. Romanowski responded the estimates were purely cost. Mr. Post added 

the savings were accounted for elsewhere. Mr. Borenstein and Mr. Pelton further clarified continuing 

equipage costs with Dr. Romanowski. Dr. Romanowski continued to slide 31, which detailed the 

cost savings by category, and noted the vast majority of savings are a result of reduced flight delays and 

fuel consumption. He highlighted annual benefits from NextGen through 2030 on slide 32, and 

cumulative discounted costs and benefits of NextGen mid-term capabilities through 2030 on slide 33. 

This concluded Dr. Romanowski’s presentation, and he solicited questions from the 

subcommittee members.
Future of Aviation Advisory Committee

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Record of Meeting

August 17, 2010

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Mr. Borenstein questioned by what method the discounting on slide 33 was accomplished. Mr. Post 

responded standard Office of Management and Budget principals were used. Mr. McKenzie asked for 

clarification if the original provider of the FAA’s current air traffic control (ATC) equipment, which he 

believed was an IBM, had stopped supporting the product in the 1990s. Dr. Romanowski responded he 

was unsure if this was the case, but added the FAA gains tremendous capability from its present 

system, though obsolescence was a significant factor and a key driver for the need to modernize the 

air traffic system.

Mr. Williams asked how NextGen benefit estimates for passenger time savings were calculated. 

Mr. Post replied the DOT has a standard value that is used for passengers’ time value that is multiplied 

by average flight delays, air carrier load factors, and other factors. Mr. Williams asked if the estimate 

included delays to air cargo being transported. Mr. Post responded it did not, but acknowledged it was 

an important factor that should be considered.

NEXTGEN EQUIPAGE FORECAST

Mr. Pelton introduced Mr. Chris Benich, Honeywell, and noted his presentation would focus mostly 

open equipage costs. Mr. Benich began his presentation by noting the flight deck on the cover slide

was an example of a very well-equipped aircraft. He added that many aircraft in the U.S. fleet are not, 

which causes a great variation in costs to equip aircraft for NextGen. Mr. Benich covered organizations 

that participated in the study on slide 2. He noted some factors included in the study were covered on 

slide 3, and pointed out that aircraft equipment upgrades would be needed for ADS–B Out, 

RNAV/RNP, and Ground Based Augmentation System (GBAS)/Global Positioning System Landing 

System (GLS). Mr. Benich noted the first GBAS/GLS installation was completed at Newark Liberty 

International Airport (EWR) and that Continental Airlines is currently equipping its aircraft to conduct 

GBAS/GLS approaches. Other air carriers are also considering equipping their aircraft. He stated

data communication applications and ADS–B In technologies were not included in the study, because 

clarification is needed on the requirements for these applications.

Mr. Benich continued to slide 4, and listed assumptions made for segments of the U.S. aircraft fleet that 

were studied. He noted adjustments that were made for aircraft lifespan and retirements, airspace and 

operational needs, and existing avionics capabilities. Mr. Benich covered estimated costs for the 

seven segments of aircraft on slide 5. He clarified the cost estimates included labor for installation and 

if they were not based on investment in new equipment alone. Mr. Borenstein asked if the costs were 

reduced over time, based on an assumption that equipment costs would lower as technology advances. 

Mr. Benich stated that he was uncertain, though the costs were estimates and not scientific. 

Mr. Borenstein asked if the cost estimates were predominately for equipment or the labor required for 

installation. Mr. Benich replied that costs were predominately for equipment, though he was unsure of 

an exact percentage, and added aircraft down time was not factored into the estimates. Mr. Pelton 

asked if it was assumed installation would occur during a regularly scheduled major maintenance 

event. Mr. Benich stated that was not taken into account.
Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

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Mr. Borenstein asked for clarification on the varying numbers of the fleet size represented in the 

assumptions. Mr. Benich stated the assumptions were based on the FAA’s forecasted fleet numbers 

for 2012, plus a 25-year lifecycle for aircraft. He noted aircraft planned for retirement in the next 

3 years were assumed not to equip for ADS–B Out, those planned for retirement in the next 5 years 

were assumed not to equip for ADS–B In, and new aircraft would be delivered with NextGen 

equipment. Mr. Benich further explained the assumptions on slide 5.

Mr. Borenstein asked if the estimated costs were cumulative, citing it would cost approximately 

$700,000 to equip an air transport aircraft if all of the columns were added. Mr. Benich confirmed the 

columns were cumulative.

Mr. Benich continued to slides 6 and 7 of the presentation, which covered normal spending profile

assumptions for the aircraft segments through 2020, assuming the complete equipage by a 

2020 deadline, and investment amounts for the various types of equipment needed.

Mr. Benich explained the acceleration of NextGen implementation on slide 8, noting most 

aircraft operators are assumed to equip near the 2020 deadline. He highlighted benefits that could be 

realized by operators that voluntarily equip early. Mr. Benich also highlighted accelerated spending 

profiles on slides 9 and 10 and covered assumptions of how quickly aircraft could be equipped with 

available resources.

Mr. Kolshak noted approximately one-third of costs appeared to be for air carriers. Mr. Pelton added 

approximately half of the mandated equipage costs will be covered by aircraft operators. 

Mr. McKenzie asked if equipping aircraft by 2013 would be constrained by the amount of labor 

available. Mr. Benich acknowledged it was a concern, particularly for the GA segment. Mr. McKenzie 

asked, if the aviation industry was able to fully equip by 2013, would the benefits realized be 

approximately the 25 gallons per flight cited in the example of optimized profile descents at 

Los Angeles, California? Mr. Benich replied it was likely more, since a number of factors will be 

combined for what is currently in place 2013.

At the completion of his presentation, Mr. Benich solicited general questions from the 

subcommittee members. Mr. Borenstein asked if a matrix had been constructed showing 

various options for implementation speed among the segments and the resulting benefits. He added the 

aviation industry wants to move forward, but also is seeking value for its investment. Mr. Borenstein 

also noted the air carrier industry could be hampered if the rest of the sectors do not equip. He

expressed his opinion that a significant policy issue seems to be how quickly to implement, and which 

segments should be included. Mr. Benich agreed the aviation industry is ready to implement, but noted 

there are policy issues that need to be determined by the FAA to facilitate implementation.

Mr. McKenzie asked if a 2013 target date for equipage was attainable, assuming that approval by the 

FAA could be achieved in time to reach it. Mr. Benich clarified the target date referred to equipment 

already approved, not navigation procedures requiring approval. Mr. Kolshak asked if the 

2013 target date coincided with full installation of ground-based facilities, which Mr. Benich

confirmed.
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August 17, 2010

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PERFORMANCE BASED NAVIGATION

Mr. Ken Shapero, Naverus/GE Aviation, introduced himself and stated his presentation would cover the 

near-term benefit of PBN. He stated the presentation would explain how to obtain benefits out of 

aircraft that have existing equipment. Mr. Shapero moved to slide 2 and explained that the graph 

demonstrates the gap in aviation technology. He further explained the technology in aircraft has far 

surpassed the technology available with air traffic management. Mr. Shapero stated the universal 

concerns driving aviation change include flight delays, climate change issues, aircraft noise, and fuel 

prices as seen on slide 3.

Mr. Shapero continued to slide 4, and stated the technology available today can be compared to buying 

a new global positioning system (GPS) for a vehicle, but not being able to open the box. He stated the 

situation is the same with aircraft, that is, the technology is available but is unusable. Mr. Shapero 

explained his presentation would demonstrate how to take the technologies that are available today and 

implement them sooner to realize the benefits of NextGen.

Mr. Shapero continued to slide 5 and explained there is a need to transition from a ground-based 

infrastructure to performance-based infrastructure. He explained this transition may be difficult 

because it involves human factors, including air traffic controllers and flightcrews. Mr. Shapero stated 

PBN allows for more direct routes, fuel savings, and reduced carbon dioxide (CO2) emissions through 

use of GPS, Inertial Reference Systems, and Aircraft Flight Management Computers. He noted the 

tailored flight paths and infrastructure for air traffic management are not available to take advantage of 

the current aircraft technology.

Mr. Shapero continued to slide 6 and stated the three elements of NextGen are communication, 

navigation, and surveillance. He stated PBN is made up of required navigation performance with 

authorization required (RNP AR); required navigation performance approach, which includes lateral 

navigation, vertical navigation, and WAAS/LPV; and RNAV. Mr. Shapero noted RNP can be taken to a 

higher level once the authorization is received, which will be explained later in the presentation.

Mr. Shapero explained the three categories that comprise PBN on slide 7. On slide 8, he explained that 

RNP AR protects a very narrow lane of airspace that offers more efficient flight paths. Mr. Shapero 

explained on slide 9 that an RNP path allows for a more optimized approach, saving fuel, time, and 

CO2, compared to a ground-based navigation approach. As displayed on slide 10, Mr. Shapero stated 

optimized PBN can provide immediate benefit for arrivals and departures.

Mr. Shapero noted RNP technology is already being used today in countries outside of the 

United States, as displayed on slide 11. He moved onto slide 12, which stated that RNP is being used 

by WestJet in Kelowna, British Columbia, Canada. He explained the graphic representations show the 

flight paths before and after RNP. Mr. Shaper stated the flight paths after RNP display shorter routes,

allowing for less fuel burn and lower emissions, as seen in the close up views on slide 13.
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Mr. Shapero explained how WestJet chose to implement RNP AR throughout their company. He read 

the statistics on slide 14, which display the distance, time, fuel, and emissions saved. Mr. Shapero

explained that, in addition to these savings, WestJet now only flies two types of approach procedures,

which is a safety benefit for the company.

Mr. Borenstein inquired about what coordination was required with the airports and what technology 

was required by WestJet in order to implement these changes. Mr. Shapero stated there was a lot of 

coordination with airports and the Canadian air navigation service provider. He stated the airports used 

were not the busiest airports, but his presentation will explain how to use the RNP AR technology in 

mixed-equipage environments.

Mr. Pelton explained Naverus/GE Aviation designed specific approaches, the regulator had to approve 

the approaches, the local airport had to agree to the procedures of these approaches, and WestJet had to 

train the flightcrew to fly the approaches. Mr. Shapero added the routes were all flown with 

Boeing 737s with a flight management system capable of RNP AR, contracted through 

Naverus/GE Aviation. He noted this specific example was unique to WestJet, but Naverus/GE Aviation

is working with the FAA to start implementing similar procedures in the United States.

Mr. McKenzie inquired why the design approaches worked in Canada but not in the United States. 

Mr. Shapero explained WestJet paid for all of the expenses, putting the company at an operational 

advantage. He further explained the FAA had a negative reaction to one air carrier creating specialized 

operations for their own company. Mr. Shapero stated if one company has their own procedures, other 

companies will follow suit with their own procedures, leading to chaos. He noted in the United States, 

rather than creating specialized operations for each airline, there will be a public RNP procedure 

instead. Mr. Shapero stated the first public RNP will be implemented at Bradley International Airport 

(BDL) in Windsor Locks, Connecticut, on August 26, 2010.

Mr. Shapero stated the FAA is more deliberative than the Canadian air navigation service provider. He 

noted the FAA has a responsibility to manage air traffic and since this is a large transition, the FAA is 

choosing to implement changes at their pace. Mr. Pelton contrasted the conflict control issue in the 

United States vs. Canada. He stated that changes made at JFK will affect EWR and LGA, whereas the 

airports in Canada are spaced out enough to avoid that conflict.

Mr. Shapero continued to slide 15 and explained the magnitude at which the WestJet network was able 

to save miles, fuel, and emissions. On slide 16, he addressed the issue of airports with additional traffic 

and mixed equipage. He stated operations were tested at Brisbane Airport, a medium-density airport 

with about 80,000 operations per year. Mr. Shapero explained the magenta line on the slide displays 

the RNP path flown by QANTAS and the yellow line shows a traditional RNAV approach.

Mr. Shapero moved to slide 17, and explained RNP AR offers benefits beyond fuel and 

emission savings with reduced noise impact. Slide 18 displays the benefits seen at BNE, and 

Mr. Shapero explained the air traffic controllers were able to merge the RNP technology with 

legacy technology to see successful results. He stated these procedures are being implemented at all 

airports in Australia over the next 5 years.
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Mr. Borenstein requested a time period for the statistics in slide 18. Mr. Shapero stated these figures 

are for the first phase of the project, but he will send updated information to the subcommittee. 

Mr. Kolshak asked Mr. Shapero if there is feedback regarding conflicts or issues from the mixed 

equipage environment. Mr. Shapero stated the air traffic controllers were initially skeptical, but 

Airservices Australia included the air traffic controllers in the early designs of the program. He stated 

once the air traffic controllers became familiar with the program, they did not experience problems. 

Mr. Shapero acknowledged it is a different way of thinking for the air traffic controllers, but they have 

learned to trust the procedures and the automation tools. He stated RNP AR-equipped aircraft 

experienced better performance and, as a result, other aircraft experienced better service since the 

RNP AR aircraft cleared up more airspace.

Mr. McKenzie inquired how much ATC is required for RNP-based approach landing. Mr. Shapero 

stated it is sequencing and oversight. He explained the idea of ATC is changing from controllers 

vectoring in aircraft to aircraft following very specific paths with controllers monitoring separation.

Mr. Shapero returned to the presentation by reading slides 19 and 20, which display implementation at 

airports in the United States. He then moved to slide 21 and explained that in order to reap the benefits, 

RNP must be implemented. Mr. Shapero stated there are numerous benefits that NextGen will offer, 

but it must start somewhere. He noted RNP is the foundation of achieving NextGen technologies.

Mr. Shapero moved to slide 22 and explained 42 percent of the operations in the United States have 

traffic density less than or equal to Brisbane (BNE), and can implement RNP arrivals immediately. He 

stated the lessons learned at these airports can be used as tools to help implement RNP at the 

larger airports. Mr. Shapero explained slide 23 offers the conservative assumptions and 

resulting benefits that can be seen at the 42 percent of airports that are RNP capable.

Mr. Shapero moved to slide 23 and read the details regarding benefit assessment. He emphasized the 

inaccuracy of the phrase “RNAV everywhere, RNP where necessary.” Mr. Shapero suggested this 

mentality is a recipe for mediocrity and the RNP equipment should be used to its full advantage. 

Mr. McKenzie inquired where the phrase originated from. Mr. Shapero stated the origin is unknown, 

but it is a term that is commonly used at the FAA and offers a misguided approach to RNP.

Mr. McKenzie inquired if operators with older fleet types are resistant to the changes. Mr. Shapero 

stated it is not necessarily the case since operators are still able to operate without RNP. He noted it 

does help incentivize equipage since operators will be able to see the cost-benefit of RNP operations.

Ms. Bowens inquired if this system would work well with airports that are heavily impacted by 

military aircraft. Mr. Shapero stated this system would be beneficial in those types of airspaces,

because RNP may be able to free up airspace for non-military use.
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Mr. Shapero noted slide 25 stated there is no time to waste in implementation because the trend of 

jet fuel prices continues to rise. Mr. Shapero read slide 26 and explained the difference between 

RNP .3 and RNP .1. He offered an example: RNP .1 allows for a decision height of 350 feet, while 

RNP .3 allows for a decision height of 800 feet. Mr. Shapero stated the RNP procedure allows for a 

greater benefit.

Mr. Williams asked about the implementation schedule at BDL. Mr. Shapero stated it is ready to 

deploy on August 26, 2010, and took approximately 3 years to complete. He stated future 

implementation will take significantly less time.

Mr. Shapero addressed the issue of environmental impact of noise. He stated when a flight path 

changes, an environmental impact statement must be completed for any new people affected by the 

changes. Mr. Shapero recommended when new airports are being designed, the environmental impact 

statement take into account all possible scenarios.

Mr. Borenstein inquired if the FAA has been conducting studies in Brisbane, Australia, and 

Kelowna, British Columbia, Canada. Mr. Hennigan stated the FAA is aware of the operations at these 

locations. He noted he was unable to answer the question but offered to find an answer.

EQUIPAGE INCENTIVES

Ms. Shellabarger stated she plans to walk through issues around incentives for equipage and will cover 

both operational incentives and financial programs that can help accelerate the equipage issue for 

NextGen.

Ms. Shellabarger began her presentation with a discussion of operational benefits. She stated the 

phrase “best equipped, best served” has become a prevalent issue with NextGen implementation. 

Ms. Shellabarger stated the theory of the statement has been discussed at length and the FAA is now 

addressing the issue of putting this phrase into practice. She noted the issue becomes defining what is 

better, how much better, and how can it be implemented without a negative impact on others.

Ms. Shellabarger explained the first theory is a non-interfering service improvement, which means an 

operator who is equipped can perform an operation others are unable to complete. She compared this 

service improvement to a high occupancy vehicle (HOV) lane on a highway. Ms. Shellabarger stated 

those with the new equipage would receive the benefits of the “HOV lane” without creating a 

disadvantage for non-equipped aircraft.

Ms. Shellabarger explained a second theory for “best equipped, best served” where there is a positive 

benefit to operators who equip, with a slight disadvantage to operators who do not equip. She 

described this situation as taking an existing lane on a highway and turning it into an HOV lane. 

Ms. Shellabarger stated in doing so, those who cannot use the HOV lane will be at a slight 

disadvantage but there will be an increase in the throughput in the system. She mentioned this situation 

requires a thorough cost-benefit analysis.
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Ms. Shellabarger explained a third theory where there is a benefit to society that is not net positive to 

the operators. She stated the surface analogy for this theory is allowing hybrid vehicles in the 

HOV lanes. Ms. Shellabarger noted although this model does not allow an increase in the throughput, 

it does allow for a decrease in emissions which is a benefit to society.

Ms. Shellabarger stated the forth, and last, theory is to encourage equipage by making a mandate. She 

noted that although there is a short-term hit, there is a long-term infrastructure shift. Ms. Shellabarger 

compared this theory to imposing a tax on private cars traveling into center city, London, England,

which greatly reduces fuel consumption and congestion.

Ms. Shellabarger stated the FAA is looking at studying the operational financial incentive approaches 

for equipage. She noted there is a spectrum of options available, but none of the options have been 

approved by the Federal government. Ms. Shellabarger stated one option is government financial 

options, which includes grants, loans, loan guarantees, or tax credits. She also stated a number of 

considerations before implantation, including how much total money is needed, how much money is 

enough to make a difference to each operator, how to deliver the money from the government to the 

operators, how the financial incentives will effect on budget deficit, and how to be fair in the 

distribution of resources.

Mr. Borenstein inquired if it is appropriate for the government to finance equipage. Ms. Shellabarger 

stated this is a question that is underlying all the options available. She posed the question to the 

subcommittee as to what the public policy will be regarding funding. Mr. Kolshak replied aircraft are 

an extension of the airspace, rather than part of a private company, so from a public policy standpoint, 

it is an integral part of how the airspace will function. Mr. Borenstein argued the opposite case and 

stated the government does not pay for brake repair, yet cars drive on the highways.

Mr. McKenzie noted equipping an aircraft is really transferring the cost into that aircraft. He stated it is 

different than the brakes on a car analogy, in that the aircraft are absorbing cost for the whole structure 

to work effectively. Mr. Kolshak echoed this thought by referring to the Naverus/GE Aviation

presentation. He stated the controller monitors the aircraft while the aircraft is receiving and sending 

information. Mr. Kolshak also stated that aircraft who equip help to reduce the overall cost to the FAA.

Mr. Kolshak stated the acceleration of equipage would bring the benefits sooner, otherwise, there may 

be an endless loop of operators who do not want to equip and the benefits of NextGen cannot be 

realized.

Mr. McKenzie inquired how the government is taking into consideration the economic costs of delays. 

Ms. Shellabarger stated the government takes these costs into consideration. She stated it is possible to 

calculate the measurable costs of the delay.

Mr. Borenstein stated the reason the delays exist is because the aircraft are already creating congestion. 

He noted the congestion problem is equivalent to paying people to reduce their electricity usage, rather 

than charging for the actual electricity use. He stated the operators that create a negative externality 

should be charged for the congestion.
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Mr. Borenstein inquired what the subsidizing situation will be for the GA side. Mr. Pelton responded 

there is a crossover point where the new aircraft coming out will have the NextGen equipment as 

standard features. He stated although it may raise the cost of new aircraft, the new equipment will also 

be replacing current technologies that are no longer useful. Mr. Pelton noted, with regard to existing 

GA aircraft, operators will have to find a way to equip. He stated the ADS–B mandate has to be 

absorbed by everybody, but the financing for future technologies has not been decided upon.

Mr. McKenzie asked for clarification about the phrase “best equipped, best served” and who will be 

disadvantaged. Ms. Shellabarger noted each situation is different. She stated there may be delays to 

non-equipped aircraft if the approaches do not allow for non-interfering operations. Ms. Shellabarger 

stated those who are equipped will receive priority; therefore, non-equipped aircraft will see a 

disadvantage.

Mr. McKenzie inquired about the level of approval in order to move forward with financing options. 

Ms. Christa Fornarotto, DOT, stated it is not an exact science. She stated the rulemaking process 

allows time for notice and comments to receive a broad spectrum of opinions to make a decision.

Mr. Dan Elwell, AIA, stated there is an analogous piece of equipment with trains called positive train 

control. He stated it is a display system that shows where trains are located, similar to the technology 

with ADS–B. Mr. Elwell noted this equipage for trains was funded through Federal grant money, so 

the financing situation is not unprecedented. He added there are many incentive packages available in 

addition to grants, including money given up front, and, at a point in the future when benefits are 

realized, the money is paid back.

Mr. Hennigan stated that in the RTCA Task Force 5 report, the response to the FAA questions regarding 

“best equipped, best served” was positive, but there was some reluctance from the industry. He stated 

the lack of a definition for “best equipped, best served” creates ambiguity. Ms. Shellabarger stated 

determining the definition is the next level of detail in the study and analysis process. She stated as 

stewards of the public interest, the subcommittee must look for the best solutions.

Ms. Shellabarger stated there has been some conceptual work done on the spectrum of financing 

options available. She noted grants come with a list of practical considerations, including: how much 

money is enough to be useful, what is the payback, how will the government account for the high cost, 

will it be a net increase in the deficit or will there be a payback, and what is the best way to implement 

the grants?

Ms. Shellabarger stated loan facilities also come with a list of considerations. She stated there must be 

some form of initial capitalization, favorable interest rates, and repayment mechanisms which should 

be tied to the realization benefits. She stated the FAA needs to know how much of a difference a 

lower interest rate would make to the industry to evaluate the attractiveness of these loan facilities.

Ms. Shellabarger stated all options are scored assuming some level of default. She noted 

budget scoring includes the consideration of the cost to the government, the time value of money, and 

the default rate.
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Ms. Shellabarger noted loan guarantees raise the same questions as grants and loan facilities. She 

stated from the Federal budget scoring angle, loan guarantees score more favorably than direct loans. 

Ms. Shellabarger mentioned the FAA is uncertain of how attractive these options are to operators.

Ms. Shellabarger changed the subject back to the option of tax incentives. She stated this option does 

not score well and is a very complicated process. Mr. McKenzie stated the airlines will not benefit 

from tax incentives.

With regard to GA, Ms. Shellabarger stated there are some options available to work with states. She 

noted the Alaska Capstone project was funded with state assistance.

Ms. Shellabarger stated it may be an option to design a more targeted and limited program geared for 

one technology issue or one regional area to solve one problem with equipage. She stated the issue 

could be solved and the project could move on. Ms. Shellabarger explained that since there are aircraft 

already equipped, there will be published information about the benefits of equipage. She stated this 

information will help operators build an internal case for equipage.

Ms. Shellabarger asked the subcommittee for feedback on which public policy case makes the most 

sense, which options should be excluded, and if there are any other options that need to be explored.

Mr. McKenzie inquired how the HOV lane analogy looks in a cost-benefit analysis. Ms. Shellabarger 

stated in the case of a new HOV lane, there is a net positive outcome. She stated response is a 

generic statement, and each case needs to be analyzed to determine the specific cost-benefit.

Mr. Kolshak stated with the HOV lane analogy, the on ramps and off ramps need to be taken into 

consideration as well, meaning from runway to runway. He stated this issue becomes complex with 

mixed equipage. Ms. Shellabarger noted the issue of mixed equipage comes with the issue of how 

much of a disadvantage will others receive regarding extra miles and restricted access. She stated each 

airport is different and the answer is dependent upon runway configuration, weather, 

and traffic volume.

Ms. Shellabarger asked if the subcommittee had any additional comments or questions. Mr. Kolshak 

asked if there have been any conversations with the air carrier industry regarding the involvement of 

capital markets. Ms. Shellabarger stated there is a need for Congressional action. She stated there is a 

pending reauthorization bill that has a couple of provisions for operational incentives. 

Ms. Shellabarger stated there is also a topic of financial incentives on the Senate bill which would 

authorize the FAA to enter a cooperative agreement with states for loans for ADS–B.
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FAA BUDGET AND FINANCE

Mr. Chris Bertram, DOT, gave a presentation to the subcommittee on the FAA budget and finance

(see attachment for a copy of this presentation). He began the presentation with an overview of 

FAA funding. Mr. Bertram explained slide 1, which showed a basic table of the 

FAA’s FY 2010 budget. He noted the two sources of funding. Mr. Bertram first described the

Airport and Airway Trust Fund (AATF) and highlighted the individual areas of spending. He explained 

the structure of the General Fund and how it is used to fund operations that are not covered under the 

AATF. Mr. Bertram provided a brief overview of the historical inception of both funds. He discussed 

slide 2, which showed a breakdown of how the FAA designates operations funding. He pointed out the 

vast majority of the funding goes to ATO and Aviation Safety. Mr. Bertram mentioned a small 

appropriation is used for commercial space and staff offices.

Mr. Bertram moved to slide 3 which displayed the financial breakdown of the 

Grant-in-Aid for Airports program. He continued to slide 5, which reflected Facilities and Equipment 

funding broken down by activity. Mr. Bertram briefly explained slide 6 which showed the funding that 

comes out of the Research, Engineering and Development (RED) budget. He noted that 

NextGen funding comes out the RED budget. Mr. Bertram proceeded to slide 7 to discuss the 

breakdown and evolution of aviation taxes and fees. He concluded the presentation with slide 8, which 

reflected FY 2009 taxes by user groups.

Mr. Bertram then opened the floor for questions. The subcommittee discussed the structures of the 

AATF and General Fund. Ms. Bowens inquired about the FAA’s position on uncommitted balances 

and how the issue will be addressed. Mr. Bertram commented on how the AATF is not overcommitted 

like other funds and provided an example of the highway fund. Mr. Bertram assured Ms. Bowens when 

the FAA proposes the budget to Congress, the numbers are structured to ensure that AATF balance 

remains positive. There was a discussion about the volatility of aviation taxes and fees.

Mr. Borenstein asked for clarification of the Grants-in-Aid for Airports program. Mr. Bertram 

explained the grants to the airports are for capital improvements. He deferred further discussion on the 

topic to the next presentation on the Airport Improvement Program (AIP) and Passenger Facility 

Charge (PFC) Program. Ms. Bowens asked what percentage of AATF funding is applied to airports. 

Mr. Bertram explained that the airport program is usually 100 percent funded through the AATF. He 

noted the AIP percentage has consistently remained around 3.5 percent. Mr. Bertram further noted the 

overall FAA budget has grown.

Mr. McKenzie asked how the FAA determines revenue shortfall. Mr. Bertram replied there is usually a 

formula written into the law that tells the department how much can come from the AATF and the 

General Fund. He noted the formula was not renewed by Congress but explained that the expired 

formula is based on theory of capital priority. Mr. Bertram stated the formula was designed to keep the 

trust fund stable. Mr. McKenzie inquired about the potential need to increase sources of revenue. 

Mr. Bertram expressed his confidence in the FAA’s funding structure and commented on the 

historical success and stability of the structure.
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Mr. McKenzie asked Mr. Bertram for his advice to the subcommittee regarding finance and focus. 

Mr. Bertram responded the funding is relatively stable in structure and of the policy issues the FAA has 

to confront; he would not consider funding as a top as problematic issue. Mr. Bertram concluded the 

discussion by noting the delicate balance of the funding structure. He cautioned that even 

small changes could disrupt balance and result in unintended effects.

AIRPORT IMPROVEMENT PROGRAM (AIP) AND PASSENGER FACILITY CHARGE (PFC) PROGRAM

Ms. Kate Lang, FAA, gave a presentation to the subcommittee on the AIP and PFC Program. Ms. Lang 

provided a high level overview of the FAA Office of Airports (Office of Airports). She stated the 

Office of Airports is first and foremost a safety organization. Ms. Lang listed some of the primary 

functions of the Office of Airports, including certification and regulation of all airports in the United 

States, design standards for airport development, and harmonizing U.S. standards with international 

standards.

Ms. Lang mentioned the magnitude of the Research and Development (R&D) program, which is 

funded by AIP. She commented on the life-saving innovations such as 

Engineered Material Arresting System technology and avian radar developed by the R&D program. 

Ms. Lang noted the Office of Airports is well known because it manages the AIP and PFC Programs. 

She further explained the Office of Airports is also a planning and environmental entity responsible for 

actions associated with development at U.S. federally obligated airports.

Ms. Lang listed the compliance activities managed by the Office of Airports including 

Grant Assurances, airport privatization, and leases. She concluded her overview by mentioning the unit 

within the Office of Airports responsible for national planning. Ms. Lang discussed the significance of 

the National Plan of Integrated Airport Systems (NPIAS). She explained the document that catalogs 

the number of warranted developments at federally obligated airports in the United States. Ms. Lang 

noted identification in the NPIAS is a prerequisite to obtaining a Federal grant.

Ms. Lang discussed the historical background of the Federal Aid to Airports program and stated it is a 

mature program and a stable network. She briefly reviewed the airport utility in national defense, 

mail delivery, rural connectivity, and emergency readiness. Ms. Lang noted the density of public

interest. She emphasized the importance of understanding the statutory structure as a prerequisite to 

understanding the AIP setup.

Ms. Lang commented on the great variance among airports. She stated only a limited number of 

airports are actually able to borrow from the capital markets, and noted even fewer airports are able to 

take advantage of another Federal subsidy in the form of tax exempt bonds. Ms. Lang commented on

the importance of the Federal subsidies unique to the highest performing commercial service airports in 

the system. She stated almost all of these commercial service airports rely on AIP funding as the 

principal source of capital financing. She described the very dense network asserting that the AIP is the 

backbone of how the Office of Airports maintains the system. Ms. Lang conceded as a consequence, 

there are many rules associated with the Grants-in-Aid Program, because it is not a one size-fits all type 

of program. She noted it is a diverse and popular program that has been funded at very high levels.
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Ms. Lang highlighted key points in slides 4 through 7, which addressed the 12 general rules for the AIP. 

She discussed acceptable uses for AIP funding and stated AIP funds can be used to pay for equipment

that is used by pilots, such as an ILS, but cannot pay for anything that generates a profit. Ms. Lang 

provided examples of unacceptable uses of AIP funds including aesthetic improvements and 

maintenance. She emphasized that against the 12 general rules, there are many exceptions.

Ms. Lang addressed the division of funding. She referred to slide 12, which showed AIP allocation 

rules. She explained the pattern and emphasized the importance of understanding how the funds are 

spent. Ms. Lang moved to slide 18, which showed AIP historical funding levels. She explained how 

U.S. airports have sustained a very stable period of high-level funding. Ms. Lang then referred to 

slide 19, which reflected a further breakdown of historical AIP funding.

Ms. Lang moved to slides 20 and 21, which provided an overview of the PFC program. She noted the 

PFC Program is almost identical in eligibility to the AIP with the exception of certain cases, including 

matching Federal grants, noise mitigation, terminal eligibility, and repayment of debt. Ms. Lang 

asserted that similar to the AIP, the PFC Program has many rules.

Ms. Lang corrected the misconception that there is high tension between airports and air carriers. She 

explained how airports must consult air carriers before applying to the Office of Airports for PFC 

Program funding. Ms. Lang noted there is little tension between the airports and air carriers. She 

further noted that the few disputes that do occur surround pro-competitive projects or projects that 

benefit operators that do not pay PFCs, such as GA and all-cargo operators.

Ms. Lang also corrected the misconception that the FAA does not turn down very many projects. She 

explained that the Office of Airports works with local governments and airports very closely and 

strongly advises which projects will be approved. She noted airports usually withdraw projects before 

they are rejected. Ms. Lang commented on how the PFC Program is a mature program that has proven 

to be very valuable.

Ms. Lang addressed slide 25 which showed a breakdown of PFC program funding. She continued to 

slide 26, which showed the contrast between the PFC Program and AIP activities. Ms. Lang 

highlighted the synergies between the two programs and commented on how the high level of activity 

demonstrates the programs are achieving the intended public interest.

Mr. Borenstein asked for clarification of the new Denver International Airport (DIA) segment of the pie 

chart on slide 25. Ms. Lang explained the segment represents the portion of PFCs that went to pay for 

the PFC eligible portion of the new DIA. She described the magnitude of the new DIA project. 

Ms. Lang explained, because the number of eligible uses for funding was so high, the Office of 

Airports decided it was not necessary to break out the DIA project by line items.
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Mr. McKenzie asked Ms. Lang to provide perspective on the complaint that air carriers do not get 

enough control over the funds they collect through PFCs. Ms. Lang clarified air carriers are invited to 

talk about how PFC funds are applied to projects. Mr. McKenzie also asked Ms. Lang for perspective 

on the relationship between air carriers and airports when discussing PFC program funded projects. 

Ms. Lang acknowledged that tempestuous conversations take place, but noted the infrequency of 

disputes. She commented on the low number of documented instances of air carrier disagreement with 

PFC program funded projects. Mr. Kolshak commented on how the air carriers would prefer to have 

greater governance over PFC funded project spending. Ms. Bowens commented on how many projects 

are not controversial, and Mr. Kolshak acknowledged that the topic will remain controversial.

Ms. Lang recognized the healthy tension in the interaction in the debate that surrounds the 

PFC-funded projects. She expressed her belief that governments who own and operate airports have a 

vested interest in the success of their air carriers, and noted the importance of tending to that 

relationship to maintain the greater welfare of the surrounding community. Ms. Lang provided the 

historical background on the structure of the PFC Program.

Ms. Lang addressed the Office of Airports’ involvement in the Stimulus Bill. She noted the Office of 

Airports received approximately $1.1 billion in stimulus funding. Ms. Lang commended the airport 

community for completing such a high number of projects despite the debate over stimulus spending. 

She commented on the great success of how airports benefitted from the 

Alternative Minimum Tax (AMT) being waived for the past 2 years.

Ms. Lang continued describing other functions of the Office of Airports. She explained how the 

Office of Airports maintains policies on rates and charges. Ms. Lang provided a brief overview of the 

Airport Privatization Pilot Program. She discussed the pitfalls of the program. She noted a renewed 

interest in airport privatization and further noted that the Office of Airports will safeguard the program.

Ms. Lang mentioned some of the challenges that surround the suite programs managed by the 

Office of Airports. She acknowledged the need for a better funding structure for GA airports. 

Ms. Lang stated the Office of Airports clearly needs to rethink hierarchy and how to optimize 

investments. She noted another challenge in maintaining rules to allow the airport portion of financing 

to contribute to NextGen.

Ms. Lang provided an example using Wide Area Multilateration (WAM). Ms. Lang posed the question 

of why states should not be allowed use state apportionment for technologies like WAM that improve 

predictability, reliability, and safety. She noted the inconsistency in why ILS is eligible for 

AIP or PFC Program funding but GBAS is not. Ms. Lang also noted the challenge posed by the 

inability of airports to incentivize equipage. She stated another challenge moving forward is how to 

harmonize and get out of legacy financing schemes to leverage an integrated platform of the future. 

Ms. Lang asserted it would take a change in law to overcome these challenges. There was a discussion 

of the rigid rules that conflict with funding eligibility.
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Mr. McKenzie agreed with the need to leave legacy financing systems and inflexibility. He asked 

Ms. Lang what the DOT’s perspective is and what ways will the DOT overcome the challenges. 

Ms. Lang noted this topic is being addressed by an FAA policy team out of the FAA’s NextGen 

management port. She assured the subcommittee the Office of Airports is actively working to 

overcome the challenges. Ms. Lang noted the last Reauthorization proposal was rejected, but affirmed 

the Office of Airports is trying to build a business case to add more approved uses for the AIP and 

PFC Programs.

The subcommittee further discussed the ways the AIP and PFC Programs limit airports and air carriers. 

Ms. Bowens invited the subcommittee to consider whether airports will be viewed as robust businesses 

with the ability to play a large part in local economies and communities. She noted the need to rethink 

the regulation. Ms. Bowens conceded airports might have to give up some protection. Ms. Lang 

reaffirmed the need for specific proposals. She suggested starting with a clear understanding of what 

airports and air carriers can do, and then determine what is limiting. She reaffirmed the 

Office of Airports supports flexibility as long as the public interest is at the forefront of the mission.

There was a discussion of whether to add more airports or modernize existing airports. Ms. Lang 

asserted a solution to the challenge is to think strategically and increase airport throughput. 

Mr. Kolshak expressed his agreement with Ms. Lang and commented on how stability and 

predictability will solve a lot of problems. Ms. Lang noted the need to redefine the infrastructure of the 

future to be more technology driven. She concluded the presentation and thanked the subcommittee.

POST PRESENTATION DISCUSSION

Mr. Pelton began the discussion to reach a decision regarding recommendations the subcommittee will 

make. Mr. Kolshak acknowledged that NextGen took up a major portion of the presentations and he 

suggested the subcommittee recommend acceleration of the capabilities that are already mature.

Mr. Pelton stated the acceleration of NextGen is followed by the subset issue of funding. 

Mr. McKenzie inquired if funding is really the issue. Mr. Pelton explained that funding is accounted 

for on the path to 2020 on today’s current profile, making the assumption that equipage will occur; the 

question then becomes how to implement the changes. He questioned if it would be implemented like 

ADS–B as a mandate in the next notice of proposed rulemaking.

Mr. Kolshak stated there is currently a time discrepancy since the infrastructure will in place by 2013,

but the equipage mandate does not follow until 2020. Mr. Kolshak noted the benefits with accelerating 

the equipage of ADS–B so that the benefits of NextGen can be realized sooner. Mr. Pelton 

acknowledged the financial burden of the operators must be taken into consideration. Mr. Kolshak 

offered the suggestion to incentivize the equipage.
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Mr. McKenzie proposed creating a new definition for airport infrastructure. Ms. Bowens noted the 

need is for expanding AIP eligibility. She explained there are infrastructure needs at airports that must 

be attended to so that airports can support NextGen. She expressed concern about NextGen increasing 

air traffic in airports that are already constrained. Ms. Bowens stated without the appropriate 

infrastructure, the goal of NextGen cannot be realized and the congestion issue will persist.

Mr. Stan Van Ostran, Metropolitan Nashville Airports Authority, expressed concern about rolling out 

NextGen to congested airports. He believed the equipage issue will progress naturally if NextGen is 

introduced to airports in a reasonable fashion.

Mr. Pelton made the recommendation to define airport infrastructure as opposed to defining the 

eligibility requirements. He suggested the subcommittee look at the current definition and see what is 

included. Mr. Pelton explained the intent is to ensure national priority at airports is enhanced and 

create a funding source for equipage for both airports and aircraft.

Mr. Pelton reviewed the two major issues open for discussion: (1) overall acceleration of NextGen, and 

(2) determining the priority regarding PBN and its associated equipage.

Mr. Van Ostran inquired about the strategy for aircraft coming into an airfield. He questioned if there 

will be restrictions for aircraft not equipped during peak hours. In response, Mr. Kolshak suggested 

adding to the definition of “best equipped, best served,” to include how it will be deployed at major 

airports.

Mr. Williams inquired about funding for the equipage on aircraft. He understood that the equipage on 

the ground would be considered part of infrastructure and could be funded through AIP, but equipage 

on the aircraft would not. Mr. Pelton stated the decision would be made locally. He explained that if 

an airport decides to upgrade to a GBAS, operators and airports would need to decide together how to 

fund the changes. Mr. Pelton implied that most likely, if the operators want to take advantage of the 

equipment at airports, it will be their responsibility to equip.

Mr. McKenzie offered a summary of the three topics that were discussed: (1) use of grants, loans, and 

loan guarantees as options for accelerating NextGen; (2) expanding AIP eligibility; and (3) defining 

“best equipped, best served” and how to deploy the definition in practice.

Mr. Van Ostran speculated that several operators will line up for monetary grants given by the 

Government for NextGen equipage. He suggested that because there will be limited funding, priority

for distribution of these grants needs to be determined based on a cost-benefit analysis. Mr. Borenstein 

stated the subcommittee must first investigate the appropriateness of loans versus simply mandating 

equipage. Ms. Bowens inquired if the subcommittee was attempting to accelerate the 2020 mandate 

date. Mr. Pelton explained only a piece of NextGen, ADS–B Out, has been mandated so far. He stated 

there are other significant pieces of equipage that are coming that have not been addressed yet. 

Mr. Pelton explained operators will need to be advised of the benefit, so that implementation will not 

be delayed due to financial questions from the operators. He advised operators will have questions 

regarding use and cost of the next piece, ADS–B In.
Future of Aviation Advisory Committee

Subcommittee on Financing

Record of Meeting

August 17, 2010

General Aviation Manufacturers Association

Washington, DC

24

Mr. Pelton recommended defining “best equipped, best served” as a method of solving equipage 

problems around hub airports. Mr. McKenzie stated there will be potential pushback from air carriers 

unless there is a way to quantify the benefit of equipping their aircraft. Mr. Kolshak referenced the 

Reduced Vertical Separation Minimum as an example. He recounted aircraft not equipped were unable 

to fly over 29,000 feet. With this restriction, Mr. Kolshak demonstrated that air carriers were able to 

quantify the benefit and suggested that a similar comparison could be made for NextGen equipage.

Mr. Williams stated there is irony in the “best equipped, best served” model. He stated in the beginning 

of equipage, the small number of air carriers will receive the best service. Mr. Williams noted the 

larger the group of equipped aircraft, the less advantage each carrier would experience. Mr. Kolshak 

countered the argument by stating the more operators who equip, the better the benefit. He noted the 

greater the throughput of the system, the greater the available capacity. He further noted this should 

reduce delays throughout the system. Mr. Borenstein stated the incentive to equip grows even greater 

due to the disadvantages of not equipping.

Ms. Fornarotto suggested the subcommittee focus on making a case for providing funding. She stated 

if there should be funding, the subcommittee must lay out the case and state why grants are needed. 

She stated the funding question must be answered before moving to the next phase of equipage. 

Mr. Pelton stated that figuring out the benefit of equipage would help make the case.

Mr. McKenzie referred to statistics regarding the cost of delays to consumers. He stated if NextGen 

can reduce the cost by 20 percent, then there may be a case for loan guarantees. Mr. Borenstein 

indicated that would be a tough case to make. He stated the real issue is who should pay for the 

equipage, not what the impact of equipage will be.

Mr. Elwell offered information regarding a program encouraging carbon neutral growth for the 

aviation industry. He stated the milestone date is 2020 and companies who commit to the carbon 

neutral growth receive grants. Mr. Elwell stated companies who do not meet the requirements by 2020 

are required to pay the grants back. He offered this example as a potential solution to financing 

equipage with NextGen.

Mr. Pelton summarized the four recommendations made, which include: (1) redefining infrastructure 

for AIP eligibility; (2) broadening the scope of AIP and PFC to allow for the accelerated infrastructure 

to support NextGen; (3) answering the public policy question around the possible mechanisms for 

funding equipage; and (4) defining “best equipped, best served.”

Ms. Fornarotto asked for clarification on the issue of AMT relief from the airport community. 

Ms. Bowens stated it is something that airports want, but she is not sure of the current status.

Ms. Debby McElroy, ACI–NA, stated the FAA reauthorization bill has been passed by the house with a 

1-year extension of the current AMT relief. She stated ACI–NA was planning on putting together a 

paper on the benefits of extending AMT relief, which would highlight the benefits for both airports and 

airlines with funding infrastructure and refinancing debt. Mr. Van Ostran expressed his agreement with 

making the AMT relief permanent.
Future of Aviation Advisory Committee 

Subcommittee on Financing 

Record of Meeting 

August 17, 2010 

General Aviation Manufacturers Association 

Washington, DC 

CLOSING REMARKS/NEXT MEETING 

Mr. Pelton reiterated the subcommittee had identified the following four topics as issue areas for 

presentation to the FAAC: (1) redefining infrastructure for AIP eligibility; (2) answering the public 

policy question concerning funding opportunities; (3) making AMT relief permanent; and (4) defining 

the "best equipped, best served" as an incentive mechanism for equipage. 

The subcommittee briefly discussed the date for the next meeting. There was no set date decided upon. 

ADJOURNMENT 

Mr. Pelton solicited a motion for adjournment. On motion, duly seconded and approved by the 

majority of the subcommittee members present, the meeting was adjourned. 

The meeting adjourned at 4:14 p.m. 

I hereby certify that, to the best of my knowledge, the foregoing minutes are accurate and complete. 

Approved by: X 

John Hennigan, Designed Federal Official 

Dated: JlpferiUr <2J; dO/O 

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