Federal Aviation Administration 

Research, Engineering and Development 

Advisory Committee 

Financing the Next Generation Air 

Transportation System 

April 2006 

FNGATWG Final Report May 18, 2006 1
 

Executive Summary 

The FAA Research, Engineering and Development Advisory Committee (REDAC) 

established the Financing the Next Generation Air Transportation System Working 

Group (FNGATSWG) to investigate options for financing Next Generation ATS as 

outlined by the National Plan and defined by the Joint Planning and Development 

Office (JPDO) of the FAA, TSA, and NOAA, their parent departments, NASA, DoD, and 

OSTP. The goal is to identify and develop the available options for funding and 

financing research and development, capital projects, and operations cost of the Next 

Generation ATS. The effort focused on the FY2006 through 2025 time frame. The 

working group considered the levels of funding required, possible revenue sources, and 

techniques for financing. It considered opportunities to reduce costs through introduction 

of advanced technologies and techniques or outsourcing, but did not consider issues such 

as labor contracts, privatization or major structural changes in the FAA organization. 

 

The working group: 

1. Established in cooperation with the JPDO and other elements the government cost 

estimates in general and the FAA in particular. Others are preparing the related 

industry costs for NGATS implementation: 

o A 2006-2025 baseline cost estimate and projected funding estimate for 

developing, implementing, and operating the planned NAS if the NGATS is not 

implemented (Status Quo option) and the current revenue scheme were continued; 

o A corresponding 2006-2025 cost estimate for developing, implementing and 

operating the NAS 2006 through 2010 and then converting to NGATS between 

2010 through 2025 (NGATS Option). 

2. Identified the options for funding the resulting system cost through user fees or user 

taxes supplemented by a general fund contribution. 

3. Developed a set of criteria for assessing these options. 

4. Defined financing options to be used in the event that the modernization funding 

requirements vary significantly from year to year . 

5. Considered approaches to implementing the NGATS that the industry and Congress 

would support. 

The following findings summarize our efforts: 

• In both the Status Quo and NGATS scenarios, funding the FAA R&D, F&E, 

Operations, and AIP activities is estimated to require about $15 billion annually in 

2005 dollars. FAA operations costs dominate these figures. 

 

• The Status Quo scenario will provide insufficient increases in capacity to meet the 

growing demand. The Status Quo scenario is therefore not an acceptable option other 

than for analysis purposes. The NGATS provides the needed capacity and reduces 

total funding requirements by inserting technologies that provide the required 

increase in capacity with lower operation cost. 

FNGATWG Final Report May 18, 2006 2
 

• The continued use of the current FAA trust fund revenue rates will lead to 

approximately a $1 billion shortfall over the next several years without an increase in 

the General Fund contribution. This projection assumes a General Fund contribution 

to the FAA budget on the order of 20%. 

• The FAA relies on the current NASA aeronautics R&D program as the principal 

source of the technologies needed to provide the nearer-term NGATS aviation system 

capacity and operations cost reductions. The current restructuring of the NASA 

program introduces uncertainty in this reliance. Refocusing NASA efforts on lower 

Technology Readiness Levels (TRL 1, 2, & 3) is a particular source of concern 

because it shifts a greater R&D transition burden to the FAA. To accommodate this 

reduction in NASA support for transition will require an additional approximately 

$100 million annually in FAA R&D funds. If the current NASA effort were 

abandoned completely, the FAA would require a further $100-150 million annually in 

FAA research and development funds. More importantly, NGATS implementation 

would be delayed, probably by five years, while the FAA reestablishes the 

infrastructure needed to accomplish the work. This delay in NGATS would have a 

severe long-term impact on the FAA operations budget. 

• The alternatives for closing the near term funding gap are to: 

o Significantly reduce Operations, F&E, R&D, and/or AIP costs, 

o Increase user taxes and fees, 

o Increase the General Fund contribution, 

o Introduce some sort of financing (borrowing) that bridges the near term gap and 

repays it with longer term surpluses, or 

o Some combination of these. 

• The FAA is pursuing substantial cost reductions in operations and other costs, for 

example, the outsourcing of Flight Service operations. The working group identifies 

other cost saving opportunities. A composite annual cost savings on the order of 

$500 million is a reasonable objective for these cost reduction activities. 

• The distribution of taxes/fees between user groups and the level of the general fund 

contribution are the basic problems to be solved. Each user group has a different 

model for determining the share of FAA costs it should pay. Once the shares are 

determined, the method of tax or fee collection may vary from user to user at a level 

to meet their allocated share. 

 

• There are an infinite number of user fee/tax options with or without a General Fund 

contribution. The working group has identified four: 

o Current revenue approach with rate adjustments 

o Fuel tax or fee only 

o Weight/distance fee 

o Distance fee 

FNGATWG Final Report May 18, 2006 3
 

These have been analyzed against a set of developed criteria.. No one of them is 

expected to be acceptable by itself to the entire community. Defining a hybrid to 

create an approach that is acceptable to aviation industry groups will be required. 

• Successfully transforming the NAS into a Next Generation Air Transportation System 

(NGATS) that meets America’s future aviation needs is a demanding project that will 

require twenty years of consistent and stable funding, management, and oversight to 

be successfully and efficiently completed. All the while, the system must safely and 

efficiently provide services every day to satisfy an ever-expanding demand for air 

transportation. 

• On the financial side, the operation and transformation of the NAS into the NGATS 

will require about $300 billion or $15 billion each year in constant 2005 dollars. 

While the budget will be managed to minimize year-to-year variations in revenue and 

expenses, some will occur. Hence, a flywheel is required to overcome these 

variations. 

• On the program side, a process must be deployed that ensures successful and cost 

effective development and implementation of the NGATS. It must provide a 

consistent management and oversight mechanism and a mechanism for measuring 

ongoing cost, performance, and progress toward transformation of NAS to NGATS 

• The Working Group has identified Six Engines for Success needed to meet these 

objectives: 

o First is the Leader. The twenty-year NGATS implementation period will require 

three to five leaders to over the life of the project. The selection and development 

of these leaders is probably the most important element to NGATS success. In 

addition to their being smart and hard working people they must know the NAS 

and the NGATS and the transformation between them. They must be innately 

people of vision and public purpose. 

o A Revenue Engine that raises the required $15 billion each year through 

collection of user fees/taxes and a contribution from the General Fund. It is 

assumed that this engine is a variant of one or more of the funding approaches 

discussed in this report. 

o A Financial Stability Engine that accommodates year-to-year variations in 

the revenue or expenses. The selected Financial Stability Engine could be any 

one of an infinite set of variations but will always be some combination of either 

reserve accounts (e.g. The Aviation Trust Fund) or borrowing authority or both. 

o A Program Engine that provides the mechanism for consistent, stable 

program management of development, production, implementation, and initial 

operation of the sub-systems that transform the NAS into the NGATS. 

FNGATWG Final Report May 18, 2006 4
 

o A Planning, Management, And Oversight Engine that provides the 

mechanism for maintaining the NGATS implementation plan, managing its 

accomplishment, providing for its oversight by the FAA, the aviation community, 

the Congress and the Administration. 

o A Metrics Engine that facilitates the measurement of the on-going 

performance of the NAS and the progress toward its transformation to the 

NGATS. It should be provide transparent measurements of specific metrics at 

any given time and the incremental change in that metric over time. It includes 

measurements of Safety, Capacity, Environmental Impact, FAA Costs, FAA 

Productivity, and User Benefits as a minimum. 

FNGATWG Final Report May 18, 2006 5
 

 

Table of Contents 

Introduction....................................................................................................................... 7

Purpose............................................................................................................................ 7 

Approach......................................................................................................................... 7 

Status Quo Scenarios...................................................................................................... 10

Operations Cost............................................................................................................. 10 

Capital and R&D Costs................................................................................................. 11 

Total FAA Costs ........................................................................................................... 11 

Trust Fund Contribution ............................................................................................... 12 

General Fund Contribution ........................................................................................... 13 

Effect of Level of General Fund Contribution on Overages & Shortfalls.................... 15 

Opportunities to Significantly Reduce Cost ................................................................. 18

NGATS Cost Analysis .................................................................................................... 20

NGATS Roll Out .......................................................................................................... 20 

NGATS Operations Cost .............................................................................................. 20 

NGATS R&D Cost ....................................................................................................... 21 

NGATS F&E Cost ........................................................................................................ 23 

NGATS Total Cost ....................................................................................................... 24 

NGATS Funding ............................................................................................................. 26

User Fee/User Tax Options........................................................................................... 26 

Criteria for Assessing Options...................................................................................... 27 

Initial Projection of Options Impact on User Groups................................................... 28 

Initial Option Assessment............................................................................................. 30 

NGATS IMPLEMENTATION AND FINANCING.................................................... 33

NGATS Implementation Requirements........................................................................ 33 

The Six Engines for Success......................................................................................... 33 

NGATS Financing Through Private Sources ............................................................... 36 

Borrowing from the Federal Financing Bank ............................................................... 41 

Appendix A: Terms Of Reference................................................................................ 42

FNGATWG Final Report May 18, 2006 6i
 

INTRODUCTION 

Purpose 

The FAA Research and Development Advisory Committee (REDAC) established the 

Financing he Next Generation Working Group (FNGATSWG) to define and evaluate 

options for funding and financing the Next Generation Air Traffic System (NGATS) as 

outlined in the National Plan. The FAA Joint Planning and Development Office (JPDO) 

in consultation with NASA, DoD, OSTP, TSA, NOAA, and their parent departments are 

further defining the NGATS. 

The Working Group addressed government funding requirements in general and FAA 

funding requirements specifically, opportunities for cost reduction, alternative options for 

funding, and alternative methods for financing NGATS over its twenty-year 

implementation period. The FAA’s four budget accounts – Operations, Facilities and 

Equipment (F&E), Airport Improvement Program (AIP), and Research, Engineering, and 

Development (RED) are projected for both a baseline Status Quo scenario and an 

NGATS scenario. The capital accounts (F&E, AIP and RED) are currently funded by 

appropriations from the Airport and Airway Trust Fund, which is supported by user fees 

and taxes. The Operations account is funded with both General Fund and Trust Fund 

appropriations. The related industry costs are being defined by others. 

Approach 

The Terms of Reference, which defined the working group’s charter, appear as Appendix 

A of this report. Our work has proceeded in the following steps: 

Step 1 The Status Quo. We began by developing a baseline scenario of projected costs 

and funding profile for a “Status Quo Scenario” between 2006 and 2025 assuming that 

NGATS is not implemented. 

Note that the Status Quo scenario is presented here for analytical purposes only since 

the current approach to air traffic control and management in use in the United States 

cannot be scaled up to handle the projected growth in traffic. Capacity limitations are 

geographically sensitive. Demand is currently exceeding capacity in several places 

including Chicago and New York. The severity of this problem is expected to grow so 

that in the 2010 to 2020 time frame the demand will exceed the capacity in enough 

places to have a significant impact on the overall U.S. economy. One of the major 

NGATS objectives is to provide the capacity to meet the growth in demand.

Step 2 Opportunities to Significantly Reduce Costs. We then considered what cost 

reductions are possible in either the Status Quo or the NGATS scenario. The dominant 

cost category by far is Operations cost, so significant cost reductions require reductions in 

Operations cost. Cost reduction mechanisms for ATC Operations are of two general 

types: cost reduction achieved by reducing labor expense (e.g., by better management of 

overtime or sick leave), and cost reduction achieved by increasing labor productivity 

(e.g. by better training or by better automated decision aids). The first category is 

FNGATWG Final Report May 18, 2006 7
 

currently being addressed by the ATO organization. The second category (increased 

productivity) is within the purview of the Working Group and is considered herein. The 

NGATS is expected to be a cost reducing mechanism (by increasing the productivity of 

the controller work force). We also consider outsourcing as a potential cost reduction 

mechanism available for ATC Operations support costs (communications, surveillance, 

and facilities maintenance). Outsourcing of the Flight Service Stations is under way. 

Note that the Working Group did not consider privatizing the FAA, major FAA 

restructuring or industrial issues including labor management relations and employee 

salaries. 

Step 3 NGATS Cost. Next, we assumed that the NGATS is completed as defined by the 

National Plan and implemented by 2025. 

The first questions are: “How much will the NGATS cost to implement?”, “What is the 

associated spending profile?” There was no formal implementation scenario or overall 

NGATS cost estimate as we began our considerations. We spent several months working 

with the JPDO developing a “Roll Out” plan for implementing the defined NGATS 

capabilities over 20 years; a schedule of Research and Development funded activities 

necessary to support their development; a schedule of Facilities and Equipment funded 

activities necessary to support their implementation; and a schedule of Operations funded 

activities necessary to integrate them into the operating National Airspace System (NAS) 

to form the NGATS. We then worked with the JPDO and the FAA Air Traffic 

Organization Planning and Finance Offices to estimate the costs of these activities and to 

develop a profile of the required funding. 

Step 4 NGATS Funding. We next considered three funding categories: General Funds, 

fees or taxes collected on the basis of cost of service required from the FAA, and fees or 

taxes collected on the basis of the value of service received by the aircraft operator. 

The General Fund contribution to the FAA budget has varied over a wide range 

historically. In 2005 it was about 20% and in 2006 about 18%. The rationale for a 

General Fund contribution is that a safe, efficient, air transportation system benefits the 

economy as a whole, that it is consistent with American values to make the airways 

affordable for as many users as practical, and that the military services make substantial 

use of the ATC system. 

The Cost of Service funding category includes fees or taxes, which are collected on the 

basis of operations or of flight hours or miles. Landing fees, segment fees collected on a 

per aircraft basis, and charges on a per interaction basis are examples. Note that these 

mechanisms take no account of the size of the aircraft, so they are perceived as especially 

burdensome for general aviation. This kind of funding is in accordance with the business 

and accounting principle that each activity should cover the cost that it imposes on the 

service provider. 

The Value of Service funding category includes fees or taxes which are proportional to 

the benefit derived from the system. Examples are the ticket tax, fuel tax, and weightdistance fees (which are widely used in other countries). These fees and taxes draw 

FNGATWG Final Report May 18, 2006 8
 

heavily on the airlines (and thus, their customers, the airline passengers) and the 

airfreight operators. The pragmatic justification for this class of fee and tax is it draws on 

that part of the aviation community which receives the greatest economic benefit from 

and has the economic size to afford a significant contribution to the cost of building and 

operating the nation’s aviation infrastructure. 

Step 6 Implementing and Financing the NGATS. Finally we considered the process of 

implementing the NGATS over a twenty-year period and the necessary elements to 

managing and financing NGATS implementation. 

FNGATWG Final Report May 18, 2006 9
STATUS QUO SCENARIOS 

We begin by considering a continuation of the current funding approach and the 

continuation of the OEP effort, without implementation of NGATS, that we have labeled 

the Status Quo Scenario. To establish the set of likely status quo scenarios we have 

reviewed a number of sources including FAA forecasts, GAO studies, and industry 

association reports and formulated the scenarios to be further analyzed. 

The Status Quo scenarios project the costs of continuing the current plans for operations 

and improvements of the National Airspace System (NAS) from 2006 through 2025 

against a projection of the expected revenue using the current Aviation Trust Fund 

revenue scheme. These results will later be compared with projections which assume the 

development, implementation, and operation of the Next Generation Air Transportation 

System (NGATS). 

Operations Cost 

The cost scenario assumes the Operation costs will rise with the number of operations. 

The number of enroute IFR operations projected in the FAA 2005 forecast is used as a 

basis through 2016 and is estimated to grow at a slightly lower rate from 2017 through 

2025. Three levels of productivity improvement assumptions are then used to create three 

cases: 

The Best Case assumes a productivity growth of 1% per year in years 2006

through 2015 and 0.5% per year in years 2016 through 2025, resulting in a 15% 

reduction in cost growth over the twenty year period, 

The Base Case assumes a productivity growth of 0.5% per year in years 2006

through 2015 and 0.25% per year in years 2016 through 2025, resulting in a 7.2% 

reduction in cost growth over the twenty year period, and 

The Worst Case assumes no growth in productivity, resulting in no reduction

in cost growth over the 20-year period. 

Status Quo Operations Cost in Constant 2005 $

7

8

9

10

11

12

13

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Best Case

Base Case

Worst Case

FNGATWG Final Report May 18, 2006 10
 

Capital and R&D Costs 

AIP funding is projected constant at $3.55 billion per year (current level); F& E funding 

at the ATO Planning and Finance Offices’ projected levels; and R&D funding is 

projected constant at $125 million per year over the period. The F&E costs decrease in 

the out years is probably exaggerated in that the out year requirements have not yet been 

clearly identified. The R&D costs assume that NASA will continue to fund the major 

portion of the Air Traffic Management research and development. (Note: All costs are in 

constant 2005 $.) 

Status Quo Capital Costs in Constant 2005 $

0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

R&D

F&E

AIP

Total FAA Costs 

The total Status Quo Scenario cost used here as the baseline cost is the sum of all of these 

costs. 

Status Quo Total FAA Cost in Constant 2005 $

12

13

14

15

16

17

18

Fiscal Years

Billion $

Best Case

Base Case

Worst Case

FNGATWG Final Report May 18, 2006 11
 

Trust Fund Contribution 

The Best Case revenue scenario is the FAA Forecast of Aviation Trust Fund revenue 

(including interest) between 2006 and 2015 and it is extended between 2016 and 2025 by 

the average growth rate between 1999 and 2015. However, the FAA trust fund revenue 

estimates published for the past several years have been optimistic given variations in 

ticket prices and the general estimating uncertainties. 

Trust Fund Revenue (including 

interest) Actual vs Forecasted 

2000 2001 2002 2003 2004 2005 Average 

Forecasted (President’s Budget) 10.0 10.4 12.2 10.3 10.9 11.1 10.8

Actual 10.5 10.1 9.9 9.3 9.7 10.7 10.0

Variance # 0.5 -0.3 -2.3 -1.0 -1.2 -0.4 -0.8

Variance % 5.0% -2.9% -18.9% -9.7% -11.0% -3.6% -6.9%

Therefore we use the FAA forecast as the Best Case and our Worst Case discounts the 

FAA forecast 10% per year (the average variance between the FAA’s forecast and actual 

revenue in 2003-2004) over the period and the Base Case discounts the FAA forecast by 

4% over the period (the average variance between 2000-2005, excluding 2002, which 

was an extreme case due to the effect of the 9/11 attacks). 

Projected Trust Fund Revenue in Constant 2005 $

9

10

11

12

13

14

15

16

17

18

19

20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Best Case

Base Case

Worst Case

 

The annual over and short of the Trust fund revenue and the total FAA costs are projected 

below. 

FNGATWG Final Report May 18, 2006 12
 

Over and Short of Trust Fund Revenue vs Total FAA Cost in Constant 

2005 $

-5

-4

-3

-2

-1

0

1

2

3

4

5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Best Case

Base Case

Worst Case

Trust Fund reserves have been used to overcome shortfalls in the past, but for the past 

several years the amounts appropriated from the Trust Fund have roughly equaled the 

FAA forecasted (shown in the Presidents Budget) amount each year. These optimistic 

revenue projections combined with the resulting appropriations from the Trust Fund have 

resulted in a significant decrease in the Trust Fund’s uncommitted cash balance. If this or 

other reserves depleting practices continue for a few more years the reserve will be 

exhausted. 

Trust Fund Year End Balances in Millions $ 2000 2001 2002 2003 2004 2005

7,074 7,344 4,815 3,898 2,447 1,940

General Fund Contribution 

Using the General Fund to make up the shortfall has been the norm since the beginning of 

the Trust Fund concept. In 2000, the Congress began using a statutory formula for 

determining the Trust Fund share of the FAA’s Operations costs. In 2003, use of this 

formula was extended through 2007. For this approach to General Fund contribution to 

continue after 2007 it will be necessary to extend the enabling legislation. This formula 

requires that Trust Fund revenues first be used to fully fund the FAA’s Airport 

Improvement Program and Facilities & Equipment Program at the authorized levels, and 

also fund the research and development, before being used to fund FAA operations. The 

formula also requires that the total amount appropriated from the Trust Fund each year 

must equal the amount of the tax receipts and interest forecasted to be deposited into the 

Trust Fund that same year. In other words, the formula requires that the forecasted Trust 

Fund income amount each year is the same amount that must go out that year, with 

preference given to fully funding the FAA’s capital programs before using Trust Fund 

revenue to fund operations. To calculate the total amount that must be appropriated from 

the Trust Fund each year, the statutory formula relies upon the FAA prepared Trust Fund 

revenue estimates published in the President’s Budget for that year. These as noted 

above have been overstated in most years hence the amount taken from the trust fund 

exceeds the income and the trust fund balance is decreasing. If this approach is continued 

FNGATWG Final Report May 18, 2006 13
 

the following General Fund contribution will result using the Status Quo Trust Fund 

estimates. 

General Fund Contribution for Status Quo Scenario Based on Statutory 

Formula in Constant 2005 $

0

1

1

2

2

3

3

4

4

5

5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billion $

Best Case

Base Case

Worst Case

Note that the general fund contribution is high in the early years and then declines to zero 

as the projected Trust Fund revenue rises. In the Best Case it reaches zero in 2017, the 

Base Case in 2020, the Worst Case does not yet reach zero by 2024. It should be noted 

that out-year forecasts by their nature have greater uncertainty associated with them. 

A second General Fund scenario is maintaining a constant percentage of the Total FAA 

Cost. In 2005 the percentage (from the Statutory Formula) was 20% and in 2006 was 

18%. Proposing a constant 20% General Fund share would result in a roughly $3+ 

billion annual General Fund contribution: 

General Fund Contribution Based on a 20% Share of Total FAA Status Quo 

Scenario Cost

2.5

3.0

3.5

4.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Best Case

Base Case

Worst Case

FNGATWG Final Report May 18, 2006 14
 

A General Fund contribution of 13% proposed by OMB for 2006 and beyond in 2006 

would result in nominally a $2+ billion annual General Fund contribution: 

General Fund Contribution Based on a 13% Share of Total FAA Status 

Quo Scenario Costs

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Best Case

Base Case

Worst Case

Effect of Level of General Fund Contribution on Overages & Shortfalls 

The Statutory Formula adjusts to cover the short fall in the early years. The surplus 

revenue in the out years leads to an overage in the Best case and the Base case in the out 

years. 

Over and Short as Result of Using Statutory Formula to Determine General Fund 

Contribution in Status Quo Scenario in 2005 $

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Best Case

Base Case

Worst Case

The 20% General Fund contribution leads to a shortfall in the early years of in both the 

Base Case and the Worst Case. The Best Case has a small shortfall early. In all three 

cases there is a surplus in the out years that can lead to a build up Trust Fund reserves or 

reductions in user charges/taxes. Additional user fees and taxes may be necessary in 

early years and returned in the out years. It should be noted that out-year forecasts by 

their nature have greater uncertainty associated with them. 

FNGATWG Final Report May 18, 2006 15
 

Over and Short Resulting From Using a 20% General Fund Contribution 

in Status Quo Scenario in 2005 $

-4

-2

0

2

4

6

8

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal years

Billions $

Best Case

Base Case

Worst Case

The 13% General Fund contribution alternative has significant shortfalls in the early 

years and leads to a small to moderate surpluses late in the out-years. It would require 

additional user fees/taxes in early years and provide a reduced return in far out years. 

Over & Short Resulting From Using a 13% General Fund Contribution in 

Status Quo Scenario in 2005 $

-4

-3

-2

-1

0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal years

Billions $

Best Case

Base Case

Worst Case

A variation on the percentage of total FAA costs that might be employed is to fund 

selected functions of the FAA operation, e.g. the safety regulation activities, by the 

General Fund. The composite cost of these activities will add up to some percentage of 

the total FAA costs. 

At the bottom line, about 25% of the total FAA costs must be paid for out of the general 

fund over the next five to ten years; otherwise, a compensating amount will need to be 

raised in new user fees/taxes, or the costs of the FAA need to be reduced by a 

compensating amount. Cost reductions beyond $500 million annually appear unlikely. 

FNGATWG Final Report May 18, 2006 16
 

FNGATWG Final Report May 18, 2006 17
 

OPPORTUNITIES TO SIGNIFICANTLY REDUCE COST 

The FAA is pursuing substantial cost reductions in operations and other costs including 

the outsourcing of Flight Service operations. Additionally, the working group suggests 

the following as a representative list of other cost reduction opportunities: 

1. Establish a date certain (such as January 1, 2008) to shut off all stand-alone nondirectional beacons. 

2. Reduce VOR’s to about 400 by January 1, 2010; eliminate VORs by January 1, 

2015; 

3. Consider outsourcing more of the infrastructure operation and maintenance. 

Infrastructure inspection and certification should remain a government function; 

4. Consolidate air traffic operating facilities after completing the proposed study on 

the appropriate size and distribution of these facilities. 

A composite annual cost savings building to at least $500 million by FY-2010 should be 

the objective of the cost reduction effort. 

The NGATS is expected to provide major future cost reductions by increasing the 

productivity of the controller work force. However, it should be noted that the primary 

motivation for NGATS implementation is that the current approach to air traffic control 

and management in use in the United States cannot be scaled up to handle the projected 

growth in traffic. Thus, the best model of the evolving situation is that NGATS, by using 

automation to transform the air traffic controller’s tasks away from air traffic control 

toward air traffic management will allow the current staffing level to handle the increased 

traffic through 2025 and beyond. 

The NASA aeronautics R&D program is the principal source of technologies needed to 

enable NGATS to provide these increases in aviation system capacity and reductions in 

FAA operations cost. Continued funding of this NASA program (funded from the 

NASA budget) is required if the Next Generation ATS is to become a reality. Moving 

this work to the FAA is possible but would require an additional $500 million annually 

for at least 10 years in research and development funds and delay NGATS 

implementation by at least five years as the FAA reestablishes the infrastructure needed 

to accomplish the work. 

FNGATWG Final Report May 18, 2006 18
 

FNGATWG Final Report May 18, 2006 19
 

NGATS COST ANALYSIS 

At the beginning of the working group’s effort there was not a cost estimate or transition 

plan for implementing the JPDO National Plan. The working group worked with the 

JPDO, FAA ATO Planning office and the ATO Finance office to develop a transition 

strategy, called the Roll-Out, and subsequently a cost estimate and funding profile for the 

implementation of the NGATS. 

NGATS Roll Out 

The Roll-Out is displayed on a chart that breaks the 2006 to 2025 NGATS 

implementation period into four five-year periods and outlines the National Plan 

objectives and their incremental achievement over those five years with specific goals for 

system capacity, system productivity and user benefits defined for each five year period. 

Next a strategy for implementing these five-year goals is defined. Then a 

characterization of the rollout of new system capabilities that implements the goals is 

developed for each of the five-year periods. The research and development activities 

necessary to develop the capabilities are defined for each period. Then the Facilities and 

Equipment funded activities needed to implement the capabilities are developed and 

depicted. Finally, the Operations funded activities such as rule-making and operational 

procedures that are necessary to integrate the capabilities into the NAS to create the 

NGATS are defined. This process was iterated a number of times and coordinated with 

numerous knowledgeable people and organizations over several months. The costs of 

accomplishing these activities were estimated and a funding profile was developed and 

coordinated. The attached product of this work is attached. 

NGATS Operations Cost 

The Best Case scenario levels uses Status Quo Scenario results from 2006 through 2010; 

then reduces operations costs by 25% between 2011 and 2025 through increased 

productivity (about 2%/year). The Base Case uses Status Quo scenario results between 

FY-2006 through 2010; then assumes that increases in demand for services can be offset 

by productivity improvements between 2011 and 2025 to maintain cost at 2010 level in 

constant 2005 $, i.e. operations costs are held within inflation. In the Worst Case the cost 

per operation is assumed to remain constant over 2006-2025, hence costs grow as 

operations grows. Large reductions in operations costs are one of the major reasons for 

implementing NGATS. [COMMENT—the previous sentence is talking about 

increasing operations cases; therefore it is confusing to say “these” large reductions] 

FNGATWG Final Report May 18, 2006 20
NGATS Operational Cost Compared to Status Quo Operations Cost in 2005 $

6

7

8

9

10

11

12

13

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

NGATS Best Case

NGATS Base Case

NGATS Worst Case

SQ Best Case

SQ Base Case

SQ Worst Case

NGATS R&D Cost 

The following is a first list of R&D activities necessary to support the NGATS 

development and implementation: 

ATC Automation: Develop a system that automatically performs routine aircraft

separation, traffic flow management, clearance generation delivery, and 

acknowledgement functions. Design and develop the National Airspace Optimizer 

including determining requirements for Optimizer integration into the NGATS system. 

Consider the optimum roles for pilots, controllers, and dispatchers in a highly automated 

system including moving certain separation responsibilities to the flight deck. Develop 

the optimum balance between the roles of human and machine in each domain and in 

association with alternative automation architectures. Develop associated human factors 

for the controller, pilot, and manager including responding to questions such as: How 

will the humans deal with the exception in an automated environment? Develop flight 

deck situational awareness technology. 

A Seamless, Highly Fault-Tolerant System: Determine the natural capacity bounds

of an automated system for enroute, transition, and terminal domains. Design the entire 

NGATS system for minimum safe separation in terminal, enroute, oceanic and airport 

surface environments. Design and develop a network centric automation system 

architecture and information management with the required reliability, fault-tolerant 

robustness and security. 

Weather Impacts to Aviation: Further reduction of the effects of weather on flight

safety, system and airport capacity is needed. This requires design and development of 

ATC and user automated decision support systems that integrate weather into the 

advanced automation systems. These systems would provide the ability to fully integrate 

a 5-dimensional weather hazard database into a full array of ATC, ATM and aircraft 

automation systems. A five-dimensional weather system (spatial – x, y, z, temporal t, 

FNGATWG Final Report May 18, 2006 21
probability P) that identifies hazardous weather for all phases of flight and for all aircraft 

types (air carrier, high end business jets, regional jets, baby jets, UAV, rotorcraft, small 

GA) including thunderstorms, in-flight icing and turbulence, oceanic and remote area 

weather and snowstorms is needed. 

Wake Turbulence Separation Reduction Operational Enhancement:

Development of wake vortex coping techniques are needed to minimize the additional 

wake turbulence separation beyond radar or visual separation at congested airports. This 

requires: 

o An improved understanding of wake behavior and wake vortex encounter hazard

based on statistically significant data 

o Development of ground and airborne weather sensing and prediction systems that

sense cross winds and wake demise, and wake location for safety alerting. 

o Coupling with precision navigation including high performance RNP RNAV

o Assessment of benefits from high-update rate, low altitude, multi-lateration

surveillance capability

o Airborne based relative position and deviation alerting such as ADS-B and CDTI.

Development of Separation Standards For An Automated Environment:

Research to reassess current separation standards; develop methods to safely 

accommodate blunders, and to develop rational safe separation standards. Separation 

standards have been developed over the last fifty years, virtually all based on operational 

judgments by experts. They have proven to create a remarkably safe system but they 

limit system capacity. It is necessary to expand the collision risk analysis to provide a 

basis for future separation standards in a highly automated environment. 

Development of NGATS Required Avionics: Design and develop avionics for each

category of aircraft that bring the aircraft into the automated NGATS environment. 

Optimum Navigation: Define optimized GNSS that provides for enroute navigation

and for CAT II approaches without augmentation and CATIII approaches with 

augmentation. 

Airports: Define and develop techniques to significantly increase airport capacity.

Develop improved airport surface technologies. 

NGATS R&D Cost 

The following is a top-down estimate necessary to accomplish the research and 

development necessary to develop the NGATS. It includes FAA RE&D but not selected 

F&E accounts that are near R&D. Others Accounts includes the related research 

activities of NASA, DOD, TSA, & NOAA necessary to implement the NGATS. The 

coordination of these activities is critical the successful implementation of the National 

Plan. The technologies that enable the advertised capacity and productivity 

improvements are dependent on the application of this work. Note that these estimates 

end in 2017, which is the planned end of the NGATS development. It is also likely that 

R&D for the system following NGATS will be required. There is probably a similar 

FNGATWG Final Report May 18, 2006 22
 

R&D requirement during the 2016-2025 time to support the development of yet the next 

generation ATS. 

NGATS R&D Cost Compared to Status Quo Scenario R&D in 2005 $

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

FAA NGATS R&D

Others NGATS R&D

Total NGATS R&D

SQ R&D

The FAA relies on the current NASA aeronautics R&D program as the principal 

source of the technologies needed to provide the nearer-term NGATS aviation system 

capacity and operations cost reductions. The current restructuring of the NASA 

program introduces uncertainty in this reliance. Refocusing NASA efforts on lower 

Technology Readiness Levels (TRL 1, 2, & 3) is a particular source of concern because 

it shifts a greater R&D transition burden to the FAA. To accommodate this reduction 

in NASA support for transition will require an additional approximately $100 million 

annually in FAA R&D funds. If the current NASA effort were abandoned completely, 

the FAA would require a further $100-150 million annually in FAA research and 

development funds. More importantly, NGATS implementation would be delayed, 

probably by five years, while the FAA reestablishes the infrastructure needed to 

accomplish the work. This delay in NGATS would have a severe long-term impact on 

the FAA operations budget. 

NGATS F&E Cost 

The Facilities and Equipment cost estimates the funding required to support the 

sustainment of the NAS and the implementation of the NGATS system. These estimates 

have been developed and coordinated with the JPDO and the ATO Planning and Finance 

Offices. They represent the current best estimates for the Status Quo and the NGATS 

F&E projects. 

Note that The NGATS implementation is projected over a twenty-year period. It begins 

in 2007 with technologies that are currently available such as data link and proceeds 

through 2025 with the implementation of newer technologies on a new network centric 

automation platform in a new set of facilities. The roll off in the out years may be 

exaggerated. 

FNGATWG Final Report May 18, 2006 23
 

NGATS F&E Costs Compared With Status Quo Scenario F&E Costs in 2005 $

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

Total SQ F&E Costs

Total NGATS F&E Costs

NGATS AIP Cost 

Airport Improvement costs are estimated at the 2006 level throughout the period. 

Coordination with airport authorities is necessary to complete these estimates. 

AIP Cost Estimates for Both NGATS and Status Quo Scenarios in 2005 $

3.0

3.1

3.2

3.3

3.4

3.5

3.6

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Fiscal Years

Billions $

NGATS and SQ AIP Cost

NGATS Total Cost 

A comparison of the total government NGATS cost and the total government Status Quo 

scenario cost is shown below. Note that the total NGATS cost is expected to be slightly 

less than the total Status Quo cost over the twenty-year period in both the Base Case and 

the Best Case. Only in the Worst Case where there are no productivity benefits achieved 

in either the NGATS or the Status Quo scenarios is the NGATS scenario more expensive. 

FNGATWG Final Report May 18, 2006 24
 

Total NGATS Cost Compared to Total Status Quo Scenario Cost in 2005 $

11

12

13

14

15

16

17

18

19

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Fiscal Years

Billions $

NGATS Best Case

NGATS Base Case

NGATS Worst Case

SQ Best Case

SQ Base Case

SQ Worst Case

The over and short from comparing the NGATS costs with the current Trust Fund 

revenue model forecasts indicates a shortfall in the early years of $ 1 billion in the Base 

Case, $0.5 billion in the Best Case and $1.5 billion in the Worst Case with a 20% 

contribution from the General Fund. The shortfall increases to $2 billion in the Base 

Case, $1.5 billion in the Best Case and $2.5 in the Worst Case. If the statutory formula 

were used the General Fund contribution would rise to 30+% in the near term to cover the 

shortfall. 

Over and Short NGATS Cost vs Current Model Revenue With 13% and 20% 

General Fund Contribution in 2005 $

-4

-2

0

2

4

6

8

10

12

2006200820102012201420162018202020222024

Fiscal years

Billions $

Best Case w 20% General Fund

Contribution

Base Case w 20% General Fund

Contribution

Worst Case w 20% General Fund

Contribution

Best Case w 13% General Fund

Contribution

Base Case w 13% General Fund

Contribution

Worst Case w 13% General Fund

Contribution

FNGATWG Final Report May 18, 2006 25
 

NGATS FUNDING 

There are an infinite number of variations of four or five basic user fee/tax models with 

or without a General Fund contribution. The distribution of taxes or fees to user groups 

and the General Fund is the base problem to be solved. Each user group has a different 

model for determining the share of FAA costs they should pay. Once the shares are 

determined, the method of tax or fee collection may vary from user-group to user-group 

at a level to meet their allocated share. The choice of method and variations are political 

questions that will be addressed by the Administration and Congress with advice of 

aviation stakeholders. 

The working group outlines four options and makes a preliminary assessment of the 

consequences of choosing one. None of them is expected to be acceptable by itself to the 

entire community. Defining and refining a hybrid of them to create an approach that is 

acceptable to aviation industry groups is the work of others over the next several months. 

User Fee/User Tax Options 

After consideration of a number of user fee and taxation options, the group reduced the 

set to four for further analysis. For this analysis, each option was normalized to raise 

$11B in fees/taxes based on estimated 2005 traffic. For purposes of this analysis $3B 

(~20%) of the estimated FY-06/07 required revenue of $14B is assumed to be from the 

General Fund in each case. Note by 2010 the required funding level is expected to reach 

$15B. At a 22% share the General Fund would contribute $3.3B and the user fee/tax 

scheme $11.7B. At a 13% share the General Fund would contribute $1.95B and the user 

fee/tax scheme ~$13B. 

Considering the difficulty of collections and the limited amount of Trust Fund proceeds 

collected from light (piston) GA, this group is charged an aviation gas tax, but no other 

fees in all of the options. These options consider only the taxes paid into the Aviation 

Trust Fund. Other taxes/fees, e.g. security fees, are not considered. 

Option 1 Extension of the Current Ticket Tax Scheme

The current taxing scheme with rates adjusted proportionally to generate the requisite 

revenue. The following rates (which are approximately 10% higher than the current rates) 

were derived assuming that the base on which the tax is applied is 10% higher than 

FY'04: 

• Ticket tax 8.25% 

• Segment tax $3.50 

• International head tax $15.50 

• Airfreight tax 6.875% 

• Jet fuel tax (non-commercial operations) $0.24/gal 

• Av gas tax (non-commercial operations) $0.2125/gal 

• Fuel tax on commercial operations $0.0475/gal 

Each element is increased over current rates. If this option were adopted, in the interest 

of "equity" it would be appropriate to increase the fuel tax on non-commercial operations 

to a larger number, in the range of $0.50 to $1 per gallon. Doing so would have 

FNGATWG Final Report May 18, 2006 26
 

relatively little impact on the overall funding situation, because the amount of additional 

revenue would be relatively small, but it would reduce the criticism that the noncommercial user isn't “paying his way". 

Option 2 Flat Fuel Tax Option

Under this option, all domestic operations are charged a fuel tax, and no other taxes. 

International operations are charged an International Head Tax, at the same rate as in 

option 1. Based on extrapolation of FY'04 fuel usage, a fuel tax of about $0.65 per gallon 

(jet fuel and aviation gas) would raise the requisite revenue. 

Option 3 The Weight Distance Rate Option

Under this option, all turbine operations (and probably also the relatively few commercial 

piston operations) would be charged a fee based on the aircraft MTOW and the distance 

flown. As is common in most other countries, the fee would have two components, one 

based on weight only for terminal-area services, and one based on weight and distance 

for en route services. (Typically, the en route charge is based on distance times square 

root of the weight.) Non-commercial piston operations (primarily light GA) would be 

charged a fuel tax, probably in the range of $0.50 to $1 per gallon. 

Option 4 Rate Distance User Fee Option

Same as option 3 without the weight factor. All turbine aircraft, regardless of size, would 

be charged the same for the same operation. Also as in option 3, non-commercial piston 

operations (primarily light GA) would be charged a fuel tax, probably in the range of 

$0.50 to $1 per gallon. 

Criteria for Assessing Options 

The working group has developed thirteen criteria for assessing the options: 

 

1. Funding Stability and Sustainability: Can the funding be counted on in the future? 

(Stability) Is there a mechanism to deal with periodic shortfalls? (Sustainability) 

Resilience to bad years? 

2. Flexibility to Cost Profile Changes: Is the mechanism sufficiently flexible to deal 

with changes in cost profile? 

3. Flexibility to Organization Changes: Will the funding mechanism (especially if it 

includes long term obligations) adapt to potential changes in government’s “status”?, 

e.g. NASA gets out of CNS/ATM R&D business; FAA gets corporative or does 

significant outsourcing of services. 

4. Ease of Administration: Ease of administration of fee structure and collection of 

fees. 

5. Fairness and Proportionality: What is impact on stakeholders? Includes questions 

of fairness and proportionality; to size; to operation; to revenue; etc and does 

mechanism work well for some stakeholders, but not others? May suggest need for a 

hybrid solution. 

6. Relationship of User Benefit and Fee: Does the fee structure reflect benefit to those 

who pay, i.e. do people pay for what they use? 

FNGATWG Final Report May 18, 2006 27
 

7. Relationship of Public Good and Fee: Does the fee structure reflect public good of 

the service? Value to nation, as opposed to individual? 

8. Public and Private Support: How likely is support for proposed mechanism from 

public sector (Congress, Administration, State and local governments) or from private 

sector (airports, airlines, GA, manufacturers, passengers, shippers etc.)? Who will 

support it? Who will oppose it? If cost for elements like avionics falls on industry, 

perhaps through mandates, will they support it? 

9. Potential Safety Impact: If there is a negative safety impact, the fee structure is a 

non-starter. 

10. Technology Drive: Will it encourage technology change, e.g. more efficient aircraft; 

avionics that improve operational safety, efficiency, or capacity? 

11. Equipage Drive: Does it encourage equipage? 

12. Mobility Drive: Does it encourage mobility (use of many airports, especially the 

smaller markets)? 

13. Experience of Using Option: Has it worked for others in aviation? Other industries? 

Is this experience applicable to FAA? 

Initial Projection of Options Impact on User Groups 

Distribution of User Fees/Taxes by User Group 

User Group Option 1 

Current Tax 

Structure 

Option 2 

Flat Fuel Tax 

Option 3 

Weight-DistanceBased Fee 

Option 4 

DistanceBased-Fee 

Commercial 

Passenger 

$10.02B 91.1% $9.70B 88.2% $9.53B 86.6% $8.89B 80.8%

Commercial 

Cargo 

$0.62B 5.6% $0.77B 7.0% $0.99B 9.0% $0.61B 5.5%

Turbine GA $0.32B 2.9% $0.50B 4.5% $0.45B 4.1% $1.47B 13.4%

Piston GA $0.04B 0.4% $0.03B 0.3% $0.03B 0.3% $0.03B 0.3%

Totals $11.00B $11.00B $11.00B $11.00B 

Notes 

1. Funds are constant 2005 $ 

2. Operations data based on extrapolation of 4/15/05 flights in ETMS 

3. Fuel data based on FY04 tax collections, increased by 10% to account for the 

increased number of flights in FY05 vs. FY04 

4. Allocation of fuel use between Commercial and Cargo based on total weight x 

distance of each flight 

5. Allocation of fuel between GA (Turbine) and GA (Piston) based on total weight x 

distance of each flight 

6. Tax/fee rates for each option normalized to result in same total tax collection of $11B 

7. GA numbers include only those aircraft being tracked by the ETMS, and so 

substantially understates piston GA operations and contributions under options 3 and 

4. 

8. The commercial category includes all aircraft currently paying the 7.5% ticket tax. 

This includes airline, air taxi, charter, and fractional operators. Within the 

FNGATWG Final Report May 18, 2006 28
 

commercial category, option 3, and even more so option 4, will result in a substantial 

shift in charges from large aircraft to small aircraft. 

FNGATWG Final Report May 18, 2006 29
 

Initial Option Assessment 

Funding Stability and Sustainability 

Each of the options will nominally generate the defined revenue each year. However: 

• Option 1 (Ticket tax based) will vary with ticket prices and with demand rise and 

fall. 

• Option 2 (Fuel tax based) will remain stable with ticket prices but will vary with 

demand and aircraft efficiency. 

• Option 3 (Rate-Distance-Weight) will remain stable with ticket prices but will 

vary with demand. 

• Option 4 (Rate-Distance) will remain stable with ticket prices but vary with 

demand. 

None of the options in themselves provide the mechanism to deal with periodic shortfalls 

in revenue. To overcome this problem it will be necessary to either create reserve 

balance in the Trust Fund or to establish a bonding capability. 

The year-to-year uncertainty of the General Fund contribution is in itself a degree of 

instability, as is the uncertainty of the annual appropriation process. A longer-term 

appropriation would tend to stabilize both of these uncertainties. The concept of using a 

user fee approach for some or all of the FAA funding where the revenue bypasses the 

appropriation process would also reduce these uncertainties. 

Flexibility to Cost Profile Changes

None of the options in themselves provide the mechanism to deal with changes in the 

cost profile. To overcome this problem it will be necessary to either establish an agency, 

say the FAA Air Traffic Services Committee, or for the Congress to reassess and adjust 

the fee levels to meet the expected cost profile. This could be done annually or on a 

longer term basis, say five years. 

Flexibility to Organization Changes

Any one of the options should accommodate any of the publicly discussed FAA 

organizational variants including long-term obligations considering congressional 

approval of the fund use 

Ease of Administration

The simplest single option to administer is probably option 2, the flat fuel tax. The user 

elements of option 1 are comparatively easy to administer if allocated as part of the 

ticketing process for air carriers or as a function of weight bills in the cargo case. They 

are rather complex for General aviation in any case and could be made complex in the 

cargo case. 

Fairness and Proportionality

This is one of the most difficult questions to answer and probably can only be reduced to 

a political answer. 

FNGATWG Final Report May 18, 2006 30
 

Relationship of User Benefit and Fee

Each of the primary aviation stakeholder groups has a different model for determining the 

proportion of the services they use and the cost they should therefore pay. While it 

would be interesting to compare each group’s model against the models of the other 

groups, this question is likely to be reduced to a political answer. 

Relationship of Public Good and Fee

The public good is the basis for the General Fund contribution to FAA funding. Notable 

areas include public access to public transportation of people and goods; the military use 

of the system; and payments for functions that do not generate the level of revenue that 

covers the cost of the capital and services provided, e.g. the smaller airports. 

Public and Private Supporters

This question will be dependent upon each of the user groups’ assessment of the 

appropriateness of the costs to be covered by the user fees and on the ultimate definition 

of the charging scheme and its associated distribution of the fees between the groups. 

Public stakeholders will consider the benefits to their interests and will often be local in 

view. The outcome will be reduced to a political answer. 

Potential Safety Impact

None of the four options has an obvious negative safety impact. Should one of the user 

fee options include a fee for an optional safety-related service, it would be considered as 

having a negative safety impact. 

Technology Drive 

Option 2 (Flat Fuel Tax) may lead to a yet sharper focus on more efficient aircraft. None 

of the other options in themselves probably drive technology. 

Equipage Drive

None of the options in themselves drives users to voluntarily equip. Equipage will occur 

when either it is mandatory for operation in some or all airspace or it provides for an 

economic benefit to the user that justifies the cost. Operational benefits or safety benefits 

will also have some impact on equipage. User fee discounts for equipage may have an 

impact but each fee discount has to be made up by an increase somewhere else. 

Mobility Drive

None of the options as envisioned are likely to cause use of a greater number of airports. 

It may be possible to develop a version of option 3&4 that provides incentives for 

operation into and out of small airports. 

FNGATWG Final Report May 18, 2006 31
 

Experience of Using Option

• Option 1 has been used in the FAA Trust Fund in one version or another for many 

years. 

• Option 2 has been used in the current system for general aviation for many years. 

It is the basis of user charges for highway transportation. 

• Option 3 has been used in numerous countries of the world for many years. 

• Option 4 has not yet had a large usage. 

FNGATWG Final Report May 18, 2006 32
 

NGATS IMPLEMENTATION AND FINANCING 

 

The working group has considered the FAA NGATS implementation and funding 

situation and observes: 

1. That the required F&E spending level for implementing NGATS is essentially flat 

between $2 and $3 billion in 2005 $ over a twenty year period. This amount is about 

$0.5 to 1 billion greater that the Status Quo scenario over the first ten years. In the 

out years the NGATS F&E levels are maintained at this level while the Status Quo 

levels decrease (See NGATS F&E Cost), though there is greater uncertainty 

associated with these out-year estimates. 

2. That there is a $1B to $2B shortfall in total FAA funding of the NGATS scenario, 

depending on the General Fund contribution, for several years if today’s Trust Fund 

mechanism is continued at the current user fee/tax level. The Trust Fund reserves 

will be exhausted in two to three years without a significant increase in the General 

Fund contribution. 

3. In the longer term, the revenue levels are projected to overtake the costs levels if FAA 

productivity can be enhanced by NGATS technology. 

NGATS Implementation Requirements 

To successful implement NGATS we must recognize that: 

• Operating and transforming the NAS into the NGATS is a twenty-year project and 

will require $300 billion, or $15 billion on average each year for twenty years, in 

constant 2005 dollars, 

• While every effort must be made to devise a funding strategy to minimize year-toyear variants in user fees/taxes and operations and implementation expenses, some 

will occur, 

• A program process must be deployed that ensures successful and cost effective 

development and implementation of NGATS capabilities, 

• A consistent and stable management and oversight mechanism is essential to safely 

operating the NAS while transforming it into the NGATS, and 

• A mechanism of measuring ongoing costs, performance and progress toward 

transformation of NAS to NGATS is necessary. 

The Six Engines for Success 

The working group proposes a toolbox of the Six Engines for Success to address these 

requirements: 

1. The first element of success is the Leader. Given that the NGATS implementation 

is a twenty-year program this really means a minimum of three and likely five 

leaders to accomplish the NGATS implementation. The selection and development 

FNGATWG Final Report May 18, 2006 33
 

of these people is probably the most important element to NGATS success. In 

addition to being smart and hard working people they must know the NAS and the 

NGATS and the transformation between them. They must be innately people of 

vision and public purpose. Recognizing the need for a Leader and a Leader Elect to 

maintain continuity over the twenty-year period is very important. 

2. A Revenue Engine that raises the required $15 billion each year through a collection 

of user fees/taxes and contribution from the General Fund. It is assumed that this 

engine is a variant of one or more of the funding approaches discussed above. 

3. A Financial Stability Engine that accommodates year-to-year variations in the 

revenue or expenses. In the past this engine took the form of annual adjustments in 

the General Fund contribution or in some form of cost cutting that changed the 

outcome of the program. Successful implementation of the NGATS requires access 

to some sort of reserve fund to cover these variations. 

 

A Financial Stability Engine approach might be an expansion of the current Trust 

Fund concept where the money collected from fees and taxes would go into the Trust 

Fund and all FAA expenses except those for a selected set of regulatory safety 

activities would come out of the Trust Fund. These regulatory safety activities would 

be supported by a General Fund contribution. A target year-end Trust Fund reserve 

balance range would be established by legislation. If the year-end balance is too low, 

taxes and/or fees are raised for the following year according to a legislated formula. 

This adjustment process would have congressional oversight, but would not require 

legislation. If the year-end balance is too high, taxes and/or fees will be lowered 

according to the same process. If the year-end balance is in range, no change will be 

made in the taxes and fees for the ensuing year. 

A second Financial Stability Engine alternative could be establishment of two 

funding FAA streams: the first a continuation of the user fee/taxed based 

appropriation for operation of the FAA and funding AIP and the second a special 

purpose user fee that goes directly to the FAA for the purpose of supporting R&D and 

F&E activities. Associated with this user fee would be an authority to issue revenue 

bonds to fund some or all of the R&D and F&E activities. The special purpose fee 

would be used to cover repayment of the bonds. This approach would mean that 

future users of the system would thus pay, be it a higher cost, for the facilities and 

equipment they are using. 

The selected Financial Stability Engine could be any one of an infinite set of 

variations but will always be some combination of either reserve accounts or 

borrowing authority. 

4. A Program Engine that provides the mechanism for developing, producing, 

implementing, and commissioning on line the various capabilities that transform the 

NAS into the NGATS over these next twenty years. Approaches that focus 

government staff on identifying service requirements and assuring that services are 

FNGATWG Final Report May 18, 2006 34
 

properly provided rather than designing, developing, producing, implementing and 

operating NGATS equipments, may lead to earlier implementation with earlier 

benefits at lower cost and risk while reducing the initial cash outlay. 

A Service Purchasing approach is an example that could provide for vendor 

financing of the assets and reduced overall costs to the government. An example 

may be the purchasing of Air-to-Ground communications including the air-to-ground 

ADS-B function as services through a competitive procurement. In this example the 

vendor would provide international standard digital voice, and data link services in 

the entire U.S. sovereign and delegated airspace from near the surface to upper 

altitudes. This capability would provide the basis for implementing much of the 

NGATS productivity and capacity increases while interfacing with all equipped 

aviation users. The approach would supersede the Data Link, Digital Radio, CPDLC 

(Controller-Pilot Data Link Capability), and ADS-B (Automatic Dependent 

Surveillance-Broadcast) programs. 

The Program Engine must see the NGATS implementation as a twenty-year 

program that requires a consistent and stable program management approach to 

implement NGATS capabilities promptly and efficiently. 

5. A Planning, Management, And Oversight Engine that provides the mechanism for 

maintaining the NGATS implementation plan, managing its accomplishment, 

providing for its oversight by the FAA, the aviation community, the Congress and 

the Administration. 

A twenty-year plan in four five-year increments similar to the NGATS Roll-Out used 

by the working Group might be a basis for this engine. The idea would begin with a 

specific set of incremental safety, capacity, FAA productivity, and user benefits 

objectives for each of the five-year segments; followed by a strategy for achieving 

the goals; followed by a rollout of NGATS capabilities in increments in each of the 

five-year segments. Then the R&D, F&E, and Operations activities required to 

implement the capabilities would be ordered into the five-year segments. The 

expected costs for these activities would be estimated for each five-year segment. 

We now have the basis for an agreement between the FAA, the aviation industry, and 

the Congress on what needs to be done, when and how it will be done, how much it 

will cost, and the benefits to be achieved by its accomplishment. Propose that the 

first five-year segment serve as the basis for both a five-year authorization and a 

five-year appropriation tied to a five-year agreement on the user fees/taxes, levels of 

funding and the performance objectives for the FAA. In year three or four 

performance against the goals of the first five-year segment would be reviewed; 

negotiation to reduce the second five-year segment to an agreement would proceed; 

the twenty year plan would be extended for an additional five year period; and the 

twenty year plan revised as needed to meet the current aviation needs. The result 

would be a constant view of the next twenty years in five-year segments. In this 

context the FAA would propose the twenty-year plan, the industry would review, the 

FNGATWG Final Report May 18, 2006 35
 

Congress would authorize and appropriate, and the Administration approve the plan 

in five-year segments. 

In any case a Planning, Management and Oversight Engine is required that provides 

for the management of NGATS as a twenty year program is required recognizing 

that it will be overseen by several different Congresses and Administrations during 

its accomplishment. Each will want to leave their mark on the product. This engine 

may include some sort of Congressional hearing and review process to assess 

performance. 

6. A Metrics Engine that facilitates the measurement of the on-going performance of 

the NAS and the progress toward its transformation to the NGATS. Is organized as a 

twenty-year view to support the transparent measurement of specific metrics at a 

time and the incremental change in that metric over time. Enables measurement of 

the accomplishment of the objectives of each five-year plan segment by each 

member of the aviation community and the Congress. Includes measurements of 

Safety, Capacity, Environmental Impact, FAA Costs, FAA Productivity, and User 

Benefits as a minimum. 

NGATS Financing Through Private Sources 

Financing can be used to stabilize the funding stream as noted above, it spread the cost of 

the project to be better aligned with the benefits of the project, provide greater control 

over timing of capital investments, avoid “intergenerational” funding problems, and 

provide for more businesslike management of management of the NGATS 

implementation. 

The working group has reviewed the government budget process and the constraints on 

private financing. The result is the discussion below that acknowledges the possibility 

but difficulty of arranging private financing. 

FAA Funding – Appropriations and Taxes: 

FAA’s budget is divided into four accounts – Operations, Facilities and Equipment 

(F&E), Airport Improvement Program (AIP), and Research, Engineering, and 

Development (RED). The capital accounts (F&E, AIP and RED) are funded 100% with 

monies from the Airport and Airway Trust Fund. The Operations account is funded with 

both General Fund monies and funds from the Trust Fund. The fact that FAA receives 

most of its funds from a Trust Fund has almost no bearing on FAA’s budget treatment. 

While two of FAA’s accounts are funded with contract authority, all four of these 

accounts typically receive their funds through the annual appropriations process. 

Budget Rules – Mandatory and Discretionary Funding 

To properly discuss aviation funding issues, such as replacing existing taxes with user 

fees, or using existing taxes to support bonding authority, a basic understanding of 

federal funding rules is necessary. 

FNGATWG Final Report May 18, 2006 36
 

One basic funding rule is that the Federal spending and revenue streams are divided into 

two categories -- Mandatory and Discretionary. Mandatory spending is also referred to as 

direct spending or entitlements. Mandatory spending includes Medicare, Veterans’ 

benefits, and Social Security. Mandatory refers to spending or revenue actions that are 

taken by the authorization committees. In the world of aviation, our authorization 

committees include the House Transportation and Infrastructure Committee, the House 

Science Committee, and the Senate Commerce, Science and Transportation Committee. 

Aviation taxes are mandatory as well, and are in the jurisdiction of the House Ways and 

Means Committee or the Senate Finance Committee. These committees typically pass 

multi-year mandatory spending or revenue legislation. 

Discretionary funding is controlled by the Budget Committee and the Appropriations 

Committee. The House and Senate Budget Committees annually set the overall 

discretionary spending constraints and the Appropriations Committee develops the 

specific discretionary spending bills, which are annual spending bills. 

The fact that the aviation revenues are mandatory and FAA spending is discretionary 

usually is not an issue. However, when aviation policy discussions begin to explore 

using existing taxes for new purposes, an understanding of budget scoring is essential. 

Budget Scoring – Controlling Revenues and Controlling Spending 

Prior to 1921, there were no central controls on federal spending. Congressional 

Committees were not given spending guidelines and this decentralized budging process 

led to large federal deficits. The Budget and Accounting Act of 1921 created the Bureau 

of the Budget (now the Office of Management and Budget), established the General 

Accounting Office, and required the President to submit an annual budget to Congress. 

This was the first time the Federal budget was considered in its entirety. 

Over the years, Congress and the Executive Branch have amended the Budget and 

Accounting Act and have adopted additional rules to control Federal revenues and 

spending. Some of these rules are in law, some in resolutions, and others in Executive 

circulars. These rules encourage that the budget is reviewed as a whole, national 

priorities are set, and the American taxpayers are protected from increasing deficits and 

taxes. Their success has been mixed. 

To describe these budget controls in the most general terms, at the beginning of every 

calendar year, Congress and the Executive Branch estimate what the tax revenue will be 

for the next fiscal year and what mandatory spending requirements the government is 

facing. Then, there is a decision on what the total discretionary spending will be, taking 

into account whether or not the government is willing to borrow funds. Once that overall 

spending goal is set, there are rules to ensure that no laws are passed which would reduce 

the anticipated tax revenues or increase the spending levels above the anticipated levels. 

If a bill or government action is proposed that would decrease revenues or increase 

spending outside these agreed upon levels, it is considered a “scoring problem” unless the 

bill provides a budget cut or an increase in revenues in another part of the budget. 

FNGATWG Final Report May 18, 2006 37
 

One way to avoid a scoring problem is to provide an offset – in other words, if a bill 

would include a tax cut, then the bill could also provide a spending cut of equal value as 

an offset. The only catch is that if the tax is on the mandatory side of the budget, the 

offset in spending must also be on the mandatory side of the budget. The Federal budget 

is in two categories; mandatory and discretionary – so a reduction in mandatory revenues 

cannot be offset by discretionary spending cuts. This is because mandatory taxes are 

multi-year and discretionary spending is one year – so a multi-year reduction in taxes 

must be off-set with a multi-year reduction in spending, or replaced with other multi-year 

revenues. 

A simple example of a bill with a scoring problem would be a bill stopping any tax – for 

instance, a bill discontinuing the aviation segment fee. A bill that discontinues the 

segment fee would be “scored” by the Congressional Budget Office at a dollar amount 

equal to the estimated revenue those taxes would have generated. This tax cut bill could 

only pass if there was a decrease in mandatory spending or if the point of order against 

the bill was overridden with a 2/3 vote. 

There are some exceptions, one being emergency supplemental funding which is not 

required to have an offset, however, Congress and the Executive Branch often attempt to 

offset some or all of many emergency spending bills. 

Using FAA’s Current Taxes for New Purposes and The Budget Rules 

There have been some discussions in the aviation community of using some or all of the 

current aviation taxes for new purposes. There are budget-scoring implications to those 

proposals. For instance, to use the segment fee to support a bond would create a scoring 

problem. The current aviation taxes are part of the mandatory budget and are expected to 

be collected for the foreseeable future. Therefore, a bill that discontinues the segment fee 

(even though it is expiring) would have a scoring problem (equal to the amount expected 

to be collected by the segment tax). In addition, a bill that diverted the segment fee for a 

new purpose (such as serving as a payment stream for a bond) would also be scored equal 

to the expected loss in tax revenue. Since the revenue is on the mandatory side of the 

budget, a reduction in FAA spending would not be an acceptable off-set, since FAA 

spending is discretionary. 

A new tax, however, could be used as a revenue stream to support a federal bond, or 

another approach to funding FAA investments. However, bonds also have unique 

scoring issues. 

Bonding in the Federal Government 

There have been several aviation policy discussions about using bonding to support 

aviation capital investments. However, implementing bonds to support federal agencies’ 

capital investments are often not successful, in part, because Treasury views the ultimate 

cost of bonding to be more expensive then annual appropriations. 

Most of the federal budget policy makers believe that the best way to fund federal capital 

projects is through the annual appropriations process. The OMB Circular A-11 that 

FNGATWG Final Report May 18, 2006 38
 

establishes the guidelines for developing the President’s annual budget request to 

Congress, states: 

The general belief is that special bonding authority for an agency is not cost effective. 

Treasury Secretary Snow wrote a letter in 2003 strongly opposing a bill to allow special 

bonding authority for transit projects. He stated that “I want to emphasize that these 

strong objections exist whether the proceeds of these bonds are used to finance mass 

transit, highways, or any other form of federal spending. If legislation including these or 

similar proposals were to be presented to the President, I would recommend that he veto 

the legislation.” 

Under all recent administrations, Treasury has been on record opposing special bonding 

authority. Treasury’s concerns include the fact that Treasury bonds are the least 

expensive way to borrow funds due to the volume they generate; therefore, any special 

bond would be more costly for the tax payers. In addition, once a precedent is set that 

other agencies can issue Federal bonds, Treasury’s lower bonding rate will be threatened. 

In general, it is better for the tax payers that one entity provides borrowing services in 

order to receive the benefits which come with large volume bonding authority. 

Even in cases where special bonding authority has been considered, the scoring rules 

have discouraged final action. In most cases, the Congressional Budget Office (CBO) 

will require that the full amount of the bond be scored in the first year instead of the 

annual bond payments. This scoring position is in part to discourage more costly 

bonding outside of Treasury, but also, because CBO believes spending is spending and 

should be shown on the federal books in the year it is spent. 

At first glance, this scoring policy may appear to be “unfair”, however, the budget 

accounting principals are pretty simple – revenues minus spending equal deficit (or 

surplus). If the CBO rule allowed only the bond payment to be scored (as opposed to the 

full bond amount), then every year, in the big federal budget picture, we would not run a 

deficit. The calculation would be revenues minus spending plus bonding equals zero. In 

FNGATWG Final Report May 18, 2006 39
 

recent times, the Federal Government has issued bonds to cover the gap between 

spending and revenues, but that spending is scored in the year it appropriated; otherwise, 

the federal books would not show any deficit. 

Government Leasing – operating versus capital 

Another “creative financing” option discussed has been issuing an operating lease. There 

are three types of leases defined by the Office of Management and Budget (OMB): 

Lease-purchase; Capital Lease; and Operating Lease. The scoring of these three types of 

leases simply means “What would need to be appropriated for the Executive Branch to 

sign a contract.” 

OMB and the Congressional Budget Office (CBO) believe that the most efficient way for 

the government to invest in capital is with annual appropriated funds (any other scenario 

would require interest payments, making the purchase more costly). Therefore, any 

capital lease agreement, which would include any, identified or buried interest payments 

would be discouraged. The way OMB and CBO discourages any capital lease agreement 

is to require essentially the full cost of the contract to be paid in the first year. This 

approach means that a capital lease “scores” in year one at the full cost of the contract – 

removing all incentive to enter into a capital lease contract. 

Definitions: 

The definitions of the three types of leases are included in OMB A-11 and 

interdependent: 

Lease-Purchase: any lease in which ownership of the asset is transferred to the 

Government at or shortly after the end of the lease term (may include a bargain-price 

option). 

Capital Lease: any lease other than a lease-purchase that does not meet the criteria of an 

operating lease. 

Operating Lease: any lease that meets ALL of the following criteria: 

1) Ownership of the asset remains with the lessor during the term of the lease and is 

not transferred to the Government at or shortly after the end of the lease term. 

2) Lease does not contain a bargain-price purchase option. 

3) Lease term does not exceed 75% of the estimated economic life of the asset. 

4) Present value of the minimum lease payments over the life of the lease does not 

exceed 90% of the fair market value of the asset at the beginning of the lease term. 

5) Asset is a general purpose asset rather than being for a special purpose of the 

Government and is not built to the unique specification of the Government as a 

lessee. 

6) There is a private sector market for the asset. 

A true Operating Lease is scored equal to the annual payments of the contract plus 

cancellation costs. 

Creative Financing – An Overall Look 

FNGATWG Final Report May 18, 2006 40
 

The summary of budget rules, scoring issues, and policies of the Federal Government 

may seem that any kind of “creative financing” is unattainable. However, there are 

several success stories, even in the world of transportation. Those success stories have 

developed because of strong policy needs. Creative financing cannot be debated in a 

vacuum – if it is, then it is sure to fail. Creative financing can only succeed if a clear 

investment need is articulated with a federal policy crisis. The first step is NOT to 

identify a creative way to finance -- the first step is to identify the problem and the 

specific need and then identify a unique financing mechanism. As we all know, there are 

lots of worthy causes in the Federal Government that could claim special budget 

treatment is needed. The biggest threat to the makers of budget policy is setting a 

precedent. Therefore, it is a solid policy need that must be established to support special 

budget treatment. 

Borrowing from the Federal Financing Bank 

It may be easier to borrow from the Federal Financing Bank, as Postal Service, 

Bonneville Power, and others do. This approach requires further investigation. 

FNGATWG Final Report May 18, 2006 41
 

APPENDIX A: Terms Of Reference 

1) Objective. Investigate options for financing Next Generation ATS currently outlined by the 

National Plan and currently being further defined by Joint Planning and Development Office of 

the FAA, TSA, and NOAA, their parent departments, NASA, DoD, and OSTP. 

2) Scope. Investigate the available options for funding and financing research and development, 

capital projects, and operations cost of the Next Generation ATS. The effort will address: 

participating agency research and development programs from FY-2007 through 2016; capital, 

operations, and aid to airports programs from FY2010 and through 2025. The working group will 

consider the levels of funding required, possible revenue sources, and techniques for financing 

capital expenditures. It will consider cost reduction options, as well as, leasing, purchasing 

services, and other options for providing the infrastructure of the Next Generation ATS. The 

Working group will not consider privatizing the FAA or industrial issues such as labor 

management relations, employee salaries, etc. 

3) Candidate Work Group 

1) Mr. Gerald Thompson 

2) Mr. John Fielding, Raytheon, Retired 

3) Dr Aaron Gellman, Northwestern University 

4) Dr Jack Fearnsides, Independent Consultant 

5) Mr. Paul Drouilhet, MIT LL retired 

6) Gen. Jack Cole, ATA 

7) Mr. Neil Planzer, Boeing 

8) Ms. Carol Carmody, formerly with NTSB 

9) Mr. Ron Swanda, GAMA 

10) Mr. Michael Lexton, Bear Sterns 

11) Mr. Ed Montgomery, ARINC 

12) Mr. Andy Cebula, AOPA 

4) Supporting Government Personnel 

1) Ms. Joan Bauerlein, ATO-P Designated Federal Official 

2) Mr. Bob Robeson, APO-200 

3) Ms. Gloria Dunderman, ATO-P 

4) Dr Andres Zellweger, Embry Riddle/NASA/JPDO 

5) Mr. John Kern, JPDO 

5) General Work Plan and Schedule

1) April, Collect and review related studies and actions taken by other government agencies and 

other countries. 

2) April-May, Solicit ideas from industry, government, company groups and individuals. 

3) April and Continuing, Develop and refine the level of funding required to support the Next 

Generation ATS through 2025. 

4) May, Develop a preliminary set of funding, cost control, and financing alternatives. 

5) May-June, Interview selected members of the business and financial communities to discuss 

alternative financing ideas. 

6) May-June, Develop criteria for assessing financing alternatives. 

7) June, Review of preliminary work with FAA staff 

8) June-July, Develop the working groups proposed set of alternative funding scenarios. 

9) August, Prepare preliminary report of findings 

10) September, REDAC review 

11) September, Stakeholders review 

12) September, Review of findings with FAA staff

13) December, Prepare final report of findings

FNGATWG Final Report May 18, 2006 42
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

OBJECTIVES 

Capacity 

+25% 

Productivity + 5% 

Delays -10%

Capacity +35% 

Productivity +35%

Delays -15%

Capacity +35% 

Productivity +35%

Delays -15%

Capacity +35% 

Productivity +35%

Delays -10%

STRATEGY 

1. Implement ongoing programs 

that increase capacity and 

productivity and reduce delays on 

the NAS/STARS/ARTS Platform. 

2. Define overall NGATS and 

initiate the development of 1st 

Generation NGATS. 

3. Search for opportunities to 

reduce cost and implement them. 

1. Implement 1st Generation 

NGATS on 

ERAM/STARS/ARTS/Transition 

CNS platform to enable initial 

productivity and capacity increases. 

2. Development of the 2nd 

Generation NGATS. 

3. Realign airspace and procedures 

and consolidate facilities to capture 

benefits. 

1. Implement the 2nd generation 

NGATS on the "Network Centered" 

Platform to enable a significant 

increase in capacity and 

productivity. 

2. Development of the 3rd 

Generation NGATS system. 

3. Consolidate facilities and realign 

airspace and procedures to capture 

benefits. 

1. Implement the 3rd generation 

NGATS to achieve the advertised 

productivity and capacity increases. 

2. Begin work on Next-Next 

Generation ATS 

3. Realign airspace and procedures 

and complete facility consolidation 

to capture benefits 

CAPABILITY 1 NETWORK ENABLED INFORMATION ACCESS

A. Ground-to-Ground 

(1) Interagency info sharing 

enhances national security 

(2) Integrated surveillance network 

enhances national defense & 

reduces costs 

(3) FAA and AOC inform sharing 

reduces user costs 

(4) FAA and FBOs share 

collaborative decision making info 

improves sys access

(5) Automated handoff info sharing 

increases capacity & productivity 

(6) Automated FAA\AOC autonegotiation increases efficiency & 

productivity

B. Air-to-Ground 

(1) A transition CNS capability w 

ADS-B enables air-to-grd 

information sharing & surveillance 

redesign.

(2) Airborne Information Web 

enables grd-to-air information 

sharing that reduces FAA & User 

costs.

(3) Airborne Info Web enables airto-grd info sharing that safety, 

security & efficiency 

C. Air-to-Air

(1) Airborne Info Web enables info 

sharing between aircraft increasing 

safety, security, and efficiency. 

(2) Airborne Info Web enables 

aircraft to aircraft info sharing 

increasing safety, security, and 

efficiency.

CAPABILITY 2. PERFORMANCE BASED SERVICES 

A. Communications

(1) Data link rule making 

(2) Initial controller-pilot data link 

capability reduces FAA and user 

costs 

(3) Data link clearance delivery 

reduces FAA and user cost. 

(4) 4-D trajectory data link delivery 

improves FAA productivity 

(5) 4-D trajectory negotiation by 

data link reduces user costs. 

B. Navigation 

(1) SatNav rule making 

(2) RNP routes established to and 

from all congested airports to 

increase capacity. 

(3) RNP routes established to and 

from all runway ends at congested 

airports to increase capacity. 

(4) Time-metered RNP routes 

flown to all runway ends at 

congested airports to increase 

capacity. 

(5) RNP routes to all airports 

serving commercial traffic. 

C. Surveillance 

FNGATWG Final Report May 18, 2006 43
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

(1) ADS-B rule making 

(2) CDTI rule making 

(3) Integrated surveillance network 

reduces infrastructure costs and 

enhances safety and security. 

(4) Air-to-air surveillance enables 

reduced oceanic separation & 

increased capacity. 

(5) Position and intent information 

shared between aircraft via ADS-B 

enhances safety 

 (6) Aircraft sharing ADS-B 

position and intent with major 

terminals increases safety and 

security

(7) Aircraft sharing position and 

intent information with en route 

ATC via ADS-B increases safety 

and security. 

(8) Aircraft sharing ADS-B 

position and intent with ATC in all 

airspace increases safety and 

security. 

D. Environment 

(1) Use of 4-D flight paths reduces 

noise and emissions impact 

(2) Advanced engines reduce noise 

and emissions. 

E. Safety

(1) Proactive risk-based safety 

management system (SMS) 

enhances system safety 

(2) Safety analysis provides 

mathematical basis for redefined 

NGATS separation standards for en 

route, terminal, runway spacing, 

et.al 

(3) Safety data collection and 

analysis resulting in safety 

improvement. 

F. Service Level Implementation

(1) Service levels based on user 

equipage and training capabilities 

increase capacity. 

(2) RNP approaches /departures 

required at congested airports to 

increase capacity. 

(3) Improve airspace utilization to 

provide temporal flexibility and 

improved responsiveness 

(4) Negotiated contracts between 

users and service providers increase 

capacity. 

CAPABILITY 3. ADVANCED AIR TRAFFIC CONTROL AUTOMATION SERVICES

A. Future Role of Pilot, Controller, Dispatcher, and Others

(1) Alternate scenarios are defined 

based on RTCA ops concept with 

safety and cost benefit analysis. 

(2) Scenario is selected and 

adjustments made in NGATS 

programs to accommodate

(3) NGATS Pilot (including 

avionics), controller, dispatcher, 

and other workstations enable 

selection. 

B. Decision Support Tools

(1) Complete implementation of 

TMA increases capacity and 

productivity. 

(2) Complete implementation of 

URET increases capacity and 

productivity 

C. Traffic Flow Management

(1) Implementation of TFM 

modernization package reduces 

delays and increases capacity 

D. Separation and Sequencing

(1) Automation of routine 

separation and sequencing are 

developed from NASA baseline 

(2) Implementation of automated 

separation and sequencing in en 

route and terminal airspace 

increases capacity and productivity.

(3) Integrated package of advanced 

separation & sequencing, airspace 

management, and trajectory 

management techniques increase 

capacity and productivity 

(4) Follow on package of advanced 

separation& sequencing, airspace 

management, and trajectory 

management techniques further 

increases capacity and productivity 

E. Platforms, Network & Protocols

PLATFORM #1. NAS/STARS/ 

ARTS platform in place with FTI 

grd\grd network. 

PLATFORM #2. ERAM platform 

with ERAM work stations, 

Transition CNS and FTI grd/grd 

network 

PLATFORM #3. NEO platform 

with NEO work stations, Airborne 

Info Web and NGATS grd/grd 

network 

(1) NEO design principles including 

fault tolerance, reliability, integrity 

suitable to support a highly 

automated air transportation system 

are defined. 

(2) NEO, Airborne Info Web & 

grd\grd network design & 

development 

(3) Transition from Platform #2 to 

Platform #3 2016-2020 

Fully Platform #3 by 2020 

FNGATWG Final Report May 18, 2006 44
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

CAPABILITY 4. AIRCRAFT TRAJECTORY-BASED OPERATIONS.

A. Airspace Reconfiguration

(1) Special use Airspace & 

Temporary Flight Restrictions are 

dynamically managed to enhance 

access, reduce delays and prioritize 

security needs. 

(2) Enroute facility airspace is 

dynamically configured by 

demand/capacity balancing to 

reduce delays, increase efficiency, 

accommodate disruptions and 

potentially reduce facilities

(3) Terminal facility 

airspace is dynamically 

configured by 

demand/capacity 

balancing to reduce 

delays, increase 

efficiency, 

accommodate 

disruptions and 

potentially reduce 

facilities 

B. 4-D Trajectory Development

(1) Implement time based metering 

nationwide to increase capacity 

(2) Enroute 4-D trajectory 

management is the basis for 

reduced delay and increased 

capacity.

(3) Terminal 4-D trajectory 

management is the basis for 

reduced delay and increased 

capacity. 

(4) Surface 4-D trajectory mgmt 

based flight planning reduces 

surface delay and airport 

congestion. 

CAPABILITY 5. WEATHER ASSIMILATION INTO DECISION LOOPS

A. Observations

(1) Enhanced sensor development 

and deployment to enhance 

capacity and increase safety.

B. Forecasts

(1) Fusing sensors and models into 

a national database improves 

forecasts & reduces Wx delays

C. Database

(1) Sharing of improved weather 

information with users enhances 

flight planning & reduces Wx 

delays

D. Probabilistic Development

(1) Inclusion of probabilistic and 

deterministic weather info into 

decision making process reduces 

Wx delays 

CAPABILITY 6. BROAD-AREA PRECISION NAVIGATION

A. Satellite Navigation As Primary Means

(1) SatNav primary means enables 

reduced oceanic separation stds & 

increased capacity. 

(2) SatNav primary means enables 

support reduced domestic 

separation standards to increased 

capacity.

(3) CAT I approaches available on 

all runway ends to reduce weather 

delays 

(4) CATII approaches available at 

all runway ends to reduce weather 

delays 

(5) CAT III approaches available at 

all runway ends to reduce weather 

delays 

B. Ground-Based Infrastructure Reduction

FNGATWG Final Report May 18, 2006 45
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

(1) NDB navigation aids shutdown 

to reduce sustainment costs (2) VOR/DME 

network reduced to 

reduce sustainment 

costs. 

(3) ILS shut down at all but 

CATIII airports to reduce 

sustainment costs. 

CAPABILITY 7. EQUIVALENT VISUAL OPERATIONS

A. Low Visibility Air Operations

(1) CDTI enables 

reduced in-trail 

separation during 

approach increasing 

airport arrival capacity 

during IMC to VFR 

levels 

(2) CDTI enables independent 

operations on converging & closely 

spaced parallel runways increasing 

airport arrival capacity during IMC 

to VFR levels

(3) Self merging and spacing using 

CDTI reduces controller workload 

& increases a/c flight path 

flexibility under certain conditions 

and airspace 

(4) Airborne separation assurance 

and sequencing automation 

increases operations at non-towered 

airports during IMC to VFR levels 

(5) Self separation 

using CDTI reduces 

controller workload and 

increases a/c flight path 

flexibility under certain 

conditions and airspace 

(6) Airborne automatic collision 

detection and resolution increase 

capacity and safety 

B. Low Visibility Ground Operations

(1) Synthetic vision enables 

zero/zero or blind taxi capabilities 

reducing airport surface delays 

during IMC to VFR levels 

CAPABILITY 8. SUPER DENSITY OPERATIONS

A. Reduced Terminal Area Longitudinal Separation

(1) Reduction of arrival/departure 

spacing requirements for a single 

runway increase throughput at high 

density hubs 

(2) Dynamic longitudinal arrival 

and departure spacing based on 

wake vortex detection and 

prediction increases throughput at 

high density hubs 

B. Reduced Terminal Area Lateral Spacing

(1) Reduction of arrival/departure 

spacing requirements for closely 

spaced parallels increases 

throughput at high density hubs 

(2) Throughput at high-density 

hubs is increased through the 

implementation of coupled 

approaches to very-closely-spaced 

parallels. 

C. Reduced Runway Occupancy Time

(1) Improved energy management 

during rollout and situational 

awareness of nearby aircraft reduce 

runway occupancy time and 

increase throughput at high density 

hubs 

(2) Multiple aircraft operations on a 

single runway increase throughput 

at high density hubs 

CAPABILITY 9. LAYERED ADAPTIVE SECURITY

A. People

(1) Security is enhanced and 

passenger screening time is reduced 

with secure passenger programs

B. Cargo

FNGATWG Final Report May 18, 2006 46
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

(1) Next generation explosive trace 

detection screening technology to 

improve security. 

(2) Security enhanced and shipper 

overhead reduced with 

known/trusted shipper programs.

C. Airports

(1) Improved airport perimeter 

surveillance and security 

checkpoint design reduce terrorist 

threats 

D. Aircraft

(1) Enhancements of vehicle 

tracking to improve security 

(2) Improved airport perimeter 

surveillance and security 

checkpoint design reduce terrorist 

aircraft threats 

REQUIRED R&D ACTIVITIES

A. System Enabling Research & Development

(1) Initiate research to establish a 

mathematical safety analysis basis 

for en route, terminal, runway 

spacing, in trail, et al separation 

standards 

(2) Initiate research to define the 

optimum roles of pilot, controller, 

and flight dispatcher as related to 

each other and their machines. 

(3) Determine the optimum size for 

a NGATS facility in terms of 

people, airspace, etc. 

(4) Initiate research to define a truly 

fault tolerant "network centered" 

automation network that support 

very high levels of automation 

(5) Continue to redefine weather 

and wake vortex research to 

develop products that enable visual 

rules in IMC conditions and 

minimize approach spacing 

B. NGATS Platform, Network & Protocol Development

(1) Define Airborne 

Information Web 

(2) Define NGATS grd/grd 

network 

(3) Develop Airborne Information 

Web 

(4) Develop NGATS grd/grd 

network 

(5) Develop 2nd generation 

"Network Centered" NGATS 

architecture and associated 2nd 

generation automation platform (s) 

that maybe airborne, space or 

ground based or some combination. 

(6) Initiate the definition and 

development of the associated pilot 

work station (including avionics), 

controllers workstation, flight work 

station, and other workstations , if 

needed , to support the human roles 

for the future NGATS.

(7) Network sustainment research (8) Network sustainment research 

C. 1st Generation NGATS Software (ERAM/STARS/ARTS Platform)

FNGATWG Final Report May 18, 2006 47
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

(1) Develop automated handoff 

software 

(2) Develop automated FAA/AOC 

auto-negotiation software 

(3) Develop Data link clearance 

delivery software 

(4) Develop 4-D trajectory data link 

delivery software 

(5) Develop terminal ADS-B 

position and intent application 

software 

(6) Development of automated 

separation and sequencing from 

prior NASA work on airborne and 

ground automation 

(7) Develop dynamic management 

of SUA/TFR airspace management 

software 

(8) Develop en route dynamically 

configured airspace software 

(9) Develop 4-D trajectory software 

(10) Develop software for sharing 

weather information with users on 

the ground and airborne 

D. 2nd Generation NGATS Software (NEO Platform)

(1). Initiate research & 

development of 

Optimizer/Evaluator and associated 

dynamic realignment of airspace. 

(2) Develop Airborne 

Information Web 

Software 

(3) Develop 4-D trajectory 

negotiation software 

(4) Develop enhanced ADS-B 

based position and intent software 

(58) Continue development of 

automated separation and 

sequencing engines 

(6) Continue Optimizer/Evaluator 

research & development 

(7) Development of software for 

inclusion of probabilistic and 

deterministic weather information 

in decision making processes 

E. 3rd Generation NGATS Software (NEO Platform)

(1) Develop Air to grd information 

sharing software 

(2) Continue development of 

automated separation and 

sequencing engines 

(3) Continue the refinement of the 

Optimizer/Evaluator concept 

(4) Develop dynamic longitudinal 

arrival and departure spacing 

software 

(5) Develop coupled 

approach software for 

use with closely spaced 

parallel runways 

(6) Develop software to support 

multiple aircraft on the same 

runway 

FNGATWG Final Report May 18, 2006 48
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

F. Next-Next Generation ATS

(1) Begin work on the Next-Next 

Generation ATS System. 

REQUIRED F&E ACTIVITIES

A. NAS/NGATS Operating Facilities

(1) Select 4 existing ARTCCs and 

50 TRACON/Towers to 

accommodate the ERAM platform 

that would drive the full 

complement of ARTCCs, 

TRACONs and Towers. 

(2) Determine location and begin 

establishment new NGATS 

operating facilities of appropriate 

size that will accommodate the 

NEO platform

B. NGATS Platform, Network & Protocol Implementation

(1) Continue development and 

begin implementation of ERAM 

based automation platform 

(2) Establish NGATS transition 

CNS transition platform from 

MOCA (ORCA) up over entire U.S. 

airspace and to the ground at 

selected airports with digital radio, 

data link and ADS-B using selected 

ground locations with a space based 

overlay. 

(3) Integrate transition CNS into 

existing NAS, STARS, ARTS 

platform with FTI grd/grd system 

(4) Implement integrated 

surveillance network 

(5) Complete 

implementation of 

ERAM, STARS, 

Micro-ARTS 

automation platform. 

(6) Integrate NGATS CNS 

transition platform into ERAM 

platform 

(7) Implement "Network Centered" 

Platform with associated pilot, 

controller, dispatcher, and other 

workstations in net NGATS 

facilities. 

(8) Implement Airborne 

Information Web 

(9) Implement NGATS grd/grd 

network 

C. Decision Support, Collaborative Decision Making, Information Software Tools Implementation 

on NAS/STARS/ARTS Platform

(1) Implement interface with 

transition CNS w ABS-B position 

data 

(2) Implement Interagency 

information sharing software 

(3) Implement integrated 

surveillance network enabling 

software 

(4) Implement FAA/AOC 

information sharing software 

(5) Implement FAA/FBO 

information sharing software 

(6) Complete implementation of 

TMA and URET automation 

support tools into NAS, STARS, 

ARTS platform 

(7) Implement TFM modernization 

CDM tools on NAS, STARS, 

ARTS platform 

D. 1st Generation NGATS Software Implementation On ERAM Platform

(1) Build (k) functionality of the 

2010 NAS software. 

(2) Build (k+1) 1st generation 

NGATS software

E. 2nd Generation NGATS Software Implementation On NEO Platform

FNGATWG Final Report May 18, 2006 49
 

NAS to NGATS Roll Out 

Base Period 

2006 thru 2010 

Initial NGATS 

2011 thru 2015 

NGATS 

2016 thru 2020 

Final NGATS 

2021 thru 2025 

(1) Build 2nd generation NGATS 

software 

F. 3rd Generation NGATS Software Implementation On NEO Platform

(1) Build 3rd generation NGATS 

software 

REQUIRED OPERATIONS ACTIVITIES 

A. Notices of Proposed Rule Making

(1) Data link rule making 

(2) SatNav rule making 

(3) ADS-B rule making 

(4) CDTI rule making 

B. RNP Route Establishment

(1) RNP routes established between 

all congested airports 

(2) RNP routes established between 

all runway ends at congested 

airports

(3) Time metered RNP routes flown 

between all runway ends at 

congested airports 

(4) RNP routes established between 

all airports served by commercial 

traffic 

C. Satellite As Primary Navigation Means

(1) SatNav becomes primary means 

for navigation in oceanic airspace 

(2) SatNav becomes primary means 

for navigation in domestic airspace

(3) SatNav CAT I approaches 

available at all runway ends 

(4) SatNav CAT II approaches 

available at CAT II airport runway 

ends

(5) SatNav CAT III (augmented) 

approaches available at CAT III 

airport runway ends 

D. Safety Management System Implementation 

(1) Proactive risk based SMS 

implemented

E. Service Levels 

(1) Service levels based on user 

equipage and training implemented

(2) RNP approaches /departures 

required at congested airports

(3) Negotiated contracts between 

users and providers established

F. Airspace and Procedures Review 

(1) Realign airspace and procedures 

to capture benefits of enhanced 

CNS and automation tools.

(2) Realign airspace and procedures 

to capture benefits of enhanced 

CNS and automation tools.

(3) Realign airspace and procedures 

to capture benefits of enhanced 

CNS and automation tools.

(4) Realign airspace and procedures 

to capture benefits of enhanced 

CNS and automation tools.

G. Cost Control Activities 

(1) Survey the NAS to identify 

opportunities to eliminate or 

modify existing obsolete facilities, 

equipment, and procedures to 

reduce costs.

(2) NDB Navigation Aids 

Shutdown 

(3) Survey the NAS to 

identify opportunities 

to eliminate or modify 

existing obsolete 

facilities, equipment, 

and procedures to 

reduce costs. 

(4) VOR/DME network reduce 

from ~1000 facilities to ~400 

facilities 

(5) Survey the NAS to identify 

opportunities to eliminate or 

modify existing obsolete facilities, 

equipment, and procedures to 

reduce costs.

(6) ILS shut down at all but CAT 

III airports 

(7) Survey the NAS to identify 

opportunities to eliminate or 

modify existing obsolete facilities, 

equipment, and procedures to 

reduce costs.

FNGATWG Final Report May 18, 2006 50