Airlines Want Subsidies For NextGen Equipment Costs, Too

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NextGen will move parts of the air traffic control system from the ground to the cockpit -- so who should pay for the acquisition and installation of that part of the system? The government is expected to invest some $20 billion in creating the infrastructure that will be NextGen air traffic control, but the airlines (and general aviation advocacy groups) are hoping for federal funds to help offset the cost of equipping their aircraft, and they've got help. The Wall Street Journal reported Friday that Lawrence Summers, a senior White House economic aide, agrees with a broad coalition of about a dozen industry interests that support government assistance to jump start the equipage of aircraft. Of course, equipment makers are among those pushing for such aid. The standing economic argument is that an investment of $10 billion over five years would translate to industry-wide fuel savings of about $2 billion each year, forever, and early implementation would reduce overall spending on the program. FAA Administrator Randy Babbitt says upgrading the air traffic control system is "not optional," but the catch is the federal deficit -- a political hot-button likely to become hotter as elections near.

Some estimates put the cost of equipping one airliner with NextGen hardware at $200,000, and the airlines would prefer that the FAA treat that equipment as part of the government-owned air-traffic control system. The White House has so far not embraced adding the cost of equipping aircraft to the overall cost of the system and has not yet supported tax breaks or subsidies to help airlines pay for necessary NextGen hardware.