November 23, 2016

In a prolific week for reports on air traffic control (ATC) by government watchdogs, the Governmental Accountability Office (GAO) released yet another one on November 17. The letter, titled “Next Generation Air Transportation System: Information on Expenditures, Schedule, and Cost Estimates, Fiscal Years 2004 – 2030”, summarized the past and future costs of NextGen, the ATC modernization program being implemented by the Federal Aviation Administration.

GAO answered three questions:

1. How much has FAA invested since 2004?
2. When does FAA predict that NextGen will be completed?
3. How much FAA’s cost estimates changed since 2004 and how much additional funding will be needed to complete NextGen?

On the first question, the GAO reports that the FAA has received around $7.6 billion from 2004 through 2016 (annual – nominal – amounts below). This represents 4 percent of the FAA budget over the same period, and 93 percent of the amount requested for NextGen. Futhermore, the FAA also spent or is planning to spend $5.5 billion in programs that are not part of NextGen but are related to it.

On the second question, FAA’s initial plan was to have NextGen entirely deployed by 2025. The agency’s goal is to still have the major NextGen programs completed by then, but has delayed six NextGen initiatives to 2030. At least one program has been delayed into the 2030s. Like the USDOT’s Inspector General (IG) reported earlier in the week, GAO also noted that FAA has now broke the initial large, complex, NextGen programs into smaller pieces. The GAO also reached a similar conclusion to the IG, noting that this approach can increase the overall duration and costs of each program.

Finally, on the third question, the GAO notes that while projected FAA costs have gone up, they haven’t increased “markedly”. In 2007, FAA costs with the program were expected to be between $15 and $22 billion, while the private sector was expected to spend between $14 and $20 billion. Since 2012, the FAA has been updating those estimates annually (table below).

As the table shows, since 2012 the estimated costs for the agency have increased by $2.6 billion (in fact it is a little less, since these are not constant dollars). Since the initial estimates in 2007, the costs are still in the same ballpark. At the same time, predicts costs for industry have been decreasing. According to the report this is because of two reasons. First, smaller aircraft are being replaced with new, larger, and better-equipped aircraft, reducing the need for retrofits (new aircraft tend to be already equipped with NextGen-capable equipment). Second, there are now more precise forecasts on the volumes of traffic and the cost and type of equipment needed to be installed.