Facility consolidation could save billions: Reason Foundation

Bob Poole of The Reason Foundation chairing one of the panels at this year's World ATM Congress

A new study, just released by the Reason Foundation, estimates that large-scale consolidation of TRACONs and Centres in the continental United States could yield one-time savings of $1.7 billion and ongoing savings of about a $1 billion per year.

Air Traffic Control from Anywhere to Anywhere: The Case for ATC Facility Consolidation,” was researched and written by Michael Harrison, Ira Gershkoff, and Gary Church of Aviation Management Associates.

Bob Poole, director of transportation policy at the Reason Foundation, a think tank based in Los Angeles, reports in his latest newsletter that the study relies on two underlying premises. The first is that the new paradigm of air traffic management, under way via NextGen, makes it possible to control air traffic anywhere in the country from any location, thus severing the link between ATC facility location and the geographical boundaries of airspace. Hence, instead of rebuilding the 187 mostly aging and obsolescing Centres and TRACONs, they could be replaced by a much smaller number of new, high-tech facilities in less-costly geographic locations.

The second underlying premise is economies of scale. The project team quantified this using FAA data to calculate the productivity of each of its Centres and TRACONs. New York Centre is the most productive, averaging over 9,400 operations per controller; Denver Center is least productive, at just over 5,400 operations per controller. A similarly large variation in productivity was found among TRACONs.

The research team then used these data to estimate the potential savings from facility consolidation. For Centre staffing they created a regression equation which posits that the number of controllers at a Centre equals a constant plus a variable term based on the number of air carrier operations, air taxi operations, general aviation operations, and military operations.

Using FAA data for those variables from each of the 20 Centres, the regression equation found that the constant term is 84.6.

“That means if you have a Centre at all, it needs a minimum of 85 people, with the rest determined by the various amounts of traffic handled. A similar equation for TRACONs had a constant term of 8.56, with the rest being variable based on types and amounts of traffic,” says Poole.

When two Centres are combined, the workloads measured by the variable terms based on traffic are added together, but you now have only the one constant of 85 baseline people. The authors developed a large-scale consolidation plan to even out workloads among facilities, aiming for higher overall productivity.

The plan they came up with replaces the 20 existing Centres with five high-altitude en-route facilities and eight “Integrated Control Facilities” that combine en-route and terminal airspace in the largest metro areas. Smaller TRACONs would be consolidated regionally, ending up with 38 such facilities. Overall then, the plan reduces 187 existing en-route and terminal facilities to 51—just over one-quarter as many.

Because compensation practices call for higher pay in higher-activity facilities, the savings in operating costs are not as great as might be expected, and many controllers would end up with increased compensation. But some, needless to say, would be phased out or transferred to other FAA positions.

The authors estimate that consolidation would save a net $314 million a year due to the lower staffing made possible by combining facilities. In addition, productivity gains due to NextGen technology and procedures might add between $540 and $680 million per year. Add another $109 million in maintenance savings due to fewer buildings and total annual savings could be in the $1 billion range. Poole points out here that this analysis does not address possible productivity gains with control towers, such as expanding the use of contract services and/or implementing remote towers.

But the savings don’t stop there, says Poole. Since a large fraction of the existing 187 Centres and TRACONs are nearing the end of their useful lives, the FAA is rapidly approaching the point at which it must either engage in large-scale rehabilitation of these facilities where they are today or replace them with a smaller number of consolidated facilities. Selling the land, buildings, and equipment associated with facilities recommended for closure would yield $1.7 billion toward the cost of the new facilities, based on analysis of data in two FAA property databases.

The Centre consolidation approach outlined here is similar to the initial concept the FAA’s Air Traffic Organization (ATO) developed several years ago, when it began facing up to the need to replace aging facilities and the potential changes NextGen would make possible. Unfortunately, says Poole, last year the agency changed focus. Instead of developing an overall consolidation plan, with a schedule and cost estimates, it will proceed one project at a time. For now it is focusing all its efforts on an initial Integrated Control Facility for the airspace in the Northeast.

That approach is high-risk since state and national elected officials in the affected areas are already mobilizing to fight the loss of jobs in their jurisdictions. In the view of the Reason study’s authors, a far wiser approach would be to follow the kind of comprehensive approach that has been used several times for large-scale military base closures and consolidations. An overall nationwide plan is drawn up, and Congress has a choice of either accepting it as a whole or rejecting it. This makes the battle one between winners (those gaining new or expanded facilities) and losers, rather than just between potential losers and everyone else who is not affected.

“And if that approach seems too difficult for Congress to work out, the report suggests an alternative: separate the ATO from the FAA and from the federal budget process, by making it a self-supporting ANSP,” says Poole.

“That way, as shown in facility consolidations carried out successfully by such ANSPs in Australia, Canada, Germany, and the U.K., these decisions can be made as business decisions, rather than political decisions. That would allow Congress to avoid a decade or more of fighting over facility consolidations, as well as easing the ATO’s looming budget problems.”

In response to the Reason Foundation report on facility consolidation, US controllers’ union  NATCA said it supports facility consolidations and realignments where they enhance operational services and the safety and efficiency of the National Airspace System.

“For example, we are collaborating with the FAA on the planned New York Integrated Control Facility which will combine NY Centre and NY TRACON into one facility. We also support the implementation of NextGen as a way to modernise the system over the long term. Unfortunately, sequestration is hampering these critical efforts. The indiscriminate nature of the cuts means that both current and future operations will be impacted. We continue to urge policy makers to replace these cuts so that efforts to improve, enhance and modernise our national airspace can continue.”

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