The FAA’s industry-government Management Advisory Council (MAC) is recommending that the agency take several steps to save money, including consolidating some Tracons, contracting out more VFR control towers and reducing the number of FAA regions.

The FAA now operates more than 150 Tracons, which are expensive to operate, maintain, staff and re-equip, the MAC wrote in a recent report to FAA Administrator Marion Blakey. Modern telecommunications and data transmission costs are so low that the same service could be provided far more economically by far fewer facilities, it added.

According to the MAC, no service would be lost as a result of the proposed changes–it would simply be provided through substantially fewer facilities. The group told the FAA that it should develop a Tracon consolidation plan in which approximately 50 to 60 Tracons would replace today’s aging and inefficient system, in substantially improved facilities with far more capable and efficient automation.

FAA Contract Towers

The FAA has already converted about half of its local airport towers to contract operations. A majority of the VFR towers have been converted to date, and they account for about one-quarter of all tower activity. Of a total of 448 towers, 297 are VFR towers, of which 226 are contract towers.

These contract towers operate at substantially lower costs and have a better safety record when compared with towers operated directly by the FAA, the MAC said.

The FAA directly regulates the safety standards, certifies controllers to the same levels of training and proficiency and sets ATC procedures at all towers. In fact, nearly all contract tower controllers have experience as FAA or military controllers.

The MAC recommended that the agency convert nearly all FAA-operated VFR towers (at present 71 towers) to contract operations. The report estimated that the result would be operations savings of approximately $1 million per tower per year with no loss in service whatsoever.

Streamlining Regional Offices

The FAA’s nine regional offices were created when communications were far less effective, less timely and more expensive, but today it has become a structure with excessive duplication that needs substantial consolidation, the report said. The council advised that this is an area that demands streamlining of management, adding that the agency should reduce the number of regions by approximately two-thirds.

“There are a number of other areas the FAA should review to find further operating efficiencies of a lesser magnitude that are achievable and prudent,” the report said. “These include curtailed availability of some facilities during hours of low use and setting minimum-use standards for navaids and decommissioning those that provide little public benefit.”

The cost to operate, maintain and/or flight check these facilities is not worth the minimal benefit and takes funds from other efforts that would better serve the public. In the longer term, the advisory panel said, the FAA also needs to plan for consolidation of en route centers in conjunction with technology changes in the centers in the coming years.

Implementing Labor Cost Controls

The MAC also told the FAA that while it has made significant progress in a number of areas with respect to efficiency improvements and becoming a performance-based organization, the areas of labor cost and productivity require the most attention.

Three-quarters of the FAA’s operating budget is devoted to paying salaries. However, even as the agency has reduced the number of employees, the MAC said, salary costs have continued to rise markedly. For example, from Fiscal Year 2003 to FY2005 the total number of employees declined by about 4.5 percent, but in the same period salary costs increased by about 9.5 percent. “In this one area of labor costs, the FAA finds itself doing less with more,” according to the Management Advisory Council.

Approximately 70 percent of all FAA personnel are in the Air Traffic Organization (ATO) and about 40 percent of those are air traffic controllers. The FAA is the only federal agency required to set compensation through collective bargaining.

Under a law passed by Congress in 1996, the National Air Traffic Controllers Association (NATCA), the FAA’s largest bargaining unit, negotiated its first and only contract in 1998. The result has been a 70-percent increase in average controller compensation over the seven years of the contract, which the MAC said cumulatively added a “staggering” $3.7 billion in costs to the FAA’s operations budget over the period. To a lesser extent, the problems in the controller contract were sometimes replicated in the contracts of other employee groups.

“Total annual compensation for the ATO has gone from $1.3 billion in FY1998 to $2.4 billion in FY2004, a period over which the total number of controllers was nearly unchanged,” the MAC report said. “The FAA now has controllers who make well over $200,000 per year in base pay, locality pay and premiums, and that does not count benefits.”

But the group said that pay is only half the problem, with productivity every bit as important. “Controller productivity has been approximately flat for more than a decade,” the advisors said, “yet the entire [Operations Evolution Plan] is predicated on substantial productivity improvements throughout the 2003 to 2012 period.”

Under the current contract, NATCA often sets the work schedules, drives the need for overtime, determines whether new technology can be introduced and on what terms and dictates the custom design of new technology.

The MAC said that the FAA must achieve a controller contract that contains costs and restores the agency’s ability to manage for the efficiency and productivity gains it needs to come close to keeping up with demand.

Congress cannot solve the problem by allowing the current contract to continue while simply appropriating less for operations, the council warned, because the result will be a system even less able to meet demand, punishing the economy for government’s failures and preserving de facto the terms of the existing contract.

“Instead, Congress, in the event of an impasse, must support the position that costs must be controlled and management’s ability to improve and expand the system must be restored,” the MAC advised Blakey.