The $30 billion air traffic control modernization plan that isn’t

In this issue:

• $30 billion air traffic control modernization plan
• GAO on major FAA ATC problems
• Airport slots vs. runway pricing
• Why separate ATC from air-safety agency
• NASA’s rocket-launch shortfalls
• News notes
• Quotable quotes

The $30 Billion “ATC Modernization” Plan That Isn’t

Legislation introduced this month purports to provide $30 billion to “finish” the modernization of the U.S. air traffic control system. The bill is intended to further Transportation Secretary Sean Duffy’s speech at the Aero Club of Washington, in which he proposed that a new $30 billion bill would be split three ways: one-third for air traffic control telecommunications, one-third for upgrading airport control towers, and a final third for airport terminal “beautification.” The bill quickly received the endorsement of the Modern Skies Coalition.

In the following weeks, interpretations of what would actually be in the bill kept changing. Secretary Duffy clarified that the $10 billion for airports would go only to medium hub airports. Jeff Davis of the Eno Center for Transportation pointed out that the $30 billion was not in the 2027 fiscal year budget request, so it would be an amendment to the budget, which is supposed to come from the Office of Management and Budget (OMB). And instead of sending it to the relevant congressional committees (House Transportation & Infrastructure and Senate Commerce), the White House gave the draft bill to Sen. Eric Schmitt (R-MO), a first-term senator and member of the Aviation Subcommittee of Senate Commerce. Eno’s Davis noted that Schmitt “is not particularly prominent on aviation issues.”

The bill Schmitt subsequently introduced (S.5572, Modern Skies Act) provides only 40% of its $30 billion for air traffic control (ATC), while offering $10 billion to replace passenger terminals at not more than three medium-hub airports, $5 billion to continue an Infrastructure Investment and Jobs Act (IIJA) airport terminal program, and $3 billion for additional grants from the Airport Improvement Program. Thus, only 40% goes to ATC and 60% to airport facilities.

One other important point has been absent from commentary on this sausage-making. The federal government does not have $30 billion it can spend on airports and air traffic control. Without offsetting spending cuts or increases to user fees or taxes, the entire sum is to be borrowed from future taxpayers (i.e., it is added to the federal budget deficit and hence the national debt).

Instead of doing that, what Congress should have done is to increase the existing federal aviation user taxes. But that would be politically unpopular, since the primary user tax is the federal tax on airline passenger tickets. Nearly 100 other countries have made their air traffic control systems self-supporting via aviation user fees for aircraft in flight. These fees follow the International Civil Aviation Organization (ICAO)  policy of charging based on gross weight and miles flown. That revenue can be and is being bonded by air navigation service providers (ANSPs) to finance large-scale modernization of ATC and its airport components. The United States is long overdue in shifting to this model.

» return to top

GAO Reports Major FAA Shortcomings on ATC Modernization

The Government Accountability Office (GAO) regularly reviews Federal Aviation Administration (FAA) projects and programs. Its reports are detailed and thorough but sometimes fail to raise questions about FAA practices that are quite different from most of its fellow ANSPs worldwide. The GAO also gives its reports innocuous titles, such as for its Sept. 2026 blockbuster report being dubbed simply “Ambitious New Modernization Effort Needs to Improve Cost and Schedule Planning.”

The new report is a serious critique of FAA planning and management of its ambitious effort to develop and implement a “brand new air traffic control system” (BNATCS). Here are some of GAO’s key findings:

• There is no comprehensive lifecycle cost estimate for BNATCS.
• FAA could not provide supporting analysis for the high-level phase 1 of this effort.
• For the figures it did provide, FAA could not provide the underlying analysis.
• The provided cost estimates did not include government costs, operations costs for phase 1, or any costs for phase 2.
• There is no master schedule for phase 1.
• FAA’s 11,389 individual project schedules are not integrated (which means potential conflicts when several different projects may occur at the same time).

Those are just a few points that are included in the introduction to the 43-page GAO report. Rather than going through the details, I think this brief summary on page 9 reflects how deep the problems are. The five key reasons for ongoing shortcomings, per GAO, are as follows:

1. FAA poorly defines requirements.
2. FAA insufficiently involves aviation stakeholders during the planning and development of new systems.
3. FAA inadequately oversees contractors and their deliverables.
4. FAA does not receive full funding for modernization.
5. FAA relies on overly optimistic estimates regarding modernization decisions.

For all its good work, the GAO never seems to discuss how other ANSPs worldwide are funded. Almost everywhere else worldwide, airlines and business jets pay weight/distance charges compliant with ICAO charging principles. In about 100 countries, where ATC systems have been reformed, those revenues are paid directly to the ANSP, and in many cases those revenue streams can be, and are, used to support the issuance of long-term bonds to finance major improvements. The FAA alone lacks this powerful financing method.

So is the FAA doomed to be cut off from long-term financing? Not necessarily. The ATC system is functionally a utility, and other government-owned utilities are able to issue bonds based on their user-fee revenue system. For example, the Tennessee Valley Authority issues revenue bonds like any other large electric utility, despite being a government corporation.

But an important complication is FAA’s dual role. It is both the provider of air traffic control services and the aviation safety regulator. Self-regulation is inherently flawed. That serious problem could be solved by separating the ATC system from the FAA, as proposed by the Clinton administration in 1994. That proposal was not “privatization,” since the proposed U.S. Air Traffic Services Corporation would have been a government utility, akin to the TVA. A reform of this kind would be a significant improvement.

» return to top

Are Airport Slots the Best We Can Do?

As major airports reach the limits of their capacity, some way to figure out how best to use that capacity is needed. The traditional approach uses slots defined by the airport based on its calculation of what it can safely handle, as vetted by the FAA. But it’s far from obvious that the traditional slot system is the best way to deal with a busy airport’s limited capacity. So, I had great expectations for a new report, Airport Slot Policy, just released by Airports Council International (ACI).

The subhead on the 61-page document is “Rethinking Airport Access in a Capacity-Constrained World.” I proceeded to read the paper with high expectations about how ACI would rethink the long-standing slot system. Alas, it turned out to be a defense of the traditional slot system, with very little “rethinking.” The report does provide current data on the extent of slot usage at busy airports: Fully slot-coordinated airports (Level 3) reached 214 in 2026, an all-time high.

To its credit, the report does identify and discuss features of the current slot framework, pointing out that current practice leads to:

• Slot-hogging, with few slots ever returning to the pool;
• Slots are not route-specific (instead they are airline-specific);
• The current use-it-or-lose-it rule leads to sub-optimal use; and
• First-come/first-served leads to limited slots for newcomers.

But the report’s basic mission seems to be justifying the status quo, despite its many shortcomings. On page 29, the report does mention congestion pricing or peak-period pricing, but although it points out potential advantages, it goes no further. And on page 30, it again points out anti-competitive aspects, such as “strong incentives for airlines to preserve key elements of the slot system.” But its nine potential reform proposals are quite modest.

While I’m not aware of any airports that have converted from slots to a congestion pricing model, that concept has been studied and modeled. Back in 2007, Reason Foundation published a policy brief explaining an FAA-sponsored exercise in which experienced airport and airline officials engaged in “strategic games” organized and managed by universities taking part in FAA’s NEXTOR program. One of several “strategic games” tested runway congestion pricing using LaGuardia Airport data. Airline and airport senior people took part in these exercises. The first of several “games” took place at George Mason University in 2007. For the LaGuardia strategic games, teams included players from four airlines, FAA officials, and Port Authority managers. Professors George Donohue and Karla Hoffman of GMU wrote a summary of this exercise and its findings for me, published as a Reason policy brief, “Evidence That Airport Pricing Works.”

To the best of my knowledge, this is the closest U.S. aviation has come to involving actual airport, airline, and FAA people in a realistic simulation of runway congestion pricing. I wish this report were better-known.

» return to top

Why ATC Operations Should Be Separate from Aviation Safety Regulation

It’s been 21 months since the deadly collision of a regional jet and an Army helicopter at Reagan National Airport (DCA) and 10 months since the conclusion of the National Transportation Safety Board (NTSB)  investigation of the accident. In an article in Aviation Daily last year, Sean Broderick reported that “FAA data did not flag midair collision risks before the DCA accident.” In researching this article, Broderick found that “a key FAA risk assessment tool did not find a single near-midair collision in Washington, DC airspace among more than 800 reviewable incidents in a three-year period prior to January’s fatal collision of a regional jet and a U.S. Army helicopter,”

Nevertheless, Broderick found that the FAA Air Traffic Organization’s Aviation Risk Identification and Assessment (ARIA) tool had flagged 874 incidents near Reagan National for further review. Of the 874 reported events near DCA, none were classified as near-midair collisions (NMAC). When the NTSB investigated why no hazard had been identified based on the ARIA data, it found that a NASA-managed Aviation Safety Action Program (ASAP) had received 85 reports on close calls between airliners and helicopters near Reagan National from 2020 to 2024. But there had been no action to alert airline pilots or helicopter crews about collision risks.

In a follow-up article last year, Broderick discussed his interviews with DCA air traffic controllers and pilots. “Pilots and air traffic controllers relied on optional and often loosely defined procedures for ensuring that helicopters and commercial aircraft remained separated” near DCA, “despite consensus that the airspace’s challenges make it unique among U.S. airports.” He also found that, despite the potential for conflict between helicopters and arriving aircraft, no special procedures were developed to deconflict traffic.

There’s more detail along these lines in Broderick’s articles, but let’s think about why this situation has persisted. I think it reflects the FAA’s built-in conflict. By law, it is both aviation’s safety regulator and the operator of the vitally important ATC system. Putting both functions into the same organization is a recipe for trouble. A long-standing policy of the International Civil Aviation Organization (ICAO) calls for organizational separation between aviation safety regulation and those who operate in the system: airlines, airports, private planes, and air traffic control. Yet long-standing US law has put air traffic control and safety regulation into the same organization. That’s a built-in conflict of interest, as well as a violation of global best practices.

Eventually, this built-in conflict must be resolved. It would help if NTSB started to advocate for this as an important policy change to increase aviation safety. The United States is out of step with global aviation best practice. Sooner or later, air safety regulation must be separated from the operation and management of every component of aviation, including the provision of air traffic control.

» return to top

NASA and Others Face a Rocket Launch Shortfall

SpaceX is phasing out its successful Falcon 9 launch vehicle in favor of its much larger Starship, which costs significantly less to launch payloads. SpaceX is stockpiling some Falcon 9s, but its remaining days are limited.

One alternative for trips to and from the International Space Station is Boeing’s Starliner, which has yet to prove itself as a reliable substitute for Falcon 9. The Wall Street Journal reported last month that NASA and Boeing are developing plans for getting Starliner certified for Space Station trips. Eric Berger, senior space editor at Ars Technica, wrote that NASA is likely to fund additional work by Boeing to get its Starliner certified.

With Falcon Heavy no longer in service either, NASA is expected to launch a competition for a new heavier-lift launch vehicle, which Berger predicts will boil down to United Launch Alliance’s Vulcan and Blue Origin’s New Glenn (a somewhat larger version of which is under development).

For smaller satellite launches, an array of new launch vehicles is being developed, such as Relativity Space’s Terran R, Stoke Space’s Nova Block 2, Firefly Aerospace’s Eclipse, and Rocket Lab’s Neutron. None of these has yet been launched.

On the high end, Politico Pro Space reported that the Space Force is considering a project with SpaceX to develop a new version of its giant Starship that would feature a larger cargo compartment to handle large military payloads, as opposed to the numerous small satellites currently being delivered to orbit via Starship’s current payload bay, which is designed to put large numbers of such satellites into orbit.

Although the current dearth of certified rockets is true today, the development pipeline looks very promising. Not all of the start-up launch vehicles will end up being built and certified, but today’s shortage is on the way to being fixed.

» return to top

News Notes

Reason Foundation in Aviation Week Cover Story
In Bill Carey’s Sept. 28-Oct.11 Aviation Week & Space Technology cover story on air traffic control, a 2026 Reason Foundation policy paper by former controller and consultant John Kefaliotis was featured. The paper “argued that Nav Canada operates more efficiently than FAA and is better at funding ongoing modernization.” He also notes that Nav Canada’s cost per IFR flight hour is lower than FAA’s (despite FAA’s potentially much larger economies of scale).

Army Finds Helicopters Need ADS-B/In
In a 50-page report released on Oct. 10, the Army recommends that its helicopters that operate in busy urban airspace be equipped with ADS-B/In, which would enable its flying crew to receive ADS-B information from nearby civilian and military aircraft. This further endorsement of ADS-B/In may increase support for the Senate’s Rotor Operations Transparency and Oversight Reform Act (ROTOR Act)t, which includes it, in contrast to the House’s Airspace Location and Enhanced Risk Transparency Act (ALERT Act), which does not.

Nav Canada Reports Summer Decrease in Flight Delays
On Sept. 28, Canada’s ANSP Nav Canada reported that in summer 2026, there were 85% fewer airspace delays than last year attributable to air traffic system performance. This was especially the case at Canada’s four largest airports: Toronto Pearson, Montreal-Trudeau, Calgary, and Vancouver. Scheduled flights delayed by an ATC problem decreased from 1.54% in 2025 to 0.24% in 2026.

Addressing GPS Interference via eLoran
A cost-effective way to counter GPS jamming and spoofing would be to build a network of eLoran stations nationwide. That’s the recommendation of Okuary Osechas of the Zurich University of Applied Sciences. In an article in the Oct. 1 issue of Aviation Daily, he calls for bringing back the 20th-century Loran technology in its 21st-century form as eLoran—an electronic version of 20th-century Loran. With the rising levels of GPS jamming and spoofing, a reliable alternative would be valuable, especially for aviation, he argues. Given the widespread need, he suggests that making this happen will depend on ICAO, equipment manufacturers, regulatory agencies like the FAA, and the military. This is a project that both the Department of Defense and Department of Transportation should support.

FAA Has Launched Termination Proceedings Against Absent La Guardia Controllers
In late August, FAA began termination proceedings for the two La Guardia controllers who left work early before the collision of an Air Canada regional jet with an airport fire truck on March 22, killing both pilots. Also, Reuters reported that the FAA is cracking down on such “early shoves” by controllers.

Secondary Cockpit Barriers Underway in U.S. and Europe
Thierry Dubois reported in Aviation Week (Sept. 14-27) that progress is being made in both America and Europe on adding secondary cockpit barriers to airliners. U.S. airlines are now required to have such barriers on all new airliners, but some airlines have been installing them on aircraft already in their fleets. The Air Line Pilots Association (ALPA) is arguing for barriers to be added to all airliners now in service. Southwest has not waited for a mandate; instead, it has been adding such barriers to its fleet starting two years ago.
 
London Heathrow Third Runway Postponed to Late 2030s
Although London Heathrow’s third runway was approved in 2025, with completion planned for 2035, it has been delayed again. Aviation Daily reported (Sept. 29) that Heathrow and the Department for Transport have now defined that as an “ambitious” target date. Heathrow recently launched an eight-week public consultation on the expansion project.

Dulles Airport Rebuild Will Lead to Large Increase in Cost per Passenger
In View from the Wing, Gary Leff reports that the planned $22 billion reconstruction of Washington Dulles Airport (IAD) will increase the cost per passenger sixfold and also lead to increased airfares. The airline cost per enplanement will likely increase from $12.77 per passenger to about $90 per passenger. He also notes that United will continue to operate from Dulles as a fortress hub, with no meaningful competition from other major airlines.

JSX Signs Up for 50 ES-36s
Aviation sources reported last month that charter carrier JSX has paid a deposit to Heart Aerospace for 50 ES-36s. That plane is a hybrid-electric regional jet with 36 seats. The ES-36 replaces Heart’s previously planned ES-30. The ES-36 has a range of 745 miles in hybrid mode.

Charlotte-Douglas Airport to “Negotiate” With Its Airlines
This major hub has a growth plan called CLT Beyond, and its news release said it would negotiate for a new airline use and lease agreement with its five major carriers. That’s good PR until you look at which airlines carry passengers there. American Airlines handles 89% of all Charlotte Douglas International Airport passengers, making it one of American’s fortress hubs.

Vancouver Will Be Canada’s First Airport Public-Private Partnership
The Canadian government plans to seek bids from investors for long-term public-private partnership leases of its four major airports, and Vancouver will be first. Dozens of large and medium hub airports have been long-term leased worldwide in recent decades, and research finds that most experience improved performance.

Space Force Triples Planned Launches
Air & Space Forces Magazine reported that the U.S. Space Force is tripling the size of one of its main launch contracts from $5.6 billion to $17 billion thanks to growing demand from government customers. The program has two tracks: one for commercial launches and the other for high-value government launches.

Honeywell Testing SURF-A in Phoenix
Honeywell Aerospace and the Phoenix Aviation Department are testing the company’s Surface Alert technology (SURF-A). The technology sends visual and audio alerts to pilots when they are within 30 seconds of colliding with another aircraft on the ground. Tests are being carried out at three airports in the Phoenix area.

Argentina Extends Airport Concession to 2056
Aeropuertos Argentina 2000’s concession for a set of airports has been extended to 2056, provided that it can document its financial capability to undertake an additional $600 million investment in Ezeiza International Airport in Buenos Aires, reported Infralogic on Sept. 28.

» return to top

Quotable Quotes

“You are spot on regarding Peraton. The issue is that the FAA makes the same mistake and does not learn from its past. People don’t remember Martin Marietta, which had the same role in 1984 (20 years at $900+ million) with the NAS AAS program. We all know what happened to AAS… FAA lost its way in the 1980s because they did not have the expertise in-house. Started out sourcing engineering to their good old boys who founded consulting companies. There are no real systems engineering people there now.”
—Long-time industry engineer and manager in an email to Robert Poole (name withheld by request)

“Why did it take FAA 12 years to start planning remote/digital towers? Bureaucracy, old guard, union issues, etc.—but if FAA can’t adopt this fairly straightforward technology any faster than 12 years, how will it keep pace with an AI tidal wave coming at it, and how will the government have even a skeleton crew of employees who choose government service over millions of dollars in compensation in Silicon Valley?”
—David Hughes (email to Robert Poole), Oct. 2, 2026

“Almost every other nation—the UK, Ireland, France, Germany, Canada, Mexico—has separated air traffic services from its regulator. The US hasn’t. The FAA still sets safety standards and provides the service, then grades itself on how well it did. As I always say, you cannot have the fox watching the chicken house.”
—Tom Lintner, Nobody’s Airspace, Oct. 12, 2026

“Google is seeing growing interest from airlines to test the contrail avoidance methods . . . We have shown with American Airlines and Cathay Pacific that the forecast and the technology works. We are able to avoid these contrail-sensitive areas in a very cost-effective manner. If you think about the available tools we have to decarbonize aviation, contrail avoidance is one of the few that’s available within the decade.”
—Kemal Armada, quoted in Helen Massy-Beresford, “Contrails Come Into Sharper Focus,” Aviation Daily, Oct. 9, 2026

» return to top

The post The $30 billion air traffic control modernization plan that isn’t appeared first on Reason Foundation.

Source: https://reason.org/aviation-policy-news/the-30-billion-air-traffic-control-modernization-plan-that-isnt/