`Significant' Aid Needed to Equip Airline Cockpits, U.S. Panel Recommends

The U.S. government should make “a significant financial investment” in equipping airline and business jet cockpits so operators can use the next generation of air-traffic control systems, a federal panel said.

Transportation Secretary Ray LaHood should also commission an independent study into whether aviation taxes and fees are too high, and back “responsible regulatory intervention” to reduce fuel-price volatility from speculative trading, according to the Future of Aviation Advisory Committee.

The panel’s work is “very significant because we were able to pull together such a broad spectrum of recommendations,” Glenn Tilton, chairman of United Continental Holdings Inc. and a committee member, told reporters on a conference call today.

The recommendations complete an effort LaHood announced more than a year ago to help guide the aviation industry after the Sept. 11, 2001, terrorist attacks, record fuel costs and other hurdles buffeted airline earnings for much of the decade.

LaHood told panelists he plans a timetable by mid-February for implementing recommendations.

‘Done Quickly’

“Many of these can be done quickly,” he said at a meeting at Transportation Department headquarters. “These recommendations will not sit on a shelf.”

Federal aid for equipping cockpits would benefit carriers including Delta Air Lines Inc. and manufacturers such as Honeywell International Inc. that produce the equipment.

The unspecified amount of aid recommended by the panel would help aircraft operators meet their commitments under a federal plan known as NextGen, which aims to boost safety and let airlines fly more direct routes, saving time and fuel. The $40 billion effort would transform air-traffic control into a system that uses satellites rather than ground-based radar.

Part of the NextGen plan requires operators by 2020 to equip cockpits so that pilots can use data from satellites to transmit their position and direction to all nearby planes. The Federal Aviation Administration is trying to get operators to upgrade cockpits ahead of the deadline.

The upgrade will cost $2.1 billion to $4.1 billion, shared by the government and carriers, FAA Administrator Randy Babbitt said in May.

Calling for Incentives

“There have to be incentives to equip early,” Jack Pelton, chief executive officer of Textron Inc.’s Cessna and a panel member, said on today’s conference call. “We want to see accelerated benefits.”

When asked if the administration would seek the equipment aid the panel had recommended, LaHood said no decision has been made.

Operators should match federal aid for the cockpits with financial or operational commitments, such as reducing emissions, the panel said. Options should be developed, including grants, loans, leases and loan guarantees, according to the panel. The government should also consider allowing federal airport grants to be used for equipment.

The recommendation to study tax rates is a victory for air carriers, which have said their industry pays too much. A commission should examine whether there are more efficient ways to collect and administer taxes to save money for consumers and the industry, the panel said. The commission should also examine whether the taxes are effective for the level of government services delivered, according to the panel.

In addition to supporting regulatory intervention on fuel volatility, LaHood should study the state of infrastructure for storing and distributing jet fuel, which threatens the economic health of aviation, according to the panel.

The panel made 23 recommendations on issues such as safety, labor and the environment. LaHood announced the 19-member panel in May, and it held its first meeting that month. Members included representatives from airlines, organized labor, manufacturers and airports.

To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net.

To contact the editor responsible for this story: Bernie Kohn at bkohn2@bloomberg.net.

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