For Immediate Release
May 15, 2019
Contact: Paul Takemoto or Tammy L. Jones
Contract towers are air traffic control towers that are staffed by employees of private companies rather than by Federal Aviation Administration (FAA) employees. The FAA’s Contract Tower (FCT) Program was established in 1982 to allow the agency to contract out the operation of certain low-activity towers. There are currently 256 contract towers, for which the FAA pays for air traffic control services on a contract basis.
Like most federal investments, the FAA is required to perform a benefit-cost analysis (BCA) on each contract tower to determine whether or not it is eligible for participation in the FCT program. Because of the economic crisis, the FAA suspended BCAs in 2008 so that the accompanying downturn in aviation traffic would not financially burden local and rural communities during a time of significant economic hardship.
After a 10-year moratorium in processing new applications, the FAA Reauthorization Act of 2018 required the FAA to resume processing of new applications to the FCT Program, and to reevaluate a limited set of current program participants. In order to be admitted into the FCT Program, the safety and efficiency benefits of a tower must exceed its costs. This is done through the BCA process whereby the FAA calculates an official benefit-cost ratio associated with each contract tower and the types and volume of activity that it supports. The FAA is modifying its BCA calculations to comply with Congressional direction on specific changes to costs and benefits in the model. We anticipate this process to be complete soon.
Contract Tower Program:
- There are 256 contract towers in the program with an estimated annual program operating cost of $165 million for FY2018 with a contract award value of $730 million.
- The contract covers the costs of air traffic services.
- The individual airports are responsible for funding capital expenses, including construction and maintenance of towers.
- While capital improvements at most contract towers are funded without federal assistance, partial funding may be available under the Airport Improvement Program (AIP) statute (Title 49 U.S.C. § 47124) for the portion of the improvements that have been determined to be grant-eligible. This provision allows the FAA to consider AIP grant funding to help an airport with construction or equipment for a tower that is approved to enter the FCT program.
- The FY2019 budget includes continued operational funding for the FCT Program.
- To participate in the FCT Program, an airport must, among other requirements, have an approved operational tower and receive a benefit-cost ratio of at least 1.0 from the FAA. Once an airport is in the FCT Program, the FAA is permitted by statute to evaluate the cost-effectiveness of current program participants only in limited circumstances.
- If costs are shown to exceed benefits for certain towers already in the FCT program, the local tower sponsor is provided the opportunity to remain in the FCT program as part of the Cost Share Program, paying a pro-rata share of the tower operating cost. The local proportion is statutorily capped at 20 percent and airport sponsors have a 12-month grace period before being required to assume the local cost share.
- As directed by statute, the FAA will only conduct cost-effectiveness reviews for current program participants if they are either 1) currently participating in the Cost Share Program, or 2) if traffic at the airport drops by 25 percent in a single year or by 55 percent over three years.