"NextGen – Fueling the Future"
J. Randolph Babbitt, Scottsdale, Arizona
March 14, 2011

International Society of Transport Aircraft Trading

Thank you, Doug (Runte).

I must say, I really like your shirt. In fact I’m pleased to announce that we have a new draft rule that deals specifically with the use of Hawaiian shirts in aircraft trading. You, sir, may have set the industry standard. 

I am really delighted to be here with all of you today. It’s my first time attending this conference as Administrator of the FAA.

ISTAT was created about 30 years ago to bring more order and better practices into the business of valuing aircraft. Executives recognized the need for professional appraisers and the need for professional standards. They launched the highly respected association that meets here today.

I’m heartened that the economy has begun to turn around and that there is good news for this industry. Airplane manufacturers in this room have back orders for thousands of aircraft. There’s a huge demand for single aisle planes as well as new wide-body aircraft in development.

Air travel is projected to grow, with even stronger growth in Asia and developing countries.

Last year, despite a challenging economic environment, 713 million passengers flew on U.S. airlines. We expect to see stronger growth this year. We’re projecting an increase of 3.5 percent.

This is all good.

But now is not the time to rest. Now is the right time to invest in safety and innovation. Delaying infrastructure investment means the long term cost to our system – to our passengers and our environment alike – will far exceed the cost of a timely deployment of technology today.

The investment that you are making in these aircraft and in NextGen avionics is going to help transform our national airspace system. The United States and the rest of the world are changing the way we all handle air traffic.

Satellite-based technologies are revolutionizing aviation. Aircraft will be safer, quieter, more efficient and they will burn less fuel and emit fewer greenhouse gases.

There is a strong business case for NextGen that many companies have already embraced. They are seeing fuel savings, which is key.

Southwest estimates it will save $60 million per year in fuel when it uses NextGen arrival procedures at airports across the country. Southwest started using the precision procedures at a dozen airports this year.

In the Gulf of Mexico, helicopters are saving about 100 pounds of fuel per flight thanks to more direct routes because of GPS-based surveillance. They’re also shaving five to 10 minutes off flight time, and there's a lot of them.

Airlines flying over the Pacific are taking advantage of a combination of improved capabilities to save 200 to 300 gallons per flight. Over time, that’s a lot of fuel – and a lot of savings – especially at today’s prices.

There are numerous other advantages to NextGen in addition to lower fuel burn.

In Alaska, where mountains cut off large areas from radar coverage, we outfitted general aviation planes with state-of-the-art NextGen cockpit displays. This gave pilots better weather information and a clearer view of mountainous terrain. It cut the accident rate almost in half.

Alaska Airlines has long been a pioneer in NextGen and is the only U.S. carrier to fully equip its entire fleet for high performance GPS-based procedures. This allows aircraft to navigate precisely through mountainous terrain in low visibility conditions.

The company estimates it would have cancelled 729 flights last year into Juneau alone due to bad weather if it were not for the GPS-based approaches. Those were passengers who got in. No diversions. No ground holds. 

By not cancelling those flights Alaska Airlines saved $7.5 million last year, and passengers got where they wanted to go.

So what will be your return on your investment in NextGen? 

As appraisers, you have to know that NextGen-equipped aircraft will be worth more on the secondary market than airliners without it. 

The time is coming – quickly – when NextGen-compatible equipment will be standard equipment on new aircraft. Values of aircraft not equipped will begin to drop. 

By 2020 all aircraft flying in the busier airspace in the United States will need to be equipped with Automatic Dependent Surveillance-Broadcast (ADS-B). This technology is GPS-based and is more precise than our traditional radar systems.

President Obama’s budget requests $285 million for the FAA’s piece of the ADS-B system. We are installing about 800 ground transceiver stations nationwide. This makes up the ADS-B network. We plan to finish that work in 2013.   

Companies that want to remain competitive will have to take advantage of the benefits of NextGen.

They will benefit from better routes, added capacity, improved on-time performance and lower fuel bills. 

On the East coast, JetBlue has partnered with us to equip some of its aircraft with ADS-B. This technology allows air traffic controllers to follow the aircraft out over the water – off the coast where there is no radar.

As a result, the company’s A320s will fly more direct routes, not unlike HOV lanes over the water. JetBlue will be able to take advantage of new NextGen routes from Boston and New York down to Florida and into the Caribbean that bypass the congestion.

You here at ISTAT are honoring David Neeleman for his entrepreneurial spirit in creating JetBlue and other airlines. JetBlue is keeping that entrepreneurial, forward-thinking attitude alive.

This is a trial period during which JetBlue will share flight data with us to see how and where the GPS-based technology is saving time, distance and fuel. It will likely lead JBU to add equipage of the balance of the JetBlue fleet—and meanwhile provide concrete data that may inspire other carriers to equip their fleets as well.

And on the other side of the world, on those long 14 hour flights across the Pacific Ocean, several airlines are benefiting by using more flexible routes that save fuel. This is because of better data communications and excellent cooperation among international users. Planes can safely change paths in order to catch a good tail wind across the ocean.

We are doing all that we can to promote new technologies to reduce fuel burn and fuel costs and to decrease our carbon footprint.

Fuel represents about 40 percent of an airline’s total expenses, on average. And it’s rising.

The cost of jet fuel has increased significantly in the last six months due to a number of factors.

We need to find alternatives to petroleum, and at the FAA, we are doing just that.  For the past five years, the FAA has been hard at work with industry, academia and other government agencies to find alternatives.

We are a principal sponsor of the Commercial Aviation Alternative Fuels Initiative, known as CAAFI.  And we are taking a comprehensive approach to addressing the barriers to using sustainable alternative jet fuels.

Already the group has secured approval for an alternative drop-in fuel that can be made out of coal, natural gas or biomass. It was approved for use at a 50 percent blend.  This is the first time in 20 years that a new standard for jet fuel has been certified.

And by the end of this year we should have approval for a renewable biofuel for commercial aircraft made from plants, algae or other sustainable sources.

These alternative jet fuels are “drop-in fuels.” There’s no need to change the engines or equipment. The source would be renewable and would reduce greenhouse gases. 

Sustainable alternative jet fuels offer benefits for both our environment and our economy.  They can help stabilize supply and the cost volatility in the jet fuel market. Consider that last year U.S. airlines spent $36 billion on jet fuel. That’s $21 billion more than in 2000 even though the airlines consumed three billion gallons less.   

Even a decrease of 10 cents per gallon could mean an industry savings of $1.7 billion per year.

We can't overlook the fuel savings from NextGen nor the benefits from initiatives like CAAFI. This is the wave of the future.

In fact innovation is affecting all aspects of flight.

Who would have thought 15 years ago that you could have an electronic flight bag on your I-Pad? And that this small tablet could dispense with about 25 pounds of aeronautical charts in the cockpit? This is happening right now.

Fostering innovation in the aviation industry and transforming our air traffic control system for the Next Generation will require the FAA to change too.  And we’re willing to do it.

We have already begun.

We have started to streamline the approval and certification for NextGen procedures for Performance Based Navigation.  These procedures include the precision approaches I mentioned up in Alaska. 

We’re calling the effort, “NAV Lean.”  We are looking to cut inefficiencies and delays in approving these procedures. We want to make the process “lean.”

An FAA group worked for almost six months and made nearly two dozen recommendations this year for streamlining the approval process to ensure that users get navigation benefits as quickly as possible. We expect to cut processing time by about 40 percent.

The FAA is also working constantly to improve safety. That will always be our top priority. But we do recognize that there is innovation in the market place. And we want to certify new aircraft and new equipment as expeditiously as possible.

We don't want to be the choke-hold in the assembly line.

As we move forward with NextGen, our goal is to reach the next level of safety and prepare our workforce for the future. We want to work closely with industry to implement new technologies and procedures that are sustainable. And we want to work with other countries to establish uniform standards around the globe.

This is a very exciting time in aviation. Together we are creating the template for a new system. 

The companies that get on board first will benefit. The best equipped will be the best served.

So, I thank you for your attention and I appreciate your help, your investment and your bright ideas as we mold the Next Generation air transportation system.