Officials Provide Sequestration Details to Airport Industry

Executive Summary: The U.S. Department of Transportation (DOT) and the Federal Aviation Administration (FAA) held a meeting today at FAA Headquarters to provide industry representatives with additional information about how sequestration-related budget cuts will impact U.S. air traffic operations.  This meeting followed up on the letter FAA sent to ACI-NA and the other key aviation associations on Friday regarding expected impacts of sequestration on FAA facilities and operations. As noted in the letter, the FAA is planning to reduce its expenditures by approximately $600 million for the remainder of federal fiscal year 2013 (e.g., through September 30, 2013).  

The most significant takeaway from the discussion is that proposed full-time and nighttime closures of airport traffic control towers described in last week's letter appear likely unless current sequestration legislation is altered by Congress.FAA noted that these tower closures are necessary to meet sequestration budget targets, adding that changes to the lists of facilities slated for closure would require finding offsetting cost savings elsewhere in ATO's budget.  ATO staff furloughs will affect most other airports in the system, with the current expectation being that all FAA ATO employees will have to take one furlough day every two weeks. Systemwide, this may reduce air traffic capacity and result in air traffic delays.

These cuts and furloughs are expected to take effect on April 7.

Who is Impacted: Airports in the United States, especially (1) large hub airports, which could experience significant flight delays due to air traffic controller furloughs and deferred equipment maintenance and (2) towered airports with less than 150,000 annual operations or less than 10,000 annual commercial operations, where it appears increasingly likely that airport traffic control towers will be closed.

Background: As we have reported in prior e-mails, budget legislation passed last year--popularly referred to as "sequestration"-- requires budget cuts across a broad range of federal agencies for the remainder of FY 2013 and beyond.  Sequestration will require FAA to cut its budget by $600 million for the remainder of federal fiscal year 2013 (e.g., through September 30, 2013). If the legislation remains in place, additional budget cuts will be required in 2014 and each year thereafter.  Approximately $375 million of these cuts will come from the FAA ATO, which is responsible for providing air traffic control services in the U.S.

Sequestration will not affect the FAA's Airport Improvement Program (AIP) or funding for FAA Office of Airports staff.

On February 22, ACI-NA was invited to participate in a meeting between DOT, FAA, and industry representatives to discuss the impacts sequestration is expected to have on U.S. air traffic operations.  The meeting, which took place on February 26, was led by DOT Deputy Secretary John Pocari, FAA Administrator Michael Huerta, and FAA Air Traffic Organization (ATO) Chief Operating Officer David Grizzle.  FAA Deputy Associate Administrator for Airports Kate Lang was also in attendance.  In addition to ACI-NA, industry participants included AAAE, A4A, IATA, RAA, NBAA, AOPA, NASAO, and NATA.

During the meeting, John Pocari noted that FAA and DOT are facing an "unprecedented scenario" in which significant budget cuts mandated by Congress must be made.  Pocari characterized these cuts as "permanent" unless Congress changes sequestration legislation.

Michael Huerta and David Grizzle presented how FAA's plans to implement sequestration cuts for the remainder of 2013.  They also discussed the rationale that FAA used to prioritize these cuts. They noted that the FAA's goal when making cuts was to minimize adverse operational impacts on the traveling public as much as possible.  

Huerta cited the following five step process was used to prioritize ATO budget cuts.

  1. First, FAA sought to achieve budget reductions through cutting travel, training, and administrative expenses as well as instituting a hiring freeze.
  2. Since Step 1 fell far short of the budget reductions required, FAA then sought to cut contracting expenses where possible.  Huerta noted that FAA reviewed its top 100 contracts.  Some of these could not be “unwound” quickly enough to achieve meaningful budget reductions before the end of FY 2013.  Those that could include the contract tower program among others.  Currently, FAA's plan to meet sequester budget targets presumes that all 238 towers in its tower closure list will be closed.  The same goes for the 73 towers that are slated for nighttime closure.  If facilities on the list are not closed, budget offsets would need to be found elsewhere to make up for the lost savings.
  3. After Step 2 did not provide sufficient cuts, FAA sought to mothball ongoing NextGen implementation efforts such as the Optimization of Airspace and Procedures (OAPM) initiatives underway at metroplexes across the country.
  4. Next, FAA sought to realize cost savings by deferring maintenance on air traffic facilities and navaids as well as drawing down its navaid parts inventory.
  5. To make the remainder of necessary budget cuts, FAA sought to limit staffing expenses through furloughs.  FAA currently estimates that after the savings achieved in Steps 1-4, it will need to furlough every employee (excepting those that are funded under AIP) one day every two weeks.

Huerta noted that absent Congressional action, these cuts would take effect on April 7.

On a related front, DOT Secretary Ray LaHood sent this e-mail to DOT staff earlier today describing expected sequestration impacts.

What is ACI-NA Doing: Understanding that sequester discussions are highly politicized, ACI-NA is trying to work with both Administration representatives and Members of Congress from both sides of the aisle to minimize the sequester's impacts on airports and the communities they serve.  ACI-NA is closely coordinating with officials from both the FAA Office of Airport, FAA Air Traffic Organization, and other key aviation associations (A4A, RAA, and AAAE) to better understand the scope and likelihood of the actions outlined in the FAA's letter. As noted last week, ACI-NA has also been meeting with Members of Congress to warn them of the adverse impacts sequestration could have on airport operations.

Suggested Airport Actions: ACI-NA encourages airports to reach out to local airline and FAA ATO representatives to prepare for sequestration impacts.  We also encourage member airports to reach out to their members of Congress to convey how they will be adversely impacted by the sequester.

ACI-NA Contact: Chris Oswald (202-293-4539)

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This message has been sent to members of the Operations & Technical Affairs, Finance, Environmental Affairs, and Small Airports committees.