	Efforts to Increase Aviation Capacity and Service Face Funding and Other Challenges

During this reauthorization period, the Congress and the administration  face several key challenges in attempting to increase the capacity of the  national airspace system and expand service to small communities. For these airports,  ACI’s estimate of planned development costs is about twice as large as  FAA’s. As the Congress moves forward with reauthorizing FAA’s  programs, it will have to determine what level of planned capital  development is appropriate to increase the capacity, efficiency, and safety  of the national airspace system. Although projections made in November 2002  indicate that the Trust Fund will be able to meet its traditional obligations  over the next 10 years, the financial outlook for the next 5 to 8 years is  uncertain, in part, because passenger traffic has decreased with the  slowdown in the economy. The current hiatus in air traffic growth creates an  opportunity for the development of long-term transportation plans. Efforts to Improve the Efficiency of the Air Traffic Control System Face Ongoing Challenges

Improving the efficiency of the air traffic control system will be important  to accommodate the expected return to pre-September 11 air traffic levels. FAA is making progress in managing the air traffic control modernization  effort and has implemented some key projects. However, other key projects continue to experience cost, schedule, and  performance problems. The Inspector General has reported that the costs  of five acquisitions have grown by $3 billion—the equivalent of 1 year’s  budget for the modernization program—and the delay in completing these  acquisitions has ranged from 3 to 5 years. In addition, with the transfer of most aviation security  responsibilities to the Transportation Security Administration (TSA), FAA  faces the challenge of maintaining close coordination with TSA to ensure  that aircraft safety is maintained as TSA implements new security  enhancements. FAA and Industry Have Taken Actions to Reduce the Fatal Accident Rate

Reducing fatal aviation accidents is key to improving aviation safety. FAA’s New Safety Inspection System Offers Promise, but Problems Still Need to Be Addressed

Improving the effectiveness of FAA’s inspections of airline operations is  key to improving aviation safety. FAA Faces Challenges in Implementing Controls over Its Costs

As the administration and the Congress focus on increasing aviation  capacity, efficiency, and safety, they do so in an extremely challenging  fiscal environment—the federal budget deficit has increased and  competition for federal resources has intensified. FAA has improved its ability to track its costs by  partially implementing a new cost accounting system that the Congress  directed it to develop in 1996. We also interviewed officials from FAA, the Air Traffic  Services Subcommittee, and aviation industry organizations. Department of Transportation, Transportation Security  Administration: Aviation Security Infrastructure Fees. Air Traffic Control: Role of FAA’s Modernization Program in Reducing  Delays and Congestion.
Why GAO Did This Study

Much has changed since the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21) reauthorized the Federal Aviation Administration's (FAA) programs 3 years ago. At that time, air traffic was increasing, and concerns about congestion and flight delays were paramount. Since then, the downturn in the nation's economy, the terrorist attacks of September 11, 2001, and, most recently, the war in Iraq have taken a heavy toll on aviation. Analysts nonetheless expect the demand for air travel to rebound, and the nation's aviation system must be ready to accommodate the projected growth safely and securely. The current reauthorization of FAA's programs provides an opportunity for the Congress and the administration to focus on challenges in increasing aviation capacity, efficiency, and safety and in controlling aviation program costs.

What GAO Found

Increasing capacity and service in the national airspace system poses several challenges. While airports currently receive enough funding to cover FAA's estimate of their planned capital development costs, a declining surplus in the trust fund that helps to support development and the need to spend up to $5 billion over the next 5 years for security-related capital improvements make the financial outlook for the next 5 to 8 years uncertain. Runway development, the principal means of increasing capacity, is now taking 10 to 14 years to complete, in large part because of time-consuming environmental reviews and community concerns. Providing air service for small communities is also becoming more difficult as costs increase and passenger ticket revenues decline. Intermodal alternatives may hold promise. Efforts to improve the efficiency of the national airspace system by modernizing the air traffic control system face challenges despite actions taken by the Congress and the administration to eliminate the cost overruns, schedule delays, and performance shortfalls that have plagued FAA's modernization efforts. Overall, FAA is improving its management of the air traffic modernization program and has implemented some systems, but key projects continue to experience problems. To enhance aviation safety, FAA and the aviation industry have undertaken an initiative to reduce the fatal accident rate, and FAA is working to strengthen its safety inspections of airlines' operations. Interagency coordination of aviation safety and aviation security activities has emerged as a challenge with the transfer of aviation security responsibilities from FAA to the Transportation Security Administration. FAA faces challenges in implementing controls over its costs. Although it has partially implemented a new cost accounting system that enables it to track 70 percent of its air traffic services costs, this system lacks internal controls over $3.1 billion in labor costs, according to the Department of Transportation's Inspector General. Congressional oversight is important to ensure that FAA implements controls and spends its resources effectively.