Aviation Week & Space Technology
Big Changes Expected Under FAA's New Organization
By Bruce D. Nordwall
February 8, 2004


UNDER NEW MANAGEMENT

With the FAA's new Air Traffic Organization (ATO) officially in business as of Feb. 8, its first major challenge will be to drastically change the practices of one of the government's most hidebound bureaucracies while operating and modernizing the world's largest ATC system and maintaining safety as the top goal.

FAA Administrator Marion Blakey first briefed the press and FAA employees via webcast on the reorganization less than three months ago (AW&ST Nov. 24, 2003, p. 33). Although the person charged with making the earthshaking moves--Russell G. Chew, chief operating officer (COO) of the new ATO--had been at the FAA for just three months at that time, as a six-month veteran now, he's energetically moving the process forward. And industry insiders say he's the right man for the job.

The fundamental realignment leaves the FAA in charge of regulation, but shifts to the ATO responsibilities for providing air traffic services, research and acquisition, as well as for the Free Flight organizations. Although officially in business, the reality is that the new organization will be forming over the next two years, says Chew. The change comes after a decades-long attempt by previous administrations, Congress and the FAA to improve the delivery of air traffic services by adopting "best (business-like) practices." Chew says the ATO is a move toward an accountable, transparent organization, meaning one that makes decisions based on a full understanding of what things cost that provide benefits to customers, owners and employees.

The focus for the first six months will be to catalog the activities of three headquarters, mapping how each one contributes to the value of the ATO's services. All work, including phone calls and staff meetings, will be analyzed to first identify who the customer is, then link the activity to an output, and finally assess how each activity adds to the value of a service provided. Although the link initially will be to customers within the FAA organization, ultimately outside customers will be the target.

This Activity-Value Analysis is common in the private sector. Booz Allen Hamilton, which has done the same kind of analysis for Boeing, is under contract to guide FAA personnel. The FAA will initially dedicate 35-50 people to analyze headquarters organizations in Washington, the Technical Center in Atlantic City, N.J., and the Aeronautical Center in Oklahoma City; more people may be added later. Chew says he expects to find that the organization spends more time communicating than doing.

Still, he hopes external customers will see changes soon, starting with some "out-of-the-box" thinking about directed outreach communication. The RTCA, an organization that advises the FAA, is arranging an invitation-only forum with operators--"Growth Without Gridlock"--on Mar. 2-4 at the National Conference Center near Leesburg, Va. The intent is to address some of the hard questions about capacity, which are social and political rather than technological, he says.

As soon as the ATO becomes a service-based organization, it will need oversight of its practices--which will be provided by a new Safety Management System. The SMS will assess safety risks from changes to ATC equipment, procedures, separation standards and airspace. Highlighting the difference in the way aircraft and the ATC system have been treated, Chew said: "Before new equipment goes into an aircraft, it has to be approved; but changes to our ATC system we have approved ourselves." The SMS will alter that approach.

Oversight is more about being accountable, according to Chew. The safety processes first have to be defined and documented. Because of the lack of definition and accountability, he says nobody has to make a decision today. With the new organization, there will be a clear definition of who is the regulator and who is the service provider. Rather than slow changes, he believes the new process and the oversight organization will actually speed decisions.

To respond to tight budgets, Chew will be looking for ways to lower costs by eliminating agency efforts that don't have much value. He'd also like to flatten the organization so that the number of steps between a controller in the field and the COO is reduced. Removing management layers is one way to increase the staff's efficiency, he maintains, but he's not talking about cutting personnel. "We have some smart and talented people in the FAA," Chew said. "With goal-setting and deliberate redirection of the fundamental way the agency runs, we can make people aware of how to manage better."

Budget processes will also be different in the ATO. In the past, in typical government fashion, the process did not aim at productivity, which will now be highlighted by the Value-Activity Analysis. "Looking at what a service costs us, we will be able to say to the customers: we don't have enough money for everything--tell us what you want," Chew said.

To some extent the ATO is following the lead of Nav Canada, the private corporation that owns and operates Canada's civil air navigation service. After a meeting last month with its executives, Chew observed that Nav Canada has turned a government-based operation into a customer-focused service organization. But one key difference is that Nav Canada also privatized air traffic services, which is not the intent in the U.S.

Part of the switch to a performance-based organization in Canada involved shifting from cash accounting (which only records income and expenses when payment occurs) to accrual accounting. The former provided no real understanding of actual costs and where the money was going, according to Nav Canada President John Crichton. With accrual accounting, income and expenses are recorded as they happen. The result, he said, was increased safety and services to customers while cutting operating costs, increasing salaries and committing early $1 billion to new equipment and systems.

While the ATO is developing, it also assumes responsibility for the rolling 10-year modernization effort called the Operational Evolution Plan (OEP). The latest edition, Version 6.0, came out at the end of January and is available on the web (www.FAA. gov/programs/oep). "It [builds] confidence in customers and industry that we can make plans, follow through and [boost] capacity," said Steve Brown, ATO vice president for operations planning. Based on Mitre Corp. modeling in the years since the first OEP in 2000, there has been a 6.5% increase in system capacity, he noted.

Still, since Sept. 11, 2001, air carriers have had capital spending constraints, while federal budget pressures have curtailed government outlays. Brown said the OEP is "about dialogue and priorities," putting limited funds in the highest leverage places.

Moreover, there will be much more emphasis on the cost of delivering service, such as on-time performance, and what customers will pay for it. Brown credits the OEP with helping to focus and translate in a pragmatic fashion what equipment should be installed. It's also a model for an organizational relationship that's both businesslike and accountable for implementing changes in the airspace system. Some of these changes involve procedures as much as technology. For example, the Reduced Vertical Separation Minimum program will have a value to customers of $400 million in the first year, Brown asserted, which is a tangible return. There will be a lot more focus on affordability, he noted.

Under ATO, Brown also is responsible for integrating FAA and international plans, to maintain an alignment with foreign carriers and service providers. An unexpected benefit is emerging from what was developed as an economic relationship among airlines. As major U.S. carriers become more closely affiliated with international alliances (United with the 15-airline Star Alliance and American with the eight-airline Oneworld, for example), Brown sees a much greater awareness of global needs.


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