Aireon Patiently Awaits FAA Contract for Air Navigation Service

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COLORADO SPRINGS, Colo. — A commercial venture that will leverage the Iridium Next communications satellite constellation to help airlines save money by flying more efficient routes is hoping to win a funding commitment from the U.S. Federal Aviation Administration (FAA) about 18 months from now, the company’s top executive said.

Don Thoma, president and chief executive of McLean, Va.-based Aireon, said the company’s business model is to land service contracts with air traffic management authorities, which typically charge airlines fees for their navigation and flight-safety services. To support the addition of Aireon services, these organizations would increase these fees, he said.

Most air traffic management authorities around the world are set up as nonprofit entities that charge fees directly to users, Thoma said during a press briefing with other Aireon-affiliated executives here at the 29th National Space Symposium. A typical example is Nav Canada, which along with McLean-based Iridium Communications founded the Aireon venture, he said.

As a founder and partner, Nav Canada has agreed to be a customer for Aireon’s position-location service, which would enable airlines flying transoceanic routes to save on fuel costs by flying more direct and efficient routes. The FAA has responsibility for more transoceanic air routes than any of its counterparts around the world and thus is viewed as a critical customer for Aireon.

But unlike the others, the FAA is funded mostly by aviation-related taxes and does not directly bill airlines for services. As such, the FAA would require new budget authority to pay for the Aireon service.

Thoma said the FAA has been consulting closely with Aireon from the beginning and that the agency is well aware of its benefits. But as a federal agency, the FAA has relatively long budgeting and procurement timelines, he said, adding that it will be at least 18 months before Aireon can expect to land a major FAA contract.

FAA funding is not required for Aireon to develop and deploy its system, which entails payloads hosted aboard the 66 Iridium Next low Earth orbiting communications satellites slated to start launching in early 2015. The payloads, being supplied by Harris Corp. of Melbourne, Fla., under a $115 million contract, will relay GPS-based position location signals from aircraft flying over remote areas primarily transoceanic routes to air traffic management authorities.

In response to government mandates, airlines around the world are switching from radar to GPS-based navigation, Thoma said. For aircraft flying over U.S. territory, these signals will be relayed from aircraft to ground-based towers being installed by the FAA.

Nav Canada has committed $150 million to the venture; Iridium has committed $12.5 million, in addition to its investment in the satellites, which were designed from the start to accommodate hosted payloads. Thoma said Aireon is piggybacking on not only these investments but also those being made by the FAA in its next-generation air traffic management service and by Harris, a leading provider of satellite and terrestrial satellite communications gear.

Thoma said an airline using the Aireon service will be able to save an average of $450 worth of fuel during a trans-Atlantic flight, of which 20-30 percent will be paid to air traffic management authorities in the form of increased fees.

The savings for the airlines will add up, even with the fee hikes, Thoma said. Airlines draw an average of 38 percent of their total revenue including passengers and cargo transport from international transoceanic business, he said.