The U.S. House of Representatives version of the reauthorization bill supports efforts by U.S. aerospace companies to set up a $1.5 billion fund to help airlines equip for the NextGen air traffic control modernization effort, say the fund’s organizers.
Aviation Week revealed details of the NextGen Equipage Fund in October, with ITT Corp., other large aerospace companies contributing startup money that will be used to leverage more Wall Street financing (Aviation Daily, Oct. 28). Organizing the fund are former FAA Chief Operating Officer Russell Chew and Nexa Capital Partners Managing Partner Michael Dyment.
The intention is to establish a public-private partnership that will enable carriers as well as general aviation users to buy avionics required by NextGen while minimizing capital outlay and risk. Repayment would be deferred until NextGen benefits are realized. While some airlines have already begun equipping their aircraft for NextGen, many others are reluctant to invest heavily until the payoff in cost savings becomes clearer. A clause was added to the House FAA bill that would provide government support for such an approach.
According to the fund’s organizers, it will be able to finance the retrofit of up to 75% of the commercial air transport fleet that requires upgrade—as well as some general aviation aircraft—with technology such as automatic dependent surveillance-broadcast (ADS-B) and data communications. The fund “combines financing at competitive rates backed by loan guarantees with proven credit management practices that drive default risks to near-zero,” its managers say.