The U.S. Next Generation Air Transportation System's low-hanging fruit—satellite-based procedures—could be within the grasp of a growing number of airlines with legacy fleets, if the market opens up for lower-cost avionics providers.

Delta Air Lines is on the lower-cost cockpit leading edge. The carrier in early April signed a $62 million contract with Pennsylvania-based avionics maker Innovative Solutions & Support (IS&S) to equip 182 MD-88 and MD-90 twinjets with new cockpits, complete with flat-panel displays, dual GPS/wide area augmentation system receivers and new flight management systems (FMS).

Including eight new cockpits for Delta simulators, the price tag for each upgrade is $326,000 including installation, a number that analyst Michel Merluzeau, managing partner at G2 Solutions, estimates to be less than one-third of what first-tier avionics original equipment manufacturers (OEM) would charge for the similar upgrades.

“OEMs are pricing those upgrades in the $1 million-plus bracket,” says Merluzeau. Ten years ago, such a price would not have raised eyebrows, as airlines at that time did not expect a return on investment for more than two years after the installation. It is different now. “The chief financial officer at any airline these days will want a return on investment for an avionics upgrade in 16-18 months,” says Merluzeau.

A lower-cost solution from second-tier providers such as IS&S could help the operators of thousands of legacy aircraft afford the benefits of time- and fuel-cutting required navigation performance (RNP) procedures and localizer performance-vertical guidance (LPV) approaches.

There's a catch, however: Airlines often have to break long-term master services agreements with first-tier avionics suppliers such as Honeywell, Rockwell Collins and Thales in order to hire a second-tier company like IS&S to upgrade their cockpits.

“The return on investment has to include the costs of breaking the agreement,” says Michael Dyment, CEO of Nexa Capital Partners, adding that often the second-tier supplier will pick up those costs to enter the market.

Nexa Capital Partners is leading a public-private partnership with the FAA to offer airlines as much as $1.4 billion in government-backed loans to equip for NextGen, though the fund has not yet announced its first customer.

Whether Delta or the other airlines had to break agreements with first-tier avionics companies to buy the IS&S flight decks is unclear, as that information is closely held. What is clear is that IS&S has a substantial amount of work on its plate. The company has installed flat-panel displays in 12 Icelandair Boeing 757s and more than 70 American Airlines 757 and 767 cockpits, with 17 more to come in 2014, it says. FedEx has 70 757s completed and flying, with three more in the modification process, 14 additional aircraft in the queue and avionics upgrade plans for 38 more. Air Transport Services Group has contracts to update 40 cockpits with its various owned and leased aircraft.

The benefits of upgrading in Delta's case will be immediate: fuel savings in part due to the lighter weight of the new equipment and in part from flying NextGen procedures such as RNP, LPV and continuous-descent approaches.

The carrier will replace the legacy electronic flight instrumentation systems (EFIS) with four 10.5-in., LED side-lit, flat-panel, liquid crystal displays for primary and multifunction flight displays, complete with IS&S's patented “zoom up” feature, which magnifies and highlights data fields that pilots can modify on the display. Also included are two multifunction control and display units in the center console housing IS&S's FMS, twin IS&S-built GPS/WAAS receivers, two controller panels and a 4.3-in. fully independent microelectromechanical system -based standby instrument.

IS&S originally developed the FMS for the Eclipse Aerospace EA550 very light jet, later evolving it during a series of cockpit upgrades that followed, including on a Boeing 737 for the National Nuclear Security Administration.

The new equipment will also be more reliable than the cathode-ray tube-based EFIS that will be removed starting next spring. Given the redundancy built into the new IS&S flight deck, Delta will be able to continue to fly for 10 days when one of the four primary or multifunction flight deck displays is not working. Delta is keeping its existing engine instruments, inertial measurement units and autopilot.

Design work is underway and IS&S expects to begin retrofitting the first aircraft in December, followed by installation of the flight deck in eight simulators, also included in the contract. The company plans to have three teams of five technicians each traveling to Delta TechOps facilities to install the new flight decks in as little as four days. The first team is in training and will perform the certification retrofit in December, according to IS&S.

Delta does not plan to perform the upgrades as part of its regularly scheduled heavy checks but may begin installing the two required GPS antennas in advance of the cockpit retrofits to speed up the installation.

IS&S says it expects to receive supplemental type certification for the upgrade before next summer and says it will take 2-3 years to retrofit the fleet, though the company and Delta are discussing acceleration options.

Dyment says U.S. airlines will have to decide their retrofit path in the next two years in order to meet the FAA's 2020 deadline for automatic dependent surveillance-broadcast “out,” an upgrade that will probably be packaged with other NextGen capabilities such as performance-based navigation, which will likely require GPS and a new FMS.

In negotiating the best prices, he says airlines will have to “be the initiators to open up the purchasing agreements to let in the innovators.” Along with IS&S, he says price innovators include ACSS, Esterline CMC Electronics, BendixKing and Garmin International.

“We don't want to pay $500,000 for what costs $50,000,” he says of the NextGen equipage fund.