What Upcoming Changes in FAA policies may impact air freight in 2018

The Federal Aviation Administration (FAA) is planning to undergo a complete overhaul. These proposed changes are extensive and could have a significant impact on air freight in 2018 and beyond. Currently, the FAA is comprised of regional offices and administrators – a structure that has been in place for 30 years. The suggested structure has been streamlined more precisely, in an effort to standardize air carriers and to increase consistency across regulations.

The 21st-Century Aviation Innovation Reform and Reauthorization (AIRR) Act is a major part of the FAA’s plans. The ultimate aims of the bill are to enhance air safety, improve the flying experience, fund airport infrastructure, encourage the development of unmanned aircraft systems, and to privatize the air traffic control system. However, the issue of privatization has created some divide. In general terms, corporate and general aviation support privatization, while some major figures in the airline industry argue that the federal government should remain in charge.

McKinnon, an attorney from LeClaireRyan, is in favor of privatization and suggests that the current system isn’t ideal for air traffic control. He argues that ageing infrastructure and other technological issues are preventing the system from operating at an optimum level. According to McKinnon, the necessary systems should be continuously updated in a logical way. McKinnon also argues that a privatized system could have the access to capital markets and issue bonds as sources of funding, rather than relying on federal budgeting.

Another issue up for debate is cost and control. Advocates of privatization argue that it would reduce operating costs because companies would compete for contracts. Ashley Nuney, Ph.D., from the Center of Transportation Logistics at the Massachusetts Institute of Technology, says that Canada’s air traffic control system (Nav Canada) reduced its costs by 30% since being privatized in 1996. Nuney also suggests that reduced operating costs should make it cheaper for companies to ship their products. This, in turn, may increase demand as it would become cheaper to use air freight.

However, Nuney states that there is a lack of evidence to support the argument that privatization would make the airspace safer. Other experts have also expressed uncertainty regarding whether private companies have the capacity to effectively manage the world’s busiest airspace. Delta CEO, Richard Anderson, stated that it would be “unnecessary and unwise” to privatize air traffic control and argues that the current system is safer. Currently, 13,000 licensed controllers work under the FAA across the country, alongside tens of thousands of engineers and technicians.

Unmanned air systems are also set to have a significant impact on air freight, although it is not clear when they will come into operation. The FAA allowed Google and Amazon to test their drone delivery systems in what’s known as Project Wing. During the tests, the companies had to operate their drones over 400 feet and were required to remain within their designated areas.

So, what effect could drones have on air cargo? Natilus, a California-based startup, is launching larger and more fuel-efficient drones, that can handle more weight without losing efficiency. They will be manned by inexpensive crew and Natilus believe that it can reduce air freight rates by half. Although Natilus is years away from launching its drones, the potential impact is huge in terms of cost.

FAA’s pending reorganization and policy changes are set to have a significant impact on air freight. It is likely that this will be particularly significant in terms of cost and control. If the air traffic control system is privatized, it could see reduced operating costs, which in turn, could lead to lower user fees and higher demand.

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