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Budget issues return: Sequestration

Posted on Wed, Mar 13, 2013

Sequestration. This word has quickly become a part of American lexicon. Most know that sequestration is a result of the Budget Control Act of 2011, which sought to establish binding caps on discretionary spending for the next decade and create a joint congressional committee to develop a proposal to achieve at least a $1.2 trillion reduction in the deficit. In an attempt to prod the committee to come to some mutual agreement to deficit cut, sequestration was added to the agreement. While broadly the nation works to determine what impacts it will have, NATA Compliance Services is working to determine what the affects will be to our customers.

 

The American Taxpayer Relief Act of 2012 managed to delay sequestration for two full months but as the March 1st deadline went whizzing by, sequestration began. The full effects of sequestration are not immediate, but will begin with furlough announcements and other spending cuts. The cuts are to be split evenly between defense and non-defense budgets. Since congress was unable to stop sequestration, $85 billion will be sequestered for the remainder of the 2013 fiscal year. However, with the Fiscal year of 2013 already nearing the halfway mark, to reach a 1% budget cut, there will need to be a 2% real cut to meet the budget. The 2013 fiscal year ends at the end of September.

 

Cuts resulting from sequestration are going to impact the aviation community. The FAA will be required to cut 5% of their budget (which remember, means a cutting about 10%). FAA Administrator, Michael Huerta said the FAA would work to avoid furloughs of employees but that it likely will be necessary. Huerta indicated the mechanics of this furlough would include most employees taking one to two furloughs per pay period (every two weeks). The furloughs do require a month’s notice so they won’t be felt immediately but come April, they will be felt. This may seem like a small change but it will result in less staff time to address the work the FAA Employees do on a daily basis. This means that operators who need paperwork reviewed, records requested or any other task that involves any FAA employee will have much longer wait times or could be unresolved completely.  GeneralAviationNews.com noted, “Certification of general aviation aircraft, products, and programs would feel the pinch as furloughed days prevent FAA personnel from doing work which, even now, is often considered by many to be unduly slow.” Sequestration effects may result in delays in certification processing efforts for operators and airport operations.

 

Another key piece of the FAA system, air traffic controllers, will also be affected. President of the National Air Traffic Controller’s Association (NATCA), Paul Rinaldi, said that sequestration will not only have a significant impact but could undermine the capacity of the National Airspace System. Sequestration is going to cause furloughs and some facilities needing to be closed all together. With fewer people directing traffic, things could get congested in the skies, causing more delays on the ground. According to an NATCA report last December, sequestration will cause “A reduction in services, reduced capacity and fewer flights”. It doesn’t take an economist to realize the ripple effects this will have, with negative impacts on airlines, pilots, general aviation, passengers and businesses that depend on aviation. As NATACS noted last month, companies who use business aviation recovered more quickly than those companies that do not use business aviation. Furthermore, the NATCA report also noted that general aviation tends to rely on air traffic control services at smaller airports. Those smaller airports are likely going to feel a larger impact from sequestration than larger airports. “Of the 106 towers that could be closed, many handle mostly general aviation traffic.” These closures raise concerns about safety for airports that have traffic levels that warrant tower facilities but would be subject to tower closures. This could be further problematic when bad weather hits an airport. Furthermore, since that report has been published, the FAA has announced that 173 air traffic control towers will close on or before April 7th with another 16 following by the end of September.

 

Sequestration will affect non-essential spending the hardest. Airshows will likely see a lack of available FAA personnel to work and help run the airshow and Air Force participation could be limited if not completely eliminated. Many airshows rely on this as a thing to drive traffic and this is considered by many to be an excellent way for the Air Force to interact with civilians.

 

Craig Fuller, President of the Aircraft Owners and Pilots Association (AOPA) commented that the cuts are extremely concerning to him because these actions “will compromise aviation security and severely damage the efficiency of general aviation flights.”

 

Current cuts not only impact today but also will have long-term affects through the future. NextGen is likely to see further delay, as some estimates have included a cut of $160 million from overall funding for NextGen to try to minimize impacts today.

 

The general aviation industry has found ways to adapt to changing conditions in the past but as Ed Bolen noted, “we have never been through something like this.”

 

NATACS will continue to monitor these and other potential impacts that sequestration will have on the aviation community and customers of NATACS. Check back often for any updates.

 

For those interested in seeing how the budget is currently spent and the impacts sequestration has, check out this website’s chart.  

 

To read the full December 2012 National Air Traffic Controllers Association report, click here.

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