FAAXX704: Automatic Dependent Surveillance-Broadcast (ADS-B)

ADS-B is a technology that will allow implementation of new air traffic control procedures based on more accurate aircraft position information that will allow better use of existing airspace. This should result in an increase in capacity and will result in fewer delays and more optimal routing for aircraft. The efficiency benefits include reductions in weather deviations, reduced cancellations resulting from increased access to some Alaskan villages during reduced weather conditions, additional controller automation, and additional aircraft to aircraft applications. The efficiency benefits translate to savings in both aircraft direct operating costs and passenger value of time. The Business Case Analysis Report dated May 15, 2012 shows $3.2B in capacity and efficiency benefits.

Given the significant funds already invested in SBS, the incremental costs are outweighed by the benefits with a B/C ratio of 1.2. Each of the new scope areas, expansion of coverage in the Gulf of Mexico and the ADS-B in ITP application, have a positive return on investment with B/C ratios of 3.8 and 1.3 respectively.

The total baseline program when considering sunk costs and benefits approaches break-even with a B/C ratio of 0.9. This is consistent with the strategy to deploy an infrastructure that can be leveraged for future operational improvements. The SBS program is pursuing additional applications which have the potential to significantly improve the overall business case increasing the B/C ratio to the range of 1.1 to 1.2 and resulting in a positive net present value of approximately $1.0B or more. A subsequent investment decision and business case analysis update will solidify the set of additional investments that can build on the program baseline.

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