The FAA Reauthorization and Reform Act of 2011, passed in the U.S. House of Representatives April 1, included an amendment authorizing a public-private partnership approach to accelerating NextGen equipage for general aviation and airlines.
The NextGen Equipage Fund will bring substantial private-sector capital to overcome the investment barriers that have prevented many air carriers and other operators from investing in the NextGen technologies for their aircraft, according to FAA officials. These barriers are driven mainly by the need to start making these investments several years before the FAA systems can deliver the benefits.
“Accelerating NextGen aircraft equipage will unlock real economic growth and benefits, such as job creation, as soon as equipment orders are placed,” said Russ Chew, general partner of NextGen Fund and former FAA chief operating officer and JetBlue Airways’ president. “According to research that we have conducted, accelerating NextGen equipage will create up to 32,000 jobs and $23.5 billion in economic growth over its five-year ramp-up period.”
“The NextGen Fund is partnering with ITT Corporation, other aerospace companies and Wall Street, to provide the more than $1.5 billion in financing for the industry to adopt the avionics technology needed to help make NextGen a reality,” said Michael Dyment, general partner of the NextGen Fund, and managing partner at NEXA Capital Partners. “We are proud to bring a private-sector solution to the aviation industry that currently has few alternatives available to address equipage financing. NextGen is the only system capable of reducing passenger delays, while at the same time lowering fuel burn and producing favorable environmental benefits.”
The NextGen Equipage Fund will enable the retrofit of up to 75% of the U.S. commercial air transport fleet – including airlines and some general aviation aircraft – with NextGen technology such as ADS-B and data communications. The NextGen Fund’s offering combines financing at competitive rates backed by loan guarantees with proven credit management practices that drive default risks to near-zero.
The main advantage to the airlines and commercial operators is that they can equip for NextGen without a large cash outlay or adding more debt, company officials said. Payments for the equipage would be deferred until specific NextGen services are delivered to the aircraft operators by the FAA.