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Highlights

Dating back to 1997, numerous reports have highlighted the need for the Federal Aviation Administration (FAA) to better control the growth in its Air Traffic Services operating costs, which account for about $6.5 billion or over 80 percent of FAA's total annual operating costs. In February 2004, FAA established the Air Traffic Organization (ATO) to take over its entire Air Traffic operations and established cost control as a major focus. GAO was asked to determine: (1) What is ATO's financial outlook for its operations? (2) To what extent is ATO taking actions to control its operating costs? (3) What are some options ATO should consider in developing its cost control strategy?

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Transportation To ensure that it is providing air traffic control services in the most cost-effective manner while addressing looming financial shortfalls, the Secretary of Transportation should direct the Administrator, Federal Aviation Administration, to develop a comprehensive, strategic long-term cost control and savings strategy. In doing so, ATO should complete rigorous cost benefit analyses to determine the optimal structure for providing its services to different user groups while ensuring against demonstrable adverse impacts on aviation safety. Results of these analyses should be documented in a publicly available business plan that the ATO and its key stakeholders can use to build a sound business case for making the difficult but unavoidable structural changes needed to streamline its operations.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA has taken several actions to close the current funding gap and reduce future costs consistent with ATO's strategic plan through 2010. FAA has reduced payroll costs through a reduction in trainee compensation, eliminated management layers, and reduced management positions. FAA has also taken other savings initiatives, including better management of contract and supplier costs and oversight of travel expenses. Further, FAA has identified areas for future cost control, including better management of direct costs, improved workforce productivity, and optimizing the NAS infrastructure.

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