Planning SATS Implementation in Nebraska
Prepared for presentation at the National Conference
American Society for Public Administration
San Diego, California
April 4, 2000
by
John Bartle
Brent Bowen
Russell Smith
Department of Public Administration
University of Nebraska at Omaha
6001 Dodge St.
Omaha NE 68182-0276
Visit the UNOmaha SATS website: http://www.unomaha.edu/~unoai/sats/
Introduction
The National Aeronautics and Space Administration (NASA), U.S. Department of Transportation (DOT), Federal Aviation Administration (FAA), industry stakeholders, and academia have joined forces to pursue the NASA National General Aviation Roadmap leading to a Small Aircraft Transportation System (SATS). This undertaking has a 25-year goal to use the next-generation of technology to improve travel between remote communities and urban transportation centers by using general aviation airports. Not only does SATS have the potential to significantly increase the throughput capacity of the U.S. aviation system, but it can provide new impetus for economic development in smaller and rural communities through spin-off activities in multi-modal transportation, support services, and increased access for those with shipping, medical services and information technology requirements.
The 70 largest of the nation's 5,400 public use airports serve approximately 90 percent of all air carrier passengers, while another 410 airports serve most of the remaining ten percent. However these 480 airports cannot provide timely, convenient, and affordable air service to the nation's rural and remote communities. By expanding all-weather access to other public-use airports, the National Airspace System capacity could be increased by a factor of ten compared to the existing commercial "hub and spoke" system.
To facilitate this initiative, a comprehensive upgrade of public infrastructure must be planned, coordinated, and implemented within the framework of the national air transportation system. Emanating from such a project of comprehensive national infrastructure change are seemingly unlimited issues of public policy, regulatory change, and financial viability (Bowen, Holmes, & Hansen, 1999). This paper provides an overview of the policy issues associated with the implementation of SATS. Since 1999 a team of multi-disciplinary researchers has been working to develop a SATS implementation template for Nebraska and other states. Research is in progress in the areas of systemic change and innovation in public infrastructure, public finance, and economics for SATS planning in the states, and state and local airport planning for SATS implementation. This change necessarily calls for an examination of state and local government issues. It is intended that the template developed by the Nebraska team can be utilized by any state, particularly by rural areas (Bowen, Holmes, et al., 1999). This paper presents several initial thoughts on policy concerns raised by SATS.
Public Policy Implication Overview
The focus of this research is on state and local public policy implications for developing strategies and carrying out the implementation of SATS in general aviation airports, particularly in non-metropolitan/more rural areas (FAA, 1999). Public policy issues revolve around several activities: "formulating strategies, designing governmental actions, allocating organizational resources, controlling organizational behavior, and managing the process of organizational change" (Lyn, 1987, p. 17). Each of these activities is critical to the success of SATS.
Similarly, the barriers to the implementation of public policy usually revolve around several factors, including:
In our preliminary review of public policy issues surrounding SATS we found issues quite comparable to those identified by Fesler and Kettl (1991). Below we highlight some of the initial findings of our research. This paper identifies three major policy areas: Public Finance and Economics, Awareness and Environmental Factors, and Diffusion of Technology and Technology Transfer. We also provide some nascent comments on the specific issues facing non-metropolitan and rural areas in Nebraska.
Public Finance and Economics
Implementing SATS in Nebraska and in other states requires a number of both technical and administrative changes. SATS also requires significant change in the infrastructure of state general aviation airports. The dilemma is how these improvements might be financed.
The primary goal in this regard is to improve airport infrastructure so that it can accommodate SATS. Other important goals include the need to link the implementation of SATS with anticipated local economic growth, and to make it financially sustainable over the long term with limited federal assistance.
There appear to be four major sources of revenues for SATS: 1) federal grants (particularly the Airport Improvement Program, AIP); 2) debt financing (general obligation, revenue bonds, and tax increment financing; 3) earmarked taxes and user fees (fuel taxes, ticket taxes, segment fees, landing fees, passenger facility charges, rentals for terminals, land, hangars, fees for concessions); and 4) innovative financing approaches (i.e. subsidized interest payments for local debt, state revolving funds, lease-purchase agreements with the private sector, and certificates of participation). The degree of use of any of these revenue options with SATS will depend largely upon federal policy. If federal grants for SATS follow the model of AIP, then some portion of the grants will be discretionary matching grants requiring local or state matching funds, and another portion will be apportioned funds based on passenger boardings. As passenger boardings are low at Nebraska's general aviation airports, the current design of this element of AIP would not provide the necessary funds to implement SATS on the scale envisioned. Discretionary grants are a logical source, especially in the early phases of SATS implementation, but local and state funds would be needed to match the federal funds.
Closely accompanying the financing options for SATS is the potential impact on local economic development. The eventual goal of this research is to develop a model that allows an assessment of the financial viability of the SATS investment at any airport. Such a model will develop the capacity of federal and local officials to judge the propriety of projects and to develop the necessary customized financial and administrative tools to implement them. Three types of analysis that are often used in project evaluation are: 1) Financial Analysis, 2) Benefit-Cost Analysis (BCA), and 3) Economic Impact Analysis (EIA).
Financial analysis is used in the private sector and considers only the cash revenues and costs accruing to a private entity making an investment. In the case of a privately owned airport, the cost of the investment must be offset by increased revenues raised by the corporation from users of the airport. However, financial analysis by itself is not appropriate to evaluate publicly financed airport projects because it does not fully measure benefits and costs to the aviation public.
BCA takes into account factors not included in market responses measured by financial analyses. Economists often refer to these factors as market failure and include such things as externalities (airport noise and pollution), lack of information (time savings and improved safety which are largely unknown issues to customers), and imperfect competition (many general aviation airports lack direct local competition).
BCA typically does not measure all of the economic benefits accruing to a community as a result of the operation of a local airport. These benefits generally are included in EIA. An EIA can measure the total local economic impact of aviation facilities. Four categories of benefits are used in EIA: 1) Direct impacts resulting from the expenditures by the airport operator and the airport tenants (payroll, operating expenditures and capital expenditures); 2) Indirect impacts from expenditures related to airport activity, but generated away from the airport facility (i.e. spending on hotels, restaurants, travel agencies, and ground transportation); 3) Induced impacts from the subsequent rounds of spending and re-spending in the community (multiplier effects); and 4) Transportation cost savings of time and money associated with additional ground transportation that would be required if the airport were not located at its present location and an alternate transportation was used.
It is difficult to measure the full effect of what an airport does for the businesses in a community, but they clearly contribute in areas such as attracting new businesses and facilitating the growth of existing businesses. These and other economic impacts are important to understand in measuring and assessing the contribution of SATS to economic development.
Environment and Awareness
Clear understanding of the environment facing general aviation airports and the awareness of that environment by those charged with implementing SATS is a key policy concern. Several policy questions flowing from our initial work in Nebraska are summarized below.
SATS both provides and requires a new vision of general aviation. Successfully implementing SATS requires the cultivation and development of new networks of supporters. How can the Nebraska Department of Aeronautics (NDA) and local airports shift the mindset of policy makers, stakeholders, and community members to one of growth and development? Nebraska is characterized by small size/scale, part-time airport managers and staff and limited long-term planning. In this context how can the management and planning capacity of staff be increased?
While it is clear that implementing SATS in states like Nebraska will require innovative financing arrangements and perhaps user-based charges, communities will also need to increase their tax support. How many communities/counties are at their maximum tax levy for airport support? What would be the impact of an increase on local property taxes? Is there local support for property tax increases to support airports? Can this support be linked to economic development benefits?
Most local airports in Nebraska have low debt levels (Smith & Wachal, 1999). There is reliance on federal AIP funds to finance capital improvements and the absence of capital improvements when non-local funds are not available. Are there new local financing policies and tools that might be adopted in Nebraska to facilitate local debt to support improvements? Can clear benefit streams be identified so that local stakeholders will be willing to take on a larger share of the improvement costs? As noted in the finance policy discussion, there are innovative local financing policies and tools that might be adopted to facilitate local debt to support improvements. Can communities begin to see that their airport can be an important facet of their quality of life, as well as an economic development tool?
If SATS serves as a base for local operations as opposed to inter-city operations, can realistic and believable projections be developed (and provided to communities)? These projections might allow communities to see how much non-local traffic might increase, and how many local residents might benefit.
SATS requires significant long-range planning, increased management expertise, and a focus on meeting the needs of local and non-local flight operations. There will be a need to increase the management and planning capacity of local airport managers and staff.
Nebraska has found a disconnect between statewide airport system plans developed in the early 1990s and the actual projects undertaken by local airports (Smith & Wachal, 1999). While the plans called for investment in development of increased runway length/width and NAVAid improvements, most of the actual expenditures have been on rehabilitation of existing capital facilities. If similar experiences exist in other states, it raises a question about ensuring better linkages between airport system plans devoted to SATS implementation and actual project funding to support that implementation. This also becomes critical if AIP funding is linked to SATS implementation. Statewide aeronautics policy boards require the leadership, vision, and commitment necessary to support SATS implementation.
In Nebraska AIP funds have been clustered in a relatively small number of counties (Smith & Wachal, 1999). This raises questions about the linkages between AIP funding criteria and general aviation needs. Have these aid dollars funded the highest needs? How can this be reconciled with the fact that large numbers of the state's general aviation airports have primary runways that do not meet the recommended length and/or width for the runway? Should the basic needs of a smaller number of airports be met rather than meet some of the needs of a larger number of airports, and what impact might this have on SATS implementation?
Finally, only ten of Nebraska's 91 airports have been designated as Commercial Service facilities. Nebraska's Airport Systems Plan puts the number of state airports at 78. How many airports are really necessary to implement SATS? With a 30-minute travel standard, how many airports would be needed to reach 90 percent of the state's population? If the SATS airports covered somewhat larger areas, would that make local tax, business, and aviation support more feasible?
Technology Transfer and the Diffusion of Technology
SATS represents a fundamental effort to shift and diffuse technology throughout the nation's general aviation airports. Unfortunately, while a good deal of past research focused on the diffusion of technology from government and universities to industry, too little is known about the transfer of technology to state and local governments. However, we understand that many of the barriers identified in the industry literature are likely to come into play with state and local governments. In some cases these barriers may be even greater.
One barrier noted by several of those who have studied technology transfer has been the conservative nature of organizations and their unwillingness to accept different approaches to delivering services (U.S. House Subcommittee on Oversight and Investigations, 1991; Vandermerwe, 1987). Most public organizations by their nature are risk averse (Lee, 1994). Organizational change and the ability to accept new approaches to service delivery is a major hurdle for SATS implementation. In order to overcome this natural hesitancy, political support will have to be generated that outweighs the disincentives that exist. An alignment of these incentives increases the chances of implementation (Smith, 1998). The greater the readiness and acceptance of the benefits of the change the technology will bring, the more likely adoption will take place (Vandemerwe, 1987). Champions who are personally motivated to see SATS implemented and who can help advocate the benefits of applying SATS technology would be key in this regard (Baron, 1990).
Another barrier already mentioned are the financial resources required to modify and apply technology appropriate to general aviation facilities. The more technology can be designed so little retrofitting has to occur, the more likely it will be adopted (Shapira, 1990). Those developing the technology and those applying the technology often have very different orientations and values. The culture of organizations devoted to innovation and development is very different than the culture of general aviation airports and fixed-based operators who deliver services on a day-to-day basis. They also have different missions, objectives, and structures (Rahm, 1994). Local and state governments may be naturally suspicious of the motives and commitment of the federal government to follow through with the support necessary to successfully implement SATS. History would indicate that this suspicion is justified in terms of federal initiatives that have resulted in considerable increases in state and local expenditures. The ability to communicate and understand the application of SATS technology and the value of that technology may be lost on airport policy leaders and managers who are more focused on maintaining and reconstructing what they already have. The greater trust that exists between SATS and state and local government stakeholders empowered with implementing the technology, the more likely it will be used (Isaacs, 1996).
There may well be barriers in the form of statutes, administrative procedures, or other legal barriers on the road to successful implementation of SATS (Lee, 1994). Each state and locality will have different legal and administrative policies and procedures that will need to be reviewed to determine which barriers exist and how best to address them. Finally, education and training about SATS regarding how the technology works and how it can be applied successfully are key factors in implementation. One-on-one contact between those transferring the technology and those charged with implementation in this process is crucial (Shapira, 1990).
Non-Metropolitan and Rural Policy Issues
Non-metropolitan and rural areas pose unique challenges to implementing SATS. First, many rural and small community airports operate with part-time managers and staff with limited budgets. Most traffic at these airports is local with limited "point-to-point" travel. The larger of these airports receive the bulk of state infrastructure funding and support.
As noted in earlier research on Nebraska, "Rural communities often lack the basic public facilities and organizational and leadership capacity to stabilize or increase economic activity. They lack access to the basic building-block financial and organizational resources" (Paulsen & Reed, 1991, p.6). Clearly, states with smaller, more rural populations face serious capacity issues. As was noted by one of the authors of this report in an earlier article:
The forces affecting rural and small communities' abilities to improve service delivery and increase revenue support hinge on several factors: economic, political, and social. Public attitudes toward taxing and spending have increasingly restricted government. The increasing use of third parties to deliver governmental services has placed different demands on local managers and policy makers. The rapid change and increasing dependency of local economies on national and international market forces has greatly reduced rural communities' control over their local economies. Finally, the increasing shift of the federal budget support away from state and local assistance increases local responsibilities while not necessarily increasing resources necessary to meeting those responsibilities (Reed, Smith, & White, 1990, p. 38).
Another concern raised in this regard is the increasing number of elderly, decreasing number of young people, and net out-migration found in many rural areas.
Taken together, these trends and issues reflect the likely need for greater resource support to implement SATS in non-metropolitan areas. Without such support, most rural area airports will be unlikely to take advantage of the opportunities SATS presents.
Next Steps for States
SATS will rely upon all stakeholders to engage in nationwide public outreach and education activities to begin the preparation of the public to embrace the SATS concept. While it is necessary for stakeholder groups to provide this function, SATS can provide support through extensions of ongoing research and planning activities. Toward this goal, there are immediate actions that a state can take to make progress. The following are those which are taking place in Nebraska (Lehrer & Penney, 1999):
Developing a state steering committee: A Nebraska SATS Oversight Committee is being developed. This committee, composed of aeronautics officials, academics, stakeholder airport managers, economic development officials, and general aviation charter representatives will provide insight and guidance for implementation of the new airport technologies in the state. This group has met and planned activities including the development of a Nebraska model for selection specifications and implementation of SATS at demonstration airports. The oversight group will provide a vehicle for information dissemination to future SATS stakeholders.
Inclusion in state airport system planning documents: The Nebraska State Airport System Plan (SASP) is the key document for the development of the state's airport system. The most recent SASP is dated 1992, but the next plan is currently being developed. Through consultation with the director of the Nebraska Department of Aeronautics, the integration of SATS within this state plan is becoming a reality. This document will influence state airport plans for the next decade and beyond, and SATS will be a part of that focus.
Interstate cooperation: The impact of SATS in Nebraska goes beyond state boundaries. With such a sphere of influence possible, it is critical to view the regional influence of the SATS initiative. Another potential benefit resulting from the development of SATS is a means of service to minority populations. In a state such as Nebraska, whose population includes many Native American citizens, SATS can be a significant benefit. A great portion of Nebraska's Native American population has no access to public transportation of any kind, and the development of an advanced airport system would bring limited air transportation system access to a greatly under-served part of the state and region, providing enhanced access to health care, government, and employment opportunities (Bowen, Holmes, et al., 1999).
Conclusion
The planning, decision-making, and implementation of innovative policies and programs for the transformation of the nation's smaller general aviation airports occurs within and is shaped by the intergovernmental relationships established by the federal character of the US constitutional framework. American federalism a complex network of government jurisdictions, public officials (elected, appointed, and career civil service), legal systems, fiscal flows, administrative arrangements, and constituencies with varying interests. To make any significant change requires sufficient mobilization behind the proposed policy to overcome the viscosity of the diverse and often competing interests created by our fragmented federal structure. Even within a single sector such as general aviation, the realities of intergovernmental relations can easily stymie the best plans.
Successfully implemented policies are characterized by high degrees of involvement among officials from all levels, substantial agreement on the objectives and mechanism used to achieve the policy, and a sense of mutual benefit for all parties. Put somewhat differently, the intergovernmental implementation of any new policy initiative requires the assembly of political and bureaucratic resources through the levels of government, across the country, and across sectors of the economy. The installation of advanced technologies and appropriate management systems throughout the nationwide network of general aviation airports can be delayed, slowed, and even halted at any one of many possible points at which a decision to commit resources must be taken. Consequently, a major element of the planning phase for the SATS proposal should include a substantial effort to identify the most serious obstacles to implementation, devise strategies for overcoming or removing them, and then create conditions conducive to the emergence of high levels of intergovernmental and inter-sectoral cooperation which undergird all successful national policy initiatives.
Typically general aviation airports operate legally as public authorities, established by local governments (cities, counties, or multi-jurisdictional entities) under the laws of the state in which the airport is located. The organization, discretionary authority, administrative capacities, and resource bases for these airport authorities vary from state to state. Additionally, because airports are local entities, they typically receive some degree of fiscal support or subsidy from state government, and concomitantly, operate under a regulatory regime, which includes state and national rules. Any nationwide program has to accommodate itself to this variation. Thus another part of the planning phase will require a classification of the discretionary authority, administrative capacity, resource bases, and other features of airport authorities which affect the adoption and administration of new systems.
The widespread adoption and implementation of SATS technology by the nation's small airports requires the review, modification, and creation of supportive and innovative public policies and management systems in a broad spectrum of government areas on the local, state, federal, and quasi-governmental levels. This includes those related to public finance, human resources, administrative systems design, project management, organizational change, and information systems. An analysis of current public policy and management frameworks that identifies gaps, as well as existing contradictory or countervailing policies that discourage innovation of new technologies, would be necessary to illuminate potential barriers to SATS adoption.
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Acknowledgement
Jerome Deichert, Henry Lehrer, Dale Krane and B.J. Reed all contributed to an earlier version of this paper.