The Newark airport's air traffic control dilemma lit up when radar screens went dark in early May. Air traffic controllers lost radio contact with pilots. Some were reportedly so unnerved they later took medical leave, then resigned. United Airlines canceled 35 flights a day at the facility. This month, the FAA slashed the number of flights to and from the New Jersey facility through year-end.
The air traffic control issues were not new. Nor are they confined to Newark Liberty International Airport. But Newark has become a beacon of serious, widespread issues in the U.S. network of aircraft communications and tracking technologies, which is decades behind the times. The shortcomings go well beyond endangering airline efficiency and service. Public safety is a very real and immediate concern.
After Newark's outage, the Federal Aviation Administration once again hurried out a fresh set of plans to upgrade air traffic control technology and infrastructure, as well as staffing, nationwide. Decades of such plans under a long string of administrations had cobbled together fixes and upgrades. But this time, if Washington follows through, Americans can expect to see billions of dollars in spending over the next several years, benefiting a long list of technology suppliers and other companies, as well as airlines and travelers.
FAA Plans Quick Fix
The current FAA, under Department of Transportation Secretary Sean Duffy, is pledging a quick fix. "This is the most important infrastructure project that we've had in this country for decades," Duffy said at a June 2 press conference at Newark airport, as reported by NPR. "Everyone agrees this is nonpartisan. Everyone knows we have to do it."
But can Duffy convince a budget-knotted Congress to approve the funds? And is his frantically tight three-year timeline even close to realistic?
For investors, which companies could benefit? Top names related to air traffic control projects in the past have included Leidos, RTX, Verizon and L3Harris. Leidos and Palantir so far are top contenders for the current modernization effort, along with scores of private companies.
Which Air Traffic Control Regions Have Problems?
Out of 138 U.S. air traffic control systems, a 2023 operational risk assessment from the FAA deemed 51, or 37%, to be unsustainable. Another 54, or 39%, were potentially unsustainable. Thirty-three systems had no issues.
The "unsustainable" systems have significant shortages in spare parts, shortfalls in long-term funding and little or no funding available for maintenance, upgrades or repairs.
"Potentially unsustainable" systems still have some operational runway, but are starting to flash warning lights regarding equipment, technology or cash shortages.
IBD's ETF Market Strategy: How Much Should You Invest In Stocks Now?
The FAA completed a 2024 operational risk assessment report, and a 2025 study is underway. The agency did not respond to requests to share those reports.
Although the agency report did not identify specific at-risk airports, various projects and upgrades point to a number of airspaces and air traffic control systems.
Regional air traffic control systems singled out for attention in the past include both Northern and Southern California, Denver, Houston, North Texas and Cleveland. Detroit, Atlanta, Charlotte, Southern and Central Florida, Washington, D.C., and Las Vegas were also named. The 11 systems, which the FAA calls metroplexes, were updated with Performance Based Navigation (PBN) infrastructure to increase safety and efficiency in the airspaces in a program scheduled for completion by 2022, but the GAO reported certain projects faced delays.
The Northeast Corridor, including Boston, the New York City area, Philadelphia, and the Washington, D.C., area, were also previously highlighted as priorities, receiving some FAA upgrades. In addition, the Atlantic coast routes and Alaska's airspace were selected for upgrade programs or were noted as areas of concern in various reports. A program running from 2019-23 implemented a number of improvements along Atlantic coast routes to reduce delays and congestion between the Northeast Corridor and the Florida metroplex.
| Difficult Airspaces | |||
|---|---|---|---|
| Metroplexes Targeted For FAA Upgrades | Airports With Chronic Scheduling Issues | % flights not on time | Avg. minutes late |
| Atlanta | New York (JFK) | 61.6 | 104.33 |
| Charlotte | New York (La Guardia) | 58.1 | 102 |
| Cleveland - Detroit | Newark (EWR) | 59.6 | 97.3 |
| Denver | Orlando (MCO) | 59.4 | 92.8 |
| Houston | Denver (DEN) | 57 | 88.4 |
| Las Vegas | Chicago (MDW) | 60.2 | 74.6 |
| North Texas | |||
| Northern California | |||
| South, Central Florida | |||
| Southern California | |||
| Washington, D.C. | |||
| Source: GAO November 2023 study | Source: AirAdvisor Study 2023 | ||
| GAO-24-105254 report to congressional committees |
America's Airspace
The FAA employs around 46,000 workers, according to the latest figures from the Wall Street Journal and the FAA website. Its personnel service an average of more than 45,000 flights daily for more than 2.9 million airline passengers across 29 million miles of airspace.
"There is no other single country whose airspace is directly comparable to the United States," said Kevin Walsh, director of information technology and cybersecurity at the Government Accountability Office. The GAO is an independent, nonpartisan agency that provides auditing, research and investigative services for Congress.
A GAO report this year said FAA actions are "urgently needed" to modernize U.S. air traffic control systems.
5 Best Stocks To Buy Or Watch Now
The U.S. was one of the first countries with air traffic control systems. Because these systems have been in place for so long, any upgrades require a massive undertaking.
"We've kicked this can down the road for so long and so hard, that it probably has very little aluminum left and probably has a lot of duct tape," Walsh said.
Last September, the GAO reported that it found "several weaknesses" in how the FAA manages investments to modernize air traffic control systems. The report noted that the FAA has taken years to establish costs, schedule and performance baselines for investments that the GAO reviewed. As of May 2024, completion dates for investments in certain "especially concerning" systems remained at least six to 10 years away.
How Old Is U.S. Air Traffic Control Technology?
Some of the systems and equipment are JFK-era technology. Other air traffic control processes still run on floppy disks.
"To still have systems operational after 60 years is, on the one hand, kind of incredible and a testament to American design to have these systems still operating at an incredible level," Walsh said.
Still, the FAA has issues with maintenance due to the age of some systems. Workers with system knowledge may have retired or moved on, and there may be limited parts available for certain radars and beacons, Walsh said.
Some manufacturers may no longer be in business, contributing to supply-chain issues. Staffing and funding shortages have further complicated the modernization efforts.
The FAA said it was "unable to accommodate" an interview for this story.
Airplane Crashes, Lost Communications
The series of crashes, near misses and delays this year left the system's shortcomings on full display. U.S. aviation accidents and incidents totaled 388 this year as of June 17, according to data from the National Transportation Safety Board.
In January, an American Airlines flight collided with a Black Hawk helicopter in the crowded airspace over the Potomac River in Washington, D.C. The accident killed 67 passengers and crew members. Neither aircraft involved, a Canadian-made Bombardier CRJ700 and a Sikorsky UH-60 Black Hawk helicopter, was deemed the cause of the incident.
How To Invest In Stocks For Beginners
In April and May, Newark airport experienced multiple communications outages as controllers lost radar tracking and radio communications with planes. More than 20% of the FAA controllers at Newark walked off the job after the incident, according to United Airlines CEO Scott Kirby. United shares rallied 7% on May 2, when the airline announced it would cut its flights in and out of Newark.
Duffy in May created an emergency task force, tapping executives from Verizon, L3Harris and the FAA to implement three new telecommunications networks between New York and Philadelphia.
To make room for upgrade efforts and new runway construction, the FAA on June 6 limited the number of flights and departures at Newark to 34 per hour through Oct. 25. Arrivals and departures are limited to 28 per hour on the weekends from Sept. 1 through the end of the year.
Besides Newark, an outage at Denver International Airport in mid-May left up to 20 pilots unable to communicate with air traffic controllers for up to six minutes, according to reports. Philadelphia, Newark and Hartsfield-Jackson Atlanta International airports all reported power or air traffic control outages in May, prompting flight delays.
Newark Airport's Air Traffic Control 'Nightmare'
Communications outages like the one in Newark present a "nightmare" scenario for air traffic control personnel, said Jeff Wonser, a 30-year air traffic control veteran. Wonser served at airports and control towers in Detroit, Indianapolis, Cincinnati and Atlanta. He retired from his air traffic control career in 2021.
Wonser said the typical air traffic control shift consists of "hours of boredom complemented by moments of sheer terror" when an issue arises in the routine.
Wonser said he had three instances in his career where the radarscope "went blank," causing a loss of communications and tracking ability. In most cases, systems are in place to send messages to the cockpit in such scenarios. But the backup systems delay communications, and are "in no way an ideal situation," according to Wonser.
Such secondary systems may not have been available in New York, where airspace is extremely busy given the proximity of Newark, LaGuardia and Kennedy airports, so any outages or issues would be even more dangerous.
New FAA Air Traffic Control System Plan
Duffy's "Brand New Air Traffic Control System Plan," unveiled May 8, aims to replace the current, aging systems over three years.
The eight-page plan calls for building six state-of-the-art air traffic control centers by 2028, which will focus on co-location, hard-to-staff and needed facilities. The FAA plans to deploy 15 new air traffic control towers and 15 colocated terminal radar approach control facilities (TRACONs) by 2028 as well.
By 2028, Duffy hopes to fully replace the existing time division multiplexing (TDM) network with IP and install 4,000 high-speed network connections via fiber, satellite and wireless technology, and over 30,000 services to cover the entire U.S.
Voice and telecommunications equipment and radio and surveillance systems are slated to be replaced with modern technology. The Transportation Department's plan also calls for investments in radar sensors, a new flight management system and a data management system, among other equipment.
| Key Initiatives In Brand New Air Traffic Control System Plan, Timeline | |
|---|---|
| Description | Timeline |
| Communications | |
| Full replacement of TDM network to IP, add 4,000 new high-speed fiber network connections | 2025-2028 |
| Replace TDM radios to full voice IP, add 2500 new radios | 2025-2027 |
| Surveillance | |
| Replace cooperative beacon and non-cooperative surveillance, Replace 618 radars | 2025-2027 |
| Replace current Surface Movement Radar | 2025-2028 |
| Automation Programs | |
| Rearchitect the Traffic Flow Management System | 2025-2028 |
| Deploy additional flight strips to 89 towers | 2025-2028 |
| Facilities | |
| Build 6 new Air Traffic Control Centers, focusing on co-location, hard-to-staff and needed facilities | FY25-FY28 |
| Deploy 15 new Towers and 15 co-located TRACONs | FY25-FY28 |
| Source: FAA Brand New Air Traffic Control System Summary. Chart does not include all initiatives in plan. |
The House Transportation and Infrastructure Committee at the end of April budgeted $12.5 billion for air traffic control modernization. But the Modern Skies Coalition, an industry group of aviation experts and pilot association representatives, estimates that at least $31 billion in emergency funding should be appropriated over the next three years to implement Duffy's plan, NPR reported. That's in addition to the FAA's annual technology and facilities budget.
The FAA declined to comment on how the new air traffic control plan differs from past upgrade efforts. Current budget talks leave unclear whether Senate lawmakers join the House's support for air traffic control upgrades.
Who Will Lead The FAA Air Traffic Control Project?
Attempting to move ahead, Duffy on June 3 announced the FAA was "seeking top innovators," looking for one in particular to act as a lead developer for the air traffic control overhaul. Duffy and the FAA hosted Industry Days on June 10-12 "to encourage companies to participate and discuss the plan."
"This is a once-in-a-generation opportunity for a new, world-class air traffic system," FAA Acting Administrator Chris Rocheleau said in the release. "We need world-class innovators to step up and tell us the best way to build it."
"The FAA wants innovative ideas, new technologies and new procurement strategies," the agency wrote in the release. The integrator will manage the effort, including acquiring capabilities and deploying the new technology.
Prior Air Traffic Control Upgrade Efforts
However, upgrades aren't a new idea. Efforts in the 1980s to upgrade the nation's air traffic control network saw actual costs balloon to around $36 billion from $10 billion, according to GAO's Walsh. Unrealistic initial estimates and failure to grasp the complexity of the upgrade forced major portions of the project to be reengineered. A 2003 GAO assessment found the modernization "far from complete."
In 2003, Congress established the Next Generation Air Transport System, called NextGen — a large-scale initiative to modernize the U.S. National Airspace System.
NextGen included a number of programs and research and development efforts. Among them were replacing the existing ground-based air traffic systems at airports, adding satellite-based navigation and communication systems and improving weather forecasting systems, among other efforts.
From 2007 to 2022, the NextGen program spent at least $14 billion, possibly more. The current program expects to spend about $8 billion from 2022 through 2030, according to Walsh.
But NextGen has had mixed results in hitting milestones since 2018, according to a 2023 GAO report to congressional committees. The Covid-19 pandemic was one big reason. The GAO found that the complexity of software development, unanticipated system requirements and a host of other factors also presented challenges or delays.
Key FAA Contractors
The FAA has a long list of contractors to develop, maintain and modernize its various programs.
Leidos provides various air traffic management system services as well as operational analysis and reporting systems. The aerospace unit of Honeywell supplies a broad range of systems and technologies used at many U.S. airports.
RTX developed and maintains the Standard Terminal Automation Replacement System (STARS) at TRACON facilities. The terminal airspace management system combines automation with radar data, flight information and various levels of weather data to allow controllers to handle more traffic.
L3Harris landed a contract to deploy the FAA Telecommunications Infrastructure (FTI) network, which provides communications infrastructure and the intranet for various FAA and Defense Department facilities. Via work with L3Harris, the FAA reportedly tested Starlink this year for connectivity at certain locations. But Elon Musk's company denied intent to take over existing FAA contracts.
The FAA in 2023 awarded Verizon a $2.4 billion contract to establish, integrate and operate a more modern network infrastructure, as part of the FAA Enterprise Network Services (FENS) program.
Another FAA program, Systems Engineering and Technical Innovative Solutions (SETIS), divided a $2.3 billion, 10-year contract among 10 prime small business contractors and five large business contractors.
Large-business prime contractors for the SETIS awards include Booz Allen Hamilton, LS Technologies, Boblis, Oasis Systems and Science Applications International Corp.
Prime small-business vendors include A3 Technology, Advanced Sciences & Technologies, Atac Corp., Cavan Solutions, Concept Solutions, Crown Consulting, Enroute Computer Solutions, GMA Solutions, Mosaic ATM and Veracity Engineering.
Sixty SETIS contracts were awarded in 2023, 52 in 2024 and one so far in 2025, according to A3 Tech.
| Potential Modernization Vendors | ||
|---|---|---|
| Company Name | Ticker | FAA Involvement |
| Leidos | LDOS | Received 10-year contract to upgrade existing air traffic control system as part of NISC program |
| Parsons | PSN | Contracted to provide engineering, construction and other services |
| Amentum | AMTM | Provides engineering design services for ATC facilities |
| Iridium | IRDM | Aireon subsidiary provides space-based ADS-B tracking |
| Palantir | PLTR | At least 4 FAA contracts to provide Foundry data platform. Services include aircraft certification, advanced analytics |
| Honeywell | HON | A key player in past FAA modernization efforts. Provides ground and airborne traffic management systems. |
| Source: William Blair |
Palantir And Leidos Take Leading Roles
William Blair analyst Louie DiPalma noted that Leidos, Parsons, Amentum, Iridium and Palantir are potential vendors for Duffy's FAA air traffic control modernization.
Leidos is the prime contractor for a 10-year, $1.7 billion contract to upgrade the existing air traffic control system as part of the FAA's National Airspace System Integration Support Contract (NISC) program.
Parsons is the prime contractor for a 12-year, $1.3 billion contract to provide engineering, construction and other services for the Technical Support Services Contract (TSSC) program.
Amentum provides engineering design services for air traffic control facilities as part of a nine-year, $167 million contract.
Iridium could have some involvement in modernization efforts through its Aireon subsidiary, which provides space-based ADS-B tracking.
William Blair data indicates that Palantir has at least four contracts with the FAA to provide its Foundry data platform. They generate about $45.6 million in annual recurring revenue. One contract involves using Palantir software to manage aircraft certification. Another provides an advanced analytical platform for a range of programs. Palantir's FAA relationship began in 2021 when the company won a contract to help manage the Boeing B737 MAX safety certification process.
Palantir has won several FAA contracts during the second Trump administration, according to DiPalma. Its software could provide an operating system for broader air traffic control management.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
YOU MAY ALSO LIKE:
Join IBD Live And Learn Top Chart Reading And Trading Techniques From Pros
Learn How To Time The Market With IBD's ETF Market Strategy
IBD Digital: Unlock IBD's Premium Stock Lists, Tools And Analysis Today
How To Invest: Rules For When To Buy And Sell Stocks In Bull And Bear Markets
