Air transport industry to be hit by looming US defence cuts, AIA warns

A STUDY released by the Aerospace Industries Association (AIA) has revealed that the US Federal Aviation Administration (FAA) would have to dramatically reduce its operations budget.

The AIA says the federal agency would not be able to support current levels of passenger and air cargo activity if federal spending cuts, or "sequestration," takes effect in January as scheduled.

The AIA also warned that the cuts would lead to reduced passenger and cargo activity, which would lead to job losses and other economic fallout, reported New Jersey's Aviation International News.

"Sequestration was supposed to be the sword of Damocles hanging over the Congress, forcing them to act [on reducing the federal budget deficit]," said Todd Hauptli, senior executive vice president of the American Association of Airport Executives.

"Thus far, they haven't acted. These cuts will have significant impact on operations within the FAA. Travellers are going to feel this. If this is allowed to go into effect in January, it will manifest itself in longer lines at the airport," Mr Hauptli said recently at a meeting Washington, DC, organised by the AIA to discuss the study.

Unless Congress acts to reverse its own legislation, sequestration will force automatic federal spending cuts of US$1.2 trillion over the next decade, split between defence and non-defence outlays. The 2011 Budget Control Act triggered the cuts after a bipartisan Joint Select Committee on Deficit Reduction-dubbed the "super committee" failed to reach agreement on reducing the federal deficit last November.

The AIA-commissioned study by Econsult postulates that sequestration would reduce the FAA's annual appropriation by $1 billion each year for nine years, forcing the agency to cut mainly from its operations budget for air traffic control services (ATC) and salaries, the largest account. The study assumes an across-the-board 8.5 per cent reduction of the operations, facilities and equipment, research, engineering and development and Next Generation Air Transportation System (NextGen) line items.