Meanwhile, the General Accounting Office (GAO) added its voice to that of DOT inspector general Kenneth Mead, who has repeatedly warned that the FAA cannot sustain continued salary increases for controllers. Average pay for controllers rose from $72,000 in 1998 to $106,000 last year.

In testimony before the Senate aviation subcommittee, JayEtta Hecker, director of the GAO physical infrastructure team, told lawmakers that one of the most significant early challenges facing the FAA’s new Air Traffic Organization (ATO) will be negotiating a new contract with air traffic controllers. The current pact expires in September next year.

“Given the inextricable link between the FAA’s operating costs and its controller workforce,” she said, “striking an acceptable balance between controllers’ contract demands and controlling spiraling operating costs will be a strong determinant of the ATO’s credibility both within the FAA and across the aviation industry.”

Despite implementing many of the reforms authorized by Congress nine years ago (personnel and acquisition), the FAA achieved mixed results, the GAO said. Hecker said that previous work by the GAO found the FAA’s strategic management of human capital lacking. As an example, the GAO said the agency’s vertical, stovepiped structure has discouraged collaboration among technical experts and the users of the ATC system, and contributed to the agency’s inability to deliver new ATC systems within cost, schedule and performance goals.

 Hecker pointed out that the FAA’s budget–which has increased from $9 billion in 1998 to $14 billion in 2004–will be under pressure for the foreseeable future. Over the past 10 years the FAA has received on average approximately 80 percent of its annual funding from the Airports and Airways Trust Fund (aka the aviation trust fund), which derives its receipts from excise taxes and fees levied on airlines and passengers.

But the downturn in passenger travel has lowered receipts into the trust fund. As a result, the total amount of transportation taxes that were remitted to the trust fund declined by $2 billion (19.6 percent) between fiscal years 1999 and 2003. “Clearly, a major challenge for the FAA both now and into the future will be cost cutting and cost control,” Hecker told senators.