Air Traffic Control Modernization Faces Funding Gap

A midair collision near Ronald Reagan Washington National Airport in January 2025 killed 67 people, putting safety front and center. An NTSB final board meeting in January concluded that systemic failures in airspace design, safety oversight and risk management by the FAA and U.S. Army contributed to the collision. The NTSB said the FAA had failed to act adequately on years of data showing dangerous proximity between helicopters and commercial aircraft near the airport.

Bedford has been central to the administration's response. He was confirmed as FAA administrator in July 2025 and has worked closely with Transportation Secretary Sean Duffy to implement sweeping organizational changes. The two jointly announced the largest reorganization in FAA history, creating new offices focused on safety, air traffic modernization, and advanced technology.

The administration is also betting on artificial intelligence. The FAA awarded Air Space Intelligence a 12-year, $875 million contract in June to develop new air traffic management software, including the Strategic Management of Airspace, Routes, and Trajectories system, known as SMART. The FAA began deploying the AI-powered tool in the Washington area in September to help manage congestion and delays. Duffy said the technologies will "fundamentally reshape how the airspace is managed." Airlines initially raised concerns about how SMART would be implemented but became more receptive after the FAA clarified that the initial deployment would not change existing air traffic procedures.

Broader Context

Congress and the aviation industry are already debating how much additional funding the modernization effort will require. A coalition of more than 50 aviation organizations, including the Aircraft Owners and Pilots Association, called for an additional $20 billion in July to close what the Modern Skies Coalition described as the BNATCS funding gap. The coalition warned that partial funding could result in stranded investments, higher long-term costs and continued reliance on obsolete systems.

Rep. Steve Womack (R-AR), the Republican chair of the subcommittee, stressed that Congress should avoid the problems that plagued previous modernization efforts. "NextGen fell short, as we all know," Womack said in his prepared remarks. "This effort cannot fail."

Transportation Secretary Sean Duffy has sought billions of dollars in additional funding for air traffic control modernization. Reporting in April said Duffy was seeking between $6 billion and $10 billion for broader integration of artificial intelligence into air traffic management, beyond the funding Congress had already provided. Earlier reporting also said Duffy had requested at least $7 billion more beyond the administration's existing budget topline.

The $16 billion Phase One estimate demonstrates that the $12.5 billion reconciliation appropriation is not sufficient by itself to cover the entire first phase of the overhaul.

The hearing also highlighted controller hiring and retention. The FAA's current workforce plan calls for hiring at least 2,200 new air traffic controllers in fiscal 2026, 2,300 in fiscal 2027 and 2,400 in fiscal 2028.

The FAA also reduced its overall full-staffing target. According to the 2026-2028 Air Traffic Controller Workforce Plan, the agency now aims for 12,563 certified professional controllers, down from a previous target of 14,633. The FAA said the new target reflects forecast demand and findings from a Transportation Research Board review of staffing models. The National Air Traffic Controllers Association (NATCA) said it was not involved in developing the new workforce plan and was reviewing it after its release.

Controllers themselves have also raised concerns. A September 4 investigation reported that hundreds of current and former controllers had signed a letter criticizing the FAA's workforce policies and raising concerns about staffing, scheduling and safety. One controller from the New York Center who retired in August said he left after more than two decades amid concerns about deteriorating working conditions.

The pay issue compounds the dispute. Congress authorized a 3.8% pay increase for air traffic controllers and appropriated $140 million for the increase in legislation President Trump signed in April. Controllers have received the 1% governmentwide federal employee raise, while the remaining 2.8% has not been implemented. Bedford has linked implementation of the remaining increase to improvements in workforce utilization and operational efficiency. Sens. Tammy Duckworth (D-IL) and Dick Durbin (D-IL) wrote to Bedford in September criticizing the decision and urging the FAA to provide the full increase.

The statute conditions the additional compensation on the FAA administrator determining that the agency has implemented improvements in controller workforce utilization or operational efficiencies, but it does not prescribe specific scheduling or staffing changes that must be made before that determination.

Secretary Duffy has emphasized that the SMART tool will be introduced gradually and will not replace human controllers. The system is intended to provide traffic managers with predictive information and alternative routes while leaving operational decisions with humans.

Chris Sununu, CEO of Airlines for America, praised the SMART system and the leadership of Duffy and Bedford. Airlines initially raised concerns about the system's implementation but became more supportive after receiving assurances about the limited scope of its initial rollout.

SMART is not expected to replace human air traffic controllers. Duffy has separately sought between $6 billion and $10 billion from Congress for broader integration of artificial intelligence into air traffic management.

The Bottom Line

The House Appropriations Committee completed its work on the fiscal 2027 Transportation, Housing and Urban Development, and Related Agencies Appropriations bill in June, approving the measure 34-27. The committee also reported all 12 fiscal 2027 appropriations bills.

The administration's goal of completing the new ATC system by the end of 2028, including replacing copper lines with fiber, upgrading communications systems and deploying new digital voice switches, depends on sustained congressional funding. GAO has warned that the FAA has not yet developed a lifecycle cost estimate or integrated master schedule for the broader modernization effort, creating risks as the agency moves to accelerate thousands of individual projects.

Rep. Tom Cole (R-OK), the full committee chairman, stated that the committee's priorities for the FAA include safety, security, and efficiency. Cole said the committee continues to push for full-year funding for the FAA and the rest of the Department of Transportation, with safety as its top priority.

Congress provided $12.5 billion through the budget reconciliation law for air traffic control modernization, while Bedford told lawmakers at the Sept. 15 hearing that Phase One of the overhaul is expected to cost $16 billion. The funding debate comes as the FAA continues responding to longstanding modernization and staffing challenges and the January 2025 midair collision near Ronald Reagan Washington National Airport that killed 67 people.

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