Contract Estimated To Be Worth $20B Over Next Two Decades

If they pull this off... does that mean we'll be able to pick up Oprah in the cockpit? Raytheon has tapped XM Satellite Holdings, Inc. to join its bid for a federal contract that could change the way people fly, by overhauling the nation's antiquated air traffic control system.

The Federal Aviation Administration is expected to award the contract as early as next week. It is estimated to be worth more than $2 billion over the next 20 years.

"This is a transformation of the air traffic control system," said FAA spokesman Paul Takemoto. "We've made quantitative leaps over the years, from flags to bonfires to radars and now to satellites."

The FAA figures it will spend around $15 billion to $22 billion by 2025 on the new satellite technology -- automatic dependent surveillance-broadcast (ADS-B) -- as well as new information management systems and data communications, according to the Boston Globe.

The agency is also planning to shell out another $14 billion to $20 billion on new avionics compatible with the new satellite technology.

"Even in today's environment, these are large contracts," said Jon B. Kutler, founder and chief executive of Admiralty Partners, a Los Angeles private equity firm specializing in aerospace and defense. "It's an attempt to bring the air traffic control system into the 21st century. Anybody who's flown this summer knows that the air traffic control system in the United States is just behind in capability."

It's worth noting Raytheon built much of the original equipment. Other companies competing for the contract include Lockheed Martin and ITT Corp; all three will employ satellite technology to allow aircraft to fly closer together, thus reducing delays... although they can't really say by how much.

 The FAA says the satellite technology will permit narrower separation... although it's not ready to say by how much, either.

"This means that air traffic control will be able to move planes through the system much faster than they can today," said Charles E. Keegan, director of future air navigation systems for Raytheon's Network Centric Systems division. "It's a real game-changer."

Raytheon's partnership with XM may give it a leg up in the bidding race. Its bid includes XMWX technology that allows pilots to track accurate weather data in the cockpit on moving displays -- enabling airlines to catch up to general aviation, where the technology has been in limited use for the past three years.

"In many cases, the pilots -- or their passengers -- could be listening to XM radio while they're using our weather systems," said XM's Roderick MacKenzie. "A single receiver can let the pilot keep tracking the weather and keep the passengers entertained."

Raytheon says its system also works on a single frequency, and it is compatible with systems currently being developed in Asia and Europe. The other competitors are proposing a dual-frequency system.

FMI: www.raytheon.com, www.xmradio.com