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Sat, Dec 24, 2011

AeroNav Defends (Or Tries To) Decision To Charge For Digital Charts

Summary Of December 13th Meeting Released

A summary of the closed-to-the-media meeting between the FAA's digital chart provider AeroNav and representatives from dozens of companies who have built businesses based on the free use of those charts has been acquired by ANN. The tone of the meeting, at least from reading the summary, seems to be that charges for electronic chart data are coming, and companies can either be on board or find another line of business.

During the meeting, the industry representatives heard presentations from several representatives of AeroNav and the FAA, and then broke into groups to discuss various aspects of the proposal to begin charging a fee for the use of the data.

Fred Anderson, director of the FAA's AeroNav Product division, said that the FAA has had legislative authority to charge for aeronautical products since the charting program was instituted in 1926. He stated the need for the division to recover $5 million it has accrued for the compilation and database management for the digital products, and pointed out that back in the days of paper charts, the price nearly doubled in a two year period between 1986 and 1988. "Based on a dollar amount, this increase was significantly greater than what we are discussing for digital products. Reports to congress showed there was no impact to aviation safety from the price increases," the summary says.

Other representatives outlined the products offered, including "Special Services" products, and the proposed pricing methodology.

To that last point, AeroNav planning manager Deborah Sullivan told the group that the division "must comply with legislation and the High Performing Organization Plan to attain fully allowable cost recovery of compilation, database management and distribution of digital aeronautical products. This ensures the sustainment of the program and that up-to-date relevant products are readily available to the public." She said that the pre-proposed pricing was based upon the assumption that 100,000 to 120,000 customers purchasing subscriptions to single digital product units (i.e., Airport/Facility Directory, IFR Enroute, US Terminal Procedures Publications and VFR Aeronautical Sectionals). She said that comparing the $150 per year cost for the digital data compares with a cost of $3,700 per year for the same information printed on paper charts.

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AeroNav Products Business Development Director Abigail Smith said that Digital Agents have up to one year to establish the net purchase requirement of $10K in digital aeronautical products to maintain their agent status and understand it is not an exclusive franchise agreement. She said the intent is to create a minimum purchase structure low enough to encourage innovation and competition to allow for as many digital agents as possible.

Discussion concerned the need for cost recovery for each individual using FAA’s AeroNav Digital Products, whether directly or indirectly from an agent. AeroNav understands that several digital distributors have sub-distributors and this article emphasized the end point of the distribution chain. Feedback during the meeting and following indicated that more consideration needs to be given to allowing subagents.

Among the suggestions to come from the discussion groups were to have the FAA create a subscription fee with discreet key codes, with companies honoring the authentication code. Key sharing is fairly straight forward to audit and control and helps address the complications of things like product returns. It was suggested that existing chart agents sell the digital keys. More than one group said that it favored a flat fee and not a tiered pricing model. Participants felt that the tiered model would not bring in the needed revenue, and that it was unfair to smaller companies.

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A second group told AeroNav that the $150 price point was too high, and said it needed assurances from the FAA that its website will not be a way that users or unauthorized distributor cannot by-pass the new processes in the FAA website. The group recommended that charts on the FAA website have a watermark “NOT for NAVIGATION”. It was also suggested that a "user" needed to be more clearly defined, and that the timeline for implementation is too short. AeroNav said it is open to looking at schedule adjustments.

Other suggestions were that the FAA impose a per-view charge on its website, that pilots who fly primarily in a specific area or region be allowed to purchase only the charts they will use. Questions were also raised about copyright and encryption oversight.

The $5 million figure is only for the first year of the program. AeroNav said in response to a question that the enabling legislation allows for price adjustments. It says it knows that the paper product sales will decline over time and digital sales will increase. As the customers shift from one format to another, adjustments would be made accordingly, and a larger portion of the fee structure may be needed in the future to realize fully allowable cost recovery in accordance with the High Performing Organization plan approved by the Office of Management and Budget.

The more users there are for aeronautical products the more the costs are shared.

AeroNav said it has no plans to develop applications that will compete with the commercial companies -- for now.



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