TEXT OF STORY

KAI RYSSDAL: Lockheed Martin and Boeing came to a mutually beneficial agreement this week.

The defense contractor and the airplane maker announced they'll be working on a new air traffic control system. It should help the FAA cut down on accidents. And it'll let more planes be in the air at the same time.

That's a nice perk if you're in the aviation business. The number of flights in this country is expected to triple in the next 20 years. And that has lit a fire under a long-planned, multibillion-dollar overhaul of the air traffic control system.

We sent Kim Green to check it out.

---

KIM GREEN: The last big push to modernize air traffic control happened 50 years ago. After a mid-air collision in 1956, the federal government spent millions on new radar equipment to cover the vast areas between busy airports.

Fifty years later, controllers still rely on that same technology to separate airplanes. And it works. But according to Paul Craig, chair of the aerospace department at Middle Tennessee State University, it's time for another overhaul.

PAUL CRAIG: Same reason why your office needs a new computer and not a Commodore 64.

Craig says like those old computers, radar is slow. It updates an airplane's location every 5 to 12 seconds. It's expensive to maintain. And it has blind spots, like over the Gulf of Mexico and in mountainous terrain.

The FAA's new "next generation" system will gradually replace radar with a new technology called ADS-B. Airplanes' GPS's will transmit their position to controllers and straight to other airplanes pretty much instantaneously. Ground-based stations will also send real-time weather radar to aircraft.

Paul Craig says ADS-B will beam the 21st century into the cockpit.

CRAIG: The new type of equipment gives us electronic eyes. We can see through the clouds. It's like when you watch your television weather broadcast. Picture that radar, and on top of that, overlay that pictures of what an air traffic controller would see in real-time in the cockpit. And this helps you build that mental image because the picture's in front of you.

Lots of larger aircraft already have GPS, weather radar, and TCAS, which allows planes to see each other on a screen. But ADS-B assembles all this information into one package, and sends it to everybody, from jumbo jets to crop dusters.

Although few airplanes carry the required avionics yet, a test program of the system in Alaska showed a 40 percent drop in accidents when pilots installed the new equipment.

VOLKER DEMPEL: I think it's going to be a lot safer.

Volker Dempel is a corporate jet pilot. He says arming pilots with more information about what's around them is a huge plus. But he's also always thinking about the bottom line.

DEMPEL: We just took off out of New Jersey the other day, and it was . . . climbing through the overcast, we could see lights everywhere. Airplanes just everywhere. So it's getting really congested up in the Northeast. We have extreme delays in the Northeast especially.

Those delays cost big money in fuel burn and other operating costs. And they're only going to get worse, unless the FAA can figure out some way to increase capacity in the nation's busiest airspace.

FAA Administrator Marion Blakey hopes ADS-B will do that.

MARION BLAKEY: In the long run, because of the precision of exactly where each aircraft is, you'll also find that you can reduce separation standards. And it will make a world of difference to be able to bring aircraft somewhat closer together and still be very, very safe.

Over the next 10 to 20 years, the FAA will gradually fill in ADS-B infrastructure from coast to coast. The cost could top $20 billion, and there's a debate raging about how to pay for it.

Right now, the FAA's trust fund is paid for by airline ticket fees and a fuel tax on private aircraft. That funding structure expires in 2007, and Marion Blakey says it needs to change.

BLAKEY: Because we believe that we should be moving to a cost-based system that ties the cost of providing the services to the revenue that's coming in.

That means funding the system with direct fees for air traffic control services. More like the privatized systems in Europe and Canada.

Retired air traffic controller Steve Baird is all for the new-and-improved system, but he doesn't agree it should be run like a business.

STEVE BAIRD: It's not a business. This is a service we provide to the flying public. And if it takes X amount of people to do it properly then that's what we should have in there. You know, I don't think it should be based on the dollar.

Another potential concern is affordability for pilots of private aircraft. ADS-B equipment could cost as much as $18,000 to install. And many small operators may have a hard time paying.

Sometime next Fall, the FAA will likely announce what equipment aircraft will be required to carry and when that mandate will begin.

I'm Kim Green for Marketplace.