ATM Modernization, Business & GA, Commercial, Military

Executive of the Year

By David Jensen | October 1, 1999

James L. Pierce, chairman and CEO of ARINC Inc. and current chairman of RTCA, is an unassuming man, considering his outstanding career and two very important titles. One would be mislead, however, to describe him as gray or lacking passion.

For example, a colleague and I discovered Pierce’s passion for the dynamic world of aviation communications during a visit some six months ago to ARINC’s headquarters in Annapolis, Md. Our interruption of his busy schedule was to be brief, little more than an introduction and exchange of pleasantries in his corner office. He was to meet us, then honor an appointment with a fellow company official.

But it took no more than a casual remark about voice and data link communications to uncap a much-animated, and prolonged, discussion. Before we knew it, Pierce had ushered us into a nearby room, where visual aids were available. With hands gesturing then quickly scrawling charts and schematics on a blackboard, Pierce, like an exuberant college professor, gave my colleague and me a comprehensive and, I might add, fascinating tour through the arcanum of VHF data link and related topics. We learned a lot and joined in Pierce’s enthusiasm. The company official, unfortunately, was left waiting.

However, Pierce can be forgiven for his distraction, for it is this enthusiasm that has helped propel ARINC into a $330 million (1998 revenues) company that enjoys an impressive 30% growth this year. Growth can be attributed to expansion into both new businesses and new international markets. Expansion in data communications has centered around the company’s GLOBALink service, which uses VHF and HF, satellites, ground stations, and airborne equipment to link aircraft with air traffic services and airline operations centers. ARINC now provides services in 140 countries. It has some 2,800 employees and now is hiring more.

As for his leadership at RTCA, he completed his two-year stint as chairman and was asked to serve a third year, which he will complete in May 2000.

Pierce has ideal experience for his two titles. He earned his Bachelor of Science degree from the U.S. Naval Academy and a Masters of Business degree from the Wharton School of the University of Pennsylvania. He served seven years in the U.S. Air Force and another 24 years with the Delaware Air National Guard (DANG), where he flew C-130s. He retired a brigadier general and was a senior officer in the DANG. Pierce held various positions with Hughes Aircraft, IBM, Colwyn Industries, Titan Industries, and General Electric Co. before becoming ARINC’s president and chief operating officer.

Now, as chairman and CEO, he has lead an impressive expansion effort at ARINC while also leading the very vital federal advisory organization, RTCA. It was these achievements and responsibilities that prompted the editors of Avionics Magazine to recognize Jim Pierce as 1999 Executive of the Year.

To accompany this honor, Avionics Magazine sought Pierce’s views of ARINC, RTCA, and the aerospace industry in general. During another visit to his corner office in Annapolis, here is what he had to say.

Avionics Magazine: We’ve heard you say that, with CNS (communication, navigation, surveillance), the letters should read big "C," little "NS." Would you elaborate on that statement?

Pierce: I believe that communications is really going to make the difference in the airspace modernization effort. Why is that true? For a couple of reasons.

First, if you look at what we are trying to accomplish in airspace modernization, we are trying to get more airplanes safely through the system, both en route and in the terminal area. It’s a question of how many aircraft can a controller handle—communications is one of the real limiting factors.

If the controllers get more airplanes than they can handle, they start spreading out the length of trail. In other words, during routine en route operations, we may see aircraft on average about seven miles in trail. Just a sequence of calls involving frequency changes, happening over and over again, accounts for 40% to 50% of the communication in our air traffic system.

Now, suppose all a controller had to do was press a button that showed the new frequency, and the airplane acknowledged, and you didn’t have to make any voice calls. It makes an enormous difference for the productivity of controllers.

The FAA in several simulations, where they took actual traffic and simulated the use of data link, have demonstrated as much as 60% increase in productivity—in others words the number of airplanes a controller can handle. Now that number may not be wholly accurate, but suppose it is only half of that. It’s still a big difference.

In fact, there are a number of elements in the government-industry Free Flight effort. Use of data link for routine controller-pilot communications is the first thing that has a chance of really improving aviation productivity.

Avionics Magazine: Regarding Free Flight, do you believe it can give the industry a sure return on investment?

Pierce: Oh yes. First of all, what is Free Flight? Free Flight is more of a concept than an end state. It is collaborative air traffic management.

But let’s be more specific: Do we need to modernize our aviation system? Clearly, we do; air traffic congestion is definitely increasing. United [Airlines] is saying the current congestion is costing them $20 million a month. That’s just for one airline.

What are the benefits of modernization? Again, looking at communications, FAA analyses have estimated that if they had data link communications, the savings in en route and in terminal area together to the users would be about $500 million a year. That’s a pretty good return on investment.

Avionics Magazine: What do you think will be the next major change in communication?

Pierce: Well, the big thing, obviously, as I mentioned, is the use of data link for routine air traffic control communications. When ARINC put in our data system 20 years ago, we saw voice traffic decline 95%. At that time, we were handling 500,000 [voice] messages a month, using about 500 radio operators. Right after we put in data link, those routine voice communications started to go down; we now handle about 25,000 messages a month by voice. In the meantime, we now handle about 15 million digital communications a month. I think that’s a pretty telling figure.

Avionics Magazine: What about one or two decades from now?

Pierce: Looking 10 to 15 years from now, we’ll be using the communications systems that we are planning for today. We’ll be using VDL Mode 2 for data link, and by that time we will have implemented digital voice communications, at least in the United States.

Avionics Magazine: Do you see satellites playing a dominant role in aviation communications?

Pierce: In oceanic and remote airspace, the answer is clearly, yes. Satellite communications are being used for air traffic control over the Pacific today and that will extend across the globe in coming years.

The use of satellite communications in congested en route and terminal airspace is a possibility. It’s a matter of economics—what’s the most efficient way to get the job done that satisfies all the safety requirements? I think satcom as the prime media for domestic ATC communications is at least 20 years away.

Here’s an important point: aviation communications alone are not enough to justify a satellite system. And you have very stringent safety communications that are required for the aviation industry both for air traffic control and for AOC [aeronautical operational control] requirements. So, that means that any satellite system in that area will have to meet both the safety requirements and will have to serve other customers, as well. That’s the reason it’s going to take some time to evolve.

Avionics Magazine: Regarding digital voice communications, when do you see that in use?

Pierce: It is probably about five years away, maybe a little longer. We really need it; the voice communication in the high altitude is getting jammed.

The United States has decided to go to the digital voice solution rather than go to 8.33 spacing that the Europeans are adopting, I think that’s the right decision. In the FAA’s proposed digital voice network, you essentially get four to one; you get four channels on the TDMA [time division multiple access] on digital voice, instead of three on the 8.33 [split]. The reason the U.S. elected to go that way is because it establishes fully digital communications as the basis for future, aviation communications.

Avionics Magazine: And we’re about a year away for VDL Mode 2?

Pierce: Yes. We’re going to start installing our VDL Mode 2 network year. We’re further away from that for ATC, pilot-to-controller data link communications. For that, we have to go through some tests, to get the certification done in Miami, so we’re talking, for ATC purposes, in the 2003 time frame.

Avionics Magazine: Tell us about some of RTCA’s activities, for example, streamlining the certification process.

Pierce: The problem of certification was addressed in some detail in RTCA’s annual seminar in 1997. RTCA was asked by the [FAA] Administrator to put together a task force on certification. That task force was lead by Tony Broderick and Ed Stimpson. They did a very good job and provided some recommendations that have been presented to the FAA.

It has been decided that the next step is to establish a standing committee to determine how to define those recommendations and to look after their implementation. We are currently getting those committees organized.

In another area, the RTCA committee that oversees the implementation of Free Flight—the Free Flight Steering Committee—is focusing on Free Flight Phase I. The planning is moving along well. We’re encountering some unforeseen difficulties in implementation and are working through the issues.

In addition, there are individual select committees that are doing a wonderful job day in and day out, developing performance standards. Overall, RTCA is a huge bargain for this country and for the FAA. RTCA with its small, hard working staff, probably provides through the voluntary support of its members in the neighborhood of $5 million of free labor. More important, it provides a way to achieve aviation community consensus.

Of course, RTCA exists under the Federal Advisory Act and legally brings government and industry together to jointly discuss issues in a way that benefits the whole industry. And you need that today because of the size of investments in modernization we’re talking about both by the FAA and users. You can’t have investments on systems that are incompatible, nor can you have a big timing difference on investment, because if you do, everybody loses.

Avionics Magazine: What about the activities within ARINC?

Pierce: We’re proud to say we’re growing very rapidly. Historically, ARINC has grown about 8% to 10% a year. We took a jump up to 15% last year and then 30% this year, and we foresee continued strong growth in the next few years.

Essentially, all of our businesses are contributing to that growth. For example, we are a leading player in helping the government deal with aging airframes and parts obsolescence. Last year, we were a winner in the Rapid Response to Critical Requirements competitive procurement to address these issues. In less than a year, we’ve booked $300 million worth of business against this contract thus far.

In this case, the government, like the airlines, has really reduced its engineering staff, so it looked for somebody to provide an interface between the manufacturing capability and the need for the parts. Think of the KC-135. It’s a [Boeing] 707 airframe, made in the ‘50s and ‘60s. The [U.S.] Air Force is going to fly that aircraft until 2040, so there are a lot of issues on part obsolescence that we are working with the Air Force to resolve.

Avionics Magazine: What about other ARINC activities?

Pierce: We’ve entered the business of integrating avionics into airplanes, both militarily and commercially. That business is going very well for us. We’ll do better than $40 million this year in avionics integration. We’ve modified the 747-200 for the military and hold the STCs. We’ve put GPS in, modified the communication system, and made changes to the FMS [flight management system]. And we’re just starting on a contract to modify some of the airplanes used in countering the drug trade.

We started an airport business three years ago. That business did $28 million last year and will probably do $45 [million] this year. We do three things: we provide the passenger processing equipment in an airport, we provide the communications service around the airport, and we integrate numerous systems at airports. We are the systems integrator for the new San Francisco International terminal, for the Lester B. Pearson Airport in Toronto, for Terminal 4 at JFK. We’re the master system integrator for the new airport at Inchon [South Korea]. These are big systems. At San Francisco, 300 pallets of equipment and 3,000 addressable devices are going into that airport.

We’re also in e-commerce for cargo aviation. We provide the electronic connectivity between the airlines and the freight forwarders and others.

And while we’ve already talked about our air-ground business, it’s important to note that in the last few years, we’ve expanded from being essentially a North American service provider. Today we have about 65 [VHF ground] stations in Europe and will put in well over 100. We installed 25 stations in eastern China and we just received an order for some 50 more.

We’ve upgraded our satellite communications, including the Aero-I service, in addition to the basic [Aero-H] Inmarsat coverage.

And what I haven’t mentioned yet is we are entering the business of providing broadcast television service in the passenger area of airplanes, including narrowbody aircraft, where they are really getting nothing [in the form of in-flight entertainment] now.

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