Tuesday, July 14, 2009

Details, Details, Details ...

The National Aeronautical Charting Office recently announced planned changes to their business model that will affect smaller retailers who sell charts to pilots. The new plan requires yearly sales of US$5000 for a retailer to be an authorized chart agent and if smaller agents can't meet the new projected annual sales figure by October 1, 2009, they'll have to buy their charts from a bigger authorized chart agent. AOPA, for their part, says that they were involved in this decision and claims that we shouldn't worry because pilots will continue to be able to buy charts. Some say that AOPA is more concerned with their Jet-A burning contingent than the average private pilot or flight instructor, so let's investigate some of the history of aeronautical charting, what's behind the change in chart distribution, and why I think these changes may be a greater concern for GA pilots than AOPA and others are leading us to believe.

Charting History
According to NACO's web site, the US charting process had its start in the early 1800s, surveying and producing charts for marine navigation. These early charts were available to governmental agencies for free and to the public for a nominal cost, which helped recoup some of the production costs. The number of charts produced gradually increased from 10,000 or so per year in the mid-1800s to 330,000 in 1916, which was made possible by the adoption of copper and then aluminum printing plates. For the fiscal year 2007, over 10 million charts were produced.

The first aeronautical charts were produced by the Aeronautical Branch of the Department of Commerce in 1926 with the stated goal of promoting air commerce. The name was later changed to the Bureau of Air Commerce, then the Civil Aeronautics Administration, and finally to the Federal Aviation Administration that we all know and love. The first series of sectional charts were completed in 1937, they were smaller than today's VFR sectionals, and sold for 40 cents - equivalent to US$5.27 in today's dollars. Today's sectionals sell for just under US$10.

Who's Charts Are They Anyway?
Here are some fascinating facts about NACO products: Members of the US Congress are entitled to 100 free chart products a year. I wonder if they have to pay shipping or if we taxpayers foot the bill for that, too? The main consumers for the NACO chart products are, in order of greatest to least percentage:

Department of Defense - 50.7%
Authorized Chart Agent Sales to Public - 27.9%
NACO Direct Sales to the Public - 11.5%
FAA - 6.9%
Other Government Agencies - 3.0%

Who Pays?

NACO does not allow their charts to be sold below the published retail prices, with some exceptions. You and I pay full price, but the DoD (the largest consumer of chart products) receives a weighted-average discount of 86% off retail. Authorized chart agents get a 40% discount and the FAA gets all their charts for free.

The New Course

There are currently around 2,000 authorized NACO aeronautical chart agents and about 500 nautical chart agents. That number will certainly go down under the new chart retailer policy because $5000 worth of chart sales per year is a lot of charts - about 500 sectionals or about 1000 terminal area charts or 1000 terminal procedures books or 1000 low-altitude en route IFR charts or 1000 Airport/Facility Directories, or some combination of the above.

You can read about forces driving this change in this whitepaper but let me save you some time: It's about money. You see, NACO wants to become an HPO (High-Performing Organization). Translation? They want to cut their operational funding by 20 to 28% while increasing the quality of their products and services. This reminds me of an advertising agency I read about years ago in Communication Arts that had an elaborate plaque on the wall of their reception area that read:

Schedule. Pick two.

I guess it all depends on how you define "performance." Still, the whitepaper does contain some laudable goals, namely to move from expensive negative-to-plate printing process to a computer-to-plate process that should reduce production costs. And there are some very reasonable organizational changes as well as some very intelligent changes to charting design processes and procedures.

Known Charting
In our current culture of perjury and PR bafflegab it can be hard to read between the lines, but I'll go out on a limb here: It seems clear that fewer chart retailers means that pilots will have fewer options for purchasing charts, especially on short notice. The best option seems to be to have a subscription with one of the big on-line ChartMart retailers. It's great to have your charts shipped to you in advance, but what about when you lose a chart or need to buy charts for an area that you are just visiting? Well you may, could - oh let's just get it over with - you're screwed.

On the bright side, if the FAA can't make charts readily available perhaps it could be argued that even without current charts a pilot could still claim compliance under the wording of 14 CFR 91.103 "Preflight Action: Each pilot in command shall, before beginning a flight, become familiar with all available information concerning that flight." If charts aren't available locally, they aren't available and perhaps that implies that having current charts will become a concept similar to "known icing conditions."

Digital Charts
Another option is to use electronic charts (a topic near and dear to my heart lately). Many of the products I've mentioned in recent posts provide real value to the average pilot in a way that NACO seems unable or unwilling to undertake. Many of those products are available at no cost, unless you consider the time it takes to download the data, yet the NACO white paper has some interesting things to say about possible goals for the digital charting products (emphasis mine).
If NACO were to expand its digital product offering, without copyright protection, to meet changing technology and customer needs, it is possible that NACO would experience a decline in retained receipts as revenue from the sale of digital products may not compensate NACO for the decrease in the sale of paper products. If NACO is not able to secure copyright protection, other strategies for maintaining this revenue stream will have to be examined. If NACO is not able to maintain this revenue stream, it will experience a decrease in retained receipts and become more dependent on operations funding.

Moving NACO charts from the public domain to copyright status, if that's what's being implied, would really stifle independent and cost-effective EFB development. This is the most vague part of the white paper, which is fascinating because digital charting is the wave of the future. If NACO is planning on copywriting their products, I'd like to see some proposals on how licensing fees would be handled.

Skeptical Conclusion
The NACO white paper has precious little to say about how a big agent will sell to smaller retailers who cannot meet the US$5000 per year minimum sales, but still want to offer charts. It doesn't take much imagination to see the inefficiencies in such a system, what with the additional time and cost of shipping charts from the big agent to the small agent. It's not at all clear how or even if this will work. Without some sort of oversight, it's unclear what the small retailer might be charged by the big agent (who is getting charts at a 40% discount off retail price).

So the next time you need a replacement chart or a chart on short notice, be forewarned that you will probably be out of luck. And that is what the new, High Performing Organization known as NACO will be offering us. AOPA doesn't seem to have any problem with arrangement, but as with all grand schemes, the devil is in the details.


Anonymous said...

This has become an issue at the company I fly for. Our flying often causes us to leave for a new destination on short notice. Recently, we were in Tucson and unable to get the IFR charts we needed. Thankfully it was VFR.

We were told that there is an additional restriction that limits returned charts to no more than 20%. So what happens is no one is willing to order charts when it is close to expiration because they don't want to get stuck with excess inventory.

So now my company is looking at EFB options.

p.s. I really enjoy your blog

PDFPlates.com said...

As an "unauthorized third party source", looks like there may be storms on the horizon. The lack of availability at my podunk airport was the main driver for our site. It will be interesting to see how the NACO website evolves if they do pursue copyright. I wonder if they'll also begin charging for per piece download? That model is complex to say the least. What is a single approach plate worth? $0.01? $0.001? I predict that they would see a dramatic drop off in approach downloads if they were to do this. It is cumbersome enough to download one by one...and if you have to put a quarter in your PC every time you want a plate, people will be driven away.

Ron said...

I think you hit the crux of the matter when you state that the government's goal used to be "promotion of air commerce". Their goal today is effectively the exact opposite. And it goes from there.