How to finance ADS-B equipment by the FAA’s 2020 deadline
Upgrade to ASD-B by 2020
- Beginning Jan. 1, 2020, the FAA will require ASD-B Out on most aircraft.
- ASD-B equipment purchase and installation starts at about $4,000.
- Avionics loan programs can be used to buy ASD-B equipment.
- Some ASD-B manufacturers offer rebates.
- Cash-out refinances or HELOCs are alternative ways to fund an ASD-B purchase.
Are you ready to fly – in 2020? Beginning Jan. 1, 2020, the Federal Aviation Administration (FAA) will require all aircraft owners to equip their aircraft with ADS-B equipment in order to fly over all class A airspace, as well as portions of class B, C and E airspace.
What is ADS-B?
ADS-B stands for Automatic Dependent Surveillance-Broadcast. Unlike radar, which is ground-based, ADS-B uses GPS satellites to broadcast information on an aircraft, including its location, altitude and speed. ADS-B is the major component of the FAA’s new transportation system, called the Next Generation Air Transportation System, colloquially known as NextGen.
Though some are banking on the FAA extending the Jan. 1, 2020 deadline, with some skeptics worried that many aircraft owners will be unable to comply with the deadline, the FAA has explicitly stated that it will not extend the deadline.
There are two components to an ADS-B system:
- ADS-B Out. ADS-B Out transmits information on an aircraft’s speed, altitude and location to both other aircraft and aircraft controllers.
- ADS-B In. ADS-B In allows a pilot to see the position of other aircraft, as well as other information such as surrounding terrain features.
The FAA will only require ADS-B Out in any aircraft that flies in airspace currently requiring a transponder, which includes all class A airspace and portions of class B, C and E airspace. While not required, ADS-B In gives pilots access to the same traffic data available to ground controllers, increasing pilots’ safety and situational awareness.
ADS-B Out cost
ADS-B technology has the potential to increase safety in heavily trafficked skies. While ADS-B equipment has become more affordable over the years, it is still a significant investment. Though the exact cost varies depending on the equipment manufacturer and the type of airplane in which the equipment is being installed, pilots are looking at a minimum of about $4,000 to comply with the new requirement. For many, the costs will be much higher.
ADS-B financing solutions
For pilots who need to consider financing options to comply with the FAA’s ADS-B guidelines, here are some options for you.
- Avionics loans. Many lenders offer financing for avionics upgrades. Some jurisdictions even offer region-specific loans. For example, the Alaska Capstone Avionics Loan Program finances up to 80 percent of the cost of avionics upgrades, including ADS-B purchases.
- Manufacturer rebates. Avionics manufacturers that produce ADS-B equipment may offer rebates. It’s impossible to predict when rebates would be available, as they fluctuate with various marketing campaigns.
- Refinance. Refinancing your airplane loan could lower your monthly payment, and you could put the savings in an account to use toward the purchase ADS-B equipment. Or, your lender may allow you to take out a loan on more than the amount you still owe on the aircraft, taking out the rest as cash to pay for the equipment. This is called a cash-out refinance.
- HELOC. A home equity line of credit (HELOC) could be used to purchase ADS-B equipment. HELOCs are revolving lines of credit, similar to credit cards, that are backed by the equity in your home. Because your home equity serves as collateral, you can secure a lower interest rate. However, if you default on the loan, your house is at risk.