UPDATE 2-ITT gets US contract to revamp air traffic control

(Recasts, adds quotes, background)

By John Crawley

WASHINGTON, Aug 30 (Reuters) - The U.S. government chose ITT Corp (ITT.N) on Thursday to take the first step toward a new satellite-based air traffic control system aimed at allowing more flights and reducing chronic delays.

The Federal Aviation Administration said the $1.8 billion contract over two decades includes building ground stations to shift from a radar-based system to one that relies on Global Positioning System (GPS) satellites.

The FAA hopes to reveal the position of aircraft more accurately and more frequently than controllers can determine now using radar.

The agency said it will award other navigation contracts in future years, hoping to have all the new air traffic pieces in place by 2025 at a cost of $20 billion.

"This signals a new era of air traffic control," Bobby Sturgell, the FAA's deputy administrator, said in a conference call with reporters.

Airlines, which welcomed the contract, have long criticized the air traffic system as an impediment to growth and a major reason for record flight delays this summer. Nearly a third of all flights were late in June, government figures show.

Sturgell said the change "will attack the delay problem head on."

But U.S. air traffic controllers called for more controllers and said the Automatic Dependent Surveillance - Broadcast (ADS-B) system that ITT will begin is no remedy.

"This is not going to fix delays," said Doug Church, a spokesman for the National Air Traffic Controllers Association. He said the agency is underestimating the need for manpower even if a satellite-based system increases efficiency.

ITT beat Lockheed Martin Corp (LMT.N) and Raytheon Co. (RTN.N) for the contract under which ITT will also operate and maintain the ground stations.

Shares of ITT rose nearly 7 percent in extended trading before drifting back to their $64.59 close on the New York Stock Exchange.

GPS MORE PRECISE

Under ADS-B, GPS satellites would transmit pinpoint location data to jetliners which would then relay the information to controllers. New cockpit displays would also allow pilots to see other planes and use text messaging to communicate with controllers.

The technology could allow many commercial planes to fly closer together and let controllers handle more flights. Airlines also hope to save fuel.

The first phase of the overhaul is $207 million over three years to build ground stations at sites including Louisville, Kentucky; Philadelphia; Juneau, Alaska; and in the Gulf Coast region, where ADS-B structures will be built on oil platforms.

But questions abound about the project's future. Measurable benefits of ADS-B could be more than a decade away and some aviation experts say the ultimate payoff may not be possible unless big airports build new runways and gate facilities.

There will also be billions of dollars in costs for airlines to outfit their planes with the equipment needed to use the new navigation system.