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: Quote, Profile, Research, Stock Buzz) 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."