Transponder problems with ATC COMS - Video
I have flown with a couple of Garmin 327's and now have two 330's. The
pressure altitude readout on the transponder comes (as I recall) from the
blind encoder. It is obviously not connected to the altimeter setting.
So, the encoder could be culprit for the mis reported altitude. I suppose
there could be a difference in altitudes of 700 feet if the day was very
non-standard (such as very cold, high pressure, etc).
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