Which transponder mode provides automatic altitude reporting capability?

The correct response highlights Mode C as the transponder mode that provides automatic altitude reporting capability. Mode C transponders transmit the aircraft's identification along with its altitude information. This altitude reporting is crucial for air traffic control and helps in maintaining safe separation between aircraft.

Mode C provides what is known as "altitude encoding," which allows air traffic controllers to receive and interpret data concerning the altitude of an aircraft in a standardized manner. This capability is essential for ensuring that air traffic operates safely, especially in busy airspace.

Regarding the other modes, while Mode A transmits aircraft identification only and does not include altitude data, Mode S has advanced features, including some altitude reporting capabilities, but it is not automatically reliant on the mode like Mode C. Mode B is less commonly referenced in current usage and is not widely implemented in modern aviation. Therefore, Mode C is distinctly recognized for its automatic altitude reporting function.