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The Case for Privatizing Air-Traffic Control

Washington, D.C., June 21, 2017 | Justin Harclerode (202) 225-9446 | comments
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The Case for Privatizing Air-Traffic Control 
The argument for splitting the FAA is based on how Canada and others 
have made flying better for travelers after removing government

By Scott McCartney 
June 21, 2017

Politics aside, travelers really should want—demand—a privatized air-traffic control services provider. Many other countries have shown that it just plain works better than having a government bureaucracy directing airplanes.

Air-traffic control, known as ATC, depends on technology. Better tools can improve safety, shorten flights, get planes out of turbulence faster and reduce delays. And privatized ATC providers in Canada, the U.K., Australia and elsewhere have shown they can modernize and continuously upgrade faster than the Federal Aviation Administration.    

On some key functions, the FAA is more than a decade behind.

The Transportation Department’s inspector general, Calvin Scovel, told Congress in May that while the FAA is doing better with modernization, two decades of reform efforts have still fallen short.

FAA Administrator Michael Huerta, an Obama appointee, and other senior officials in the trenches on air-traffic control say the FAA just isn’t structured to be a high-tech developer and operator. They argue splitting the agency would let it focus on safety regulation of airlines and air-traffic controllers instead of the potentially conflicting role of being the watchdog over its own controllers. The controllers’ union also supports the idea after seeing the technology other countries are using and facing the threat of furlough in past budget showdowns.

Privatized ATC organizations say their big advantage, in addition to steady funding and borrowing, is that they can continuously take on small projects that make incremental improvements. When you’re a government agency begging for appropriations, you pitch big, attention-getting programs. But big projects are exponentially more complex and prone to delay.

Take London’s Heathrow Airport, one of the busiest in the world. Strong headwinds cause big delays: If planes are spaced 5 miles apart and it takes longer to fly the 5 miles, fewer land each hour and some end up circling in holding patterns. So NATS Holdings Ltd., the United Kingdom’s privatized air services provider, developed a tool to let controllers easily optimize spacing by time, not distance. Time is the key safety measure —each plane needs enough to exit the runway before the next one touches down. When the tool went into use in 2015 after two years of development, headwind delays were reduced by 50%.

Time-based separation could have a big impact at New York airports, Atlanta, Chicago, Los Angeles and others that don’t always have enough runway capacity for arrivals. The FAA’s NextGen plan acknowledges it could have major benefits. But it won’t be operational for arrivals and approach until fiscal year 2022 at the earliest.

Canada privatized its ATC operations more than 20 years ago and has since leapfrogged the U.S. in technology and cut costs—13% over the past 11 years.

Flying in remote areas of Canada, pilots send text messages to controllers and get electronic responses. Requests for altitude changes are automatically checked for conflicts before they even pop up on controllers’ screens. One mouse click can approve a request, update the plane’s flight plan and alert other controllers. It’s faster, more efficient and more accurate than U.S. procedures, and results in better flights for passengers.

The FAA has implemented digital communications at 55 major airports to deliver flight plans on the ground. That saves time, especially in stormy situations where lots of flights are getting new routes, and can reduce errors. But communicating with airborne planes by text won’t come until 2019 at the earliest.

A privatized ATC organization could take many forms. In Canada, it’s a nonprofit entity with a board of directors but no ownership shares. NATS in the U.K. is a forprofit, public-private partnership. German’s ATC service is a government-owned, limited-liability company.

Privatization was first proposed in Congress in 1974, but then and every time since it has failed to gain support. Sometimes Republicans like the idea; sometimes Democrats. President Reagan tried in the 1980s. President Clinton proposed an ATC corporation in 1995. Rep. Bill Shuster, the Republican chair of the House transportation and infrastructure committee, proposed legislation last year. It never got out of committee.

Legislation is being drafted again, with White House backing. Proponents say they are making progress addressing many of the criticisms of past proposals. But the headwinds will again be stiff.

Opponents warn of higher ticket prices. But passengers are already paying the full load for big bureaucracy through hefty taxes on their tickets. On a $400 domestic round-trip ticket with a connection, you pay $46.40 in FAA taxes and fees. In addition, airlines pay a fuel tax of 4.3 cents a gallon and a tax of 6.25% on cargo and mail.

The $14.4 billion collected in fiscal year 2016 more than covered the $11.2 billion spent on the FAA’s air-traffic organization, according to an analysis by Robert Poole, transportation policy director at the Reason Foundation, a libertarian think tank. The rest paid for FAA safety regulation and helped fund some airport improvements.

Privatized ATC organizations charge user fees instead of taxes. (There likely would still be some ticket tax to cover safety regulation and airport improvements.) There are required international guidelines on charges so fees don’t get out of hand and limit travel. In many cases, charges end up getting reduced as organizations get more efficient and traffic increases.

Business jets worry they’ll have to pay what airlines pay—they often take up the same airspace and require the same services. But most privatized providers charge by aircraft weight, so small jets pay less.

Rural representatives are worried that airport improvement funding from the FAA might dry up, and that fees for private aviation would make it harder to get medical flights and business-jet trips important to their communities. Small private-plane owners worry they’ll be hit with user fees every time they practice landings in a Cessna 172.

Providers have concluded that making small planes pay small fees is a billing nightmare and would reduce safety. You don’t want private pilots avoiding air-traffic controllers to save money. So service providers charge a one-time, required annual fee. In Canada, the annual fee for small propeller aircraft is aviation’s best bargain: C$65, or about $49.

New York Sen. Chuck Schumer and others argue airlines would have too much control. That depends on how you set up the board of directors. In Canada, airlines get four seats on a 15-member board.

Some complain that sending government assets to a company would be a huge giveaway. Yet the current FAA infrastructure was paid for by travelers and shippers. If the new ATC organization had to buy the assets from the government, travelers and shippers would be paying for it a second time.

What’s clear to everyone is we need a better air-transportation system. Travelers deserve better. They already pay for it.


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Tags: Aviation