Reason: Air Traffic Control as a Public Utility

by | ARTICLES, BLOG, ECONOMY, NEWS

Robert Poole, Director of Transportation Policy over at the Reason Foundation, does as decent job laying out “the case for changing the way air traffic control is provided in the United States.” He points out that many major countries have changed the way air traffic control systems are funded in recent years, and the United States should consider adopting some form of their models. This is a thoughtful piece and well worth the read. I have included it below as well as his full pdf report.

“This report provides an overview of the case for changing the way air traffic control is provided in the United States. While this country still has the world’s largest air traffic control system, it is no longer the world’s most advanced. Over the past three decades, more than 60 developed countries have converted their air traffic control systems from tax-funded government agencies to some form of public utility. These countries include Australia, Canada, Germany, Italy, New Zealand, and the United Kingdom.

This idea has been proposed many times in the United States, dating back to the 1970s. The Clinton administration made several large-scale attempts that led to only minor reforms in how the Federal Aviation Administration operates the air traffic control system. The Federal Aviation Administration (FAA) attempted funding reform during the George W. Bush administration but was unsuccessful.

Research papers and several book-length studies find that the utility model, in which the air traffic control provider is paid directly by its customers and is able to issue long-term revenue bonds for large-scale facility and equipment modernization, works better than tax-supported systems operated as government agencies.

A much larger effort began during the Obama administration and continued in the Trump administration, driven largely by the business community and various aviation stakeholder groups. It led to the House Transportation & Infrastructure Committee twice approving enabling legislation for an air traffic control utility corporation, but neither bill reached the House floor.

Recent air traffic problems—the NOTAM fiasco, a spate of close-call runway incursions, and FAA’s inability to implement digital/remote control towers as air traffic control utilities in other countries are doing—have raised new interest in air traffic control reform in this year when FAA must be reauthorized by Congress.

The 2018 defeat appeared to foreclose further attempts at creating a U.S. air traffic control utility for the duration of the five-year FAA reauthorization period. With so many topics on its agenda and very limited floor time, any stand-alone air traffic control bill apart from the next FAA reauthorization bill would have been highly unlikely.

The 2013–2018 air traffic control reform effort garnered much greater support than any previous effort. Openly supporting the bill were all the major passenger and cargo airlines, controllers’ union Nair traffic controlA, unions representing pilots and flight attendants, six former U.S. Department of Transportation secretaries, all three former chief operating officers of the Air Traffic Organization, 13 former senior Clinton administration officials, transportation experts from a long list of noted think tanks, taxpayer and consumer groups, and the editorial boards of many leading newspapers,including the Chicago Tribune, Miami Herald, Orlando Sentinel, The Wall Street Journal, Washington Post, and USA Today.

Unfortunately, there was never a real, substantive debate on the case for an air traffic control utility corporation. Instead, a propaganda war largely bankrolled by business jet organization the National Business Aviation Association (NBAA) made untrue allegations and stepped up its opposition efforts after the bill had been revised to reflect legitimate concerns of general aviation, small airports, and rural America. Thus, while the United States retains the world’s largest air traffic control system, it also remains an outlier as:

• The only developed country that is not charging airspace users for air traffic control services;
• One of the few that still has not separated safety regulation from air traffic control service provision; and,
• A major nation whose air traffic control provider still has difficulty developing and implementing new technology and procedures in a timely and cost-effective manner.

Nevertheless, the debate has moved significantly in the direction of corporatization. In the 1970s and 1980s, it was widely assumed that the provision of air traffic control services was inherently governmental, since this service was provided by national governments in nearly all countries during those decades. The idea of separating aviation safety regulation from the provision of air traffic control services was unheard of.

Today, the inherent conflict of interest in having the same agency do both is recognized by the International Civil Aviation Organization (ICAO) and has become non-standard in practice world wide.

Second, the importance of a self-supporting utility model for air traffic control is now widely understood and in operation in more than 60 countries. Prior to the emergence of air traffic control utilities beginning in 1987, most governments already charged air traffic control fees, mostly in accord with ICAO charging principles, but the revenues went into the national government’s coffers, to be allocated to whatever purposes the national legislative body decided upon.

The move toward self-supporting air traffic control utilities has created a worthwhile customer/provider relationship that replaces the air traffic control provider’s dependence on politically determined funding. The self-supporting model also permits the issuance of revenue bonds to finance long-lived capital modernization efforts, which was not possible prior to self- support, since the air traffic control user fee revenues belonged to the national government, not the air traffic control provider.

Third, we have seen empirical evidence of a changed organizational culture in many of the ATC corporations. They are generally able to hire and retain experienced managers, engineers, and software experts, thereby regaining control of technology development from aerospace companies on whom they were formerly overly dependent. This is leading to reductions in overhead costs, more cost-effective technology improvements, and increases in productivity.

Governance is still a work in progress, with many of the government corporations being dependent on one or two government shareholders. By contrast, the stakeholder board concept has proved workable and effective for more than two decades at Nav Canada, the world’s second-largest air traffic control provider and widely considered one of the best. A governing board representing all the principal aviation stakeholders gives the air traffic control provider a governance model much like the user cooperative model well-known in the rural utilities sector in the United States. It is a model that may offer governance improvements to many air traffic control providers currently organized as government corporations.

To sum up, the world of air traffic control has changed markedly in the decades since the corporatization of Airways New Zealand in 1987. The United States is the last major country that stands apart from this reform. It is conceivable that the growing track record of self-supporting air traffic control corporations will lead to some version of this model being adopted in the United States within the next decade.”

Get the report here