Premium #198 – Privatizing America’s ATC

There is a debate within the US about privatizing the ATC system. The debate has big implications for air travel. On the pro-privatization side, we have Airlines for America, the industry trade group. They point out that the FAA, which currently manages the nation's ATC, has consistently been a poor manager. The NextGen project is held up as exhibit #1. Bud Shuster, House Transportation Chairman, is sympathetic to this view. The pro-privatization group want to see a version of the NavCanada solution applied in the US. But, as with any changes in government process, changes come with costs. The idea is to add user fees that will fund this new group. The FAA’s funding has been argued about for years. It is not clear why the current cost of the ATC system couldn’t be applied to this new group. Why do we need even more fees? The cost of the ATC issue is also a source of arguments between commercial and private aviation. Commercial aviation (airlines) argue the private aviation sector does not pay its fair share of the ATC system cost. Of course, what isn’t discussed is the fact that airlines get traffic preference. Most light general aviation users fly VFR and do not tie up ATC, and fees for doing so could negatively impact safety if they elect to avoid fees on marginal days. The anti-privatization side is of course, led by the FAA itself. They argue that their work is acceptable because they deliver safe aviation for the world’s most complex and largest aviation system. This response is to be expected, since organizational behavior is always primarily focused on protecting the organization. In other words, the FAA response is rational regardless of how poorly it has managed anything. Moreover, this side of the argument says the problem is unstable funding from Congress. Surprisingly this side also has an airline defender in Delta. American and United are squarely in the pro-privatization side. This is yet another reason why Delta did not renew its Airlines for America membership. So where does the truth lie? Discussing this matter with former airline executive and two-decade aviation consultant Bob Mann (Mann's own article on this issue for Brookings Institute)it is clear the debate is not clear cut. As Mann states, the overriding concern should be “to do no harm”. The current system works albeit less efficiently than either side wants. The focus on a NavCanada model is attractive now because the Canadian dollar is weaker than the US dollar, plus NavCanada gets much more in overflight fees than any US agency could. NavCanada, is therefore not a particularly good model for the US market. The problem with the FAA is bureaucratic management and the inability to introduce new technology on a timely basis. By the time the FAA approves and installed new computer systems, they tend to be two generations behind, as technology outpaces bureaucracy. A leaner, privatized management team could make more effective decisions, and better execute technology upgrade programs. Everyone wants a better ATC in the United States, but nobody has come forward with the details. The US airlines are driving the proposition. But what are they doing to help? For example, the FAA is a reactive agency. They do not create the flights, they merely handle them and ensure safe passage through the airspace. The airlines are the ones who cram flights into hubs at certain times of the day. The FAA then has to develop work-a rounds with longer routes to ensure all the aircraft can come in even as others are departing the airport below. Who would these controllers work for under a privatized scheme? What would be their primary focus – safety, efficiency or something else? They already deliver safety in spades. Fixing the annual funding for the FAA is a well-understood issue. Why should a privatized solution require more funding, particularly if it is more efficient? Passengers already pay a host of fees to sustain the government’s role in commercial flight. If the system were privatized passengers should see lower fees. The FAA’s budget should be cut dramatically and a good portion of the agency privatized – but good luck with cutting any government agency budget. We do not foresee greater financial efficiency coming out of this given the current political environment and politicians trying to preserve jobs in their local districts. Moreover, the NBAA, AOPA and other non-commercial aviation concerns are well placed. What are they going to pay under this new scenario? If the system is airline driven, you know what that means. Much higher fees and almost certainly no better access to slots. No wonder the recent NBAA conference was plastered with “No privatizing ATC” signs and posters. It seems clear that decision makers are facing a tough time – how to make an informed decision? Surely we all want more efficiency. We all want shorter flight times -- and to arrive ‘on time” A5, not A14. We all want lower costs. Will a privatized solution deliver transparency? Probably no better than what we have now. What are airlines doing to improve the situation? Will they start flying larger aircraft and using fewer flights? After all, the 5pm conga line at every large US airport is crowded with small aircraft (loaded to the gills). Why not fewer, but larger aircraft? Airline scheduling is driven by the airlines, not the FAA nor by any private solution. The FAA and any private version will see their job as organizing the flow through the kink in the Coke bottle. They don’t make the kink, the airlines force so much traffic at certain times of the day that any capacity has a kink. One would think that self-interest among the airlines would drive their thinking. But do not forget this is an industry that persuaded the DoT to accept any flight operating within 15 minutes is on-time. Even with the vagaries of running an airline, that is not good enough. Corporations outside the airline business routinely get their operations to Six Sigma levels of efficiency. Why not the airlines? Are they really that special? Imagine Amazon padding their delivery times the way airlines pad their schedules. Nobody would buy it. Why should we accept this from airlines? So while everyone wants a better ATC system, absent details, and that means lots of details, the privatization idea is not yet a panacea.

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