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July 12, 2024
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Privatization of Air Traffic Control has come up on almost an annual basis for the last couple of decades, and the battle has been between the airlines, who favor the concept, and general aviation, who do not.  The rationale is that those who pay the most will receive the most representation in how ATC is managed, and the general aviation community fears that the airline community could restrict access to the system and create unfairness in charges.  But the difference in 2017 is that ATC privatization stands a better chance of passage in Congress, and has the support of President Trump.

With the news that NavCanada was providing $60M in refunds to customers, the proponents of ATC privatization received one more arrow in their quiver of arguments regarding the topic.

The Issues

The debate centers around several issues.  First, whether ATC is a function that should be provided by government, or a quasi-governmental entity.  Second is how the system is paid for, and how any user fees would be determined and administered.  Third is whether a privatized system would be dominated by the group that pays the most and utilizes the system more than anyone else, the airlines, at the expense of general aviation.

Several countries have privatized Air Traffic Control, including Canada, the UK, France, Germany, Australia and New Zealand.  Proponents indicate that the process works and could be adopted in the US.  Opponents cite the close relationship between ATC and the military, the need for coordination in national defense, and the potential that small operators, such as agricultural aircraft and rural airports, could be unfairly shut out of the process.

But the US airspace system isn’t like the UK or Canada.  It is much larger and operates flights with a much higher frequency and density.   Safety levels have been high, and the modernization program to the NextGen ATC technology, while slow moving, has been effective.

There is little question that a private organization is more efficient and more effective than government.  One of the reasons for this is the ability to raise capital and not be subject to the whims of Congress and the Federal Budget.  With varying funding levels, sequestration, and other vagaries, it is not difficult to find why changes to the ATC system are slow.  While critics cite that technology is often obsolete before it is introduced, the FAA’s hands are somewhat tied by politics.  But would privatization change that? During the last recession, NavCanada had to go to the financial markets for additional funding due to recession-caused revenue shortfalls when air traffic turned downward.

Today, in the US, air traffic control is essentially free for all users.  There are no navigation charges, no fees for speaking with a control tower, no fees for filing a flight plan, and no special fees for flying on instruments.

This is different that the rest of the world, and would change under privatization.  Internationally, navigation fees are charged to airlines to cover the costs of en-route services.  Typically, charges are computed based on aircraft weight and power plant type and are levied on the terminal, en route, and oceanic airspace services used.

To be fair, the US ATC system is more productive and efficient than those in Europe, and operates without user fees.  Why then replace it?

The debate over ATC privatization, and the groups for and against it, seem more about who the who will control the operation rather than the merits of a more efficient operation, or more rapid technology development.  Today, funding is provided from the Aviation Trust Fund generated by fuel taxes that are intended to support the FAA.  Like other funds, however, Congress has co-mingled these with general funding, making it difficult to provide funding for the privatized through fuel taxes.  Given that larger aircraft burn more fuel, it is an elegant and self-regulating system that most believe is quite fair.

Airlines 4 America, the lobbying group for the airline industry, favors privatization to be able to more quickly introduce new technology to optimize airline operations and reduce costs, as shown here. But Delta Air Lines disagrees with its colleagues, as shown here.

General aviation organizations, which have been in recession in recent years, are fearful that user fees will send their segments back into recession.  Similarly, the business jet market has been making a slow recovery, and NBAA and other industry organizations are lobbying against the privatization process as being potentially unfairly administered, catering to the airlines who would provide the bulk of the usage and fees.

NBAA’s position, expounded here, is that privatization would put the airlines in charge of the system to the detriment of business aviation.  Similarly, the Experimental Aircraft Association is concerned about general aviation pilots being left out of the decision-making process, among other issues outlined here.

Other groups, including a group of rural and agricultural pilots, also oppose privatization as outlined here.

The Bottom Line – AirInsight’s Viewpoint

The core question about ATC isn’t one of efficiency, but one of control.  A solution is readily available, which is to directly fund the FAA from aviation fuel taxes and thereby enable the agency to avoid the political process in Congress for annual budgets.  Using the Aviation Trust Fund for its intended purpose (despite how rare that is in Washington) would solve many of the problems for multi-year contracting and allow the FAA to accelerate development of its NextGen programs.

The impact for airlines and general aviation would be an improved system, without the substantial user fees paid internationally.  We have an excellent design in place today – but it is up to Congress to enable it to work.  Let the aviation trust fund work as it should – and if it doesn’t help, then consider privatization.  There is no need to re-invent the wheel today – just fund it properly and allow those running the FAA to plan on a multi-year basis without worrying about the next political budget fight in Congress. All it takes is common sense – but that isn’t very common in Washington DC.at

author avatar
Ernest Arvai
President AirInsight Group LLC

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