Transportation Systems Casebook/Privatization of Air Traffic Controllers

Summary

Air traffic control (ATC) is the ground-based system that manages air traffic. The primary role of ATC is to manage airspace, manage air traffic, and to prevent collisions between aircraft. In the United States, ATC is a government service provided by the Federal Aviation Administration (FAA) that relies on government funding. Around the world there are other models used for ATC; Germany uses a government owned corporation, the United Kingdom uses a for-profit corporation, and Canada uses a non-profit corporation. Each model has it's merits and disadvantages but the issue of privatization ultimately comes down to the funding model used.

In the United States, we must consider a model that meets the needs of our large air transportation system and is able to provide stable funding and be consistently applied to all airports. Currently, funding is not completely stable as the FAA relies on federal dollars which are at risk of being lost to budget issues and politicization of budget items. It is critical that ATC has stable funding so that it may continue to work at safe and efficient levels. The other major criteria that a model must meet is being able to handle the size and volume of air transportation in the United States, currently the US ATC system handles over 16 million flights across 19,600 airports every year and that number is only going to increase.

Annotated List of Actors

Actors in Favor of Privatization of Air Traffic Controllers

President Donald Trump

Announced a plan to privatize ATC on June 5, 2017

Bill Schuster

Republican Congressman from Pennsylvania presented the bill H.R. 2997, Privatizing ATC, on the House of Representative floor on June 22, 2017.

Airlines for America (A4A)

Spent 1.6 million on lobbying for privatization of ATC. They believe the slow adoption of technology is hindering air traffic efficiency. Members include: Alaska Airlines, American Airlines, Atlas Air Worldwide, FedEx, UPS, United Airlines, Hawaiian Airlines, Jet Blue, Southwest, and Air Canada.

Actors Against Privatization of Air Traffic Controllers

Federal Aviation Administration

Against privatization of air traffic controllers because the private company would lack oversight and control.

Delta Airlines

Against bill because they believe the airline companies are the problem of congestion, at or near airports in the sky and the ground, due to loading procedures. In 2017 Delta’s antiquated computer system crashed, grounding hundreds of flights.

Alliance for Aviation Across America

A nonprofit lobbying firm against privatization of ATC. They fear privatization of ATC will bring user fees which would be too high for small companies to pay. There members include: Air Care Alliance (ACA), Aircraft Electronics Association, Aircraft Owners and Pilots Association (AOPA), American Air Campers Association, American Association of State Highway and Transportation Officials (AASHTO), Angel Flight Mid-Atlantic, Arkansas Aerospace and Defense Alliance, Aviation Council of Pennsylvania, Charlie Bravo Aviation, Experimental Aviation Association (EAA), Flight School Association of North America, Granite State Airport Management Association (GSAMA), Helicopter Association International, League of Rural Voters, Management Association for Private Photogrammetric Surveyors (MAPPS), Medimpact, National Air Transportation Association (NATA), National Business Aviation Association (NBAA), National Farmers Organization (NFO), National Farmers Union, National Grange, Popular Rotorcraft Association, Small Business and Entrepreneurship Council, Society of Aviation and Flight Educators (SAFE), Texas Aviation Association, Universal Weather and Aviation, U.S. Cattlemen’s Association, Veterans Airlift Command, West Virginia Coal Association, Wheeling Area Chamber of Commerce, and Wolf Aviation Fund.

Timeline of Events

1926- Air Commerce Act- regulated aviation economics, safety, and air traffic controllers.

1936- Federal Government took over en-route air traffic control, while airports were controlled locally.

1958- Federal Aviation Agency (FAA) created in response to air traffic control radar.

1970- Airport and Airway Trust Fund (AATF) created to provide resources to the aviation through fuel and ticket taxes.

1982- Airport and Airway Improvement Act which reorganized the aviation taxes on the usage of funds.

1983- First discussion of privatization of air traffic controllers by the Reagan administration but was shot down because no model had ever been tried before.

1985- Airlines start talking about lobbying for privatization of ATC.

1986- Congress passes Aviation Safety Commission Act which looked at “how the Federal Aviation Administration may most effectively perform its responsibilities and increase aviation safety.”

1987- New Zealand becomes the first country to corporatize ATC.

1988- FAA publishes report recommending the “FAA be transferred from USDOT and be established as a user-funded authority.”

1993- Bill Clinton suggests government-owned corporation supported by user fees and governed by stakeholders.

1995- Representative Norman Mineta (D-CA) introduced H.R. 1441 which separate ATC personnel to a separate corporate entity, collecting user fees and issuing revenue bonds.

1996- National Civil Aviation Review Commission that was tasked to perform an independent assessment of FAA financial requirements.

1996- Creation of NAV CANADA as a nonprofit user co-op private corporation.

1997- The Mineta Commission Report was released and suggested “broad and sweeping changes in the ways the FAA was managed”.

2001- British became the first enter into a Private-Public Partnership (P3) for ATC.

2009- Proposal to move toward user-fee to fund the ATC but only the large commercial airlines would pay it but went nowhere.

2017- President Donald Trump proposes privatization of ATC.

2017- Bill Schuster takes bill H.R. 2997 to the House of Representative floor to privatize ATC.

Graphics

[1]Map of NextGen landing path compared to conventional landing path

[2]Comparison of current ATC system with NextGen system

Policy Issues

Current Legislation

HR 2997- in June, 2017 Representative Bill Schuster (R-PA-9) introduced a bill titled "21st Century Aviation Innovation, Reform, and Reauthorization Act" (AIRR Act). The chief goal of this bill is to establish the American Air Navigation Services Corporation (AANSC), a non-profit corporation that would take over all ATC duties and equipment by October, 2020. Currently, HR 2997 has 22 cosponsors and no scheduled hearings or votes as of November, 2017.

Funding

Currently funding is one of the most contentious and important issues in deciding on an ATC management model. Under the federal system the US currently employs, funding comes from the federal budget which must be approved by congress. The advantage of this funding model is that it separates funding from usage and allows the FAA to lobby for the amount of money they need to maintain critical systems. The major disadvantage of this model is that funding can be late or inconsistent depending on congress, during a government shutdown funding can be frozen and employees aren't getting paid to do their critical jobs. Funding can also be politicized, if a politician or group wants to bleed out the FAA then they can by restricting federal funding.

In a private system, funding is achieved by collecting usage fees and ticket fees. There are many ways to do this such as Nav Canada's method of collecting fees based on weight of aircraft and distance flown. The advantage of usage fee based funding is that it scales with use and remains consistent as long as flight load remains consistent, while this may be an issue in some countries, it is unlikely to be an issue in the US which already handles over 88% of all air traffic. However, according to a Delta Airlines report this model will not save the customers any money and may lead to a 20-29% increase in ATC fees on tickets. The same study showed that Canadian tickets saw a 59% increase in ATC fees and UK fliers saw a 30% increase.

Equity

Currently, the United States has roughly 4000 airports that Bureau of Transportation Statistics classifies as rural. These airports serve small communities, have low passenger usage, and can be vital to the health of a community, especially in states like Alaska. General aviation and rural flights pay less into the ATC and de facto and de jure subsidized by the FAA and federal government so that this critical access to these airports may be maintained. According to the Delta study, privatization will favor larger airports that pay more into the system. This will cause rural airports to shrink, limit landings and take offs, and eventually close forcing users to potentially drive hundreds of miles to large hubs, a solution that's not always an option in rural America. This issue of rural airports struggling has already been observed in the UK following their privatization and would only be amplified by the sheer size of the United States.

Control

Control of the private ATC system is an important consideration. Currently, the ATC system is overseen by the FAA and reports to federal government oversight. In a private model, ATC will by overseen by a corporate board and under HR 2997, will be subject to government oversight. However, the downfall is that the board can be taken over and controlled by the major airlines who will be able to run ATC system in a way that is favorable to their corporation rather than be favorable to the public and to the needs of all air transportation users. From the start, there would be no competition and the ANSC would be a total monopoly, able to do whatever it wants with minimal oversight. This lack of oversight and potential market failure could leave tax payers stuck with the bill as the ATC system is inherently too big to fail.

Narrative of the Case

What is NextGen?

NextGen is an incremental program planned to incorporate precision satellite navigation and surveillance, digital networked communication, and an integrated weather system. This sophisticated program is acquiring integrated air traffic control system, developing new flight procedure, and creating and maintaining new supporting infrastructure. NextGen will require airlines and others to invest in up-to-date avionics and other technologies to take advantage of NextGen benefits.

Presidential Permitting

President Donald Trump is likely to announce a proposal to privatize ATC. He is expected to push for the separation of ATC operation from the FAA to move and improve the U.S airlines. The main issue that the FAA current software’s is insufficient; therefore, the change will improve the ATC system from radar and voice-based communication to a system based on satellite navigation and digital communication. The administration looks at the ATC system as technology business within the FAA. The separation of the system is meant to speed up the modernization to update the ATC system.

The AIRR act will help ensure a modern, safe system that benefit passenger and the economy and will keep America competitive in a vital industry. President Trump and his advisor argued that revolving off air traffic control from the FAA would accelerate the deployment of NextGen technology while freeing the agency to fulfil its core function as a safety regulation.

On the other hands, according to the Government Accountability Office (GAO), privatizing air traffic control would create problems with how the FAA and Department of Defense cooperate on air system security. Another GAO report questions about how quickly safety roles and responsibilities could be split between a privatized ATC entity and the FAA as the safety regular.

Privatizing Air traffic Control and its Impact to the Rural Community

President Trump and other support the idea of privatizing air traffic control plan that would put the management of U.S airways in the hands of a private board and bring funding through taxes and fees. Airlines Company argues that the privatization would allow the antiquated air control system to upgrade and respond more quickly to changing technology. But an alliance of small airports says that privatizing would dramatically reduce service for rural areas.

Nearly three-quarter of the U.S land found in a rural area. Rural industries like food production, firefighting, flight training, and disaster relief are critically dependent on smaller aircraft. This is not just an issue that affects some community; it changes all the ability to keep industries alive. Privatizing ATC can gain a lot of investment to the infrastructure in a small airport because rural areas are America lifeblood. Moreover, this type of structure airlines would have the ability to implement a host of new fees and taxes, which can decimate general aviation to rely on late user fees.

Effects on Delays and Costs

The most significant contributor to delays is not air traffic control. An aviation expert Michael Baiada Saied “instead of focusing on privatization, the question Congress and the (GAO) should be asking first is what causes delays. Unfortunately, the (ATC) system is too often scapegoat for airline’s problems”. According to data from the Department of Transportation in 2015, the airlines were responsible for 323 to 454 flight delays. According to Michael Baiada, “the solution to airline delays must rest with the individual airlines and their adoption of operational excellence to drastically improve their performance, blocking, and tackling”

In addition, According to senators Ed Markey and Richard Blumenthal highlighted that “the data from the Department of Transportation reveals airline problems, including technical glitches and mechanical failures, those two reasons are the leading causes of airline delays; the surpassing weather can cause delay”.

Security Concerns with Privatization

According to the U.S Department of defense Policy Board on Federal Aviation, air traffic control would create problems with how the FAA and Department of Defense cooperate on air system security. Moreover, they raised questions about safety roles and responsibilities could be split between a privatized ATC entity and the FAA in safety regulation. The issue of coordination is developing and implementing new procedures and flight standards, and highly skilled staff.

In addition, according to Fast Company, hackers already probe aviation systems looking for weaknesses, and security experts believe it is only a matter of time before cyber attacks occur. Therefore, privatizing ATC will enhance the security software to make sure the system will not fall.

Discussion Questions

• Do you trust the big airline companies to run our nation’s air traffic control system? Why or why not?

• Can a private ATC be equitable in the United States? Why or why not?

• Does the US even need privatization?

• Are there any public solutions to the issues privatization seeks to solve?

References

Full references forthcoming following technical issues