GAO Analyses Expert and Stakeholder Views on ATC Reform
November 16, 2016
On the same day that the USDOT’s Inspector General released a report about air traffic control (ATC) modernization, the Government Accountability Office (GAO) issued a new report on ATC reform, which, as our readers might remember was proposed by House Transportation and Infrastructure chairman Bill Shuster (R-PA) back in February. The bill never made it to the House floor, and an extension of Federal Aviation Authorization (FAA) funding authorizations was passed, lasting until September 2017.
Titled “Air Traffic Control: Experts’ and Stakeholders’ Views on Key Issues to Consider in a Potential Restructuring”, the report showed the results of a series of interviews and surveys of 32 experts and 20 stakeholders, as well as the FAA. GAO also interviewed a number of people in Canada, New Zealand, and the UK to learn about the issues that the systems in those countries faced when they reformed ATC. The last time that the GAO has weighed in on the issue of ATC reform had been in February.
The interviews of the U.S. experts and stakeholders focused on three key issues that would be important if ATC reform was to take place:
- Organizational management and workforce issues;
- Funding and financing;
- Time and costs to transition.
On the organizational management and workforce issues, GAO reports that it would be important to delineate roles and responsibilities between the two organizations resulting from ATC reform, i.e., the new provider and the FAA. However, experts disagreed on how difficult it would be to carry out that delineation, with roughly half responding that it would be difficult and half that it would be easy. The FAA agreed that there would be a need to clearly delineate and document roles and responsibilities, and codify those in either law of the Federal Aviation Regulations. The FAA also identified two key areas where this correct delineation would be important: global harmonization, i.e., coordination with foreign ATC providers, and environmental protection.
Experts also agreed that it would be important to ensure coordination and communication between the FAA and the new ATC provider. The FAA stated that currently sharing of information between the air traffic and aviation safety departments is very good, and it expects that a separation would lead to challenges in continuing that sharing of data. Out of 20 experts, eight expressed concerns that a separation would also negatively impact the implementation of NextGen. On the other hand, some stakeholders expressed that while in the short term complications might arise, in the longer term separation would improve NextGen deployment. (Ed. Note: NextGen implementation was the topic of the Inspector General’s report that we mentioned in the opening paragraph.)
In terms of safety oversight, the majority of experts agreed it would be very or somewhat necessary to make several changes to ensure the continuous effectiveness of FAA’s role as a safety regulator. Regardless of whether or not ATC separation takes place, stakeholders in general said FAA’s safety regulation needs improvement, namely with the need to move towards risk-based oversight to be able to better keep up with technological advances. Additionally, out of 13 experts, eight of them responded that separation would have a positive effect on the safety regulator, as it would allow the FAA to focus on safety regulation, instead of the current situation where it balances its responsibilities has both the operator and the regulator of the system. Citing a 2014 MITRE report, the GAO noticed that of the six countries that MITRE studied, safety was not reduced. But the separation required a cultural shift in the safety regulator, and that effective oversight requires strong data collection and quality-control procedures.
Regarding workforce issues, most experts noted that managing human capital would be a challenging issue for ATC reform. Issues highlighted were the right to strike and engaged in collective bargaining, as well as issues of staffing, hiring and compensation. On the right-to-strike issue, currently prohibited under federal law, nine out of 11 experts agreed that it should remain that way. On the collective bargaining issue, labor leaders agreed that current agreements should carry over to the new provider. The FAA added that several agreements are up for renewal in the next few years, which might affect a transition. In terms of staffing, hiring, and compensation, experts said that there would be competition for labor between the FAA and the new provider, with a potential to negatively impact the FAA’s ability to hire and retain talent.
On funding and financing, issues revolved about user fees, economic oversight, how to fund the safety regulator, and transfer of assets.
On user fees, almost all experts agreed that if separation was to occur, the system should be funded by user fees and that those user fees should be set at a level that cover all costs of the system. Seventeen out of 18 experts said that such a system would be a benefit, providing a reliable, transparent, stream of funding. On who should pay those user fees, most agreed that passenger and cargo airlines along with business aviation should pay them. For general aviation, most experts suggested that an annual flat fee would be a better option. Stakeholders, on the other hand, were not as enthusiastic about user fees, with only eight of 20 supporting user fees. FAA noted that under a user fee system some users might pay more than they currently pay in taxes.
Regarding economic oversight, the question arises because an ATC provider has a monopoly on ATC provision (i.e., an airline cannot choose whether to use an ATC provider or not, nor do they have different providers to choose from). Experts’ responses on the need for such oversight varied according to the type of structure of the new ATC provider. If that provider was to be a non-profit, 11 out of 18 didn’t feel the need for an economic regulator, since its board of governors, composed of several stakeholders, would self-regulate itself. If the system was to be a for-profit company, 16 out of 18 experts responded that an economic regulator would be needed. If the new entity was partially or fully government-owned, experts were split in the need for an economic regulator.
The funding of the safety regulator, i.e., the FAA, was another question asked. A majority of experts agreed that a more stable funding stream than the FAA currently has would be necessary. FAA officials also expressed concerns about this. More specifically if the FAA would be funded by some of the user fees that the new provider would be charging, or if it would have to rely solely on general fund appropriations.
The transfer of assets issue arises because all FAA facilities and equipment related to ATC would be transferred to the new entity when it was created. In Canada and the UK, for example, this transfer was accompanied by a payment to the national government. Out of 17 experts, eight responded that the government should never receive a payment for those assets, seven responded that it depended on the structure of the new provider (a for-profit would pay for the assets, a government corporation no), and two said that the government should always receive a payment, regardless of the governance structure. The experts who did not agree to a payment gave a number of reasons:
- Most of the system was paid by the users already through ticket and fuel taxes;
- A payment would impact the new provider’s finances, potentially raising the level of user fees and impacting its financial stability; and
- Determining a price for these assets would be time-consuming, complex, and expensive.
Moving on to the transition issues, experts agreed that time should be taken to ensure it was properly planned and implemented. They also noted that there would be costs associated with it; one of the experts gave a figure of $8 to $10 million. To help determine what to do to avoid any transition issues GAO contacted former and current officials in the British, Canadian, and New Zealand systems. Three key lessons were taken from those interviews:
- Communicate and coordinate throughout the transition;
- Obtain early input and acceptance from aviation stakeholders regarding funding; and
- Allow for enough time for the transition to take place.
Eno has been researching and discussing issues around ATC governance, funding, and modernization for several years now, and we’ve compiled all related information (including our 2015 report on ATC reform) in our FAA Reform Reference Page.