May 18, 2018

Earlier this year, the leading political champion of corporatizing the air traffic control (ATC) system, Chairman Bill Shuster (R, PA) of the House Transportation & Infrastructure Committee, pulled the proposal from the draft FAA reauthorization bill, when it became clear that the votes were not there to pass ATC reform.

Although support among transportation experts and aviation stakeholders was greater this year than in 2017, this year’s failure likely dooms the prospects for serious ATC reform for another four or five years, until the new FAA reauthorization expires. Yet I maintain that the United States will eventually remove the ATC function from safety regulator FAA and remove it from the federal budget, converting it into some kind of self-supporting corporation.

That may sound like a bold claim on the heels of this year’s defeat, but there are good reasons for this prediction. The first is that nothing in the likely 2018 FAA bill fixes any of the problems that afflict U.S. air traffic control.

• There is still an abysmal FAA procurement system, under which U.S. ATC technology and procedures increasingly lag behind those of other developed countries.
• The FAA (and hence its embedded Air Traffic Organization) is still the victim of the ups and downs of the federal budget—including budget sequesters, temporary lapses in aviation taxing authority, and inability to make long-range budget plans.
• Unique among large ATC providers, the ATO is unable to use long-term revenue-bond financing for major capital modernization efforts.
• It is also unable to make business decisions on needed actions such as large-scale facility consolidation, which are always subject to congressional vetoes.
• And the United States remains out of compliance with ICAO policy that calls for organizational separation of air safety regulation from the operation of airports and air traffic control.

When ATC corporatization first materialized in reformist New Zealand in 1987, most of aviation paid little attention. But by 1997, six other countries had done likewise (Australia, Canada, Germany, Netherlands, South Africa, and Switzerland). When Vice President Al Gore’s National Performance Review began researching Airways New Zealand as a model for reform in 1993, all those in operation were government corporations, so that was the model they chose. The resulting legislative proposal, for a U.S. Air Traffic Services (USATS) corporation, had the support of DOT Secretary Federico Pena and FAA Administrator David Hinson, but there was no stakeholder coalition supporting it, and the bill never got beyond the House Aviation Subcommittee.

By the time of the Business Roundtable and Eno working groups on ATC reform this decade, close to 60 countries had corporatized their systems, and their trade organization CANSO was holding global conferences on the same scale as the International Air Transport Association (IATA) and Airports Council International (ACI). Most of the 60 ATC providers were set up as government corporations, but three departed from that model: Nav Canada (private nonprofit, governed by a stakeholder board), the UK’s NATS (public-private partnership, 49% government owned), and Italy’s ENAV (51% government, 49% investors). In other words, in the 30 years since Airways New Zealand was created, the self-supporting ATC corporation had become the model of choice, certainly for developed countries.

Reflecting on the 2017-2018 U.S. legislative efforts, despite the failure to pass the bill in the House, the concept had far more support than ever before. All the major airlines supported it (after Delta switched sides and came on board). So did controllers’ union NATCA and several pilots’ and flight attendants’ unions. Five former Secretaries of Transportation supported corporatization (plus current Secretary Elaine Chao), as well as all three former heads of the Air Traffic Organization itself. Nearly all the national newspapers (bar the New York Times) editorialized in favor of Shuster’s proposed nonprofit ATC corporation.

The defeat of the measure in 2018 was purely political; there was no honest debate on the merits of the idea. A front group largely funded by business-jet group NBAA demonized the proposal as “turning over the airspace to the big airlines,” and managed to frighten directors of small airports, rural elected officials, and private pilots that the measure threatened control towers for small and rural airports and would likely make private flying unaffordable due to ruinously expensive ATC user fees. None of this was true, and Rep. Sam Graves (R, MO), co-chair of the House General Aviation Caucus, negotiated provisions in the 2018 bill that addressed all of those concerns. But the NBAA narrative proved to be very effective propaganda. The next time around, a far more skillful public-affairs/marketing effort will be needed to counter this array of issues, along with solid research quantifying the benefits to consumers.

In addition, despite the concept’s Clinton/Gore era pedigree, most House Democrats decided that “privatization” of ATC risked opening the door to other divestures and opposed reform. And predictably, House and Senate appropriators of both parties balked at losing the ability to micromanage the ATO via control of its budget. A far more explicitly bipartisan effort will be needed next time, to overcome this kind of opposition.

Finally, can we salvage any near-term ATC reform out of the past five years of effort? As I have suggested elsewhere, a meaningful reform would be to comply with the ICAO policy of separating regulation from service provision—by making the ATO a separate modal administration within U.S. DOT. That would at least remove the inherent conflict of interest built into the current FAA. This change would be more efficacious if it also removed the ATO from the federal civil service system. That would allow for the evolution of a more entrepreneurial organizational culture, the ability to hire and retain highly skilled engineers, software writers, and program managers—and hold them accountable for results.

Actions speak louder than words. The longer the ATO remains trapped in a federal regulatory bureaucracy, micromanaged by politicians, and unable to modernize cost-effectively, the further behind our ATC system will get. The best hope for ultimate ATC reform will be the comparative performance of the ATO and its corporatized counterparts worldwide.

Robert Poole is Director of Transportation Policy and the Searle Freedom Trust Transportation Fellow at the Reason Foundation. In 2014-15 he was part of the Eno Center for Transportation working group on ATC reform. He will receive the Thought Leader Award later this month at Eno’s 26^th annual Leadership Awards Dinner.

The views expressed above are those of the author and do not necessarily reflect the views of the Eno Center for Transportation.