Privatizing air traffic control

The debate over shifting air traffic control out of FAA

When an airliner takes off from a U.S. airport, the air traffic controller who was responsible for the takeoff hands a strip of paper to another controller who will guide the flight listed on the paper through the next phase. This is how things work in any of the 123 airport control towers across the United States, as controllers and pilots steer planes from the gate to the runway and through the busy airspace surrounding the airport.

For critics of U.S. air traffic technology, this means of transferring responsibility for the safe and efficient routing of passenger planes is emblematic of a broader problem. “Paper flight strips are the poster child for backwardness,” says Robert Poole, who directs transportation policy for the Reason Foundation, a libertarian think tank based in Los Angeles. “Nav Canada has had electronic flight strips for nearly two decades.”

Nav Canada, the nonprofit company that owns and runs Canada’s civil air navigation system, is the model for those in the U.S. airline industry and Congress who want to shift responsibility for air traffic control out of the FAA. Since it began operating Canada’s air traffic system in 1996, Nav Canada has adopted electronic flight strips and other technologies that have made its air navigation more efficient while improving safety. “I’m dumbfounded the United States has continued to stick with air navigation being completely within the government,” says Rick Erickson, a Canadian aviation consultant.

Enter the administration of President Donald Trump, which advocates shifting air traffic control to a private corporation, an idea that has percolated for decades, most recently in a bill last year that did not make it to the full House of Representatives. A win for the Trump team will require squeezing legislation into a crowded agenda and overcoming red flags raised by skeptics. Mayors of small towns fear that a corporation might not care enough about municipal airports; U.S. senators worry about possible effects on safety and a loss of their oversight authority.

Then there is the multibillion-dollar Next Generation Air Transportation that the FAA is in the midst of rolling out. Experts agree that the effects would be significant, but predictions differ on whether the effects would be good or bad.

NextGen’s competing narratives

In the U.S., 14,000 air traffic controllers handle an average of 70,000 flights a day in a 30 million-square-mile area that includes large portions of the Atlantic and Pacific Oceans and accounts for 17 percent of the world’s airspace. The FAA Air Traffic Organization, which employs those controllers, has not been responsible for a fatal accident since 2013, according to records from the National Transportation Safety Board.

Maintaining that safety, though, will be increasingly challenging. The FAA forecasts that its air traffic control workload will climb 80 percent in the next two decades. To keep up with rising demand, the FAA is hiring flight controllers and adopting technology through NextGen to make it easier for controllers to safely and efficiently manage the growing number of flights.

How well is NextGen progressing? That depends on whom you ask. People who are eager to spin off air traffic control call it a disaster, and they cite years of Transportation Department Inspector General reports that point to rising costs and multiyear delays with its many projects. At the heart of NextGen will be a shift to GPS-based navigation that will require airlines to install Automatic Dependent Surveillance-Broadcast transponders onto their planes. These transponders will broadcast identity and location messages that will be received by other aircraft and also a network of towers that will feed the data into the air traffic network. The FAA planned to have ADS-B in place in 2014, but later shifted the date to 2020. Other elements have been delayed too, including System Wide Information Management, the digital backbone designed to help NextGen components share data, and En Route Automation Modernization, the computer network for FAA facilities that handle high-altitude air traffic.

Some experts fear that an attempt to overhaul air traffic control management could backfire. “Separating [air traffic control from the FAA] now would be disruptive and slow progress down,” says Craig Fuller, a former head of the Aircraft Owners and Pilots Association advocacy group in Maryland and now a member of the FAA’s Management Advisory Council.

Fuller and others say that under FAA Administrator Michael Huerta the NextGen initiative has turned a corner and is beginning to pay off.

Each year, the FAA publishes a NextGen cost-benefit analysis. The cost side of the equation stands at $7.5 billion, according to an FAA statement released in February. To calculate the benefits, the FAA feeds data about fuel savings, airline operating costs, FAA spending, flight delays and other factors into an economic model that estimates the value of NextGen to passengers, airlines and the U.S. government. The 2017 statement reports a cumulative $2.7 billion in benefits over the last seven years through additional flights, fewer delays, reduced FAA costs, decreased fuel consumption and less carbon dioxide emissions.

Not all are convinced. The same day the statement was released, Trump met with airline executives and declared that the FAA’s modernization efforts were “totally out of whack.”

For the FAA to bring NextGen to full fruition, it will have to navigate through extensive personnel and purchasing rules. Advocates of the shift say a corporation could avoid much of that. Then there are the funding issues. A corporation would not be beholden to Congress for annual appropriations and instead would raise money to update technology and facilities by issuing bonds and charging fees to air carriers.

Since 2013, the FAA’s budget has remained relatively flat due, in part, to the automatic spending limits known as sequestration. To keep up with growing air traffic, modernize its infrastructure and pay for NextGen, the FAA needed its budget to increase. Congress also relies increasingly on a series of short-term spending bills to fund the FAA and other agencies instead of passing budgets annually. When Congress fails to act, money stops flowing completely as it did when the government shut down for two weeks in 2013.

The National Air Traffic Controllers Association, the union for U.S. air traffic controllers, doesn’t like this financial situation. “Unfortunately, we no longer have a stable or predictable funding stream and this uncertainty has caused many serious problems for the [air traffic] system. Without change, we face continued funding uncertainty,” NATCA President Paul Rinaldi told the House Transportation and Infrastructure Committee in 2016.

NATCA spokesman Doug Church notes by email that nothing has changed since last year: “The lack of a stable, predictable funding stream is still causing serious problems.”

That desire for a reliable funding stream prompted NATCA to support legislation introduced in 2016 by Rep. Bill Shuster, the Pennsylvania Republican who chairs the House Transportation and Infrastructure Committee. Shuster’s bill, which he plans to reintroduce this year, would create an independent, nonprofit corporation led by a board of directors to oversee air traffic control.

Opponents of the plan call it air traffic control “privatization,” while most supporters prefer the term “corporatization.”

Shuster’s bill, the Aviation Innovation, Reform, and Reauthorization Act, or AIRR, was the latest in a long line of proposals to move air traffic control out of government. Jim Burnley discussed the idea when he was Ronald Reagan’s transportation secretary in the 1980s. Vice President Al Gore lobbied for it as part of his campaign to “Reinvent Government” in the 1990s. Last year, AIRR won the support of the House transportation committee but the bill was not voted on by the entire House.

While none of those efforts succeeded, it could be different this time around.

“There are still mountains to be climbed here politically, but we are in the best position we have been in for 30-plus years,” says Burnley, now a partner in the Washington, D.C., office of the law firm Venable LLP and chairman of the Eno Center for Transportation, a think tank.

Everyone else is doing it

The Trump administration’s 2018 budget blueprint released in March, known as the “skinny budget” because it was just 53 pages and not a full budget request, calls for transferring air traffic control from the FAA to an independent, nongovernmental organization, which supporters say means a private corporation. The administration has not offered further details, so no one knows how well Trump’s plan lines up with Shuster’s.
Shifting air traffic control out of the FAA would require the introduction of new legislation that would go through the usual legislative process before reaching Trump.

The administration followed up the skinny budget by having investment banker Gary Cohn, director of the White House National Economic Council, praise the idea in a meeting with U.S. business executives. “Air traffic control [reform] to me is probably the single most exciting thing we can do for a lot of reasons,” Cohn said. As he sees it, an independent organization would be able to invest in technology to shorten travel times and save jet fuel. “Everyone else has done it, so we know its relatively easy to do.”

While that may be an overstatement, many countries have opted to change their approach to air traffic oversight and to rely on user fees instead of taxes to cover costs. Since 1987, New Zealand, Germany, Australia, Canada and the United Kingdom have switched from government-owned, government-operated models to organizational structures ranging from government corporations to public-private partnerships. All of them also turned to user fees to cover costs. France, meanwhile, kept its air navigation agency in the government, but changed its funding source from taxes to user fees.

Countries typically charge airlines fees that vary based on the weight of the aircraft and the distance flown, an approach recommended by the United Nations’ International Civil Aviation Organization. The operator of a Boeing 787 jet, for example, would pay more than the operator of a Bombardier Dash 8 turboprop to travel the same distance. Countries taking that approach issue bonds to pay for long-term capital expenditures. They point to the revenue stream to assure investors that they will be able to pay back the money.

FAA’s Huerta is well aware of the push for privatization. While the FAA has carefully avoided taking sides in the debate over air traffic control’s future, and none agreed to be interviewed for this article, Huerta and his supporters readily acknowledge the difficulty of updating air traffic facilities without the type of capital investment fund a private business would use and they have discussed with members of Congress whether the FAA could be given additional flexibility to borrow money.

“There is no business that would invest in major infrastructure projects without some ability to borrow,” Huerta said in March at the U.S. Chamber of Commerce Aviation Summit in Washington, D.C., according to an FAA transcript. “Let’s find a solution that reflects the best interests of the American people and protects the safety and flexibility of this extremely valuable public asset.” FAA officials have scrupulously avoided taking sides in the debate over air traffic control’s future, and none agreed to be interviewed for this article.

Opponents of privatization cite safety as their primary concern. Canadian air traffic safety has not suffered under Nav Canada, but doubters suggest that the U.S. might not have the same success.

“Canada does not have the size, complexity or diversity of operations the United States has,” says Ed Bolen, who leads the National Business Aviation Association, a trade group based in Washington, D.C.

“We are modernizing air traffic control in a much larger, much more sophisticated, much more complex air traffic system than other countries have,” adds Fuller of the FAA Management Council. “Some things we are doing faster, others not as fast, but we are doing it by maintaining a tremendous safety record.” The bottom line Shuster proposes creating a board of directors to oversee the nonprofit air traffic control organization. Board members would be selected by the U.S. Transportation secretary and organizations representing major airlines, private pilots, business aviators, air traffic controllers, airline pilots and aerospace manufacturers. Under the legislation introduced in 2015, airlines would have selected four members of the 13-person board.

Bolen, of the business aviation association, has concerns about giving airlines that kind of power. “It’s hard to believe they would want to run the air traffic system in the public’s best interest as opposed to their companies’ best interests,” he says. “The airlines operate for the bottom line. Some would argue that is their fiduciary responsibility.”

He’s not alone in his skepticism. After Trump’s March budget proposal, 128 small-town mayors spanning all 50 states sent a letter to Shuster and his Democratic counterpart on the House transportation committee, Rep. Peter DeFazio, D-Ore. “Privatization would hand over decisions about infrastructure funding, taxes and fees, consumer complaints, noise, and many other priorities to a board of private interests dominated by commercial airlines,” they wrote. “These are the same airlines that have cut back flights to smaller communities by more than 20 percent in recent years.”

A month earlier, a bipartisan group of four Senate appropriators cited additional reasons for opposition. In a letter to the panel that authorizes FAA spending, they complained that Shuster’s legislation would “separate air traffic control functions of the FAA from critical safety” programs and hurt oversight efforts meant to “ensure accountability for program performance and a sustained focus on aviation safety.”

For supporters of the Shuster legislation or similar proposals, the opposition of Sens. Thad Cochran, R-Miss.; Patrick Leahy, D-Vt.; Susan Collins, R-Maine; and Jack Reed, D-R.I., amounts to a high hurdle. “The appropriators are very powerful,” Burnley says. “They are not going to go quietly into the night.”

That would mean paper flight strips will be around for some more years but not indefinitely. The FAA plans to roll out electronic flight strips nationwide from 2020 to 2028.