Air Traffic Control Privatization Proposal Could Obstruct Long-Term FAA Funding

By | June 7, 2017

[UPDATE, June 8, 2017: Adds Global Business Travel Association statement, at bottom.]

Corporate travel constituents want a greater focus in Washington on FAA funding and the related issue of air traffic control modernization. The Trump administration on Monday proposed privatizing air traffic control. Hardly a new one, the idea drew lots of fresh criticism and questions from members of Congress and others.

Last year Congress failed to settle on long-term funding due in large part to controversy around ATC privatization and now some fear the same may happen again. FAA currently is operating on an extension, set to expire in September.

Sen. Jerry Moran (R-Kan.) on Wednesday asked Secretary of Transportation Elaine Chao whether she would “help us pass an FAA long-term reauthorization without the privatization provisions” if those provisions do not receive enough Congressional support. She said she couldn’t answer the question without consulting the White House.

Speaking during a Senate Committee on Commerce, Science and Transportation hearing, Moran said that “with the administration’s support of this concept, the chances of getting a long-term FAA reauthorization, in my view, have now been diminished.”

He added that Chao and the administration need to determine whether the nation’s priority is long-term FAA funding or ATC privatization, “because those two things may be mutually exclusive.”

Ranking committee member Bill Nelson (D-Fla.) said, “This entire discussion over ATC privatization distracts from legitimate matters that must be addressed by Congress” as part of FAA reauthorization. He cited “growing frustrations” among the traveling public and the need for stronger consumer protections.

U.S. Transportation Secretary Elaine Chao, former Transportation Secretary Elizabeth Dole, Vice President Mike Pence and U.S. House Committee on Transportation and Infrastructure Chairman Representative Bill Shuster (R-Penn.) join President Donald Trump as he signs proposed reforms to the U.S. air traffic control system at the White House in Washington, D.C., June 5, 2017
Image: Reuters/Jonathan Ernst

Eleanor Holmes-Norton has a similar opinion. Washington, D.C.’s Democratic delegate to the House of Representatives on Monday told attendees to an American Society of Travel Agents event that ATC privatization would require bipartisan support, and that seems unlikely. She is instead focused on funding FAA, and completing the necessary legislation this month or next, “so we’re not stuck at the last moment trying to get a reauthorization done.”

Holmes-Norton is not optimistic about that, either. “I don’t even think we’ll get our appropriations through,” she said.

Why do President Donald Trump, House Transportation and Infrastructure Committee chair Bill Shuster (R-Penn.) and many others favor ATC privatization? According to a White House statement on Monday, FAA’s ATC function is plagued by federal bureaucracy that slows implementation of new technology. Advocates think a non-profit, non-governmental entity can fix that. The White House pointed to what it said were successful ATC privatizations in dozens of other countries.

FAA would maintain regulatory and oversight functions. The new, separate entity would be “more nimble” in implementing NextGen ATC technology meant to modernize and relieve airspace congestion, thereby cutting delays and saving on fuel. It would improve safety and “protect access to rural communities,” according to a White House statement. Such an entity would “insulate” ATC from political wrangling and “the crippling effects of budget uncertainty.”

Chao said privatization is necessary “to accommodate the expected dramatic increase in passenger traffic over the next decades.”

Asked for a short answer on the rationale, Chao said: “We can procure new equipment faster. Government procurement rules are very bureaucratic.” Committee members pointed out that FAA is exempt from federal procurement regulations. Chao said that hasn’t made much difference.

Current aviation taxes supporting ATC would go away in favor of system user fees collected by the new entity. It would be overseen by a 13-member board consisting of constituents across the aviation industry, two of whom would be from commercial airlines themselves.

Committee members argued that the United States has the safest aviation system in the world. “Why would we risk that by handing the whole thing over to an untested, unproven entity?” Nelson asked. “Why give away billions of dollars in government assets that would be governed in large part by the airlines?”

Sen. Ed Markey (D-Mass.) and other members wrapped in recent, high-profile airline IT outages. “If they can’t upgrade their own IT systems, if they can’t figure out how to do it for their own passengers,” Markey said, “to give them the key seats on this kind of board — given the record of safety of the existing system — would be sequentially wrong.”

Committee members also questioned why a private entity, run in part by airlines, would protect smaller and rural communities.

Sen. Maggie Hassan (D-N.H.) raised the privatization concerns of 115 mayors who worry that it’s already hard to attract commercial airline service.

Sen. Gary Peters (D-Mich.) said “it seems inconsistent” that the president’s budget cuts the Essential Air Services program while the administration asserts privatized ATC run in part by profit-minded commercial airlines would look out for rural communities.

He asked Chao, “How do you square that?”

Chao responded by saying “they are two separate issues.” While she “can defend” that cut in EAS funding, Chao said “the decision was made when the administration was just staffing up.” She also said that removing ATC from the federal government would mean “budgeting certainty” that would help rather than hurt rural America. And she reiterated that commercial airlines would hold just two of the governing board’s 13 seats.

Another criticism is that basing a proposal on other countries’ experiences isn’t a sound approach.

During the committee hearing, Sen. Tammy Duckworth (D-Ill.) said, “We are not Canada, we are not Great Britain.” She called privatization “costly and potentially dangerous.”

Chao said the administration recognizes that each country is different, and that the U.S. airspace is the largest and most complex in the world. “Nevertheless,” she added, “there are lessons to be gleaned from the experience of other countries.”

At the ASTA meeting, Holmes-Norton said Congress is “not in the business of reviewing fees, so there is great concern about who would, in fact, speak for the public if there was no Congressional review” of what the new entity charged. “How would that work?” she asked. “These are among the issues that haven’t even begun to be discussed in the way they would have to in order for privatization to proceed.”

Holmes-Norton also threw cold water on NextGen implementation. “FAA says major functionalities of NextGen will be online in Jan. 2020,” she said, referring to the switch to GPS from radar-based systems. “That date, of course, cannot be made. We are too busy with all the moving parts.”

“Friends, NextGen is a fraud,” said airline consultant Mike Boyd, also speaking at the ASTA event. “Look at any Government Accountability Office report. Any DOT Inspector General report. It all says it’s mismanaged. It’s misdirected. It doesn’t have a clue. Doesn’t say anything about money. They haven’t gotten to the money problem yet. It’s just a clueless program. In 1994 myself and another company studied ATC. FAA came to [Congressional] hearings and said they’d have this program fixed in 2000. Now they’re saying 2020. Santa Claus and Elvis will be back before that happens.”

Boyd added that privatizing isn’t the answer. “All you’re doing is privatizing incompetence,” he said. “I think what Eleanor Holmes-Norton brought up … was entirely accurate. You have to think this through before you do it. There are things that do work within the government. This might be one of them.”

Just don’t cite Canada as precedent. “There are more moose in Canada than people, and they don’t fly,” he joked. “So it’s a different story. I think we need to fix what we have rather than rushing off and privatizing it.”

Additional info: The Association of Corporate Travel Executives welcomed the privatization proposal “if this is what it takes to move the needle” on NextGen, but raised questions about ensuring a smooth transition and avoiding work stoppages.

According to the Global Business Travel Association, “creating a not-for-profit corporation to oversee air traffic control, in theory, does offer a remedy” to ATC’s current shortcomings. The Senate Commerce Committee “should consider the President’s proposal, or seriously seek other remedies to solve the problems that includes the concerns of the business traveler,” GBTA wrote.

Disclosure: The Company Dime has an event and research partnership with ASTA.

This content is protected by copyright. Link sharing is encouraged but duplication and redistribution is illegal.