Air Traffic Control:
Chances of reform in the United States June 2016

The most intense and arguably most  important debate about the future structure of ATM is to be found in the United States, which is perhaps somewhat ironic given that the US, with its single ANSP covering such a large geographical area, is often held up as a model for other regions, not least Europe. (European ANSPs have some 25% more staff to handle half the level of traffic at lower costs than the US does.) In fact, an intense argument is taking place which has become highly political and even set airlines against airlines. The Federal Aviation Administration regulates and provides all ATC services, with the exception of some towers. It is a government body, part of the Department of Transportation, and has therefore over the years been subject to the vagaries of government finance. The result is that the FAA has a substantial investment backlog, despite its ambitious NextGen (New Generation Air Transport System) programme, the equivalent of Europe's Single European Skies/SESAR.

One issue can be isolated quite easily. It seems incredible to many that the FAA should be both the provider of ATC services and their safety regulator. Such an approach would never be accepted for airlines and has long since been abandoned by many other countries. Clear separation of roles is surely the answer. Some 60 countries have done precisely that over the past two decades, in accordance with ICAO recommendations. But that still leaves the question of what form of organisation should actually provide ATC services within the US, assuming that the regulatory functions remain with a government-owned FAA. That is where the debate gets complicated, and heated.

Numerous models have been considered, including full privatisation, partial privatisation as in the UK, the Canadian stakeholder run example and a version of the government-owned status quo. One might expect, given what is at stake for their operations, that the airlines would have united around a single solution, but that is far from the case. Delta in particular has lobbied strongly against any form of privatisation, even leaving the main airline trade body, Airlines for America, to be better able to argue its case. (It is interesting that Delta has also taken the lead, very publicly, in opposing the expansion of the Gulf carriers.)

Ed Bastian, Delta's CEO, maintained recently that collaboration, not privatisation, was the way to improve airspace efficiency, but gave a hint, albeit well hidden, of what is really driving the company's position: “The fact is the current air traffic control system, run by the Federal Aviation Administration, is the same for every airline operating within it. What sets Delta apart is that we have invested in our people, our operation and our technology to enable us to outperform our competitors within the system where we all operate … Where the efficiency of our nation's airspace is concerned, Delta's operational performance is proof that today's model is far from broken. While I agree that more needs to be done, privatising the Air Traffic Organisation isn't the answer.”

It certainly seems to be the case that Delta sees benefit for itself from, if not maintaining the status quo, at least substantially slowing down the speed of reform. One commentator has noted that Delta has the oldest fleet among US major airlines (over 17 years on average, compared with just 11.5 for American and 13.6 for United), largely a reflection of the aircraft inherited from Northwest following their merger. It might, therefore, be expected to face the largest additional costs from equipping its aircraft with new technology. It also has less congested hubs than most of its competitors, reducing the potential benefits of NextGen modernisation. Thus, it seems that structural and technical change in relation to ATC reform may have become closely, and probably unhelpfully, connected.

Most other US airlines and their trade body have come out strongly in favour of ATC reform as soon as possible, primarily in order to free the FAA from what they see as the shackles of political interference and government funding restrictions and thereby enable it to invest more easily in NextGen. Bob Poole of the free market Reason Foundation, a frequent commentator on this subject, noted in evidence before Congress in February that the airlines have been supported by a number of former DOT Secretaries, several former FAA Administrators and all three former COOs of the air traffic organisation. All have argued in favour of some form of “corporatisation”, with the main focus being on something close to the Canadian model.

Several studies have compared the US and Canadian ANSPs, and almost invariably the conclusion has been that the Canadian approach is far superior in terms of efficiency and customer satisfaction. To quote Bob Poole again, over its 20 years of operating the Canadian ATC system, Nav Canada's fees have gone down by more than 30% in real terms. It has not had a rate increase for some eight years, and recently announced a reduction. Productivity measures by CANSO, the ANSP global trade body, show Nav Canada's cost per IFR flight hour to be lower than the FAA's, despite operating a considerably smaller system. (There are significant economies of density in ATC provision, although equally parts of the US system are more congested, which raises unit costs.) As Bob Poole notes: “There is pretty solid evidence that Nav Canada is delivering ATC services very cost-effectively to its aviation customers.”

New proposals

In February this year, legislation was introduced in the House of Representatives to, inter alia, separate the provision of ATC services from the FAA and create a new independent, not-for-profit corporation governed by a board of industry stakeholders and government officials, in other words something very similar to the Canadian model. However, a similar Bill introduced in the Senate the following month contained no such provision. At present the FAA, including ATC services, is financed by means of a ticket tax. Inherent in most reform proposals, including that tabled in the House of Representatives, is a move towards user fees as found in the vast majority of other countries. Needless to say, the airlines are keen to ensure that the introduction of fees paid directly by themselves is accompanied by an appropriate reduction in passenger taxes.

The legislation tabled in the House of Representatives proposed an 11-member Board of Directors for the new non-profit organisation, consisting of -

• 2 Directors appointed by the Secretary of Transportation
• 4 Directors appointed by the primary airline trade body
• 2 Directors appointed by the GA representative body
• 1 Director appointed by the air traffic controllers organisation, and
• 1 Director appointed by the largest airline pilots body.

Interestingly, no role seems to have been seen for airports, nor for passenger and freight representatives, unless the DOT appointments are meant to do this. However, all Board members would be expected to owe a fiduciary duty to the company, rather than to the body appointing them.

In addition, this being America with its powerful general aviation lobby, the GA community soon got involved. At present GA has a free ride with respect to ATC charges. The draft House legislation proposed that this should largely continue, with exemptions from fees for piston and turbine non-commercial aircraft. However, GA representatives remained concerned that a Nav Canada corporate model would be dominated by airline interests, to the longer-term detriment of GA operators. To be fair, concern about airline dominance was shared by some other stakeholders as well.

The aviation legislation introduced into Congress in February/March was primarily aimed at re-authorising FAA financing beyond the end of March. There was never likely, therefore, to be sufficient time to address the complexities of ATC reform, a development which, in magnitude, one commentator has compared to airline deregulation in 1978. As Aviation Week noted, while FAA reform might be long overdue, it is important to “get the details right.” “Probably no measure would win unanimous agreement among all stakeholders. But Congress needs to slow things down if it is to bring as many on board as possible. The risk in not doing so is that opponents could kill the proposal.” Equally, however, this subject has been around for a long time, with no shortage of debate.

As a generalisation, ATC employee representatives around the world have tended to oppose moves away from government ownership. In the US, however, NATCA, the controllers' union, has endorsed the principles behind the recent draft House of Representatives legislation. Whether this mainly reflects frustration at frequent government intervention and investment restrictions or a belief that remuneration for its members would be more attractive in a corporatised body, is not wholly clear. (To be fair, NATCA's President, Paul Rinaldi, has been very complimentary about Nav Canada, describing it as “an excellent model.” The FAA, on the other hand, while certainly at last phasing out World War II technology, was replacing it, he noted, only with “1990s technology — because it takes that long.”) Ironically, however, NATCA's support for reform has generated opposition from certain conservatives to the whole concept of corporatisation, in the apparent belief that it would result in a union-run organisation.

Congress split

Congress itself is split on what to do about air traffic control, to a large extent along party lines, with the Republicans in favour of reform, apart from those fearing increased union power, and Democrats against it, despite the unions' support. On the whole, Republicans are usually likely to favour smaller government, but the Democrats did support airline deregulation in 1978, which was actually promoted by the Carter Administration. Similarly, subsequent Democratic Administrations, including that of Bill Clinton, have argued in favour of ATC reform. Clearly the political situation at present is confusing and complex, with ample room for disagreement.

The influential Government Accounting Office, a research body which reports to Congress, is undertaking a substantial study of ATC reform. It issued its “Preliminary Observations” in February, having consulted over 30 parties (including this author) and its final report is expected shortly. It would be surprising if the GAO did not join others in favouring a Nav Canada-type model, probably with some adjustments designed to satisfy specific US stakeholder interests.

The Democrats seem to have got themselves into an awkward position, possibly because they are confusing corporatisation and privatisation, which are not necessarily the same thing at all. It is worth quoting in this respect the views of Dorothy Robyn, who served in the Clinton White House as an infrastructure/aviation expert and is still an influential commentator. As reported by Bob Poole of the Reason Foundation (hardly a natural supporter of Democratic policies), she notes: “Democrats should not treat this as a principled fight over 'privatisation'. Controllers support the Shuster bill because they like Canada's user co-operative approach to air traffic management, which rewards productivity and involves controllers intimately in the technology modernisation process. Aircraft operators and consumers also benefit. Had Nav Canada existed in 1995, I suspect it … would have been the prototype for the Clinton Administration's proposal. With the problems that prompted that proposal having only gotten worse over the last 20 years, an idea that made sense then should be even more compelling now.”

Leaning towards the Canadian model

Thus the argument in the US seems to be leaning towards ATC reform, and towards a Nav Canada model rather than the partial or full privatisation favoured in the UK. On the other hand, this is hardly a new subject. It has been around for many years and there is clearly ample opportunity for further delay. Ronald Reagan, in frustration, once sacked most of the US air traffic controllers then on strike and introduced legislation banning further industrial action. Perhaps it needs a similar brave (foolhardy?) move to break the FAA reform deadlock. Anyone know what Donald Trump's views are on this subject?