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| Published: | 2016-Apr-08 |
| Last Updated: | 2016-Apr-19 |
| Principal Writer: | Barry Shatzman |
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Aviation Reform Act
2016 (HR-4441)
FAA Extension, Safety, and Security Act2016 (HR-636)
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Congress may look to privatize air traffic control
Each day, passengers on nearly 100,000 airplanes flying over the United States depend on air traffic controllers to keep their plane a safe distance from every other plane.
The U.S. Air Traffic Control system is run by the Federal Aviation Administration (FAA).
Some members of Congress recently proposed moving these operations from the FAA to a not-for-profit corporation. The effort failed when Congress subsequently funded the FAA through Sept. 2017.
However, we are maintaining our discussion of this issue because it is not the first time privatization has been proposed, and it likely will come up again.
What problem would privatization attempt to solve?
There are possible reasons why it might be beneficial to move the nation's air traffic control from the FAA to a private corporation...
o To make air traffic control operations less costly.
There is not a compelling case that either of these currently is a problem.
Air travel has become one of the safest ways to travel. Crashes are rare - especially considering the 2 million people who fly each day in the United Staes, and the 20 million U.S. flights per year. And most crashes that do occur are not related to air traffic control functions.*
As for cost, air traffic control run by the FAA has been estimated to cost $2.07 per mile. That is 8 cents per mile less than Canada's privatized system.**
For a more in-depth analysis of what the privatization of air traffic control might or might not accomplish, read this Center for American Progress report.
* For information about air crashes, visit PlaneCrashInfo.com or www.AirSafe.com
** Several publications quote this number based on a study by Bob Mann - an airline consultant.
A new not-for-profit corporation would control air traffic
Under the 2016 proposal (see Related Bills in the right-hand column), a new corporation called ATC Corporation would have been created. Approximately 30,000 FAA employees whose jobs relate to air traffic control would have moved to the new corporation.
By the end of 2019, the corporation would have been in charge of all air traffic control operations in the country - including military planes (though the president could authorize the Department of Defense (DoD) to take over this role).
Who would run the corporation?
The corporation would have been managed by a Chief Executive Officer and a board of directors made up of various interests in air traffic control, including...
o Four directors representing the major airlines
o Two directors representing noncommercial and recreational aircraft
o One director representing the air traffic controllers' union
o One director representing the airline pilots' union.
With this distribution, 4 out of the 11 people deciding air traffic control policies would have been representatives of the major airlines. Consumers would have had no representation of their interests.
The FAA would become more dependent on taxpayers
There are two statistics that provide a clear prospective to what the effects of air traffic control privatization might be...
o Approximately 70 percent of the FAA's budget comes from a special fund known as the Airport and Airway Trust Fund (AATF). The rest comes via Congressional appropriation from the General Fund.
If air traffic control responsibilities transfer from the FAA to the new corporation, the corporation would receive no money from the federal government. All money for its operations would come from fees charged to airlines. These fees would be passed on to passengers, and from the passenger's point of view basically would be a substitute for the AATF.*
Note from the statistics above however, that the AATF takes in more than is required for air traffic control operations. Some of that money helps pay for the rest of the FAA's mission.**
Without that boost from the AATF, the FAA would require more money from the General Fund to keep up its current level of (non air traffic control related) operations. In other words, either the FAA would need to reduce some of the things it does now, or part of the financial burden would shift from those who fly to those who don't.
* The tax currently paid to the AATF merely would become a fee - as the money would go to the airline rather than the government fund.
** In practice the money isn't allocated exactly in that way, but the effect is identical so the actual difference is irrelevant
What would be the real financial impact?
The fees passengers pay for air traffic control would be determined by the new corporation.
They would need to be high enough to cover whatever is needed to maintain safe operations. They also need to be sufficient to cover these expenses when air travel declines. However, fewer people might choose to fly if the fees are too high.
The Aviation Reform, Innovation, and Reauthorization Act explicitly states (in a section labeled "No Federal guarantee") that "Any debt assumed by the Corporation shall not have an implied or explicit Federal guarantee".
If the corporation does not collect enough in fees, it would face choices...
o It could cut back operations
o The federal government could make up the difference. Of course that would be using public money - shifting the burden back to taxpayers.
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