Andy Pasztor and Susan Carey THE WALL STREET JOURNAL
House Panel Considers Privatizing FAA’s Air Control System
November 18, 2014
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  • Opening what promises to be a spirited debate, members of the House Transportation Committee signaled a renewed willingness to consider privatizing the nation’s air-traffic control system.

    Capping months of studies and deliberations about possible privatization by industry officials and outside experts, a hearing on Tuesday morning highlighted bipartisan support for taking up the issue as part of the Federal Aviation Administration reauthorization bill.

    In addition, the broad concept of privatization was supported by a string of witnesses ranging from a pilot-union representative to the president of the Business Roundtable to the head of the nation’s leading airline trade association. Without committing to details, they all emphasized possible benefits of severing air-traffic control modernization and daily operations from the FAA’s ongoing budget. The head of the controllers union also opened the door to privatization, while urging caution.

    No specific privatization plan has yet been floated by the committee’s leaders, but the comments represented the strongest signals yet that lawmakers increasingly are concerned about the FAA’s ability to adequately plan and oversee air-traffic control modernization without first transforming the agency’s funding stream and organizational structure.

    “We must make sure the FAA is properly structured,” said Rep. Bill Shuster, the Pennsylvania Republican who chairs the committee, as he opened the hearing. “We really have to take a different look and move in a different direction.”

    Rep. Shuster also said lawmakers and industry leaders should consider lessons from other countries that have pursued privatization initiatives.

    John Engler, president of the Business Roundtable, said the FAA’s history of “slow and uncertain progress” implementing modernization plans over many years now demands a major shift in governance. The agency’s air-traffic arm, which is included in its annual budget and operations, “answers to way too many interests” and has a host of administrators who dilute its focus, according to Mr. Engler, a former Michigan governor.

    In countries such as Australia, Canada, Germany and the U.K., Mr. Engler said, privatized air traffic control systems effectively provide “a high-tech service that can be funded directly” by users. Privatization plans typically require operators of commercial, business and private aircraft to pay for services.

    The current FAA structure relies on annual congressional appropriations to support traffic control operations and improvements, a system that has seen dramatic shifts in funding as lawmakers become embroiled in unrelated spending and other political battles.

    Mr. Engler said proposals to remove air traffic control budgets from direct FAA purview mark an “excellent starting point” for committee debate.

    Nicholas Calio, chief executive of Airlines for America, which represents the country’s biggest passenger and cargo carriers, told the panel that the organization agrees with efforts to usher in “transformational change.” Considering the FAA’s “checkered history of progress” implementing modernization programs on schedule and without cost overruns, Mr. Calio urged further analysis of the advantages of privatized systems in other countries. “We just might find our answers outside the U.S.,” he testified.

    Canada’s fully privatized system, which is funded entirely outside government budgets, has drawn the interest of U.S. industry officials.

    The privatization push even received some limited support from Paul Rinaldi, president of the National Air Traffic Controllers Association. Suggesting that he remains open to at least considering privatization options, Mr. Rinaldi told the panel that such changes must be made “very methodically” and always with the goal that “we don’t want to disrupt the day-to-day operation.”

    A portion of the hearing also concentrated on nagging technical and schedule problems affecting NextGen, the FAA’s multibillion-dollar umbrella effort to switch to a satellite-based control network from a ground-based radar system.

    “I think NextGen either is in a stall or in reverse, and neither is acceptable,” said Rep. John Mica of Florida, a veteran Republican member of the panel and chairman of the Committee on Oversight and Government Reform. Rep. Shuster said FAA modernization programs are “moving at a snail’s pace,” adding “we’ve got to get these things up and running.”

    Calvin Scovel, the Transportation Department’s inspector general, told lawmakers the FAA has made some progress but continues to suffer from long-standing management weaknesses, combined with lack of reliable cost and schedule projections.

    Without agreement on a new funding model, the debate over the FAA’s future direction is likely to play out over months as industry groups maneuver to protect their interests and determine how privatization likely would affect them. Tuesday’s session, however, illustrated high-level political willingness to broach the difficult question—a dynamic that hasn’t been so clearly evident on Capitol Hill for decades.

    Lee Moak, outgoing president of the Air Line Pilots Association, North America’s largest union for aviators, was among those urging a slow approach. He gave the FAA good marks for handling increasing traffic flows, and said the situation “may not warrant an immediate need for a complete overhaul.”

    Yet the thrust of the hearing indicated FAA officials will face heightened scrutiny when they tell lawmakers how the agency plans to balance day-to-day operations with longer-term modernization initiatives. FAA Administrator Michael Huerta has signaled a willingness to at least discuss possible structural changes for the agency. Neither the FAA nor White House officials have staked out a position about whether they support some form of privatization.