ATC Privatization: A Solution in Search of a Problem?
September 30, 2016
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  • A recent op-ed (‘Don’t Ground the American Economy’, 9/15) perpetuated a number of myths and tangential arguments aimed at building support for privatization of the nation’s air traffic control (“ATC”) system – even though this would not meaningfully reduce the cause of delays and costs to the U.S. economy which airlines have been in a position for a decade to remedy themselves.

    Privatization proponents, chiefly the commercial airlines and their industry lobbying group, are aggressively pushing Congress to turn over control of the U.S. ATC system to a private board dominated by representatives recommended by commercial airlines.

    The vast majority of these proponent airlines have failed to act in their own interest and that of the National Airspace System – and ultimately the traveling public. Other significant U.S. ATC system users and funders, including the business aviation community, general aviation, consumer groups, and the Department of Defense, are far less sanguine on the prospects of privatization, some openly opposed.

    A key question should be, what improvements would U.S. ATC privatization set out to achieve? Surprisingly, proponents have not articulated any metrics on what would be achieved through privatization. Perhaps that is because there is no proof that privatization would either save operators money (one of Delta’s arguments) or reduce flight time and delays (which place a drag on the U.S. economy).

    In fact, according to DOT, delays attributed to factors airlines themselves control were the largest category of delay last year, and by the widest margin since the government began collecting such data in 2003. An equally large category of delays ‘due to late arriving equipment’ was not charged to airlines, though it is typically the consequence of earlier airline-caused delays.  According to Bloomberg, “‘airline-caused’ delays totaled 20.2 million minutes last year — 2.7 million more than all other categories combined.” Over 80% of flight delays are caused by weather or by circumstances within the airlines’ control. How would privatization of our air traffic control structure alleviate issues that are clearly within airline control? Proponents can’t – or won’t – say.

    One airline, not a proponent, can and has said, and has acted in its own, its customers’ and its investors’ interests. Delta recognized early on, circa 2006, that ‘self-help’ works, and is the first major step to reducing delays. Delta CEO Ed Bastian stated “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.”

    What about the foreign systems that the airlines say we should emulate?  NavCanada, the privatized Canadian ATC system cited most often by proponents, is arguably, absent foreign exchange advantages, more expensive to operate than the ATC portion of FAA’s current budget. For reference, the entire Canadian aviation market is 10% of the size of the U.S. market, most of that 10% concentrated in a band from the 49th parallel north 200 miles. 

    Another comparator, NATS, the UK’s privatized ATC system, has had its share of systematic issues and despite significant North Atlantic transit overflight revenue from aviation users in the Americas, Europe, the Middle East and Africa, required a bail-out by U.K. taxpayers.  A report last year from the UK Airports Commission identified “unambiguous signs of strain” and suggested that domestic routes had been sacrificed to reduce system delays resulting in “decline of domestic services from other areas of the UK, particularly the North of England and Scotland, into the largest London airports, impacting the growth of their economies”.

    Higher costs and potential impacts on regional economic growth are not the only concerns. The nonpartisan Government Accountability Office warned in a recent report that the “safety roles and responsibilities may not easily be split between the safety regulator and air-traffic control entity” in a system with privatized air traffic control management, nor is it clear how the private buyer would fund the hand-over of FAA assets.

    The bottom line is that supporters of privatization will promise the Moon to get the power that a privatized ATC system would give them, for example, to privately award multi-billion dollar annual system financing and operational contracts.

    Make no mistake, continuous improvement to ATC system processes and performance can and should be made, and informed discussion should first and foremost be about what participants can actually do – right now — to resolve these issues, not deflect attention from the self-help that should represent the first step toward improvement. 

    Robert W. Mann, Jr. is the president of R.W. Mann & Company, Inc., an independent aviation industry advisory firm. Founded in 1993, R.W. Mann & Company provides expertise for airlines, manufacturers, aviation industry investors and employee groups, on five continents. Prior to 1993, Mann served as a corporate planning officer at PanAm and TWA, after beginning his career in Industry Analysis at American Airlines.