Essay Instructions: This paper is to persuade the United State pilot as to the benefits of the privatization of Air Traffic Control (ATC) system within the United States. By allowing the private sector to
participate in the privatization of the United States air traffic control system, this would allow
more companies to move toward providing better services while at the same time reducing overhead expenses. During these economic hardship having the privatized ATC and regulatory government agencies operating as one company leads to the air transportation system to be not as efficient as it could be. There has been research to support privatization of ATC which argues that Federal Aviation Administration (FAA) which manages the largest, busiest and possibly, the most complex aviation system in the world. The FAAs staff over 49,000 controllers, who operates and maintains the nation's air traffic system, coordinates take-offs, landings as well as the routing of at least 93,000 aircraft a daily (NATCA www.natca.org/legislationcenter/privatization.msp, 2002). The FAA may be over extending their business practice with the ever changing aviation regulations, safety and security measures, as well as the ATC system itself. For many years, the FAA has provided an excellent safety record in air travel.
According to the FAA, flight delays have increased by more than 58 percent since 1995, cancellations by 68 percent, contributing to widespread passenger frustration and anger. These delays will continue to increase, because of additional population growth and the modernization of aircrafts. The FAA predicts at least a 60 percent increase in the number of passengers along with doubling of cargo, which leads to an increase in aircraft operations ( NATCA Homepage, 2002). The FAA is federal funded with a limited budget which has decreased their effort to modernize air traffic system technology. With the FAA operating a year-round, all hours schedule which the entire aviation nation depends on, as lack the ability to keep up with technology.
Due to its importance to the safety and security of American travelers, the ATC are an inherently governmental function. The ATC characteristics, which involves delivering a service, make it best managed as a separate unit distinct from the rest of FAA activities. However, the ATC management must be regulated to ensure safety. Many experts agree air traffic services is a distinct activity, which separates it from regulation or oversight of air traffic safety and security. The users of the air traffic system are identifiable, and most of the benefits and costs of air traffic services accrue to those who are already paying the costs via taxes. In contrast, most government agencies provide for public goods for which there may be little correlation between taxes paid and the services received by any individual (NATCA, 2002). According to a National Performance Review by Al Gore, air traffic operations needs be reorganized into an independent government corporation. This would allow the use of many private sector companies to provide air traffic services more efficiently and safely.
In 2000, The United States Congress established a Chief Operating Officer position for air traffic operations and a subcommittee of five member to function as a corporate board of directors to manage and budget of air traffic operations creating the begin for a private air traffic service.
In a 2002 initial proposal, the European Union (EU) insisted it was not privatizing the air traffic control system. A number of EU nations are questioning the possible introduction of an authorization procedure for navigation services operators. They regard this plan as an open door toward further liberalization, whereby several operators would compete for the contract to provide the services.
According to an article in Aviation Week, 2002, ?Privatization of air traffic control has become a worldwide trend gaining popularity over the years. Supporters of Privatization argues that competition in the private sector will allow companies to provide services more efficiently as well as reducing the company's overall costs. However, a change in ownership will improve safety, increase capacity and reduce costs, as evidenced by what is occurring in Canada and England. Nevertheless, public perception, budget constraints and pressure for improved government operations will keep privatization on the agenda." During the Bush administration, President Bush did released a proposed budget supporting the concept of air traffic control privatization.
In Robert Obert's article, ?How to Commercialize Air Traffic Control?, a strategy for achieving privatization of ATC was creating documenting a step by step plan. They argued that ?the air traffic control (ATC) system stretched beyond its limits. And not only are delays at record levels; so, too are runway incursions and operational errors by controllers. ?Over the past decade a growing consensus has emerged that air traffic control is essentially a commercial service, a 24 hour-a-day, seven-days-a-week, high-tech service business. A number of federal task forces and commissions have, recommended that ATC be separated from the Federal Aviation Administration and set up as some kind of corporate entity, funded directly by payments from users. Over the past 15 years, nearly two dozen other countries have taken this route, creating either self-supporting government corporations or private nonprofit corporations . CEO?s of America have taken up the cause purposing for a shift in the current ATC functions out of the FAA and into a self-supporting, nonprofit corporation governed by a stakeholder board and regulated at arms-length for safety by a slimmed-down FAA. Since ATC is, and will likely remain, a monopoly, it must be operated in a way that protects its users from possible monopoly
exploitation. Resulting in two possible corporate forms of a government corporation, a nonprofit corporation, or a regulated for- profit corporation. A number of countries have opted for the first, the U.S. experience with government corporations has not been highly successful.
On the other hand, a for-profit ATC corporation raises the perception of ?safety versus profits,? a fierce controversy in the United Kingdom. They strongly recommend the nonprofit corporation approach, as implemented successfully in Canada in 1996. Since it took over ATC operations, Nav Canada has speeded up modernization, dramatically increased efficiency and productivity, and cut user fees. A feature we have considered from Nav Canada is the concept of a stakeholder board. Having diverse aviation interest groups in the United States, such an approach is even more critical in the U.S. to ensure that the different interests of, commercial and general aviation are taken into account by a corporation?s board, effectively segregating group think.
Important is a workable system of ATC fees and charges. They suggest a workable fee structure where the current airline shares of cost responsibility not change significantly at the
outset; future shares would obviously depend on changing market structures in the dynamic
airline industry. Drawing on international practice, as well as guidelines from the International
Civil Aviation Organization, they recommend replacing most current aviation excise taxes with a simple weight-distance fee structure similar to current practice in Canada and Europe. Airlines under the ATC Corporation would be just 72 percent of what the airlines currently pay in aviation user taxes. They noted that the controllers union is on record supporting a government-
corporation approach to ATC, such as the 1995 Clinton administration?s U.S. Air Traffic
Services (USATS) proposal. Their plan offers the employees ?USATS plus a board seat.? While
the union is opposed to ?privatization? of ATC, what they mean by that term is shifting ATC
responsibilities to a for-profit company, creating a perceived conflict between profits and
safety. Our nonprofit, stakeholder-controlled corporation avoids any such conflict. While it
is essential to bring in a new top management team for the ATC Corporation, it is important to retain the current controllers and technicians at the outset.
Drawing on two decades of global experience with corporatization and privatization, and
U.S. experience with reinventing government, we suggest a number of policies for easing the employee transition: initial no-layoff guarantees, lateral transitions, outplacement assistance, early retirement buyouts, and pension protection. We suggest a number of reasons why corporatization would benefit employees: an improved performance-oriented
corporate culture, state-of-the-art technology, market based compensation, possible gain-
sharing (sharing in savings from productivity increases), and the seat on the corporation?s
board (RPPI, 2002).
The airline industry, manufacturers, and governments are all working toward a goal of reducing cost and gaining the most value. A non-profit ATC corporation will ensure continued safety concerns while allowing the FAA to remove itself from the day to day running of the air traffic control system, thus reducing government spending. Privatization is the future in air traffic control, it is there and will be pushed on us by economics.
References:
National Air Traffic Controllers Association (2002, November). White House Report Accompanying EO 13180. NATCA Homepage [on-line]. Available: http://www.natca.org/legislationcenter/privatization.msp
Aviation Week.Com (2002, October). ATC: U.K. Report on NATS Boots Anti-Privatization Case--AOPA/Aviation Week & Space Technology; 22-Aug-2002 Aviation Now.com Homepage [on-line]. Available: http://www.aviationnow.com/
Aviation Week.Com (2002, November). Aviation Daily: European Union Insists ATC Will Not Be Privatized; By Martial Tardy; 20-Jun-2002 Aviation Now.com Homepage [on-line]. Available: http://www.aviationnow.com/
Reason Public Policy Institute (2002, November). How to Commercialize Air Traffic Control; February 2001; By Robert Obert W. P Poole and Viggo Butler; RPPI Homepage [on-line]. Available: http://www.rppi.org/ps278central.html
