Transportation: Sky Cops

There's a growing consensus that the FAA shouldn't be directing air traffic.

The next time you fly coast to coast, which would you choose: A flight guided all the way by highly skilled air traffic controllers, using the latest high-tech radars, satellite-based navigation, and state-of-the-art computers? Or a system in which the busiest towers and control centers are staffed by some of the least experienced people, running equipment that relies on vacuum tubes, depending exclusively on ground-based radio beacons, and using computers two or three generations old?

You might think the latter description applies to flying across the vast reaches of Russia. But it's actually a description of the current air traffic control system in the United States. What's remarkable about this system, which is operated by the Federal Aviation Administration, is that it functions reasonably safely despite its major shortcomings. It does so by deliberately keeping planes very far apart, holding them on the ground when bad weather threatens, and using other techniques that contribute to millions of hours of flight delays each year. Depending on whose numbers you believe, delays caused by air traffic control cost airlines and passengers between $300 million and $1.5 billion a year.

Despite all this extra caution, the ATC system sometimes breaks down. In February 1991, a USAir 737 landed on top of a commuter plane at the Los Angeles International Airport, killing 34 people. The obsolete ground radar was on the blink (as it often was), so the controller could not see that the commuter plane had taxied onto an active runway, directly in the path of the 737. We fly in blissful ignorance of all the close calls that could have turned out like this one.

After more than two decades of criticism, there's a growing consensus that a tax-funded, bureaucratic agency like the FAA is the wrong kind of institution to operate a vital, high-tech, 24-hour-a-day business like air traffic control. Other countries facing similar problems have successfully transferred air traffic control to government-owned corporations, an approach that was recently endorsed by the Clinton administration. The proposal, which is backed by the airline industry, promises to do away with the budget constraints, micromanagement, civil-service requirements, procurement rules, and conflict-of-interest problems that undermine the ATC system. But corporatization faces stiff opposition from special interests and members of Congress who benefit from the current arrangement.

The environment in which the FAA operates is not conducive to efficiency or safety. Annual budgets are unpredictable and generally less than needed. Unlike a business, the FAA has to fund capital improvements on a pay-as-you-go basis from each year's operating budget, rather than raising money through bonds. Both Congress and the executive branch bedevil the agency with detailed "oversight," often giving contradictory directives and priorities. As a result, the top administrator seldom lasts more than about two and a half years.

In a federal bureaucracy, it's very hard to fire those who aren't cutting it. Moreover, uniform national pay scales dictated by civil-service rules mean chronic shortages of experienced people at high-stress, high-cost-of-living facilities. That's why control towers at the busiest airports–Chicago, Los Angeles, New York–tend to be understaffed, with less experienced personnel.

Cumbersome federal procurement regulations have meant chronic problems in attempting to modernize the ATC system. Many years behind schedule and billions of dollars over budget, the system cannot keep pace with rapidly changing computer and electronics technology. By the time a new computer system is procured and operational, it's already obsolete. (This is also why the FAA is the country's largest user of vacuum tubes.)

The FAA is the aviation industry's safety regulator, at arm's length from airlines, manufacturers, airports, pilots, and mechanics. But it also operates the ATC system, so it is hardly a disinterested regulator of air traffic control. The agency's role is similar to that of the now-defunct Atomic Energy Commission, which promoted and developed nuclear reactors even while regulating their safety.

The airlines have long been unhappy with this situation. In 1985 they proposed that the ATC system be spun off from the FAA and set up as a user-funded corporation, outside the constraints of civil service, procurement regulations, and the federal budget process. The idea was dead on arrival in Congress and was soon buried.

But it didn't disappear overseas. Virtually all ATC systems are government-run, and most suffer from problems similar to ours. In 1987, as part of its radical reform program, New Zealand's Labour government turned its ATC system over to a commercial corporation funded strictly by user fees, with a private-sector board and a mandate to turn a profit, albeit with the government as its sole shareholder. It worked. Airways Corporation of New Zealand has modernized that country's ATC system at less than half the cost projected by the government, gotten private planes to pay user charges, reduced its operating costs by one-third, and made handsome profits.

Word of New Zealand's success has spread. In 1992 Germany and South Africa enacted ATC corporatization laws that took effect last year. And Switzerland, which had started down this path in 1988, last year revised its plans according to the New Zealand model. Canada's airlines have petitioned Transport Canada to follow suit, and the idea is under serious study there.

Until last year, however, U.S. airlines were unwilling to revive the idea of spinning off ATC. One airline CEO wrote me in August 1992, "I think all the major airline CEOs would be in favor of privatizing the FAA's ATC functions. Unhappily…none–myself included–will publicly endorse the idea or strongly pursue it." Why? "When the Secretary of Transportation calls and makes an explicit request that that individual withdraw his support for a particular initiative, it's awfully hard to say 'No.' The reason, of course, is that every airline–and every airline CEO–is subject to the whims of an ever more political regulatory apparatus" for approval of overseas routes.

But with the advent of the Clinton administration, the outlook began to brighten. The White House appointed a National Airline Commission headed by former Virginia Gov. Gerald Baliles, who had already identified the ATC system as a major constraint on airline growth. The airlines revived their plan, and the commission backed it in its August 1993 final report, noting that "in the history of American business, no major commercial industry's minute-by-minute operating efficiency has been directly determined by the daily operating efficiency of our federal government–except for the airlines." Meanwhile, Vice President Al Gore's reinventing government commission, the National Performance Review, also endorsed the idea.

Although I supplied information to both bodies, I was still skeptical that they meant what they said. Wouldn't a "government corporation" mean another Amtrak or Postal Service? These federal corporations are neither supported entirely by their users nor free from cumbersome government red tape and bureaucracy. But after meeting Bob Stone, director of the National Performance Review, and some of his staff, I'm guardedly optimistic. Stone says their models for reinventing government were Australia, Britain, and New Zealand. At a conference on ATC corporatization in January, he told the 200 attendees, "When it comes to ATC, to paraphrase JFK, 'Ich bin ein New Zealander.' "

Why not go all the way to private ownership? Aside from the fact that such a move would not even be considered by Congress, there's the problem that air traffic control is essentially a monopoly. If the system were simply sold to the highest bidder, there would be questions about monopoly pricing and, even more sensitive, about access to the system by small-plane users. The Swiss are moving toward a greater degree of user ownership under a nonprofit structure, including shares for airlines, airports, and general aviation groups. But the complexities involved seem best left for another day. For now, the priority of most reformers is to convert the system to user funding and independent corporate status.

It's no surprise that the airlines are pushing this idea. Under the current system of user taxes (ticket taxes for airline passengers, fuel taxes for private planes), airlines pay 97 percent of costs, while private planes pay just 3 percent. Yet the small planes use 20 percent to 40 percent of all ATC services, and military and other government aircraft use about 15 percent (but pay nothing). Since they don't want to pay user fees for something they now get essentially for free, the Aircraft Owners & Pilots Association and the National Business Aircraft Association are staunchly opposed to corporatization.

The convention of lumping personal and business flying together as "general aviation" obscures some important differences. Single-engine planes are used primarily for training and recreation. Much of their flying is done from airfields without towers, with no need to file a flight plan. These "little guys" seldom use ATC services. By contrast, multi-engine private planes, especially turboprops and jets, are used mainly for business purposes. A large part of their flying takes place in controlled airspace, imposing real costs on the ATC system. These "little guys" ought to fully pay their way.

A recent Reason Foundation study proposed a pricing scheme to do just that. It called for charging fully allocated ATC costs to airlines and corporate private plane users but only marginal costs to the small private flyers (and only when they use specific ATC services). So while a Learjet would pay $88 for an instrument departure, on the rare occasion when a Cessna 172 made such a departure, it would pay $17. (A 757 would pay $182.) Based on current ATC transaction levels, this pricing scheme would have airlines paying 74 percent of ATC costs, corporate plane users 7 percent, small private flyers 5 percent, and government users 14 percent.

To Jack Olcott, president of the National Business Aircraft Association, that would be outrageous. At an Air Traffic Control Association seminar in January, Olcott said such pricing "ignores any public benefit from air traffic control." He also complained that under corporatization there would be "little the public could do to influence aviation policy." In other words, his members would no longer be able to lobby Congress for a free ride at the airlines' or taxpayers' expense.

The members of Congress on the House and Senate committees dealing with aviation are even more opposed to corporatization. Long accustomed to allocating funds and exercising "oversight" of all aspects of ATC and many aspects of aviation, they would lose much of that influence and power if air traffic control were corporatized. Officially, these senators and representatives are worried about safety. "My first concern is safety," says House aviation subcommittee chair James Oberstar (D-Minn.), "and I do not believe that moving the [ATC] system further away from government control is the best way to ensure safety." That view is echoed by such heavyweights as Sens. Fritz Hollings (D-S.C.) and Wendell Ford (D-Ky.).

But spinning off ATC would actually improve safety. Today's vacuum-tube-based ATC equipment is a hazard to air navigation, held together by the heroic efforts of overworked and often underpaid controllers and technicians. The government's budgetary roulette and nightmarish procurement system virtually guarantee that ATC equipment will remain one or two generations behind the state of the art in computer and communications technology. Furthermore, removing the FAA's conflict of interest by putting the agency at arm's length from ATC operations would strengthen safety enforcement.

Although it faces opposition from general-aviation interests and powerful members of Congress, corporatization enjoys the support of not only the airlines but also the air traffic controllers' union, the American Association of Airport Executives, and key administration officials. Washington was taken by surprise when Secretary of Transportation Federico Peña announced early in January that the ATC corporation approach had been selected as the best of three alternatives under internal review. In February FAA Administrator David Hinson strongly endorsed corporatization in a speech at the Aero Club of Washington. And Vice President Gore told a public hearing on February 23 that the administration would "go all out" to create the ATC corporation. Its legislative proposal was expected by April.

The key variable may be how much political capital the Clinton administration actually decides to expend on this issue. If Clinton and Gore really do go to bat for spinning off ATC, their claim to be New Democrats seeking to reinvent government will gain some credibility.

Reason Foundation President Robert W. Poole Jr., a former aerospace engineer, has been researching ATC problems since 1977.