|GUEST COMMENTARY. As usual, Rick Durden's recent column, ("How Many Are Going to Die, Mr. President?") generated a lot of discussion by AVweb readers. Several people mentioned a privatization plan put forward by the Reason Foundation in February 2001. In the interest of providing more information to our readers, AVweb has agreed to publish this commentary by Robert Poole, one of the authors of that plan.
July 24, 2002
On Saturday, July 13, 2002, a crowd of more than 1,500
people witnessed the rollout of the first Eclipse 500 in
Albuquerque. By the time you read this, the revolutionary six-place,
twin-engine mini-jet may well have made its first flight. With its high-tech
avionics, 355-knot cruising speed, 1,300-nm range, and 41,000-ft ceiling
all for a price tag well under $1 million the Eclipse stands a good chance
of revolutionizing general aviation.
Company founder Vern Raburn points to the Elipse's breakthrough Williams
jet engines, advanced digital electronics, and revolutionary manufacturing
techniques (e.g., friction-stir welding) as ushering in a new era of the
mass-market private jet. The company's fundraising presentations have talked
about the Eclipse creating a whole new air-taxi market, potentially as large
as 30 million trips per year, within a decade. That size market would require
some 35,000 small jets like Eclipse and possible competitors.
It's a breathtaking vision, and one that looks quite plausible, assuming
the Eclipse delivers on its cost and performance targets. Except for one
thing: There's no way the present air traffic control system could possibly
handle 35,000 more jet planes between FLs 290 and 410.
Contrary to those, like AVweb's Rick Durden, who
maintain that we don't need dramatic ATC reform ("Why change a system that
works pretty well?" Durden wrote here in June), a
growing consensus among aviation leaders says the ATC system is broken and
needs major repair. Foremost among those experts are the members of the National Civil Aviation Review
Commission (NCARC), headed by Norm Mineta.. In its 1997 report, the
NCARC accurately forecast the gridlock that beset the airways in the summers
of 1999 and 2000. The recession and the aftermath of 9/11 have given us a few
years' breathing space, but most knowledgeable observers have concluded that
the FAA's current modernization plan (the Operational Evolution
Plan, or OEP) is too little, too late. The NCARC's knowledgeable members
called for fundamental structural and funding reform of ATC. Unfortunately,
little of what the NCARC recommended has actually been implemented, five years
As James Fallows lucidly describes in his book Free Flight, the technology
exists for major leaps forward for GA, for both recreational and commercial
purposes. Thanks in part to R&D investments by NASA in propulsion,
structures, avionics, and ATC, the next decade or two could give us the means
for precision approaches to thousands of GA airports. Affordable versions of
business-jet flight management systems for small planes are also in prospect,
as are more breakthroughs in engines and structures that should give us more
planes like the Eclipse at one end of the scale and the Cirrus SR20 on the other.
But the real constraint on realizing this new world of advanced GA is the
airspace in which these planes can operate, managed by the bureaucratic,
under-funded, micromanaged FAA. To provide an ATC system that is dynamic,
high-tech, user-friendly, and well-funded is the goal of those of us who have
been developing proposals for an ATC Corporation over the past decade. Our
vision is a high-tech, 24/7 service business, controlled by, and accountable
to, its users.
Rick Durden's well-written AVweb piece, "How Many Are Going
to Die, Mr. President?" attacks something he calls "ATC privatization."
But what he's attacking bears no resemblance to the kind of plan proposed, in
several variations, by the Clinton administration and the Reason Foundation. Durden's
straw-man version goes like this:
The federal government sells or contracts out the ATC system to a large
aerospace firm, which proceeds to run ATC as a for-profit business. It
charges fees for every single ATC contact, to every single plane. It suffers
from an inherent conflict between safety and profits. And by charging GA
pilots for weather briefings and flight following, it tempts cheapskates and
rogue pilots to avoid these services, endangering their own lives and
possibly those of others.
If anyone were seriously proposing that, I'd be writing articles against
The Reason Foundation's actual plan, which has won widespread support from aviation
professionals, is fundamentally different. First of all, it's set up as a
nonprofit corporation, with a federal charter spelling out a board of
directors composed of aviation stakeholders. In effect, it's a user co-op,
designed to let the users decide the future of ATC, not politicians and
bureaucrats. Our current proposal is for a 15-member stakeholder board, on
which airlines would have four seats and GA would have three. (Other
stakeholders include controllers, airports, government airspace users, and the
In its powerful 1997 report, the NCARC called for a restructured ATC organization
to be paid for by fees, and charges to be paid by users, rather than taxes.
The reason for this change is to liberate ATC from the federal budget process.
A reliable stream of user-fee revenue would permit the ATC organization to
issue long-term revenue bonds, backed by that revenue stream. And that, in
turn, would permit large-scale technology modernization to be done far more
effectively. For example, instead of the FAA going hat-in-hand to Congress
each year for funds to add terminal radar displays to a few more VFR towers,
this safety-related improvement could be done all at once. The unit cost of an
87-display order would be much lower, and this badly needed system would be in
place many years sooner.
Over the years, people like AOPA's Phil Boyer has made the term "user fees" a swear word
within GA circles. And Durden rightly points out the potential safety hazards
of charging fees for individual GA services. That's why our plan studiously
avoids doing so. Our proposal calls for all jet aircraft, which fly in
controlled airspace, to pay ATC fees based on weight and distance the
standard ICAO formula for air navigation charges, used in nearly all countries
except the United States. For non-jet GA planes, the fuel tax would be
abolished and would be replaced by an annual membership fee. That fee would be
proportional to aircraft gross weight, and would be paid only by the plane's
owner. (The fee would be applicable only to owners who want their planes to
make use of ATC services.) The fee schedule would be designed to bring in
about as much money as the current GA fuel tax does now. Thus, the change to
the new system would be revenue-neutral for the vast majority of GA plane
Durden expresses concern about higher costs, due to a "privatized" ATC
system. But the three reasons he cites are all off-base:
- Higher costs due to the addition of a profit margin:
Since the corporation would be set up as a nonprofit user co-op,
there would be no profits.
- Higher costs, by analogy with overseas ATC
corporations: Documented evidence from Australia, New Zealand,
and Canada reveals both costs and user fees going down, not up, following
- Higher costs due to users having to pay for FAA
regulatory oversight of the ATC corporation: Our proposal calls
for the remaining FAA to be paid for out of general federal revenues, like
all other safety regulatory agencies (CPSC, FDA, OSHA, etc.)
With that as a background, let's consider how the new ATC Corporation would
differ from the FAA in dealing with the challenges of modernizing our ailing
ATC system. As noted earlier, when it comes to paying for modernization, the
corporation would do what other high-tech businesses do: Go to the capital
markets. The FAA can only modernize in fits and starts, one year at a time,
based on the annual Facilities & Equipment appropriation it can squeeze
out of Congress. Somehow, Congress always seems to have other, more pressing,
spending priorities, especially when the federal budget is in deficit.
When a high-tech firm buys new technology, it doesn't spend years on
"Beltway Bandits" defining its requirements in endless detail. It spells out
performance requirements, gets bids, selects the best value, and implements
its choice. But FAA procurements are subject to a morass of federal
procurement regulations including a statutory right of appeal by losing
bidders. No wonder it takes six to eight years for system upgrades at a
time when new-generation electronics comes along every 18 months.
Managers in a high-tech firm are held accountable for performance. They can
be handsomely rewarded for achievement and they can be fired for not
performing. Neither is true of the FAA. Even very good people find it hard to
excel in that kind of environment.
It is these kinds of differences that have led more than two dozen
countries to shift ATC from being a government department, funded out of the
government budget, to some kind of self-supporting corporate entity. Countries
making this shift include: Australia and New Zealand, Canada, Belgium,
Britain, Germany, the Netherlands, and South Africa. Nearly all of these are
government corporations. The two exceptions are Canada (a nonprofit,
stakeholder-board company, similar to the Reason proposal), and Britain (a
public/private partnership, in which the private sector owns 46 percent).
While all ATC corporations have struggled with reduced revenues post-9/11 (as
have airports), their track records have been quite good in terms of
modernization and efficiency gains.
|A Statement Concerning the Future
of the U.S. Air Traffic Control System
May 1, 2001
Each of us has held a senior position within the FAA, and each of us
continues to consult on aviation issues. In reviewing the FAA's
performance over the past decade including recent years since the
enactment of various reforms by Congress we have concluded the
1. Air traffic control is a 24 hour-a-day, 7 day-a-week high-tech
service business. It can and should be operated by a separate corporate
entity, paid directly by its customers, and directly accountable to its
customers for its performance. This country can no longer afford to
provide this 21st-century service using a 1950s-type organizational and
2. Attempted reforms of FAA's personnel and procurement systems have
failed to materially change the agency's organizational culture, which
is necessarily bureaucratic, risk-averse, and not sufficiently
customer-focused. Despite the increased funding promised by AIR-21, the
FAA's revenue stream is still uncertain, dependent on the ups and downs
of the federal budget process. And efforts to convert the FAA's Air
Traffic Services into a "performance-based organization" within FAA will
not convert it into a sufficiently customer-focused entity.
3. For the FAA to provide both air traffic control services and
regulate the safety of ATC operations is a conflict of interest. The ATC
service provider should be regulated at arms-length by the FAA, just as
it regulates air carriers, aircraft and engine manufacturers, and all
other components of the aviation system.
Therefore, we support the creation of a not-for-profit air traffic
control corporation, along the lines proposed by the Reason Public
Policy Institute in its Policy Study No. 278, dated February 2001.
Assoc. Admin. for Policy, 1986-88
Assoc. Admin. for Reg./Cert., 1985-96
Assoc. Admin. for Res./Acq., 1994-98
Assoc. Admin. for Airports, 1987-90
Chief of Staff, 1987-89
Dep. Admin, 1987
Chief Counsel, 1981-85
Exec. Director for Eng./Dev./Ops.,
The depth of concern about the inability to reform ATC as long as it
remains within the FAA is illustrated by the statement signed last year by a
dozen former top FAA officials (see sidebar). They reviewed the Reason plan,
and while not necessarily agreeing with every detail, signed a statement
supporting the creation of a nonprofit ATC corporation along those lines.
Speaking in support of the plan at the news conference unveiling the proposal
in February 2001 were former DOT Secretary Jim Burnley, former CAB chairman
(and father of airline deregulation) Alfred Kahn, and the top aviation policy
person in the Clinton White House, Dorothy Robyn.
In the nearly 18 months since the proposal's unveiling, it has also drawn
support from a number of airline CEOs, from some prominent GA people, from
Sen. John McCain (R., Ariz.), and from a number of individual GA pilots and
air traffic controllers. On the other hand, it has been criticized by the
leadership of AOPA and NBAA,
as well as by the controllers' union, NATCA.
The current Bush administration presents a mixed picture. While the Clinton
administration's Reinventing Government office and later the DOT Secretary's
office produced ambitious plans for a user-fee/revenue-bond funded government
ATC corporation, thus far the Bush White House has produced no plan of its
own. Despite having presented the case for structural and funding reform of
ATC as NCARC chair, now that Norm Mineta is DOT Secretary he has opposed both
user fees and corporatization. The only visible champion of reform in the Bush
White House thus far is budget director Mitch Daniels, who has kept the idea
in the first two Bush budget messages.
The only tangible action taken by the Bush White House thus far was the
issuance of an Executive Order by President Bush on June 4, 2002. That brief
order simply deleted the words "inherently governmental" from the December
2000 Clinton Executive Order authorizing the FAA to reorganize ATC internally.
That wording was a last-minute addition to the Clinton EO, put there at the
strong urging of NATCA president John Carr and FAA Administrator Jane Garvey
(over the objections of others in the Clinton White House). Thus, the alarms
raised by NATCA and Durden about Bush's removal of those words being an
historic change in policy are simply nonsense. All the Bush EO did was to
restore the historic status quo as it had always been up till December 2000.
The only immediate impact of the Bush EO is to remove a threat to the
continued existence of the FAA's long-standing contract tower program, in
which over 200 small-airport control towers are operated safely and
efficiently by private firms.
Whether the Bush administration will proceed with serious ATC reform is an
open question. It will depend in part on who the next FAA Administrator is, on
whether Norm Mineta retires as DOT Secretary or has a change of heart on the
issue, and on which party controls the House and Senate following this year's
elections. Contrary to Durden's fears and speculations, all available evidence
suggests that there is no current Bush administration plan to corporatize or
privatize air traffic control.
The shift to "free flight" technologies will come about eventually; like
GPS's spread from military to civilian uses, the technologies are simply too
powerful to remain bottled up forever. But how soon they come within reach of
GA remains a very open question. The FAA's track record on modernization gives
us good reason for pessimism, absent real reform.
For the past 20 years the FAA has been trying to modernize the system.
Billions of aviation-user tax dollars have been spent, many of them wasted on
things that did not work or were not wanted by the users (such as the
microwave landing system). But even as the FAA finally succeeds (late and over
budget) in implementing things like display system replacement (DSR), all it
is doing is component replacement. Very little of the agency's test-a-little,
build-a-little approach adds any new capacity to the system. What's needed is
a revamped system architecture that takes full advantage of GPS, ADS-B, controller-pilot data
link (CPDL), and cockpit weather/traffic displays. And not spread out over the
next 20 years, as annual appropriations permit, but over as short a span as
possible, thanks to large-scale bond issues and business procurement
If airspace capacity is not dramatically expanded, and we try to squeeze
thousands of new GA jets into that limited airspace, there will likely be a
battle royale over who gets access to that space. If those questions have to
be resolved politically, it will be a question of who has more lobbying and
campaign-contribution clout in Washington the airlines or GA. That's not a
future private pilots should look forward to.
How much better it would be if ATC were turned over to its users, in a
cooperative structure that carefully balanced airline, GA, and other
stakeholder needs, and provided the funding basis for high-tech modernization
to dramatically expand capacity. That's the kind of future GA's leaders should
be helping to bring about.