1. Air Traffic Control Corporatization
Baruch Feigenbaum
Assistant Director Transportation Policy—Reason Foundation
Preserving the American Dream Conference
August 7, 2017

2. Presentation Outline Chance for Meaningful Reform
Current Air Traffic Control System
Problems
ATC Corporatization
Solutions

3. Chance for Meaningful Reform
Many potential infrastructure changes
Unlocking federal barriers to private surface transportation investment
Using private financing to rebuild airports
Encouraging P3s for inland waterway reconstruction
Allowing tolling to rebuild Interstate System
Corporatizing Air Traffic Control System
Air Traffic Control reform would be most significant of these changes

4. The Timing is Right Support from political leaders
President Trump and Chairman Shuster
Support from think tanks
Cato, Reason, Heritage, Eno, Brookings
Support from trade groups
Airlines for America
Support from consumer groups
National Taxpayers Union, Americans for Prosperity, Freedom Works, Travelers United
Support from unexpected places
Air Traffic Controllers Union (ATCA) and Air Line Pilots Association (ALPA)
Need to pass multi-year aviation reauthorization

5. What’s the Problem
1) FAA is government agency designed around precautionary principle
Hesitant to embrace and manage changes necessary for 21st century aviation system
New air traffic management uses richer information than single locus of control
GPS automates the separation of air traffic
Technology increases capacity of runways
Technology improves landing protocols
Ability to serve rural airports at a lower cost
Ability to provide better weather information to pilots

6. What’s the Problem 2) FAA has trouble attracting top talent
Government management comes with lower salary and less ability to innovate
Notable brain drain over the last 15 years in particular

7. What’s the Problem 3) Micromanagement of FAA by politicians
Few understand aviation, fewer are looking out for taxpayers best interests
Oversight/interference from at least eight sources
T&I and Commerce committees, Ways and Means and Finance committees, GAO, DOT IG, OMB, DOT Executive
As a result FAA focuses on pleasing political lords not aviation customers

8. How ATC Corporatization Solves the Problem: Overall
It separates FAA’s Air Traffic Organization (ATO) from the rest of the agency
Brings U.S. into compliance with ICAO guidelines
Every developed (first-world) country in the world has separated their ATO from their safety regulator except U.S.
Majority have corporatized or privatized system
Best example is Nav-Canada

9. How ATC Corporatization Solves this Problem: Funding
Shifts from funding ATC from aviation user taxes to charges paid by aviation customers
Currently user taxes go into aviation trust fund and must be appropriated
Appropriators could provide less funding
Uncertain (government shutdown= no funding)
Could be diverted
Charges paid by aviation customers users-pay/users-benefit principle
Operates similar to utility; customers pay for what they use

10. How ATC Corporatization Solves this Problem: Governance
Provides a governance board that represents key aviation stakeholders
Aircraft operators
ATC employees
Airports
Flying public
Representative board sets policies for corporation

11. How ATC Corporatization Solves Three Problems Identified
Problem: FAA is government agency designed around precautionary principle
Solution: ATC Corporation provides air traffic control
Problem: FAA has trouble attracting top talent
Solution: ATC Corporation can have different pay, less rigid restrictions
Problems: Politicians Run FAA
Solution: ATC Corporation will have independent board of users

12. Support Growing but not Everybody on Board
National Business Aviation Association (NBAA)(Strongly Opposed)
Why they are opposed: Excluded from paying fees (Commercial, Non-commercial)
Heavy users of TRACON airspace
Currently pay 1.2% of total
Usage of system 10-13%
Users should pay regardless of type of aircraft
General Aviation Interests (Mostly Opposed)
Why they are opposed: Fear that costs would increase in future even though Shuster bill exempts them from paying any user fees
No logical reason, fear stoked by NBAA
Democratic Congressional Leadership (Definitely some Opposition)
Labels proposal privatization, complain harms workers yet ATC union supports corporatization
Rift, between current leadership in House and moderate Democrats as well as staff from Clinton Administration which supports ATC proposal
Non-transportation unions worried impact and/or jealous equals pressure on leadership

13. Aviation Reauthorization: Where are we?
House
Aviation bill does not have required number of yes votes
Rep. Shuster is still whipping votes
Will try to pass in September, end of year of even early 2018 more likely
Senate
Leadership views ATC Reform as lower priority, did not include in bill
Senate Bill has not passed due to controversy
Reduced number of hours needed for First Officers
Studies show current amount of training may not be necessary but emotional issue
Bills (when passed) will be decided in Conference Committee (we think)

14. An Additional Challenge
Scoring of Proposal
CBO scores bill as new spending even though it is not
OMB scores bill differently
Challenge is deciphering the revenue title