End corporate welfare in the sky: Privatize air traffic control

Under the well-known practice that economists call "rent-seeking," those who enjoy government subsidies will fight tooth and nail to keep them in place. In the field of air traffic control (ATC), where Congress currently is considering sorely-needed modernization efforts, the business jet lobby is digging in to protect a system that helps them and harms everybody else.

 

The current approach to pay for air traffic control services has the Federal Aviation Administration (FAA) collect fees from users. It then applies those fees to run its publicly-owned and operated system, which constitutes roughly two-thirds of the FAA’s budget. Like virtually any nationalized body, the system has its share of inefficiencies.

In this case, there isn't great correspondence between the fees its users pay and how much ATC services they consume. In short, business jets get a sweet deal.

Business jets and turboprops, which account for between 9-11 percent of system use, pay just 0.6 percent of the fees used to support that system. Commercial air travel passengers effectively subsidize mostly wealthy travelers in the smaller jets with the larger seats, while receiving the same safety benefits. 

Naturally, given this massive disparity between use and expense, any change to the status quo — and certainly, the reforms currently under consideration — would disrupt that arrangement. Through its trade association, the National Business Aviation Association (NBAA), the business jet lobby is fighting desperately to stave off reform.

If they succeed, not only would they continue to consign U.S. commercial air travelers to prices that include ATC subsidies, but also to an ATC system that is distinctly retrograde among developed economies.

The United States is unusual among developed countries in maintaining an air traffic control apparatus managed by the nation’s air safety regulator. There's a good reason most other advanced economies don't do this: It makes innovation a nightmarish prospect. The proof is in the technical pudding.

Consider that, as a result of the current system’s resistance to modernization, U.S. air traffic control still relies on ground-based radar systems that were first developed during World War II. This ancient system is stretched beyond its design capabilities and leads to delays and longer flight times. It is telling that popular routes like Chicago to Los Angeles take longer to complete today than they did decades ago.

Meanwhile, Canada, which separated and privatized its air traffic control body in the 1990s, has enjoyed the benefits of lower fees that stem from the rollout of more advanced systems of aircraft management and communications. While the United States continues to rely on ground-based systems, Canada and other developed nations utilize satellites for aircraft management.

Air traffic control modernization is not some partisan cause. It is a matter of record that bipartisan air traffic control modernization efforts have been proposed over and over again for decades. In fact, former President Bill Clinton championed a push during his tenure that would have created an entirely independent air traffic control system.

While there are some left-leaning policymakers who harbor fundamental ideological disagreements with the idea of privatization, as well as some concerns expressed by labor interests, neither represents a major obstacle to modernization. The biggest thrust of opposition comes almost from a single source with a remarkable preference for the status quo: the business jet industry.

Ultimately, the NBAA’s position is troubling not only because it is patently unfair, but because the resulting higher fees lead people to use less safe forms of travel, like driving. There is a real human cost to the NBAA’s intransigence. Modernization will bring fairness, savings and an overall better traveling experience for the vast majority of Americans.

Ian Adams is associate vice president for state affairs at the R Street Institute, which engages in policy research and outreach to promote free markets and limited, effective government.

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