A Way Forward on

Air Traffic Control

by
Robert W. Poole, Jr.
Director of Transportation Policy
Reason Foundation
http://reason.org

Overview
What is air traffic control (ATC)?
How is US ATC provided and paid for?
How is this done in other countries, and how
has it worked?
US proposals for ATC corporations
Origins of the House ATC Corp. proposal
What the bill would do
Advantages & disadvantages (both sides)
Stakeholder positions

What is air traffic control?

Purpose: keep aircraft safely separated
in controlled airspace.
The means:
Systems (radar, navigation beacons, etc.)
Procedures (controller-directed paths and
permissions)
Facilities (towers, TRACONs, centers)

Safety regulators

How is US ATC provided?

Federal Aviation Administration
Safety regulation
Airport grants
Air traffic control
Miscellany (commercial space,
drones, etc.)

How is US ATC paid for?

Aviation excise taxes (80-90% of FAA
budget)
General fund (10-20% of FAA
budget)
Budget breakdown (FY 2013):
ATC 62%
Airport grants 22%
Safety & misc. 16%

Which parties pay for what?

Airlines (ticket/segment taxes,
international taxes)
83.5%
Business turbine planes 0.5%
Private piston planes
0.15%
General taxpayers
15.8%
Source: GRA analysis of FY2013 budget

How is ATC paid for elsewhere?

In all other developed nations, aircraft
operators pay ATC charges.
ICAO principles:
En-route flying: weight and distance
Terminal-area: weight
Reflects an ability-to-pay principle
In most countries, ATC is self-supporting

ATC corporatization trend,

past 25 years
Separation of ATC from transport agency
Arms-length safety regulation
Self-funded from ATC charges; hence
independent of government budget
Revenue bonds for modernization
Directly accountable to aviation customers
Over 60 countries, mostly govt.
corporations

Studies of corporatized ANSPs

MBS Ottawa study (GMU, Syracuse, McGill),
2006
IBM Center for the Business of Government,
2006
Managing the Skies, by Oster & Strong, 2007
Organization & Innovation in ATC, Poole, 2013
MITRE study of separation of ATC operations
from safety regulation (2014)
Institutional Reform of Air Navigation Service
Providers, Neiva (2015)

Modernization in corporatized
ANSPs
ADS-B and CPDLC
Remote towers
Time-based flow management
Facility consolidation
In each case, faster and more costeffective than comparable FAA
efforts
Source: Poole study for Hudson Institute, 2014

US ATC corporation proposals

Air Transport Assn, 1985
Aviation Safety Comm., 1988
Nat. Airline Comm. (Baliles), 1993
National Performance Review, 1993-94
USATS reports and legislation, 1994-95
Mineta Comm., 1997
Brookings Hamilton Project, 2008

Origin of House ATC Corp. proposal

Business Roundtable task force (2012-14)
Former DOT and FAA officials
Consultants & policy analysts
Concluded Canada has best model

Eno Transportation Center working group

(2014-15)
Participation from all key stakeholders
Expert presentations
Concluded either govt. corp. (DFS) or nonprofit
corp. (Nav Canada)

What the House bill calls for:

Fed. chartered nonprofit ATC Corp.
Arms length from FAA safety
regulation
Direct user payments for service (but
not for private planes or bizjets)
Outside the federal budget process
Governance via board balancing all
key stakeholder interests

Advantages (say proponents)

Improved safety via separation of
regulation from ATC operations
Insulated from federal budget problems
Revenue bonds for modernization
Eliminate micromanagement from
Congress, OMB, DOT IG, etc.
Streamline procurement; better engineers
and managers
Innovation, a la Nav Canada, others

Disadvantages (say opponents)

Airline domination
Delegates taxing power to private
corp.
Threat to small community air service
Fear of future user fees for private
planes and bizjets
Might disrupt NextGen progress
Might increase everyones cost of flying

Aviation stakeholder positions

Yes Maybe No
Airlines (except DL)
X
Controllers union X
Former DOT, FAA heads X
Pilots unions
X
Airports
X
Private pilots (AOPA)
X
Business aviation (NBAA)
X
House/Senate appropriators
X

Current status of the bill

Corp. is Title II of House FAA bill
Passed House T&I Committee, Feb.
Needs Ways & Means aviation tax
changes, to get to the floor
Senate draft bill does not include
ATC Corporation

Editorial commentary
New York Times
Washington Post
Aviation Week
USA Today
Wall Street Journal

Oppose
Favor
Favor
Favor
TK

Questions?

Bob.poole@reason.org