The Swine Line: The Staff Blog of Citizens Against Government Waste

ATC Privatization Would Bring U.S. Airport Industry to New Heights

The Swine Line is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.

On June 5, 2017 President Donald Trump announced his proposal to privatize the Air Traffic Control (ATC) system as part of a broader plan to drastically improve American infrastructure. Approximately 932 million Americans took to the sky in 2016, more than the air traffic of China, Germany, Japan, and the United Kingdom combined.   The Federal Aviation Administration (FAA) is already charged with overseeing the world’s busiest airport, Atlanta’s Hartfield-Jackson International Airport, and the fourth-busiest, Los Angeles International Airport.

The FAA’s job is only going to become more chaotic in the near future; air traffic increased by 32 percent from 2003 to 2016, and will continue to rise over the next decade.  Unfortunately, the FAA’s terrible track record of failing to respond to evolving travel patterns is equaled only by its lack of success in adopting new platforms to help manage air traffic.

In 2001, the FAA started to switch from an ATC system called Host, developed in the 1970s, to En Route Automation Modernization (ERAM).  The ERAM system has been plagued by poor performance, delays, and cost overruns.  Early testing resulted in several problems; the system would track non-existent aircraft, forcing ATC centers to manually correct flight information.  Originally planned to expedite the landing process and lessen the demands on ATC centers, ERAM has instead become a constant concern for FAA employees.  Since its inception in 2001 to implementation in 2015, four years behind schedule, the program exceeded its predicted cost of $2.1 billion by about $400 million.

Regrettably, the FAA’s poor decision-making and project management extends beyond ERAM.  In 1996, the administration attempted to replace 172 of the agency’s terminal automation systems by implementing the Standard Terminal Automation Replacement System (STARS).  This program was expected to be ready in 2005 at a cost of $950 million.  However, STARS proved too problematic, and was quickly abandoned.  The FAA then pursued an even more expensive alternative called Terminal Automation Modernization and Replacement  (TAMR) with a price tag of $3.7 billion. TAMR installment has not yet been completed, but the FAA tentatively predicts 2020 as the projects end date.

Currently, the FAA is undergoing another overhaul, this time for airport communication infrastructure.  The Next Generation Air Transportation System (NextGen) is meant to lessen air traffic congestion and delays by utilizing satellite-based technology and other new air traffic management tools.  NextGen’s costs have already reached $6 billion, and expected to climb to $40 billion by 2030. A January 15, 2016 Department of Transportation Office of the Inspector General (OIG) report heavily criticized NextGen’s development, stating, “Airlines are not motivated to spend money on equipment and training for NextGen,” and, “NextGen has become a misnomer.” 

Congressional hearings have painted a similarly bleak picture of the FAA’s attempts at modernization.  Responding to the OIG report, House Committee on Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) stated, “Over two decades of FAA personnel, organizational, and acquisition reforms have failed to slow the agency’s cost growth, improve its productivity, or improve its performance in modernizing the system.”  From 2000 to 2016, the FAA’s budget grew from $10 billion to $16 billion, a 60 percent increase.  As Chairman Shuster indicated, this budget growth has not corresponded with an increase in efficiency.

Clearly the FAA is in need of reform.  President Trump’s plan would create a non profit private corporation made up of a board of directors, “nominated by cargo air carriers, passengers, regional carriers, business aviation, and air-traffic controllers.” 

Other countries have successfully privatized air traffic control systems, and have been swifter to implement new technology.  In 1996, the Canadian government adopted Nav Canada, a non-profit private corporation.  One of Nav Canada’s first changes was to electronically track the paths of departing flights.  Incredibly, the FAA still uses pen and paper.  Best of all, Nav Canada operates without government subsidies, relying entirely on airport and airline fees and raising capital in private markets. 

Australia, France, Germany, New Zealand, Switzerland, and the United Kingdom have all adopted the private model and achieved similar results.  Privatization has been so successful abroad that in November 2001, that the International Civil Aviation Organization, the United Nations agency that oversees international aviation standards, recommended that all member countries remove government bureaucracy from air traffic oversight.

Beyond the notion of privatizing ATC, the core methods currently used to monitor and direct air traffic are long overdue for modernization.  For instance, old-fashioned ATC towers might be replaced with remote centers that utilize a variety of technology to direct traffic.  Such centers could exist anywhere, and would be able to direct traffic at multiple airports. 

Remote centers already exist in Sweden and the United Kingdom.  London City Airport, which has approximately 4.5 million passengers per year, has installed a digital air traffic control tower that uses an array of cameras and sensors.  Located 70 miles from the airport, this new type of control center has lower maintenance costs and provides a greater level of detail and information than previous systems, which relied heavily on the human eye.

Rather than adopting new methods that prove safer and less costly, U.S. airports have doubled down on old approaches.  In 2015, San Francisco announced the completion of a $150 million air-traffic control tower.  The FAA contributed $80 million to the construction, with the city of San Francisco covering the remaining $70 million.  Although the new tower boasts that it has an improved air field view for air traffic controllers, London City Airport demonstrates that same goal can be accomplished at a reduced cost.

The FAA’s failure to modernize the ATC system has cost taxpayers millions, and will continue do so if it does not stop investing in flawed modernization projects.  Removing ATC from the FAA’s control would allow the private sector to lead a new era of airport modernization, lowering costs for consumers and reducing the burden on taxpayers.

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