Unprecedented changes may be in store for the nation’s system of air traffic control.
The buzzword used to describe Pennsylvania Republican Rep. Bill Shuster's FAA reform plan is "privatization," but analogies to private sector commerce are a stretch.
In the world of private enterprise, entrepreneurs are driven by cut-throat competition to offer the best goods and services at the lowest prices.
In Shuster’s plan, there are no entrepreneurs, and no competition, and no prices. So what are we really talking about?
Under current arrangements, safety regulation and air traffic control are under the aegis of the FAA. While proponents say that putting regulation and operations under separate roofs is appealing, separation can hamper accountability. It becomes less easy to determine responsibility for lapses in safety, and with airplanes, lapses in safety can be catastrophic.
Instead of competition among service providers, we will now have competition for power on the governing board of the new government-certified monopoly, consisting of a variety of stakeholders, including amateur pilots, business carriers, regional carriers, and rural airports, among others, who fear being steamrolled by the big airlines. The jockeying for influence would not be conducive to good management.
The main criticism of the current system is the hope that there would be more timely service for passengers on the big airlines.
The funny thing is, it is precisely the big airlines who seem incapable of landing and taking off on time, who stand to exercise dominant influence under the new order.
Although the new entity would operate on a non-profit basis, it would be a vehicle for the airlines to exploit their monopoly franchise and shift costs to consumers, small-fry users of the system, and taxpayers.
Ownership of valuable government assets would be given over to the new entity, free of charge. Since financing would come from loans from private sector financial institutions, for all practical purposes the value of those assets would be transferred to the lenders.
So there actually is a privatization angle here – what’s privatized is the finance of capital improvements to the system. Instead of vendors competing to provide good service, financial institutions will be competing to manage the sale of bonds to investors, and to each other. This makes no financial sense. The federal government itself can borrow money more cheaply.
Some functions should not be left to the private sector. Air traffic control is one of them.
To begin with, safety to the n-th degree is an imperative. Profits should have no role in air traffic control. We don’t want somebody trading off safety concerns against cost considerations.
The only acceptable number of airplane collisions is zero. Nobody in this debate denies that the FAA has an excellent safety record. Air traffic control isn’t broken and doesn’t need to be fixed.
Air traffic control is not up for competition. There can only be one service provider.
When you’re in the air, you’re not about choosing which controller business is going to guide your flight safely.
It’s not like choosing a barber. The same goes for the complex technology required. Modifying legacy systems and rotating their back-up service contractors according to performance is difficult. You’re largely stuck with whatever vendor you have chosen, much like the reality of big-ticket military hardware contracts.
The U.S. system dwarfs that of any other nation, in terms of scale – the number of flights – and complexity, with aircraft and functions of all shapes and sizes. The fact that privatization of some type has been effected in other countries does not automatically mean it would be successful here.
We’re not Denmark!
For all the talk about bringing business acumen to government, the proposed reorganization of the FAA brings increased costs, disruptive management, largesse to private parties, and threats to the FAA’s sterling safety record.
It’s bad business.
Max B. Sawicky is an economist and writer specializing in public finance and privatization.