Out of Control Policy Blog

Support Builds for U.S. ATC Corporation

A growing number of U.S. aviation stakeholder leaders are expressing dismay with FAA's dire budgetary situation and the outlook for further cuts threatening NextGen, facility consolidation, and contract towers. As early as February, the FAA's own Management Advisory Council (MAC) had called for replacement of the current aviation funding system with one that is sustainable and independent of federal budget vicissitudes, as well as the creation of a governing board representing aviation stakeholders.

But in recent weeks, the MAC has moved beyond that initial position. FAA Administrator Michael Huerta had briefed the MAC's 11 members on some of the steps the agency has had to take this year to cope with budget cuts. They include:

  • Postponing various NextGen activities and due dates, including final implementation of ERAM and further progress on the Metroplex initiative;
  • Implementing a hiring freeze;
  • Temporarily closing the FAA Academy, halting the training of new controllers;
  • Deferring maintenance and stretching out inspection of navaids;
  • Shifting $253 million from the AIP grant program to the Operations account, so as to keep 147 contract towers from closing and ending controller furloughs.

He also reported that deferred maintenance already totals $6 billion. And there is good reason to expect the budget situation to be even worse next calendar year, assuming the next sequestration cuts are not averted by an overall budget deal in Congress.

Building on three years of discussions on FAA budget and governance issues, the MAC has now adopted by unanimous vote a revised set of four guiding principles for reform (which I am reproducing verbatim from MAC member Stephen VanBeek's recent article from LeighFisher's Global Outlook (Oct. 11, 2013):

  1. Create a sustainable financial future for the FAA: The most important goal is to establish a funding system that provides dedicated and sufficient user-based revenues to pay for FAA obligations. MAC members believe that general fund support for the aviation industry should be phased out as soon as possible in order to insulate the agency and the provision of user services from day-to-day politics.
  2. Separate a new commercialized Air Traffic Organization (ATO) from the FAA: Modeled after other Air Navigation Service Providers (such as Nav Canada), separate the service-oriented ATO from the FAA and appoint a board consisting of users and aviation stakeholders to oversee [the ATO's] work. MAC members strongly believe that ATO reform must be accompanied by overall aviation policy reform due to the links between policy and funding decisions.
  3. Assess and codify FAA authorities and programs: Simplify statutes, regulations, and policy by reviewing existing rules and procedures and eliminating redundant regulatory oversight. MAC members believe that this process will result in significant savings to the FAA and will obviate the need for a near-term increase in user revenues after the phase-out of general fund support.
  4. Reform the tax structure: Eliminate the current mix of AATF taxes and fees and replace it with transparent schedules of cost-based fees that provide sufficient funding for services such as air traffic control and aircraft certification. MAC members believe that new schedules should be (1) revenue neutral and (2) flexible in their administration in order to gain the confidence of stakeholders and facilitate the transition to the new system.

VanBeek closes his article by mentioning MAC discussions with aviation stakeholders, whose response to these ideas has been generally positive. That's because the stakeholder groups appreciate the dire (and worsening) situation facing the FAA, the ATC system, and NextGen. This situation has not gone unnoticed overseas. The latest Global Competitiveness Report of the World Economic Forum ranked the U.S. 31st out of 142 nations in the quality of its ATC infrastructure, down from 12th in 2008

The think tank community is also stepping up its involvement in ATC reform. The Eno Transportation Center released a report this month, "Addressing Future Capacity Needs in the U.S. Aviation System." Among other things, it calls for separating the ATO from FAA and possibly corporatizing it as a nonprofit corporation. The Hudson Institute next month will release a study assessing the relatively low level of innovation in the US ATC system and recommending reform of ATC governance and funding.

FAA Administrator Michael Huerta has opened the door for discussions along these lines. In a much-discussed speech before the Aero Club of Washington, he called upon his aviation audience as follows: "One thing I think is vitally important is for the aviation industry to start having serious conversations about the structure of our aviation system, as well as the way we fund it, In the past, we have had debates over how to fund our system. I have heard from many of you that these discussions, which have historically been difficult, are starting to happen. And that's significant."

Having written about ATC reform since the early 1980s, I have never seen conditions so ripe for major change.

Note: Steve VanBeek's article is available at www.leighfisher-globaloutlook.com/feature/Aviation/Americas/1615/Now-is-the-time-for-aviation-policy-reform

See more at: http://reason.org/news/show/air-traffic-control-newsletter-108#sthash.LJwfXYGz.dpuf

Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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