Reason Foundation

The Year 2011 in Surface Transportation and Aviation Privatization

Posted on April 26, 2012, 10:53am | Baruch Feigenbaum

The rollout of Reason Foundation’s Annual Privatization Report 2011 continues today with the release of the Surface Transportation Privtization and Aviation Privatization sections authored by Reason’s Bob Poole. The Surface Transportation section provides a comprehensive overview of the latest on toll roads, HOT lanes and other news on privatization and public-private partnerships in surface transportation. The Aviation section provides a comprehensive overview on the latest news on domestic and international airport privatization and privatization of airport security. Topics include:

 Surface Transportation

• In 2011, infrastructure finance continued to recover from the credit market crunch of 2009. The amount of capital available in infrastructure equity investment funds reached a new all-time high.
• Over the past five years, the 30 largest global infrastructure investment funds have raised a total of $183.1 billion dedicated to financing infrastructure projects, with the bulk coming from U.S., Australian and Canadian inventors. 
• Eight major privately financed transportation projects were under construction in the U.S. in 2011 totaling over $13 billion investment, including megaprojects in Virginia, Texas and Florida. 
• In 2010 CalPERS, the largest U.S. public employee pension fund, purchased a 12.7% equity stake in London Gatwick Airport, and public pension funds in Arizona, Louisiana, Oregon, Texas and San Diego are seeking similar investments. 
• Puerto Rico’s Public-Private Partnership Authority announced a $1.5 billion lease of the PR-22 and PR-5 toll roads, their as its first large-scale project.  Ohio officials are considering a similar lease of the Ohio Turnpike.
• Other topics include the federal role in private infrastructure finance, an update on high-occupancy toll and express lane projects in the U.S., and a review of toll road developments in the states and across the world.

Aviation 

• In the aftermath of the credit markets crunch of 2008–2009, the airport market continued its recovery in 2011, with efforts including Puerto Rico's current plan to privatize San Juan’s Luis Munoz Marin International Airport and Chicago's continued interest in a potential Midway Airport lease. 
• A total of 48% of European air passengers were handled by partly or fully privatized airports in 2011, with that share likely to grow with impending privatization initiatives in Spain and Greece. 
• Amid public outrage over TSA’s introduction of body scanners and aggressive pat-downs, the administration and Congress continued to battle over proposals to allow airports to opt-out of TSA security and hire private screeners. However, some progress was made in Washington D.C. over reviving the trusted traveler program, advancing a more risk-based approach to security.
• Since 1990, 51 governments have commercialized their air traffic control systems, separating the air traffic control functions from regulatory bodies, removing them from civil service, and making them self-supporting from fees charged to aircraft operators. However, there was no significant progress in 2011 toward commercializing air traffic control in the United States. 
• Other news on domestic and international airport privatization and air traffic control commercialization 

FAA Shutdown And Our Air Traffic Control Funding System Are Absurd

Posted on July 28, 2011, 6:15pm | Robert Poole

The partial shutdown of the FAA came about because Congress failed to agree on extending the current law (and therefore the aviation excise taxes that fund most of FAA). This has been going on since autumn 2007, when the previous authorization expired. The bill Congress failed to pass last week would have been the 21st short-term extension of the old law.

Edward Wyatt at The New York Times writes:

The F.A.A. is not some esoteric financial concept like the debt ceiling — an issue that has some lawmakers proclaiming the end is nigh while others bluster that it does not really matter. The aviation agency holds the lives of hundreds of thousands of travelers in its hands every day, overseeing the nation’s airports and the air traffic controllers who make sure that tens of thousands of flights a day take off and land safely.

“It’s amazingly aberrant behavior on the part of our lawmakers that they haven’t been able to get a bill approved since 2007,” said Marion C. Blakey, president of the Aerospace Industries Association, who from 2002-7 was the F.A.A. administrator, the agency’s top official.

The issue is not merely a question of whether the F.A.A. might have to delay some spending on little-used airports in the districts of powerful legislators. Their dependence on a stream of short-term F.A.A. allocations has led airports to have to bid out projects one small chunk at a time, raising costs and inconveniencing travelers.

What this means is that modernization of the air traffic control system is still largely on hold.  This is a $20 billion or more program that FAA must fund in dribs and drabs, as Congress gradually appropriates annual funding. But repeated extensions of the old authorization make realistic long-term planning for air traffic control modernization nearly impossible. 

The situation is absurd.

Not a single one of the numerous issues holding up the FAA bill concerns air traffic control. The latest stumbling block was over how small the cutback would be in the subsidy program for airline service to small towns. Another major sticking point is the House’s effort to overturn a recent change in policy on airline unionization by the National Mediation Board. There have been battles over foreign aircraft repair stations, FedEx workers, slots at Reagan National Airport, and many other issues. Yet not one of those contentious issues has anything to do with air traffic control, which is about 80 percent of FAA’s budget.

Isn’t there a better way to fund air traffic control modernization? Any business faced with a $20 billion modernization agenda would finance the investment, probably issuing long-term bonds to be paid off from future sales revenue. But as a government agency, the FAA is stuck with annual appropriations, of uncertain timing—and now, a hiatus in the whole program.

Among all serious developed countries, the United States is the only one left that funds air traffic control this way. Australia, New Zealand, Canada, Germany, the U.K., Switzerland, and dozens of other countries have all de-politicized their air traffic control systems, by “commercializing” their air traffic control providers—turning them into separate corporate entities that are self-funding, getting paid by their aviation customers. That revenue stream is predictable enough that the company can issue revenue bonds to fund capital investments in facilities and equipment. 

Nav Canada was commercialized in 1996, after Canada passed legislation authorizing the change from a government department to a self-supporting not-for-profit corporation. Since the transition, Nav Canada has developed into one of the world’s best air traffic control providers. It has won the Eagle Award as ‘number one’ in air traffic control from the International Air Transport Association three different times, including last year. Like many of its European counterparts, Nav Canada has an investment-grade bond rating.

De-politicizing the air traffic control system is such a good idea that it was recommended by Vice President Al Gore’s reinventing government shop, the National Performance Review, back in 1994, and the Clinton administration introduced a bill to create a self-supporting air traffic control corporation in 1995. Congress, however, refused to let go, and the bill died.

I hope the current shutdown of FAA’s NextGen modernization program serves as a wake-up call to airlines and the traveling public. We desperately need to modernize our 1960s-era air traffic control system. But if we cling to the government-as-usual status quo, this is increasingly unlikely to happen.

Sleeping Reagan Air Traffic Controller Shows FAA's Failures

Posted on March 25, 2011, 12:42pm | Robert Poole

The incident at Reagan National Airport in which two airliners landed after midnight without any assistance from the control tower illustrates a long-standing flaw with the Federal Aviation Administration. That agency combines two incompatible roles in a single body: aviation safety regulator and operator of the air traffic control system. Every other aspect of the aviation system is regulated at arm’s-length by the FAA: airports, airlines, air taxis, business jets, pilots, mechanics, and the producers of planes and engines. Only the air traffic control system is operated by the safety regulator itself, rather than being regulated by it.

For years the FAA has been addressing the problem of fatigue among airline cockpit crews, a potential safety hazard and source of accidents. Air traffic controllers are also well-known to have fatigue problems, due in part to shift schedules that play havoc with their sleep cycles. That might well be the cause of the incident in the Reagan tower, in which the lone controller on the night shift is reported to have fallen asleep. 

Had the FAA been as diligent about controller fatigue as it is about pilot fatigue, the problem of on-the-job sleeping might be a thing of the past. But thus far, the FAA has simply not taken it seriously.

Every developed country in Europe, as well as Canada, Australia, New Zealand, and many others, has separated its air traffic control system from its aviation safety regulatory agency over the past decade, in accordance with rules from the International Civil Aviation Organization. Doing so in this country has been recommended by several former FAA Administrators, as well as a number of U.S. aviation safety experts. But Congress has thus far ignored the problem.

Let’s hope this incident at the airport used most often by members of Congress makes them aware of this overdue safety reform.

New at Reason: Annual Privatization Report 2010

Posted on February 10, 2011, 3:32pm | Leonard Gilroy

I'm pleased to announce that today marks the launch of Reason Foundation's Annual Privatization Report 2010 (reason.org/apr2010). Now in its 24th year of publication, the Annual Privatization Report is the world's longest running and most comprehensive report on privatization news, developments and trends.

Readers will notice that we've made a significant change with APR 2010, publishing it as a series of reports arranged by topic, rather than one consolidated report as in previous years. We expect that this will make it easier to use as a resource and find the information you're looking for. The individual sections of APR 2010—which will be released over the next two weeks—include:

• Air Transportation
• Surface Transportation
• Federal Privatization
• State Privatization
• Local Privatization
• Education
• Telecommunications
• Corrections
• Water

We started the rollout today with the APR 2010 Air Transportation section. It provides a comprehensive overview of the latest news on domestic and international airport privatization, the privatization of airport security - including passenger and baggage screening and the federal Registered Traveler program, and domestic and international trends in air traffic control reform. 

» Annual Privatization Report 2010: Air Transportation [pdf, 800kB]

» Complete Annual Privatization Report 2010

Rethinking the FAA Budget

Posted on February 7, 2011, 2:20pm | Robert Poole

I have a new column up on TheHill.com about the FAA reauthorization bill:

The House and Senate are both making the long-overdue reauthorization of the Federal Aviation Administration a high priority. Unfortunately, the bills they are writing seem blissfully ignorant of the fiscal crisis facing the federal government—a climate in which discretionary general fund spending is in for serious cutbacks.

Like most other federal transportation programs, aviation has traditionally been funded largely by user taxes, including the passenger ticket tax, fuel taxes on private planes, and a variety of other aviation excise taxes. These monies are accounted for in the Aviation Trust Fund, which is the source of capital spending on airports and air traffic control, as well as a large portion of the FAA’s operating budget (roughly corresponding to its air traffic control workforce). Traditionally, aviation user taxes brought in more than 80 percent of the FAA’s budget.

But the last five year have seen an alarming increase in general fund support of FAA. For FY 2011, bills enacted in the last Congress but never reconciled would have required 37 percent (S 223) or 41 percent (HR 915) of the FAA’s total to come from the general fund. Both houses now seem to be on course to pass very similar bills, from a budgetary standpoint. With our current debt and deficits, making the FAA even more dependent on discretionary general fund spending is not sustainable.

Read the rest here.

Tarmac Delay Rule Will Cause Flight Cancellations

Posted on April 29, 2010, 8:40pm | Robert Poole

Katherine Mangu-Ward has done a great job explaining how badly the new government rules on tarmac delays are going to turn out for passengers.

Having been stuck once on the runway for more than two hours, I was overjoyed by the pilot’s decision to return to the gate and let those (like me) who wanted to get off the plane to do so. In my case, the two-hour delay meant I’d miss a meeting in Washington (my only reason for this day-trip), and my least-bad option was to get off the plane to someplace where I could take part in the meeting by phone. Nevertheless, I am strongly opposed to the U.S. Department of Transportation’s draconian tarmac delay rule that goes into effect today.

Besides my philosophical objection to the feds imposing a rule on airlines that compete vigorously for business, I’m concerned that this blunt instrument will cause more passenger delays than it will prevent.

No airline will risk paying a fine of up to $27,500 per passenger. At a typical plane-load of 135 people (on a 150-seat plane), that comes to over $3.7 million per flight. At the typical domestic “yield” of 14 cents per available seat mile, that 150-seat plane on a typical (2008 average) trip of 873 miles brings the airline about $18,000—for the entire flight. And that’s gross, not net, revenue. So any flight that comes close to two or two and a half hours on the taxiway is going to turn around and go back to the terminal rather than risk that outrageous fine.

When it does, a long list of problems will ensue. First, there may be no gate for it to return to. Second, it may have to replace some or all of its crew, due to FAA duty-time limits, meaning further delays. If it eventually departs the gate after all that, it goes to the end of the taxi line; it can’t go back to its “original” place in line, because taxiways don’t have passing lanes. And if it finally takes off and reaches its destination, all of its passengers that needed to connect will miss their connections and may be stranded somewhere else.

In many cases it will be simpler for the airline to cancel the flight, rather than reschedule it to run much later. That’s when its passengers’ problems really start. At today’s typical 90% load factors, only 10% of the seats on other flights to the plane’s original destination will be available. So to accommodate all 135 passengers from our original flight in batches of 15 (10% of 150) will take nine planes. But if there are only three flights a day to the destination in question, it will take three days to get everybody to that destination. And this is just from one flight that was cancelled in response to Transportation Secretary Ray LaHood’s rule.

And by the way, if this DOT rule is supposed to be for the passengers’ protection, how much of that $3.7 million fine would go to compensate the passengers? Zero.

The tarmac delay problem that led to this rule has been grossly exaggerated. During the first eight months of 2009, taxi-out delays greater than two hours averaged 0.02% of all flights. That’s not two percent; it’s two/one-hundredths of one percent. In the worst month, June, it was 0.03%. So we’re talking about a miniscule problem—though certainly one that’s horrible for the scores or hundreds of those involved in such an incident.

The good news is that airlines that put passengers through such ordeals suffer big reputational penalties; JetBlue went to huge lengths after its fiasco several years ago. And for the past several years, airports and airlines have been working out contingency plans to accommodate stranded passengers, to make it more feasible for planes to return to the terminal in the event taxi-out delays become lengthy.

There are also policy changes that would help. One would be for more U.S. airports to shift to the kinds of common-use gates that are commonplace in Canada and most of Europe, especially with privatized airports. I’ve sat on taxiways many times after arriving early (or late at night) and waited half an hour because “my” airline had no gate available—yet we could see empty gates sitting there unused.

And since a huge fraction of these delays occur at a handful of the most congested airports during bad weather, market pricing of runway access would allow the most time-sensitive travelers to book trips on “premium” flights that pay extra for take-off priority when weather imposes serious constraints.

In short, the feds should butt out, and let competition, pricing, and airport-airline cooperation continue developing workable solutions.

Volcano Eruption and Air Travel's Economic Importance

Posted on April 23, 2010, 1:30pm | Robert Poole

My new post at The New York Times' Room for Debate blog on aviation's importance to the world economy:

The disruptions to air travel caused by a hasty overreaction to the volcano eruption in Iceland illustrate how our global economy depends on aviation.

Nearly one-third, by value, of all world trade moves by air. Components for BMW’s South Carolina auto plant arrive daily by air. Summer fruit from Chile reaches our supermarkets all winter by air and flowers from Kenya reach the whole world by air via The Netherlands. Global tourism, made possible by aviation, is by some measures the world’s largest industry.

Airlines lost nearly $2 billion in revenues from the European shutdown, European Union airports an additional $400 million, and air traffic control providers another $160 million.

All had a stake in reopening airspace as rapidly as possible — but they were stymied by confused and panicked government policymakers. Officials relied on generic computer models rather than sending up test planes from day one to more precisely map the ash cloud in real time.

Full Column

Air Travel Delays Don't Have to Be Part of the Holidays

Posted on December 23, 2009, 2:50pm | Robert Poole

My new column for the Christian Science Monitor:

Thanks to the recession, air travel delays are down from the highs of recent years. But even if flights this holiday season aren't nightmarish, experts project far worse delays in coming years, unless fundamental changes are made.

Delays would not have become a problem if air travel had remained the province of the relatively well-off - as it was in the 1950s, '60s, and '70s. In those days, a federal agency called the Civil Aeronautics Board (CAB) tightly controlled which airlines could fly which routes, and strictly limited competition to keep fares high and profits virtually guaranteed. But in 1978, thanks in part to the late Sen. Ted Kennedy, Congress deregulated air travel, permitting real competition on routes and fares.

The result has been rightly called the "democratization of air travel," as competition created openings for low-fare airlines such as Southwest, JetBlue, AirTran, and others. Air travel became affordable to just about everyone, and studies show that consumers benefit to the tune of tens of billions of dollars per year. 

When airline deregulation was enacted, there was lots of "slack" in the infrastructure; airports and the air traffic control system had lots of excess capacity. But the intellectual father of airline deregulation, economist and CAB chairman Alfred Kahn, warned at the time that airline competition would so stimulate the market that airports and air traffic control would get overwhelmed - unless Congress took action to enable them to become more nimble and better able to grow.

Unfortunately, Congress ignored Mr. Kahn's warning. Air traffic grew and grew, but the air traffic control (ATC) system plodded along as a stodgy, bureaucratic government operation. It gradually introduced better displays and more modern computers, but most of these projects were delivered years late and way over budget. Airports were generally better managed, but remained passive when airlines scheduled far more flights at busy times of day than their runways could handle, leading to ever-longer delays in major cities.

As recently as the early 1990s, more than 81 percent of flights arrived on time, according to US Department of Transportation figures. By 2007, that number had plunged to 73 percent. Thus, prior to the current recession, about 1 out of every 4 flights arrived more than 15 minutes late.

During the 1990s, other countries began reforming the way their ATC systems were governed and funded. The common diagnosis was that ATC is essentially a high-tech service business that doesn't really fit the model of a government department that depends on annual tax funding and micromanagement. 

Instead, they decided that ATC should be operated like a business, charging its aviation customers directly for its services and able to go to the bond market to raise capital for large-scale modernization investments. Australia, New Zealand, Canada, Germany, and Britain all adopted this model, setting up ATC as a self-supporting entity run by a board of directors and regulated for safety by the national air-safety regulator.

Full Column Here.

Limping Along on Aviation Funding Authorization

Posted on December 10, 2009, 10:19am | Shirley Ybarra

Deferring action once again on aviation funding the US House of Representatives  on Tuesday passed a bill to extend aviation programs and excise taxes through the end of March 2010. The three-month extension will give lawmakers additional time to work on the long-delayed multi-year FAA reauthorization bill. The Senate is likely to agree. 

We have many big issues in aviation such as the outdated air traffic control system.  Everything from managment, funding, equipment etc.   Just start here as my colleague Bob Poole discusses them.

When will we get around to discussing the aviation issues in earnest? 

Five Keys Issues Facing Aviation and Transportation Secretary LaHood

Posted on December 2, 2009, 5:28pm | Robert Poole

National's Journal's Transportation Experts Blog asks, 'What should Secretary LaHood's new aviation advisory committee focus on?'

Let me suggest five guiding principles.

First, do no harm. By that I mean don't undercut or hobble the democratization of air travel ushered in by the Airline Deregulation Act of 1978. Even though adjusting to real competition has been difficult for most legacy carriers (and some new entrants), some airline business models are succeeding, even in today's recession. Passengers overwhelmingly prefer low fares to greater amenities, and we should respect their judgment.

Second, implement further reforms of the air traffic control system, as recommended by both the Baliles and Mineta Commissions. Implementing the much-needed NextGen paradigm shift will remain high-risk, if the Air Traffic Organization remains embedded in a traditional federal bureaucracy subject to continual micromanagement and unable to tap the capital markets for large-scale investments. The Nav Canada example of user-board governance and a bondable user-charge funding system is the best model for what the ATO should become.

Third, strengthen FAA safety regulation, in two ways. Get serious about applying a single safety standard to all scheduled air service. And put FAA safety regulation at arm's length from the provision of air traffic control services, by separating the ATO from the FAA. The latter is critically important to ensure public confidence in the major changes (e.g., automation, reduced separation standards) inherent in implementing NextGen.

Fourth, get serious about "over-scheduling" at major congested airports, by implementing runway congestion pricing at such airports. Yes, NextGen and more concrete have roles to play, but ultimately when peak-period demand still far exceeds capacity, that limited capacity must be allocated somehow. The fairest way to do that is via market pricing.

Fifth, let's implement truly open skies, by dropping the anachronistic protectionism that still treats airlines as different from other competitive industries. In other words, remove the restrictions on foreign ownership, so as to permit the emergence of truly global carriers with access to global capital markets. And yes, that will ultimately mean removing restrictions on cabotage.

On Aviation, Secretary LaHood Should Look to Plans From the Clinton Era

Posted on November 24, 2009, 7:45am | Robert Poole

I got a very bad feeling when I saw the announcement that DOT Secretary Ray LaHood had convened a closed-door meeting of aviation stakeholders. And my misgivings only increased when I read the follow-up opinion piece by Bob Crandall and Kevin Mitchell in Aviation Daily’s Nov. 17th edition.

Crandall and Mitchell, both of whom I know and generally respect, got it wrong in this piece, both in their statement of the problem and their proposed solution. They claim that airline deregulation has been a disaster, producing nothing good except lower airfares. I guess they aren’t impressed by the dramatic reduction in accidents and fatalities over that three-decade period or the variety of new airline business models that have emerged. They also lament the loss of “well-paid jobs and a secure career” for airline employees, ignoring the fact that under the cartel conditions maintained by the CAB prior to deregulation, airlines and their employees were locked into Detroit-like wage and work-rule agreements that were no more sustainable long-term for airlines than they were for auto makers.

But what really concerns me is their discussion of “the industry,” as if all companies were knee-deep in red ink and none had viable business models. Quite a few carriers, primarily low-cost carriers, are making profits, which means they have figured out business models better suited to an environment of competition than most of the legacy carriers, still encrusted with business models that have not adequately adjusted despite three decades of competition. On the basis of this glossing over of critically important differences, they call for development of a “national air transportation policy” that would “reshape [the industry’s] future” around some kind of consensus about air transportation public policy objectives.

I respectfully disagree, and hope that Secretary LaHood’s new Federal Advisory Committee on the Future of Aviation does not adopt that grandiose central-planning approach. Instead, the members of this body would be wise to dust off two previous national commission reports, both produced during the Clinton administration. The more far-reaching was the 1993 Baliles Commission, which called for commercializing the ATC system so as to facilitate real modernization, keeping deregulation intact, relaxing restrictions on overseas investment in airlines, and promoting Open Skies initiatives. Most of that sound agenda remains to be accomplished. The other report was produced by the Mineta Commission in 1997. Narrower in focus, it called for more aggressive FAA safety programs, increasing investment in airport capacity, and a watered-down version of ATC commercialization. That report did inspire creation of the Air Traffic Organization, but its even more critical ATC funding reform recommendations remain unaddressed.

The Baliles and Mineta Commission reports should be the starting point for the new Commission. Besides highlighting the portions of their recommendations that remain to be implemented, the new body could also call for serious rethinking of the burden that poorly justified TSA regulation puts on commercial aviation. My main point is that all this ground (except security) has been well-trod twice before. There’s no need to re-invent the wheel. Let’s take advantage of the considerable research and hard thinking that’s already been done.

Banning Laptops In Cockpits Would Be More Congressional Meddling

Posted on November 24, 2009, 7:00am | Robert Poole

Poorly informed members of Congress respond to aviation problems by proposing hare-brained interventions. And surely one of the most hare-brained is to ban portable electronic devices such as laptops from airliner cockpits.

To be sure, it was outrageous that two Northwest/Delta pilots flew 150 miles past their Minneapolis destination last month while engrossed in a heated discussion over things they were going over via laptops. (Also outrageous, though getting much less attention, was the failure of air traffic control to do anything about this flight being incommunicado for more than an hour.) In response, Sens. Jay Rockefeller (D, WV) and Byron Dorgan (D, ND) have introduced the Distracted Flying Act that would ban laptops and other portable electronic devices from the cockpit.

What is unappreciated by these lawmakers is the rapid spread of Electronic Flight Bags (EFBs) on aircraft. The idea is to replace a plethora of maps, charts, and logbooks with compact, quickly-accessible electronic information. The most common form of EFB is called Class 1 and is, in fact, a laptop computer, specific to the aircraft type, including charts, weight-and-balance information, company policies and procedures, etc. More advanced Class 2 and Class 3 EFBs are starting to appear, with the Class 3 units far more specialized and provided as original equipment on new planes such as the Airbus A-380. Meanwhile, for the thousands of planes in service already, Class 1 laptop-type EFBs are the only game in town, adopted thus far by at least five major U.S. airlines, in some cases with federal assistance.

Yes, the small print in the senators’ bill provides for exemptions for electronic devices that are used to operate the plane or to enhance its safety (whatever that means). But that still inserts congressional micromanagement into what should be either an FAA safety regulatory decision or an airline flight operating policy decision. One of the reasons Congress created safety regulatory agencies like the FAA is to ensure that specialized knowledge and expertise would be used to shape safety regulation, where difficult trade-offs are nearly always involved. Micromanagement by Congress conflicts directly with this sensible division of responsibility.

Footnote: Last week, the Wall Street Journal wrote about a bill by Sen. Jim DeMint (R, SC) that allow the use of cockpit voice recording information to monitor and discipline airline pilots. While I’m sure Sen. DeMint (like Rockefeller and Dorgan) means well, this kind of thing runs directly counter to the “just culture” idea under which pilots and air traffic controllers are encouraged to voluntarily report safety problems because they are protected from disciplinary action. If this measure should become law, it would set back the cause of increased air safety thanks to non-punitive reporting of problems.

Air Traffic Control Research

Monthly Air Traffic Control Reform Newsletter

Aim Your Travel Frustrations at Washington

Posted on November 24, 2009, 6:45am | Robert Poole

The new AOL News site Sphere published my commentary on the ongoing failures and recent computer glitches that are bogging down air travel in this country.

Air Traffic System Is Outdated and Politicized

Posted on November 20, 2009, 3:34pm | Robert Poole

Early Thursday morning a computer glitch disrupted the nation’s system which handles flight plan processing for air traffic controllers. For nearly four hours, flight plans filed by many pilots had to be entered into the National Airspace Data Interchange Network by hand. The problem occurred at the FAA Telecommunications Infrastructure center in Salt Lake City, and then the other center (in Atlanta) could not handle the workload by itself. Because planes cannot take off until their flight plans are in the system, the result was long delays for travelers thanks to the backlog caused by the manual entry of flight plans.

If you think this sounds familiar, you’re right. In August 2008, there was a similar failure at the Atlanta facility, with similar delays. And there were two such outages in September of this year, one at both locations and the other just at Salt Lake City. The big question is why these delays keep happening.

These problems are symptoms of an institutional structure that, despite some well-meaning reforms this decade, still cannot get the job done well. Consider that the old radar technology the Federal Aviation Administration (FAA) uses to navigate $200 million jets is far less advanced than the GPS technology drivers can use to navigate $20,000 cars.

If air traffic control were being operated as a business, responsible to its paying customers, it’s inconceivable that there would not be 100 percent backup for the vital flight plan filing centers that caused these delays. At the very least, if one center goes down, the other should have the capacity to handle the full workload. More broadly, these problems reflect a system whose funding and governance does not make sense for a high-tech, 24/7 service business like the country’s aviation system.

The FAA is under way on what is projected to be a 20-year top-to-bottom revamp of the way it controls air traffic. Called NextGen, this new approach will largely replace ground-based radars and other navigation aids with GPS navigation, digital communications (rather than voice, for routine messages), and replace many routine manual operations with more automation. The cost is estimated at $20 billion for FAA equipment and facilities and up to another $20 billion for those who operate planes in U.S. airspace to equip aircraft with the necessary gear. While everyone supports this modernization in principle, it is correctly judged to be a “high-risk” endeavor by the Government Accountability Office. The FAA has a long track record of bringing in new technologies late and way over budget, though modest reforms this decade have actually made some improvements on recent projects.

The underlying air traffic problem is the mismatch between the system’s tax-funded, government bureaucracy and the needs of a high-tech service business.

In most businesses, a major technological paradigm shift, like that needed by our air traffic system, would be worked out and justified by the company and its customers, with a solid business case for making each investment, and mutual agreement on the schedule—so that customers don’t buy their gear way before the company is ready with its new facilities and equipment. And based on the customers’ willingness to pay, the company could go to the capital markets to raise the $20 billion in a timely manner. It could also crack the whip on program managers and contractors to get the projects done on-time and on-budget.

The FAA can’t do any of that.

It gets its capital budget in dribs and drabs from annual congressional appropriations, along with generous amounts of “oversight” (otherwise known as micromanagement). The current “reauthorization” of the FAA budget is over two years late, making any kind of long-term capital planning problematic. Plus, in calling the shots, Congress tends to resist cost-saving, productivity-improving measures such as automation and facility consolidation in the interest of preserving jobs in members’ districts. But without those kinds of changes, much of the increased-productivity benefits of the new technology go away.

Former Vice President Al Gore and a half-dozen national commissions have called for changing this model—making the FAA’s Air Traffic Organization a self-supporting business unit paid directly by its aviation customers and able to go to the bond market for capital funding. So far, none of these recommendations has gained any traction. Until they do, we are likely to be stuck with a status-quo that leads to outages, cost overruns, delays in new technology, and chronic delays for air travelers.

Air Traffic Control Reform Newsletter

Our Air Traffic Control System Is Outdated and Wasteful

Posted on November 18, 2009, 11:12am

As the holiday travel rush approaches, air travelers grounded by delays should take a moment to think about why they're stuck in airports or on the tarmac. There's a good chance Washington is to blame.

"The air traffic control system in the United States is technologically obsolete," says Robert W. Poole, Jr., director of transportation studies at Reason Foundation. "This model is basically the same model that we have used since the beginning of air travel."

The technology the Federal Aviation Administration (FAA) uses to navigate $200 million jets is less advanced than the GPS technology drivers use to navigate $20,000 cars.

Poole says the system could safely handle more planes if the FAA used modern technology that would provide real-time information about where planes are. But the funding process, overseen by pork-hungry members of Congress, often thwarts technology upgrades. 

The only way to get the politics out of our air traffic system is to take the system away from the politicians. Why not let a private corporation manage the skies?

That may sound like a far-out, free-market idea, but Canada doesn't think so.

Our neighbors to the north often take pride in their lavish government programs, yet they allow a private corporation called Nav Canada to manage their air-traffic control system. Canada's approach, often called commercialization, has some surprising supporters in the U.S., including Al Gore, who pushed for commercialization when he was Bill Clinton's vice president.

"Your Flight Has Been Delayed" is written and produced by Ted Balaker. Director of Photography: Alex Manning; Field Producers: Paul Detrick and Hawk Jensen. The host is Nick Gillespie.

Approximately 7.28 minutes. Go here for embed code and downloadable versions. 

Reason's Air Traffic Control Research

Poole's Air Traffic Control Reform Newsletter

Bob Poole (Quoted by Steve Forbes) Has It Right: Airline Deregulation is not to Blame

Posted on November 11, 2009, 11:00am | Shirley Ybarra

In a book by Steve Forbes and Elizabeth Ames, How Capitalism Will Save Us, Why Free Markets and Free People Are the Best Answer, the question was asked:  Didn’t deregulation wreck the airline industry?  The resounding answer is NO! It actually greatly benefitted consumers. As the a short version in an article concludes:  Airline deregulation actually has made service cheaper and more abundant. Adjusted for inflation, fares today are 25 percent to 44.9 percent lower than they were before deregulation three decades ago. Carriers offer far more service to more cities. And studies show travel is safer, too.

In the course of describing the situation (accurately) the authors use an article in 'Regulation Magazine" by (Reason’s own) Bob Poole, Jr. and Viggo Butler where they explain:

• … government management of our airports and air-traffic-control systems has produced an antiquated, inefficient infrastructure unequipped to handle the explosion of air travel resulting from deregulation.
  Government-run airports, for example, are unable to use market-based methods to reduce airport congestion--such as using peak pricing to direct some usage by carriers into off-hours. This would not only cut down on overcrowded terminals, it would generate much-needed fees to finance expansion and technological improvements both in air traffic control and in airport facilities
• …the misery of today's air travel is largely caused by an air-traffic-control system that relies on outdated 1950s technology. Only recently did the FAA announce that it would phase in more sophisticated NextGen air-traffic-control systems that use the kind of GPS satellite navigation technology consumers have had for years in passenger cars. The new systems would enable airports to handle at least twice as much traffic.
• NextGen technology has existed for years. But the system has been bogged down in political debate. Not having to account to consumers, bureaucrats, as always, take their time at taxpayer expense. NextGen isn't expected to be fully in use until about 2025, at a total cost of some $35 billion.
• Other countries already have more efficient, up-to-date air-traffic-control systems than the United States because they have given the management of airports and air-traffic-control systems to nonprofit corporations under industry control--and out of the hands of politically interested government bureaucrats.

Hence the accurate concluding comment which Bob Poole has written about many times over:  "The real problem in the United States isn't our airline traffic jam. It's the bureaucratic bottleneck in Washington."

See other articles by Bob Poole, Jr. at http://reason.org/areas/topic/air-traffic-control

Air Traffic Union Panics, Demonstrates How Badly Reform Is Needed

Posted on August 28, 2009, 11:55am | Robert Poole

I was out of the country for a week but wanted to circle back to note that the reaction of air traffic controllers' union - NATCA - to the tragic collision over the Hudson River on August 8th can best be described as panic.

Union president Pat Forrey quickly attacked me (Aug. 16) for my non-accusatory New York Post op-ed (Aug. 12) which merely explained how politicized decision-making had led to this congested airspace remaining uncontrolled and better technology pushed far into the future.

Forrey went on to blather about air traffic control (ATC) being “inherently governmental,” etc.—all the usual NATCA tropes. A few days later, when it was revealed that the air traffic controller on duty at the Teterboro Airport tower at the time of the crash had called his girlfriend to talk about barbecuing a dead cat while the two aircraft were on a collision course, NATCA went into all-out cover-your-ass mode. Defying the confidentiality rules that apply to all investigations by the National Transportation Safety Board, it revealed time-line information that was still under wraps purporting to show that the controller’s dereliction of duty was not a causal factor in the accident—admitting that in doing so, it could no longer play a constructive role in the ongoing investigation.

And now we’re treated to a long New York Times article (Aug. 22) presenting the typical union sob story about what a cramped, awful, obsolete mess the Teterboro tower is. While serving to distract attention from the controller’s actions in this tragedy, this union stratagem only reinforces the case Pat Forrey attacks me for making—namely that a politicized, poorly funded ATC system needs basic reform of its governance and funding, not hysterical defenses of the status quo.

Hudson River Air Collision Highlights Safety Failures

Posted on August 11, 2009, 4:02pm | Robert Poole

My piece in today's New York Post:

SATURDAY'S helicopter-plane collision over the Hudson stems in part from the politicization of decisions about air safety and air traffic control, both of them the province of the Federal Aviation Administration.

When a crash occurs, members of Congress from the area are quick to point fingers and call for tougher regulations. But few people realize how much Congress and aviation interest groups can be obstacles to improved air safety.

Private planes like those involved here are referred to as "general" aviation (as opposed to commercial aviation -- mostly airlines). The general aviation trade associations have large memberships in every congressional district, and are very active in both lobbying and campaign donations. So when these groups take a position on aviation issues, members of Congress on aviation subcommittees feel considerable grassroots pressure to make decisions that are GA-friendly.

One example is defining the airspace under which planes needn't file flight plans or be directed by air traffic control. That's the category of airspace over the Hudson River below 1,100 feet, where the collision occurred.

Everyone recognizes that airspace above and around major airports must be controlled, but GA groups resist any expansion of controlled airspace, which restricts their members' freedom to fly. In turn, because the GA crowd has a lot of clout with Congress, the FAA (which gets its budget from Congress) must take that into account in any redesign of airspace.

Another example is the use of next-generation technology to keep track of where planes are, even outside of controlled airspace. Today, all planes must carry transponders which, when interrogated by FAA radars, transmit the plane's ID number and altitude, which appears on the air traffic controller's display.

But radar only scans once every 5 to 12 seconds, and isn't very effective where there is lots of ground clutter.

Full Column Here

Reason's Air Traffic Control Research and Commentary

FAA Reauthorization and the Future of Air Traffic Control

Posted on July 24, 2009, 3:15pm | Robert Poole

National Journal's Transportation Experts blog asks:

What Does The Senate Commerce Bill Mean For FAA Reauthorization?  On Tuesday, the Senate Commerce Committee passed a $35 billion bill to reauthorize Federal Aviation Administration programs through fiscal year 2011. The bill sidestepped the politically tricky funding issue, but it would accelerate the timetable for implementing the NextGen system of satellite-based air traffic control.

Though I have concerns over some of its provisions, I’m glad to see the Senate Commerce Committee finally moving forward on FAA reauthorization. By the time they get the Senate bill passed and into conference committee with the House, it will be two full years since the previous authorization lapsed (to be extended again and again, since September 2007).

First, the good news. The Senate bill is for just two years. That jibes with the Obama administration’s intent to replace most of the current aviation excise tax structure with air traffic control user fees after 2011. That is a long-overdue reform that’s been supported by a half-dozen expert national commissions, most recently one chaired by Norman Mineta.

And the Senate bill does not contain the ridiculous protectionist nonsense of the House bill, attacking global airline alliances and imposing new inspection requirements on FAA-certified foreign repair stations. These provisions pose serious risks to U.S.-Europe cooperation in aviation. There is no problem in these areas that Congress needs to solve.

But the Senate bill is flawed in at least two important ways. First, unlike the House measure, it does not permit a much-needed increase in the cap on passenger facility charges (PFCs) at airports. This local self-help measure has become a vital funding source for expansion and modernization of airport facilities, but the current $4.50 cap has not kept pace with construction cost inflation. The House bill calls for a reasonable increase.

Also, the Senate bill in its own way seeks to micromanage the FAA’s Air Traffic Organization as it begins implementing the much-needed NextGen modernization. The old saying that “Too many cooks spoil the broth” is applicable here. Congress created the Air Traffic Organization (ATO) to be a businesslike entity, yet refuses to delegate to it the ability to make management decisions about major modernization programs like NextGen. We do not need either house imposing new management structures or setting specific deadlines for implementing pieces of NextGen. Instead, Congress should allow the ATO to function as it was intended to do, working these things out with its aviation customers.

Air France Tragedy Prompts Question: Are Airliner Black Boxes Now Obsolete?

Posted on June 23, 2009, 12:06pm | Robert Poole

One of the core concepts of the new paradigm for air traffic management, per NextGen and the Single European Sky, is network-centric information management. Aircraft will be equipped to generate and transmit, in real time, a lot more (and better) information than they do today, permitting far more precise tracking of exactly where they are at all times. That is the key to reducing spacing in all three dimensions, thereby making much more efficient use of airspace.

The loss of the Air France A-330 in the South Atlantic and—thus far—the inability to retrieve its cockpit voice recorder and flight data recorder (the black boxes) has led to considerable discussion among aviation experts about a high-tech alternative: real-time streaming of that kind of data to airline control centers on the ground.

The Associated Press reports:

The two recorders, key to helping determine what happened to the Air France plane that plunged into the ocean May 31, will only continue to emit signals for another eight days or so.

If all of the flight information was streamed the data would not be lost if the black boxes were destroyed or could not be located. Since air safety is generally enhanced by figuring out what went wrong in a crash, the result would be an increase in air safety.

But is it do-able, at an acceptable cost?

Well, to begin with, nearly all airline aircraft (at least for major carriers) are already equipped with a system called ACARS, which transmits data about the status of various aircraft systems to its maintenance base. Reports on the Air France crash have recounted the kinds of information received from Flight 447 in its last minutes. But there is a much larger volume of data collected on the two black boxes, so having enough bandwidth to transmit all of that in real time is a potential problem. But data compression techniques exist, and a spokesman for Canada’s Aeromechanical Services has suggested that a system it makes could transmit 10 times as much data per second than the uncompressed data sent via ACARS. And spokesmen for black box makers Honeywell and L-3 Communications agree that this is a realistic prospect.

ACARS was developed by ARINC, and now both ARINC and competitor SITA offer various competing communications services. Given the importance of learning everything we can about the causes of crashes, this kind of real-time data-streaming—either to supplement or replace black boxes—should be seriously explored as part of NextGen.

Airport Congestion Costs New York Billions

Posted on June 18, 2009, 2:01pm | Robert Poole

How bad is congestion at the major New York-area airports? That’s the question the Partnership for New York City set out to answer, in a follow-up to the 2006-07 debates over congestion, delays, runway pricing, and slot auctions. It commissioned HDR Decision Economics to research the question, and the result was released in February 2009 as “Grounded: The High Cost of Air Traffic Congestion.”

The report, which appears to be competently done, is something of an eye-opener. New York airport congestion has a number of costs, the principal ones of which are estimated as follows:

• Lost time to air travelers was $1.7 billion in 2008, and over the period 2008-2025 will likely total more than $50 billion.
• Airline costs (wasted fuel and excessive crew time) were $834 million in 2008 and will total $25 billion between now and 2025.
• Freight shippers lost $136 million in 2008, and will lose a total of $4 billion by 2025.
• Productivity losses to the regional economy were estimated at $21.5 billion over the 2008-2025 period.
• And additional emissions generated by planes in long lines waiting to take off are estimated to cause harm estimated at $1.7 billion of this time period.

That’s a huge price tag, in anybody’s book. So now that we know how bad the impact is, how should those affected deal with this costly congestion?

The introduction of the report created big expectations for me, saying the Partnership “wanted to determine whether investing in expansion of regional airport capacity and upgrading the air traffic control system to reduce flight delays would pay off for the region and the nation.” It follows this by saying that, “The findings of this study clearly show that such investment is more than justified by the cost burdens resulting from inefficient and unpredictable passenger and air freight service due to congestion.”

I read on eagerly, hoping to find conclusions and recommendations calling for bold expansion plans—perhaps terminal expansion at LaGuardia to permit larger passenger volumes that would be consistent with “up-gauging” the average passenger capacity of planes using that airport or possibly the 2008 Reason Foundation proposal for adding a closely spaced parallel runway at JFK.

Alas, what I got was a set of very modest incremental improvements: improve ground traffic management, speed up the use of RNAV (area navigation) departures, redesign the region’s airspace (already under way by the FAA), implement NextGen capabilities in the air traffic control system and on airliners, and (a direct result of the previous measure) reduce excess spacing between aircraft on approaches to the airports.

The report also includes a provocative statement: “All travelers, other things being equal, would prefer to arrive at their destinations more quickly, and almost all would be willing to pay something more to make that happen.” Indeed, the cost of passenger delays in the report was estimated using FAA air-traveler value of time figures. But instead of taking this point to its logical conclusion—runway congestion pricing—the report just drops it.

In fact, as George Donohue and Karla Hoffman found when they ran a strategic simulation game in cooperation with the FAA, airlines, and the Port Authority of New York and New Jersey, runway congestion pricing at LaGuardia would lead to significant up-gauging of aircraft there, making better use of its scarce and valuable runway capacity.

There is good reason to expect the same to be true of JFK and Newark. Runway pricing would not only reduce delays without reducing passenger throughput; it would also generate additional airport revenue that could help pay for terminal and runway expansions in the Port Authority’s airport system.

FAA Promotes Future Air Traffic Control System on YouTube

Posted on April 23, 2009, 5:02pm | Robert Poole

Via Wired, I’m glad to see the FAA putting out a fairly accessible video explaining the benefits of NextGen.  This is a much-needed transformation of air traffic control that offers much-improved air travel. However, it is unlikely to be implemented on time or on-budget as long as the FAA’s Air Traffic Organization remains part of a tax-funded bureaucracy, held hostage to the federal budget process. Every leading western nation except the United States has “commercialized” its ATC system over the past 20 years, allowing it to finance major modifications by going to the bond market, and letting it make commercial decisions without political interference. We should do likewise in this country.

Maybe Business Jet Groups Don't Want to Pay Their Fair Share Or Fix Their Image

Posted on April 15, 2009, 11:48am | Robert Poole

My most recent Air Traffic Control Reform Newsletter seems to be drawing some attention because I suggested that business aviation could improve its image by paying for its fair share of air traffic control (ATC) services. I wrote:

For business aviation to alter its current "fat cat" image will take more than rhetoric. One very positive gesture this industry could make would be to help address the impending budget crunch that threatens timely implementation of NextGen, the transformed ATC system that, by doubling or tripling capacity, will dramatically reduce delays and make all of aviation more effective...Supporting the $25 NextGen fee would be a symbolically important step for NBAA and other business aviation advocates. It would make tangible their claim that business aviation is not a luxury but a necessity.

Over at AIN Online, Ed Bolen, president of the National Business Aviation Association, responds to my newsletter in a short piece by AIN's Chad Trautvetter:

In response, NBAA president and CEO Ed Bolen told AIN that Poole’s comments are a “thinly veiled attempt to promote aviation system privatization. He said the general aviation community supports ATC modernization and has “agreed to pay more in direct investment for modernization through Congressional proposals that build on the proven, pay-at-the-pump fuel tax to help fund continued transformation to NextGen.

Bolen does not bother to rebut my actual argument, but instead raises the red herring of “aviation system privatization.” Large-scale governance and funding reform of the air traffic control system is something I’ve advocated for many years, and has been carried out in Australia, Canada, Britain, Germany, and about 35 other countries over the past 20 years. None of those cases involved turning over the air traffic control system to an outside for-profit company, as Bolen well knows. Instead, they have involved converting the existing ATC provider from a tax-funded government bureaucracy to a user-funded, not-for-profit corporation. In the best model for the United States to consider adapting, Nav Canada, the business aviation community has a seat on the board of directors.
 
But that’s not what my article proposed as a near-term change. It simply argued that since business aviation uses about 10% of all air traffic control services but provides less than 3% of the system’s revenue (via Bolen’s beloved “pay at the pump” method), it would be a worthwhile symbolic move for business aviation groups like Bolen’s to support a small additional payment whose proceeds could be bonded against to provide $5 billion for much-needed air traffic control modernization. The fee, as proposed by Sen. Jay Rockefeller (D-WV), would be a mere $25 per flight, and it would apply only to jets and turboprops—the kinds of planes that make the greatest use of ATC services. Business jets cost their operators a lot of money - $1,500 to $3,000 per hour just in direct operating costs. So adding $25 per flight to help modernize the ATC system would add a trivial amount to operating costs, but might help repair business aviation’s fat-cat image.

2006 Study: Business Jets and Air Traffic Control User Fees

Reason Foundation's Air Traffic Control Research and Commentary Archive

FAA Nominee Talks About Air Traffic Challenges Ahead

Posted on March 31, 2009, 8:16pm | Shirley Ybarra

Aviation Week talks with Randy Babbitt, President Obama’s nominee to head the FAA. Babbitt knows he'll face plenty of challenges:

The NextGen modernization initiative will be a major focus during Babbitt’s tenure. “This is a big investment, and we have one chance to do it right,” Babbitt said. He believes getting system user input will be a key to implementing NextGen – “I want to keep channels open” to industry,” he said.

Another major priority for Babbitt after he is confirmed will be resolving a long-running labor dispute with the National Air Traffic Controllers Association. He said this is a two-part process, and the first step will be addressing the current contract that was imposed on controllers and has remained a sore point. The administration has already acknowledged that this agreement has to be revised, Babbitt said.

Controllers and the administration also have to look at the longer term, and reform the process for negotiating contracts, Babbitt believes. The current process is “too subject to politics...there needs to be a more balanced, neutral approach.” For an initiative as ambitious as NextGen, “we need employees on board,” he said.

Reason Foundation's Air Traffic Control Research and Commentary

Gingrich Is Off Base on Fixing the Air Traffic Control System

Posted on March 16, 2009, 10:01pm | Robert Poole

Former Speaker of the House Newt Gingrich in The New York Times Magazine recently:

“One of the projects I’m going to launch — we don’t have a name for it yet — is an air-traffic modernization project,” Gingrich told me excitedly. “You can do a space-based air-traffic-control system with half the current number of air-traffic controllers, increase the amount of air traffic in the northeast by 40 percent, allow point-to-point flights without the controllers having to have highways in the sky, and reduce the amount of aviation fuel by 10 percent. So it’s better for the environment, better for the economy. You have far fewer delays in New York, and by the way, you cut the number of unionized air-traffic controllers by 7,000. “Our thematic is going to be — you’re going to love this — that if you have an air-traffic delay that’s not caused by weather, take the extra time at the airport and call your two senators and your congressman and demand they pass the modernization act,” Gingrich enthused. “Now, notice what I’m doing,” he said, leaning back and smiling. “I’m offering you a better value.”

Gingrich is correct that a GPS-based air traffic control (ATC) system along the lines that’s been largely designed (under the rubric NextGen) could dramatically increase the productivity air traffic control.

But it will actually set back the efforts to implement this new paradigm if it is framed as a means of cutting the current workforce in half. One of the factors in the slow progress of the Bush administration on NextGen was the bad blood between FAA management and its unionized controllers—something everyone expects the labor-friendly Obama administration to work hard to fix. In fact, phasing in NextGen and phasing out the old, labor-intensive system, will probably take 15 to 20 years—in part because in order for it to work, tens of thousands of commercial planes and eventually all private planes will have to be equipped with expensive new gear in order to show up in the new (non-radar-based) system and to interact properly with it. During that time period, everyone expects air traffic to continue growing, probably doubling by 2025. So a doubling of ATC productivity would mean handling twice the traffic with about the same number of controllers as today. That’s a far different message than Gingrich’s glib line about cutting the current workforce in half.

The correct understanding - that NextGen is not a threat to ATC jobs - provides a much better basis for getting the controllers union engaged in serious efforts to prepare for this essential transition.