Air Traffic Control Reform Newsletter #15

Topics include: controllers' union pushes too hard for ATC privatization ban, flight service station reform, data link decision a setback for modernization, and good news from the Canadian and UK ATC corporations.
In this issue:

NATCA Pushed Too Hard with ATC Privatization Ban

Be careful what you ask for, goes the old adage, because you may get it. Controllers' union president John Carr must be having second thoughts this month, as the all-out NATCA campaign against the specter of "ATC privatization begins to alienate the rest of the aviation industry.

Carr and NATCA spent the first half of 2003 alleging a Bush Administration plot to "sell ATC to the highest bidder," when no such plan existed. But rather than seeking legislation to attain their real objective-to repeal or at least halt the expansion of contract control towers-the union fought hard for more-sweeping anti-privatization language. Ultimately, both House and Senate bills contained such language, preventing any expansion of outsourcing in ATC, but with carve-outs to protect the existing contract towers.

But that went too far for the Administration, which threatened to veto any bill with such sweeping anti-reform language. Hence, DOT and the GOP transportation leadership drafted Conference Report language that (1) exempts not only the existing contract towers but the additional 70-odd FAA-run VFR towers that the DOT Inspector General has identified as good candidates for the program, (2) sunsets the privatization ban (on activities involved in directly controlling air traffic) in 2007. This language, approved by the White House, became the Conference Report approved by the Republican members of the conference committee, just before the August recess.

To Carr's great embarrassment, the media spun this outcome as authorizing ATC privatization in 2007. There is scuttlebut that some Democrats who've been carrying NATCA's water now prefer to remove the anti-privatization language from the bill altogether, rather than see this "deadline" enacted into law. And the nationwide NATCA campaign (with media events in 25 cities and inflammatory press releases) is now alienating the rest of the aviation industry. Another long battle over the privatization language (and the still-credible White House veto threat) could delay final passage of the FAA reauthorization bill for months. Even GAMA and AOPA, two leading general aviation groups that officially oppose ATC privatization, are telling NATCA to cool it. AOPA president Phil Boyer sent a letter to every member of the Senate urging passage of the bill, despite his unhappiness with the privatization provision.

Thus, Carr looks likely to lose whichever way Congress votes in September:

  • If they pass the bill as is, contract towers will expand, and we have a 2007 target date for ATC privatization;
  • If they remove the privatization provision, the status quo prevails-contract towers can be expanded, and ATC retains its status as not inherently governmental;
  • If they redraft the provision to reflect NATCA's original intent, the White House vetoes the bill, and the entire aviation community comes down on NATCA for letting its narrow special interest harm the general interest.

Perhaps this debacle will lead to the election of a more reasonable leadership team at NATCA this fall, like those who managed the union during the early and mid-1990s.


Flight Service Station Reform to Continue

Although the unions' original goal was to have all of air traffic control redesignated as "inherently governmental" and hence required to be provided by federal employees, the final language in the House and Senate bills was more limited. Hence, the ATC support functions of equipment maintenance and Flight Service Stations (FSSs) are exempt from the bill's four-year ban on outsourcing.

That means that the FAA's current FSS competition study, under OMB's revised A-76 process, will go forward. This is an 18 month effort, already under way, to compare the costs and effectiveness of outsourcing some or all FSS functions with continued FSS operation by the FAA. Under the A-76 rules, the FAA may submit its own proposal for a revamped and modernized operation, for comparison with what would likely emerge from private-sector bids. If it appears that the private sector could do a better job, the FAA would go out to bid for the relevant services.

Flight Service Stations provide flight-plan filing services, weather briefings, and other miscellaneous services to pilots; 80% of FSS transactions are with general aviation (GA) pilots. Unfortunately, the FSS system "is in a state of decline and disrepair, with escalating costs and reduced service." So says Phil Boyer, president of AOPA, in the June issue of AOPA Pilot. Citing both GAO and Inspector General Studies, Boyer notes that FSS now eats up $600 million a year-about three times what GA pilots pay in fuel taxes. That works out to a cool $2,700 per GA plane, per year. Boyer notes that each pilot contact with FSS costs $20; by comparison, the FAA's privately contracted DUATS service costs just $1.50 per contact. Boyer also notes that FSS modernization plans are years behind schedule and way over budget (like many other FAA modernization efforts). The long-awaited OASIS replacement for the 1970s-era FSS computers "may be obsolete by the time it is fully implemented."

Despite normally standing shoulder-to-shoulder with the FAA unions against any form of privatization, Boyer has carefully steered AOPA and its members to support the current competition study. A survey of its members found that 65% would support outsourcing of FSS services, as long as this did not result in the imposition of user fees (which is not planned; no fees are charged for DUATS services). As Boyer notes, "Flight service stations must be modernized and briefings brought down in cost, or FSS will face extinction. . . . A-76 could very well provide the best route of flight."


Data Link Decision Sets Back Modernization

Jaws dropped last month when the FAA announced that controller-pilot-data-link communications (CPDLC) was being put on indefinite hold, despite a highly successful test program in Miami. Automating routine ATC communications-in effect, switching from voice to email-"is the key architectural enabler of almost any future envisioned air traffic management system," says Kevin Brown, one of Boeing's senior ATC people. "It is hard to imagine a future where the connective tissue between aircraft and ground is someone's voice over a VHF radio." And CPDLC isn't just about automating a few routine voice messages. It could eventually permit a plane's flight management system to automatically update ATC computers with the plane's current trajectory, making possible a "network-centric" approach to ATC.

By putting the program on hold, the FAA is ceding leadership in CPDLC to Europe. Eurocontrol's plan will equip 15 en-route centers by 2007, whereas observers now don't expect comparable nationwide CPDLC equipage here until 2012, at the earliest.

FAA's Charlie Keegan told Aviation Week that there isn't a viable business case for deploying CPDLC nationwide now, based on return-on-investment calculations. The agency gives to reasons for its conclusion. First, in their current financial condition, the airlines don't have the money to equip their fleets any time soon, so FAA's land-side investment would be wasted for many years. Second, CPDLC's cost to the FAA is turning out to be higher than expected, eating into funds needed for more urgent projects like replacing the host computer systems (ERAM) and terminal systems (STARS). There are problems with both of these explanations.

First, there's no evidence the airlines were balking at timely expansion of CPDLC. In fact, FAA's announcement was greeted with dismay, not only by American (the largest participant in the Miami program) but even by severely stressed United. Joining the general industry dismay were the Air Line Pilots Association and Airports Council International. In Europe, this problem is being addressed by giving airlines incentives to make the investment. Eurocontrol is paying to equip the first 100 airliners in its program; thereafter, en-route ATC user fees will be reduced by 2% for CPDLC-equipped planes.

But second, what is the reason for those higher FAA costs? Sources tell us it's primarily the high cost of the extensive overtime required to train and qualify controllers to use the system. Under the notorious memoranda of understanding (MOUs) negotiated with NATCA by former Administrator Jane Garvey, controllers in effect have to be bribed (via overtime pay and time off) into cooperating with modernization efforts, says one FAA source.

When you step back and take an arms-length look at what CPDLC really means for the future of ATC, it's hardly surprising that NATCA would be dragging its feet. The more the system can automate routine tasks, the greater the increase in productivity. And that means, other things equal, that a given amount of air traffic can be handled with fewer people. As NATCA looks ahead to the looming controller retirement bulge, they can see that higher productivity will mean fewer dues-paying, letter-writing members. So even though better technology can make the individual controller's job easier, it makes things tougher for the union as an institution.


Canadian, UK ATC Corporations Weather the Storm

Despite the continued low levels of air traffic across the North Atlantic, both Nav Canada and NATS-the corporatized providers in Canada and the U.K.-are making progress in coping with a difficult business environment.

As reported here previously, NATS accomplished a financial restructuring last spring that brought in BAA as a new investor and led to new cash infusions by both BAA and NATS's 49% owner, the U.K. government. Now NATS is about to launch a billion-dollar bond issue to refinance a large part of its bank debt. That, in turn, will permit the removal of restrictive provisions on the debt that had prevented NATS from moving forward with its $1.6 billion, 10-year modernization program. The bond issue has received AAA ratings by both Standard & Poor's and Moody's. (Incidentally, there is a good, even-handed assessment of the NATS public-private partnership in the April-June 2003 Journal of Air Traffic Control: "The Part Privatization of NATS: The Experience One Year After," by Arnab Majumdar and Washington Ochieng, both with the Centre for Transport Studies at Imperial College in London.)

Meanwhile, NavCanada averted a threatened strike and reached agreement with its controllers' union on a new contract (and pay increase) in June. Not too surprisingly, the settlement was followed in July by the company's announcement of a 6.9 percent user fee increase, effective as of August 1st. In announcing the increase, NavCanada noted that the new rates are only four percent higher than the initial rates, first fully in place in March 1999. Thus, the overall increase since then has been far below the rate of inflation. In addition, the current charges are still 28% less than the now-repealed air transportation tax they replaced. (For some further perspective on NavCanada, you might want to look at a March 2003 report from Moody's Investors Service titled "Canadian Non-Share Capital Corporations in Infrastructure Finance: High Credit Quality Despite the Lack of Equity.")


Notable and Quotable

"We should create brand new types of federal entities, unleashed from the managerial systems designed in the last century. That means transforming a host of federal agencies into performance-based organizations (PBOs) . . . . An even more far-reaching reform would be to shift federal responsibilities to independent, nonprofit corporations-what the British call Quangos."
— Robert D. Atkinson, "Radical Reinvention: Democrats can seize the initiative on streamlining and modernizing government," DLC Blueprint Magazine, July 2003.

"Heathrow is an aviation miracle. It is the busiest international airport in the world . . . [with] 60% more takeoffs and landings than JFK last year. . . . Heathrow shows just how efficient air traffic flow can be. Since it has been so overcrowded for so many years, [NATS] controllers and pilots work hard to make sure no second is squandered."
— Scott McCartney, "U.K.'s Heathrow Goes to Extremes to Ensure Not a Second Is Wasted," Wall Street Journal, July 23, 2003.


Post-Script

Several issues back, I wrote about former FAA Administrator Langhorne Bond's paper calling for separate safety regulation of ATC. At the time it was not available online. I'm happy to report that you can now download here.

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





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