In this issue:
- “Turning over control to the major airlines”?
- Congressional appropriators oppose corporatization
- Fresh thinking on ATC reform in Europe
- Business aviation and Nav Canada
- Feedback on FAA’s procurement system
- News Notes
- Quotable Quotes
“Turning Over Control to the Major Airlines”?
The most damaging charge against efforts to convert the FAA’s Air Traffic Organization into a self-supporting ATC corporation is that this would be “turning over ATC to the major airlines.” This meme was launched last year by Ed Bolen, CEO of business jet organization NBAA. It has spread widely among not just ideological opponents but also among many people who are genuinely concerned about aviation and access to the National Airspace System (NAS)—private pilots, mayors of small towns concerned about losing (or not getting) a control tower, rural state members of Congress, and newspaper editorial writers, especially in small cities and rural states.
Here are a few samples;
- “[This would] take congressional and public oversight of our air traffic control system away from Congress and put it under the control of big, commercial airline interests.”— Kate Hanni, FlyersRights.org.
- “The airlines will probably have an outsize number of seats on this new entity’s board, and they can then do what they have long dreamed of: raise the tax on using the system and limit non-airline traffic (known as general aviation).”—Andrew Schwartz, Huffngton Post
- “Allowing major airlines and their trade associations to win the fight to privatize would be wrong for several reasons, with passenger safety at the top of the list.”—Editorial, Buffalo News
- “Sweeping decisions about system access, fees, and local airport investments would be made by a private board dominated by the biggest, commercial airline interests.”—Chip Goodman, op-ed on OregonLive.com.
These views misunderstand or deliberately misrepresent the governance model set forth in last year’s AIRR Act that passed the House Transportation & Infrastructure Committee but got no farther. First of all, the stakeholder board defined in that measure called for 13 board seats, of which only four would be nominated by the major airlines’ trade association, Airlines for America (A4A). It also specified three seats to be nominated by general and business aviation groups. Four out of 13 is hardly “domination.”
Second, the actual members of the governing board would, by law, be prohibited from being employed by or receiving any compensation from any aviation organization during their term of service on the board. So they would not be “the big airlines,” but (one hopes) distinguished private citizens knowledgeable about aviation, business, finance, etc. Third, the board members would, by law, owe a fiduciary duty to the ATC corporation, not to any private interest. All of these provisions are intended to create a U.S. version of the governance structure that has worked very well for Nav Canada, widely regarded as the world’s best air navigation service provider, with the highest productivity of any developed-country ANSP.
That said, however, the misperception is very real, and has been fostered by two things. First, A4A has been the most visible and most vocal organization promoting and lobbying for ATC corporatization (even though they did not originate the proposal, which was developed by the Business Roundtable and, in a slightly different form a bit later, by the Eno Center for Transportation). Business Roundtable first broached the idea to T&I Committee Chair Rep. Bill Shuster (R, PA), prior to A4A deciding to endorse it. And second, having the airline stakeholder board nominations come solely from the trade group representing the major passenger airlines has played right into the hands of opponents.
So as Congress gears up for a second attempt at FAA reauthorization this year, last year’s proposal needs some serious revisions, especially in terms of the stakeholder board. Since airlines will end up paying the vast majority of the fees that will fund the corporation (replacing the large majority of existing aviation taxes), it certainly seems fair that they have more than token influence in nominating board members. But A4A is not synonymous with “airlines.” Two important categories of airlines not explicitly considered as stakeholders in the AIRR Act are regional airlines and cargo airlines. Regionals account for 44% of all flights in the NAS, and they have different issues and concerns than the major airlines, especially about the viability of and ATC services at the numerous small airports where they provide the only scheduled service. Cargo carriers also have interests and concerns different from those of the major passenger airlines.
Consequently, I recommend that instead of all four airline stakeholder nominations coming from A4A, the revised proposal should have two nominated by A4A, one by the Regional Airline Association, and one by the Cargo Airline Association. I anticipate that A4A will oppose this, and that’s unfortunate, since their opposition would reinforce the claims of opponents that corporatization is a plot by the major airlines to gain control of the system, etc.
This is not the only change needed to overcome the concerns of representatives of rural states, small cities, and general aviation. Another change should be to include a board seat nominated by the airports community (AAAE and ACI-NA). Airports are a critically important stakeholder group, and are rightly concerned about access to the NAS for their smaller members.
Congressional Appropriators Oppose Corporatization
Of the various groups that might consider themselves losers if the Air Traffic Organization is removed from FAA and converted into a self-supporting utility, one of the most obvious is congressional appropriators—specifically members of the House and Senate Appropriations Committees. While the authorizing committees decide on policy (e.g., on aviation), what agencies are allowed to spend depends on the decisions of the appropriators. As Politico noted on March 1st, “The appropriators . . . stand to lose significant turf if they yield jurisdiction over the air traffic control system.” Consequently, nobody should be surprised that both the House and Senate appropriations committees have come out against ATC corporatization.
And this opposition transcends party lines. The recent letter to Senate Commerce Committee leaders from the Senate Appropriations Committee was signed by both Republican Chairman Thad Cochran and Democratic Ranking Member Patrick Leahy. Among other claims, their letter said that breaking up FAA “does not appear to make sense” because it could jeopardize progress on NextGen and “would provide consumers with no recourse for complaints and mistreatment.” The latter sounds strange, since it is DOT, not FAA, that deals with consumer complaints about airlines, which are in the private sector. Presumably DOT would also be the venue for complaints about an ATC corporation in the private (nonprofit) sector.
Even stranger were the comments from the chairman of the Transportation Subcommittee of the House Appropriations Committee, Rep Mario Diaz-Balart (R, FL), who likened the proposed ATC corporation to the controversial Consumer Financial Protection Bureau which gets no appropriations from Congress, but is funded directly by the Federal Reserve. He went on to complain that the ATC corporation would “not solve the issues that it’s trying to solve”—paying for NextGen. That misunderstands that the corporation would charge customers for its services, like all utilities do, whether public-sector or private-sector. The larger ANSPs issue revenue bonds to finance major capital expenditures, such as NextGen and facility replacement. Most larger ANSPs have investment-grade bond ratings, like well-run utilities.
Diaz-Balart also complained that corporatization would give “a board made up of corporations the ability to tax something.” Again, this misunderstands the public-utility nature of an ATC corporation, and the profound legal difference between a charge for a utility’s services and a tax levied by a government and allocated by legislators.
Still, to me the most surprising response to the White House announcement that an ATC corporation will be part of its infrastructure plans came from Grover Norquist, head of Americans for Tax Reform. In a March 7th letter to Chairman Bill Shuster, Norquist expressed several concerns, including the “potential for the traveling public and American taxpayers to be subjected to increased economic and financial burdens” and the claim that “the annual appropriations process provides the oversight of agency resources necessary to ensure accountability for program performance”—which he quoted directly from the Senate appropriators’ letter.
This is my long-time friend Grover Norquist, who has always favored downsizing the federal government, who endorsed Reason Foundation’s 2001 ATC corporation proposal (very similar to the current Shuster plan), and whom I spent nearly an hour with last May explaining the rationale for ATC corporatization and debunking claims by one of his staffers that Shuster’s bill was a give-away to FAA unions. I never thought I’d see the day when Grover Norquist would defend congressional micro-management (aka “oversight”) and the status quo of a large, tax-consuming federal bureaucracy. (By the way, the National Taxpayers Union remains true to its conservative, limited-government principles by strongly supporting ATC corporatization.)
I sent Grover a long email, and have not received any response. For now, I refer you to an excellent rebuttal to his letter by Marc Scribner of CEI, “Right and Wrong on Air Traffic Control Reform.”
Fresh Thinking on ATC Reform in Europe
The problem with ATC in Europe is not the organizational structure of ANSPs: nearly all have been corporatized, and all charge their customers for ATC services in accordance with ICAO charging principles. The problem is Balkanization—within the European Union alone there are 27 separate ANSPs, leading to a system far more-costly and less-efficient than that of the United States, with a single ANSP and significant economies of scale. The Single European Sky project is an attempt to fix this, but has foundered on the rocks of nationalism, since no government has been willing to shut down any of its ATC facilities to reduce costs or straighten out dog-leg routes.
But recent months have seen a lot of fresh thinking. One example is last month’s launch of the ATM Policy Institute (where ATM means air traffic management, not the money machine at your bank). The Institute’s founding members are the innovative ANSPs of the Czech Republic, Ireland, New Zealand, and the UK, along with trade association CANSO. It is chaired by David McMillan, former Director General of Eurocontrol, and former DG of Civil Aviation in the UK Department for Transport. The Institute will explore possible ways to liberalize and open to competition parts of ATC in Europe.
An example of what might be possible comes from the European Parliament. As Aviation Intelligence Reporter revealed in January, Polish MEP Pavel Telicka discovered a little-known provision in the framework legislation for the Single European Sky: permission for a single upper airspace flight information region for all of the E.U. AIR‘s editor, Andrew Charlton, described the potential as follows:
“The single pan-European upper airspace FIR . . . would extend across all of Europe. The analogy that everyone uses is a superhighway. . . . No longer would flights that go over, but not into, France be subject to the increasingly frequent industrial action [strikes] the various French controllers’ unions call. . . . [S]uch a proposal would facilitate making en-route services more competitive. The EU FIR can be controlled from anywhere, for all of Europe. Maybe, in the interests of ensuring back-up and competition in the provision of these services, you could split Europe into three or four [upper area] FIRs, and have a back-up provider on standby. ANSPs could bid for providing these services for fixed periods of time.”
Perhaps related to this, CANSO and Airlines for Europe (A4E) have agreed to work together cooperatively to enhance the performance of Europe’s ATC system. In the news release announcing this effort, A4E noted that many CANSO members have worked hard to provide an organizational culture of consultation and negotiation that has minimized the likelihood of “industrial action.” A4E added that it hopes to work with CANSO on measures to limit the impact of industrial action on consumers and businesses.
Creating a single upper airspace FIR along the lines suggested by Aviation Intelligence Reporter would be a dramatic and effective way to minimize the impact of strikes by workers of a single ANSP, since flights over France (but not landing or taking off there) would be able to travel unobstructed across the country when its (lower-altitude) domestic ATC services were off-line due to a strike.
Business Aviation and Nav Canada
Note: this is a reprint of an article from Issue No. 27 of this newsletter, from June 2005. Given the opposition to ATC corporatization led by Ed Bolen of NBAA, I thought you might like to see what Bolen’s counterpart at the Canadian Business Aviation Association had to say about Nav Canada, after it had been in operation for nearly a decade.
One of the concerns of people in general aviation is that the board of directors of a user-funded Air Traffic Organization would be airline-dominated. Even if business aviation accounts for 30 to 40% of ATC services, if airlines had 60 to 70% of the board seats, in principle they could make all the key decisions in the interests of airlines—and potentially against the interests of business aviation that competes, to some extent, for high-end customers.
The country whose aviation sector looks the most like ours, especially in having a large general aviation component, is Canada. And Canada offers us a very useful model of governance reform in air traffic control. With the creation of Nav Canada in 1996 came the world’s first aviation stakeholder board of directors. The legislation that shifted Canada’s ATC system to this new model specified the structure of its board, which is designed to balance the interests of airlines, business aviation, employees, the Canadian government, and the traveling public. The 15-member board has four airline seats, one business aviation seat, two for Nav Canada’s unions, and three for the government. Each of these “stakeholders” appoints people to those designated seats. Those 10 select the CEO, who becomes the 11th board member. And those 11 select four more, from the traveling public, as independent directors. That’s not exactly the composition I would recommend for an ATO board, since our aviation sector is more diversified, but it should give you the general idea.
To see how business aviation fares under this structure, in effect for nine years now, I interviewed Rich Gage, the head of the Canadian Business Aviation Association. I asked him straight out whether he thinks business aviation gets a fair shake, given that there are four airline-appointed board members and only one for business aviation. He noted that airlines are four out of 15 total seats, which means they can’t dominate things. And he pointed out that all board members have a fiduciary duty to Nav Canada itself, not to the stakeholder group that appoints them. I asked if he thought business aviation is getting good value for the money they pay in fees. Although they’ve had some concerns, he said, on balance they get good service and a continually upgraded system. In response to my request that he speculate—if it were possible to go back to the old system, whether his members would prefer that—he said he doubted it, saying that the new system is pretty well accepted.
Because of concerns being raised by the GA community here, I asked Gage about Nav Canada’s billing system. He said he’s unaware of any problems with it, and he would be likely to hear from his members if bills were wrong or sent out late. What about the concern that user fees would increase the cost of owning and operating a business aircraft? “I think it’s had no effect on business aviation,” he said. “I just don’t see nor do I hear people making aircraft decisions on the basis of Nav Canada fees.”
Gage also explained some other aspects of Nav Canada’s governance of which I was not aware. In addition to being represented on the board of directors, business aviation is also one of four “members” of Nav Canada (the other three being the airline community, labor, and the government). These four have the responsibility for things like bylaws changes and voting on new directors. And CBAA is also part of a large Nav Canada Advisory Committee, which includes representatives of airports, provincial aviation organizations, U.S. airlines, the Canadian pilots’ union, etc.
In short, our neighbors to the north have provided one model of how the business aviation community, in view of its significant usage of ATC services, can become part of the system’s governance. The U.S. business aviation community should see which aspects of this model could be applied in a user-governed Air Traffic Organization.
Feedback on FAA’s Acquisition Management System
Last month’s issue included long quotes from two knowledgeable observers about how cumbersome and time-consuming procurement of new systems is, under FAA’s Acquisition Management System (AMS). Former FAA Associate Administrator for Research & Acquisitions, George Donohue, who was in charge of developing AMS in the mid-1990s, sent me the following comments, which I’m happy to pass along.
“I take issue with the assessment that the AMS that I was responsible for is the problem. I designed it and used it to move several large systems that were traditionally over cost and behind schedule into the field on time and cost. It was designed by an outside (non-government) blue-ribbon committee of experts and reduced the federal [procurement] bureaucracy from 11 volumes of FARs [Federal Acquisition Regulations] to 100 pages. The control points that were inserted would be the same control points that any large corporation would do as due diligence for a major capital expense. AMS actually favors COTS (Commercial Off the Shelf) buys and rigorous requirements review, to make sure that expensive and time-consuming development is minimized.
“That is not to [deny] that the individuals that took over management of the system after I left turned it into a bureaucratic nightmare. It is not the AMS; it is how it has been used. This is one of the main reasons that I decided the entire ATC system and operation needed to be outsourced. It is the people and culture that need to be changed.” (emphasis added)
George was one of the peer reviewers on my study, commissioned by the Hudson Institute, on the relationship between (lack of) innovation and the organizational culture of FAA. If you are interested, it’s available online.
Eno Renews Call for ATC Corporation. The Eno Center for Transportation has released an updated version of its major study calling for separating the Air Traffic Organization from safety regulator FAA, and converting the ATO into a self-supporting air navigation service provider (ANSP). The report was highlighted at a March 21 event at the National Press Club, featuring the co-chairs of the stakeholder group effort that produced the study, former DOT Secretary Jim Burnley and former Sen. Byron Dorgan. The report is available online.
House T&I Leaders Call for Review of NextGen Benefits Methodology. Rep. Bill Shuster (R, PA) and Rep. Frank LoBiondo (R, NJ), the chairmen, respectively, of the Transportation & Infrastructure Committee and its Aviation Subcommittee, sent a letter to the DOT Office of Inspector General on March 16th requesting a review of FAA’s methodology for estimating the benefits of the NextGen technology upgrades, and an audit of the agency’s benefit projections.
DOT Secretary to Visit Nav Canada. Making her first overseas trip as Secretary of Transportation, Elaine Chao will visit Nav Canada at the end of March. This is a visit numerous U.S. aviation stakeholders and researchers have made in the past five years (including the editor of this newsletter). Most such visits include a morning of briefings at Nav Canada headquarters in Ottawa and an afternoon at the company’s technology development center at the Ottawa Airport and a visit to the Ottawa control tower.
Aireon Testing Space-Based ADS-B Surveillance. With the first 10 of a planned 75 Iridium NEXT satellites now in orbit, Aireon has begun operational testing of its global surveillance capabilities. The Aireon ADS-B receivers pick up ADS-B transmissions from aircraft anywhere in the world and down-link them via Iridium ground stations to subscribing ANSPs once every eight seconds. Aviation Week reports that initial tests were even able to receive signals from a Swedish regional airline flight in terminal airspace during its landing phase. Separately, Thales (provider of TopSky ATC automation systems to numerous ANSPs) is doing its own validation tests. In other Aireon news, the company announced an agreement with Airways New Zealand to enter into an operational trial, and a memorandum of understanding with the French ANSP (DSNA) to evaluate Aireon’s space-based ADS-B services.
Peru Getting Major ATC Upgrade. The ANSP of Peru, CORPAC, has contracted with Indra to modernize the country’s Lima Center, which controls all airspace in the country. The new software system will include automated arrivals and departures features and will also facilitate performance-based navigation (PBN) throughout the country. Previously, Indra supplied CORPAC with Mode S secondary radars and an ADS-B receiver
NATS Signs New Agreement with Japan’s ANSP. Part-privatized NATS, the U.K.’s ANSP, has signed a letter of intent with JANS in Tokyo to enhance the efficiency of air traffic control in Japan. One focus of the new working relationship will be ATC upgrades to handle increased air traffic expected because of the 2020 Olympics, to be held in Tokyo. The agreement was signed this month during the World ATM Congress in Madrid.
IATA Slams Slow Progress on Single European Sky. The International Air Transport Association lambasted the slow progress on unifying airspace in Europe. “The Single European sky has been in the starting blocks for 17 years, and the European Union seems toothless to force member states to implement it,” said IATA chairman Willie Walsh at the World ATM Congress in Madrid. IATA chief economist Brian Pearce added that “By not implementing the Single European Sky, the EU is leaving $3.2 billion of lost GDP on the table.”
Shuster Guest Editorials in Aviation Media. In recent weeks, House T&I Committee chairman Rep. Bill Shuster has published guest editorials in both AOPA Pilot (March 2017) and Aviation Week (Feb. 20-March 5, 2017) making the case for the proposed ATC corporation. In his AOPA editorial, Shuster emphasized his strong support for general aviation and the bill’s prohibition on user fees for piston and noncommercial turbine aircraft, repeated that GA access to the National Airspace System will be preserved, and that GA will be strongly represented on the corporation’s stakeholder board.
Survey Finds Public Support for ATC Corporation. As part of its “Status of Air Travel in the United States” survey, Airlines for America included the following question: “Some have proposed that an effective way to modernize the air traffic control system would be to transfer day-to-day operations to an independent non-profit with continued federal regulatory oversight of safety. Such an approach would be more in line with international best practices.” In the responses of 5,047 U.S. citizens, 63% somewhat favored the idea and 15% strongly favored it, for a total of 78%.
Two More ANSPs Join iTEC Alliance. Oro Navigacija of Lithuania and PANSA of Poland are the two newest members of the iTEC Alliance. All seven member ANSPs have agreed to use a common flight data processing system in the planned Single European Sky. Other members include founders DFS (Germany), ENAIRE (Spain), and NATS (UK) as well as LVNL (Netherlands) and Avinor (Norway). The system’s provider is Indra. Among other features, the iTEC system will enable 4D trajectory-based operations.
Follow-up on European ATC Costs. Rui Neiva of the Eno Center pointed out that last month’s article comparing U.S. and European ATC costs relied on data from 2014, when one Euro cost about 1.35 dollars. Today, with the Euro below 1.10 dollars, European ATC costs would be relatively close to U.S. costs.
“[P]olitical, government-wide disruptions, such as a federal hiring moratorium, can put the FAA in a tailspin for days, even if they are not officially affected once the dust settles. Disruptive political decisions can come from either party, and any of the three branches of government. In fact, when I discuss the pros and cons of FAA reform, I always ask, ‘What problem are you trying to solve, and will restructuring solve that problem?’ In addition to possibly providing a predictable and reliable revenue stream, avoiding political whims could be another problem we might be able to cross off the list if we were to restructure. . . . [T]ime and time again, the FAA is subjected to policies—sequesters, shut-downs, hiring freezes—that impede aviation efficiency and safety. . . . As we debate FAA reform, we must look to our international counterparts, their lessons learned, and their best practices as independent air navigation service providers (ANSPs).”
—Pete Dumont, Air Traffic Control Association, “Government Disruptions,” ATCA Bulletin, No. 2, 2017
“The new air traffic control system will benefit everyone. The Trump administration’s business approach with proposed long-term funding rather than FAA’s bureaucratic instincts should help modernize our air traffic control infrastructure. After wasting $7.5 billion of consumer tax revenues keeping the old radar-and-paper-strip systems working over the past decade, it’s time to get the job done properly. Let’s make technology that the American public takes for granted and holds in its hands, in cell phones and GPS systems, available to our pilots and air traffic controllers. Airlines and the FAA need to begin educating travelers about the tangible benefits of modernizing the ATC system. The USA, once in the forefront of technology, is falling behind other nations when it comes to airspace management.”
—Charlie Leocha, “Air Traffic Control—America’s Biggest Infrastructure Project,” Travelers United, March 16, 2017
“You can start by counting a majority in Congress among the unconvinced. Our federal lawmakers have repeatedly over the last two decades decided NOT to pass—or even vote on—proposed laws that would have spun off the nation’s Air Traffic Control system from the FAA . . . even though all such proposals would have continued strong oversight roles for the government. Delta Airlines, alone among the nation’s big airlines, also opposes ATC privatization. So does the National Business Aircraft Association. That’s the Washington lobby representing owners of private aircraft used by companies and wealthy business people, and most of the manufacturers who make those planes. Their reasons, and those of other ATC privatization opponents, differ in some respects. But they all center on fears that a privatized ATC system will mean a loss of their ability to influence or control the ATC system’s policies, spending priorities, and major decisions on matters like where major facilities will be located. For some, there’s also concern that they or their constituents will end up shouldering a bigger share of the costs than is the case today.”
—Dan Reed, “Another Opportunity for Congress to Privatize Air Traffic Control,” Forbes.com, Feb. 27, 2017
“Remote air traffic services have been around for decades in the form of en-route services, so why should it be different for an airport [control tower]? It’s a mindset shift, but one that means the coming digital revolution is one for everyone, even the busiest airport.”
—Steve Anderson, NATS, in Tony Osborne, “NATS Offering Remote Tower Demonstration,” Aviation Daily, March 6, 2017
“Liberalization revolutionized the airline industry and has been a global success story, driving growth across the world. Unfortunately, air traffic management [ATM] remains a largely national monopoly, without the incentives necessary to drive up performance. We believe that by opening up parts of the ATM industry to greater liberalization, significant benefits can be achieved, including reducing costs and minimizing the environmental impact of aviation, all the while maintaining or improving on today’s safety levels.”
—David McMillan, Chair, The ATM Policy Institute, “New Think Tank Launched to Promote Air Traffic Management Liberalization,” news release, Feb. 7, 2017