FAA, Controllers Mistaken on Privatization

Holiday travelers can expect to be greeted at many airports by off-duty air traffic controllers protesting an alleged Bush Administration plan to “farm out to the lowest bidder” their vitally important jobs. In response, the Federal Aviation Administration has managed to muddy the waters, rather than defending the validity of what the Bush folks are actually doing.

First, let’s clarify the specific change in federal policy which the President announced last June. He signed a one-sentence executive order re-affirming that air traffic control (ATC) is not “inherently governmental.” That order overturned a last-minute executive order issued by President Clinton, which slipped the inherently governmental” language into a broader directive on reforming ATC. Most aviation experts agree that ATC is a high-tech service business, which can be provided either by government or by commercial entities-always operating under stringent governmental safety regulation. It’s the safety regulation that most would agree is inherently governmental.

One of the reasons President Bush issued his June order was to protect the legal status of the FAA’s long-standing program of contracting out the operation of over 200 control towers at smaller airports. Both the General Accounting Office and the Transportation Department’s Inspector General have found that these contract towers are just as safe and just as effective as FAA-run towers—but cost less than half as much to operate. No wonder the controllers’ union hates the idea and tried to get Clinton to make them illegal by stealth.

In responding to controller leafleting against privatization, FAA spokesman Greg Martin muddied the waters by claiming that tower operations have been contracted out only at non-commercial airports—those without scheduled passenger service. That’s simply incorrect, as Martin should know. When you fly to Charlottesville, Macon, Key West, New Haven, Laredo, Cheyenne, Missoula, Bellingham, Modesto, or San Luis Obispo, your regional jet or turboprop is guided safely to its landing by a contract tower. And it’s not just small airliners that are handled by such towers. Nonstop 757s from Los Angeles are controlled at Kona and Lihue, Hawaii by contract towers.

The Bush Administration recently launched a major effort to subject some 850,000 not-inherently-governmental positions to competition from private bidders, including some additional FAA functions. FAA Administrator Marion Blakey has assured controllers that their positions are not included in that program. But that doesn’t mean ATC is being exempted from reform. It’s just that outsourcing this function’s 15,000 jobs is not on the list.

In any case, outsourcing is not the form of privatization being used in other countries that have accomplished major ATC reform. Australia, Germany, New Zealand, South Africa and more than a dozen other countries have transformed their ATC agencies into government-owned ATC corporations. Instead of being embedded in transportation bureaucracies, these corporations are independent, paid directly by airlines to provide cost-effective ATC services. And they are regulated at arm’s length by the government’s air-safety regulator. These ATC corporations have modernized more quickly than the FAA and have come to resemble commercial enterprises.

Canada and the U.K. have gone one step further. They have created quasi-private ATC corporations-Nav Canada and NATS. The former is a non-profit, with a board composed of aviation stakeholders, including controllers. The latter is part-private, part-government. Since both depend heavily on North Atlantic traffic, both took serious hits from the big declines in that market after 9/11. To survive, year-old NATS is getting an additional capital injection from both government and private owners. By contrast, since Nav Canada had already built up financial reserves over its six-year history, it’s come through the post-9/11 in pretty good shape.

These two dozen ATC corporations are what the leafleting controllers point to when they claim that “privatization has not worked in Great Britain, Canada, and Australia, and it won’t work here.” On the contrary, privatization via outsourcing of small control towers is working here. And quasi-privatization via creation of government-regulated ATC corporations has worked quite well overseas. It’s too bad the FAA is so tongue-tied when it comes to explaining these things to air travelers.

Robert W. Poole, Jr. is Director of Transportation Studies at Reason Foundation. A version of his air traffic control corporation concept was implemented in Canada in 1996. He has advised the Office of the Secretary of Transportation the White House Office of Policy Development, the National Performance Review, the National Economic Council, and the National Civil Aviation Review Commission on air traffic control.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.


Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.