FAQ

Air Traffic Control FAQs

21 Answers to Air Traffic Control Questions

  1. Why do advocates call this “corporatization” rather than “privatization”?
  2. Wouldn’t the ATC corporation board be dominated by the major airlines?
  3. Small cities and airports fear that the corporation might withdraw ATC services from their airports, cutting them off from the national airspace system. Is that a realistic worry?
  4. Some have called ATC corporatization a “give-away to unions.” Is that accurate?
  5. The U.S. ATC system is far larger in size than that of any other country. How can you extrapolate from the experiences of other countries whose ATC systems are much smaller?
  6. What impact would corporatization have on air safety?
  7. Doesn’t this proposal amount to privatizing the airspace?
  8. Private pilots fear that a fee-supported ATC corporation could make general aviation unaffordable. How will they be protected from ruinous ATC charges?
  9. Why not let GA continue to “pay at the pump”?
  10. Wouldn’t moving the ATO out of FAA and changing its funding and governance disrupt FAA’s NextGen modernization program?
  11. What evidence is there that corporatization has led to cost savings?
  12. Won’t the military oppose corporatizing the Air Traffic Organization?
  13. An ATC corporation would be “Too big to fail,” so wouldn’t this risk government bailouts?
  14. Isn’t corporatization a partisan plan by small-government conservatives? Why should others support it?
  15. What is a federally chartered nonprofit corporation? Are there some existing examples?
  16. Wouldn’t allowing an ATC corporation to charge user fees be giving it taxing authority?
  17. What would happen to current aviation taxes after corporatization?
  18. Wouldn’t it take a large, costly bureaucracy to collect ATC user fees?
  19. Who would be responsible for noise complaints from changed flight paths near airports?
  20. Doesn’t the proposed corporatization amount to giving away many billions of dollars in assets to a private corporation?
  21. Why do business jet groups oppose corporatization?

  1. Why do advocates call this “corporatization” rather than “privatization”?
    The term privatization implies shifting a government function to a for-profit company—either via a service contract (outsourcing) or via sale by the government. By contrast, what is proposed for U.S. air traffic control is converting the existing FAA Air Traffic Organization (ATO) into a federally chartered nonprofit corporation, governed by a board selected to represent a balanced set of aviation stakeholders. Over the past 30 years, more than 60 countries have divested their ATC provider from the government transportation agency and made it self-supporting from fees paid by users of ATC services.
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  2. Wouldn’t the ATC corporation board be dominated by the major airlines?
    No; there would be no airlines on the board at all. Instead, various aviation stakeholders (including airlines, airports, ATC employees, private-plane groups, etc.) would nominate knowledgeable individuals to serve on the board, in the numbers spelled out in its federal charter. Those board members would be prohibited from having any financial compensation from any aviation organization while serving on the board, and would owe a legally enforceable fiduciary duty to the best interests of the ATC corporation. Proposed stakeholder boards have ranged from 11 to 15 members, with a maximum of four seats to be nominated by various kinds of airlines. Since the corporation would be nonprofit, all board members would have equal votes, so the members nominated by airlines would be a small minority.
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  3. Small cities and airports fear that the corporation might withdraw ATC services from their airports, cutting them off from the national airspace system. Is that a realistic worry?
    Nearly all small airports get control towers under a federal “contract tower” program, in which companies are paid by the FAA to provide non-radar tower services. FAA requires that the benefits of a control tower exceed its costs. But FAA’s limited budget has led to a moratorium on any new contract towers since 2014. Also, FAA has deleted from its NextGen modernization plan the best hope for more small-airport towers: a technology called Remote Towers that is already in use in Europe, provided by ATC corporations there. Compared with a conventional tower, a Remote Tower offers larger benefits at lower cost, so the benefit-cost ratio will be higher, allowing more airports to qualify. The best hope for small airports having affordable control towers is an ATC corporation with reliable revenues and the ability to issue bonds to pay for modernized facilities, including new technology such as Remote Towers.
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  4. Some have called ATC corporatization a “give-away to unions.” Is that accurate?
    A smooth transition from a governmental, civil-service bureaucracy to a customer-friendly high-tech business will require fair treatment of existing employees. Current union contracts will continue in force until their expiration dates, at which point the new management will negotiate new contracts better suited to a business context. It would be grossly unfair not to protect existing employees’ pension benefits, but that will not preclude newly hired employees being covered under whatever new pension program the corporation develops. And of course, the prohibition on strikes by ATC corporation employees will continue. The good news, from the standpoint of enacting ATC corporatization, is that the largest employee group—controllers and others represented by NATCA—favors the shift to a nonprofit corporation with a reliable user-fee revenue stream and the opportunity to take part in developing new technology, as their counterparts at nonprofit corporation Nav Canada have been doing for 20 years.
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  5. The U.S. ATC system is far larger in size than that of any other country. How can you extrapolate from the experiences of other countries whose ATC systems are much smaller?
    This might be a relevant criticism if the aim were to create a huge ATC system from scratch. But the U.S. ATC system is already at the required large scale, in terms of facilities, equipment, and personnel. What needs to be changed are the funding and governance arrangements. Annual appropriations by Congress are uncertain and always come with numerous strings attached. When customers pay the ATC corporation directly (as households pay their electric bills), the corporation will have a reliable revenue stream that will support issuing revenue bonds to finance large-scale modernization—something FAA is unable to do. Likewise, governance by a stakeholder board will be far better focused than “oversight” by 535 members of Congress, the Office of Management & Budget, the Government Accountability Office, the Secretary of Transportation, and the FAA Administrator. No management team can function with that many different bosses.
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  6. What impact would corporatization have on air safety?
    Corporatization would increase air safety for three reasons. First, it would remove the current conflict of interest, in which FAA (the air-safety regulator) regulates itself when it comes to air traffic control. Since 2001, the International Civil Aviation Organization (ICAO) has recommended arm’s-length separation between the aviation safety regulator and the provider of ATC services; the United States is one of the few countries not in compliance. Second, ensuring truly state-of-the-art technology is a key to continually increasing air safety, and FAA is lagging corporatized providers in this regard. Third, ATC corporations purchase liability insurance in the global aviation insurance market (which also insures airlines). Insurers then have an incentive to monitor safety performance of the ATC corporation, to reduce their own financial exposure. In addition, empirical evidence from several international studies finds that air safety has improved following corporatization and arm’s-length separation of safety regulation from ATC service provision.
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  7. Doesn’t this proposal amount to privatizing the airspace?
    That concern reflects a misunderstanding of this reform. The airspace will remain in the public sector, with decisions about ATC procedures and technology being made by the FAA, as safety regulator. It is only the provision of the ATC services that will become the task of the ATC corporation. The corporation will not be allowed to arbitrarily stop providing ATC services to certain airports or portions of the airspace, in violation of the provisions Congress provides in its federal charter. This is consistent with international aviation law and ICAO recommendations.
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  8. Private pilots fear that a fee-supported ATC corporation could make general aviation unaffordable. How will they be protected from ruinous ATC charges?
    The very large General Aviation Caucus in Congress will not permit such an outcome to occur, and the 2016 House bill prohibited charging per-use fees to small private planes. Private pilots’ organization AOPA has spent decades arguing against fees for private planes for individual flights or other ATC transactions. Canada also has a large general aviation community, and instead of charging small planes per-transaction fees, it levies a single annual charge, akin to a vehicle registration fee—currently $68 for a plane up to 2 metric tonnes and $227 for a plane between 2 and 3 metric tonnes. That makes private pilots paying customers, justifying their ability to nominate a stakeholder board member. This system has worked fine for more than 20 years, and has not led to any attempt to impose per-transaction fees on general aviation.
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  9. Why not let GA continue to “pay at the pump”?
    Both general and business aviation currently pay modest fuel taxes that help to support the FAA’s programs, but providing only 0.8% of all aviation user-tax revenue. The problem with using tax money to help pay for the ATC corporation is that tax money gets deposited in the U.S. Treasury and can only be spent on aviation if and when Congress appropriates the money. And Congress never appropriates tax money without imposing “oversight” on how the money is used. This creates the perverse system in which the FAA and its Air Traffic Organization have hundreds of overseers—which is one of the problems that needs to be solved. ATC corporatization, now in place in more than 60 countries, is de-politicization of air traffic control. It creates a direct relationship between customers (aircraft operators) and the ATC service provider, in which the ATC company can focus on delivering cost-effective service to those customers. Any involvement of tax money will undercut the purpose of the reform, which is to transform the ATO into a high-tech, 24/7 service business delivering value for its customers.
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  10. Wouldn’t moving the ATO out of FAA and changing its funding and governance disrupt FAA’s NextGen modernization program?
    The FAA has made modest progress on replacing very old technology with somewhat newer technology. But it lags many years—even decades—behind ATC corporations in countries including Australia, Canada, Germany, the United Kingdom, and elsewhere. Digital communications between pilots and controllers, electronic flight strips, routine use of GPS (satellite) navigation, remote towers, and GPS-based landing systems are some examples of where FAA significantly lags countries with self-supporting ATC corporations. Moreover, in a 2015 report, the National Research Council concluded that the FAA is not implementing the original transformative vision of NextGen; rather, NextGen has become simply a set of equipment upgrades. While the conversion of the ATO into an ATC corporation would not disrupt existing NextGen contracts, one can expect its stakeholder board to revisit the original NextGen vision to map out a better path forward.
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  11. What evidence is there that corporatization has led to cost savings?
    The most dramatic example of reduced costs is in our neighbor, Canada. In inflation-adjusted terms, Nav Canada’s ATC fees are 40% lower than they were at the outset, and its productivity has increased over its 20 years of existence. By contrast, according to the update of a Brookings Institution report, FAA’s unit cost of service has increased by 66% over this same period, while flight operations have actually declined. ATC corporations in Europe are much smaller, and have only achieved modest reductions in costs over this time frame. Nearly all of those corporations, however, are government corporations, without the customer focus created by Nav Canada’s stakeholder board.
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  12. Won’t the military oppose corporatizing the Air Traffic Organization?
    Opponents have made this claim, but it is false. Secretary of Defense James Mattis recently sent a letter to Sen. John McCain stating that “DoD is supportive of possible privatization [sic] of ATC services,” and has created an ad-hoc committee to review the existing interactions between DoD and FAA air traffic operations, to ensure that all needed arrangements are maintained. Civil/military cooperation is standard practice in all 60 countries that have corporatized ATC. Airservices Australia and that country’s Air Force are jointly developing a new nationwide flight management system that they will operate jointly. In the UK, military controllers work side-by-side with NATS controllers at the latter’s Swanwick Center. Every year in Washington, DC, the Air Traffic Control Association hosts a civil/military ATC conference in parallel with ATCA’s own annual conference.
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  13. An ATC corporation would be “Too big to fail,” so wouldn’t this risk government bailouts?
    Given current technology, ATC is akin to a natural monopoly, like some other utilities. It is therefore what bond-buyers consider an excellent credit risk. Indeed, the larger ATC corporations have investment-grade bond ratings. In the 30 years during which ATC corporations have been in operation, there has never been a bankruptcy. The worst aviation downturn occurred following the 9/11 terror attacks. Nav Canada’s traffic suffered serious declines, and it instituted a temporary rate increase to make up for reduced transaction volume. Since then it has developed a robust reserve fund to help it get through future downturns without having to increase its rates. In the UK, NATS was only a few months old when 9/11 occurred, and had no reserve fund. To get through the downturn, both major shareholders—the Airline Group and the UK government—made equity contributions to increase working capital. Neither company came anywhere near bankruptcy.
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  14. Isn’t corporatization a partisan plan by small-government conservatives? Why should others support it?
    In fact, ATC corporatization was begun in 1987 when the Labor government of New Zealand converted its ATC agency into self-supporting Airways New Zealand. That company, in turn, was the inspiration for Vice President Gore’s National Performance Review, which proposed taking the ATC function out of FAA and converting it into a self-supporting U.S. Air Traffic Services (USATS) corporation in 1994-95. In 1997 the Mineta Commission proposed a follow-up version of that plan. Today, ATC corporatization is supported by a large number of former DOT Secretaries and former senior FAA officials appointed by Democratic and Republican Administrations. It is a bipartisan, good-government reform.
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  15. What is a federally chartered nonprofit corporation? Are there some existing examples?
    The most common examples are numerous federal credit unions, which are nonprofit, stakeholder-governed financial institutions. The American Red Cross and the U.S Olympic Committee are the two best-known examples. In aviation, the Congressional Research Service has cited the example of MITRE Corporation’s Center for Advanced Aviation System Development (CAASD), which does research and development work under contract to the FAA. There are dozens of other federally funded R&D Centers organized as federally chartered nonprofit corporations, including The Aerospace Corporation, the Center for Naval Analyses, and Oak Ridge National Laboratory. FFRDCs receive federal funding, which the proposed ATC corporation would not.
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  16. Wouldn’t allowing an ATC corporation to charge user fees be giving it taxing authority?
    This claim misunderstands the legal difference between a tax and a fee. A tax is paid to a government, and is allocated to various uses by a political body. A user fee is charged only to those who receive a service, and is paid directly to the provider of that service. There is a long legal history clearly defining the difference between taxes and fees. Government utilities, such as the electricity provider Tennessee Valley Authority, charge their customers fees for the electricity they use; those fees are not “taxes.” An ATC corporation is a utility, like those that provide electricity, natural gas, water supply, etc. Customers pay fees based on the amount of services they use; those charges are not “taxes,” even when the utility is owned by a government entity.
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  17. What would happen to current aviation taxes after corporatization?
    Current aviation excise taxes each year generate more than the total (capital and operating) costs of the Air Traffic Organization, and they also generate funds for the federal airport grants program, AIP. The rest of FAA’s costs come from the federal general fund. Once the ATC corporation is in operation, deriving its revenue from ATC fees, the existing aviation taxes would be dramatically reduced—from about $14 billion to just the $3.5 billion needed to support the AIP grants program (which will continue to be FAA’s responsibility). Most likely, Congress would continue to support the safety regulatory functions of FAA via the general fund, like nearly all the other federal safety regulatory bodies (Consumer Product Safety Commission, Food & Drug Administration, etc.)
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  18. Wouldn’t it take a large, costly bureaucracy to collect ATC user fees?
    The rest of the world pays for ATC via user fees, following the charging principles set forth by ICAO, which call for en-route and overflight charges based on aircraft weight and distance plus terminal charges based on weight. Because charging ATC fees is so ubiquitous, the new ATC corporation can obtain billing service at the outset from one of several global providers. One service has long been offered by the International Air Transport Association, aimed largely at developing countries. Another is provided by a commercial company, COMSOFT. A newer service is the FlightYield system developed by Airways New Zealand and now offered worldwide by SITA in cooperation with the Civil Air Navigation Services Organization (CANSO). Thanks to billing software that obtains its basic data from aircraft flight plans, the cost of ATC billing is quite low. As of 2012, the world’s second-largest ATC provider, Nav Canada, had a 12-person billing department, and their billing cost was estimated at 2/10th of one percent of their total revenue.
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  19. Who would be responsible for noise complaints from changed flight paths near airports?
    As the aviation safety regulator, the FAA would remain in charge of approving or disapproving new flight procedures that could change noise exposures on the ground. Such changes would also have to comply with the National Environmental Policy Act (NEPA), as they currently do. So there would be little or no change in how noise problems are handled by the federal government.
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  20. Doesn’t the proposed corporatization amount to giving away many billions of dollars in assets to a private corporation?
    First of all, if this were actually a “privatization”—a sale to a for-profit company—then paying for the assets would be routine. But the proposed corporatization is a reform of the existing ATO, simply giving it a new funding and governance structure. The day before the change-over, the ATO will be a government agency. The day after, the same facilities and the same people (except for top management) will still be there, doing the same jobs, under a new organizational model. Secondly, the existing facilities and equipment have all been paid for not by general federal revenues but by aviation excise taxes deposited in the Airports & Airways Trust Fund. So the users have already paid for the assets. Third, most of the assets are obsolete and need to be replaced. This includes the 50-year-old en-route centers, aging VORs and radars, obsolete terminal equipment still using paper flight strips, etc. And finally, if aviation users were required to pay even the depreciated asset value of the assets, that would needlessly inflate the level of ATC fees users would have to pay. The ATC corporation will have to issue revenue bonds to pay for not only technology modernization but also large-scale facility replacement and consolidation. That should be the focus of its capital spending, not paying again for aging and obsolescent facilities and equipment.
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  21. Why do business jet groups oppose corporatization?
    U.S. business jets in U.S. airspace are the only such jets in the world that don’t pay ICAO-type ATC fees. Even though they are a large user of the ATC system (12% of all control tower operations, 13% of all TRACON operations, and 11% of all en-route miles flown), the amount they pay in aviation fuel taxes is only 1.3% of all aviation excise tax revenue—a very sweet deal. Business jet groups allege that paying ATC fees would greatly damage their industry, yet business aviation in Canada is thriving, and the Canadian Business Aviation Association finds that Nav Canada’s services are a good value for the money. A 2006 Reason Foundation study found that if a Nav Canada fee system were in place in this country, shifting from the current turbine fuel tax to those fees would add between 3% and 5% to the variable cost per hour to operate a business jet. The argument that this would be crippling is not credible. If ATC reform reduced delays and provided more-direct routes, business jet operators would better off paying the ATC fees if they saved as little as 3 to 5% of their annual flight hours.» return to top

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.

Aviation

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.