¶ … privatization of Air Traffic Control
in the U.S.
Non-profit privatization of ATC
Industry experts position on privatizing the U.S. ATC
Improvement in safety and regulation
New Public Management Orientation in the U.S. Air Traffic Control
Technology up gradation and budgetary constraints
State-owned enterprises (SOEs) are organizations owned and operated by governments. There is a growing consensus amongst economists and governments that governments should not operate commercial organizations as it hampers the efficiency and productivity of the respective enterprise. There is an increased debate within the U.S. And other developed countries in favor of privatizing SOEs. Federal Aviation Administration (FAA) is one of the most important agencies of the U.S. Department of Transportation. FAA has four lines of business that includes:
Airports planning and development
Air Traffic Organization (ATO)
Aviation Safety (AVS)
Commercial Space Transportation (AST)
ATO's main role is air traffic control (ATC). Of late, there is a growing debate that ATC needs to be privatized or run by a non-profit government run board of directors (BoDs) which is independent of FAA. The paper aims to present arguments in favor of privatizing the U.S. ATC.
Rationale
FAA manages the largest and the most complex aviation system in the world. There are four main lines of business that FAA operates. This over stretches FAA's ability and capacity to manage multi-dimensional business lines. However, ATC is a specialized and service-intense business line crucial to flight operations. The recent statistics (such as 58% increment in flight delays since 1995 and 68% increment in flight cancellations) indicate that ATC's efficiency and productivity can be improved by privatizing the entity. The introduction of private companies to deliver part or whole of the air traffic safety services will allow all the stakeholders (pilots, passengers, employees of ATC) to reap the efficiency and productivity related benefits.
Non-profit privatization of ATC
There is much concern regarding the privatization of ATC and transforming air safety control into a commercial activity. Different stakeholders have taken different positions on this issue. A press release by the National Air Traffic Controllers Association (NATCA) reads that privatizing the air traffic control system may damage the aviation system of USA. Profit and cost cutting motives may impact the level of safety presently offered by ATO (NATCA, 2002). Examples of Canada and England were cited by the NATCA press release as examples of countries where privatizing air traffic control remained unsuccessful. The press release fails to highlight the underlying reasons which may hamper safety after privatizing the ATC. It implies that NATCA's position on this issue may reflect conflict of interest as the association composes of air controllers, engineers, and safety related professionals whose jobs or perks may be at stake if ATC is privatized.
A rather unbiased and neutral source to plead the case for privatizing ATC is the Reason Foundation. A detailed analysis was provided by Poole and Butler (2001) in a report published by the Reason Foundation. The report highlights that air traffic control attained its limits in the summer of 1999 and 2000. Runaway incursions and operational errors due to air traffic controllers increased during 1990-2000 decade. Poole and Butler (2001) argue that air traffic control is essentially a commercial service that requires 24 hours a day and seven days a week operations. The report purposes that ATC can be transformed into a self-supporting non-profit entity that is free of FAA operational interference. The report also argues for governance related reorganization of ATC. Fig 1 highlights the three forms of governing structure that air traffic control currently manages. The figure highlights the three developed countries where these forms of ATC are currently in practice.
Fig 1-Forms of ATC Governance
Adapted from: (Poole and Butler, 2001)
The report also highlights the cost-savings achieved by ATC corporations in countries such as Canada and the U.K. The cost savings are then passed on to the commercial airlines by decreasing the airport user fees. A major advantage of the proposed reorganization of ATC into a non-profit corporation will be the establishment of a 15 member corporate board. If FAA adopts the proposed ATC reorganization on the patters of Nav Canada, following would be the board member composition of the U.S. ATO.
a. Four FAA appointed board members
b. One member appointed by the U.S. Business Aircraft Association
c. Two board members appointed by NATCA
d. Three board members appointed by the government
The examples of Thailand and Switzerland are also cited by Poole and Butler (2001) to rationalize that there is a middle way between complete privatization and the current form of Government Corporation. The proposed...
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