Air Traffic Control Privatization: Cato View Gains Ground

October 21, 2015
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Five years ago, Bob Poole and I wrote that Canada’s privatized air traffic control (ATC) system would be “a very good reform model for the United States.” U.S. policymakers—including the chairman of the House committee that oversees ATC—are now coming around to that view. 

The Wall Street Journal reports:

The headquarters of Canada’s air traffic control corporation is becoming a busy destination for U.S. transportation officials and airline executives looking for a model to privatize U.S. airspace management.

 

John Crichton, chief executive of Nav Canada, has hosted more than a dozen U.S. delegations in the past 18 months as Congress considers stripping U.S. air-traffic control from the Federal Aviation Administration—much as Ottawa did 19 years ago.

 

U.S. admirers—including Rep. Bill Shuster (R., Pa.), chairman of the House Transportation and Infrastructure Committee—advocate similarly extricating air-traffic control from the FAA and its parent, the Transportation Department. They say that would assure more reliable funding than the current mix of taxes and congressional appropriations, and could help advance NextGen, a $40 billion FAA air-traffic modernization program criticized by government watchdogs for being delayed and over budget.

 

Mr. Shuster has been preparing a bill that could establish a Nav Canada-like corporate structure for the U.S. He may introduce it as soon as November, people familiar with the matter said.

What are the advantages of air traffic control privatization? The head of Canada’s system, John Crichton, described some of them to the Journal:

Nav Canada operates through user fees that Mr. Crichton says are 35% lower than the government formerly levied in ticket taxes, not adjusted for inflation. The operation is safer while handling more traffic with fewer people, he says. It can sell bonds to fund upgrades, unlike the FAA, and airlines save fuel through more efficient altitudes and routes, Nav Canada says.

 

“This business of ours has evolved long past the time when government should be in it,” Mr. Crichton argues. “Governments are not suited to run … dynamic, high-tech, 24-hour businesses. When they try, they mess up.”

Exactly. Imagine if the federal government, with all its red tape, tried to run Apple Computer. It would be a total screw-up, which is the direction the government’s ATC is headed without privatization reforms. While the FAA has long struggled with technology upgrades, Nav Canada is now a leader in developing ATC technologies and exporting them to the world.

Some critics claim that Canada’s successful reform model could not be scaled up to the larger U.S. market. That is ridiculous, and it goes against everything we know about private enterprise and governments. The former successfully scales from the smallest sole proprietorship to the largest multinational corporation. By contrast, government performance gets increasingly more bureaucratic and dysfunctional as it expands in scope from local and state governments, to the federal government, to the United Nations.

Kudos to chairman Shuster for seizing the initiative and pursuing a reform that would be a boon to one of the nation’s most important industries. America pioneered the aviation industry, but it will fall behind if it keeps critical parts of it locked inside old-fashioned government bureaucracies.

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