Yesterday, the American Conservative Union Foundation (ACUF) released a statement on the air traffic control reform proposal pending in the House. “After fully analyzing the degree of consistency with our Seven Principles, the ACUF has determined that the proposed plan would not actually privatize a governmental entity,” the group wrote.
ACUF is correct that air traffic control reform isn’t privatization. Supporters never claimed it was. Rather, it is more accurately called corporatization, similar to what dozens of other developed countries have done since the late 1980s. The U.S. is the last large developed country in the world to still have its air traffic control provided by the government aviation safety regulator.
The proposal would spin off the Federal Aviation Administration’s Air Traffic Organization into an independent congressionally chartered nonprofit. This nonprofit would be governed by a board of stakeholders and charge cost-based user fees. The Department of Transportation will provide safety and economic regulatory oversight just as it does today. This is modeled on the extremely successful reforms that took place in Canada more than 20 years ago. Today, nonprofit Nav Canada is the world’s most efficient and technologically advanced air navigation service provider and it recently reduced its user fees again, falling 45 percent below the inflation-adjusted aviation taxes they replaced following reform.
ACUF ignores the fact that not a single air traffic control provider in the world would meet ACUF’s “Seven Principles.” The only partially privatized, for-profit air navigation service provider in existence is NATS in the UK, where the government owns 49 percent of the company and holds a golden share to prevent ownership takeovers. Numerous aspects of NATS operations, including safety and the rates it charges, are heavily regulated by the UK’s Civil Aviation Authority.
The nonprofit user co-op model pioneered in Canada seems to work best when considering international experiences in air traffic control governance. This model was proposed during the Reagan administration in a 1982 Heritage Foundation study by Bob Poole of the libertarian Reason Foundation, who has spent decades making the case for these important reforms.
In addition to the Reason Foundation and CEI, most major free market groups or their affiliated policy experts have endorsed these reforms, including the Cato Institute, Heritage Foundation, National Taxpayers Union, Americans for Prosperity, FreedomWorks, American Legislative Exchange Council, American Enterprise Institute, and Hudson Institute.
Opponents are being led by the National Business Aviation Association (NBAA), the corporate jet lobby. NBAA has spent years opposing any effort that would reform the aviation tax system because it enjoys massive air traffic control subsidies under the status quo. Although private jets account for around 10 percent of air traffic control system use, those users pay less than 1 percent of the aviation taxes that support the system. The bulk of the tax revenue collected comes from airline ticket and segment taxes, which those of us who fly coach all must pay. NBAA has decided that it is willing to sacrifice a more efficient, safer, modern managed airspace—and the truth—in order to preserve the massive government wealth transfer from everyday flyers to the ultra-affluent corporate jet set.
NBAA’s position is entirely rational from its perspective, but it is in direct conflict with the public interest. Given that air traffic control constitutes approximately two-thirds of the FAA’s annual budget, spinning it off into a nongovernmental nonprofit will save taxpayers more than $10 billion per year. Aviation taxes would also be proportionately reduced. Unfortunately, ACUF is now on record opposing slashing a federal agency’s budget by more than half and the largest tax cut in recent memory. That is not a defendable conservative position. We urge the ACUF to reexamine these important air traffic control reforms with a proper understanding of what the proposal actually aims to do and how consumers and taxpayers will benefit if it is enacted.
More background and details are available in the CEI Web Memo “Air Traffic Control Reform 2017: FAQ.”