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Diana Furchtgott-Roth Still Mistaken on Air Traffic Control Reform

A lonely critique from the center-right of air traffic control corporatization appeared on MarketWatch making a series of incorrect and misleading claims. I have previously discussed the factual problems with the handful of anti-union conservatives’ arguments against these reforms and encouraged them to read the House’s bill and take a closer look at federal labor law (see here, here, here, and here).

What follows is a point-by-point response on where things went wrong in a recent commentary by Manhattan Institute labor economist Diana Furchtgott-Roth. Her claims are in bold and my corrections and comments follow.

The summer travel season is in full swing — and about 16 legislative days are left until funding for the Federal Aviation Administration expires on July 15.

The House and Senate are trying to compromise on a bill to reauthorize spending for the agency. The outcome could determine whether the nation’s air-traffic-control system is a thriving, vibrant part of U.S. aviation or becomes as infamous as the post office, Amtrak and those painfully long airport security lines in terms of consumer service and as, in at least those first two, a sinkhole for taxpayer money.

Awaiting floor action is a House bill supported by the federal National Air Traffic Controllers Association union. It would spin off the air-traffic-control part of the FAA into a federally chartered nonprofit corporation. A FAA reauthorization bill recently passed by the Senate doesn’t include the spinoff provision.

Congress should go with the Senate version. Here’s why.

Furchtgott-Roth fails to note that supporters of the bill include Republican congressional leaders, the airline industry (with the exclusion of Delta Air Lines—see here for why Delta and the corporate jet lobby oppose reform for crony-capitalist reasons), travel industry, Business Roundtable, the Washington Post and Wall Street Journal editorial boards, as well as libertarian and conservative researchers here at CEI, Reason Foundation, Cato Institute, American Enterprise Institute, Hudson Institute, National Taxpayers Union, Citizens Against Government Waste, and others.

Opponents of reform are mostly limited to government employee unions, congressional Democratic leadership, the New York Times editorial board, Public Citizen, and the aforementioned Delta and corporate jet lobby National Business Aviation Association—along with the Kansas congressional delegation, a result of intense lobbying to protect aircraft manufacturers concentrated in Wichita. That puts Furchtgott-Roth—a former Republican chief economist at the Department of Labor—on the side of government unions, their far-left allies, and a small number of businesses seeking to preserve their government subsidies when it comes to air traffic reform.

Furchtgott-Roth not only opposes the air traffic control title in the House’s AIRR Act, but endorses the Senate’s bill, which is littered with anti–free market provisions that would, to name a couple, crush many civilian drone manufacturing entrepreneurs and ratchet up anti-consumer regulations favored by the Obama administration (as I explained before and after the Senate bill passed).

For all the bad elements in the House’s bill (here’s one, for instance), the Senate bill either matches or exceeds all of them in the promotion of big government.

Finally, supporting immediate passage of the House or the Senate FAA bill is a false choice. Instead, and more likely before July 15 when the current FAA law expires, Congress will pass an extension of the current law with some policy tweaks into the next year to give lawmakers more time to negotiate unresolved issues. Before Congress passed the current law, the FAA Modernization and Reform Act of 2012, there were 23 short-term extensions—and we all hope it does not require as many extensions to pass a transformative FAA bill this time. Furchtgott-Roth seems either unaware of the horrible anti-market provisions in the Senate bill or unfamiliar with the normal FAA reauthorization process, which has (unfortunately) become plagued with delays in the 21st century.

In a February memo to its members, NATCA listed 14 advantages of the House bill. These include keeping the union “as the exclusive representative of those represented today;” “collective bargaining agreements, orders, rules, practices remain in effect until renegotiated;” “labor seats on the governance board;” and the carry-over of all benefits and contracts.

True privatization would be a step forward. But with NATCA’s provisions in the bill, the new Air Traffic Control entity wouldn't have the flexibility to reduce costs in the same way as other private entities can. It also would be a monopoly, so it would be protected from competition. Government-sheltered monopolies such as Amtrak and the U.S. Postal Service have been a steady drain on taxpayers for decades. In 2015, Amtrak lost $307 million, and the U.S. Postal Service lost $5.1 billion.

Amtrak and the post office have unionized workforces that make it difficult for them to implement cost- and labor-saving technology. Transportation Security Administration red tape means it can’t quickly address those long lines that cause travelers to miss their flights. The new ATC Corp. would have union representation on its board of directors and on its advisory board.

None of the entities Furchtgott-Roth cites resemble the corporate structure proposed in the House AIRR Act. The nonprofit congressionally chartered ATC Corporation would be much more like a utility co-op than Amtrak (the federal government owns all preferred shares) or the Postal Service (an independent agency of the federal government). But Section 90304 of the AIRR Act specifically provides:

(a) Non-Federal Entity.—The Corporation is not a department, agency, or instrumentality of the United States Government, and is not subject to title 31.

(b) Liability.—The United States Government shall not be liable for the actions or inactions of the Corporation.

(c) Not-For-Profit Corporation.—The Corporation shall maintain its status as a not-for-profit corporation exempt from taxation under the Internal Revenue Code of 1986.

(d) No Federal Guarantee.—Any debt assumed by the Corporation shall not have an implied or explicit Federal guarantee.

In fact, a primary purpose of these reforms is to take air traffic control out of the congressional appropriations process. Bailout fears are unwarranted and comparisons to Amtrak and the Postal Service are off the mark.

As for union representation on the board, it is limited to two of the 13 seats, one for the controllers’ union and one for the largest airline pilots’ union. This is similar to the corporate governance structure of Nav Canada, on which these reforms are modeled and now the international gold standard for air traffic control. Furchtgott-Roth may be disappointed this is not a union-busting bill, but that was never the purpose. Worse, she is expressing a “perplexing” preference, as Chris Edwards of the libertarian Cato Institute notes, for a unionized federal bureaucracy over a private-sector unionized company. That’s a sentiment shared by government employee union leaders, but it’s not conservative.

After President Reagan fired more than 10,000 members of the Professional Air Traffic Controllers Organization when they refused to return to work during a 1981 strike that threatened to cripple the U.S. economy, air-traffic controllers organized again under the National Air Traffic Controllers Association in 1987. NATCA has powerful friends in Congress, including Rep. Bill Shuster (R-PA), chairman of House Transportation and Infrastructure Committee and Rep. Frank Lobiondo (R-NJ), chairman of the House Aviation Subcommittee, who want to help the union cause.

Paul Rinaldi, the president of NATCA, testified before the House Transportation Committee on Feb. 10 that his union supports the proposed ATC Corp. because it keeps workers’ compensation packages, including pay, pensions, health insurance and “negotiated agreements for their work rules.” He threatened to withhold support for the legislation if these principles are violated.

NATCA lobbied extensively to make sure that its workers face no change under the new bill, including any change to their collective-bargaining rights. Air-traffic controllers can make a top salary of $185,000, plus federal benefits such as health insurance and pensions, work-life benefits such as elder care, and legal and concierge services, and tuition reimbursement.

Under current law, ATC workers, along with other federal workers, have to take an oath not to strike, and workers who do strike can be fired. Under the House bill, striking would be treated as merely an unfair labor practice, for which the penalty is not firing, but a hearing before the Federal Labor Relations Authority—which has to wait at least five days before holding the hearing. Imagine five days of grounded flights.

Furchtgott-Roth fails to note that when President Reagan fired the more than 11,000 air traffic controllers following the illegal PATCO strike in 1981, the union challenged the Reagan White House in court and lost. This is important because Furchtgott-Roth dismisses the strike prohibition carried over in the AIRR Act, which is similarly subject to adjudication in court. This is how the law works. In fact, litigation over the fallout of the illegal PATCO strike continued into the 2000s.

As I explained in a previous post, Furchtgott-Roth is fundamentally mistaken on federal labor law, which does allow the ATC Corporation to immediately fire striking employees:

Section 90703 of the AIRR Act extends 5 U.S.C. Chapter 71 to the ATC Corporation. This also includes 5 U.S.C. § 7106(a)(2)(D), which makes clear that federal law does not limit the ATC Corporation’s ability “to take whatever actions may be necessary to carry out the agency mission during emergencies.”

Under Section 7106 of the Civil Service Reform Act, courts have upheld agency management rights to compel employees to return to work regardless of leave status during an emergency (Bangerter v. Dep't of Transp., F.A.A., 16 M.S.P.R. 670 (1983)), discipline employees (Patent Office Prof'l Ass'n v. Fed. Labor Relations Auth., 26 F.3d 1148 (D.C. Cir. 1994)), demote disciplined employees (Patent Office Prof'l Ass'n v. Fed. Labor Relations Auth., 873 F.2d 1485 (D.C. Cir. 1989)), and fire employees (Bross v. Dep't of Commerce, 94 M.S.P.R. 662 (2003), aff'd, 389 F.3d 1212 (Fed. Cir. 2004)) without consulting a labor organization.

Furthermore, as I noted in that same post, it does not advance free markets to complain about the lack of government price controls on private-sector employee compensation:

Of course the federal salary cap would not apply. The ATC Corporation would be a private corporation. Why should Congress be able to dictate its compensation schedule? And how on earth is forcing government wage controls onto a private company controlled by a board of directors with a fiduciary duty to the corporation, even if it is unionized, considered “conservative”?

The House bill codifies in law that NATCA would be the “exclusive representatives of FAA employees” in the new ATC Corp. But with the same union, the same contract, no permitted competition from other firms, and no serious penalty for striking, there would be no advantage to moving air-traffic controllers to a separate ATC Corp. The union provisions in the House bill were crafted to attract support from Democrats, but not one voted for the bill.

A better approach would be to give air-traffic controllers the same right as other Americans to choose their own union—or no union at all.

The contract would stay the same during the three-year transition period and could then be renegotiated on intervals of at least two years going forward (Sections 90705 and 90706). Nothing in the bill stops management and employees from negotiating radically different contracts in the future or decertifying the union if the majority of employees believe it no longer adequately represents them. As the libertarian Reason Foundation’s Bob Poole, the intellectual godfather of these reforms, noted in response to previous claims made by Furchtgott-Roth:

Any realistic transition of a large workforce from a government agency to a new kind of organizational structure must preserve existing pay and benefits during the transition period. In a stakeholder-governed co-op structure that seeks to emulate the Nav Canada model, gaining the trust and cooperation of employees on whom service delivery depends makes very good sense. And of course politically, it is also the smart and sensible thing to do.

Conservatives should rejoice that an important labor union agrees that the FAA status quo is unsustainable and that this high-tech, 24/7 service business is more appropriate to a self-funded corporation business model. And that said union is willing to stand up and be counted in favor of this kind of far-reaching reform.

Instead of creating a new federal entity, Congress should free each airport to choose the air-traffic-control service it prefers. There could be one agreed-upon set of communications protocols, and each service provider would have to abide by those protocols. There are tens of thousands of public safety systems in the U.S., and they all can connect with each other.

What Furchtgott-Roth is referring to is often called “free flight,” a theoretical replacement for centralized air traffic control. I am very interested in the concept and promoted an experimental federated air traffic management framework for low-altitude small unmanned aircraft systems in this recent CEI paper.

Furchtgott-Roth is absolutely right that free flight should be considered in the future. However, saying we should adopt free flight and actually adopting free flight are very different things. Wired published a notorious pie-in-the-sky article 20 years ago. Yet to date, the technology required does not exist and most do not expect it to exist in a widely deployable form for all aircraft throughout the entire navigable airspace for at least another 20 or 30 years. So, are we to wait decades as the nation’s government-run, 1960s-era air traffic control system implodes or seek major reforms grounded in reality today?