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Right and Wrong on Air Traffic Control Reform

Yesterday, Americans for Tax Reform (ATR) sent a letter to House Transportation and Infrastructure Committee members raising a number of objections to Chairman Bill Shuster’s plan to corporatize the Federal Aviation Administration’s (FAA) Air Traffic Organization. The Shuster plan would spin off air traffic control into an independent nonprofit corporation governed by aviation stakeholders, and the newly minted ATC Corporation would then charge cost-based user fees to support operations and investments.

Their objections on this issue contradict conservative principles or else have previously been debunked. The letter can be found here. I will respond to each relevant section, with ATR’s letter quoted in bold with my response below.

Increasing the efficiency with which the federal government operates is a laudable goal, and a goal that ATR supports. However, we would urge you to do so in a manner that ensures Americans are shielded from potential increases in user fees or even taxes.

The reform proposal with which ATR takes issue is supported by free-market transportation policy researchers from the Reason Foundation, Cato Institute, American Enterprise Institute, Hudson Institute, and here at CEI, to name just a few. Taxpayer groups such as the National Taxpayers Union and Citizens Against Government Waste also back the reforms. In fact, the basic framework of Chairman Shuster’s reform proposal was drawn up in 1982 in a Heritage Foundation study by the Reason Foundation’s Bob Poole at the request of the Reagan White House following the illegal 1981 strike by the union (subsequently decertified) representing air traffic controllers.

More importantly, we should not want to shield Americans from user fees, especially when we can fully substitute a user fee for a broad-based tax. Air traffic control currently accounts for approximately two-thirds of the FAA’s annual budget, paid for by taxpayers. So that funding should be slashed, along with the aviation taxes that support most of the FAA’s budget, in favor of user fees charged by the ATC Corporation. Reform proponents would never go along with any proposal that allowed the FAA to continue spending at current levels.

Still, those user fees would likely decrease over time. The potential efficiency gains from corporatization and the requirement that the ATC Corporation adhere to the International Civil Aviation Organization’s cost-based charging principles suggests that fees for most can be expected to go down. This has been the experience in Canada, which has relied on a nonprofit corporatized air navigation service provider for more than two decades. The inflation-adjusted user fees are now about one-third lower than the aviation taxes they replaced.

In Chairman Shuster’s reform proposal introduced last year, noncommercial general aviation aircraft were statutorily exempt from fees. But there is one segment of airspace users that stands to pay more than they do currently: business aviation—i.e., corporate jets. This is because adhering to cost-based user fees would require the elimination of business aviation’s current air traffic control subsidy. Under the status quo, business jets pay less than one percent of the aviation taxes that support air traffic control yet account for more than 10 percent of controlled movements. It is unsurprising that a chief opponent of reform is the National Business Aviation Association. I hope ATR is not in favor of continuing to require commercial air travelers to subsidize the air travel of the ultra-wealthy.

The 2016 ATC reform proposal put forth by the Committee was particularly concerning with regard to the potential for the traveling public and American taxpayers to be subjected to increased economic and financial burdens. Provisions in the 2016 reform proposal would have exempted certain FAA functions from congressional oversight. Doing so could decrease the level of accountability to the public for actions taken by the new entity.

In a recent letter to Senate Commerce Committee Chairman John Thune, a bipartisan group of Senate appropriations leaders expressed similar concerns. The letter states, “The annual appropriations process provides the oversight of agency resources necessary to ensure accountability for program performance” and, “the public would not be well-served by exempting any part of the FAA from congressional oversight.”

Appropriators may object to losing spending authority under the proposal, but a major advantage of air traffic control corporatization, and one that most libertarians and conservatives familiar with the proposal grasp, is that it would eliminate the congressional meddling and inconsistent funding that has plagued the FAA’s attempt to modernize air traffic control under its NextGen program. The “accountability” claim simply defies reality. What is really driving appropriators’ opposition to air traffic control reform is their loss of “turf.” By taking the side of spendthrift members of Congress, ATR is in effect demanding that a federal agency spend more than twice what it otherwise would under the proposal.

It is also concerning that a number of concessions were made in the 2016 proposal in order to appease union interests. We worry that removing the unionized ATC employees from the federal salary cap would result in runaway labor costs. In addition, removing them from the current legal prohibition against striking could prove a grave threat to national security, as President Ronald Reagan demonstrated so memorably in his first term.

ATR here makes numerous misleading and false claims. The union giveaway canard is one I have addressed repeatedly.

(See herehereherehereherehereherehere, and here for my rebuttals to critics who claim air traffic control is a sop to unions.)

First, the FAA’s controllers are already exempt from the federal aggregate limitation on pay that applies to most federal employees. Further, why should federal salary caps apply to a private corporation? The aggregate pay limitation does apply to some of the FAA’s employees that would be transferred to the ATC Corporation, such as engineers. This has had a negative “brain drain” effect on employee quality over the years. One advantage of reform is the freedom to attract and pay top talent what the market demands.

Second, it is absolutely false that the ATC Corporation’s controllers would be removed from the current prohibition against striking. As I explained last year in detail, this misconception is the result of a fundamental misreading of federal labor law—at its core, it is conflation of 5 U.S.C. Chapter 71 (which contains anti-strike provisions that would apply) with Chapter 73 (which contains another anti-strike provision that would not apply). If the ATC Corporation’s controllers were to strike, their union would be decertified. In addition, Chapter 71 would also grant the ATC Corporation broad emergency powers to immediately discipline or terminate any individual striking employee, as I noted in response to another reform critic last year.

I also have a summary of non-labor provisions contained in the legislation from last year. Once they come around to these facts, I have no doubt that our friends at ATR will support these badly needed air traffic control reforms.