Like most federal agencies, the Federal Aviation Administration is a costly bureaucracy. Its $16.4 billion budget is enormous, but that is just the direct cost borne by taxpayers. The indirect costs, such as inefficiencies imposed on the air transportation system, also are significant. This has nothing to do with the TSA, by the way. The FAA is responsible for the air traffic control system, things like airport towers and radar systems that tell planes where to fly and when to land.
The Canadians have a much better approach. They privatized their air traffic control system back in the 1990s. So instead of having to rely on a clunky and incompetent government bureaucracy, our neighbors to the north have a private company that is generating very impressive results.
Not that this should be a surprise. Other nations have made remarkable gains through privatization, including Social Security personal accounts in Chile and 30 other nations, education choice in places such as Sweden and the Netherlands, and privatized postal service in Germany.
Reforming government monopolies should be a priority in the United States. Robust economic growth requires more than just low tax rates. It means getting rid of policies that cause resources to be misallocated. Privatization is an unsettling concept for some people, in part because they’ve always assumed certain things should be run by the government. This is why international examples are so important. Canada’s 14 years of experience with a private air traffic control system clearly shows that there are very successful alternatives to inefficient and costly bureaucracies.
Here are some excerpts from a story in Canada’s Financial Post about Canada’s remarkable reform.
A once troubled government asset, the country’s civil air traffic controller was privatized 14 years ago and is now a shining example of how to create a global technology leader out of a hulking government bureaucracy. Nav Canada’s efforts have flights moving more efficiently than ever through the skies above the country. Many of the changes implemented by Nav Canada in recent years have gone unnoticed by the flying public. Certain flights are now shorter than they once were; aircraft no longer circle airports awaiting a runway; descents start further out and planes reach cruising altitudes more quickly; and flights to Asia now spend less time by jaunting over the Arctic than endlessly cruising the Atlantic or Pacific Oceans. …Nav Canada estimates its efforts to modernize the aircraft navigation system in the country since it was privatized in 1996 have cut the fuel bill of airlines flying into Canada and above it by an estimated $1.4-billion collectively… Meantime, Nav Canada has won the respect of airlines for keeping its fees steady, and in some cases, like in 2006, even reducing them when it can. …John Crichton, Nav Canada chief executive, makes no bones about why he thinks his organization has been able to make these improvements and emerge as a global leader. I don’t think there’s any question that the privatization was the best thing that ever happened,” he said. “That really unleashed all the innovation.” …Calin Rovinescu, Air Canada’s chief executive, commended Nav Canada for its efforts to modernize the country’s navigation systems during a speech in Montreal earlier this year, while condemning the United States and the European Union, which still operates as a patchwork of nationalized systems, for their lack of leadership on the issue. Nav Canada also won the International Air Transport Association’s Eagle Award earlier this year for its efforts, in particular its constant consultation with the industry.
My Cato colleague Chris Edwards has more analysis, including a call to private the Federal Aviation Administration as well as some useful links.
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so where is the room for political corruption? The US is now
Chicago politics writ large.
“Government is not a solution to our problem, government is the problem.” –
— Ronald Reagan
It might be wise to check with some folks inside Nav Canada, as well as the operators in Canada (outside the airlines) to see if it’s been such a wild success.
As far as privatizing the rest of the FAA, that should be approached with some caution. Make a comparison to the European way of doing what the FAA does, and you’ll see that the FAA is actually pretty efficient at some things. The UK killed their aviation industry and the Europeans are about to do the same thing. The FAA’s mandate of ‘the minimum legislation necessary for safety’ is a wonderful way to go (not perfect, but better than any other way).
While on the surface privatizing the ATC function of the FAA may seem to be a good move, yet there are other factors to consider.
First, it is a matter of law and court rulings that access to air navigation is to be shared equally by all users. This article was written from the standpoint of how the airlines enjoy efficiencies, yet there are a host of other users such as air ambulances, charter flights, pipeline patrols and bush pilots.
The FAA and ATC are one-size-fits-all. This has been the battle for many years. Different classes of users only need certain services, yet the Leviathan bureaucracy raises costs that when the services are privatized to “save” money, the bill will be unaffordable for large numbers of aircraft operators.
For example, a nearby airport has a tower and even 10 years ago, when you divided its total budget by the number of “operations” (take offs and landings), it amounted to $19 each. If I used that airport at night, alone, which I sometimes used to do on a regular basis, under a privatized system, they should rightly charge me at least $38 for a round trip, even if all I did was take off, circle the field and land.
Who would drive their car if it cost $38 every time you went to the store for using a public road, even late at night when nobody else was around?
The problem with privatization is how easily it leads politicians to the next step: allocating costs among the various user groups. It destroys the user groups who have costs for services imposed on them that they are not allowed to decline but don’t use. If you want to destroy one more American industry, general aviation, privatizing air traffic control and then allocating the costs is the quickest way possible.
There are other ways to enjoy cost savings apart from privatizing the ATC function of the FAA. For example, on a recent trip, according to the rules, I had to navigate only by using an FAA-approved radio that cost about $3,000, that gives me guidance (according to the FAA rules themselves) of plus or minus 4.5 miles either side of the center line of flight.
I have a $500 GPS unit, but since it is not officially FAA approved, even though it is accurate to plus/minus 50 feet either side of the center line, I am forbidden from using it to navigate.
The airplane originally came with two very bright incandescent landing lights. Later GE came out with an exact replacement, but using a halogen element. Even though the original bulb lasts only 25 hours (or about 50 takeoff/landing cycles), some FAA field offices have ruled it to be illegal to install the halogen-based replacement, even though it is brighter and lasts 4x as long.
On my last annual inspection I was charged for one hour of mechanics time for chasing down a single sheet of paper that formalized the approval of the installation of a single metal pin in the track of the pilot’s seat. The pin had been installed some 20 years ago by an unknown mechanic and both I an my mechanic faced a fine should an inspector discover we lacked the paperwork for it.
The radio shop I used has over a hundred man hours in getting the FAA to approve the permanent installation of a single piece of radio equipment in a local police helicopter.
It is endless, but that is the nature of the beast and no amount of privatizing it will change those aspects of it. Thus, I say that the anticipated savings are at least somewhat a mirage.
[...] DAN MITCHELL: Why Can’t We Copy those Radical Free-Market Canadians and Privatize the Air Traffic Control System… [...]
I have worked all FAA facilities; radio, ARTCC, Non-radar tower/CST, radar approach/tower and for 2 private ATC firms.
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The ARTCC will remain FAA for a longtime as its just too big for undustry to absorb.
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Level 1 towers will soon be 100%, level 2 soon after. It might take decades to absorb 3 & 4s.
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The biggest mistake private ATC makes are management. They are making the same mistake the FAA did in ’81 with their on-site management.
The first company hired an ATC failure as the head resulting in NO understanding how facilities worked
An additional mistake, the secound company I worked for, was PC. They selected a black to hire all personnel and then 80% of the hires were black with no others in midlevel management.
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Its going to take awhile to correct but I believe its the future.
Cost effectiveness
First company replaced 11 FAA ATC with 5 private ATC. The pilots raved at our increased efficency, little delays & better service.
Operations should not be dollar rated as the reason for ATC is survivial, err make that safety.
Privatizing “ATC” (incorrect use of term, but will do) sounds like a good idea in theory, for a libertarian anyway, but every proposal I saw thus far was basically a government handout airlines and murder of general private aviation. For that reason AOPA and EAA mounted opposition every time it was brought to the table. As a pilot, I would not mind paying a user’s fee, unless I fly in class E or G. Heck it might be the best money I ever spend *IF* it actually reduces the excess regulation (and reduces our government’s spending). But it seems never on the table. I wonder why!
The simple answer to the high cost of the FAA: AIR TRAFFIC CONTROLLERS
When Ronald Reagan (rightfully) fired 10,000 Air Traffic Controllers in 1981 for going on strike, the FAA failed to plan ahead for the replacement of the mass concurrent retirement of all the Controllers who were hired after the strike between 1981-1985.
In fact, the FAA had a hiring FREEZE in place for almost all of the 1990′s which caused a vacuum in the training pipeline and prevented sufficient replacement for the aging staff many of whom were eligible or nearing eligibility for retirement.
Top that off with the FAA Administration actively seeking to piss off the ATC union by withholding negotiating a new contract at its expiration in 2006, thereby causing most all ATC’ers who were eligible to retire, to do exactly that.
These two FAILURES by the FAA Administration caused (an is still causing) a massive under staffing of qualified, trained Air Traffic Controllers, many of whom now work 6 days a week due to forced (expensive) overtime, and to make matters worse there are not enough trainers to train the new trainees which generally takes from 1-3 years depending on the airport where you work.
The cost of these failures by the FAA management is that when Obama took office he quickly had Ray LaHood (by proxy of Jane Garvey the former FAA Administrator under Clinton)negotiate a new contract with the ATC Unions (because naturally they had backed Obama’s campaign so he owed them). And, since the FAA had backed itself into a corner by causing a staffing shortage, it had little choice but to cave to the unions demands.
A new pay structure was implemented which included a three year gradual increase of something like 10% the 1st year, 8% the 2nd years, etc. and almost ALL Air Traffic Controllers (15K of them? Maybe more) now easily break the $150K mark.
Full disclosure, I work for the FAA but I no longer work as an Air Traffic Controller and I am NOT a union member.
I believe there was a time when ATC in this country was all private. Back to the Future.
[...] restraint (relative to the U.S., at least) is not the only positive development. Canada also has privatized its air traffic control system and fought against European schemes for bank taxes. No wonder Canada now ranks above America in [...]
[...] progressives used to say that air traffic control system needs to be a government monopoly, but our Canadian neighbors privatized their system and now have more safety and [...]
In G Edward Griffin’s book on the Federal Reserve, he says that the Fed is private , not Federal at all. Our current Federal Reserve System is not the first; it is our fourth one.
The first three Federal Reserves were “taken down”-so why not end this Fed?
[...] a much-needed lesson for Paul Krugman), and I’ve also praised our northern neighbors for privatizing their air traffic control system and opposing global bank [...]
[...] a much-needed lesson for Paul Krugman), and I’ve also praised our northern neighbors for privatizing their air traffic control system and opposing global bank [...]
[...] But I wasn’t totally shocked by the news because Canada has been lowering tax rates, reducing the burden of government spending, and taking other steps to make its economy more competitive. [...]
[...] But I wasn’t totally shocked by the news because Canada has been lowering tax rates, reducing the burden of government spending, and taking other steps to make its economy more competitive. [...]
[...] By allowing the private sector to grow faster than the government, Canada has also been able to implement big tax cuts. Heck, they even privatized their air traffic control system. [...]
[...] By allowing the private sector to grow faster than the government, Canada has also been able to implement big tax cuts. Heck, they even privatized their air traffic control system. [...]
[...] a much-needed lesson for Paul Krugman), and I’ve also praised our northern neighbors for privatizing their air traffic control system and opposing global bank [...]
[...] progressives used to say that air traffic control system needs to be a government monopoly, but our Canadian neighbors privatized their system and now have more safety and [...]
[...] But I wasn’t totally shocked by the news because Canada has been lowering tax rates, reducing the burden of government spending, and taking other steps to make its economy more competitive. [...]
[...] progressives used to say that air traffic control system needs to be a government monopoly, but our Canadian neighbors privatized their system and now have more safety and [...]
[...] already written on this topic, citing some good analysis from Canada’s Financial Post, and the evidence is overwhelming that the private system in Canada works much better than the [...]
[...] already written on this topic, citing some good analysis from Canada’s Financial Post, and the evidence is overwhelming that the private system in Canada works much better than the [...]