Privatization of the U.S. ATC system is a solution in search of a problem, according to a report commissioned by the National Air Traffic Controllers Association (NATCA).
“When it comes to air traffic control, the market-based incentives of efficiency and economy that are supposed to motivate a private provider do not easily align with the abiding interests of government and passengers in safety and security,” said professor Elliott Sclar of Columbia University. “It would be unwise to create an ATC system that puts profits ahead of safety.”

Privatizing the existing system also raises security questions, Sclar noted, because “the air traffic control system must be under the firm control of the federal government and able to respond instantaneously and seamlessly.” He added that it took only one call from the Transportation Department on September 11 to ground the nation’s commercial and private aircraft.

While the issue of “privatizing” the ATC system has been debated on and off for years, NATCA, the labor union that represents more than 15,000 air traffic controllers, most recently became alarmed when, in early February, the Office of Management and Budget (OMB) designated ATC as a commercial activity. Controllers say the decision serves as a prerequisite for future privatization.

Shortly before Christmas NATCA conducted an “information campaign” at 75 airports about the “dangers of the Bush Administration’s intent to sell off air traffic control to the lowest bidder.” Earlier in December the White House reclassified the jobs of controllers as “commercial” rather than “inherently governmental.”

After the OMB action in February, NATCA president John Carr took umbrage. “For this Administration to federalize airport security workers and then take steps toward privatizing air traffic control is not only a stark, head-scratching contradiction in policy, it’s the continuation of a march toward the erosion of safety in our skies.”

ATC Privatization ‘Disastrous’
Sclar, a professor of urban planning and public affairs at Columbia, led a project team that included HDR Management Consulting Group of New York City. HDR said it has helped privatize more than $20 billion worth of government operations, ranging from fleet management to health care. “HDR has always accepted that privatization is a solution to many government problems,” said national director John Williams, “but it’s not always the best solution or even the right solution.”

Sclar’s research concluded that privatizing ATC has been “just short of disastrous” in countries that have tried it, specifically Britain, Australia and Canada.

In Britain, he said, the new privatized National Air Traffic Services (NATS) has been forced to go to the government for financial bailouts, valued at two-thirds of the system’s original sale price. Over the past year the British government has twice been forced to supplement NATS’ income to the tune of $131 million. In addition, technology failures have resulted in multiple system shutdowns and operational irregularities, he added.

Excessive demands on controllers in Australia have led to a series of strikes, and failures with new technology have caused radar blackouts and major traffic disruptions. Meanwhile, the privatized system in Canada has prompted “massive” increases in user fees and what Sclar characterized as dangerous understaffing in towers.

Further, Nav Canada expects to lose $80 million this year and may consider hiking its fee on airline tickets this spring–the third such increase in less than two years. “Nav Canada currently charges $24 on a round-trip ticket within Canada, on top of a $24 federal security tax,” said Sclar. “Those amounts would inspire outrage in the United States.”

The project team argued that cost-cutting related to privatization has been directly
or indirectly blamed for two recent public transportation accidents in Europe–last July’s midair collision over Switzerland that killed 71 people and a train derailment in London last May that killed six and seriously injured 65 more.

In the Swiss crash, it said the investigation indicated systemic problems at Skyguide, the company that operates the Swiss ATC system, including inadequate staffing, a degraded communications link with German controllers, a collision alarm that had been taken out of service for maintenance and a general lack of clarity about lines of responsibility and authority.

The train crash was blamed on poor maintenance and slipshod inspections by Railtrack, the privatized rail infrastructure operator. On a related note, the report alleged that, following privatization, British Rail has slipped from being ranked as one of the world’s best railroads to one of the worst.

The project team attacked the presumption by the National Civil Aviation Review Commission, the Reason Foundation and the Clinton Administration that ATC is essentially a “product” that could be provided to the FAA under contract by a “business.” (Consistent with this product/business approach, ATC privatization is often referred to as “corporatization” or “commercialization.”)

Sclar declared that ATC privatization flunks the “yellow pages” test–a quick check of the telephone book to see if the private sector already has a competitive range of companies in the desired sector. “There appears to be no shortage of building maintenance firms and computer network designers,” he said. “But you won’t find many listings for air traffic controllers.”

In addition, the researchers said, ATC services could not be frequently rebid in a knowledge-based industry because of the potential loss of experience and continuity when contractors change. Furthermore, the government could not create a competitive market for ATC services even if it wanted to, because of the high cost of technology and infrastructure, including control towers, computers and radar.

The project team estimated that the cost of ATC operations in the U.S. could rise by 30 percent or more if equivalent levels of ATC services were provided by private contractors. “In the end, once cost of training and liability expenses are appropriately taken into account, the federal government will spend more in its efforts to privatize ATC than the FAA would spend to provide the same service,” the report concluded.