Myth vs. Fact

Myth

Supporters of reform want to “privatize” ATC, implying that the new entity would be a profit-making enterprise.

Fact

We support a federally chartered, non-profit organization, and not privatization as it is typically construed to mean a for-profit enterprise.

  • We evaluated and rejected a for-profit ATC structure because we believe it provides the wrong incentives and is inappropriate for a monopoly function such as ATC.
  • Under our proposal, fees would be set based on the costs to operate, maintain and improve the air traffic control system. Any revenues exceeding costs would stay within the ATC system.
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Myth

The current FAA structure is optimal for safety oversight of ATC; separating ATC from the safety function will make ATC less safe.

Fact

Separating ATC service provision from ATC safety oversight is an international best practice and will improve safety by providing truly independent oversight.

  • Today’s structure has the FAA essentially oversee itself, as one part of the FAA’s Aviation Safety (AVS) organization is responsible for oversight of the FAA’s Air Traffic Organization (ATO).
  • By combining the operation with the oversight function, the status quo confuses responsibility for the different safety functions and impairs accountability when something goes wrong. It is also inconsistent with international best practice.
  • ICAO’s Safety Oversight Manual (Doc 9734, paragraph 2.4.9) calls for the separation of ATC safety oversight from ATC service provision:
    • “In those States where the State is both the regulatory authority and an air traffic service provider, aerodrome operator, air operator, manufacturer or maintenance organization, the requirements of the Convention will be met, and public interest be best served, by clear separation of authority and responsibility between the State operating agency and the State regulatory authority. The approval, certification, and continued surveillance procedures should be followed as though the operating agency were a non-governmental entity.”
  • A recent MITRE report reviewed the experiences of six countries which have separated their ATC safety oversight from ATC service provision. The report found that one of the significant benefits of separation was that both the oversight body (civil aviation authority, or CAA) and the air navigation service provider (ANSP) demonstrated an increased focus on safety.
    • Specifically, MITRE found that “the collective experience after separating the ANSP from the CAA was quite good. The primary responsibility of a CAA is safety regulation. Despite the many approaches to organizing the CAA and the ANSP, in each case the safety record of the ANSP was equal to, or better than the record prior to the separation and regulatory costs are largely, or completely, supported by aviation users.”
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Myth

The current funding and governance system works well.

Fact

The current funding and governance system subjects the economically-critical, technology-intensive ATC operation, and its modernization, to government-wide budget reductions and shutdowns, as well as undue political influence on operational decisions.

  • In July 2011, the lapse in FAA’s authorization caused the FAA to stop work on numerous projects funded through the Facilities and Equipment account, including NextGen modernization projects.
  • In April 2013, the government-wide sequester caused the FAA to furlough air traffic controllers (among other employees), resulting in massive delays throughout the ATC system. The sequester also interrupted funding for NextGen programs – and imposed significant re-start expenses when funding was resumed.
  • In October 2013, the government shutdown resulted in many FAA employee furloughs. While air traffic controllers were generally not furloughed, NextGen programs were again negatively affected.
  • Workforce readiness has declined dramatically as training programs have been suspended and decades-old training systems become more stretched in the face of a generational retirement wave.
  • ATC operations and capital investment depend on the annual appropriations process, which is simply not conducive to long-term planning.
  • ATC needs to compete with the rest of the government for funding, even when there is sufficient money in the Airport and Airway Trust Fund (AATF).
  • Decisions that could result in more efficient operations are often stopped due to political factors.
  • Congress can’t “fix” NextGen through the FAA Reauthorization bill and better oversight. Over the past few decades, Congress has passed many FAA Reauthorization bills and annual appropriations bills, held scores of hearings; and directed GAO and the DOT IG to investigate the FAA’s troubles implementing NextGen. Unfortunately, there is very little progress to show for it, despite billions of dollars of stakeholder and taxpayer investments. What is needed is a new governance model in which a team of aviation industry experts – representing all segments of aviation operators and employees – are empowered and have a fiduciary duty to oversee the operation of a 21st century ANSP.
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Myth

A new governance structure would give inappropriate control of the new system to “special interests.”

Fact

We support an independent Board of Directors, and all Directors would have a fiduciary responsibility to the new ATC organization.

  • All Directors would be prohibited from having any financial or employment ties to any stakeholder.
  • While stakeholders, including the federal government, may appoint Directors, no single stakeholder group should appoint a majority of the Directors.
  • The federal government, labor unions and general aviation (GA) would all appoint Directors because they are important stakeholders, even though they account for little or no ATC revenue. Airlines will also appoint Directors, given that they would be the most significant users and funders of the new system.
  • We believe the interests of all stakeholders are similar—to create the safest, most efficient, most cost effective and most modern ATC system in the world.
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Myth

A restructured ATC system will “crowd out” or deprioritize GA.

Fact

We are proposing that GA interests be represented on the new ATC provider’s Board of Directors, and that FAA oversight would continue; a more efficient system will create more access and benefits for all users.

  • Delivering a more efficient ATC system through NextGen is the most reliable way to ensure continued GA access to the NAS. Without NextGen, there is a risk that increased congestion could crowd out GA in certain areas.
  • FAA would retain oversight of any changes in service levels or policies and procedures from a safety perspective.
  • GA activity in Canada has remained robust under NAV CANADA.
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Myth

NextGen is almost done and a change in funding and governance will interrupt its progress, and will interfere with the collaboration between ATO and AVS within FAA.

Fact

The FAA has made some recent progress on NextGen, thanks to good leadership and collaboration with stakeholders, but there is still a long way to go and ATC reform will only help accelerate the progress.

  • The recent pockets of progress have been in spite of, rather than because of, the current funding and governance structure.
  • And while infrastructure (like $1.5 billion in ADS-B ground stations) is being delivered, the FAA policies and procedures that would enable delivery of benefits are not in place, meaning benefits to carriers aren’t being delivered.
  • Because of the FAA’s long procurement cycle, even the systems being installed today do not include state-of-the art technology.
  • Under the current funding structure, NextGen is subject to the annual appropriations process, including government-wide budget constraints and starts and stops caused by sequestration and government shutdowns.
  • Changing from the government’s cash-based, upfront financing of capital projects to a structure where the ATC provider can access capital markets will provide a more stable source of funding for NextGen and support a program of constant incremental technology refreshment like is employed in all well-run technology dependent enterprises – rather than the FAA’s current “once every 30 years” replacement program.
  • This structure will also provide incentives to deliver projects on time and on budget, and capital markets will also impose discipline on costs relative to projected benefits of the ATC provider’s investments.
  • As noted in a report from the National Academies of Sciences earlier this year, because there is no developed enterprise architecture within the FAA, there is currently a wide range of misunderstandings of what “NextGen” is and what capabilities FAA intends to deliver; with a stakeholder-driven Board, such misunderstandings are much less likely.
  • Other ATC providers, such as NAV CANADA, have been able to collaborate effectively with their customers, as well as government regulators, to keep their systems constantly modernized, and have been able to deliver capabilities more quickly and cost effectively than the U.S. because they are providing capabilities customers want and are willing to pay for.
    • An example is the delivery of ADS-B capabilities in the Hudson Bay. NAV CANADA coordinated with its customers on an implementation plan and presented a detailed safety case to Transport Canada (the regulator) for review and approval.
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Myth

The new ATC organization would have power to “tax.”

Fact

The new ATC organization would collect user fees for the services it provides; a non-government entity cannot levy a tax. Fees are distinct from taxes in several ways:

  • Tax payments must be remitted to the government, and tax levels can only be set or changed by Congressional action.
  • We envision a system in which users pay a fee for ATC services, not a tax.
  • The payment for service model is used in ATC systems all over the world, including U.S. overflight fees (as well as other industries in the U.S., such as utilities) and has been demonstrated to work well without burdening users, including GA.
  • If non-jet GA users want to continue to pay for their use of the ATC system through the fuel tax, collected by the government, we will not object as long as the net result is that the airlines do not pay more in taxes and fees than they do today.
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Myth

There will be a funding shortfall if the ATC operation is removed from the federal government.

Fact

There is sufficient funding for all current FAA functions (ATC, safety oversight, and airport grants), assuming a General Fund contribution in line with historical levels.

  • ATC would transition from its current mix of user tax and General Fund funding to 100% user fee funding.
  • FAA’s safety oversight and airport grant functions can be funded through a mix of user funding and General Fund appropriations.
  • Over the last 15 years, the General Fund contribution to FAA funding has averaged $3.25 billion. Combined with the airlines’ current payments and slightly higher contributions from corporate jets, a General Fund contribution at this level would be sufficient to fund the current FAA budget (based on FY 2013 data).
  • Initial funding requirements for the new ATC organization may also be lower than current requirements due to the new ATC entity’s ability to borrow in capital markets rather than having to fund capital investments with current revenues under government budgeting rules.
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Myth

Recreational GA flyers will pay more under ATC reform.

Fact

We support allowing recreational users the ability to continue to pay the same amount they’re paying today through the fuel tax.

  • Non-jet GA could pay a simple, annual registration fee that would apply to the majority of GA aircraft, similar to the structure in Canada, which is generally supported by the Canadian GA community. In this case, the fuel tax that applies to every flight would be eliminated.
  • This annual fee would give GA users unlimited use of the ATC system, except for a small additional charge to use the most congested hub airports.
  • Larger GA aircraft would generally pay flat daily fees, or would have the option of paying movement-based fees if those fees are more favorable.
  • Alternatively, non-jet GA users could continue paying a fuel tax, though it may be more challenging for these funds to reach the ATC service provider.
  • Effectively, piston GA users would continue to pay about the same amount. According to the IRS certifications, GA paid $23 million in aviation gas taxes in FY13 or 0.2 percent of total receipts.
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Myth

Canada’s successful experience in restructuring its air traffic control system is irrelevant to the United States because our system is so much larger and more complex.

Fact

Canada’s system does have less traffic in aggregate than the U.S., but new technology is inherently scalable and thus the efficiencies of scale should be greater in the U.S. U.S. airspace is not different from other busy, complex airspace in the U.K. and around the world—most of which is handled by restructured ATC providers.

  • It is unclear why the aggregate size and complexity of the U.S. ATC system would prevent a restructured ATC provider from being successful.
  • When viewed in aggregate, Europe’s ATC system is of a scale similar to the U.S. (roughly 10 million IFR flights under Eurocontrol versus 15 million in the U.S.)—but with 37 ATC providers (many of which are corporatized in some form).
  • With a single provider in the U.S. and homogeneous facilities, the opportunities for efficiencies should be greater.
  • Corporatized ATC providers are responsible for complex airspace around the world, including in London, which rivals New York for the most complex airspace in the world. Europe has five of the world’s fifteen busiest airports by number of movements; the U.S. has eight (though those eight are all in the top nine).

 

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Myth

The transition of governance and funding will take many years and compromise safety in the process.

Fact

We propose that the new ATC provider take over the ATC operation within two years of legislative authority being enacted, with a full transition of funding and governance within four years. Both during and after the transition, safety will be equivalent or improved compared to today.

  • The most critical overriding principle in the transition will be to ensure there is no disruption to core ATC operations or to the safety of the National Airspace System (NAS) throughout the transition period. The day-to-day jobs of the operational personnel will not change during the transition.
  • The U.S. already has a functioning ATC system and the proposed reform at its heart is simply changing the governance and financing model rather than creating a new operation.
  • Major milestones in the proposed transition plan include:
    • Negotiations between government and the new ATC provider over the details of the transfer, including (among other issues) asset and liability valuations and transfer conditions, the appropriate split of the FAA organization between ATC and other functions, and the process for transferring employees to the new organization.
    • Simultaneous to the above negotiations, the new ATC provider would begin consultations with stakeholders on the initial user fees, and commence negotiations with labor unions to extend collective bargaining agreements and adjust them for a non-government setting. The FAA would develop regulations to oversee the new ATC provider.
    • Two years after legislation is enacted: Transfer of operational responsibility to the new ATC provider
    • Three years after legislation is enacted: Implementation of user fee funding and elimination of excise taxes (with the exception of the funding mechanism for the remaining FAA)
    • Four years after legislation is enacted: Ability to adjust user fees and operational service levels (subject to safety oversight and public notice and comment)
  • While there are many details to work out during the transition process, the U.S. will have the advantage of learning from international providers’ experiences. The timeline above is generally consistent with what worked successfully in Canada, though it incorporates several adjustments to account for current circumstances and the different form of government in the U.S.
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