Pro-market reforms would modernize U.S. aviation system, say Heritage panelists

With reauthorization of the the Federal Aviation Administration (FAA) looming, Congress has an opportunity to enact pro-market reforms that would improve modernization, spark innovation and give consumers more choices, experts said last week during a Heritage Foundation panel discussion.

The proposed bill that’s expected to get the job done is the 21st Century AIRR (Aviation Innovation, Reform, and Reauthorization) Act, H.R. 2997. The bill passed the House Transportation and Infrastructure Committee about a week after its introduction June 22 by U.S. Rep. Bill Shuster (R-PA) and could reach the House floor for a full vote soon.

“The privatization or corporatization or whatever you want to call it of air traffic control (ATC) is one of the most exciting things that is going on right now in Congress that very few people are paying attention to,” said U.S. Rep. Thomas Massie (R-KY), who spoke in advance of the panel.

“The best description of what we’re doing is not really privatization in the sense that you turn [ATC] over to a free market and a bunch of companies compete. It’s more like a user-managed cooperative or user-managed utility,” Massie explained during the July 18 event.

There are instances in which a monopoly is appropriate, he said, “like an electric utility, because you can’t have a whole bunch of wires out on the poles running to everybody’s houses that are managed by different utilities. It’s the same way with air traffic control.”

Specifically, two highlights of H.R. 2997 are that it would transfer operations of FAA-provided air traffic services to a separate not-for-profit corporate entity, but allow the FAA to continue handling aviation safety for the nation’s industry.

“One of the best reasons to vote for this bill is to advance the technology,” said Massie, a member of the House transportation committee, which tried but failed during the last session of Congress to push through a similar bill.

Bureaucracy keeps ATC stuck in the past where controllers are using World War II-era processes, like strips of paper and old radar technology to track aircraft, said panel moderator Michael Sargent, the lead transportation and infrastructure policy analyst at the Heritage Foundation.

“We are woefully behind other countries in technology and air traffic control,” Massie said. “Pac Man had more advanced graphics than the computers used by the air traffic controllers do in my district.”

In one Kentucky air traffic control tower that he visited twice recently, Massie said the controllers did a great job with what they have, but everything they use is inefficient and outdated.

Panelists agreed with Massie and said H.R. 2997 would open up the floodgates to modernization and innovation.

Chris Edwards, director of tax policy studies at the Cato Institute, explained that the Canadian ATC system was privatized in 1996 — something no other country had done. And Canada has seen remarkable results, Edwards said.

For instance, the Canadians developed their own electronic flight progress strip system more than a decade ago and have integrated it across their tower and airport systems. Other countries also have purchased the software program, Edwards said.

“If you keep things trapped inside the government, the innovation is very slow,” he said. “There’s also no general benefit to the U.S. economy; we don’t get the benefit of exporting our technology around the world,” for instance.

There are other examples, he added, such as virtual or remote air traffic control towers, which will replace today’s traditional tall tower structures. Edwards said that Sweden was the first to use them in 2015 to replace towers at small, rural, low-volume airports.

Essentially, an airport’s traditional tower is shuttered. Numerous wires and cables connected to cameras positioned around an airfield and along the runways feed live video or images to an off-site control tower where air traffic controllers monitor the action. One controller can have multiple screens displaying different airfields and be able to control flights in and out of different airports, making it a more efficient way to handle operations, Edwards said. Norway, Australia and Britain have plans under way for remote towers and the Canadian-based Searidge Technologies is conducting trials at larger airports.

“Other countries are getting ahead of us in innovation because we’ve trapped air traffic control inside the government,” said Edwards.

Jarrod Thompson, vice president of legislative and regulatory policy at Airlines for America (A4A), the industry trade organization for the leading U.S. airline companies, said A4A supports the separation of the air traffic controller service provider from the FAA and putting it under an independent, not-for-profit entity funded by the system users.

The model would remove politics from the air traffic control system and guarantee a more reliable funding stream, Thompson pointed out, which would allow for long-term capital improvements that keep pace with technology, while enabling the FAA to focus on what it does best: regulate safety.

With the federal government involved as it is, Thompson said, “there’s too much inertia. It takes years and years and years to get anything done. The main problems are governance and funding.”

Uncapping the PFC
Massie has been at the forefront of introducing pro-market reforms in Congress, Sargent said.
Along with U.S. Rep. Peter DeFazio (D-OR), ranking member of the House Transportation and Infrastructure Committee, Massie on March 1 introduced the Investing in America: Rebuilding America’s Airport Infrastructure Act, H.R. 1265.

The heart of the bill is that it would remove the existing cap on the passenger facility charge (PFC), a per-passenger fee that airports may choose to collect to fund only federally approved capital-improvement projects that improve capacity, reduce noise or stimulate competition among airlines. Congress last increased the PFC cap in 2000 and it has remained unchanged since then, despite a growing need, year over year, for increased investment in the nation’s aging airports, Massie said.

In 1990, DeFazio had successfully led efforts in the House to create the PFC as a non-tax user fee to help airports bridge the gap between capital investment needs and limited federal funding. The PFC program was established in the Aviation Safety and Capacity Expansion Act of 1990, which authorized airport sponsors such as state and local governments, with FAA approval, to levy a fee of $1, $2, or $3 per passenger. In 2000, Congress authorized PFCs of $4 and $4.50 per passenger, but the PFC hasn’t been adjusted for inflation nor to heed the needs of airports, said Massie.

“Airports need flexibility and local control to finance major construction projects. This market-driven reform [would] help modernize our nation’s airports and return power to local decision-makers,” he said.

H.R. 1265 also would reduce airports’ dependency on federal funds because some of the major airports would raise their PFC above the current cap of $4.50 and forego seeking federal airline improvement grants.

Chris Barron, president of the non-profit Right Turn Strategies, which provides pro-bono strategic advisory services to businesses and other nonprofits, said air traffic control corporatization can’t really happen until the cap is removed.

“If we want to see it happen, pattern it on Canada’s work and its removal of their cap to let airports become self-sufficient,” Barron said during the panel discussion.

Barron added that the United States has $100 billion in unmet infrastructure needs at airports and there are only two ways to pay for it — continue to have taxpayers carry the burden or actually make airports self-sufficient and allow them to raise their fees themselves and force the people who are actually using the airports to pay for them.

“As somebody who believes in a free market, if we want to build 21st Century airports, we don’t need Washington to do it; we need Washington to get the hell out of the way and unleash that entrepreneurial spirit,” said Barron.

H.R. 1265 would be “an exciting tweak” to add to H.R. 2997, but Massie said that hasn’t happened yet. “But I would like to see it happen,” he said. “Maybe in the Senate we can try to do something.”
Currently, the bill is being reviewed by the House aviation subcommittee.

“The growth of the U.S. aviation industry over the last century has been one of innovation,” said Sargent. “However, outdated public policies have not been able to keep up with the pace of innovation, government micromanagement of airports is stifling their growth, while increasing regulation is burdening our air carriers and risking decades of success.”

With the airline industry expected to handle a billion passengers within the next 20 years, Sargent said, “Congress must seize its opportunity this year in its FAA reauthorization.”