February 09, 2016

GAO Report Confirms Air Traffic Control Privatization is High Risk

Washington, D.C. – Today, Ranking Member of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) and Ranking Member of the Subcommittee on Aviation Rick Larsen (D-WA) responded to a Government Accountability Office (GAO) report that confirmed that a Republican proposal to privatize air traffic control operations would be a high-risk gamble. The report was released on the same day as a hearing on the controversial ATC privatization proposal.


“This GAO report confirmed what many opponents of air traffic control privatization already suspected. Privatization would negatively affect small and rural communities by jeopardizing their access to the aviation system. It could mean higher user fees for passengers, general and business aviation, and others. A privatized ATC system would be ‘too big to fail’, meaning consumers or taxpayers might have to bail out the private corporation if it couldn’t pay the $10 billion plus that it costs to operate a safe system. And finally, it would jeopardize safety oversight by separating the system and leaving safety programs vulnerable to sequestration and shutdowns. The Republican privatization plan will not fix the real problems plaguing the FAA. I urge support for targeted solutions to fix those problems—not a radical privatization scheme that gambles with aviation safety,” said DeFazio.


“I have said many times that turning over the most complex air traffic control system in the country to private hands raises a lot more questions than it answers, a concerning reality that GAO confirmed today. Ranking Member DeFazio and I asked GAO to look into privatization precisely because we want to be clear about what it means for safety and oversight, for our national security, for rural communities, and for NextGen. The only thing that this report makes clear is the lack of clarity about the implications of privatization for the future of our airspace. The safety of our air traffic control system is no place for an untested, uncertain science experiment,” Larsen said.


The GAO found:


  • Equal access to the aviation system. “[S]mall and rural communities could be negatively affected by a restructured ATC. . . . [R]ules need to be in place for the ATC entity to not restrict access so that only high value customers, such as commercial airlines[,] are served; access should be maintained for small communities and other services, which are important but don’t make a lot of money.”


  • User fee fairness. Charging user fees for air traffic services, which significantly improve safety and prevent midair collisions, could discourage pilots from operating under air traffic control to save money. Moreover, “it is possible that general and business aviation might see their contribution to the cost of ATC services rise and that this increase could reduce the use of the airspace by these users.”


  • Fairly distributing costs. “Because no single user can be said to ‘cause’ . . . fixed costs,” such as administrative overhead costs, including the $640 million in the FAA ATO’s administrative services, “there is not a truly cost-based means to assign these costs to users . . . .”


  • Too big to fail. “Another key issue . . . is how a new entity would mitigate risk of unforeseen events or economic downturns that could affect traffic and revenue,” in view of the extraordinary measures taken by NATS UK and Nav Canada during the post-9/11 slump (NATS UK was bailed out, and Nav Canada hiked user fees and tried to impose cost-cutting measures on its workforce).


  • Liability.  “[A]nother transition issue is ascertaining whether the ATC entity would be fully insurable in the private market. The extent of insurance coverage needed might be substantial, and as such, a consideration would be whether the federal government should play a role in insuring certain risks that may not be privately insurable.”


  • Splitting up the FAA. “[I]t is not clear how activities such as the development of flight standards and procedures and approvals of new procedures, which spans FAA’s operations and safety organizations, would be easily separated between the safety regulator and ATC entity,” nor is “coordination between the safety regulator and an ATC entity” assured.


  • Leaving safety subject to shutdowns. “[A] restructuring could result in the safety regulator being more vulnerable to funding challenges because the safety regulator would no longer have the ability to shift resources among programs as FAA has some ability to do. Additionally, one expert stated that [the safety regulator] . . . may face challenges hiring skilled staff because it would be competing with the ATC entity for skilled labor. For example, Transport Canada . . . lost many skilled staff that went to [Nav Canada] . . . [and has] continued to face challenges filling technical positions within the organization.”


  • Maintaining safety. A challenge would be “ensuring that the safety regulator has access to safety data and other information to continue to maintain oversight and safety.”


The study can be found here.