US ATC privatisation fails math(s) test

Alud Davies
By Alud Davies August 21, 2017 08:50

US ATC privatisation fails math(s) test

The only real argument for privatising US air traffic control is that it would save taxpayers’ money.

The theory is that a non-profit air traffic control organisation would be more efficient and therefore cheaper than the FAA. Several airlines (but not Delta) and lawmakers pushing privatisation keep repeating this.

“The previous administration spent over $7 billion trying to upgrade the system and totally failed,” said President Donald Trump, when he sent a memo pushing what is now the proposed 21st Century Aviation Innovation, Reform, and Reauthorization Act H.R. 2997. “Honestly, they did not know what the hell they were doing. A total waste of money – $7 billion plus.”

This week a new Congressional Budget Office (CBO) cost estimate killed this argument. It says that the proposed privatisation of US Air Traffic Control (ATC) could increase America’s budget deficit by $98.5 billion by 2027.

“This study is further evidence that ATC privatisation is a bad idea for all Americans,” said Ed Bolen, president and CEO, NBAA. “The new CBO findings show that the House bill to privatise ATC would increase the nation’s budget deficit by nearly $100 billion. Adding to the budget deficit, just to help the big airlines, is the definition of bad public policy.”

NBAA and other general aviation associations have launched a website where Americans can oppose the bill.

A cynic could argue that privatisation could allow the government to look as if it was cutting its national debt by effectively taking ATC off-balance sheet. But the CBO calculation says this would not happen.

“To finance the costs of providing air navigation services, H.R. 2997 would authorize the corporation to charge fees to users and to issue debt. Although the proposed corporation would be independent and autonomous, in CBO’s view it would effectively act as an agent of the federal government in carrying out a regulatory function,” says the CBO. “Hence, in the CBO’s view, the guidance specified by the 1967 President’s Commission on Budget Concepts suggests that the proposed corporation’s cash flows should be recorded in the budget. More specifically, fees charged by the proposed corporation should be recorded as federal revenues, and its expenditures should be classified as federal direct spending.”

As Bolen says, it is easy to see why (some) airlines like the idea of running air traffic control (although the last few years have shown that many of them have enough trouble with their own IT systems already). But it is hard to see why anyone else would support it.

Alud Davies
By Alud Davies August 21, 2017 08:50