As Congress takes up a bill to renew funding of the Federal Aviation Administration (FAA), the controversial plan from Rep. Bill Shuster, R-Pennsylvania, to privatize U.S. air traffic control promises to be a sticking point. One thing that Congress clearly does not need is an additional source of delay in doing its normal business, given the pressing problems of hurricane relief, passage of a budget, and other legislative tasks.
The plan’s boosters point to the example of other countries that have undertaken similar reorganizations, including Great Britain.
If you think airline service in the United States is terrible, apparently privatization in European countries has not spared their passengers from the same grief. Complaints from travelers in Europe about flight delays and unpleasant conditions in the air and in airport terminals would be familiar to U.S. travelers. On Aug, 7, the British Independent ran a story headlined “Every summer, airports and everyone connected with air travel decide to inflict as much misery as possible on customers — and no one is prepared to take the blame.”
The British National Air Traffic System (‘NATS’) was privatized in 2001, when a 51 percent ownership share was sold to the private sector. Control in this arrangement was dominated by the major airlines, which is also what is feared will result in the United States from Shuster’s plan. Two advantages of the British reform compared to the proposal in our Congress is: the British government kept an ownership stake in the system; and it made some money by selling shares to the airlines. Under the Shuster plan, the entire set-up would be given away for free.
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In August, Britain’s air traffic regulator, the Civil Aviation Authority (CAA), reported that NATS service suffered from failure to manage staffing shortages because of sickness, unforeseen retirements, and refusals to work overtime. The example of European nations’ privatization of air traffic control is often cited as evidence of its appropriateness for the United States, but apparently service across Europe also leaves much to be desired.
One motive for privatization in the United States is the need to upgrade the technology. This appears to have been a problem in the British case, even after privatization. The head of the British system was quoted as saying “The U.K.’s airspace was designed decades ago and doesn’t allow us to take advantage of the technology on board modern aircraft that would raise capacity, and also reduce emissions and noise for communities on the ground.” Technological advance and innovation are said to be the fruits of privatization, but apparently such benefits are not guaranteed.
In the same vein, in 2014 British business secretary and parliamentarian Vince Cable criticized NATS for inadequate capital investment. As the BBC reported, “He said it was running “ancient computer systems, which then crash”. This was in the wake of a computer glitch that, according to the BBC, affected “thousands of passengers.”
NATS’ difficulties with investment points to a problem that could arise in the United States. The separation of NATS from full British government control came with strings attached that limit NATS’ ability to raise its own funds for investment. That means the British government has been obliged to provide additional funds. Under Shuster’s plan, the new system would have more power to set its own taxes and fees, but insofar as Congress objects to an independent agency creating revenue-collection devices, the federal government could end up responsible for bail-outs and other infusions into a new air traffic control entity. At the same time, the difficulty of “letting go” means the same political pressures that inhibit investment in the United States could carry into a new “privatization” set-up.
Aside from technological weakness, why isn’t the NATS system working? Britain’s CAA, its version of the FAA, found understaffing and low employee morale to be problems. They also said the air traffic control system needed to “boost its resilience.” In the United States, a lack of flexibility in the face of adversity is a complaint commonly directed at government operations, one that privatization is supposed to remedy.
The CAA sourly noted that, “NATS is already the second-highest cost air traffic control service provider in the EU, and posted profits of £126 million last year.” So not only is service lacking, but British travelers are paying a premium for it.
Max B. Sawicky is an economist and writer specializing in public finance and privatization.