In 1996 Canadian officials concluded a $1.1 billion privatization of the country's air traffic control system. It was sold to a private, nonprofit organization called NAV Canada which now provides air traffic control, flight information, electronic aids, and navigation to business, personal, and commercial flights throughout Canadian air space.
Free from bureaucratic mandates and able to operate more like an entrepreneurial enterprise, NAV Canada is the only private company in the world to operate a country's air traffic control system. So how is the newly privatized system flying?
Consider a few facts. NAV Canada has
invested $250 million in new systems and technology and built three new, state-of-the-art control towers;
reduced the Canadian government air traffic control system's bureaucracy by 900 people across four major areas: administration, management, engineers and controllers;
helped save airlines $163 million in taxes while passengers have saved an average of $25.00 per ticket; and
increased the salaries of air traffic controllers by an average of 33%.
According to an October 1999 article in The New York Times, most of Canada's air traffic control constituencies believe the new arrangement is going well.
When the idea was introduced, controllers, who had endured a wage freeze for years, were eager to become employees of a private company. Airlines, upset at delays and at the government's use of taxes collected on air fares for non-aviation purposes, were also ready for change. And Transport Canada was running late and over budget on its huge modernization project which threatened to collapse, as a similar system did in the United States in the early 1990s.
Meanwhile, the U.S. air traffic control system remains woefully outdated. Much of the radar equipment in use is two or three decades old and is still dependent on mainframe computers and vacuum-tube technology. Robert Poole, president of the Reason Foundation and an air traffic control expert, notes four other problems with our current system.
First, there may be a conflict of interest within the Federal Aviation Administration (FAA), the regulatory body in charge of the U.S. air traffic control system. Not only is the FAA owner and operator of the system, it is in charge of ensuring aviation safety. How likely is the FAA to police itself with regard to safety violations?
Second, the U.S. government's procurement process is far too slow. Technology advances quickly and federal procurement systems don not move fast enough to supply a dynamic air traffic control system.
Third, U.S. civil service rules are inadequate for hiring and retaining qualified workers for air traffic control systems.
Lastly, America's current system of funding is restrictive and politicized because it relies on federal appropriations for its budget.
The Clinton administration, to its credit, has tried to resolve some of these issues. In 1995, for instance, it proposed making the entire U.S. air traffic control system a quasi-governmental corporation, much like the U.S. postal service. This allegedly would have given the U.S. air traffic control system more flexibility on personnel and procurement, but the idea never got off the ground.
In 1998 the administration proposed making the FAA an organization similar to the Patent and Trademark Office, which can set its own fees and control revenues, but Congress balked. As it turns out, politicians enjoy a subservient FAA, and many airports remain a potent source of pork-barrel spending projects.
It is unfortunate that U.S. policy-makers have had so little luck changing the operational status of America's air traffic control system. Air travel is booming. The total number of "enplanements" (how often a person steps onto a domestic carrier on U.S. soil) now tops more than 500 million annually.
Privatization has increased the safety and lowered the costs of air travel in Canada. By contrast, billions of dollars are spent every year in the U.S. on wasted fuel and wasted crew and passenger time due to delays caused by the obsolete U.S. air traffic control system.
The United States should follow Canada's lead. Adapting NAV Canada's model of privatization to America's air traffic control system would mean greater safety, greater efficiency, less cost, and less frustration..
Michael LaFaive is managing editor of Michigan Privatization Report.
Editor's Note: Portions of this article were excerpted from the summer 1998 issue of Michigan Privatization Report.
