July 2017Strategy

Trump's FAA privatization scheme: one more attack on the public sector

Most of us find a lot not to like about flying these days.  From cramped seats with minimal legroom to delayed and oversold flights to having to pay for meals (when you can get them at all) and checked baggage, the experience of flying has changed a lot since the "coffee, tea or milk" days of the 1960s, and not for the better. Flying, now far from glamorous, is now an experience akin to being part of a boxcar of cattle being ferried to market. Most passengers don't have encounters with airlines as traumatic as the poor man who was bumped last April from a United Airlines flight by being beaten bloody and dragged from the plane, but we all can empathize.

Dislike of the aviation status-quo was one of the motivations behind the latest plan to "reform" the Federal Aviation Administration (FAA) by transferring many of its duties to a private corporation.  President Trump aired his privatization scheme in May, but the idea goes back to the Reagan years.  Privatization proponents argue that a federal agency is not as well-equipped as a private entity to run the air traffic control (ATC) system and take over the long-running project, known at NextGen, to upgrade it from a radar-and-radio-based system to a modernized network based on satellite navigation.

The latest proposal, which was actually the brainchild of Rep. Bill Shuster (R-Pa.), would not in theory result in ATC being someone's cash cow -- the proposed corporation would be a nonprofit entity.  The idea, which seemed to have wings as recently as a few weeks ago, appears to be off the table for now -- on June 30 the Senate approved an FAA authorization bill that kept the agency intact.  And yet privatization has powerful backers who aren't ready to quit after 30 years of trying, and it is likely to be resuscitated in the near future.

Almost everyone agrees that the FAA, which has operated the U.S. air traffic system since 1958, has done a good job of handling the growing volumes of domestic air traffic -- now averaging 24,000 flights per day -- safely and, within the constraints of an overtaxed system, with reasonable efficiency.  Over the last few years, from 75 to 80 percent of domestic flights by the larger U.S. airlines have arrived on time, although that record is worse for flights involving more-congested airports.  And there has not been a fatal crash by a U.S. commercial airline since 2009.

The main complaint about the FAA is not the work of the existing employees, but rather the structural limitations of what amounts to a government-operated business that serves profit-making companies, i.e., the airlines.  While the FAA is funded largely from ticket taxes and other fees paid by travelers, the funds go through the hands of Congress and must be appropriated to the agency before it can use them.  While the airlines raise their revenues from fares and other passenger fees, they depend on an agency subject to political whims in order to be able to operate at all.  During the periodic government shutdowns while Congress wrangles over the budget, the planes continue to fly; controllers are deemed "essential" government employees and required to stay on the job.  But the longer-range NextGen project gets put on hold until Congress passes an appropriations bill, and the FAA must hope it appropriates enough to keep the program on track.

Hence the administration's proposal, would remove air traffic control and NextGen development from the FAA -- which would still carry out its remaining functions of regulating air safety and funding airport infrastructure.  An independent board would oversee the new corporation, and its funding would come from airline user fees and be independent of the federal appropriations process.  (The proposal also includes new limits on when airlines could bump passengers, although such aviation consumer issues are not the province of the FAA but of a separate office directly under the Secretary of Transportation).

What could go wrong?  Well, for starters, the new corporation's board surely would be dominated by the major airlines, who largely support the privatization scheme (with the notable exception of Delta Air Lines).  The air traffic system would convert from one accountable to the public and managed by the government for all stakeholders -- large airlines, small airlines and private-plane operators, as well as passengers and airports -- to one operated by and for the major carriers, who have profit on their minds.  This could result, for example, in prioritizing service to the larger cities served by the major airlines while gouging the smaller communities which depend on the smaller regional airlines.  With limited airspace over the country, which routes get priority is a major concern.

Also, as noted by Ashley Nunes in the Atlantic, a private corporation operating air traffic control would likely be considered "too big to fail."  If the user fees it collected were insufficient to cover revenues, taxpayers might be on the hook to bail the corporation out.

The National Air Traffic Controllers Association, the union that represents the controllers, has taken a stand in favor of the administration's proposal, mainly because it would remove the system from the federal appropriations process.  The main opponents are the smaller airlines as well as private-plane operators, who worry they would wind up paying more in fees and getting poorer service from a system dominated by the big carriers.

But underlying the debate is an almost unspoken driver of the proposal, which is to further erode the idea of the government's ability to provide a quality service to the public.  The FAA takes a lot of heat from Washington insiders, but the agency has cultivated a strong culture of safety.  The stops and starts to air traffic modernization have undercut the efficiency of the system, but the FAA has never let this affect safety.  On the contrary, the agency has sometimes deliberately limited the capacity of the system to prevent overcrowded skies or runways that could threaten safety -- notably by imposing limits on takeoff and landing slots at highly congested airports such as Washington National, New York LaGuardia and Chicago O'Hare.

But is the FAA as hopeless at modernizing the system as its critics claim?  The FAA has made progress in developing NextGen, and certain would be farther along with a stream of funding free of the uncertainty of congressional appropriations.  Instead of creating an entirely new organization to run air traffic, why not create the funding stream envisioned by the administration while giving the money to the FAA as it now exists?

The "why not" is that if this might result in the specter of a federal agency providing a high-quality public service.  And this would be intolerable to the privatizers.  They need to demonstrate that only the private sector can provide efficient service at a low cost, and they have worked tirelessly to bring former government services into the private sector to be exploited for profit.  For decades, government at all levels -- mostly under Republican control, but sometimes even under Democrats – has often collaborated with big business to transfer public enterprises to the private sector.  Schools, prisons, water supplies and welfare intake systems, among many other traditionally government-run institutions, have been privatized across the United States.  Corporations are eyeing the takeover of other potential cash cows now largely in public hands, such as highways, parks and, yes, airports.

So it behooves socialists and other progressives to be highly skeptical when the airlines tell us they can run the aviation system better than the government can.  Aviation is one sector where the government has performed well within the limits imposed by politics, and the private sector has yet to make the argument that it could do better.

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