Dec. 14 (Bloomberg) -- Twenty years ago, Canada’s air-traffic system used outdated equipment and was choking with flight delays. Since then, the organization set up to control the nation’s airspace shuttered radar rooms and towers, cut the workforce and created a market for its technology.
The turnaround was triggered by the government’s decision in 1996 to turn the agency into a nonprofit corporation, backed by flight fees and insulated from political interference, according to John Crichton, president and chief executive officer of NAV CANADA.
“We’re operating today with 25 percent fewer people, yet the traffic has increased by 50 percent,” Crichton said in an interview. “Our technology is being used in the four corners of the Earth.”
The modernization of NAV CANADA provides lessons for the Federal Aviation Administration and should kick-start a debate about the future management of the U.S. air-traffic system, analysts and former U.S. agency officials say.
Members of the U.S. Congress have blocked multiple attempts by the FAA to shut or merge underutilized air-control towers and radar rooms, costing taxpayers millions of dollars, according to logs of correspondence obtained by Bloomberg News through the Freedom of Information Act. Political interference also undermines the introduction of the $42-billion technology upgrade known as NextGen, which the agency plans to introduce over the next two decades, former FAA officials say.
In Canada, Australia and the U.K., control over domestic air space has been handed over to nonprofit, government-owned or private corporations, a concept that has been adopted by at least 35 other nations since 1987, according to a U.S. Government Accountability Office report.
“Only when it sinks in that other countries are doing better than we are will this happen,” said Langhorne Bond, who served as FAA administrator under President Jimmy Carter.
The concept of privatizing all or part of the FAA, considered during the administrations of Bill Clinton and George W. Bush, was rejected on both occasions by lawmakers. The air-traffic controllers union opposes any such move, citing safety concerns. Even proponents say those objections make the privatization of the FAA difficult to get through Congress.
The challenges the FAA will confront as it modernizes suggest that a new management model is needed, said Clinton Oster, a retired Indiana University professor and co-author of a book comparing air-traffic systems around the world.
“Why couldn’t it work here?” Oster said. “You come up short of reasons other than that people have dug their heels in the sand.”
Oster found that both NAV CANADA and NATS Ltd., a firm established in 1998 to run the U.K.’s air traffic, became more efficient by imposing fiscal discipline and gaining independence from political meddling.
The National Air Traffic Controllers Association, a union representing more than 15,000 controllers along with engineers and other FAA employees, and the Professional Aviation Safety Specialists, which includes FAA technicians, reject the notion of private control.
They are allied with aviation groups representing pilots and business aviation interests, such as the Washington-based National Business Aviation Association and Aircraft Owners and Pilots Association in Frederick, Maryland, which object to fees that private air-traffic agencies charge.
It’s unfair to compare the FAA to NAV CANADA because the U.S. is more complex and has more than 10 times the traffic, NATCA President Paul Rinaldi said in an e-mail.
“The U.S. air-traffic control system is the safest and most efficient in the world because it prioritizes safety over a bottom line,” he said.
Controllers are like police and firefighters, ensuring public safety, and should be under government control he said.
That argument is echoed by members of Congress.
The job of controlling aircraft is “inherently governmental,” former U.S. Representative James Oberstar, the Minnesota Democrat who was chairman of the House Transportation and Infrastructure Committee, said in an interview.
Oberstar said he helped block efforts to take air-traffic management away from the FAA going back to President Bill Clinton’s administration.
The FAA, which handles more than 50 million flights a year, has the most efficient system in the world, the agency said in an e-mailed statement.
“Over the years, privatization options and other approaches had been discussed to better manage the delivery of air traffic services, but none of those proposals were put in place,” it said in the statement.
NAV CANADA, which raises funds with bonds and has no shareholders, was established because airlines, the government and employees were fed up, Crichton said.
“The system in those days couldn’t keep up with the growth in air-traffic,” he said. “It was plagued with cost overruns, delays and poor staffing.”
At Canada’s Area Control Center in Montreal, which oversees a swath of airspace from Quebec Province north toward Hudson Bay, controllers have a suite of new tools that make their job easier, Caroline Heroux, a controller supervisor, said in an interview.
They now can track aircraft using satellites in desolate areas without radar coverage. Properly equipped aircraft can exchange detailed electronic messages with controllers, which streamlines or eliminates radio calls.
“In the same volume of airspace, our capacity has really increased,” Heroux said. “It’s a revolution.”
While the FAA is working on a more ambitious technology system known as NextGen, Canada has fielded some of its upgrades sooner than its wealthier neighbor to the south, according to records from both agencies.
Canada’s controllers have been happier under NAV CANADA, Greg Myles, president of the Canadian Air Traffic Control Association union, said in an interview.
While the union hasn’t always supported NAV CANADA as it closed under-used towers and merged radar rooms, it has cooperated with the company to ensure members were compensated, Myles said. While total staffing is down, NAV CANADA now employs more controllers than in 1996.
Controllers also are pleased with the new systems that NAV CANADA has developed, he said. A team of about 30 works full-time at the agency’s technology development department, helping design and test new systems.
Canadian controllers make between C$64,000 ($65,001) and C$137,000 ($139,143) a year, according to NAV CANADA data. U.S. controllers earn a median salary of $108,000, according to the U.S. Bureau of Labor Statistics.
In the tower at Montreal’s Pierre Trudeau International Airport, NAV CANADA has automated most records, from runway condition reports to the paper strips controllers once used to keep track of each plane, supervisor Sebastien Bourgon said in an interview.
The Canadian government still oversees safety and also approves the rates the agency charges airlines and private aircraft for flights, with fees determined by aircraft weight.
That separation of the regulator from the operator is an important step to improving safety oversight, Robert Poole, director of transportation policy at the libertarian Reason Foundation, said in an interview.
“In Australia, Germany, Canada, all these places where air traffic has been corporatized, there is an objective third-party safety agency,” Poole said.
Pilots of small private planes pay a flat fee of C$68 ($69) a year. A Boeing Co. 737-800 would pay C$926 ($940) for a trip of 800 kilometers (497 miles), according to NAV CANADA data.
The FAA collects about $1,700 in fees and taxes on a similar airline flight, assuming that it carries 100 passengers who pay the current average of $370 for a round-trip a ticket, according to FAA and U.S. Bureau of Transportation Statistics data compiled by Bloomberg.
Fees charged by NAV CANADA and other private systems around the world are too expensive and create an inefficient collection bureaucracy, Edward Bolen, president of NBAA said in an interview. Corporate aviation fliers would rather pay the current 21.8-cent-per-gallon tax on jet fuel in the U.S., he said.
NAV CANADA augments its revenue by selling its air-traffic computer system for towers to agencies in Dubai, Hong Kong, the U.K. and other locations, Sid Koslow, chief technology officer, said in an interview.
“Our record of developing and deploying air traffic technology is probably the best in the world,” Crichton said.
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