Photographer: Reed Saxon/AP Photo

Air-Traffic Control Spinoff Sought by Key U.S. Lawmaker

Updated on

A key lawmaker proposed spinning off the government-run U.S. air-traffic-control system into a nonprofit corporation, in what would be the most far-reaching change since the current structure was created in the 1950s.

The shift is needed to insulate the Federal Aviation Administration from political interference and budget uncertainty, House Transportation and Infrastructure Committee Chairman Bill Shuster said in an interview.

“It’s one of our leading industries in this country and if we don’t do something transformational, we’ll start to lose that leadership in the world,” Shuster said before unveiling the plan Monday at the Aero Club in Washington. “We need to do something different.”

The more than $10 billion operation within the FAA that oversees flight routes and purchases computers, radars and other technology would become part of a federally chartered, independent, nonprofit corporation, according to a summary of the legislation.

The corporation would be governed by a board representing users of the aviation system including airlines, private-plane owners and unions, according to the committee. The FAA would continue to set standards and oversee safety of the system.

‘Failure’ Path

Shuster, in his speech to the Aero Club, acknowledged that other lawmakers and industry groups didn’t always agree on the proposed changes at FAA.

“But we agree that continuing on the present course is the surest path to failure,” he said.

The Obama administration hasn’t looked at the details of Shuster’s plan, although press secretary Josh Earnest didn’t reject it out of hand. He said the first priority should be maintaining the safety of the air-traffic system while seeking ways to make it more efficient.

“We’ll be in touch with Congress about it,” he said of the legislation.

The plan calls for funding air-traffic control with user fees instead of the current patchwork of taxes, fees and general tax revenue. The structure would insulate the new corporation from the federal budget process.

The legislation would promise to protect current FAA employees who would no longer be working for the government.

Airlines support the move as the best way to speed efforts to modernize flight monitoring and improve traffic flow, the Washington trade group Airlines for America said Monday in an e-mailed statement.

Delays, Cancellations

“Inefficiency in our national air space system costs our economy a staggering $30 billion per year while subjecting travelers to delays, cancellations and countless hours of lost productivity,” the group said in the statement.

If successful -- and the concept is opposed by some powerful aviation interests -- it could create uncertainty for companies such as Harris Corp., Lockheed Martin Corp. and Raytheon Co. that are building portions of the $42 billion air-traffic upgrade known as NextGen.

The plan reflects what most industrialized nations have done with air-traffic agencies in recent decades. One advantage to that structure is it separates air-traffic control from the safety regulator, Shuster said.

A similar proposal by President Bill Clinton was derailed in 1995 by fierce objections from FAA unions and others. The current political and budgetary climate may give enough cover to advance legislation, Shuster said.

FAA Authorization

Shuster says he will include the plan in a bill to renew the FAA’s authorization, which expires at the end of September. Lawmakers haven’t finished writing the bill, which Shuster said he wants filed by the end of the month. House leaders plan to consider it on the floor in July, he said, before Congress leaves for its monthlong August recess.

After recent years of fights over spending, including a partial FAA shutdown in 2011 and more furloughs in 2013, Shuster said some previous opponents have been willing to revisit the idea in exchange for promises of stability and certainty.

The National Air Traffic Controllers Association, which represents almost 15,000 controllers, is waiting for more information before deciding whether to back Shuster’s plan, President Paul Rinaldi said in an interview after the speech.

“The details matter,” Rinaldi said.

Canada, Australia

Rinaldi and other union leaders have been impressed on multiple visits to Canada and other countries that have privately run air-traffic services, he said.

The National Business Aviation Association, which represents corporate aviation operators, opposes any plan that adds new fees for flying and takes away congressional oversight, President Ed Bolen has said.

In addition to Canada, Germany, England and Australia have created various private and semi-private operators to oversee their air-traffic systems, according to a report this year by the non-partisan Congressional Research Service.

The private systems have generally improved their efficiency and operators say it has been easier to install new equipment, according to the CRS report.

There have been no indications that the new non-governmental operators are less safe, according to CRS.

While the U.S. has overseen the air-traffic system for its entire history, examples exist of partially private organizations being chartered by the government, such as the Tennessee Valley Authority.

Shuster’s bill also will include provisions to streamline the way aircraft are certified, a reaction to industry concerns that it takes the FAA too long.

Shuster said the time is ripe to alter the FAA because of the success of those other countries and fights over the federal budget.

“I feel pretty good, but you know I’ve been around this place for a lot of years,” Shuster said. “You take nothing for granted.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE