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Public policy and technology management: changing the role of government in the operation of air traffic control.

A movement is under way to "privatize" the U.S. air traffic control (ATC) system, the largest department within the Federal Aviation Administration (FAA). A study of this issue - currently in the debate stage and receiving high visibility in the press - affords a unique opportunity to examine the forces and events leading to the formation of a public-private partnership, as they unfold, at the federal level. In particular, activities currently under public discussion include:

* The historical performance of the air traffic control system, with respect to its mission and goals.

* Perceived shortcomings in the system and the need for improvement.

* The history of events that led to the public-private partnership being considered as a solution.

* The options available as to the form of public-private partnership, the perspectives on privatizing, and the outlook for its success.

* The implications of operating a large, complex, high-technology function such as air traffic control, exclusively within the public sector.

* How politically-motivated, socially-based policies can operate at cross-purposes with other social priorities.

Observing the dynamics of a public-private partnership in the making can be far more revealing than an ex post facto analysis of a partnership already formed. In particular, political forces which will ultimately determine the shape of the partnership can be examined.


The first proposal put forward to separate ATC from the FAA appears to have been developed by Glen A. Gilbert, an aviation consultant, in 1975.(1) Gilbert's plan provided for funding to be shared between user fees and tax revenues. In 1982 Robert Poole proposed a plan based on a nonprofit, user-funded, user-owned corporation.(2) In 1985 the Air Transport Association (ATA) proposed a plan for an ATC organization which would be completely user-funded. The Air Transport Association is a nonprofit organization representing U.S. airline interests.

These early movements, directed to removing ATC from the FAA and "privatizing" it in varying degrees, were founded on the perception of the aviation user community that ATC was increasingly lagging the industry it was serving. Often cited in those first proposals as a case study in support of privatization was the success of ARINC (Aeronautical Radio, Inc.).

ARINC was formed in the 1940s as a result of the FAA's (then the Civil Aeronautics Administration, or CAA) recognition that commercial air carrier flights needed to be in constant contact with their companies, and that the infrastructure for "company radio" operations should be owned and operated by the airlines themselves, not by a federal agency. ARINC was formed by participating airlines as a federally regulated not-for-profit corporation. A nationwide system of interconnected ground radio stations was built to support the requirements for Airline Operational Control (AOC), which was operated by ARINC and is still in use today.

Finally, in 1989, the Transportation Research Board of the National Research Council was commissioned by the federal government to investigate and report on the operation of the airline industry since the beginning of deregulation in 1978. The TRB report, Winds of Change: Domestic Air Transport Since Deregulation, published in 1991, noted that while the impact of deregulation had both positive and negative effects on the airline industry, the airlines had nonetheless emerged from the ordeal in a new and growing form.(3)

The report noted that the FAA had fallen steadily behind the airlines it was serving and regulating, and had lost much of its ability to keep pace with the needs of the industry. In particular, the report focused on the air traffic control system as lacking the necessary technology and resources to keep pace with air traffic growth. It was cited as already being responsible for a major share of system delays, and the situation was projected to worsen as air traffic growth continued into the future. The report predicted that major system breakdowns would result if the ATC system were not improved dramatically.(4)

In 1992 the Aviation Consumer Action Project focused on the effect of the ATC problem most visible to the public - operational delays - and issued a report calling for ATC to be spun off from the FAA. Finally, in 1993, the Infrastructure Subcouncil of the Competitiveness Policy Council concluded that there is " overwhelming consensus in the aviation community that the ATC system requires fundamental change if aviation's positive contribution to trade and tourism is to be maintained" (italics ours).(5) In the latter part of 1993 the National Commission to Ensure a Strong Competitive Airline Industry, appointed by the president, proposed an independent corporation be formed to manage and fund ATC, and that the responsibility for maintaining safety remain with the government.

As might be expected, the originally perceived need for improving ATC was identified by industry experts and the user community. The need to form a public-private partnership (or to consider one as an option) would naturally tend to begin with those closest to an operation, program, or issue. They would be the first to be aware of conditions that might call for such action. Acting on their own, however, would not likely be very effective, particularly if the matter were one of broad interest. In the case of ATC, it was not until the issue had evolved and grown through organizations with progressively broader constituencies, from a single consultant to an industry organization to a national research organization, a consumer organization, and finally a presidential commission, that real progress actually began to occur and action was taken to change the form of the air traffic control organization.

Eventually, formation of the United States Air Traffic Services Corporation (USATS) was recommended in a 200-page report issued by the Executive Oversight Committee (EOC) of the Department of Transportation (DOT).(6) The report mirrored the findings of the 1991 TRB Winds of Change analysis of the deregulated airline industry in which the ATC system was cited as not keeping pace with the deregulated industry, and in need of reorganization.

Under the Clinton administration, the USATS report favored turning the ATC system into a nonprofit, independent federal corporation. It focused principally on removal of ATC from Congressional control (to replace politically influenced management with operationally based, objective-oriented management), removal of ATC from the Congressional budget process, and relief from the restrictions of government procurement regulations and personnel laws. These changes were proposed as the means needed to reduce the cost of ATC operations and capital investments, to improve organizational effectiveness, and to make technology advancements possible on a par with other elements of the aviation industry. (Leading elements of the USATS proposal are detailed later in this writing.)

It was not, then, the matter of technical insufficiency that mobilized the forces for ATC change, but matters of broader and more comprehensible concern to the public, such as delays and an adverse effect on trade and tourism, that made progress possible.



It would seem logical that when a public-private partnership is selected to solve a problem, or to create the most appropriate organization to address a particular objective, dealing with the matter only from either a completely public or private perspective would be undesirable. Such appears to be the case where high technology is concerned.

High technology, by its nature, is in a continuous state of rapid evolution in almost all applications. When tied to governmental bureaucracy it can be severely restrained. As a department wholly contained within a federal agency, and, perhaps more importantly, as an organization funded by tax revenues, the air traffic control organization is tied directly to the Congressional budget process. As the goals and priorities of Congress change with each fiscal year and election period, budgetary planning for ATC becomes tenuous, at best. In the current environment in which Congress and the administration endeavor each year to increase revenues and reduce outlays (to reduce the federal deficit), FAA's authorization to spend from the Aviation Trust Fund (e.g., revenues from the 10 percent ticket tax, which are the primary source of funds earmarked for system infrastructure improvements) has been consistently reduced. (Large Aviation Trust Fund balances appear to have been kept on the books to make the deficit appear smaller, whereas fund expenditures would tend to give the appearance of deficit growth.) Unpredictability of the federal budget process has played havoc with the need for long-term planning.(7)

As a result of these budget constraints, the ATC system has not kept pace with either technological advancements in the aviation industry, or with air traffic growth. Advancements in aerodynamics, propulsion, and avionics technologies have produced commercial air transport airplanes capable of operating efficiencies that cannot be realized as a result of ATC constraints. Excessive spacing between airplanes due to the limited accuracy of ATC surveillance systems, and indirect routings resulting from the use of outdated ground-based navigation systems and ATC's inability to manage multiple direct routing cases, are estimated to cost U.S. airlines some $5 billion annually, an amount that substantially exceeds losses for the industry in domestic operations.

Procurement Policies

Federal procurement policies were originally developed to ensure fairness and to diminish the likelihood of bias or undue influence in federal purchasing and contract awards. The policies have been made excessively comprehensive, however, and have become counterproductive by driving costs up and reducing organizational effectiveness. Some U.S. industry experts believe the chief blame for FAA not updating its ATC system lies with procurement policies within the FAA and other governmental departments.(8) Bureaucratic procurement and (civil service) personnel laws are believed to be responsible for major acquisitions requiring up to five years to complete.(9)

Competitive bidding laws, the Brooks Act, and the Competition Contract Act are leading examples of inefficiencies created by excessive control in the procurement process. The FAA Administrator has stated that statutory competitive bidding laws result in a period of two to five years being needed to write specifications, develop evaluation plans, submit detailed documents for solicitation, and award a contract. The federal budget process imposes severe restraints and limitations on how the agency can use the funds it receives. Federal government procedures hinder the FAA's ability to hire and reassign personnel.(10)

The Brooks Act, for example, calls for consideration of all protests when in the acquisition process for federal information technology. The FAA receives an average of 10 protests each year. Even though the FAA wins 90 percent of the protest cases, it nonetheless moves slowly and painstakingly to avoid protest action. The Competition Contracting Act requires that bids be solicited from all potential vendors, regardless of qualifications or expertise in the area in question. It also requires competition at each stage in the life of a program, which results in mid-stream vendor changes, greater delays, higher cost, and loss of continuity.(11)

The Congress has painted itself into a corner, in that procedures do not exist for exempting certain government organizations from these policies, based on unique requirements or needs. Consequently, the only effective corrective action that can be identified for ATC is its removal from direct federal control.

Congressional Control

It is unfortunate, but perhaps not surprising, that placing a function under the control of Congress, despite the presumed education, sophistication, and good intentions of its membership, seems to create an irresistible temptation to fiddle with its internal workings, regardless of the knowledge or experience of particular individuals. Accordingly, micromanagement by Congress has been broadly cited by government and industry as a major hurdle to efficient conduct of the air traffic control system.

Congressional actions have led to special ATC procedures at Washington's National Airport, DCA (considered by some to be self-serving and inappropriate), while the Reagan administration resisted attempts to privatize the Washington Dulles Airport, IAD, and DCA.(12) They have also led to the inability of FAA to compensate ATC employees equitably with respect to high-cost living areas, and to implementation of technical resources in inappropriate locations in response to more powerful Congressional leaders exercising budgetary control. Micromanagement substitutes the conflicting priorities of outside bodies for the judgment of FAA professional managers.(13)

Bureaucratic Management

Management practices within FAA have been cited as deficient in ways that are generally considered a result of excessive bureaucratic procedures and policies. For example, the FAA culture has been cited as "...averse to risk,... often [pitting] one internal organization against another,...[and inhibiting] the effective flow of information. Such a culture is an important facet of FAA's difficulties in developing and ultimately deploying new technology...."(14)

An example of the consequences of these types of management problems is the experience of the Advanced Automation System (AAS), the centerpiece of FAA's plan to modernize air traffic control. As a result of underestimating the complexity of the project and misjudging the technical effort needed to complete AAS software, by both FAA and its prime contractor, IBM, cost and schedule estimates rose from $2.5 billion with completion expected in 1994, to $7.6 billion with completion expected in 2002.(15)


A more efficiently run ATC system is inherently a safer ATC system. To be considered further, however, is the present arrangement in which ATC is under the complete control of FAA, as one of its departments. FAA's charter obligates it to maintain and enforce safety standards in aviation, while promoting the health and welfare of the industry. In that sense, some regard FAA's relationship to the ATC system as one in which "FAA regulates itself," a conflict of interest.

FAA regulates other entities in aviation, such as airlines, airports, and mechanics, at arm's length, and does so effectively. Few would recommend, for example, that FAA own or operate airlines and airports to ensure that they are safe. It is widely believed that FAA's relationship to ATC should be considered from the same perspective.

The FAA Administrator favors privatization and has publicly taken the position that such an arrangement would increase safety.(16) Organizationally, the FAA has publicly stated that air travel in the future "...may not be as safe as in the past if management of the air traffic control system is not changed to a federal corporation."(17)

While the safety and service records of the U.S. ATC system are excellent, recent technology developments (e.g., availability of the satellite-based GPS - Global Positioning System) and the return to healthy traffic growth levels (5 percent to 3 percent annually) have intensified the need for advancement of the ATC system. Because ATC technology is substantially behind system demands, continued inattention will not only bring about obsolescence, it will worsen the effects of existing obsolescence. Continued advancements in aerodynamics, propulsion, and avionics heighten the need for advanced ATC systems.


As the traditional world leader in aviation and air traffic control, the U.S. has been surprisingly behind other countries in moving to "privatize" or "corporatize" ATC to improve its operation. Smaller nations have actually led the way to privatization: New Zealand, Switzerland, South Africa, and Germany all have implemented different forms of public-private partnerships as privatized air traffic control systems. The United Kingdom and Canada have had the matter under study for some time and appear ready to move forward in the near future. They will most likely be the next privatized ATC systems in operation. The British system will rely entirely on user fees for funding.(18)

The Czech Republic began to consider a public-private partnership for ATC in 1993 when discussions began in central government committees. Like a number of emerging Eastern-bloc nations, its focus so far has been on a nonprofit, user-owned, public-private company operating on a user-funded basis, the Central Holding Corporation proposed by the Association of European Airlines in 1989 as a single Europe-wide system.

One consistent characteristic of the programs of all of these nations is that, in all cases, the government has remained in charge of safety enforcement and control.(19)

New Zealand

Airways Corporation of New Zealand (ACNZ) has met with unusual success, is the world's first fully commercial air traffic control organization,(20) and is, therefore, a model for other countries of the world to consider when developing their own system plans. ACNZ has been characterized as the prototype of successful transition. It has transformed deficits into profits which have grown consistently year after year. For the four years prior to corporatization, the government-controlled New Zealand ATC system posted operating losses of more than $40 million. In the five years since its creation it has contributed more than $57 million to the government in dividends and taxes. Total annual operating costs have decreased from $70.5 million to $47 million. Payroll has been reduced from 1,055 employees to 656 employees. The cost per trainee has decreased 33 percent, annual flight inspection costs have been reduced 27 percent, the average cost per aircraft movement has gone down 13 percent, and the landing fees assessed by ACNZ are now the lowest in the world. In March of 1994 ACNZ reported a $3 million after-tax profit for six months of operation. It has replaced its outdated air traffic management system with computerized state-of-the-art technology, has embraced the latest technologies promulgated by the Future Air Navigation System (FANS) Committee of the International Civil Aviation Organization (ICAO) including GPS, and has begun internally funded operational trials.(21)


There is much to be gained from an examination of the experience of other countries, as well as New Zealand.

The Swiss ATC organization was initially set up as a partially private nonprofit company in 1988. The government retained 71 percent of the shares, the other 29 percent divided up among airlines, airports, and aviation employee and user groups. It was ultimately decided that the government's holdings of the new organization, Swisscontrol, would be reduced to 51 percent. Swisscontrol would be allowed to set and collect user fees, the government would pay only for its use of Swisscontrol services, and shareholders outside of the government would not receive dividends, their ownership to provide them with a voice in decision making only. This type of arrangement may not provide the incentives for success that would be needed in the U.S.(22)

The new German ATC, Deutsche Flugsicherung Gmbh (known as DFS), was established in 1993, also on a nonprofit basis, but not legally prohibited from making profits. It began by merging the military and civil ATC organizations into one. Funding is from user fees, and 90 percent of DFS's income is derived from fees for enroute flight operations within Germany and internal landing fees. Due to its status as a monopoly, rates are subject to approval of the Transport Minister.(23)

In 1992 the South African government transferred ownership of ATC to a commercial corporation that remained 100 percent government owned. Funding is entirely from user fees, and the responsibility for oversight and enforcement of safety matters remains with the government.(24)

A proposal to change the Canadian ATC organization to one funded entirely by user fees has been under review for some time. The proposal includes a provision for the repeal of Canada's ticket tax. The German and Swiss models are under study by Austria, Ireland, Italy, and Portugal.

It seems likely that a significant number of air traffic control organizations around the world, particularly in western Europe, parts of the African continent, and the southern Pacific region, will be "privatized," in one form or another, by the end of this century. To the extent that such operations prove to be more efficient for users and suppliers, it becomes important for the U.S. to mobilize an ATC privatization effort as one means of maintaining the competitiveness of its air transport industry.

The FAA has, however, unique conditions to deal with in the structure of the U.S. federal government, the size of the U.S. aviation industry (it is the largest in the world), the variety of operations in the U.S. aviation community (air carrier, regional airlines, business aviation, personal aviation, military aviation), and the realities of U.S. society, such as its proclivity for litigiousness.

FAA has established that three key principles must be followed in restructuring the ATC system toward a government-controlled private corporation:

1. The need to upgrade equipment and systems must be recognized as urgent and acted upon.

2. The organization must have the ability to raise capital through private markets and through the Treasury.

3. The organization must have the ability to attract the highest quality managers and staff.(25)

It has been noted that other high-tech services, such as utilities, possess the ability to raise capital in the financial markets, and that ability has proven to be critical to the success of their operations.(26)


Current estimates of total annual expenses for the proposed USATS corporation are $6.26 billion, allocated at $2.84 billion (45.4 percent) for air carriers, $2.26 billion (36.1 percent) for general aviation, and $1.16 billion (18.5 percent) for air taxi/commuter operations.(27)

Military aviation accounts for approximately 13 percent of all hours flown in the U.S. This amount might indicate the need for some $1 billion in additional funding to accommodate military activity. The U.S. General Accounting Office (GAO) notes, however, that the traditional absence of long-range airspace planning by the military, and the failure to share what planning information is available with the FAA and state governments, makes it difficult to project future resource requirements for supporting military aviation operations.

Further, long-range weapons systems and higher speeds associated with new military aircraft result in the need for disproportionate amounts of airspace for training maneuvers, including high-speed maneuvers at all altitudes, extremely low level operations, night flying, and supersonic flight.

Military airspace planning functions now coming on line as a result of GAO recommendations will make it more practical than in the past to estimate the amount of resources needed to accommodate the military. Military funding for the proposed USATS corporation has been recommended on the basis of direct payment from each branch.(28)

If the USATS proposal is approved, 81.5 percent of the 10 percent ticket tax will be given to the corporation; the remaining 18.5 percent will be designated for the Airport and Airway Trust Fund. USATS will also receive 80 percent of the 6.25 percent cargo waybill tax and 80 percent of the $6 international departure tax currently levied on all international departures. General aviation will continue to pay $300 million annually from fuel taxes. All taxes will be converted to fees to effect removal of the corporation from the Congressional budget approval process.(29) Revenue for USATS, then, would come from indirect payments from existing federal fuel taxes, and for commercial users, from direct user charges.(30) In addition, USATS will be able to borrow up to $15 billion from the Treasury and private lending institutions (debt financing);(31) prior ATC commitments will be funded by the Airport and Airway Trust Fund.(32)

A major element in the projected success of USATS is cost-containment, which is expected to be most significantly affected by employee compensation, pension benefits, and post-retirement health benefits. (Post-retirement benefits are commonly unfunded within a government organization's budget, and are paid from the general fund.) In some cases, such as Spain's ATC reorganization, increases in these costs led to sharp rises in user fees.(33)

The General Aviation Case

Handling of general aviation interests has been particularly interesting and important. Some industry experts originally suggested that USATS should exist as a "financially independent, autonomous organization within the Transportation Dept. and funded primarily by user fees."(34) The preference for user fees was likely based on the experience of ACNZ, British planning, and financial principles. Neither New Zealand nor Great Britain have, however, general aviation constituencies of significant size.

"General aviation" in the U.S. encompasses corporate business aviation operations, small aviation businesses (such as crop dusting, aerial photography, fire fighting, traffic reporting), individual transportation for entrepreneurs in the conduct of business, flight training, personal transportation, and recreational flying. Recreational flying comprises a very small portion of overall general aviation operations. Collectively, general aviation accounts for more than 61 percent of all aircraft hours flown annually in the U.S., more than 36 percent of all aircraft miles flown, over 78 percent of all departures, and more than 17 percent of all passengers carried.(35) It is a substantial segment of the U.S. aviation industry.

It was recognized early on, however, that the imposition of user fees for such acts as filing flight plans, obtaining weather briefings, and establishing communications with ATC control towers would lead to undesirable changes in the operations and behavior of general aviation. Ultimately, the DOT EOC recommended in its report that direct user fees be instituted only where doing so would not discourage the use of ATC services. As a result, commercial operators will contribute to USATS only in the form of direct user payments.(36)

A significant question remains, however, concerning the willingness of USATS to provide funding for services to system users, such as general aviation, whose financial contributions to the system are less than the value of the services they receive.(37)

Key Points of the USATS Proposal

Finally, the key recommendations of the EOC for forming USATS were put forward, including the following:

* Acquisition guidelines will replace regulations for procurement.

* USATS will be "off budget." Any requirement that USATS annual budgets be submitted to Congress could weaken USATS authority.

* Contractors, vendors, and suppliers will be selected on the basis of performance and capabilities, not price.

* Contractor/vendor/supplier competitions can occur as desired, but sole-sourcing is allowed as a matter of good business judgment.

* System users will be involved in establishing acquisition requirements.

* An environment supportive of flexible labor relations must be created and maintained.

* The no-strike provision will be retained.

* Owners and operators of small aircraft will be exempted from user fees, and will continue to pay for USATS through fuel taxes, now converted into indirect fees.(38)


The organizational principle is to "privatize" the air traffic control system by creating a wholly-owned not-for-profit government corporation to operate and maintain the system, to be called the U.S. Air Traffic Services Corporation (USATS). FAA's role in assuring aviation safety and security will remain unchanged.(39)

USATS will operate under the direction of an eleven-member board of directors, which will include a CEO, the Secretary of Transportation, the Secretary of Defense, four commercial airline seats, and several government and union seats. As a board member, the Secretary of Transportation will have the authority to disapprove borrowing, rates, and fees.(40) Board decisions will be reached on the basis of a simple majority. Some 38,000 ATC employees will be transferred to USATS.(41)

FAA will retain regulatory authority over USATS, and Congress will retain direct oversight of FAA's regulatory role, but will lose control of ATC's budget.(42) Figures 1 and 2 depict the general organizational structure among FAA, the Congress, DOT/DOD, and ATC, before and after implementation of USATS.

Safety is a concern among some who believe that effectiveness may be impaired as FAA officials cross from the FAA government bureaucracy to the ATC corporate bureaucracy.(43) Other safety concerns focus on the relationship between cost-control pressures and safety standards. In the case of the New Zealand example, one official expressed this concern by noting that he would hate to see an accident in which a Metroliner ran into a Cessna 172 because ACNZ didn't get an adequate return on investment in that sector. Another official may have inadvertently heightened concern over safety with his remark that "...New Zealand is not running a public service, it is running a business."(44) It is critical that priority conflicts of this type be considered and addressed in organization design. Balancing the incentives for safety and efficiency will be a major challenge in the final design of USATS.


From the tenets of public policy analysis we know that the best technical solution may not be the politically acceptable solution. In fields such as air traffic control, however, the intensity of the conflict between technology and the forces of politics may be greatest. Political concerns and parochialism cannot be permitted to compromise safety, a fact that may be the strongest underlying reason for removing functions like ATC from the public arena. Nonetheless, politicians and representatives of the user community seem prepared to dilute the effectiveness of the best possible solution in return for political advantage. For example, balanced and proportional representation on the board is important to effective functioning of the organization. Representatives of smaller users expect it to be biased in favor of large air carriers, however, and current plans do call for four of the eight at-large positions to be allocated to the airline community.(45) James Landry, ATA president, indicates, nonetheless, that airlines will withhold endorsement of USATS until more details are available on how it will be funded and governed.(46) Another factor that may cause the airlines to temper their support of the proposed concept would be the possible alienation of certain legislators who are helping airlines gain advantages in other areas, if those same legislators do not support corporatization.(47)

Some Congressmen have openly indicated their resentment to losing turf and control:

Aviation leaders in Congress object to a loss of authority over the largest portion of what is now the Federal Aviation Administration. One Congressman noted that, "Congress would have no role in the system, facilities, and costs of the traveling consumer after one year." The legislators do not deny that turf is an issue, but they contend that Congress should have a role.(48)

In addition to the committees with jurisdiction over aviation losing their turf, the plan includes the ability of USATS to issue debt, which moves USATS out of the Budget Enforcement Act. In combination with an industry-led board of directors, USATS is placed completely out of Congressional control. One Congressman openly rationalized that while he agrees with the goals of USATS supporters, he believes restructuring would be more disruptive than constructive - due to the good safety and efficiency record of ATC. The Congressman therefore supports smaller changes.(49)

Representatives of general aviation groups including the Aircraft Owner's and Pilot's Association (AOPA), the National Air Transport Association (NATA), and the National Business Aircraft Association (NBAA) expressed concern about their representation on the board of directors, and about how flights would be classified as "general aviation."(50) The NATA president raised an interesting point concerning the lack of consistency in positions held by government appointees: "[The NATA president] expressed doubt that promises made by a Congress today can be trusted to be upheld by future Congresses, in light of experience, including the broken words of FAA Administrators, DOT Secretaries, and Presidents."(51)

AOPA expressed wonder at why a system that is working so well should be changed to a government-owned corporation, "...the virtue of which is demonstrated by the U.S. Post Office." AOPA is on record as opposing corporatization.(52) This position is surprisingly inconsistent with other forward-looking positions held by AOPA and is, therefore, somewhat of a testimonial to the invoking of political strategy (withholding support) until parochial concerns are satisfied.

Equally interesting is the support for corporatization offered by the Regional Airline Association (RAA) and the Airports Council International (ACI) - based on Airport Improvement Plan (AIP) funding to remain with FAA under the USATS plan.(53)


The "corporatization" of the U.S. air traffic control system defines the formation of a public-private partnership between the federal government and the U.S. airline industry. The U.S. Air Traffic Services Corporation (USATS) began with the writings and research of industry experts who became aware of ATC system deficiencies and assessed the impact of the deficiencies against a growing air traffic system. The issue did not gain mobility, however, until it gained a broader base of support extending beyond internal industry concerns, primarily to the air traveling public (reacting to system delays) and the business community (having been made aware of the potential negative impact on commerce).

The current public debate highlights the importance of developing a public-private partnership to represent all interested parties equitably. It also highlights, however, how the attempt to gain universal appeal can dilute the effectiveness of the best technical solution. The distractions of political influence are equally capable of moving the focus away from the most important considerations. It is important to guard against these pitfalls when a public-private partnership is in the formative stages.

The importance of implementing the best technical solution for certain kinds of functions, such as air traffic control, regardless of political considerations, was shown to be a leading factor in the removal of ATC from the public sector. The same principles might be considered for application to other high-technology organizations, such as the National Aeronautics and Space Administration (NASA), to raise its ability to function at peak effectiveness. The Space Shuttle Challenger disaster, not a very distant memory, is suggested by some experts to be the result of launch pressures created by the need for additional Congressional funding.

Lessons available from the USATS public debate may be equally valuable if applied to the current health care issue before Congress. The Clinton plan seems to be pulling health care from an almost completely private arena to one of almost complete public control. The practice of medicine today is a high-technology venture. Should not health care be placed in a balanced public-private partnership as a strategy for producing the best possible results in terms of the goals sought?

The U.S. appears, in the matter of ATC, to be taking an unusual back seat to other countries, particularly smaller ones, in developing and realizing the benefits of privatizing ATC. Those experiences, particularly that of New Zealand, dramatically demonstrate the value of removing a high-technology operation from the constraints and influences of the public sector.

An element of the USATS approach that has been shown to require careful attention is the matter of maintaining high safety standards while functioning between government and corporate bureaucracies, and while endeavoring to maintain cost containment. This highlights an important principle in forming public-private partnerships: A comprehensive view of trade-offs must be maintained as various elements of the partnership are altered to serve conflicting priorities.

Finally, as suggested by Stone,(54) the most effective and lasting mobilizing partnerships are those based on informal relationships in which trust has grown over time. At the federal level, where presidents, cabinet officials, and agency and administrative heads are transient, informal relationships cannot be formed, and the formal (bureaucratic) relationships that exist tend to erode the foundation of public-private partnerships, as a result of policy inconsistencies among different administrations.

With regard to this final matter, it may be advisable to reconsider the nature of appointments to the eleven-member USATS board of directors. At the present time, USATS plans call for a number of key board members to be presidential appointees, such as the Secretaries of Transportation and Defense. The Secretary of Transportation will hold the single greatest concentration of power in peacetime (control of capital funding). Whereas political appointees may be represented on the board as necessary to effect oversight and the functional interface between public and private sectors, voting power and control should be held exclusively by those members completely outside of the political process. A lasting organization can then be formed, capable of mobilizing to achieve objectives, by virtue of long-term relationships developed over time.


1 Robert W. Poole, Jr., How To Spin Off Air Traffic Control (Washington, D.C.: The Reason Foundation, 1993), p. 10.

2 Poole, p. 11.

3 Robert W. Moorman, "Air Traffic Control: U.S. Restructuring" Air Transport World July 1994, p. 53.

4 Poole, p. 3.

5 Poole, p. 3.

6 Edward H. Phillips, "Flexible Policy Key to ATC Corporation" Aviation Week & Space Technology May 16, 1994, p. 36.

7 Poole, p. 3-4.

8 Phillips, "Flexible Policy Key..." p. 36.

9 Moorman, p. 53.

10 Edward H. Phillips, "Hinson Says Privatizing ATC Will Spur Growth" Aviation Week & Space Technology January 31, 1994, p. 34.

11 Bruce D. Nordwall, "Privatization May Speed ATC Systems Acquisitions" Aviation Week & Space Technology May 16, 1994, p. 49.

12 Gabriel Roth, Proceedings of the Academy of Political Science, 1987, Vol. 36, Issue 3, p. 74-82.

13 Poole, p. 4.

14 United States General Accounting Office, AVIATION RESEARCH: Perspectives on FAA's Efforts to Develop New Technology, by Gerald L. Dillingham, GAO/T-RCED-95-193, May 16, 1995, p. 8.

15 United States General Accounting Office, AVIATION RESEARCH: Perspectives on FAA's Efforts to Develop New Technology, by Gerald L. Dillingham, GAO/T-RCED-95-193, May 16, 1995, p. 7.

16 Phillips, "Hinson Says Privatizing..." p. 34.

17 Aviation Week & Space Technology "ATC Plan May Benefit Future Airline Safety" July 4, 1994, p. 38.

18 Aviation Week & Space Technology "Access To Capital Essential For Privatized ATC System" January 31, 1994, p. 34.

19 Ed Hazelwood, "Global Support Grows For Private ATC Companies" Aviation Week & Space Technology May 16, 1994, p. 45.

20 Michael Mecham, "Airways Corp. Leads Way In ATC Commercialization" Aviation Week & Space Technology May 16, 1994, p. 42.

21 Leonard Hill, "Doing It Right" Air Transport World July 1994, p. 48.

22 Poole, p. 6-7.

23 Poole, p. 7-8.

24 Poole, p. 8.

25 Aviation Week & Space Technology "ATC Plan May Benefit..." p. 38.

26 Poole, p. 5.

27 David Collogan, "General Aviation Groups Skeptical of Corporate ATC Aviation Week & Space Technology May 16 1994, p. 41.

28 United States General Accounting Office, MILITARY AIRSPACE: Better Planning is Needed to Meet Future Requirements GAO/NSIAD-87-93, 1987.

29 Moorman, p. 53.

30 Phil Boyer, "ATC Inc. - Round One" AOPA Pilot June 2, 1994, p. 2.

31 Moorman, p. 53.

32 United States General Accounting Office, AIR TRAFFIC CONTROL: Analysis of a Proposal to Create a Government Corporation, by Kenneth M. Mead, GAO/T-RCED-95-139, May 15, 1995, p. 3.

33 United States General Accounting Office, AIR TRAFFIC CONTROL: Analysis of a Proposal to Create a Government Corporation, by Kenneth M. Mead, GAO/T-RCED-95-139, May 15, 1995, p. 7.

34 Phillips, "Flexible Policy Key..." p. 36.

35 AOPA Pilot "AOPA's 1994 AVIATION FACT CARD" January 1994, Insert.

36 Collogan, p. 40.

37 United States General Accounting Office, AIR TRAFFIC CONTROL: Analysis of a Proposal to Create a Government Corporation, by Kenneth M. Mead, GAO/T-RCED-95-139, May 15, 1995, p. 14-17.

38 Edward H. Phillips, "Corporate ATC Plan Awaits Assessment" Aviation Week & Space Technology May 9, 1994, p. 35.

39 Boyer, p. 2.

40 Phillips, "Corporate ATC Plan..." p. 35.

41 Moorman, p. 53.

42 Moorman, p. 53.

43 Collogan, p. 41.

44 Mecham, p. 45.

45 Collogan, p. 41.

46 Avery Vise, "ATC's Future Hostage to Turf-Sensitive Congress" Aviation Week & Space Technology May 16, 1994, p. 39.

47 Vise, p. 39.

48 Vise, p. 37.

49 Vise, p. 39.

50 Collogan, p. 40.

51 Collogan, p. 41.

52 Boyer, p. 2.

53 Moorman, p. 53.

54 Clarence N. Stone, Regime Politics: Governing Atlanta (Kansas: University Press of Kansas, 1989), p. 4-6.

Mr. Charles is director, Eastern Region Marketing, Collins Commercial Avionics Division, Rockwell International Corporation, Atlanta, Georgia 30337; Mr. Newman is professor in the School of Public Administration and Urban Studies, College of Public and Urban Affairs, Georgia State University, Atlanta, Georgia 30303.
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Author:Charles, Richard A.; Newman, Harvey K.
Publication:Transportation Journal
Date:Sep 22, 1995
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