King Donald’s Privatized Air Traffic Control System

My standing bet with Trumpenfuhrer-hating pilots is that I will buy them dinner if the target of their hatred is able to get even a single FAA regulation changed in 8 years.

All kinds of friends have been asking me about “President Donald J. Trump’s Principles for Reforming the U.S. Air Traffic Control System”:

the FAA’s ATC operations are currently mired within a Federal bureaucracy that hinders innovative operations and the timely introduction of new technology. In order to modernize our ATC system, the Administration supports moving the FAA’s ATC operations into a new non-governmental entity. This will enable ATC to keep pace with the accelerating rate of change in the aviation industry, including the integration of new entrants such as Unmanned Aircraft Systems and Commercial Space Transports. A more nimble ATC entity will also be able to more quickly and securely implement Next Generation (NextGen) technology, which will reduce aircraft delays and expand the availability of the National Airspace System (NAS) for all users.

The new ATC entity would grant FAA-certified users access to the NAS, subject to their participation in the system’s user fees,

America’s growing aviation system demands a new, independent, non-government organization to operate our Nation’s airspace. The new entity should have access to capital markets in order to spur capital investment, technology adoption, and innovation faster, more effectively, and securely. Over the last 20 years, more than 50 countries have already successfully transitioned their ATC operations.

Here’s where the proposal begins to go off into the realm of fantasy, in my opinion. It can cost the U.S. 5-10X as much to do anything involving the government, whether run by the government itself or run by a crony (“privatized”), compared to what other countries spend (see New Yorker, for example). We would be bankrupt if we tried to operate a huge subway system that runs every minute like they do in Moscow, for example. We spend 4X as much, as a percentage of GDP, as Singapore on health care. Any argument of the form “people in Country X can do Y” is irrelevant, in my opinion, unless the plan is to import people from Country X to run Y here in the U.S.

Two members [of the Board] should be selected from the airline list, two members should be selected from the union list, one member should be selected from the general aviation list, one member should be selected from the airport list, and two members should be selected from the Department of Transportation list. Those eight initial Board members would then select a Chief Executive Officer. Those nine Board members would then select four independent Board members.

Why does the union for air traffic controllers support this proposal? Under the current system, controllers are civil servants so it is tough for them to get paid more than $400,000 per year (the President’s salary). Under a privatized system in which they have a monopoly on labor and board seats on the monopoly entity that pays for labor, there is no limit to what controllers might get paid. It could be the $500,000 per year that stage hands can get in New York (Forbes). It could be the $1.2 million per year that controllers in Spain are able to get (previous post).

Harrison Ford spoke in Boston on Sunday (People). Regarding ATC privatization, he said “What is the problem that we’re trying to solve?” Considering all of the things that the government does, running a 1950s-style ATC system is probably one of the best. Controllers are competent, energetic, helpful, and reliable. They get a lot more than private-sector workers (as with others in the federal government), but not so much that taxes on aviation fuel and airline tickets have to be cranked up to insane levels. The 1950s-style radars are up and running most of the time.

The Trump proposal is to hand over to a government crony a monopoly on running a 1950s-style ATC system and let the crony charge whatever fees it wants. There is a hint regarding new technology, but the U.S. track record in this area is terrible. The contracts regarding the fancy new ADS-B system ($20 billion?) have completely stifled innovation according to the FAA employees with whom I’ve spoken. The contract specifies a minimum level of performance and therefore the performance is fixed at that level indefinitely (e.g., this brand-new system won’t give you weather information for airports that are farther than about 500 miles away, so the people who paid for this new system still have to keep installing and paying subscription fees for XM satellite weather).

It would be interesting to see a rethinking of ATC that used modern technology and clean-sheet engineering. One small example: Americans have paid and are paying billions of dollars for ADS-B, which streams digital information into aircraft avionics systems. Why are aircraft operators having to swap out SD cards with updated databases every 28 days? The databases contain information on airports, navigation beacons, and intersections (lat/longs) that changes at a geological pace. For airline and charter operators, the FAA and DoT requires that the work of swapping out SD cards be done by maintenance (not pilot) employees who are on random drug testing. If an aircraft is based remotely from the maintenance facility, therefore, mechanics or avionics technicians must drive out to where the aircraft lives. It might cost $5,000 per year to keep the database in a GPS (functionally the same as the GPS in your smartphone) current. Why aren’t the handful of bits that are updated streamed to aircraft either in flight via ADS-B or on the ground via LTE?

It would be interesting to see a proposal for a system that starting from the following goals:

  • separation of human-occupied aircraft from drones, including drones sold to consumers for $500
  • zero humans in the loop for en-route operations by Date X
  • zero humans in the loop for approach control by Date Y
  • zero humans in the loop for airport (tower/ground) operations by Date Z
  • only a single communications method required for in-flight operations (not VHF voice radio plus transponder plus ADS-B)

How challenging is this? There are only about 7,000 aircraft in the sky at once spread across 5 million square miles of U.S. airspace (FAA). Admittedly these tend to be clustered in certain areas, especially around the busiest airports. Nonetheless, we are not discouraged from working on self-driving cars despite the fact that a single Interstate highway might carry 7,000 cars in one hour in one direction.

So… the Trump Administration proposal doesn’t seem to address the real safety hazard that has developed over the past 10 years, i.e., drones. In fact, the proposal probably makes it worse. The organization that has the power to regulate what equipment is included in a drone sold to consumer (federal government) will become disconnected from the organization that has to deal with the potential for mid-air collisions.

[What has the FAA been busy with instead of managing the drone hazard? One example is the FAA’s huge staff devoted to hassling aircraft manufacturers and owners regarding extremely unlikely problems, e.g., forcing Bell to put an $18,000 backup attitude indicator into a VFR-only 505 helicopter, which already has two huge G1000 screens that offer attitude information. These themselves are unnecessary because under VFR the pilot looks out the window to see if the helicopter is pitched up or down. It is not legal to fly the 505 into the clouds and it would only be in exceptional situations when a pilot would refer to the extremely reliable G1000 for basic aircraft control. The old Bell Jet Ranger, which the 505 replaces, was legal to operate without any attitude indicator (“artificial horizon”). If an operator stuck a mechanical gyro in the panel the FAA required no backup to the unreliable mechanical instrument. Now that the new 505 Jet Ranger comes with a bulletproof electronic attitude indicator, a backup is required, and it can’t be the $500 backup that is available in the world of kit aircraft or portable electronics that Cessna pilots might use. (Thus does an ever-larger fraction of GDP get devoted to stuff that has no value to Americans, making GDP an even less reliable indicator of economic progress.)]

The Trump Administration proposal locks Americans into paying for a unionized labor force of 24,500 people (BLS) to do a job that, in a clean-sheet design, likely wouldn’t be done by humans at all. If the controllers are able to use privatization to boost their salaries to $300,000 per year and total comp (including pension and health care benefits) to $500,000 per year, this will be a $12 billion cost to the U.S. economy (some comparison numbers).

The Trump Administration proposal contains no metrics for how we would know whether or not the implemented privatized/cronyized system was actually better. The people will be able to declare “success” and “mission accomplished” as soon as this is spun out. Currently there is no metric for FAA success or failure, but at least they are subject to Congressional oversight if the lack of accomplishment becomes too obvious.

If the government can’t resist privatizing something related to aircraft this year, I suggest starting with aircraft certification. Due to our comparatively ponderous bureaucracy, the U.S. is at a competitive disadvantage to countries such as Switzerland and Austria where new aircraft designs can be tested and approved quickly. The FAA can turn over aircraft certification to a competing group of UL-style companies, maybe with some involvement by the insurance industry. Unlike with ATC there is no need for a “big bang” change due to the fact that the team certifying a new Boeing 787 variant need not talk to the team certifying a new helicopter.

If Congress can’t resist privatizing ATC, I suggest starting with Alaska, Hawaii, and Puerto Rico and giving those three disconnected airspaces to different organizations. There is no reason that multiple private ATC operators can’t cooperate with existing government ATC and/or each other. The FAA controllers already cooperate with privatized Canadian and governmental Mexican, Cuban, and Bahamian controllers (for example). If this goes well, let these three competing vendors start bidding for one center (out of 20) at a time within the continental U.S.

Whatever we do, it needs to be done with some high-level goals (such as the elimination of in-the-loop humans and redundant legacy communications systems) and metrics so that we can evaluate our progress against those goals. We also should be humble with respect to our repeated failures at executing projects like this and consider that government-run ATC is one of our government’s few success stories. If the goal is, as it seems, to continue running a 1950s-style system (humans primary, augmented by radar and computers), I don’t see how it can be worthwhile. If the goal is to run a system that takes advantage of modern technology, the proposal should start with “let’s redesign this from a clean sheet.”

[Comment from a friend: “Think of the last time the ATC system went down? Vs private airline scheduling and reservation systems? (Two weeks ago)?”]

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12 Comments

  1. reha gur

    June 7, 2017 @ 11:18 am

    1

    I don’t know where you get 300K salary from.

    The median pay of ATC is 122K.

    https://www.bls.gov/ooh/transportation-and-material-moving/air-traffic-controllers.htm

    The highest 10 percent earned more than $172,680. But that is probably for the NYC/Chicago/ATL airspace senior controllers.

  2. philg

    June 7, 2017 @ 11:29 am

    2

    Exactly, Reha. They are paid peanuts right now compared to the $300,000+ that they could get working for a private enterprise not subject to Congressional oversight and federal civil service pay scales. Why should a New York Approach controller vectoring Airbus A380s get paid only one third as much as a Carnegie Hall stage hand? Why should a busy American controller get paid less than half as much as his or her not-busy Spanish counterpart?

  3. superMike

    June 7, 2017 @ 1:39 pm

    3

    Why not rent out the control of some flight levels to independent operators? It doesn’t take care of the multiple-box problem, but they could run the automation and communication however they wanted it. I like the idea of privatized certification, especially for avionics.

  4. toucan sam

    June 7, 2017 @ 4:52 pm

    4

    Make ATC great again!

  5. Vince

    June 7, 2017 @ 8:28 pm

    5

    It can cost the U.S. 5-10X as much to do anything involving the government, whether run by the government itself or run by a crony (“privatized”), compared to what other countries spend

    This can’t possibly be true. The governments of the countries that we typically compare ourselves, e.g. Canada, the UK and Germany, spend something 35% – 40% of their national GDP. It’s not possible for America to spend give times as much as that.

  6. philg

    June 7, 2017 @ 10:30 pm

    6

    Vince: I didn’t mean to suggest that every governmental function was 5-10X as expensive here, but the New Yorker article that I referenced in the original post gives some examples of infrastructure spending that are, on average 5-10X what other countries spend for comparable results. There is no reason that privatized ATC couldn’t turn out to be one of those areas where we excel at spending.

    [Separately, I don’t think it makes sense to compare Germany and the U.S., for example, on aggregate spending alone. You would need to look at what the Germans actually get for their spending. They have 265 high-speed trains, for example, while the U.S. has 0.]

  7. philg

    June 7, 2017 @ 10:40 pm

    7

    http://www.canadianbusiness.com/lists-and-rankings/best-jobs/2015-air-traffic-controller/ says that a Canadian controller earns a median salary of about US$64,600 per year. So we are already spending roughly 2X per person. Canada has universal health care, so I don’t think the employer would have to be spending on top of that $64k/year for health insurance. We might get to 3X in labor costs just with health care and a more generous pension.

  8. dean

    June 8, 2017 @ 10:35 am

    8

    philg # 7, You assume that Canadian doctors, nurses and medical equipment companies somehow work for free. Not sure about tax structure in Canada but I am pretty sure that Canadian health care system is financed by employer and employee taxes.

  9. philg

    June 8, 2017 @ 9:46 pm

    9

    Dean: http://healthblog.ncpa.org/free-canadian-health-care-costs-12000-per-family/#sthash.EaZBH2hx.dpbs says that “general government revenue—not a dedicated tax—funds health care”

    So I infer from this that the controller essentially pays for his or her own health care by paying income tax on the $64,600. Nav Canada is not kicking in an additional $10,000 or $20,000 per year for a family health insurance policy, as a U.S. employer would typically do (actually be forced to do under Obamacare if they have more than 50 employees?).

  10. Joe mcguckin

    June 10, 2017 @ 11:56 am

    10

    I see 2 problems with privatizing atc.

    Most plans call for a private company that is financially self sustaning. This will pit the airlines against GA in figuring out how to charge for the system. Will charges be assessed per plane or per passenger? Airlines prefer the former, GA the latter.

    The current ATC infrastructure dates back to the 1950’s with the government having spent billions with very little to show. Procurement practices ensure that the systems are spec’d, then delivered 20 years later when they are obsolete. Besides ADS-B, the only new part of the system that has been put into operation is a bit of software that runs on windows and needs to be rebooted manually every 30 days. I read that the LA TRACON was down for a day when the windows box crashed because someone forgot to perform the preventative reboot. Why would anyone consider delivering anything as critical as ATC software on windows.

    A service as critical as ATC to public safety, we want to encourage everyone to participate. No one should fosake using the ATC system because of cost. Othwise we’ll have more disasters like Cerritos.

  11. philg

    June 10, 2017 @ 12:57 pm

    11

    Joe: You make an excellent point about everyone fighting “per plane or per passenger”. If the primary purpose of ATC is to separate traffic and thereby reduce mid-air collisions, and drones have to be included in order for this to work at all, what about an attempt to charge users of airspace/ATC according to the value of avoiding a collision? (since this is run by the government, or a crony, we don’t have to consider Econ 101 marginal cost pricing)

    So the owner of a $500 drone would pay something appropriate to avoiding the loss of $500. The owner of a $20,000 Cessna with two people on board would pay something related to the value of the aircraft plus the expected earnings of those two people. It gets tricky with Gulfstreams. Consider the $70 million G650 with Hillary Clinton on board. Would the loss of this aircraft be unbearable and something to mourn for years on Facebook? Or would the main component of the loss be the airframe value? (I am going to guess that the country would be split roughly 50/50 on this question!)

  12. Joe mcguckin

    June 10, 2017 @ 2:05 pm

    12

    I’m one of those who would argue that Hillarie’s NPV is zero. Yes, it’s a tragedy about the loss of such a nice airframe…

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