Testifies Before Senate Commerce Committee On ATC Privatization

Transportation Secretary Elaine Chao testified Wednesday before the Senate Commerce Committee with a focus on President Donald Trump's proposal to privatize the nation's Air Traffic Control System.

In her prepared testimony, Chao said that the system "must be more nimble. A bulky federal government procurement apparatus does not move fast enough to keep pace with new technologies and new demands. A private non-profit entity with the flexibility and authority to make investment decisions can move much more quickly to replace old equipment and paper flight strips with the latest technology. A private entity, with an impartial board of directors, is directly responsive to the users of the National Airspace System – delivering the air traffic services that users demand, and charging for the cost of those services. ATC improvements could be made more effectively by an organization supported by its own revenue. Fees charged to users of these services will support the new entity, and any surplus revenue will be reinvested to keep the system current. This is an improvement from the today’s mix of aviation taxes that are not tied to the use of air traffic control services," Chao told the committee.

"While the U.S. remains the gold standard in aviation, the FAA understands that continued innovation and modernization are important to safety and global leadership. Shifting air traffic control out of the government, improving accountability to aviation users and adaptability in its operations are key steps to achieving these goals," she said.

"While NextGen modernization has been implemented at certain airports and facilities under current constraints, FAA’s efforts are often hampered by piecemeal government appropriations and a slow Federal procurement process. A private, nonprofit ATC co-op would be able to leverage private sector financial tools with agility and ingenuity, and accelerate advances in aviation technology. Combined with a steady, predictable revenue stream from user fees and borrowing from capital markets when necessary, the new ATC would be able to make the best modernization investment decisions to keep ATC technology up-to-date and competitive with that of our global peers."

Committee Chair Senator John Thune (R-SD) said in his prepared remarks that he is looking forward to a "robust discussion" of the proposal. "One of the key governance issues we have not yet focused on this year, but which has been discussed extensively over the last two years and commonly occurs in other parts of the world, is whether the United States should separate the air traffic service provider function from the FAA and create a non-governmental, not-for-profit corporation to do the job," Thune said.

"The FAA runs a remarkably safe operation, but outside auditors have dinged the government’s performance on delivering safety and efficiency upgrades, prompting a debate as to the best path forward to realize those benefits.    

"This week, the President used his bully pulpit to join the proponents of significant reform.  The President has challenged Congress, his administration, and aviation stakeholders to take bold action to improve our air traffic control system.

"It is hard to ignore the many independent studies and reviews that document the flaws with the current structure. I am looking forward to a robust discussion today on the merits of the reform proposals, as well as ways the Administration will seek to address concerns of key stakeholders, especially those with a rural perspective."

But the committee's ranking Democrat, Senator Bill Nelson (D-FL), said he remains steadfastly opposed to privatizing ATC, no matter what form it might take.

"We currently have the safest air traffic control system in the world.  Why risk that by handing the whole thing over to an untested, unproven entity? And why give away billions of dollars in government assets to an entity that will be governed in large part by the airlines?" Nelson said.

"Even some of my friends on the other side of the aisle have not rallied behind this proposal because they understand the potential harm to general aviation as well as to small and rural communities. A fundamental break-up of the FAA cannot advance when there are such strong divisions among aviation stakeholders and in Congress.  It just won’t happen.

"This entire discussion over ATC privatization distracts from legitimate matters that must be addressed by Congress as part of an FAA reauthorization.

"The traveling public is frustrated:

• Frustrated that they can’t check their bags or board flights with increasingly shrinking and overbooked seats without paying fees.
• Frustrated that airlines won’t design websites that clearly communicate their fees and policies.
• Frustrated that failing airline IT systems result in cancelled and delayed flights for days on end.

"This is why this year’s FAA reauthorization legislation must once again include strong consumer protections to address these growing frustrations. After all, if the airlines can’t even manage their own IT systems, how can we trust them to effectively govern a privatized ATC entity and continue current NextGen modernization efforts?

"Instead, let’s deal with real problems – like making sure passengers are treated like valued customers – not solutions in search of a problem," Nelson said.

Other topics discussed during the hearing were the integration of drones into the NAS, FAA certification standards and the Essential Air Service.

(Source: Senate Commerce Committee. Images from file)

FMI: Chao Statement, Thune Statement, Nelson Statement