Reason Foundation Study Details 'How To Ease Fiscal Crisis And
Fund Modernization Efforts'
E-I-C Note:
One of ANN's most respected news-spies leaked us an early copy of a
statement from the Reason Foundation announcing their apparent
advocacy of a user fee scenario for future ATC funding issues. As a
result, we also have a full copy of the report due to be released
less than two days hence. What we know of the report is quite
worrisome and we are running this ASAP in order to get the word out
as far and wide as possible -- and before various bureaucratic
PR machines start spinning this thing the way they'd like.
Reason Foundation Statement
The nation’s air
traffic control system is short $8 billion in the near term, and as
much as $25 billion longer-term. As a result, desperately needed
modernization efforts to double air traffic capacity may be put on
hold. To ensure the overburdened system can meet growing capacity
needs and fund technological improvements, air traffic control,
currently funded by a declining tax base, should be shifted to a
system that directly charges users, i.e. aircraft owners, according
to a new Reason Foundation study.
The plunge in air fares, thanks to competition from low-cost
carriers like JetBlue and Southwest, has caused a sharp decline in
the ticket tax revenues that currently fund the strained air
traffic control system. The Reason Foundation study demonstrates
why these decreases are likely to continue and recommends making
the Federal Aviation Administration’s Air Traffic
Organization (ATO) a self-supporting agency that charges aviation
users for its services. The shift would remove the uncertainty and
fiscal constraints of the present system, in which air traffic
control is part of the federal budget process. It would provide a
predictable revenue stream that keeps pace with aviation growth,
enabling revenue bonds to be issued to pay for the new technology
needed to double the system’s capacity.
“In one way or another, FAA must be given the ability to do
integrated capital and expense budgeting if it is to support
additional capacity while lowering costs and improving service.
Current procedures, which hold the agency hostage to the annual
governmental budgeting and appropriating processes, do not work and
never will work,” stated Robert L. Crandall, the retired
chairman of AMR and American Airlines who supports the Reason plan.
“To get the improved results we all want, both the
Administration and Congress must recognize that the FAA is a very
big, very complex business, which must have the ability to lay out
multi-year capital and operating plans which reinforce one another
and can be implemented without political interference.”
“The Air Traffic Organization needs to be taken out of the
federal budget process and users who pay should have say in what is
spent and how it is spent,” said Vaughn Cordle, CEO of
AirlinesForecast and co-author of the Reason study. “Right
now the FAA’s customer is not the users who pay the costs of
the air traffic control system, but the congressional committees
that hold and relish political power. Politics trumps potential
market-responsive efficiency and the tax payer and users of the
system pay significantly more than they should.”
“Congress created the Air Traffic Organization and wants it
to operate like a business,” said study co-author Robert
Poole, director of transportation at Reason. “But they failed
to give it two necessary tools: a board of directors representing
its customers and its own bondable revenue source.” Both the
board and air traffic user fees were recommended by a 1997
commission that proposed creation of the ATO. It was headed by
former Congressman Norman Y. Mineta, now the secretary of
transportation. “The Mineta Commission got it right eight
years ago,” Poole said. “But Congress needs to
implement the rest of what it recommended.”
The Reason study
explains several benefits of a user-funded air traffic control
system, drawing on the Mineta Commission’s report,
including:
- A self-sufficient air traffic operation with funding levels
driven by the needs of customers and actual levels of aviation
activity, instead of whatever the federal budget process can eke
out each year;
- A reliable revenue stream, against which long-term bonds for
much-needed modernization could be issued;
- Investments in modernization that would actually benefit the
users, improving the system’s productivity;
- Economic incentives for owners to equip their planes with new
technologies, improving efficiency;
- More equitable distribution of costs among users;
- A customer-focused corporate culture that gives users what they
want and need in terms of air traffic control services.
Why would airlines support a new system? A customer-focused
system would be more likely to expand capacity and reduce unit
costs than the present one that is accountable to congressional
committees, instead of aviation customers. And the transition to
the bond funding of modernization would save significant money
during the first decade of transition. The Reason also study points
out that the U.S. is the only major country that does not charge
air traffic fees to the operators of aircraft and shows how 180
other countries determine their air traffic user fees.
ANN's Daily Aero-Term (11.28.25): Unmanned Aircraft System (UAS)
See All