Interview transcript

Terry Gerton You have a recent article that warns about air traffic chaos, especially related to the shutdown that we saw in November. And once again, air traffic control was sort of the straw that broke the camel’s back. What were the key pain points that you saw?

Chris Edwards Well, when the federal government doesn’t decide on its annual budget and the appropriations process, sometimes we get a government shutdown, as most of your listeners know. And sometimes when shutdowns happen, it affects the air traffic control system because the air-traffic control system is run as part of the Department of Transportation, as kind of a regular bureaucracy. And so we’ve seen this sorts of interruptions on air traffic and control in previous shutdowns 2013 and 2018. And the recent one where the government shut down for a month and millions of American airline passengers were delayed and had their flights canceled.

Terry Gerton The Department of Transportation is now offering $10,000 bonuses to air traffic controllers who had perfect attendance. Is pay the key issue here?

Chris Edwards No, I think the problem is that the funding stream of our air traffic control system is the federal government budget. And I’ve written extensively about how other countries such as Canada and the U.K. Have taken their air traffic controls system and moved it out of the regular government budget and given it a dedicated funding stream. So in Canada, they set up a non-profit corporation. They put their air traffic controllers in there, and it’s funded separately by fees on airlines and airport landings. So the stream is insulated from political battles that may happen. Back in 2016, the House Transportation Committee here in the United States passed out a bill of, out a committee that would sort of set up a Canadian-style system where we’d set a non-profit corporate entity. We’d put the air traffic control in there, and we would fund that system separately from the regular government budget.

Terry Gerton That sounds similar to the way Amtrak is run, and they’ve certainly had their funding challenges there. How would it work differently for air traffic control?

Chris Edwards So Amtrak is still reliant on the federal government for money for capital investment. The way the Canadians and the British have set up their systems is that they are completely independently funded for both the operating and the capital purposes. So the Canadian and British air traffic control systems are not subsidized, which is the way I think it should be because aviation is an industry like any other. There’s no reason why users shouldn’t pay for services. Air traffic control is a service and I think that the cost should ultimately land on people who use the air traffic system.

Terry Gerton You mentioned capital investment there. Certainly, the FAA and Department of Transportation have spent, let’s say, tens of billions of dollars trying to modernize the next-gen air traffic control. And they haven’t been very successful yet. All of those funds would be passed on to passengers, right, airport passengers? How would we get enough capital investment to really move forward in those critical functionalities?

Chris Edwards So when you move the system to the private sector, like on the non-profit system, like in Canada, the system, of course, raises money through fees, as we talked about, but can also issue bonds to raise money for capital, just like private companies do. And that system has worked really well in Canada and Britain. In fact, both Canada and Britain, in some ways, their technology is more advanced than ours on air traffic control. You touched on the next gen system. As some listeners may know, the Government Accountability Office, the inspector general for the DOT has been complaining about FAA’s poor performance on its capital upgrades for years and years in fact for over two decades now there’s a long series of government reports criticizing the FAA For the excessive bureaucracy or the risk aversion. You know, they’re not getting the job done in terms of adding the advanced technology we need in our air traffic control system.

Terry Gerton I’m speaking with Chris Edwards. He occupies the Kiltz Family Chair in Fiscal Studies at the Cato Institute. I wanna explore a couple of other things about privatization with you because you’ve also made the argument that the TSA screening function should be moved out of government funding. Talk us through that logic.

Chris Edwards So the logic there again is, is partly that, I’d like to get the politicians and their micromanagement out of some of these functions where we can. I mean, to go back to the air traffic controllers for a minute, the Washington Post had a nice story a few weeks ago about how we only have one training academy for air traffic, controllers, and we have a short and a shortage now on a lot of air traffic control facilities. This is Partly because Congress hasn’t allowed the creation of an additional training academy for traffic controllers it seems to be that’s the sort of micro that the problematic micromanagement you get when congress tries to control these sort of functions. With airport screening the idea is you decentralize the screening to individual airports, you have the Department of Transportation do safety oversight like they like they do now but the actual screening would be controlled by airports. That would give airports more flexibility to meet the sort of individual demands and unique demands the airports face. And we wouldn’t get sort of system-wide problems. We wouldn’t these system- wide mistakes. We’d get different experiences in the airports. The airports could learn from each other. The way Canada does it is they contract out their services to big expert security agencies. And many European countries do this too. The British do this. And that system works well also.

Terry Gerton What does the airline industry have to say about these proposals to privatize?

Chris Edwards Well, back in 2016, the airlines, all of them, except Delta actually supported the privatization plan passed through the House Transportation Committee. So Delta was the outlier there. Most airlines were on board with privatization back then. I think that the airlines should rethink now that we’ve had another government shutdown. I worry that the budget battles in Washington are going to get bigger and nastier. Unfortunately, in coming years, because deficits and debt are going to keep growing, there’s going to be a lot of pressure to cut spending. So I think we need to — the airlines, the air traffic controllers union and others, the other stakeholders need to — rethink the funding for air traffic control because I think the budget battles are going to get worse in Washington.

Terry Gerton So if the airlines support privatization, what are the biggest political obstacles that you see that are keeping it from happening?

Chris Edwards Well, unfortunately in the American political system, you only sort of need, you know, one sort of veto point and a whole reform plan can go down. So back in 2016, the House Transportation Committee passes the reform bill through, but the Senate Transportation Committee wasn’t too excited about it. Back then President Trump in his first term supported the plan. His transportation secretary, Elaine Chao, supported it. And the air traffic controllers union supported this privatization back in 2016 as well because, again, they’re concerned about stable funding. And they looked at the Canadian system and they could see that it works very well. Indeed, back then in 2016, members of Congress went up to Canada, looked at this system and so did our air traffic controllers union. They all thought it worked very well and looked good, and that was sort of the basis for that reform bill. Today, I think we’ve had another government shutdown. There was very damaging. Millions of passengers were inconvenienced. The economy lost money from the shutdown. I think this is time, it’s time now for Congress to rethink the structure of our air traffic control system.

Terry Gerton Air traffic control is really a global industry. I mean, you get on a plane in Dallas and you fly to Frankfurt or in Seattle and you flight to Beijing. What are our international partners in air traffic control saying about the U.S. System and how they would like it to be improved?

Chris Edwards Well, the U.S. System, you know, works well. I don’t think we’re at the leading edge of technology anymore, but it does work well. We have a giant system, but I worry about the future. The skies are getting more crowded all the time. Aviation demand is going up. The skies you’re getting more congested. Our technology is falling behind. We hear that from the GAO consistently year after year. So we’re not at the crunch point yet, but I worry. We’ve got to invest more and move that technology ahead to make progress. I mean, just to give you one example on that, the U.K. And Canada are moving ahead with what are called remote towers. These are, rather than the traditional air towers you see at airports where you have the controllers up top looking at the airfields. Visually the new idea is you put a bunch of sort of fancy technology and cameras with different sort of visual wavelengths looking at airports and you have the controllers looking at the runways on big screens with all kinds of advanced technology. These systems save money and they’re safer. And London City Airport now has a system like this in place and Canada’s moving ahead with this as well. That’s the type of technology where the FAA has been really hesitant. I think because it’s a government agency, frankly, it’s a little too risk-averse. So I think by opening up air traffic control, we get more entrepreneurs in and more innovation. And just the last point on that is, we’ve seen this with NASA or the space agency, that by opening a little bit and letting entrepreneurs like Elon Musk and Jeff Bezos get in there with new ideas, new ways of doing things, I think it’s been very beneficial for America’s space agency. So I like that same sort of innovation in air traffic control.

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