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Reason Foundation

Air Traffic Control Reform Newsletter #18

Topics include: ATC modernization in peril, coping with airline changes, the good and bad in the controller contract extension, and standardizing definitions for safety measures.

Robert Poole
February 1, 2004

In this issue:

The Perils of the Federal Budget Process

This morning's announcement that the Bush Administration is proposing a $443 million (nearly 14%) cut in investment in ATC modernization is chilling. To be sure, as DOT Inspector General Ken Mead has tirelessly documented, the FAA has done a miserable job of managing large new technology programs and needs drastic reform. But to impose such a cut now, just when the new Air Traffic Organization (ATO) is finally getting off the ground with the best chance yet of making real change, seems terribly short-sighted. And while Congress may restore some or all of the cuts (albeit after much wrangling), this is no way to run a high-tech service business.

There is one fundamental reason why the ATO is subject to this kind of interference. Instead of being funded directly by its users - the way commercialized ATC providers are in more than two dozen other countries - the ATO must still go hat in hand every year to Congress to plead for its money. DOT leadership understands the case for direct user funding of air traffic control. Indeed, the report that created the blueprint for what became the ATO - the National Civil Aviation Review Commission in 1997 - called for shifting to a system of ATC fees and charges precisely to avoid such budgetary shenanigans. And the head of that commission was none other than now-DOT Secretary Norm Mineta. Instead of cutting modernization funding, the Administration should be modernizing the ATC funding system.


Dynamic Airline Industry: Can ATC Cope?

A string of pre-Christmas news stories all sang the same tune. "The massive realignment of the airline industry has the FAA pondering its future deployment of resources," said one. Thanks to cutbacks at struggling major airlines, traffic has plunged 23% at Boston Logan compared with 2000, 31% at Washington Dulles, and 22% at San Francisco. But airports favored by low-fare carriers - BWI, Midway, Ft. Lauderdale - are booming. A Reuters story noted that "regulators are concerned that airlines are again overscheduling flights." The FAA's response? "We are watching [the low-cost carriers] carefully," said the FAA's Steven Brown. "It doesn't shake the whole tree. But if they continue to grow their market-share with their strategy of high-frequency, shuttle-type service, we could get to a point where we would have to change our response."

Brown is Vice President for ATC operations in the FAA's new Air Traffic Organization. His boss, Russ Chew, has promised to remake the operation into one that figures out what its customers need and gives it to them - not one that gets upset when the marketplace does what markets do, which is to change unpredictably. That means making the ATO far more flexible than FAA has been in allocating its resources, especially its controllers, so they are located where the action is, not where it used to be (see next story).

Chicago is one of the focal points of rising congestion, with a large expansion of regional jets at O'Hare (from 20% to 41% of all traffic) and continued growth of low-fare operations at nearby Midway. Operational errors have soared in the past year, and controllers union NATCA correctly notes that the Chicago TRACON is under-staffed. Of the 98 controllers, only 75 are full-performance level controllers who can work unsupervised. The last time that facility had a full complement was after a significant incentive pay program in the late 1990s — a program that no longer exists.

But a customer-focused ATC provider also needs to invest in better technology that can expand the effective capacity of congested airports like O'Hare and Midway. Both could be among the first to offer more precise landing approaches using the RNP (Required Navigational Performance) techniques pioneered several years ago in Alaska. ATA and Southwest want to introduce a new RNP approach to Midway, which would reduce conflicts with O'Hare traffic, expanding capacity for both.

To be sure, in the very short term, "over-scheduling" can exist at a very busy airport like O'Hare, especially when landing access is not priced. But that's a signal that the customers need more capacity. Over the longer term, that's what a customer-driven ATC organization is supposed to provide.


New Controller Contract a Mixed Bag

Both the NATCA and the FAA celebrated the negotiated two-year extension of NATCA's contract. Which naturally made me suspicious. Sure enough, there is less there than meets the eye — though it's not all bad.

The best part is that the FAA managed to get rid of the staffing agreement that required the agency to maintain 15,000 controllers, regardless of the level of demand. Ever since 9/11, global air traffic has been in a slump, and most ATC providers have cut back, to better match resources to activity, and costs to revenues. But not the FAA, which till now had been contractually bound to keep on paying. And that's despite the fact that we are still seeing declines in traffic at some of our biggest airports. For the first nine months of 2003, total air traffic at Pittsburgh was down 18%, at St. Louis over 9%, at Miami off 6.5%, at Boston 5.5%. Meanwhile, NATCA's John Carr was telling everyone in sight about controller shortages. So at least now FAA will be able to make cuts where needed, and transfer controllers to where flight activity is actually increasing (such as Chicago).

But the part of the contract that got the most publicity — pay for performance — is pretty much a joke. A miniscule portion of the payroll budget (0.8%) is set aside for so-called Superior Contribution Increase. If the controller workforce overall achieves a 3% reduction in operational errors this year, they will get 0.2% more; another 0.2% will be paid if there is a 9.6% decrease in runway incursions; and another 0.4% for meeting landing-rate and arrival time goals. So a controller making the average $100,000 a year stands to get an additional $800 if all four goals are met. And if they're not? Then the money gets distributed to good ATC facilities to reward them and to under-performing ones to help them do better. (As Dave Barry says, I'm not making this up!)

At least the agency did not succeed in linking individual raises to individual performance on goals like reduced operational errors. If you wanted to incentivize not-reporting errors, handing out money for not having (recorded) errors would certainly do the trick.


Safety Measures Need Standard Definitions

Speaking of runway incursions and operational errors, in December the DOT's Inspector General reported that ATC operational errors were up 12% last year (from 1,061 to 1,186), with the most serious category up by 25% (from 44 in 2002 to 55 in 2003). On the other hand, runway incursions declined for the second year in a row, from 339 in 2002 to 324 in 2003. Both remain on the IG's list of the FAA's top management challenges. And IG Ken Mead repeated his call for the FAA to change the way it defines serious operational errors.

As it happens, those terms are defined differently in different countries. In last year's battle over ATC "privatization," NATCA made comparisons of U.S. "operational error" rates with Canada's "operational irregularities." But that comparison was meaningless, since the Canadian term encompasses far more things. Similarly, the definitions of "near-mid-air collisions" in this country and "airprox" incidents in the U.K. are not the same. And it turns out there are 20 or more different definitions of "runway incursions" in various countries.

This definitional chaos is a problem for at least two reasons. First, as just noted, it makes comparisons among countries meaningless, when valid comparisons would be very useful for helping to identify and correct poor performance in an area where lives are at stake. Second, consistent definitions would make it possible to assemble global databases on errors and incidents. That's important because, fortunately, serious aviation errors are rare, statistically. Therefore, the larger the base of data analysts can sift through, the easier it is to spot trends and figure out possible contributing factors.

On this score, there is some good news to report. The International Civil Aviation Organization has a project under way to create a standardized set of definitions for runway incursions, with active support from both FAA and Eurocontrol. But no comparable effort exists for operational errors. Until both terms are consistently defined worldwide, air safety will suffer. And arguments about whose ATC system is safer will be so much hot air.


Outsourcing Alive and Well at FAA

Despite last year's knock-down, drag-out battle over whether various ATC functions are "inherently governmental" (and hence ineligible to be performed, under contract, by private firms), competitive contracting seems to be alive and well at FAA in 2004, as evidenced by two January developments.

The bigger item is the official start of a public-private competition (under OMB Circular A-76, the government-wide outsourcing rules recently revamped by the Bush administration) for the operation of Flight Service Stations. Costing taxpayers a half billion dollars a year, the network of FSSs provide private pilots with flight-plan filing and other services such as weather briefings. Mired in bureaucracy and using obsolete technology, the FSS program is widely recognized as costly and inefficient. Even the large private pilot organization, AOPA, which normally opposes anything that can be termed "privatization," has supported putting this function out to bid.

The big surprise is not that 10 companies had responded by the January 15 deadline for initial applications (including Raytheon, Lockheed Martin, Unisys, and Computer Sciences Corp.). Rather, it was that one of them - Harris Corp. - teamed up with the FSS employees to present a joint bid. There are provisions in the A-76 procedure for employees to bid against outside companies, by proposing a restructured operation known as a "most efficient organization" or MEO. But it's unusual for such bids to be submitted jointly with a private firm. Evidently, the employees and their union (NAATS) figured that the credibility of their bid would be enhanced by embracing the private sector. (Such teaming has been seen occasionally in municipal outsourcing. In the 1990s the employees of the Indianapolis wastewater system teamed with United Water Co. and won the contract. And in San Diego, a joint bid by Rural Metro and county firefighters won the emergency medical services contract.) The FSS contact is expected to be awarded early in 2005.

The other outsourcing news also involves services to private pilots. Years ago the FAA decided to outsource a package of FSS-type services for pilots who own personal computers. Called DUATS (direct user access terminal system), it is operated by two private contractors and is very popular with pilots. Last year the FAA had considered taking this service back in-house, as part of a still-being-implemented FSS technology upgrade called OASIS. But AOPA argued that the DUATS contractors are providing a higher level of service than what was contemplated by the OASIS project. So AOPA cheered when, late in January, the FAA announced that this service will continue to be outsourced.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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