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Reason Foundation

Air Traffic Control Reform Newsletter #21

Topics include: controller shortages, ATC procurement reform in Australia, identifying ATO's "customers," and consolidating flight service stations.

Robert Poole
September 1, 2004

In this issue:

A Bottom-Up Perspective on Controller Shortages

All summer long, controllers union NATCA has been wooing reporters and getting ink on its contention that the ATC system is faced with an impending controller shortage. I must have seen a dozen newspaper stories, each from a different part of the country, in which a sympathetic reporter presented NATCA's case, practically verbatim.

To be sure, as the DOT Inspector General's Office has pointed out, there is a looming retirement bulge, since so many controllers were hired at the same time following the 1981 strike. And FAA has not been on top of the situation, in terms of having a good quantitative handle on likely attrition rates at various facilities. The FAA is now looking into raising the mandatory retirement age from the current 56, and has promised to develop a plan to address the retirement bulge by the end of the year.

But in formulating such a plan, it would be a mistake to begin with the status quo as the baseline. Because it appears that many ATC facilities — not the busiest TRACONs and Centers but numerous lower-activity facilities — are currently overstaffed. At least that is the contention of a controller whose anonymous letter has been heating up the Internet since it was posted on Avweb September 9th. Under the headline, "The 'REAL' Story on the Controller Shortage?" the detailed letter from "Jane Doe" painted a picture of controllers who average just four hours a day "on position," abuse break time and sick leave, and are over-compensated for the work they actually do. You can read the whole letter here: www.avweb/com/eletter/archives/avflash/286-full.html#188087.

At first, NATCA declined to comment, but letters poured in from current and retired controllers and managers, some taking issue with Jane Doe but others agreeing that her portrayal is true of a great many facilities (www.avweb.com/news/avmail/188104-1.html). After that much exposure, NATCA president John Carr responded, not only disputing Doe's points but also ripping into FAA spokesman Greg Martin, who'd told Avweb that the letter contained "troubling charges" and added that many of the more general observations are well-known to the agency.

To the extent that some FAA facilities (e.g., Oakland Center) are understaffed and others overstaffed, the obvious response of a business would be to move people from the overstaffed ones to the understaffed ones. FAA used to be able to do that. But under former Administrator Jane Garvey, it bargained away that right. As part of addressing the retirement bulge, it's essential that the new Air Traffic Organization get it back.

In a recent interview in Aviation Week (Aug. 16, 2004), ATO head Russ Chew opined that his greatest opportunities for efficiency gains are at headquarters — in administrative overhead, human resources, information technology, etc. I'm sure FAA overhead is too high, but with the vast majority of payroll cost being controllers in the field, getting a full day's work from each of them ought to be a priority.


ATC Procurement Reform, the Australian Way

Defenders of the U.S. ATC status quo continue to imagine that ours is the world's most advanced system, when the reality has changed dramatically over the past decade. This shows up most clearly when the issue under discussion is modernization — the procurement of advanced technology. Year after year the DOT Inspector General and the Government Accountability Office document major technology procurements that are many years late and hundreds of millions, if not billions, over budget. And now that FAA's modernization budget is being squeezed, it's all the more critical that we think smarter about how to procure more-advanced hardware and software.

That's why I really paid attention when an Australian ATC expert who'd been involved in their across-the-board modernization in the 1990s contacted me in response to the previous issue of this newsletter. In his view, the key to effective technology procurement is this: Get the requirements correct in the first place, produce a strong specification, and freeze it for the duration of the procurement, with strong incentives/penalties for performance. Sounds simple, but it's night and day different from how FAA does things. Let me quote some excerpts from my informant's communication:

"If the requirements are poorly written or allowed to creep, then costs and schedule suffer... TAAATS provided total replacement of the entire national ATM system. The only things not replaced were the existing microwave radars, regional towers' systems, and major airport control tower buildings. The project included construction and equipping of two brand new en-route centers, data transfer to those centers, training (including two simulators), data fusion, ADS, CPDLC, PDC, displays, communications, airspace redesign... The system provides terminal, enroute, oceanic, and FSS functions. The system was specified in the early '90s, opened up once to include the FANS 1 elements, and then firmly closed. During the project, a number of 'new' functionalities arrived on the scene but were not included in TAAATS. The answer to any request to change the specification was, 'after delivery, as an operational modification, assuming the business case holds.' The system was delivered, to schedule, well within budget and has subsequently been successfully modified to include such things as ADS-B, multilateration, flow metering, etc."

If the new Air Traffic Organization is ever to function as a business, as COO Russ Chew intends, it has a lot to learn from this type of procurement policy.


Who's the Customer for ATC Services?

Congress hasn't quite figured out what it did by following the recommendations of the Mineta Commission and creating the Air Traffic Organization. The idea was to create a "performance-based organization" that would run the ATC system like a business. After more than two years of search efforts, last year the FAA finally found someone who was up to the challenge of running the ATO. And so COO Russ Chew has taken on the task of transforming a bureaucracy into a business. He talks the talk, especially telling his people that they need to focus on serving the needs of their customers.

Only... who's still calling the shots about what new technologies get purchased? If ATC were being run like a business, you'd think it would be Russ Chew and his customers, particularly the airlines who pay most of the aviation excise taxes. But then take a look at a recent news report on FAA's budget for next year. On July 22, the House Appropriations Committee approved a $14 billion FAA budget for FY2005. But in so doing, the Committee imposed significant reductions in what FAA had proposed for Air Traffic Management, FAA Telecommunications Infrastructure, TRACON facilities improvements, ASR-11s, and ITWS, STARS, and WAAS. But it increased funds for a whole raft of other programs (such as Loran-C, Transponder Landing System, Approach Lighting System Improvement Program, and on and on).

In other words, instead of leaving the ATC professionals at the new ATO to get on with the job of making their best professional judgments, the members of this committee are micro-managing like always, just as if the ATO had never been voted into existence. How are you supposed to run a business like that?

A student of organizational theory would observe what's taking place here and reach an important conclusion. The ATO's "customers" are not the airlines and the GA pilots who make use of its services. A customer is the one who provides the organization's funding, and whom the organization must try to satisfy. Sad to say, in functional terms, the ATO's actual customers are the members of those congressional committees. Until that changes, it's not going to be much of a business.


Honesty vs. Politics on Flight Service Stations

Taking a leaf from fellow union NATCA's book, the union representing employees of the FAA's network of Automated Flight Service Stations, NAATS, has been conducting a propaganda campaign against the possible outsourcing of these facilities. They are briefing naive reporters, writing letters to the editor, and buttonholing politicians with the standard "would you trust your life to the lowest bidder" arguments. Their latest trophy win was South Dakota Gov. Mike Rounds, who repeated back these arguments in print last month, noting also that he's a private pilot.

Apparently Gov. Rounds has not been reading AOPA Pilot, the magazine of the nation's largest private pilots' organization. In the August 2004 issue, AOPA president Phil Boyer defends the ongoing outsourcing study, being carried out by FAA under the OMB A-76 procedures for getting proposals from outside bidders. First, Boyer reminds his members that the AFSS program is costly and inefficient, mired in "obsolete 1970s computer technology." He notes the results of a member survey which found that "walk-in briefings are a thing of the past," and that with today's computer and telecommunications technology, "it is obvious that 58 AFSSs are no longer needed" (i.e., perhaps a handful of modern facilities could do the whole job).

But Boyer goes beyond that to discuss the politics of the issue. Unlike the rest of ATC, the AFSS program almost exclusively serves private pilots, and mostly light plane pilots. It costs nearly $600 million a year. Yet the total annual amount of fuel taxes paid by avgas purchasers (the type of fuel burned by most FSS users) is only $60 million. Boyer acknowledges that this "glaring discrepancy" between costs and revenues is very hard to defend. And since he cannot advocate an increase in fuel taxes (or imposition of dreaded user fees), the only answer if AFSS is to survive is to dramatically reduce its costs.

That is what the A-76 competition is all about. Technical proposals were submitted last month and cost proposals are due this month, with a contract to be awarded by next March. AFSS employees have teamed with Harris Corp. to submit an in-house, "most efficient organization" bid, as allowed under A-76. It will be interesting to see what advanced technology and facility consolidation can produce.


News Notes

German ATC Corporation Cuts Rates, May Be Privatized. Deutsche Flugsicherung (DFS), the government-owned corporation providing air traffic control in Germany, in July announced planned reductions of 32% in terminal-area charges and 16% in en-route charges, as of 2005. The reductions are possible thanks to reduced costs and increased air traffic volume. And German magazine Der Spiegel reports that the German government may privatize DFS next year, though exactly what that means (who could buy the company, whether it would continue to be run on a not-for-profit basis) remains to be seen.

NATS Finally in the Black. Reviving North Atlantic air traffic, along with the effects of cost-cutting over the past several years, have led to FY2004 being the first year in which the UK's part-privatized National Air Traffic Services operated in the black. NATS handled an all-time high of 2.1 million flights during the fiscal year, up 3.4% from the previous year.

On the Speaking Circuit. ATC reform issues will have me on the road in October and November. Here are the highlights:


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


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