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Reason Foundation

Air Traffic Control Reform Newsletter #59

Topics include: the ATO governance problem; GAO on ATO progress; governance at Nav Canada; getting NextGen off the ground; and other news

Robert Poole
January 1, 2009

In this issue:


Facility Battles Highlight ATO Governance Problem

Two recent controversies over ATC staffing and facilities raise a much broader issue than the safety concern flogged by the related unions to a poorly informed public. In one case, the FAA's Air Traffic Organization (ATO) announced plans to shift weather forecasters from its 20 en-route centers to two central locations, in Kansas City and northern Virginia. The move is a step toward creation of the NextGen Network Enabled Weather (NNEW) program, which will coordinate real-time weather information for the entire aviation community. (An excellent article on this is "Weather Services in the NextGen Era," by Jennifer Harrington, Aviation International News, January 2009, www.ainonline.com.)

That, of course, is not how the move was portrayed by the unionized meteorologists who, understandably, don't want to move. Their news release, picked up in breathless news articles last month, stressed the loss of "real-time, face-to-face updates" at each center, and argued that even one crash due to inadequate weather information would dwarf any possible cost savings from the consolidation. Members of Congress, always ready to speak up for safety, praised a late-December FAA decision to give the National Weather Service until February 23rd to submit further recommendations about the move. At least one news story did point out that centralized weather is standard practice at Nav Canada, the commercialized air navigation services provider to our north.

The other controversy concerned the ATO's plan to "deconsolidate" the tower and TRACON at Orlando and several other locations. Controllers' union NATCA played the safety card on this one, too-despite the fact that they have on many previous occasions fought hard to prevent consolidation of towers and TRACONs. In the Orlando case, they managed to persuade 14 members of Congress from Florida to send a letter to ATO chief Hank Krakowski urging that no decision be made until Congress eventually passes the long-stalled FAA reauthorization bill. But in this case, the ATO went ahead and implemented the deconsolidation as planned on January 4th.

Let me hasten to state that I have not studied either the weather consolidation plan or the Orlando deconsolidation plan in any detail. That isn't my point. What these controversies illustrate is the flawed governance model under which the ATO is forced to operate. To be sure, the state of labor-management relationships within the ATO is not good, and working on that will, I'm sure, be a priority for the new FAA Administrator, as telegraphed repeatedly by candidate and now President Barack Obama. But assuming the best intentions on the part of ATO management, how can it have realistic negotiations over things like staffing and facilities when the union can always run to Congress to intervene?

The two controversies above may seem like small potatoes, but much more is at stake as we move to implement NextGen. As pointed out by Krakowski in an interview in the FAA Managers Association magazine, with the new paradigm of air traffic management that NextGen will bring, both the number of facilities and their staffing and supervision will likely be vastly different from today. ("FAAMA Interview, Henry P. 'Hank' Krakowski," Managing the Skies, Jan./Feb. 2009, www.faama.org)

A December AP story, based on a report by the DOT Inspector General, said that 59% of FAA's 420 staffed facilities are more than 30 years old, with the en-route centers averaging 43 years. Many are in relatively poor shape. But with NextGen on the verge of implementation, it would be the height of irresponsibility to replace all these facilities one-for-one. As Krakowski told FAAMA, "Let's fast forward a little bit to 2015 to 2025 when we start building NextGen facilities. What are they going to look like? Are we going to have 9 or 19 or even 90 facilities in the U.S.? I can't sit here and tell you now. But instead of just building facilities to replace the old facilities . . . we want to be morphing into what the NextGen approach is going to be."

As Krakowski knows full well, the commercialized air navigation service providers in Australia, Canada, Britain, Germany, etc. have already carried out large-scale facility consolidations. And under the Single European Skies initiative, there will need to be a lot more such consolidation, across borders, in Europe in the coming decade. The key difference is that commercialized ANSPs generally have both the funding and the autonomy to make those key business decisions-albeit in consultation with their controllers and other employees.

Thus far, governance reform has been the neglected step-child in NextGen planning. These recent skirmishes over minor facility changes are a warning of how crucial it will be to include serious governance reform in the transition to NextGen.


ATC Modernization Off the High Risk List

The FAA/ATO program to modernize ATC (i.e., all the new technology stuff) has been on the Government Accountability Office's high-risk list since 1995, due to chronic problems of poorly specified programs being endlessly redefined, going way over budget, and being delivered years late. But the latest update of this list, released this month, removed ATC modernization-the only deletion from GAO's government-wide list. The GAO's 2007 update had acknowledged the agency's progress, but kept it on the list to see if its better ways of doing business would be institutionalized.

That the program has now been removed from the GAO's list is a tribute to outgoing Acting Administrator Bobby Sturgell and former Administrator Marion Blakey. It is also a vindication of the first stage of ATC institutional reform, namely the creation of the Air Traffic Organization, which integrated the Operations and the Facilities & Equipment units of FAA into a single air navigation service provider, intended to operate like a business. First Russ Chew and more recently Hank Krakowski have done an excellent job operating as quasi-CEO of the ATO, despite their lack of control of revenue and budget, and despite having to report to 535 members of Congress, the FAA Administrator, the Office of Management & Budget, etc.

But speaking of FAA reform, does anyone remember the big deal that was made in the early 1990s over Congress's decision to depoliticize and professionalize the FAA by giving the Administrator a fixed, six-year term? The first six-year Administrator was Jane Garvey, appointed by President Clinton. She remained in office several years into the Bush administration, and when her term was up, President Bush appointed Marion Blakey, who also served a full six years. All nicely fair and non-partisan. But when Blakey's term ended, Congress refused to confirm Bush's choice of Bobby Sturgell as the next Administrator-on the blatantly political grounds that this would mean the expected incoming Democratic president would be stuck with Bush's choice for his first term.

So much for de-politicizing and professionalizing the FAA, I guess.


Cheap Shot by Departing Columnist

In the December issue of Business & Commercial Aviation, a respected magazine from the Aviation Week group, Washington columnist David Collogan's topic was "Aviation in the Obama Administration." In addition to speculating that incoming Senate Commerce Committee chair Jay Rockefeller (D, WV) might revive his proposal for a $25 fee per IFR jet or turboprop flight (to fund NextGen investment), Collogan took the following cheap shot at me:

"Obama's view that managing the ATC system in inherently a government role also should eclipse the rants of Robert Poole and his supporters. Poole, the director of transportation studies for the Washington, DC-based [sic] Reason Foundation, was a principal proponent of turning ATC management over to private enterprise and paying for it all with an expensive matrix of user fees. Poole's mantra won support from the Bush administration, which repeatedly backed use fees, but Congress refused to go along."

That characterization is spectacularly wrong. In more than 25 years of advocating ATC reform, "turning ATC management over to private enterprise" has never been my recommendation. Rather, I have urged the United States to emulate the dozens of other OECD countries that have reformed their existing air navigation service provider in place, by separating it from their transport agency, making it self-supporting from charges for its services, and regulating it at arm's length by the national aviation safety regulator. Notice what's missing there: no role for Lockheed Martin, Raytheon, ITT, or anybody else in taking over the management or dumping the existing workforce.

My basic reform model was fleshed out by then-Vice President Gore's National Performance Review and then turned into a detailed proposal (by a task force operating out of DOT Secretary Pena's office) in 1994 as the U.S. Air Traffic Services Corporation (USATS). Although it failed to gain traction in Congress (despite the endorsement of then-FAA Administrator David Hinson), a somewhat watered-down version was unanimously supported by the National Civil Aviation Review Commission, headed by Norman Mineta, in 1997. This long pre-dates the Bush administration, which did promote a shift to ATC user fees, but did very little on ATC organizational reform.

All this is a matter of record, but with the notable exception of Professional Pilot magazine, not a single general aviation publication has ever offered its GA readers an objective look at such reform proposals. It's no wonder most private pilots equate ATC reform with "privatization" and user fees with crippling cost increases.

Postscript: I'm told that Collogan has been downsized out of his job at BCA. Can't say I'll shed any tears.


How Nav Canada's Stakeholders Govern It

Those who fear what "commercialization" of the ATO would mean (which usually means controllers and private pilots) fear that their voices would get drowned out without Congress in the loop (aka "micromanagement") to protect their interests. But the best model I've seen for preventing that from happening is the stakeholder board set-up used from the beginning of Nav Canada. In article in the January 2009 Aviation International News, John Sheridan used the accession to Nav Canada's board of Rich Gage, former CEO of the Canadian Business Aviation Association, to explain how the company's stakeholder governance model works.

With current and projected technology, ATC amounts to a monopoly, and we know three alternatives for protecting customers from monopolistic exploitation. One is a government agency or company (e.g., a municipal utility). Another is an investor-owned utility, regulated by some kind of external body, generally in the USA a state public utility commission. The third alternative is a user co-op; in this case, the utility is set up as a nonprofit corporation with a board representing the customers. We have numerous examples of these, most notably rural electric and telephone co-ops.

The aviation stakeholders who studied ATC reform in Canada in the early 1990s decided that a modified form of use co-op was their preferred model. Because there were several different groups of aviation customers (airlines, business aviation, general aviation), representing those stakeholders required something of a balancing act. And because of a strong desire to build a solid working relationship with employee groups, they were given strong representation, as well. The government itself is an airspace user, for both defense and civil purposes, so it was to be represented as a user. And the flying public was also to be represented.

The final structure of the board of directors-a real corporate board with the usual powers and duties-has four seats for the airlines, three for the government, two for employees, and one from non-commercial aviation. (The latter seat had been held by John Lawson, former head of sales for Bombardier's corporate aircraft organization.) Those 10 stakeholder members select four independent directors from outside aviation (chosen for things like management experience), and those 14 select the company president, who becomes the 15th board member. This structure is spelled out in Nav Canada's charter, pursuant to the legislation creating the company and transferring to it the ATC staff and facilities that were formerly part of Transport Canada.

That carefully balanced structure is not the end of the governance story. As Sheridan explains in the AIN article, two other key provisions are aimed at ensuring good governance. The first is that neither any elected officials nor anyone connected with any supplier to Nav Canada can serve on the board. Second, although the stakeholder members are chosen because of their experience in specific aspects of aviation, their primary fiduciary duty is to Nav Canada. As Gage told AIN, "When we enter the boardroom, we take our other hats off and put on our Nav Canada hats."

The final ingredient in this unique governance structure is Nav Canada's 20-member Advisory Committee-professionals chosen by airports, airlines, general aviation, etc. Their task is to represent the particular interest of their company or association in making reports and recommendations to the Nav Canada board. In this way, the company gets direct input from stakeholders, which the board of directors can weigh in its decision-making.

Sheridan closes the AIN article by quoting John Lawson on his experience on this board: "There's no question that the model works. Nav Canada is the best managed company I've ever been involved with."


Getting to Implementation with NextGen

In previous issues I have expressed my own and aviation stakeholder frustration with what seems to be the achingly slow pace of moving the next-generation air traffic system (NextGen) from paper studies to implementation. I applauded the November Executive Order from former President Bush creating a multi-agency liaison officer for NextGen, reporting directly to the Secretary of Transportation, and was pleased to see Karlin Toner appointed to this position in mid-January. But there is still a lot of concern out there. Two documents have crossed my desk in recent days, one representing a best-effort status-quo way of moving forward, the other calling for a radical departure.

The first of these is the announcement by RTCA, Inc. that it has been tasked by the FAA to create a Task Force on mid-term implementation of Next Gen capabilities. RTCA is chartered as a federal advisory body, and it operates the ongoing Air Traffic Management Advisory Committee (ATMAC), which currently consists of 33 members, including representatives of all the aviation alphabet groups (trade associations), several airlines and avionics companies, and several European members, as well as ATO head Hank Krakowski as its "designated federal official." RTCA is often called upon by the FAA to seek consensus among aviation stakeholders on important issues. The purpose of this new task force is to seek consensus, by August of this year, on NextGen capabilities that can be operational in the 2015-2018 time frame, so that needed R&D, hardware and software specifications, and timetables for both aircraft equipage and FAA infrastructure can be spelled out. T he initial task force meeting takes place in Washington on Feb. 10, 2009.

Among the sticky issues the task force is charged with dealing with is the non-consensus on implementation of ADS-B, as reflected in last fall's report of the Aviation Rulemaking Committee devoted to that issue. Since the benefits to aircraft operators from ADS-B depend on their equipping their planes with new displays and other equipment for ADS-B/In, getting airlines, cargo carriers, business jet operators, and private pilots to agree seems highly unlikely. Yet ADS-B is supposed to be one of the main building blocks for NextGen's replacement of costly ground-based radar with GPS-based navigation and surveillance. So while I wish the task force well, I will not be holding my breath.

The other document is a position paper from the Aerospace Traffic Management Program Committee (ATMPC) of the American Institute of Aeronautics & Astronautics. It notes that NextGen depends not only on the FAA and parent DOT but also on NASA, the Defense Department, and several other agencies each playing its part, both organizationally and in terms of funding. But nobody in any single agency (e.g., DOT) has the authority to order the other agencies to carry out their roles or spend the needed funds. Therefore, it calls for a presidential directive creating a new entity-a Special Program Office, similar to what was used for major programs such as the Apollo moon landing, the fleet ballistic submarine program, etc. This new entity would be charged by Congress (and funded at $3 billion/year for 20 years) with implementing NextGen separately from the operational staffs of the FAA and other partner agencies.

This would be a radical change from the status-quo approach-and it might work. It is intended to address a number of the problems that are holding back this much-needed transformation of how we manage America's airspace. Among these problems (cited in the position paper):

On the other hand, the position paper seems blind to the organizational restructurings that have been implemented overseas, transforming and de-politicizing air navigation service providers, thereby addressing many of the problems that are holding back implementation here. It also ignores the crucially important policy of arm's-length separation between ATC operations and air safety regulation, which is especially important as we implement new technology and automation to bring about reduced separation between aircraft.

And the position paper also suffers from an overly grandiose conception of NextGen, including within it the specification of radically new aircraft engines, with low noise and much greater fuel efficiency. It also calls for a politically correct "multi-modal program effort," with DOT's Volpe Center and Amtrak(!) taking the lead, to bring about high-speed rail in selected corridors. Gumming up what is already an incredibly complex undertaking with these maybe-nice-to-have items is surely overkill.

Still, I commend the position paper to your attention, since I don't think current status-quo approaches are likely to succeed. It's not available online yet, but Jim Cistone, chair of the ATMPC, will be glad to email you a copy, on request: jcistone@aol.com.


News Notes

CANSO Welcomes 50th Member. The Civil Air Navigation Services Organization this month announced that a 50th air navigation services provider had joined as a full member. The newcomer is NATA, the National Air Traffic Agency of Albania. Most CANSO members are autonomous, self-supporting ATC providers, funded by ATC user fees.

NextGen Planning Information Now Online. The Joint Planning & Development Office (JPDO) has put a large array of planning information and related data online, making it accessible not only to key stakeholders but to journalists and the general public. The web-based Joint Planning Environment is a relational database, available to anyone as a guest browser. Go to http://iie.jpdo.gov/ee.

Ex-Airline Head Seeks High-End Travelers. Despite the decline in orders for new business jets and the downsizing of some corporate flight departments, David Siegel sees a bright future for private aviation-in new forms. Siegel, formerly CEO of US Airways, now heads XOJet, a company described as a blend of fractional ownership and on-demand charter. For high-end customers frustrated with the "commoditization" of airline travel but perhaps unwilling to own business jets, XOJet aims to offer the conveniences of corporate-jet travel but without the burdens of ownership. It will be an interesting business model to watch.


Quotable Quote

"The situation in the United States with a lack of controller input on modernization to JPDO is in marked contrast to the situations in both Canada and the United Kingdom. With both Nav Canada and NATS, controllers are heavily involved in virtually all aspects of hardware and software design and system modernization. Indeed, many of the improvements at NATS have originated with ideas from the controllers. Controllers at NATS and Nav Canada are thoroughly involved in the design, testing, and implementation of new equipment and procedures."
--Clinton V. Oster and John S. Strong, Managing the Skies: Public Policy, Organization, and Financing of Air Traffic Management, Ashgate Publishing Co., 2007, p. 182.

"I just don't know anyone in Canadian aviation who would ever want to go back to the Transport Canada system. Nav Canada has the agility to quickly adopt new technologies that are right for the aviation community at large, while providing leadership for the future."
--Rich Gage, former CEO of the Canadian Business Aircraft Association, in "Former CBAA Executive to Join Nav Canada Board," by John Sheridan, Aviation International News, January 2009.

"The JPDO and the FAA are not designed to exhibit or achieve a sense of urgency. There have been unspoken cultural and organizational taboos and severe consequences to those that try to lead bold change from within the agency. The FAA has a typical consensus culture where all must agree in order to proceed, and where no one vote stops all decisions. This culture may work for the incremental upgrade approach to the legacy systems, but not for a bold program like NextGen."
--"For the Transformation of America's Air Transportation Sysem," Aerospace Traffic Management Program Committee (of AIAA) Position Paper, Nov. 24, 2008.



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


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