The Problem With Air Traffic Control

The federal government plays a large role in transportation in the U.S. For most modes that role is limited to safety regulation or funding infrastructure. In aviation, however, the federal government also operates the air traffic control system. Users of the system, such as airlines and other operators, pay taxes and fees to the federal government to keep the system operating. Congress must then appropriate these funds in order for the system to function.

Unfortunately, Congress has not been doing a very good job in this regard. In 2013 a sequester of existing funds—as well as a complete government shutdown—caused severe disruptions across government. Since the federal government actually operates air traffic control, unlike other modes, the air system was severely disrupted by these events. As Congress continues to have challenges passing budgets or appropriations bills, this problem is likely to resurface.

But perhaps a bigger issue is related to technology. Much of the air traffic control system in this country is still operating based on cutting edge technology—from the 1940s (namely, radar). While we have the capability of transitioning to a much more effective satellite-based system, the process has been quite slow. Part of the reason for this is that the Federal Aviation Administration (FAA) is both the regulator and the operator of the air traffic control system, which creates an inherent conflict that slows technological upgrades. Other factors slowing implementation include inconsistent funding, the challenges of the government procurement process, and the inability to bond against future revenues

The most viable solution to these problems could be removing air traffic control from the government entirely. Most other developed nations have separated their air traffic control operations from their safety regulation, and the operators are typically removed from the government to some degree. In some countries this means that a government corporation operates air traffic control; in others a nonprofit or for-profit corporation operates it. Both of these scenarios would accomplish two key objectives if implemented in the U.S. – they would remove air traffic control from the appropriations process and they would also accelerate technological upgrades.

Why Cities Should Care

So why should cities care? When most large urban areas in the U.S. think about their biggest transportation problem, chances are they won’t mention aviation. That is a mistake. Aviation may account for a small percentage of travelers to and from a metropolitan area, and an even smaller percentage of freight, but those travelers and that freight are of very high economic value for the region. The passengers are either on business, in which case they are likely contributing to the economic output of the region, or tourists, in which case they are coming to the region to spend money. Facilitating their journey by ensuring there is sufficient capacity to meet demand for air travel turns out to be a very pressing and important transportation and economic problem for urban areas.

Different urban regions are facing different challenges with respect to aviation capacity. While 15-20 years ago there was a major problem with congestion across the country, a shift in the airline business model has changed that problem significantly. Airlines used to compete with one another most directly on the basis of frequency, and therefore tried to run more flights with smaller aircraft, creating congestion at even medium-sized hubs. However, two trends have dramatically changed the industry in recent decades:

• Consolidation. Due to industry consolidation there are now only four major carriers (United, American, Southwest, and Delta). Other majors such as Northwest, America West, US Airways, AirTran, and Continental have all been swallowed up. The result of this consolidation is better financials for an industry that has typically lost money, but also less competition. Reduced competition has meant reduced frequencies and a de-hubbing of many airports in medium-sized cities such as Cleveland, Cincinnati, St. Louis, San Jose, and Pittsburgh.
• Cost drivers. At the same time, the costs driving the industry have changed. Following the downturn of the early 1990s airlines took steps to cut costs and amenities, and many went into bankruptcy in order to cut labor costs. Once these costs were stripped to their bare bones, the only major cost driver and differentiator became fuel. Aircraft fuel-efficiency became a much more important factor in profitability. Takeoffs and landings are where the greatest percentage of fuel is expended on a flight; therefore fewer frequencies became a potential way to cut costs and increase load factors.

As a result of these changes, the aviation delays and capacity issues are going to be much greater at large hubs in the biggest urban areas. Most of these areas cannot afford or are unable to find land to expand aviation capacity. For example in the New York region, which has some of the most congested airports in the country, there is simply no room for new runways without severe environmental or political consequences.

The greatest opportunity to expand the capacity of the aviation system in these large urban areas will be through technological upgrades. Satellite-based technology can help reduce fuel consumption by enabling more direct routes, improve safety by providing pilots and controllers with a better picture of what is happening in the skies, and expand capacity by enabling shorter distances between aircraft. In some urban areas, this is the only way to expand capacity.

The Path Forward

These critical improvements to airspace are unlikely to occur without significant reform of the funding and governance structure of our air traffic control system. Fortunately, a working group of experts and stakeholders in this area, led by Eno, are getting together regularly to try and reach consensus on a policy approach. If successful, this group hopes to persuade Congress to include reform provisions in the next FAA reauthorization bill, which is scheduled to come up in 2015. All indications are that if the industry comes together on this issue, there is a real opportunity for reform.

Large metropolitan regions need to be leaders in this area. More than the rest of the nation, their economic vitality is at stake in the air traffic control structure. Major urban areas should join with other aviation stakeholders in shaping the future of our national airspace system.