Air Traffic Inc.: Considerations Regarding the Corporatization of Air Traffic Control (CRS Report for Congress)
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| Release Date |
Revised May 16, 2017 |
| Report Number |
R43844 |
| Report Type |
Report |
| Authors |
Bart Elias, Specialist in Aviation Policy |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Over the past 40 years, Congress has intermittently considered proposals to establish a
government corporation or private entity to carry out air traffic functions currently provided by
the Federal Aviation Administration (FAA). While the issue had been relatively dormant since a
proposal offered by the Clinton Administration in the 1990s failed to gain the support of
Congress, interest reemerged following budget sequester-related funding cuts to FAA in FY2013.
In the 114th Congress, the House Transportation and Infrastructure Committee ordered H.R. 4441,
an FAA reauthorization bill that proposed to establish a government-chartered air traffic services
corporation, to be reported. However, the bill was never reported in the House, and the FAA
extension act passed by Congress in July 2016 (P.L. 114-190) did not make any organizational
reforms regarding air traffic services. Authorizations under that extension expire at the end of
FY2017, and debate over air traffic services reform has arisen once more.
Many other countries have established government corporations, quasi-governmental entities, or
private firms to perform air traffic services. While none of these air traffic service organizations
are comparable to FAA in terms of their size or complexity, they represent a broad array of
organizational models including a large number of wholly government-owned corporations, a
public-private partnership model in the United Kingdom, a government-controlled joint stock
company in Switzerland, and a fully private nonprofit entity controlled by aviation industry
stakeholders in Canada.
Direct comparisons among these models have been limited. There does not appear to be
conclusive evidence that any of these models is either superior or inferior to others or to existing
government-run air traffic services, including FAA, with respect to productivity, costeffectiveness,
service quality, and safety and security. Certain corporate and private air traffic
service providers have improved cost-effectiveness and performance as a result of access to
financial markets to fund large-scale acquisition projects, and of faster implementation of
technologies. In this regard, the tax status of a potential air traffic entity’s debt could become a
significant issue in the United States, as a privatized or a government-owned corporation could
end up paying more to borrow in the financial market than the federal government does.
The prospect of reforming FAA air traffic services raises many unique challenges for
congressional consideration, including
the framework and governance of a future air traffic services corporation;
its organizational structure and elements;
corporate financing and FAA funding mechanisms;
measures to ensure a smooth transition;
labor provisions to address legal rights of labor organizations while minimizing
potential system disruptions;
safety regulation and oversight of the corporation;
measures to address corporate liability; and
safeguards to assure equitable treatment to the wide array of system users
