President Trump seems to be starting in on his long awaited infrastructure initiative by announcing new technological upgrades to the air traffic control system that are long overdue. This system is envisioned to be run by a private non profit organization that will save money and be more efficient, according to him. While it's too early to tell, how much more will airlines pay and what affect, if any, would Amtrak feel? Sorry for not supplying a link to this speech, but it is on youtube. I am not too technically savvy, forgive me.
What is the advantage of running air traffic control with a private non-profit organization? Why would it be more efficient and save money?
Some pros and cons ...
https://www.floridatechonline.com/blog/aviation-management/pros-and-cons-of-privatized-air-traffic-control/
rdamon Some pros and cons ... https://www.floridatechonline.com/blog/aviation-management/pros-and-cons-of-privatized-air-traffic-control/
"...bill for privatization (H.R. 4441) has been moved out of committee but has seen no action in the House. It calls for the creation of the ATC Corporation, “a federally chartered, not-for-profit corporation,” and says that the Department of Transportation will transfer operational control of FAA air traffic services to the corporation by Oct. 1, 2019..."
Sounds like the legislation will give us another U.S. Post Office ?
Not sure the country can afford another of those. Employee Benefits are the albatross on that, these days.
The article makes a case for privatization and lists other countries where it has been successfully done(?). The Airlines, and Unions also, seem to be for it; as long as their (ATCU) working conditions,benefit, and pay are not effected...Another USPS deal?
Apparently, the 'System' need a major upgrade , as to its equipment used to track and control the aircraft at airports and in-flight. Sounds expensive! The railroads have used "associations(?) to handle traffic in certain heavy traffic areas, Chicago Belt Rwy, Conrail shared assets, Houston, spring to mind right away.. It might work with the air traffic?
I generally understand what is meant by “privatization,” but not what is meant by “non-profit privatization.” That sounds like a contradiction in terms. In reading some of the details, it sounds like it amounts to adding another complete and highly regulated private bureaucracy between the FAA and air traffic control.
Euclid I generally understand what is meant by “privatization,” but not what is meant by “non-profit privatization.” That sounds like a contradiction in terms. In reading some of the details, it sounds like it amounts to adding another complete and highly regulated private bureaucracy between the FAA and air traffic control.
What's hard to understand? It is non-government and non-profit. University and other non-profit hospital systems are among the best medical facilities in the US
C&NW, CA&E, MILW, CGW and IC fan
schlimm Euclid I generally understand what is meant by “privatization,” but not what is meant by “non-profit privatization.” That sounds like a contradiction in terms. In reading some of the details, it sounds like it amounts to adding another complete and highly regulated private bureaucracy between the FAA and air traffic control. What's hard to understand? It is non-government and non-profit. University and other non-profit hospital systems are among the best medical facilities in the US
Specifically, how does it differ from the current air traffic control organization? How would it be funded? Why would it cause air fares to increase as the article says?
EuclidSpecifically, how does it differ from the current air traffic control organization? How would it be funded? Why would it cause air fares to increase as the article says?
Unless it's run like Amtrak - with a government subsidy - the users are going to have to pay the whole cost of the service.
Right now, because the ATC people are federal employees, you're paying for them, whether you fly or not. In addition, if you read about improvements at your local airport, especially ATC stuff, you'll find a strong federal presence as well. As in dollars.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Trump doesn't touch anything that is by design 'non-profit'. If there is 'private' ATC, someone will profit, and profit handsomely.
Never too old to have a happy childhood!
tree68 Euclid Specifically, how does it differ from the current air traffic control organization? How would it be funded? Why would it cause air fares to increase as the article says? Unless it's run like Amtrak - with a government subsidy - the users are going to have to pay the whole cost of the service. Right now, because the ATC people are federal employees, you're paying for them, whether you fly or not. In addition, if you read about improvements at your local airport, especially ATC stuff, you'll find a strong federal presence as well. As in dollars.
Euclid Specifically, how does it differ from the current air traffic control organization? How would it be funded? Why would it cause air fares to increase as the article says?
Okay, I see what you mean. That would explain why fares will rise. I would prefer that particular outcome of privatization. Is that where the main benefit is? What about the effect of getting more bang for the buck if the government overhead is removed? Generally, what I wonder is who is supposed to like this plan and why?
The theory behind privatizing ATC, has been viewed as being advantageous in regards to technology implementation, more so than anything to do with human resources or directly related to saving money.
Optimally, ATC requires vast continual upgrades in improved technology. This hasn't been done in a timely manner, because of the bureaucratic red tape involved in making capital investments of the magnitude required to modernize ATC. There's equipment upgrades in the pipeline, that have been bogged down in the planning, budgeting, and contract bidding process for decades.
The best analogy I can give on a railroad forum, is comparing a 1950's dispatch office of a major railroad with an operations center of one today. Then look at the aeronautical equivalent of an FAA Air Route Traffic Control Center of the 1950's, compared to one today. The 1950's railroad dispatch office will look nothing like the modern center of today. But with the exception of variances in the physical appearance of the radar scopes, the FAA center will looked roughly the same.
There's other minutia on the labor intensive side of the equation related to the stagnent nature of FAA technology implementation. Let's just say FAA controllers are still doing the aeronautical equivalent of hand typing orders and stringing them up on a pole.
"Deutsche Flugsicherung (DFS) is the company in charge of air traffic control for Germany. It is a company organized under private law and 100% owned by the Federal Republic of Germany. Since January 1993, DFS has been controlling air traffic in Germany. In Germany, military and civil air traffic controllers work side by side. Since 1994, DFS has been responsible for the handling of both civil and military air traffic in peacetime. Only military aerodromes are exempted from this integration. DFS's running costs are covered by applicable route charges ( "Flugsicherungsgebühren", collected by Eurocontrol for its 37 participating member states) and by approach and departure fees (determination by the BMVBS by ordinance and collected directly by DFS). According to the Gesellschaftsvertrag, (articles of association) DFS is a not-for-profit company. Any surpluses generated must also be repaid in accordance with the internationally accepted principles for the collection of air navigation charges to airspace users."
In other words, user fees pay the freight, not the taxpayer.
So the system in place operating today has a specific operating cost that is borne by the taxpayers. If you shift that cost over to the air passengers exclusively, their fare prices rise because there are fewer of them than the pool of taxpayers. If major infrastructure and technology upgrades are needed, fares will have to further increase to pay for that.
As fares increase, fewer people will fly, and there will be less money available for upgrades. Without a need for profit, how is it decided how much upgrading is necessary and how much less revenue can be tolerated as a consequence before the system’s cost has outpaced its use?
That choice is decided naturally in a for-profit business because cost has to be balance by demand.
In other words, why would there be any motive for a non-profit business to keep its costs down?
Seems to work just fine in the countries that switched, in the German case, for over 20 years.
I am just asking to understand the economic principles involved. It seems to me that for the non-profit model to work, it would have to be government regulated in every detail. And then those regulations would need the economic wisdom to correctly manage supply and demand as though it were actually a for-profit business. If this works, would it be better if private railroads operated on a non-profit basis?
I think the main idea is to get ATC out from under the FAA bureaucracy, and allow for more expedient modernization.
There's a lot of hand wringing going on in the general aviation community over potential user fees, and also to a lesser degree among consumer groups concerned with airline passengers. Considering the overall cost of air travel, I can't see that these fees are going to be at a level that makes air travel cost prohibitive. The real whiners are the airplane owners at the high end of the scale, who are worried about a few bucks an hour ATC fee, for a $4 million airplane, that as is, cost $2000 an hour to operate.
Euclid Generally, what I wonder is who is supposed to like this plan and why?
Oh that's easy. Trump's big business croonies (and probably Trump himself). Maybe I'm misunderstanding something, but why not empower the FAA to enforce what's already implace and push the upgrades through? I realize there's a lot of red tape (of course there is, there's always red tape) but at the same time it would seem more effecient to me at least to use what's already implace.
An artist sees the world in colors and patterns. An engineer sees the world in mathematical equations. Both help shape the World and are just as important as the other.
EuclidIf this works, would it be better if private railroads operated on a non-profit basis?
It occurs to me that 'non-profit basis' may be the sensible way to manage the infrastructure (ensuring, for example, that operating 'profit' from the track-providing entity be earmarked for maintenance and improvement, debt reduction, etc.) leaving the operating companies free of large stranded real-estate-related costs and able to compete on their best for-profit operational models -- now with no cheap or expedient deferred-maintenance or track-eliminating "economies" hiding their true operating performance...
I got this out of Kneiling's "iron ocean" ideas back in the '60s. I still find the idea attractive in many contexts.
RME Euclid If this works, would it be better if private railroads operated on a non-profit basis? It occurs to me that 'non-profit basis' may be the sensible way to manage the infrastructure (ensuring, for example, that operating 'profit' from the track-providing entity be earmarked for maintenance and improvement, debt reduction, etc.) leaving the operating companies free of large stranded real-estate-related costs and able to compete on their best for-profit operational models -- now with no cheap or expedient deferred-maintenance or track-eliminating "economies" hiding their true operating performance... I got this out of Kneiling's "iron ocean" ideas back in the '60s. I still find the idea attractive in many contexts.
Euclid If this works, would it be better if private railroads operated on a non-profit basis?
Unfortunately, that is one of his great iconoclastic ideas that still meets resistance, certainly on here.
Thanks to Chris / CopCarSS for my avatar.
The US ATC system can be reduced to a two words . " Traffic density ". Other world systems run by "private" corporations do not run with as close separation with a few exceptions. One being over Germany. The whole NE traffic from BOS - Albany - Montreal -Cleveland -Pittsburg - Atlanta - Jacksonville -Washington - Boston is very tight. The computer programers have not been able to come up with lines of code that will cover all problems.
Take a look at 20+ years of trying to make it work in the U.K. and it becomes less attractive rather quickly
Murphy Siding Euclid If this works, would it be better if private railroads operated on a non-profit basis? They did for many years before Staggers. How'd that turn out?
They did for many years before Staggers. How'd that turn out?
Yes this is the point of my rhetorical question. There is always the argument as to whether public sector business should be privatized. It really goes to the fundamental faith in capitalism. Capitalism includes profit, and some argue that a business model will be more efficient without the need to extract a profit from production. The capitalists will say that profit is the necessary reward to pay for the risk of investment in the business.
Rarely in this debate have I heard of a third way of non-profit privatization. That is why I ask what it actually is. Who takes the risk of investing in a business that produces no profit to reward the risk of investment?
It seems to me that if government controls every detail of the non-profit entity, then that entitiy is fundamentally a public sector enterprise just like the FAA.
Rio Grande Valley, CFI,CFII
IF (and this is a HUGE if) it is done right, it could be a good thing. The two big advantages to true privatization over a government organization are personnel and privatization. A private entity can easily get rid of the deadwood in an organization, while it is almost impossible to fire a government employee. A private entity can also buy things (new technology for the system) much more quickly and easily than government. A private entity can research what technology is available, decide what is best, and buy it in a matter of months, and the unsuccessful bidders have very few opportunities to delay the process or cause the purchase of inferior items with bid protests, lawsuits, and political influence.
Mind you, what I've said is only true for TRULY private entities, free from political influence and bureaucratic rules. I know whereof I speak - I spent 30 years doing procurement for the Federal gov't, and work with contracts in state gov't now.
I can see the proposal delivering a workable system faster and cheaper than the FAA, unless the FAA went passive-aggressive with the oversight.
The losers here might be general aviators. They currently get to use the system nearly free. Would they be asked to fund a larger chunk?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
EuclidWhat is the advantage of running air traffic control with a private non-profit organization? Why would it be more efficient and save money?
You mean like running the Economy using the Federal Reserve? Can you imagine if the Economy were run by the Treasury Dept how expensive that would be and how many government employees it would take......not to mention how political it would be and how long it would take to act on a decision.
Speaking of which, the Federal Reserve actually performs many of the Treasury Departments Information Technology and bookkeeping tasks at probably one third the cost. Very efficient for it to be private and non-profit and somewhat under the government thumb vs another government department or a profitable corporation........which would be going too far in either direction for management of the Money Supply.
I am all for this proposal as we have several working and proven models of it at the Federal Level...........Federal Reserve System is the biggest example, that I can think of off hand.
schlimm Seems to work just fine in the countries that switched, in the German case, for over 20 years.
I think they are misunderstanding a few points.
Proposal is 100% private and non-profit, only analogy I can see that fits that description is the Federal Reserve.
Both Amtrak and USPS are quasi-governmental and are not 100% private Corporations. Amtrak and USPS are for profit quasi-governmental organizations even though they do not act like it.
Proposal is to be managed and funded by the airlines and airline users, meaning it will not have to seek budgets or capital from the Feds.........ever.
Non-Profit means if it makes a profit, the profit is either turned over to the Treasury Dept or to the IRS...........or spent down to zero.
And to be 100% honest, this is not Trumps idea, it existed pre-Trump and Pence is the biggest promoter of private infrastructure, so if anything the idea came from the VP. However, it was an option and has been an option decades before the last election. We just never choose the path before.
Likewise for Soverign Wealth Fund, used to subsidize Health Care or used to pay off our National Debt. Obvious non-taxpayer involvement solution that would raise Trillions but up to this point.........never chosen. Norway has done social wonders with their Soverign Wealth Fund including paying off completely their national debt.
Private non-profit operations (often university) that are of the highest quality would include most/all the top 10 hospital/medical centers in the US, such as Mayo Clinic, Mass Gen, UCLA Med Center, Johns Hopkins, etc.
schlimm RME Euclid If this works, would it be better if private railroads operated on a non-profit basis? It occurs to me that 'non-profit basis' may be the sensible way to manage the infrastructure (ensuring, for example, that operating 'profit' from the track-providing entity be earmarked for maintenance and improvement, debt reduction, etc.) leaving the operating companies free of large stranded real-estate-related costs and able to compete on their best for-profit operational models -- now with no cheap or expedient deferred-maintenance or track-eliminating "economies" hiding their true operating performance... I got this out of Kneiling's "iron ocean" ideas back in the '60s. I still find the idea attractive in many contexts. Unfortunately, that is one of his great iconoclastic ideas that still meets resistance, certainly on here.
Espically from those of us that have worked in both environments.
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