Across the Aisle from Delta’s SVP of Operations on Why Privatizing Air Traffic Control Would Be Bad

If you haven’t heard, it’s time for Congress to once again try to reauthorize the FAA. I say “try” because in general, Congress is really bad at this. Usually it just passes temporary extensions which keeps the lights on but does nothing to push the FAA forward. On occasion, it can’t even do that, and the FAA shuts down (excluding essential functions). In light of this governmental dysfunction, there is talk about trying to privatize the air traffic control organization. While Airlines for America (A4A) and its members support the idea, Delta has notably opposed it.

Delta is really starting to push on this and approached me about doing an Across the Aisle interview with Steve Dickson, the SVP of Flight Operations. A4A has asked about the possibility of interviewing someone at an airline on the other side of the coin. That’s going to happen after Thanksgiving. For now, here’s a nice long interview you can read while you digest your turkey later this week.

Cranky: Thanks for taking the time to talk, Captain. Let’s start by explaining why you’re talking about privatizing air traffic control now. Modernization has been a topic for many years.

Steve: Sure, as you noted, the modernization of the air traffic control system has been decades in the making and it continues to proceed. It really is an evolution and Delta’s been involved in a significant way for a number of years. Most recently we saw a pretty significant improvement in the way we engaged with the FAA in 2009 in the NextGen implementation task force. There’s been quite a bit of activity, a number of initiatives that have rolled out that have seen improvements in the operation of the system. The disagreement at this point is whether it makes sense to split out the air traffic organization from the FAA. Our position is that would be a distraction and would actually delay what we’re doing in our current collaboration with the government.

Cranky: Let’s get into that. If you can, please explain why you believe the way you do, that this shouldn’t be broken out?

Steve: Sure. I think it really comes down to four basic points. The first one being that we don’t see at this point in time how privatizing the air traffic organization would improve efficiency or the performance of the ATC system. I can get into that in more detail. We also see the potential that we could see some cost increases that our customers may ultimately end up having to bear. Third, we think privatization will create new barriers that will set back some of the implementation initiatives we already have quite a bit of momentum on. Finally, we think that separating the safety organization from the operations organization doesn’t make much sense. That stove pipe that’s created there would be counter productive.

Cranky: Alright, then let’s start with the efficiency piece and get into more detail since you brought that up. Is it that you don’t think this will improve it or you think it will be harmful?

Steve: I think it’s both. We actually think that it would create a distraction. It would take quite some period of time. It would be a distraction from those who are working on the implementation of new operational capabilities. During the time period it would take to run its course, whether 18 months, 3 years, 5 years depending on the model you look at, there will be some unintended consequences in terms of disrupting and interrupting work that’s already underway. That’s one of our biggest concerns and that’s why if you look back 20 or 25 year ago, you might come to a different conclusion at least with respect to that point.

Cranky: Let’s say they do go down the privatization path and there is disruption. Do you not think once it’s completed that it would be more efficient at that point?

Steve: No not really, because first of all the system in the US is unlike any other system in the world. It’s considerably more complex than what we see even in Europe. And we have fewer air traffic control delays than in most other industrialized countries. If you look at Delta’s operation for example, on a good weather day we’re running 92 to 94 percent on time and we’re setting records. We’ve had 133 days without a cancellation. That kind of performance, if the system were broken, we wouldn’t be able to achieve. We’re the largest operator up and down the East Coast.

Cranky: Of course the Northeast is where the concern is. Nobody is worried about congestion in Salt Lake or Minneapolis. So if we talk about the Northeast, you don’t see a need for improvements around New York? You have a couple of hubs there. Are you saying it’s fine the way it is or the current path will solve those problems?

Steve: You’ve actually set me up for the next point I was gonna make. With respect to the Northeast, there absolutely need to be improvements made and we think the path that we’re on will provide those improvements. But privatization will not address the structural issues in the Northeast. There aren’t new airports being built. The US is often compared to Canada, Nav Canada in particular, but the New York airspace every day handles the same amount of traffic as all of Canada. You’re dealing with very close proximity of airports, a lot of demand. There aren’t new airports being built, there aren’t new runways being builtin the northeast. Without those physical infrastructure improvements, privatization isn’t going to help. The implementation of the improved capabilities that are already in the pipeline, that’s what’s going to make the difference.

Cranky: One of the things that sticks with me as being a primary reason to consider is the interruption in funding that occurs every 5 minutes when Congress decides to use the FAA as a bargaining chip. Is the current method not something that concerns you or is it just not enough of a problem?

Steve: I’d say the latter. Unstable funding is an issue but I also think Congressional accountability is important as well. We believe the funding issue could be addressed through changes in the FAA budgeting process without privatizing the organization. You don’t see the same kind of difficulties in other agencies of the federal government. If that’s the problem, let’s address that. You don’t need to privatize.

Cranky: The issue is they just never seem to properly fund it for any period of time.

Steve: Sure it creates some challenges, but remember this is an evolutionary process. That’s one of the difficulties we face. The NextGen project was said to be some sort of revolution or big bang. You introduce all this new technology and the system will have big improvement. But the system we have now is evolving and it has improved. We’ve seen improvements at several large airports. Specifically Atlanta which, by most measures, has been the busiest airport in the world. We’re seeing new efficiencies with new departure procedures that have allowed us to take advantage of new technologies. That’s led to fewer ground delays, better utilization of gates, taxiways, runway, environmental benefits. That’s been going on for really more than a decade. We wouldn’t see the kind of operational performance Delta has been demonstrating without these improvements. And there’s certainly more to do. Were only at the tip of the iceberg of what’s going to be happening over the next decade or so.

Cranky: Let’s talk about the second point, costs.

Steve: We’ve looked at systems in other countries and it’s a mixed bag on what’s happened. When we visited Nav Canada, we actually saw some decrease in their air traffic control costs, but we had also seen a decrease in volume and we also saw increases in the cost for their airport system. So if you look at the entire cost of the system, it had actually gone up since before Nav Canada was created. Look at the all-in costs in the US vs other systems around the world, we actually see that the US stacks up very well. I think there’s really just not any data that suggests that the airlines or traveling public would benefit to any degree on cost advantages.

Cranky: If it’s just no benefit of cost advantages, that’s probably less of a concern than severe cost increase. Is the real concern that people say this is going to save money but it won’t or is it worse than that and it’ll just be very costly.

Steve: We feel like it’ll be the latter where there’s a certain loss of control. You would have to have some sort of user fee system and you could have taxes on top of that. It ends up increasing the price of a ticket and increases the overall cost of the system.

Cranky: The proposals I’ve seen have suggested creating a not-for-profit federally-chartered corporation. It’s not truly spinning it off to a private company. What is that most similar to in the other systems you’ve seen and does that make a difference?

Steve: I’m not sure it makes a whole lot of difference. Frankly, it depends on what the outcome, what all the twists and turns of the legislative process are. At Nav Canada, I believe they have a 15 member board. The operators are about a third of that board. There are a lot of other stakeholders that get involved. You don’t necessarily have the control over how decisions are made that you’d like to have. There’s a lot of detail involved in what the structure would look like. We haven’t actually seen a specific proposal. It’s just not out there yet.

Cranky: Do you think you have more control today? I mean… it’s the government.

Steve: We feel like we have a forum to work with the government. Richard Anderson our CEO is the current chairman of the NextGen advisory committee. He works with the deputy administrator to make recommendations on what the industry, not just the airlines, thinks the next priorities are that the FAA should be working on in terms of improving performance of the system. Nothing ever happens as fast as you’d like, but we’ve got a pretty good track record of these incremental improvements and that’s given the industry a pretty strong voice in Washington.

Cranky: Alright, then on to the third point which was these new barriers?

Steve: Sure, I talked about this before. The process of removing the air traffic organization is going to necessarily result in some period of organization disruption. When you work across the FAA whether it’s the aviation safety and regulatory side or the air traffic organization, they’re able to work across those lines of business fairly effectively at least at the leadership level. When that goes out into a different entity, it formalizes a separation between the two. We believe it’s more difficult to get things done in Washington. A lot of the improvements to the system are not technology. They’re training, standards separation criteria that the standards side has to push forward… when there’s a separation it remains to be seen if that would allow us to proceed more efficiently or provide another barrier to process.

Cranky: This is your fourth point, I believe, that separating the FAA would be problematic. There are a lot of people who want to do that, see a problem with the FAA being both the promoter of the industry and the regulator. But your concern is specifically about air traffic control and the ops side?

Steve: Yes, splitting off the air traffic control organization from the safety, airports, flight standards side of the FAA… all those areas have a significant stake and have something to say as we implement new air traffic control procedures. When you separate out the air traffic organization, then they have to go hat in hand to get things done.

Cranky: Give people some hope here. You say there’s been progress, but the general feeling in the public is it’s never going to change. It’s never going to get better. Obviously you see this differently, so give people some hope about where things are going and when we’ll see that.

Steve: I would just come back. We’re seeing all the network carriers, I know at Delta we’re setting operational records. We see the performance of other carriers improving as well. At Atlanta within the last 2 years, we’ve seen a minute and a half reduction in our departure queue delays and that has been worth quite a bit of savings here. On the order of $15 to $20 million a year. We’re seeing similar benefits in other locations.

Cranky: What do you attribute that to in Atlanta?

Steve: It’s two things, the implementation of new departure procedures that allow us to do 3 departure routes off of 2 runways. This takes advantage of the more precise GPS systems on the aircraft. What’s happened is over a period of years, the controllers are now able to clear aircraft for takeoff more rapidly during big departure banks. You have tighter degrees of separation on departure if for example, you have one airplane heading to the northeast and the other to the southeast. You can space them closer together instead of having them in a nose to tail string.

Another change in the rules has allowed us to operate on parallel runways more independently. This is a change in the wake turbulence separation criteria. A lot of modeling and a lot of work with NASA and the FAA and other stakeholders. We’ve got the ability to fly airplanes closer together. All of these things have led to getting more capacity out of the infrastructure that’s already out there. For example in Atlanta we have 5 runways. One of the reasons our taxi times have gone down is we can get better utilization of the runways closer to the terminal and we don’t have to resort to that far away runway as often. It’s not only in Atlanta. It’s other places around the country.

Cranky: Why are you standing alone on this side of the coin in terms of privatization? Why are A4A and its member airlines standing on the other side?

Steve: That’s a good question, you’d have to ask them why they think privatization would be a silver bullet. Frankly when we look at the data and we look at the roadmap and the way forward, we think that collaborating with the FAA is more effective way forward than going through this privatization exercise. We see more risk with privatization than we do benefit. That just comes from years of rolling up our sleeves and really looking at the data and seeing what we can do to improve the performance for our customers.

And ask them I will. Stay tuned for an interview with someone on the other side after Thanksgiving.