Across the Aisle From American’s SVP of Government Affairs on Why Privatizing Air Traffic Control is Good (and Shouldn’t be Called Privatization)

A couple of weeks ago, I posted an interview with Steve Dickson, Delta’s SVP of Flight Operations, on why Delta opposes efforts to privatize air traffic control in the US. This week we look at the other side of the coin. Will Ris, American’s outgoing SVP of Government Affairs, spoke with me to discuss American’s position that air traffic control should be put into the hands of a non-profit corporation and removed from the government. He bristled at the idea of calling this privatization, and you’ll see why in the interview below.

After a long career with American in Washington, Will is stepping down at the end of this year so it was great to talk to him one last time in his official capacity. Even though he was accompanied by Jean Medina (from Airlines For American, aka A4A, which is championing this position for all its members) and Matt Miller from American corp comm, I knew Will wouldn’t disappoint.

Planeline

Cranky: I’m a little sad that you’re there, Matt. I was hoping Will would just go completely off the rails since he’s probably in between a couple of retirement parties now.

Will: I may still do that. What do I have to lose, right? But for the record, how cranky are you today? Because if you’re really cranky, we can postpone this call.

Cranky: I’m good today. I’m just fine, so let’s get started. I spoke with Steve Dickson at Delta which takes the opposite view of A4A and most US carriers it seems. Now it’s your turn. Why should we be privatizing ATC?

Will: Ok, let’s start by talking about the topic, because we don’t believe we should be privatizing ATC as that term is normally Across the Aisle From American Airlinesthought of. Privatization is usually used when talking about spinning something out of the government into a for-profit corporation. We’re not talking about that at all. Folks who oppose this concept will use the term privatization as a derogatory term. They know full well that’s not what we’re talking about. What we’re talking about is the notion of taking an organization that’s currently within the government that runs a 24 hour-a-day, 7 day-a-week operation, which is tantamount to the production line for air carriers, and moving that into an entity that it created by Congress that is not-for-profit. That only has one goal, and that is to provide safe and efficient air traffic control for all users of the system.

Cranky: So what’s the sound bite terminology that should be used for this?

Will: It’s that we’re looking for a congressionally-chartered not-for-profit organization. That’s really important. It’s an organization that would be run in a business-like fashion with all the tools that the private sector has, but with none of the profit-making incentives. Around the world as we look at other systems, we’ve looked at different models. I think we emphatically believe that a not-for-profit congressionally-authorized organization is the best way to go.

Planeline

Cranky: Is there an example somewhere in the world that you’re trying to emulate?

Will: We think there are lots of systems around the world. From the beginning, Australia and New Zealand have systems that have been very successful. We think Nav Canada is successful. They have improved the quality and efficiency of air traffic control in the jurisdictions they serve uniformly. They’ve done it without excessive costs. There’s no one particular model, but certainly we’re very familiar with the Nav Canada model and think it has a tremendous amount of value to look at.

Planeline

Cranky: What’s the primary motivation for pushing to this model? It still requires congressional action, which generally means it might happen in 100 years. What is it about this model that’s going to solve the issues?

Will: The main thing about the model is that it’s not about the technology. It’s about the financing and the governance of the system. What’s unique today is we have a set of circumstances here [that] there is enormous consensus growing that we should do this. This is not a new idea. This has been floating around for decades. It was an idea that was proposed in the Clinton administration. It was endorsed by numerous studies. Every time there’s been a study about how to make air traffic more efficient, this concept has been raised.

What’s happened is we have growing consensus that the status quo is simply not acceptable. And the main part that’s not acceptable is the uncertainty of the financing tied up in the federal budget. It’s not that we can fix that just by saying we’ll give it more money. That’s not how it works. And the way that the government entities have to expense their money, they have to do it on an annualized basis. So you have an organization that has to make huge investments in capital and it doesn’t have the tools to do it as we do in the private sector. If we had to buy all of our airplanes with cash generated in the year that we’re buying the airplanes, we’d have the smallest fleets in the world. But we can go to the capital markets; we can engage in long term planning with a great deal of certainty that we’ll have the resources.

Planeline

Cranky: The piece specifically about funding… opponents have said that there are other parts of the government that don’t have this issue. They function without these stop-gap extensions. They think it can be fixed. You’ve been here for decades. Is that something that can be fixed under the current structure?

Will: I don’t think it’s true. That’s a pipe dream. There is nothing in the federal government that is equivalent to this. This is a government organization that is running what is tantamount to an operational business providing services day after day, year after year. It’s totally unique. You can’t point to other agencies in the Department of Transportation. They don’t do this. We’ve seen the effect of a sequester; the effects of a shut down. When you shut down anything for even a couple of days in this business, it takes months to get it going again. Being in the federal budget process is a problem…. Those who are very much part of the system, like air traffic controllers. NATCA is incredibly articulate about the stress that the federal budget process puts on the recruiting, the training, and the retention of air traffic controllers. They’re really worried about it. And if they’re worried about it, we’re worried about it.

Planeline

Cranky: Do you envision this effectively saying, “look we’re gonna take the current organization, the people, the projects, and just change the funding structure”? In other words, do you like the projects in the pipeline right now and you just don’t think they can get done?

Will: Yeah, I think, well who knows what happens in the very long run, but in the short run absolutely. We know what we have to do. We know what the goal is. This isn’t about making huge technological changes. It’s about expediting a process that we know has been much slower than it needs to be and creating an environment where innovation and change can be adapted as technology develops and comes on board. But we’re not looking for a radical wholesale change. We would assume that day one of the organization, the same people would be doing the same things, but they’d be subject to a different financing and different governance system.

That’s really important. Today what happens, the governance is done in the political environment. Congress has a lot of good intentions, but it has the ability to send mixed signals about priorities that aren’t necessarily consistent with the best interest of the users of the system. So it’s to have a board of directors that would be focused on the basic principles of safety and efficiency at reasonable cost. We’ve seen around the world where this has happened. It hasn’t skewed the system to any particular group of users. It only increases the efficiency of the system where it’s been implemented.

Planeline

Cranky: What Delta is saying is, “there’s a lot of good happening right now and this is going to be disruptive.” It sounds like what you’re proposing is not actually disruptive. It’s really more of a change in funding?

Will: This is the one argument that I think is just the weakest possible argument that it would be disruptive. I agree with the premise of your question. I don’t think it would be nearly as disruptive as people might be fearful of. What we’re trying to do is change the financing and the governance. But that aside, not to do something that’s really, really important around which there’s tremendous consensus just because it’s hard is crazy.

If you think about all the decisions made in the last decade in the airline industry… when Delta and Northwest decided to merge, I bet there were people inside either company that said “this would be really disruptive, I’m not sure we should do this.” In retrospect, it probably was disruptive, more than we’re talking about here. But it was worth doing. And just to say something is hard or may have some bumps in the road is absolutely the weakest argument, because then we wouldn’t do anything.

I’m unfortunately old enough to have been a part of the airline deregulation process back in the 1970s. This was exactly the argument people were using. “We can’t do it. It’s gonna be really disruptive. There may be safety implications.” And none of that came true. But there was a lot of opposition to it. And to its great credit, Congress just bit the bullet and said it was the right thing to do. If we hadn’t done that, we would have the worst aviation system in the world today.

Cranky: If that’s the weakest argument, then what’s the strongest?

Will: I don’t think any of the arguments are very strong, but I think the strongest one arguably is that you have to go do it right or it has the potential of being a disaster. It’s true. The transition has to be done carefully and thoughtfully with the cooperation of all parties. But all the perceived dangers and escalation of costs, there is no empirical evidence showing that’s true. There are hypotheticals, Congress can continue to tax the airlines no matter what system there is, but that’s hypothetical.

Before we signed on to this, we not only had our operational people but we had our financial officers at all the airlines look at this with a sharp pencil. We said, “we may propose something here that transfers the financial burden from the passengers to us. We’re going to have to write the checks. So we want you to look at this and make sure this makes sense from an economic point of view.” And when they did that, universally they came to the conclusion, at least the current members of A4A, that this has more chance of reducing cost because of the ability to utilize capital more efficiently, then increase cost. But the actual costs themselves aren’t as important as the efficiencies you create in the system. We’re willing to step up to the plate and write the checks to support the system through user fees instead of just collecting the money and passing it on.

Planeline

Cranky: The expectation is that this would be funded straight through user fees?

Will: Yep.

Cranky: Is the argument that there should be a reduction in taxation elsewhere to offset that?

Will: Yeah. The bulk of the money today comes from the 7.5 percent excise tax. To the extent we’d take a federal function out of the government, those fees should be reduced or eliminated proportionally. There are other functions that will continue to be in the government so there will be some need for taxation but it’ll be reduced proportionally.

Cranky: Well apparently they’ll be using the money to fund road paving or something. Though that’s a whole different issue.

Planeline

Cranky: If you were handicapping this, what do you think the chances are right now?

Will: I would give it an 85 to 90 percent chance of being successful. Getting a hard piece of legislation passed is like launching a rocket to the moon. There’s a certain window in time and space that you need. And I think we’re coming to that point. I’ve had more than 40 years experience including working on the Airline Deregulation Act. You need among other things a really strong advocate in Congress who understands the issue and is willing to take it on and get it done. In airline deregulation we had Senator Cannon and Senator Kennedy who passionately felt strongly about it and pushed hard.

Today we have the Chairman of the House Transportation and Infrastructure Committee [Rep Bill Shuster, R-PA] who understands this beautifully, who is really committed to getting it done, who is really respected for his views on this. You also need a great deal of unanimity in the airline industry. We have that with one lone exception. There was an A4A call in which large carriers, small carriers, regional carriers, cargo carriers, everyone stepped up to the plate at the CEO level saying this is what we need to get done. That is similar to what we saw in airline deregulation, though I have to admit the one airline that continued to oppose it until the very end was American Airlines. And yet the wisdom of Congress was “we’re gonna do the right thing.” And I think that’s gonna happen here.

The House is on a trajectory that’s very positive. The final component here is that we’ve reached a set point where we have a great deal in common in terms of our worry about the status quo with the air traffic controllers union, the Air Line Pilots Association, and other key stakeholders in the system. And nobody has come out yet and endorsed, we haven’t seen the proposal yet, but I’m optimistic that we could have a very substantial agreement on it, and I’m hoping that includes general aviation…. This should be for everybody.

Planeline

Cranky: Will this be your retirement job? Running this thing?

Will: I want to take over The Cranky Flier. I want you to run the system and I wanna sit there and pontificate on things.

Cranky: Sounds good to me. Thanks for the time Will, and enjoy retirement.

Planeline

Now you’ve heard both sides of the argument. What do you think should happen?

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31 Responses to Across the Aisle From American’s SVP of Government Affairs on Why Privatizing Air Traffic Control is Good (and Shouldn’t be Called Privatization)

  1. loehlert says:

    While I¹m very much in favor of privatizing governement entities, I do have a question which I¹m sure has been previously asked and answered but I missed it.

    The US Post Office was changed to a not-for-profit entity for the same reasons as are being put forth to justify a not-for-profit ATC; how has that worked out? What makes us think that a not-for-profit ATC will work out any better than what happened with the Post Office? There will still be the union and ineffective staff challenges along with bloated payrolls and any attempt to upgrade services through technology will be met with the same resistance, for the same reasons, as when the Post Office tried to do it.
    Beyond the usual ³We¹re different and that won¹t happen in this case.² comments, how can we have a reasonable assurance this won¹t be a repeat of the Post Office debacle?

    • loehlert – I can’t say I’m an expert on the USPS, but there are some significant differences.

      The USPS was designed at a time when the internet didn’t exist. Demand for mail has fallen. While there’s still a need for that last mile service they provide, the revenues are hard to come by to justify it. And it’s really expensive to provide that last mile service. It’s a messy situation. ATC, however, is not going to see dramatic reduction in demand and it doesn’t have the same level of fixed costs to maintain in the way that USPS does. So I would think it would be a lot easier to create a sustainable organization in a situation like that.

      But that’s my my random thinking. I don’t know of any official answer to that.

      • Alex Hill says:

        That and USPS has a Congressional mandate to fund itself without cutting any unprofitable services that people like (like Saturday delivery, rural delivery, etc). Very similar to the issues that Amtrak has. And I worry that Congress would do the same thing to the new ATC organization if this happens. For example, what if they try to close control towers at very quiet airports overnight?

      • DesertGhost says:

        For better or worse, companies like UPS and FedEx have taken away much of the Post Offices more potentially lucrative services and left it stuck with basic mail service. This kind of cannibalization will be highly unlikely with air traffic control service.

        • Nick Barnard says:

          Though one could also argue the post office has moved very strongly into the package delivery business, especially the last mile where they get packages directly from Amazon, and even UPS and FedEx have the post office deliver less time sensitive packages.

    • axelsarkis says:

      The problem with USPS isn’t exactly the same, but it is something to be weary about.

      USPS is forced by Congress to pre-fund its pension fund to the tune of $5 billion a year, which is a ridiculous burden that none of their private sector competitors (FX, 5X, etc) have to meet.

      If it weren’t for that, USPS would be in the black about a billion dollars a year, if I recall correctly.

  2. Alex Hill says:

    From my reading, it sounds like the main idea of this is to take air traffic control out of the annual discretionary appropriations process in Congress and give it a permanent footing.

    Is this executive summary accurate?

    • Alex Hill – Pretty much.

    • Jeff Lewis says:

      Your summary misses some of the real meat in the middle. The goal of any change such as this is to provide a benefit for the so-called ‘stakeholders’. At the top of the heap, the airlines want a stronger/quicker response from the designated regulator (FAA, which regulator was captured from day one in FAA history!), to do away with pesky restrictions like decades-old noise mitigation procedures. The unions, especially in this case NATCA, want to be able to climb salaries beyond the roughly $180K annual cap. In a nutshell, it is like a balloon being inflated, and the bigger it gets, the more personal benefits controllers, airline managers and faux-regulators accumulate. They are the stakeholders, so they gain the benefits. Of course, in the full picture someone’s gains always connects back to someone else’s losses … but those people (um, us taxpayers) are not ‘stakeholders’, so we do not really count. And, balloons do eventually pop, too.

      It is amazing to recognize some key facts about NextGen and this privatization push. For one, the technologies have been in use for decades, yet FAA/airlines/et al are telling Congress we gotta throw money into this ‘transformational’ ATC change. Yeah, right. And, underlying this, actual annual counts of takeoffs and landings at the 35 biggest U.S. commercial airports are down approx. 25% from their peak levels decades ago … so, this is not driven by pressing traffic demand (and what with fossil fuel dependency, if anything, airline operations are headed for decline). Plus, if FAA could get the airlines to better serve the public, with far more direct flights from where they depart from to where they end up (instead of routing the majority of passengers via hubs, which hugely increases number of flights, passenger count, miles flown, etc.) … well, if FAA just did this one thing, the improvements for passengers, for system flow and for the environment would be both positive and TRANSFORMATIONAL. Nah, instead the ‘stakeholders’ are busy collaborating their latest PR campaign.

      • Nick Barnard says:

        Jeff, you’ve got alot in there.. But if airlines could make money flying direct flights they would, and they do.

        The hub concept works for frequency, and there are some times where it makes sense to bypass the hub and fly direct. But often this is only in cases where there is lots of demand for one destination. Allegiant does this with their business to Vegas and Orlando. The mainline carriers have do have some flights outside their hubs to major destinations such as Orlando, just not a lot, and not on every day.

  3. RNB says:

    Amazing! I am less convinced that this is a good idea after reading the interview than I was going in!

    • RNB – Care to add some substance to that?

      • Anonymous says:

        “And the main part that’s not acceptable is the uncertainty of the financing tied up in the federal budget.” I generally favor privatization (whether Mr. Ris finds that word PC or not). And I see a lot of things, day-to-day, that could be done better in ATC. But the fact that the funding is in the federal budget is not the No. 1 problem that springs to my mind. If that’s Mr. Ris’s best argument, I don’t find it convincing.

  4. enrique escobar says:

    the air traffic control system handles thousands of airports without airlines. these airports provide essential services to these communities. how do they keep there services with these proposed changes?

    • enrique escobar – I don’t think anyone is talking about changing the existing system at all. Why would it be any different?

    • I think there would have to be mandates of service levels to be provided.

      Something like requiring a controller overnight once the average number of airfield operations goes above a certain amount. I’d strongly suggest that instead of this being put in the legislation that it should be given to the FAA as the regulator of the new entity.

      • enrique escobar – oops somehow I got it into my head that your question was specifically about closing control towers overnight, but the basic suggestion stands. The new organization should have to provide service based on the number of operations in that area or at that airfield.

        There are some airfields that seriously don’t call for any controllers, some that only need them during the day, and some that need them all the time.

        (One of the airfields that doesn’t require its own control tower is Woodland State Airport in Washington.. I look up the thing every time I drive by it on I5. http://www.wsdot.wa.gov/aviation/AllStateAirports/Woodland_WoodlandState.htm )

  5. AirBoss says:

    So…. How will it be funded. Will airlines pay more or less than their present share. Whose ox is gored?

    • SEAN says:

      In addition, how much more will the consumer be paying in fees to this so called NP beyond the cost of the ticket?

    • AirBoss – Well the proposal isn’t out there yet, but the way Will put it, the idea would be to lower the 7.5 percent tax and instead have user fees that would go to funding it. I’ll be curious to see how this actually looks when there’s a concrete proposal on the table.

  6. SteveFromCVG says:

    So by taking this private, they still have the controllers union that’s affiliated with the AFL CIO. But, can the union call a strike and not have the blowback like in 1981 when Reagan fired the ATC and the then current union was decertified? Could we have another France or similar situation where the air traffic is disrupted by wildcat strikes?

    • SteveFromCVG – I am sure they would not be allowed to strike. If that weren’t included in the legislation, then I would think everyone would shoot it down.

  7. generalgarcia says:

    It was sad to see the gentleman being escorted by someone from AA to insure he said what they wanted him to say. Seems like they don’t trust such a professional.
    This from an airline that speaks partial truths such as when they paint retro planes of some of the airlines they have acquired. Yet they hide some of the airlines such as Trans Caribbean Airlines which they acquired some time ago. Why would they overlook this one acquisition? Food for thought.

    • CF says:

      generalgarcia – I’m afraid you might not know how media interviews work.
      It’s normal to have a representative from corp comm in the room during interviews. The one with Delta had a PR person on the phone as well. In most cases, they just sit there and take notes and don’t interject into the conversation. But I have had some conversations (not with American) where they do try to stop the person being interview from saying things. (Or as they put it, they try to clarify… yeah.) There was nothing abnormal about this conversation.

  8. DesertGhost says:

    Anything that gets an important function like air traffic control away from political whims is something to be considered.

  9. Daniel says:

    Neither interview has done anything to convince me they are on the side of right. My natural inclination is to support the status quo. When I look at this, I also look at private aviation and I think this will just make it harder for someone to start off in aviation making it more expensive.

  10. 121Pilot says:

    There are a number of points where I find Mr Ris’s credibility to be lacking and it starts when he insists on trying to change the language being used. The term “Privatization” may not be perfect but it does honestly portray what is being sought and his need to redefine it makes me wonder what’s behind the curtain.

    Secondly his argument that ATC can’t take on a large expensive capital improvement project with government funding is bull. There are a lot of large expensive long term projects that get done by the government and ATC modernization need not be any different.

    Then he claims that when you shut something down for even a couple of days it takes months to restart… Really months????

    And to claim that the federal budget process affects controller retention and hiring is the biggest bunch of bull of them all. It was at that point that he lost what little remaining credibility he had with me. If American is concerned about the ATC workforce it might start by demanding the FAA hire people based on ability and qualifications instead of a personality test!

    But he did show his real colors when he used the term “user fees” and that is what this is really all about. The airlines have beat this drum for years now in the belief that they could cut their costs by hitting the corporate jet crowd hard. Well this is one airline pilot who is adamantly opposed to user fees and consequently to this proposal. Luckily for me it looks like their arguments lack any real credibility.

  11. Ibsunni2 says:

    All with air transportation should be left alone!!!!

    • Nick Barnard says:

      If we left everything alone with air transportation pilots would still be giving impromptu tours of the Grand Canyon on their LAX-LGA flights and crashing into each other.

      This industry must keep evolving.

  12. ted says:

    User based fee will be interesting.
    AOPA and all others alike are fighting against it. It might make the airspace more dangerous, when private pilots are not calling for flight following because of the $xx associated with an ATC call.

    from this it looks like AA just want to reduce their expenses.

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