Feasibility of Privatizing Air Traffic Control in the USA - Case Study Example

Abstract The federation aviation of United States of America controls the air traffic and looks after the funding and development of the project. The last few decades have witnessed a sharp drop in the service quality which the federation aviation provides and has been primarily due to reduction in budgets. This has affected the level of service quality and has thereby been unable to deliver quality services as seen in other places. The impact has been so strong that it has delayed the acquisition of new technology and up gradation of airports and airplanes is suffering which has impacted the customers using the services. In order to deal with the situation privatization of air traffic control was put forward by certain proponents based on the premise that it has been successful in United Kingdom and Canada and would thereby help to improve the quality of service. Privatization would help to bring modernization and efficiency through the process of tax saving and will thereby impact the quality of service positively. People are also against it as the different unions and agencies believe that it will have an impact on the security aspect. The legislation for the privatization of air traffic control was voted by the senate in the house but it failed and was rejected and instead more focus and funding would be provided so that the manner in which the aviation sector works will improve. This will help to improve the quality of service and will provide an opportunity through which better services will be provided to the customers. Chapter 1: Introduction Background In the United States of America, The Air Traffic Control(ATC) system is managed by the Federal Aviation Administration(FAA).FAA is responsible for the use of navigable airspace and regulation of both civil and military operations in the airspace. Thousands of agency's (FAA) employees are involved in controlling the air traffic and technical work to provide best of services to the customers. Alexander Wells (1994) states that the U S ATC system is the largest and most advanced air traffic control and navigation system. But the rising complains from the customers on the services provided has raised concerns for the air industry. According to Elias Et al (2013) the customer complaints have increased by 60 percent in 2007. An increase in worldwide air traffic can be held responsible for such problems. Further the rising costs borne by the ATC has been continuously regulated as it increases the burden of the government which is indirectly passed on to the customers. This has lead to a lot of pressure on the FAA, and it has been continuously trying to cut the budget in the ATC departments. The government is still incapable in administering the ATC in its present budget. Experts suggest that the government should find out different methods to privatize ATC which would help in funding the department (Majumdar and Ochieng, 2004). The privatization of ATC would see the funding of the FAA increase without necessarily straining the aviation users (Buyck, 2010). Data sources and Scope The report will focus upon analyzing the U.S. ATC system .The challenges faced by the FFA to increase funds, avoid budget cuts and find out how privatization of ATC could help in solving the traffic control issues. The method used in this study assumes the findings in the study can be generalized to similar situations. The factor of size and volume of the U. S. ATC system as compared to the systems of this study could possibly affect the outcome and produce different results than indicated by this study. Purpose of the study The basic purpose of this study was to determine if privatization of the Air Traffic Control (ATC) system would help in reducing costs and improvisation of safety in air traffic. Reduction in cost and safety will result from the replacement of various regulations and use of better techniques and personnel. Air traffic control plays a vital part in the transportation industry, which is the fastest mode for the movement of people and freight. Efficient air traffic control must exist to maintain the orderly and safe flow of air traffic. The report will also reflect the various problems faced by the FAA in administering the ATC in US in terms of rising cost and continuous lack of budget which has led to rise in taxes and complains of the customers.The explanations of this report is analyzes the present scenario of traffic control of countries like United Kingdom, Brazil and Canada which will help us to understand how privatization of ATC in US will be help the air industry of the country. Structure of the thesis Chapter 1 will focus on providing the basic framework regarding the study which will cover various aspects related to the purpose of the report, the scope of the report, the different data source used and the questions which will answered through the thesis Chapter 2 will focus on the methodology which will highlight the sources which is used, the manner in which the research is carried out, the different aspect which is covered while looking to carry out the research and the manner in which the research will be formulated Chapter 3 will focus on carrying out a literature review which will be based on past studies so that important information and interpretation can be developed based on which the entire thesis will be carried and will highlight the different areas which will be covered through it Chapter 4 will focus on analyzing the data so that the question which has been asked can be answered and will look at both the aspects so that proper results based on it can be found which will help to take future decisions Chapter 5 will focus on providing recommendations and conclusion for the future and will also help to open up the scope for future research through which better results and evidence can be found to build on the present findings Conclusion After thoroughly analyzing the report, it can be concluded that the US government needs to adopt means of privatizing the ATC in order to control the costs and provide better air traffic safety. The countries like United Kingdom and Canada are clear examples of how privatization of their ATC has ensured controlled costs and better safety in traffic control. The United States government should get into a public-private partnership which can help the government to meet the costs of ATC by bringing in finance from the private partners. This will also help prevent the government from raising the taxes on air transportation in order to meet its expenses. This will enable quicker adoption of technology and modernization of the sector throughout good management and improved procurement procedures. Chapter 2: Methodology Introduction This chapter will analyze the methodology which is being used in the research so that the question regarding the privatization of air traffic control in the United States can be properly answered. The chapter will highlight the manner in which data will be collected and the different sources which will be used. Research Questions The research looks at answering some of the basic question regarding the privatization of air traffic control in United States and the manner and impact it will create on the performance of the aviation sector. It thereby looks to answer the following questions Determining if privatization of the Air Traffic Control (ATC) system would help in reducing costs and improvisation of safety in air traffic in United States? The various problems faced by the FAA in administering the ATC in US in terms of rising cost and continuous lack of budget which has led to rise in taxes and complains of the customers. Aim of the thesis The thesis looks at answering the basic question whether privatization of air traffic control in United States will be beneficial or not and the different proponents and determinants which are in favour and against the privatization of air traffic control. This will thereby help the federation of aviation to develop future strategies and will direct the path that has to be adopted for better performance. Methodology for Data Collection The data collection method mostly focuses on secondary sources which will use different published sources to answer the question which has been posted in the research question. This will help to find out the different factors which have a role in determining the process through which decisions gets impacted and the long term benefit of it. In addition to it the research will also use some primary sources by conduction an interview so that better insights can be found regarding the privatization of air traffic control. This will help to provide better linkage with the secondary information and will provide a better link through which the different questions will be answered. While looking to collect data authenticity will be maintained to ensure that no information gets leaked or is manipulated so that the research provides correct information and direction for the future. Time Horizon The research will be carried out over a short period of time but care has been taken to cover all the areas are included. Sufficient time has been allocated for collecting information both from primary and secondary sources so that the results which are complied based on in provides corrective data for future use. Limitations The study is limited to the fact that it focuses on secondary data and the use of primary source is limited. Apart from it the paucity of data and manner in which it will impact the privatization process is limited which has impacted the study to a slight level and needs to be properly dealt so that better results can be achieved for the future. Chapter 3: Literature Review Arguments for Air Traffic Control Privatization There are both pros and cons in privatizing the air traffic control and various arguments suggest that privatization of the air traffic control system will enable efficiency and rapid modernization of the air traffic control system. This study indicated that ATC privatization would reduce operating cost and increase ATC safety. Air Traffic Control Funding As discussed earlier in the report, we know that the FAA controls and manages the air traffic control in the US. It not only regularizes the ATC but also continuously tries to mange and modernize the ATC through money raised from the consumers. The FAA also frames the budgetary policies for the ATC. But in recent years it is noticed that FAA has been trying hard to cope up with the rising cost of ATC. According to Edwards (2009), the FAA budget was cut down by around 37 million US Dollars. This clearly indicates that the department is in need of funds in order to finance and maintain proper flow of work of ATC. A sequester program was introduced (Elias et al., 2013) to reduce the budget by the FAA in 2013. This program aimed to cut the 2013 budget across the board. However, the sequester program failed to take place during the first half of 2013 resulting the FAA to cut its budget by 10 percent (Edwards, 2009). This was clear indication that FAA was unable to provide modernization and smooth functioning of ATC (Appendix 1). There is little reason to doubt that privatization would increase efficiency thus reducing operating cost and increasing safety. Privatization would help the FAA to bring down its budget (US Government Accountability Office, 2005) which means that there will not be budget deficit. Reduced operating cost would also come from personnel reductions and efficient equipment procurement procedure. Countries like Canada clearly reflect the benefits of privatization. In Canada, the government finance was removed when ATC was put under a commercial basis. As per Canadian model of privatization, profits are ploughed back by ATC and used in improvement of the system and clients are charged considerably lower for the services. Further, the capital investment brought in by the private players help in smooth functioning of the system of ATC. If the United States government adopts the Canadian model of privatization, it will allow it to get full profit incentives that enable efficiency and will enhance quick modernization of the ATC (Marett & Winters, 2007). Administration and Control The air traffic control in United States is administered by a department named Federal Aviation Administration. The department mainly manages the functions of ATC and frames budgetary policies to ensure modernization and provide better safety measures for smooth control of the air traffic.Air traffic is defined as any aircraft operating in the air or on an airport surface, exclusive of loading ramps and parking ramps and parking areas (Federal Air Regulations, 2004). Air traffic control is concerned with (I) keeping aircraft safely separated while operating in controlled airspace, on the ground, during takeoff, during ascent, en route and during approach and landing; and (2) providing pre flight and in-flight services to all pilots (Kane, 1982) . According to Sparks, the FAA has been for a long time having poor management practices. This has led to delay in the acquisition of new technologies for the increasing growth of traffic as shown in (figure 1)(2008).Further improper management has led to poor quality of services provided to the consumers FAA has been continuously trying to mange the ATC but has failed continuously because of poor management and insufficient capital. This is clear indication that the government frames policies for the privatization of the ATCS. Privatization of ATC will ensure that the government is able to focus on other aviation-related matters and concentrate on other political matters in order to provide efficient air travel services. The Canadian model of privatization of air traffic can be adopted by United State government. The Canadian government has established a nonprofit organization. The charges are kept considerably low for the consumers using aviation. The United States government can privatize the ATC system so as to enable management to draw greater efficiencies from the existing assets and enable them to offer quality customer services (Edwards, 2009). Findings The results of this study shows that reduced operating cost and increased safety would result from the privatization of the U. S. ATC system. This will also help the government to focus on other political matters and ensure proper safety to the consumers. The privatized system as proposed would employ corporate style equipment procurement and personnel management techniques rather than present-day bureaucratic techniques. These recommendations based on the results of this study are: 1. The proposed proposal is implemented as a separate ATC service from the FAA. 2. The separate ATC service is structured as a nongovernment corporation employing corporate style personnel management and equipment procurement techniques. 3. Measures should be taken to bring in private capital to help in financing the cost burden. 4. The FAA should maintain responsibility for oversight of the ATC and should ensure better traffic control. This research constitutes a different approach to the ATC privatization issue. It is an attempt to analyze the existing data scientifically to reach conclusions concerning the privatization of the Air traffic Control System in the United States. Arguments against Air Traffic Control Privatization The privatization of air traffic control is being opposed by many based on different grounds and regions which needs to be looked and analyzed so that proper dimensions are analyzed and the different fundamentals which supports the same is properly developed. Airline Owner & Pilot Association The airline owners and pilot association are opposing the privatization of air traffic control stating that the safety aspect might be ignored. This is on the background that the United States government is thinking of privatizing some of the state owned corporation so that the problems associated with funding and efficiency gets solved out. This will help to provide better services and will act as a medium through which better services can be provided but is opposed on the grounds of safety of passengers and the crew members. Airline owners and pilot association are of the view that privatizing the air traffic control could raise security threats especially to an industry which is highly regulated and controlled by the government (Leone, 1994). The different groups have thereby requested the Senate to look into the matter differently and ensure that the process of privatization doesn’t leads towards safety and security aspect. The government on the other hand is of the view that improvement of funding and efficiency would help to reduce the delays of airlines, improve the conditions of the airport, provide an opportunity to provide better services to the customers, help to deal with scheduling difficulties and weather conditions which would thereby improve the entire process of working and solve the problems that the federal aviation department is facing (Stottlemyer, 2007). This has multiplied the difficulties for United States as ensuring privatization of air traffic control has become a problem. The other issues which has been raised is that privatization might lead towards concentration of power in a few hands which might thereby result in exploitation of the customers through high charges and cost (Marett & Winters, 2007). The association and the agencies are also worried about the people as private business will have their own rules and regulations and is considered a less trustworthy agency as compared to government which might thereby act as an hindrance in the path of carrying out services and might impact the long term future. Read More