Privatization of Air Traffic Control - Term Paper Example

Privatization of Air Traffic Control of United States Name Institution Table of Contents Table of Contents 2 List of figures 3 Abstract 4 Audience Scenario 5 1Introduction 6 1.1Background 6 1.2 Purpose of report 7 1.3Data sources and Scope 7 1.4Conclusion 7 2Arguments for Air Traffic Control Privatization 8 2.1Air Traffic Control Funding 8 2.2Administration and Control 9 2.3Findings 11 3Arguments against Air Traffic Control Privatization 11 3.1Airline Owner and Pilots Association 12 3.2Congress Opposition 13 3.3Findings 14 4Conclusion 15 4.1Summary and Interpretation of Findings 15 4.2Recommendation 16 5References 17 Appendices 19 List of figures Figure 1……………………………………………………………………………………………8 Figure 2…………………………………………………………………………………………..12 Abstract The air traffic control in the united states of America is under the federal aviation administrations which is responsible for its funding and development. However, in the past few decades, the federal aviation administration was in the process of cutting its budget which has resulted into poor service delivery in the airline industry. In addition, poor management of the federal administration has resulted into delays in acquisition of technology and modernization of air traffic control in order to make it efficient. There was the proposal to privatize the air traffic control in order to save tax payers money and allow quicker modernization of the air traffic control. The privatization has been supported by some arguing that Canada and united kingdom had done it and succeeded. The senate and house voted against the privatization and resolved to use current legislation in order to improve management of federal aviation administration and increase funding in order to make air traffic control efficient. Audience Scenario This repot on air traffic control is directed to the lawmakers of the United States of America and the stakeholders in airline systems. The arguments presented in this report will help the senate and the house as well as the airline owners and pilot association to make the necessary legislation that will allow good management and services delivery in the air traffic control. In fact, it will help the United States government to make decision as to whether to privatize the air traffic control by adopting models used in the United Kingdom and Canada so as to save tax payers money. Hence, the report will offer an insight to the stakeholders on whether to adopt the recommendation and save the air traffic control device way to ensure efficacy and modernization of the air traffic control. 1 Introduction 1.1 Background The management of air traffic control system in the United States of America has been in the hands of the United States government under the Federal Aviation Authority. The customer satisfaction in the airline control; system has generated a lot of concerns with a lot of customers in the airline industries complaining on service delivery. According to Elias Et al (2013), the customer complaints increased by 60 percent in 2007. This was due to an increase in world wide air traffic (Appendix 2). The administration of the air traffic control system has been faced with a lot of regulations due to its increased budget that strains on the taxpayers. The federal aviation authority has been under a lot of pressure due to its regulation which sought to cut the budget in the air traffic control departments. This means that the government was no longer in a position to manage the air traffic control system from its existing budget. In order to increase funds in the air traffic control, there is the need to explore ways and means in which the government can put the air traffic control under the private sector (Majumdar, A., and Ochieng, W. (2004). Since, the federal aviation administration relies on the aviation users taxes in order to fund the air traffic control; it was not possible for the air traffic control to achieve good service delivery including modernization of the NextGen. The privatization of the air traffic control would see the funding of the federal aviation administration increase without necessary straining the aviation users (Buyck, 2010). 1.2 Purpose of report Based on different reports and scenarios used in the united kingdom, Brazil and Canada, this report examines the possible ways in which privatization of the air control in the united states will help in the generation of more funds in order to safeguard the aviation users from increased fees and taxes. Hence, the explanation of this report is based on case studies in United Kingdom, Brazil and Canada as well as different literature in the air traffic control. 1.3 Data sources and Scope The report will cover areas such as issues and challenges facing the federal aviation administration in terms of cost overrun in order to modernize, the possibility of commercializing the air traffic control system in order to increase funds and avoid budget cuts and establish whether privatization of the air traffic control will help to solve the issues such as budget cuts in the federal aviation administration. 1.4 Conclusion This report concluded that there is the need for the United States government to adopt the different models of privatizing the air traffic control in order to offer quality services to the American aviation users. This is because areas countries that have privatized their air traffic control have good results and are saving many funds. Taking the examples of the United Kingdom and Canada, the United States can either establish a private-public partnership that will foresee the management and funding of the air traffic system. On the other hand, the United States government can establish a nonprofit corporation that will finance the air traffic control from the profits of the aviation users and save tax payers money. This will enable quicker adoption of technology and modernization of the sector though good management and improved procurement procedures. 2 Arguments for Air Traffic Control Privatization Different arguments have been presented in favor of the privatization of the air traffic control system in order to enable efficiency and quicker modernization of the air traffic control system. 2.1 Air Traffic Control Funding The federal aviation authority faces the operations of the air traffic control in the United States. This means that the federal aviation administration manages, maintains and modernizes the sector using the tax payer many. During the recent past the administration has been faced with financial challenges forcing the federal aviation administration to cut budget in air control. According to Edwards (2009), cutting of the federal aviation administration budget by 37 million US Dollars. This means that there is the need to find funding for the airline transport sector so as to isolate the airline safety system from the politics of United States. The cutting of the federal aviation administration budget meant that some of the operations such as NextGen operations would slow down due to lack of funding. In order to reduce the budget of the federal aviation administration, the sequester programme was introduces (Elias et al., 2013). This programme was in introduced in order to cut the 2013 budget across the board. However, the sequester programme failed to take place during the first half of 2013 resulting the federal aviation administration to cut its budget by 10 percent (Edwards, 2009). This was an indication that the funding of the federal aviation administration was not able to cater for the modernization of the air traffic control systems in the country (Appendix 1). Privatization of the air traffic control is seen as the only way in which the federal aviation administration would be able to raise funds which will enable it to finances the projects and modernize the air traffic control system. This is because the will be in the hands of a private body which will be able to fund for all the operations of the air traffic control. Privatization would cut the budget of the federal aviation administration (US Government Accountability Office, 2005). This means that there will be no budget deficit. This can be proved from the Canadian experience. In Canada the government financed was removed when the air traffic control was put under commercial basis. According to the Canadian model of privatization, the air traffic control plough back profits to running g and improvement of the system and also lowers the charges of their services to clients. In addition, the efficiency in the air control system was increased since the private sector was able to increase the capital investment in air traffic control. 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 air traffic control (Marett & Winters, 2007). 2.2 Administration and Control The control of the air traffic control in the United States is in the hands of the government through the federal aviation administration. Firms that are managed by the government are seen to have poor management practices that lead to poor service delivery. According to (Sparks (2008), the federal aviation administration has been for a long time having poor management practices that lead to delays in the acquisition of new technologies for the increasing growth of traffic as shown in figure 1. In addition, poor management has led to provision of second rate services to the American people. The federal aviation administration has struggled for a long time to modernize the air traffic control system with no success due to poor management skills. Hence, in order to provide quality services and ensure faster acquisition of new technology, there is the need for the government to privatize the air traffic control system. Privatization of the air traffic control will ensure that the government is able to distance itself from important matter and concentrate on other political matter in order to provide efficient air travel services. The United States government can adopt the Canadian model in which it establishes a nonprofit organization that charges aviation users low rates. Adopting the Canadian model, the United States government can privatize the air traffic control system so as to enable manager to draw greater efficiencies from the existing assets and enable them to offer quality customer services (Edwards, 2009). Figure 1: growth of American air traffic between 2008-2009 (Buyck, C2010). 2.3 Findings In order to save the public funds and ensure quicker developmentof the modernization of the air traffic control system, experts argue that privatization will help the federal aviation administration to avoid budget cuts. The federal government can adopt the Nav Canada model and set a private corporation that will ensure both management and funding of the business organization. This means that the corporation will have its own directors and managers who will manage the nonprofit making organization. On the other hand, the United States government can adopt the United Kingdom version and fully privatize the whole air traffic control system. Thiswill give the private sector more powers to control the air traffic control system which will enable it to offer quality management for the benefits of the American people. Findings reveal that the privatization of the air control system will save the tax payers money o that it can be used for other project. For example, the introduction of the sequester programme was seen to have a negative impact on the American people working under the federal aviation administration. In addition, the procurement system of the federal aviation administration was found to be ineffective in addressing the needs of the air traffic control systems. 3 Arguments against Air Traffic Control Privatization The privatization of air control system has faced a lot of opposition from different groups of people in the United States of America. 3.1 Airline Owner and Pilots Association As the united states congress was in the process of passing legislation that would allow the united states government to privatize some of the state owned corporation in other to increase funding and efficiency, the airline owners and pilots association was opposed to the move, arguing that the safety of the airline systems will not be guaranteed. According to the airline owners and pilots association, privatization of the air traffic control was not necessary and could pose security threats in the highly regulated industry (Leone, 1994). The president of the airline owners and pilots association wrote to the senate arguing that the proposal was well intended but said that it was not necessary since the congress had passed the AIR-21 legislation (Appendix 1). He argued that since the funding problems in the federal aviation administration is among the reasons for privatization; the new landmark legislation will ensure that there is an increased funding for the federal aviation administration in order to finance the air traffic control department. It was also noted that the delays in the air traffic control are contributed by other factors including poor airport conditions, labor issues, scheduling technicalities, and weather problems and not necessarily management issues of the federal aviation administration (Stottlemyer, 2007). This is because the air traffic control has been witnessing delays of airplanes and passengers as shown in figure 2. In this case it was difficult for the United States government to implement the privatization of the air traffic control system. In addition, this association was worried with the fact that private companies that would take control of the air traffic control may end up exploiting the public by not giving satisfactory services (Marett & Winters, 2007). This is because private corporations may have their own rules and terms that may not necessarily be useful to the American people. Moreover, the airline owners and pilots association was worried with the fact that the government is seen as the only trustworthy agency when it comes to security of the American people. This means that they were concerned on the fact that private companies may not manage the security issues in the air transport department. Figure 2: Hours of passenger delays between 1990- 2007 3.2 Congress Opposition At one point the senate and the house in the United States voted in order to prevent privatization of the air traffic control system. The senate and the house were having differences on the amount of money the federal aviation administration scan use in the next four years with the senate quoting 43.5billion USD while the House quoted 58.9USD. This means that the house was not of the opinion to cut the budget of the federal aviation administration. This implied that the federal aviation administration was facing financial challenges in modernizing the air traffic control system and acquisition of new technology that would ensure efficiency in the air traffic control (Wald, 2003). The decisions by the senate and the house were due to pressure from union and pilot representatives in the United States who were opposed to the privatization of the air traffic control. On the other hand, the federal government argues that restricting the funds for the federal aviation administration would hinder it operations and control of the airlines in United States of America (Leone, 1994). This would translate to customer dissatisfaction due to delays and poorservicesdelivery. The congress lawmakers opposed on the fact that they were not in favor of creating a new center of power to control the airline system. According to the law makers, what was needed was to improve the management of the current air traffic control and streamline the procurement system in order to speed up the modernization of the air traffic control. This meant that they were to use the existing federal aviation and administration framework in implementing meaningful reforms that would make sure that the federal aviation administration is managed better, modernized and procurement procedures improved. There were fears from other law makers that the United States government may end up giving more jobs to the public sectorrather than the public sector (Edwards, 2009). 3.3 Findings Focusing on the senate and airline owns and pilots association, one can deduce that, the privatization of the airtraffic control was not favored by the stakeholders. This is because for the air traffic control to get in private management, the congress would have to pass the necessarily legislation. Since the senate and the house had voted against the idea of privatization, it was prudent of the stakeholders to establish a way in which they can increasing funding and improve management practices in the federal aviation administration in order to make it possible to acquire new technologies necessary for modernization of the air traffic control. Although, the opposition from the two parties appears to lie on safety and finances, it is necessary for the United States government to find way and mean to ensure that the federal aviation administration get enough funds and have the appropriate management that will allow it to modernize the air traffic control. In addition, the airline owns and pilots association did not take into account that airline privatization has been done in other countries like United Kingdom, Canada and Brazil (Steuer, 2010). This had helped the governments to save tax payers money and obtain security measure. Hence, the federal aviation administration will be more efficient when it become modernized. 4 Conclusion 4.1 Summary and Interpretation of Findings The air traffic control in the u united states of America has been faced with a number of challenges. This is due to poor funding from the federal aviation administration. The federal aviation administration has been for decades under poor management resulting o poor air traffic control services. The federal aviation authority has been under a lot of pressure due to its regulation which sought to cut the budget in the air traffic control departments. This means that the government was no longer in a position to manage the air traffic control system from its existing budget. Based on the literature and findings, it is possible to deduce that the federal aviation administration was in need of more funding in order to be able to acquire new technologies and modernize the air traffic control. In order to provide more funds, there was the need to privatize the air traffic control and adopt privatization models similar to those used in Canada and United Kingdom. This would help the air traffic control to modernize and save tax payers money. However, the senate and house was opposed to the idea due to opposing from union members and pilots association. They argued that it is possible to use the current legislations to improve management of aviation control. Hence, it was clear that the United States government was not ready for privatization. 4.2 Recommendation Based on the findings of this report, the air traffic control should be put under an efficient management body independent from the bureaucracy of the government procurement procedures. This will ensures that the acquisition of modern air traffic control equipment is faster. The congress should vote to increase more funding to the federal aviation authority in order to allow the air traffic control acquire modern technology. In addition, the senate and house should agree on the ways in which they can privatize the air traffic control after considering the United Kingdom and Canadian models. 5 References Buyck, C. (2010). World Airport Report. ATW Edwards, C. (2009). Privatization: Downsizing the federal government. CATO Institute. Available at http://www.downsizinggovernment.org/privatization Elias, B., Brass, C., & Kirk, R. (2013). Sequestration at the Federal Aviation Administration (FAA): Air Traffic Controller Furloughs and Congressional Response. Congressional Research Service. Majumdar, A., Ochieng, W. (2004). From ‘Our Air is Not for Sale’ to ‘Airtrack’: the part privatization of the UK’s airspace. Transport Review 24, 135–176. Marett, P., & Winters, J. (2007). Air Traffic Control Industrial Relations: Great Britain and the United States. J. Collective Negotiations, 31(2), 155-172 Leone, J. (1994). ATC Privatization Faces Opposition. Dateline Washington. Sparks, E. (September/October 2008). Why You Hate to Fly. The American. Steuer, M. (2010). The partially private UK system for air traffic control. Journal of Air Transport Management, 16 (1) 26–35 Stottlemyer, T. (2007). A Harbinger of Ills? The Central New York Business Journal, 25. US Government Accountability Office (2005). Air Traffic Control; Characteristics and Performance of Selected International Air Navigation Service Providers and Lessons Learned from Their Commercialization. Report to Congressional Requesters. US Government Accountability Office, London. Wald, M. (20th June 2003). Congress and bush split on privatization of F.A.A. New York Times. Appendices Appendix 2: Federal aviation administration funding levels Appendix 3: Evolution of air traffic control in the world Read More