Now is the time for aviation policy reform

By: Steve D. Van Beek, Ph.D   |    Fri 11 October 2013, 12:51 pm
Tags: Aviation Americas

Wrangling over the U.S. government budget points for the need for a new aviation funding regime, according to Steve Van Beek.

October 1 marked the beginning of the U.S. government’s fiscal year. For the users, passengers and employees who rely on the National Aviation System (NAS) the new fiscal year is going to look an awful lot like the previous three years when vital services within the NAS - such as safety inspections, air traffic control services and certifications - were reduced. This has become so regular that airlines, airports, general aviation and even FAA employees have come to expect it.

If the sequence of events unfolds like it has on previous occasions, the ensuing operational dislocations will steadily increase and eventually force Washington policymakers to put ideological interests aside, and finally address the issue with a series of stop-gap measures that will restore system capabilities by mortgaging future capabilities.

Aviation stakeholders will bemoan the loss of services, delayed investments, and foregone revenue and get back to work. Then they will return to work until the next system interruption.

Notwithstanding these public budgetary fire drills and visible loss of services, many in the aviation industry have not yet fully grasped the cumulative effects of the budget problem at the Federal Aviation Administration (FAA).

While a furloughed employee may lose a portion of his or her paycheck, an airport might see a delay in a capital grant, a manufacturer may experience a delay in having a new part or aircraft certified, or a pilot may grapple with the loss of some service provided by a contract employee or an airport’s navigation aid, few understand the serious system-wide and long-term implications of the FAA going through its annual cost-cutting.

In a recent briefing to the FAA Management Advisory Council (MAC), Michael Huerta the FAA Administrator detailed several of the actions the agency has had to take to deal with its financial situation:

  • Postponing NextGen modernization by delaying initiatives such as the En Route Automation Modernization (ERAM) and the Metroplex Initiative (working to increase capacity and service in complex metropolitan airspaces)
  • Implementing a hiring freeze
  • Closing temporarily the FAA Academy (that trains new air traffic controllers)
  • Deferring maintenance and stretching out inspections on air navigation equipment
  • Redirecting $253 million in Airport Improvement Program (AIP) money to the FAA Operations account.

Already, the FAA’s deferred maintenance bill tops $6 billion and the delay in hiring can be expected to have serious downstream implications as FAA retirements increase.

An even more severe set of measures is a near certainty this fiscal year as the FAA is poised to take another 5-7% reduction in its FY 2014 budget if Congress fails to come to a budget deal and head off a second round of sequestration.

This is likely to cause delays and cancellations at major hubs and metropolitan airports. Due to personnel notification requirements, airlines and airports will at least get a 30-day notice prior to implementation.  Last year, commercial airlines have said that the one-day a pay period furloughing of air traffic controllers cost them over $400 million in lost revenue.

These types of embarrassing and destructive disruptions of recent years have done real damage to aviation, an industry that is a leading driver of U.S. economic growth, exports and job creation. 

Meeting over the last three years, the members of the FAA MAC — appointed by the Secretary of Transportation and representing all segments of aviation—have held a series of discussions and meetings with the FAA and invited guests to (1) understand the factors that have led to the industry being placed in such a precarious position and (2) develop a reform agenda that can get aviation out of its current predicament. 

The MAC finds that the uncertain funding environment, combined with the key roles played by the FAA in operating air traffic control and investing in aviation infrastructure, make the FAA today uniquely susceptible to the partisan divisions and public policy failures that today are commonplace in the nation’s capital.  

Our ultimate goal is to protect and support aviation by having the aviation industry take greater responsibility for operating the system and investing in it, as is common in other aviation systems. Safety and regulatory responsibility would remain in the hands of the FAA.

To guide a reform effort, we have unanimously agreed on a set of four interrelated principles:

  • Create a sustainable financial future for the FAA: The most important goal is to establish a funding system that provides dedicated and sufficient user-based revenues to pay for FAA obligations.  MAC members believe that general fund support for the aviation industry should be phased out as soon as possible in order to insulate the agency and the provision of user services from day-to-day politics.

  • Separate a new commercialized Air Traffic Organization (ATO) from the FAA: Modelled after other Air Navigation Service Providers (such as NAV CANADA), separate the service-oriented ATO from the FAA and appoint a board consisting of users and aviation stakeholders to oversee its work.  MAC members strongly believe that ATO reform must be accompanied by overall aviation policy reform due to the links between policy and funding decisions.

  • Assess and codify FAA Authorities and programs: Simplify statutes, regulations and policy by reviewing existing rules and procedures and eliminating redundant regulatory oversight.  MAC members believe that this process will result in significant savings to the FAA and will obviate the need for a near-term increase in user revenues after the phase out of general fund support.

  • Reform the tax structure: Eliminate the current mix of AATF taxes and fees and replace it with transparent schedules of cost-based fees that provide sufficient funding for services such as air traffic control and aircraft certification.  MAC members believe that new schedules should be (1) revenue neutral and (2) flexible in their administration in order to gain the confidence of stakeholders and facilitate the transition to a new system. 

MAC members have begun to have discussions with many of the aviation stakeholders who will be vital to forge an industry coalition to pressure Congress and the White House for change.

We have found, without exception, that whether it be airlines, labor, general aviation, airports or manufacturers, the industry appreciates that it must take responsibility to solve the problem. 

As we come together for reform, we have many examples from nations such as Australia, Canada, France, Germany and the United Kingdom to draw upon for the best organizational and funding models to employ for the U.S. system.

Just north of our border, back in 1991, the Canadian industry was faced with similar degradation of service and budget challenges and managed to come together to petition the government for change.

Four years later it was successful, creating NAV CANADA, a private, non-shareholding commercial air traffic organization that has proven so successful that it is now selling its services in the U.S. and beyond.  The test for those of us south of the border is whether or not we value aviation enough to save it and allow it to prosper.

About the author

Steve D. Van Beek, Ph.D

Steve D. Van Beek, Ph.D

Steve has over 25 years of experience as a senior executive, policy analyst and transportation professional. Steve advises airport and transport clients and coordinates policy and business strategy across the consulting firm's lines of business. Current projects include strategic planning and policy analysis, multimodal planning, transportation funding and finance, as well as federal laws/regulations/policy.

Contact Steve

Phone: +1 703 796 6220 | Email Steve