Within Transport was the Canadian government’s Air Navigation System, which cost the feds $200 million in annual subsidies. In 1996, partly to save money and partly to improve air navigation, the feds sold the system to a private nonprofit company called Nav Canada. The transaction netted the feds a cool $1.4 billion. That doesn’t sound like much, but remember that this was Canada, whose economy is approximately 10 percent of the size of the US economy. Remember also that this was in 1996 dollars.
One quick change from the old model to Nav Canada was in funding. Whereas the federal government had funded the Air Navigation System with a tax on airline tickets, Nav Canada is financed with fees to airplanes that are based mostly on the weight of the airplane and the distance flown.
This is from David R. Henderson, “Privatize the Skies,” Defining Ideas, January 18, 2023.
And:
If you want to see a quick comparison of technology with Nav Canada and “technology” in US air traffic control, check out this 2009 video. Compare US technology at the 1:23 point of the video with Nav Canada’s technology at 5:15.
Thanks to Scott Lincicome at the Cato Institute for the link to the 2009 video.
And:
In a 2008 study for the Brookings Institution, economic scholar Dorothy Robyn, who had been a special assistant for economic policy during President Clinton’s time in office, catalogued the failings of air traffic control in the United States. Foremost among them were flight delays. In 2007, she estimated, flight delays cost passengers and airlines between $12 billion and $14 billion in lost time and fuel. She noted, for example, that the time taken to fly from New York to Los Angeles was twenty-five minutes longer in 2007 than in 1997. She attributed the problems to poor governance, another term for bad incentives. Because Congress and federal budget rules constrained the FAA, it was ill-suited to run “what amounts to a capital-intensive, high-tech service” business. Also, the use of passenger taxes to fund air traffic control “encourages overuse of scarce capacity” and deprives the FAA of feedback from aircraft operators. While Robyn called aircraft operators the FAA’s “real customer,” in fact the structure of control and financing means that its real customer is Congress.
Read the whole thing.
READER COMMENTS
Andre
Jan 20 2023 at 8:56am
“She noted, for example, that the time taken to fly from New York to Los Angeles was twenty-five minutes longer in 2007 than in 1997.”
This didn’t pass my smell test. The switcheroo here is the implied increase in flight time and/or perhaps the implied increase in gate-to-gate time.
But she was just quoting a WSJ aviation columnist for the twenty-five minute claim. However, in that same context, she wrote that, “Flights from New York to Washington, DC, which involve only about thirty-five minutes in the air, are now routinely scheduled for well over an hour.”
None of this indicates flights take any more time, though, nor that gate-to-gate times are any longer, either.
At some point about a generation back, as I recall, the entire system added about half an hour of padding to just about every flight. This seemed obviously intended to change customer perceptions: rather than compete on (short) flight length with the inevitable results of late arrivals being the norm, airlines shifted to sandbagging the schedule so that the entire industry could instantly improved “on time” arrivals for most flights. I.e., by adding half an hour to the schedule, most of those late flights are suddenly early.
I.e., underpromise and overdeliver.
I have not noticed flights themselves, nor gate-to-gate, taking any more time than they used to 30-40 years ago. The system seems to be working as intended: airlines can better deliver on the more relaxed standard and we’re okay with that.
MarkW
Jan 20 2023 at 9:16am
This seemed obviously intended to change customer perceptions
IIRC, I think it was also intended to pad the ‘on-time performance’ stats and avoid penalties for late flights. And, of course, flying is also slower now because of all the time wasted with the TSA security theater.
TMC
Jan 20 2023 at 3:28pm
I wouldn’t be surprised if flight time is a little longer. They seem to fly a bit slower to conserve fuel. Not necessarily a bad thing.
Mike Hammock
Jan 20 2023 at 11:54am
Whenever I’ve discussed privatization of air traffic control with my father (who used to fly a small plane, mostly for fun), he has said that it would be terrible for general aviation. General aviation is the term applied to people flying small planes (think Cessna), owned by one person or maybe a small group of people. https://en.wikipedia.org/wiki/General_aviation
The only argument I can find to back this up is that general aviation would be poorly represented on the board of directors, and that general aviation would have to pay an unfair portion of the costs of the new system. If I remember correctly, Bob Poole doesn’t think these are problems.
Art K
Jan 20 2023 at 2:25pm
I agree with the spirit of the post but I’d argue that giving the responsibility to a non-profit isn’t privatization. Moving the responsibility away from government as demonstrated is generally a good thing as there is then more discipline in the system and better outcomes. Related, Toronto’s airport was privatized in the same manner and it became one of the best airports in North America (pre-COVID at least). The end user experience was dramatically improved. Ironically, at the same time the airlines (private sector) loudly complained about their increased fees. The headlines inferred that the private sector capitalist airlines preferred the non-privatized government subsidy model for the airport.
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