Resolving the Crisis in Air Traffic Control Funding

Publication Date: May 2005

Publisher: Reason Foundation

Author(s): Vaugh Cordle; Robert W. Jr. Poole

Research Area: Transportation

Type: Report

Abstract:

The air traffic control (ATC) system is faced with a major funding crisis, which puts at risk ambitious plans to double or triple the system's capacity over the next 20 years. Based on the recommendations of the National Civil Aviation Review Commission (known generally as the Mineta Commission), Congress authorized the reorganization of the air traffic control functions of the Federal Aviation Administration into a performance-based organization. The new Air Traffic Organization (ATO) was formally launched early in 2004, headed by former airline executive Russell Chew. But the high hopes for faster and more cost-effective modernization, and for productivity gains, are now at serious risk, with consequences for all of aviation. Just over a year after the start-up of the reorganized ATO, its ability to modernize the system is seriously threatened.

This study recommends that Congress make the ATO a self-supporting unit of the FAA, by authorizing it to charge aviation users directly for its services. The ATO would also be authorized to raise money for capital spending (modernization) by issuing long-term revenue bonds in the capital markets. The FAA's safety regulation and miscellaneous other functions would still be supported, as they are now, by $2 billion per year of general fund monies. And the airport grants program (AIP) could be continued at its current size by a modest tax on airline tickets and cargo waybills (in the vicinity of 1 percent).