'Conservative' air traffic control bill fails to privatize industry

'Conservative' air traffic control bill fails to privatize industry
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In June, Transportation Chairman Bill Shuster introduced H.R. 2997, The 21st Century AIRR Act. Couched as a way to “privatize” the Federal Aviation Administration’s (FAA) outdated air traffic control (ATC) systems, Shuster’s bill was shopped around to House Republicans, the airline industry, and special interest groups and sold as the conservative answer to a much-needed overhaul of an aging system and a welcomed transfer of power from public to private hands.

While efforts to roll ATC systems into the 21st century are commendable, the problem lies in the bill’s execution. When examining exactly how it purports to privatize the ATC, it’s clear that the federal government will still play the leading role in the life of whatever new entity is created.

The American Conservative Union Foundation (ACUF) developed the Seven Principles of Privatization as the standard to guide federal and state officials regarding the outcomes needed to achieve the benefits of privatization.

Applying these Seven Principles to the Shuster bill, we discovered that it misses the mark when it comes to tried and true privatization, completely failing in five of our seven principles. For example, under the bill, the U.S. Secretary of Transportation must approve the fees to fund this new entity and is given the authority to decide the makeup of employees. The Board of Directors — which will include directors appointed by the government — must accept existing union contracts. Unaffiliated private citizens have no opportunity to secure appointment to the Board.

Most tellingly, private entities are not allowed to compete for ownership of the new nonprofit. Because this new entity is a not-for-profit corporate entity controlled by the federal government, it is not possible to shield taxpayers from future liability. Stacked up against the ACUF’s Seven Principles of Privatization, it is evident that the bill’s means don’t justify its substantially oversold ends.

In response to this, we voiced support of true policy efforts to privatize our air traffic control system that better reflect the ideals of privatization and urged Rep. Shuster to rework the bill into something that more closely aligns with a robust free market and exhibits a true transfer of power from public to private hands.

As proponents of free market ideals, government accountability and transparency, and the protection of the private sector against unwarranted government overreach, conservatives of all stripes should be eager to discuss effective and successful methods that allow for modernizing and privatizing this and other government entities. That’s why it’s especially disappointing to see some supporters pushing for floor action on H.R. 2997, even though the nuts and bolts of the bill remain largely unchanged.

It’s a telling sign that many Republicans and outside organizations have also voiced their opposition to a bill they’ve agreed just doesn’t cut it. With lackluster support from fellow House Republicans, Chairman Shuster is rumored to be focusing his attention on whipping votes from Democrats, who stand in near unanimous opposition against his plan, in a last-minute effort to move the struggling bill off of life support. Even if the House moves to pass the bill, Shuster should expect strong opposition to the bill from the upper chamber, which seems to be exhibiting a strong distaste for his loose interpretation of privatization.

With the likelihood of no substantive changes to move the 21st Century AIRR Act toward a bill that resembles true privatization, the bill will continue to fail the privatization test ACUF originally put forth in our analysis.

Let’s be clear: Encouraging a robust debate on cost-effective and efficient ways to update our air traffic control systems is important — and needed; privatizing a government entity in dire need of reform is even better. But privatization doesn’t work if the federal government blocks private-sector competition and investment and ultimately has the final say when it comes to structure, employment, compensation, contracts, and fees.

Because of its failure to successfully transfer an authoritative grasp from public to private hands and open itself to a competitive free market, Chairman Shuster is advocating for a “privatization” bill that simply does not exist. 

Jackie Anderson is director of Policy and Public Affairs for the American Conservative Union Foundation.