Wednesday, June 7, 2017

Yes to Privatizing Air-Traffic Control

By Kevin D. Williamson
Wednesday, June 07, 2017

If you think about the businesses you really hate, you’ll notice that many of them have something in common: They are in industries with a big federal footprint — banks, cable companies, health-insurance providers, and, bane of my personal existence, airlines.

If the word “capitalism” makes you think of the Apple Store, then it gives you a nice fuzzy Milton Friedman vibe; if the word “capitalism” makes you think of Wells Fargo’s shenanigans or trying to get Nasty McEvil Stupidface Health Partners to approve your mom’s dialysis, then it gives you more of a Karl Marx, Shining Path kind of a feeling.

Air travel in the United States is terrible, both in absolute terms and relative to air travel in other parts of the world. President Donald Trump has proposed trying to fix one of its defects — air-traffic control — by privatizing the activity and entrusting it to a new nonprofit corporation. The model here isn’t some Rothbardian fantasyland or a hypercapitalist city-state such as Singapore but our nice neighbor to the north, Canada, which keeps out-scoring the United States on the Heritage Foundation’s economic-liberty rankings in spite of its commie health-care system. Canada’s air-traffic control is managed by a truly private corporation, Nav Canada, which receives no government funding but instead operates on fees charged to airlines and other flight operators and raises capital in the private markets the same as any other business. It seems to work pretty well, and Nav Canada recently — get this — lowered its fees. The Trump administration, taking up legislation authored by Bill Schuster (R., Pa.), wants to emulate that model in the United States.

This is one of those blessed occasions when corporate management (the airlines) is on the same side as labor, with the air-traffic controllers’ union friendly toward the idea: Privatization would not change the union’s status, and the FAA is so screwed up that even American union bosses shake their heads in dismay and disbelief at its incompetence. The main opposition comes from . . . people like Donald Trump, i.e., the private-jet set and the firms that serve them. The general-aviation crowd fears that the board of the new nonprofit corporation will be too entirely dominated by the big commercial airlines, who may be tempted to use their position to shift some costs onto the smaller and less powerful private-flight industry. A few left-wing ideologues who oppose the privatization of anything also have made it known that air-traffic control falls within the category of “anything,” and that they oppose privatizing it.

While the eternal plight of the private-jet owner must never be far from our thoughts, arranging the new nonprofit corporation in such a way that their interests are not overwhelmed by those of the major carriers ought not be too difficult. It certainly does not represent, on its own, a persuasive argument against privatization.

Is this proposal an instance of “corporatism”? Of course it is: Organizing industry and government interests into a cartel in the form of a nonprofit charged with serving the public interest is classical corporatism. Our progressive friends have a great affection for corporatism when it is the Corporation for Public Broadcasting, and some of our Chamber of Commerce friends seem to think that they would wither up and die without the Overseas Private Investment Corporation or the Export-Import Bank. But a genuine free-market alternative is not on the table. So, setting aside the question of nomenclature: Is this likely to improve air travel in these United States? Put another way: Will this corporatist cartel represent an improvement over the current monopoly model?

The problems with air travel are legion, and there is no single reform that will address all of them. The airlines are part of the problem in that they are poorly managed but big and politically connected enough to protect themselves from more nimble competition (for example, foreign carriers are prohibited from operating domestic flights within the United States), which explains why airline incompetence rather than weather trouble was the biggest cause of flight delays in 2016, according to the FAA; the various unions are part of the problem, inflicting work rules on the industry that inhibit innovation and flexibility, contributing to those flight delays by making flight crews unavailable; antiquated regulation is part of the problem. And the FAA is a big part of the problem, too: Supporters of privatization point out that its defective procurement process means that equipment often is outdated by the time it is installed, and a recent program to modernize its traffic-control practices descended into fiasco. And part of the reason the FAA is a problem is that Congress is part of the problem, with its unsteady budget practices making it difficult for federal agencies to commit convincingly to long-term projects.

You know what else is part of the problem? New York. As recently as 2012, problems originating in the New York air space accounted for more than half of all flight delays in the United States.

Air-traffic control is one part of a very big picture, but making it more effective and more efficient would do a great deal to improve the overall functionality of the air-travel system, which would give airlines, airport authorities, and other responsible parties some breathing room to work on their own particular reforms. “Privatization” is a word that warms libertarian hearts, but institutional design matters a great deal here, too: The new private nonprofit will be theoretically accountable to federal regulators, but how that actually works in practice will end up mattering more than whether the new entity is formally private.

This is a step in the right direction, and we should take that step — carefully.

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