Feb. 22 — When a major airline breaks from the rest of the industry on a legislative proposal to overhaul the nation's air traffic control system, it doesn't go unnoticed.
Most of the airline industry supports a plan by House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) to strip air traffic control from the Federal Aviation Administration and create a non-profit corporation to operate the system. Shuster touts the legislation as a way to shield the system from federal budget cuts and speed up implementation of the multibillion-dollar transition to a satellite-based navigation system.
But Delta Air Lines Inc., the second-largest U.S. passenger airline measured by traffic, opposes the plan and quit the industry's main lobbying organization last October. The split reflects Delta's strategy of flexing its lobbying muscle to influence the FAA's implementation of the “NextGen” satellite navigation system—instead of trying to sway Congress to restructure the entire operation. Delta's chief executive currently leads an FAA NextGen advisory panel and the company contends that splitting air traffic control from the FAA will create more complexity and confusion. Delta insists it is pursuing a “more efficient way of communicating in Washington.”
(Click image to enlarge.)
Delta's lobbying position is a break from the united front of the other big U.S. airlines and their trade association, Airlines for America, which support the plan that Shuster recently introduced in a House FAA reauthorization bill (H.R. 4441). Under Shuster's proposal, major airlines—along with private aircraft owners and air traffic controllers—would serve on the board that would oversee the new non-profit air traffic control corporation.
That board would determine how much users pay for access to national airspace. Air traffic control user fees would replace the ticket and fuel taxes that the FAA now collects.
Major airlines like American Airlines Inc., United Airlines Inc., and Southwest Airlines Co. favor the plan, which would give air carriers four of the board's 13 seats. The National Air Traffic Controllers Association also supports the proposal.
Airlines for America has said removing air traffic control from the FAA would insulate the system from future federal budget constraints, like those imposed when automatic spending cuts kicked in during sequestration, and make it easier to structurally change air traffic management.
Delta takes the position that it is better to modernize air traffic control within the FAA framework.
“We don't see any evidence that privatizing the air traffic organization would improve the efficiency or the performance of the air traffic control system in the U.S.,” Capt. Steve Dickson, senior vice president of Delta's flight operations, told Bloomberg BNA.
Dickson said privatization instead could lead to higher airline ticket prices.
Earlier this month, Delta released a study of countries that had privatized air navigation operations and found that in Canada, for example, air traffic control-related user fees had risen by 59 percent and the fees tacked onto Canadian airline tickets increased by 80 percent.
Dickson said privatizing air traffic control could hinder progress the FAA already has made on the NextGen modernization. Splitting air traffic control from FAA safety operations also makes little sense, he said.
“If you separate that out and make them an additional organization that has to be dealt with, then actually what you've done is you've created more bureaucratic complexity,” Dickson said. “Delta is not advocating for the status quo. We do think that there are improvements and reforms that need to be made within the FAA structure. We just don't think that this is the way to do it.”
Delta currently is advising the FAA on its NextGen implementation. Delta's Chief Executive Officer Richard Anderson is chairman of a NextGen Advisory Committee that includes the FAA and the Radio Technical Commission for Aeronautics. The company is the first major carrier to chair the panel.
Rui Neiva, a policy analyst at the Eno Center for Transportation, questioned Delta's suggestion that privatization would drive up air travel costs.
“A possibility, it certainly is,” Neiva told Bloomberg BNA. “But the systems in other countries were able to curb costs a lot. User fees in Canada compared to inflation have decreased by 30 percent.”
Neiva said there doesn't seem to be a direct correlation between air traffic control user fees and higher airline ticket prices in Canada, though airport-improvement fees have driven up passenger costs. U.S. airports are limited to charging $4.50 per customer for airport infrastructure projects, but Canada has no cap on airport-improvement fees. That's why passenger facility charges are higher in Canada, Neiva said.
Even if user fees did rise, it would be up to individual airlines—not the air traffic control corporation—to decide whether to pass along the cost to customers, he said.
Neiva rejected Delta's warning that a corporate air traffic control organization could become “too big to fail” and—like Fannie Mae or Freddie Mac—need a taxpayer bailout should it struggle financially. He said other countries that have privatized air traffic control created “rainy day” funds that set aside a portion of user fee revenue in case of an economic downturn.
The Eno Center for Transportation formed an aviation working group that released a report last year recommending creation of a private or government-chartered air traffic control corporation. Airlines for America participated in the group and, at that time, Delta Airlines was an A4A member. Delta left the industry group shortly after release of the think tank's report, Neiva said.
Capt. Dickson said Delta's departure from A4A was not prompted by any work done with the Eno Center, though he noted that both of the working group's chairmen—former Sen. Byron Dorgan, a policy adviser at Arent Fox, and former Transportation Secretary James Burnley, a partner at Venable LLP—were paid lobbyists for American Airlines.
Dickson said Delta's split with A4A was not limited to disagreement over air traffic control. In addition to passenger airlines, A4A represents cargo aviation companies including FedEx Corp. and United Parcel Service Inc. Dickson said the divergent interests can limit the group's advocacy to the “least common denominator position.”
According to the Center for Responsive Politics, Delta spent more than $3 million lobbying on air transport related issues in 2015, while A4A spent $5.3 million. A4A member companies also lobby individually.
Dickson said airlines should hold themselves more accountable for some failings of the current air traffic system and should own their performances.
Delta has invested in its operations and made sure it builds time into flight schedules that allow for maintenance check-ups that could otherwise delay an on-time departure, he said. Over the past five years, Delta has had fewer cancelled flights, a better on-time performance and a reduction in lost bags, Dickson said.
For its part, A4A said Delta is an outlier on the air traffic control issue.
“Delta suggests that nine other airlines are simply not owning up to their responsibility. That's an entertaining statement, but it just belies the facts” said Sean Kennedy, A4A's senior vice president of global affairs and a former Obama White House official. “You can't say that everything is going really well in the face of countless [inspector general] reports, nine airlines and air traffic controllers saying: ‘The system is not where it needs to be and we're not going to get there under the current structure.'”
Kennedy told Bloomberg BNA that airlines are willing to pay to support the system but lack confidence that the FAA can make the changes needed to improve air traffic control. He said Congress has tried and failed through multiple bills to tweak the FAA's air traffic control division, and that it also is difficult to deploy new technology like NextGen on year-to-year appropriations.
“We're really excited by the proposal because we look at how these 60 other countries have done it,” Kennedy said. “And we think that Chairman Shuster and Congress have a unique opportunity to finally put that kind of change in place so that the American passenger can really enjoy the benefits.”
To contact the reporter on this story: Stephanie Beasley in Washington email@example.com
To contact the editor responsible for this story: Heather Rothman at firstname.lastname@example.org
Details on the House Transportation and Infrastructure's FAA reauthorization are available at: http://src.bna.com/cMs.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)