Privatization of Air Traffic Control Term Paper

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This allows the respective ANSP to focus on its core function of air traffic control (Dillingham, 2005).

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Term Paper on Privatization of Air Traffic Control Assignment

The new public management (NPM) approach also supports the provision of public services through alternative institutional arrangements. NPM approach supports the privatization and outsourcing of government functions. Lewis (2004) argues that due to the national security considerations, international obligations, and safety, air traffic control services shall be provided by government dominated agency. However, alternative institutional arrangement such as those managed in Canada, New Zealand, and the U.K are a model for the U.S. Non-profit corporate governance of ATC is desirable as it impedes system inefficiency and improves productivity. It is observed that the private sector management practices allow for better utility of available funds and human resources when delivering public services. Bachman (2013) also argues that privatizing the ATC is the only way forward for sustainably funding the air traffic control operations. Given that the Federal budget sequestration resulted in a cut of $637 million in the federal budget, it has resulted in 50,000 furloughs and 2300 flight delays. It is also argued that taxation system on the airlines shall also be simplified and simpler provision for taxing the airlines shall be enforced. Paul Rinald, the president of NATCA also admitted in 2013 that the current ATC system is broken and there needs to be a broad-based discussion between stakeholders for reforming the organization. It seems that resistance towards privatization of ATC system is not only contentious in the U.S. But in other countries. In 2013, the French Air traffic controllers went on strike after the European airspace reorganization efforts were kick started. As part of the efforts, the European Union announced opening bidding on services including navigation and weather forecasting (Beardsley, 2013). The traffic controllers protested for two days that resulted in delay of 27,000 flights mostly originating from the French capital. The controllers resisted a move meant to privatize the radar maintenance service. The European authorities cite 'capacity crunch' as the main reason behind the impetus of privatizing many functions of the air traffic control out of the government control.

Technology up gradation and budgetary constraints

The two most compelling arguments made in favor of privatizing the air traffic control system are that high productivity enabling technological up gradation is only possible when ATC is privatized. Privatizing the ATC will enable cost efficiency and research and development (R&D) of air traffic control. Further, technological up gradation such as conversion of the U.S. ATC to satellite navigation also requires bigger budgets for funding. The government sources of funding the capital project of ATC are also dried up. In these circumstances, it is pertinent that the ATC is commercialized under the governance of a non-profit entity composed of multiple stakeholders within BoDs of the company. A major debate in the U.S. is regarding the shift of the U.S. ATC towards NextGen, a satellite navigation system

It is also argued that not privatizing the air traffic industry has led to increased monopoly and oligopoly like situation in the U.S. market (Goetz, 2002). By not allowing private firms to bid for the provision of public services such as air traffic control, the government has increased the barriers to entry into this market segment of air traffic. Economies of scale are high and barriers to entry make it visibly impossible for private parties to contribute their expertise in the flight traffic control systems.

Conclusion

There has been a long debate regarding privatization of the U.S. air traffic control (ATC). Currently, the U.S. Department of Transportation, through its subsidiary called Federal Aviation Administration (FAA) manages the ATC system of the country. Lack of accountability, publicly funded operations, and operational inefficiency has led the debate forward into favoring privatization of ATC. NATCA has often argued against privatizing the U.S. ATC. It has cited reasons such as shift of ATC from safety towards profit maximization and putting the important function in the hands of a private authority. Recent statistics published by the Reason Foundation and other institutes indicate towards increased flights delays and flight cancellations. The research reports by Poole and Butler (2001), McDougall and Roberts (2008), and Bachman (2013) indicate that a non-profit corporate governance structure will suit the commercialization of ATC by serving the interests of ATC's multiple stakeholders and ensuring that safety standards are improved.

References

Bachman. (2013). Talks on Private Air-Traffic Control Turn Serious in U.S. Bloomberg News. Retrieved from: http://www.businessweek.com/articles/2013-09-23/should-the-u-dot-s-dot-get-out-of-the-air-traffic-control-business

Beardsley. (2013). Strike by French Air Traffic Controllers Ends. NPR. Retrieved from: http://www.npr.org/2013/06/13/191226119/french-air-traffic-controllers-strike-disrupts-flights

Dillingham, G.L. (2005). Air Traffic Control: Preliminary observations on Commercialized Air Navigation Service Providers. United States Government Accountability Office. Retrieved from: http://www.gao.gov/new.items/d05542t.pdf

Goetz, A.R. (2002). Deregulation, competition, and antitrust implications in the U.S. airline industry. Journal of Transport Geography, 10(1), 1-19.

Lewis, I. (2004). Analysis of alternative institutional arrangements for reform of U.S. air traffic control. International Public Management Journal, 7(3), 385-413.

McDougall, G., & Roberts, A. (2008). Commercializing air traffic control: Have the reforms worked? Canadian Public Administration, 51(1), 45-69.

NATCA (2002). Air Traffic Controllers Distribute Leaflets Nationwide, Warning of Looming Safety Concerns from Privatization. National Air Traffic Controllers Association. Retrieved from: http://www.natca.org/press_releases.aspx?aID=1606#1606

Poole & Butler. (2001). How to Commercialize Air Traffic Control. Reason Foundation, Policy Study No. 278, 2-53. Retrieved from: http://reason.org/files/6034f239566dfeee8821afac04629415.pdf [END OF PREVIEW] . . . READ MORE

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