Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. Thanks for comments are due Dorothy Robyn and Sohaib Nasim.
December 17, 2023 — Air travel is soaring, as a long-term trend, especially in the growing economy. It is also soaring seasonally: The few days after Christmas are expected to be especially intense. Many passengers will experience maddening flight delays this holiday season, especially in the US. A few might be exposed to scary airport near-misses. It is reasonable to hope that the excellent US safety record — no fatal crashes since 2009 — will be extended. But close calls have increased during the post-pandemic return to commercial air travel, reaching about 300 in the most recent year, 27 of them serious.
- The strain on the Air Traffic Control system
These troubles in American skies are in part attributable to severe overstraining of the air traffic control (ATC) system. To begin with, there aren’t enough qualified air traffic controllers. The National Air Traffic Controllers Association says there are 1,000 fewer working today than a decade ago, despite the increase in air travel. This translates into an estimated shortage of about 3,000 controllers [that is, 14,500 at full strength minus a current staff of 11,500]. As a result, those in the control towers chronically work overtime. Six-day workweeks are common. They are, reportedly, often exhausted.
Worsening the situation, the equipment that the controllers use is very outdated. At a time of great technological progress in computing and satellite-based telecommunications, the controllers must rely on the same sort of ground-based radar and analog radio communication as they did in the 1950s. Many controllers are said still to use paper strips to keep track of planes. The results include unnecessarily high costs and an unpleasant flying experience.
The ATC system is not sufficiently well-funded. The function resides within the Federal Aviation Administration (FAA), which is also responsible for regulating air safety. As a result, ATC planning can’t rely on the sort of stable multi-year funding that it would need to be able to invest in appropriate modern equipment and to hire and train the controllers it needs.
Currently the FAA is training barely enough new controllers to keep up with the ones who are aging out (required at age 56) or choosing to retire (as many do at 50), let alone to make up the existing shortfall. Worse, it needs to keep up with long-term growth in air travel. It takes three years to hire and train a controller. Thus, the FAA needs to increase sharply the number in the pipeline, to catch up with normal levels within a reasonable time frame.
The undependability of FAA funding is more than a notional concern. Congressional Republicans have repeatedly threatened to cut appropriations, as a component of their demands to reduce the US fiscal deficit exclusively by cutting non-defense discretionary spending. In 2018-19, for example, a government shutdown ruptured the FAA pipeline of new controllers by suspending the academy in Oklahoma City where they are trained. Another government shutdown is on the calendar for February.
The problems go beyond funding, however. Another factor that contributes to airport congestion, flight delays, cancellations, and near-misses, is the over-allocation of scarce ATC resources to corporate jets, at the expense of commercial planes.
- How to fix the malfunction
The solution to these problems is to move the air traffic control function outside the FAA, and to replace congressional appropriations with user fees paid directly by ATC customers. This is the “public utility” model. Freed from dependence on Congress, the ATC organization could hire a generation of controllers and invest in modern technology.
In the 1990s, the Clinton Administration tried unsuccessfully to spin off ATC to an independent government corporation funded by user fees. At the time, only a few other countries had “corporatized” ATC. Since then, some 60 countries have done so, with favorable results. For example, Australia, Canada, Germany, Great Britain, and New Zealand, have privatized their air traffic control systems. Experts consider the most successful model to be NAV Canada, which was established in 1996 as a private non‐profit corporation, operated by the ATC users and other stakeholders.
Giving a private corporation responsibility for a matter as delicate as air traffic control may at first sound reckless. But this is wrong. ATC is not an inherently governmental function. Like the production of Boeing aircraft or the business of the airlines that fly them, the operation of the ATC system can be performed safely by a commercial entity as long as it is subject to FAA safety regulation. In fact, the current arrangement, in which the FAA both operates and regulates ATC, represents a conflict of interest — one that the International Civil Aviation Organization directs countries to avoid.
- Why the delay?
Independent experts have long agreed on the diagnosis of the problem. They range from libertarians at the Reason Foundation and the Cato Institute, to Nobel Prize winner Joe Stiglitz and Dorothy Robyn, who worked on Clinton’s effort to corporatize ATC. Elaine Chao, former Secretary of Transportation in the Trump administration, has also made the case for ATC reform.
Why, then, haven’t proposals to move the ATC system out of the FAA been adopted? One major obstacle is simply stated: the political power of the tiny elite who use corporate jets. The private-jet-set is small in number but large in wealth and influence, with an effective lobbying operation. Their priority is to retain cheap access to airports. They have blocked reform in Congress, most recently in 2017.
Funding for ATC would not be quite so problematic if all planes paid their fair share. Currently, the system heavily subsidizes corporate jets at the expense of the general traveling public, via the substantial taxes and fees that we all pay as passengers. The rapidly growing fleet of private jets contributes only 2 percent of the tax revenue on which the FAA depends, even though they constitute about one sixth of the flights handled. The effective subsidy has been estimated at $1 billion a year. If the ATC organization were made answerable to the air-going public, rather than to Congress, business jets would be asked to pay their way. The frequency of airport takeoffs and landings by smaller planes would go down, reducing congestion, the strain on air traffic controllers, and stress for the beleaguered flying public.
Corporate planes are further subsidized by tax deductibility. Meanwhile, they contribute a disproportionate share of carbon emissions — as much as 14 times as much per passenger as commercial flights in the UK.
The solution is to give the ATC system more of an incentive to respond to the needs of the airlines, which in turn respond to the needs of the air traveling citizenry as reflected in their willingness to buy tickets. It should be given correspondingly less of an incentive to respond to the desires of the corporate airplane lobby, as reflected in its ability to influence Congress, which is currently the year-to-year dispenser of taxpayer funds for ATC.
The general story of small but powerful lobbies in Washington is familiar in the abstract. The traveling public’s experiences with long flying times, flight delays, cancellations, and near-misses are familiar in the concrete. If only the voting public understood the causal link between the two, perhaps Congress would be motivated to act.
This post written by Jeffrey Frankel.
Off topic, employment diffuion and theeconomic outlook –
The latest industrial production report shows that, aside from a post-strike rebound in auto output, things are a bit shaky in the factory sector. We already knew that from the employment data. The employment diffusion index for manufacturing has been below 50 in 8 of the past 12 months; a reading below 50 means more firms shedding workers than adding them:
https://en.macromicro.me/collections/4/us-employ-relative/72744/us-nfp-diffusion-index
Here’s a sample o fwctory employment data:
https://fred.stlouisfed.org/graph/?g=1cQE7
Note also that the diffusion index for all private firms in the first picture is pretty soft relative to earlier in this expansion.
Here’s a sample of service sector hiring data:
https://fred.stlouisfed.org/graph/?g=1cQEZ
In fact, 97% of employment gain in November came in just 4 sectors – health care, leisure and hospitality, government and auto manufacturing. That’s a pretty narrow base.
We can take some comfort from the fact that the factory hiring diffusion index is a poor predictor of recession. – way too many false positives. The private hiring diffusion index, on the other hand, is pretty reliable; it drops toward 50 as recession approaches, sometimes below, an always dips below 50 during recession. The latest reading, at 54.6, is wellshy of the 60-70 range common in healthy late-expansion periods.
By th way, if anyone can provide a link to a FRED seres for either employment diffusion index, I’d appreciate it.
We need to get our priorities straight. Not only is the subsidization of corporate jets a bad idea, but casual air travel is, in general, a bad idea. It is among the most polluting forms of travel, particularly as regards the production of greenhouse gasses. Private motor yatchs are worse, but very few of us travel by motor yatch. Millions travel by air.
So while I agree with Professor Frankel in the abstract, I think reforming an activity which should be priced out of existence through Pigovian taxes is a waste of time and effort.
But we could possibly lose all the jokes about “fly-over country”. Charlie Munger would roll over in his grave. All the lost chances for condescension.
The idea of user fees for access to public infrastructure is not new. Toll roads have existed for a very long time. It puts the burden of financing on those who use it the most. Of course, the counterpoint is that it is too much of a burden for lower income users. That shouldn’t be an issue for air transportation.
I’d like to see this thinking extended to EVs that are getting a free ride in many places because they lack a process in place to charge federal/state/sales taxes on recharging in the same way that there is a refueling ICE vehicles. Since EVs are generally heavier than their ICE counterparts which causes more wear to roads, it is only equitable that EV owners pay at least as much toward road building and maintenance as ICE vehicle owners.
You’d like to see it, but it would be bad public policy. The life-cycle greenhouse gas budget for EVs is about half that for an equivalent fossil fuel vehicle.
Maybe you can educate us on this. Brucie Boy was told EV users do not pay user fees by Kelly Anne Conway. I’m not sure he’s right about this since Brucie Boy has gotten everything else wrong so far.
Ah Brucie – you do did get what these user fees pay for. Do you? Try the upkeep on the roads dumbass. An EV does the same damage as the gasoline fired vehicle so making them pay more is stupid. Now one could argue they should pay less since they pollute less but we get you are even dumber than CoRev on this issue.
most of the damage is caused by weather and trucks. he could charge mother nature a toll fee.
“Since EVs are generally heavier than their ICE counterparts which causes more wear to roads,”
this is an inaccurate comment. the difference in weight between the two vehicle types will not cause difference in wear. the weight difference needs to be greater. that is why trucks (not pickup) are differentiated from road vehicles. 18 wheelers and dump trucks cause more damage, pickup trucks do not. the difference between personal vehicles is minimal.
you could eliminate the gas tax, and make all highways toll roads. privacy folks will throw a fit. but it would be equitable to various vehicle types. but it is not necessary until EV’s gain more ground. no reason to try and snuff out the technology too early, unless you have an agenda. but the gas tax will need to be replaced eventually.
Off topic, Russian propaganda –
In turns out, Johnny isn’t the only one spewing Russian propaganda in the U.S. (You all knew that already, though, didn’t you?) There’s this guy:
https://en.m.wikipedia.org/wiki/Ben_Swann
He is a registered foreign agent, employed by Russian news agency RT, and runs a “news” operation in Florida. He pushes conspiracy theory, revisionist claptrap and pro-Russian commentary. Here’s a look at his operation from TPM:
https://talkingpointsmemo.com/news/inside-the-russian-propaganda-mill-beaming-out-of-a-florida-strip-mall
So, yeah, Russia funds a professional propaganda operation right here on U.S. soil, all legal and everything. Assuming Menzie is right that the Russian government wouldn’t hire someone as dim as Johnny, then Johnny seems to have swallowed Mr. Swann’s propaganda, hook, line and sinker. You can fool some of the people all of the time.
The usual frivolous and mendacious drivel from pgly’s döppelganger Tricky Ducky. Opponents of the US pointless and futile quagmires have been hearing these character attacks since at least the Vietnam War.
you are not an opponent of war, Johnny. you are a supporter of the murderous regime in Russia right now. you are not pro-peace, you are anti usa. quit whining like ltr, it is pathetic.
Hey lying little troll. Try READING the piece by Josh Kovensky and Kate Riga. It is very good even if your master (Putin) hates its integrity.
‘Swann reported on conspiracy theories about the 2012 Aurora, Colorado shooting, questioned the truth of the Sandy Hook Elementary School shooting, presented 9/11 conspiracy theories, and the false claims of a cover-up by the CDC of data related to the MMR vaccine and autism. He has also questioned the use of chemical weapons in the Syrian Civil War, whether United States had a role in the development of the Islamic State, and other controversial topics.’
This dude tells a lot of lies. But little Jonny boy defends this clown because they both work for RT.
Swann is making millions peddling Putin’s trash? And little Jonny boy does the same for pet food!
Oh, and Ben Swann has also worked for Faux news affiliates. He was so bad, one of them forced him to take down his website. I guess that’s when Russia figured out he’d be perfect for people like Johnny.
Forecasting note –
Minimum wage uncreases are due in 22 states in January. Thirteen of them are automatic annual adjustments, so are likely to be picked up by seasonal adjustment factors. California, New York, Florida and Illinois are among the states raising the minimum wage, so more than half of minimum wage earners may receive increases, even though fewer than half of states are boosting their minimum.
About 25% of the ATC in US is run by DoD. The DoD has common equipment and procedures and in some locations run terminal radar (60 milees coverage to landing airfield.
FAA ATC automation is funded by the receipts from “taxes” on airline tickets. That funding could be revised to have the private jets add a surcharge to landing fees etc.
I have not been near ATC automation since 2016, at that time the automation was evolving with numerous technology updates and SW improvements which often reach performance w/o new hardware.
One issue is the transition to ADS-B, where the sircrsft reports location. That is relatively expensive for the operators and causes delays to adding new ATC capabilities as the airlines pay for the neded updates to flight management systems.
Privatization could be an answer but the baseline needs to be years not contracts.
Experts could be bought?
Trump judge slams credibility of paid expert in fraud case, suggests fee influenced testimony
Story by Kevin Breuninger
https://www.msn.com/en-us/news/other/trump-judge-slams-credibility-of-paid-expert-in-fraud-case-suggests-fee-influenced-testimony/ar-AA1lHw4z?ocid=msedgdhp&pc=U531&cvid=a225da03972a4c259ce8965e3acf27c2&ei=7
The judge presiding over former President Donald Trump’s civil fraud trial harshly questioned the credibility of an expert defense witness, New York University Accounting Professor Eli Bartov.
Manhattan Supreme Court Judge Arthur Engoron wrote that the only thing Bartov’s testimony proves “is that for a million or so dollars, some experts will say whatever you want them to say.”
Bartov told CNBC he was “shocked” by the judge’s remarks and denied that his payment played a role in his assessment.
Look – some experts tell courts the truth but there are a lot like Bartov – alas. Hey Bartov – you were properly called out. Stop whining.