Next gen affirmative 1ac advantage-Econ

A2: PPP CP

The private sector could also potentially be a driving force behind funding NextGen. Private sector modernization efforts could be in the form of a full-fledged privatized ATC system to a public-private financing partnership. Privatization of ATC is a controversial topic. Proponents of privatization invoke free-market competitive efficiencies and optimal pricing that alleviates congestion and is self-sufficient in raising adequate operating revenues without need for bureaucratic delays and the appropriation process. Some have argued for privately funding NextGen by separating ATC from the FAA and funding its operations by charging private user fees to all aviation users. 51 The idea is that the long-term trend of declining ticket prices due to increased market share for low-cost carriers means that the passenger ticket tax cannot be relied on as a source of funding for NextGen. Furthermore, political stagnancy is a hindrance to bringing about changes in a timely fashion. Finally, there are examples of successful privatized ATCs from countries such as Canada and the United Kingdom. Arguments against privatizing ATC make the general case that the private sector might not cater to an outcome that is in the interest of society. A privatized ATC would still require some form of government oversight to ensure safety standards are met and pricing practices are fair.

Making a case for or against privatization is not the focus of this paper, as it deserves more thorough analysis. In any case, due to its controversial nature, privatization talks in Congress would likely cause more friction than fluency towards modernization efforts.

“The problem is there has not been the leadership necessary to bring the private sector along effectively and to move forward with the technology from the FAA’s perspective,” Schank said. “You need someone who will say, ‘Here are the promises we’re going to make to the private sector. This is how we’re going to meet the deadlines and performance objectives.’ The private sector does not want to invest when it’s not clear who’s in charge or how it’s going to get done.”

However, like most initiatives where governments are involved, there are unintended consequences, implying a difference between the expected and the real outcomes. The two most prominent unintended consequences of a PPP involve undermining innovation and risk: Innovations. Since a PPP results in less competition as the private company is securing an intrinsic monopoly, there are limited incentives to innovate, particularly for the purpose of reducing operating costs. Innovations, such as new management methods and new infrastructures, may also be impaired by regulations and conditions related to the contract. Therefore, as long as the contract remain effective, inertia (status quo) will endure, which means that long term contracts can become factors delaying innovation. It can also be expected that investment capital commonly the outcome of the accumulation of profits would come from the public sector. Since governments often put maximum profits clauses in contracts (windfall profits), there are limited incentives to use innovations to increase productivity and profits above the arbitrary threshold. Risk. Strategies involved in the exploration of new market opportunities, such as new services for customers, are common business practices and always involve a level of risk. While a PPP may reduce several risk factors because of the implicit public support, both from a financial and regulatory perspective (the government retains its potential to tax and coerce to achieve its goals), the abatement of risks also has unintended consequences. The goal becomes compliance to government policies at the expense of focusing on new opportunities and mitigating the associated risk. Thus, the rewards of risk taking are essentially removed. This can be seen as a reverse form of moral hazard where a government guarantee undermines the risk taking behavior of private enterprises.

A2: PPP CP

No private interest in investing in next gen

Lippman 2012

When airplanes are delayed, nobody wins. Airlines lose money. Passengers become inconvenienced. Airports get overwhelmed. That’s why the FAA is touting an effort that it says could reduce delays by 35 percent by 2018. The project, which aviation administrators began planning in 2003, is dubbed NextGen, and proponents say it would revolutionize air travel in this country by switching from radar-based to satellite-based flight-tracking technology. That, along with other technological advances like improved weather forecasting and communication systems, would allow planes to fly more direct routes instead of following the existing, inefficient flight paths that are arranged like highways in the sky. The result: More flights in the air at any given time, fewer delays and less wasted fuel. But the cost is enormous. FAA officials say they’ll need between $20 billion and $27 billion for the project through 2025. The Government Accountability Office says the cost could actually be as high as $160 billion. Meanwhile, there’s an ongoing debate about what proportion of the cost should be picked up by the airline industry, which has historically been skeptical of the benefits of government-mandated technologies. A recent report from the Department of Transportation’s inspector general said the system will likely face delays because the “FAA has not made critical, longer-term design decisions on NextGen ground and aircraft systems.” To complicate matters, the FAA has spent more than four years without a long-term funding bill, thanks to congressional inaction. That’s made it difficult to pursue larger projects like this one. A long-term bill signed earlier this year should help on that front, but the funding for the effort is still in question. The president’s 2013 budget calls for just over $1 billion for NextGen, which is a drop in the bucket. In a Congress focused on spending cuts, launching something like NextGen could be tough. “I’m guessing we’ll muddle along,” says David Plavin, an aviation consultant. “They won’t provide the big, incremental investment … that’s ultimately necessary.”

More ev-feds key and no private interest in next gen now

KIRK 2009 Specialist in Transportation Policy Congress Research Services

The AIP is one of five major sources of funding for airport development and improvement. Airports also fund capital projects using tax-exempt bonds, passenger facility charges (PFCs; a local tax levied on each boarding passenger), state and local grants, and airport revenue. Different airports use different combinations of these sources depending on the individual airport’s financial situation and the type of project being considered. Small airports are more likely to be dependent on AIP grants than large or medium-sized airports. The larger airports are also much more likely to participate in the tax-exempt bond market or finance capital development projects with the proceeds generated from PFCs. Each of these funding sources places differing legislative, regulatory, or contractual constraints on airports that use them. Bonds, AIP, and PFCs are the primary sources of funding for airport capital projects. Based on 2001-2005 data, the U.S. Government Accountability Office (GAO), found that the airport system received an average of $13 billion per year from all sources for capital development. Of this amount, bonds accounted for 50%, AIP for 29%, PFCs for 17%, state and local contributions for 4%, and airport revenue for 4%. The average amounts made available for AIP and the average An increase in AIP funding of the size of the AIR21 increase, faces a number of obstacles in the 111 th Congress, that are discussed later in this report, including deficit reduction efforts, enforcement of pay-as-you-go rules, and the spending of limited available funds on other initiatives such as air traffic control modernization. For more see, CRS Report 98-579, Airport Finance: A Brief Overview, by Robert S. Kirk. Airport revenue sources include airfield area fees/landing fees, terminal area concessions and rent, airline leases, parking, etc. PFCs are sometimes referred to as a “head tax.” Government Accountability Office, Airport Finance: Observations on Planned Airport Development Costs and Funding Levels and the Administration’s Proposed Changes in the Airport Improvement Program (Washington: GAO), (continued...) Airport Improvement Program (AIP): Reauthorization Issues for Congress Congressional Research Service 6 annual PFC collections have been significantly higher since FY2001 (because of the AIR21 increase in AIP funding and the raised PFC ceiling). Bonds, however, remain the largest source of funding for airport capital projects. Of the 3,356 airports in the NPIAS, all but 102 are public sector enterprises that usually operate under a city, county, or state department or a specially created organization such as an airport or port authority. Generally, airports can do little to influence their financial relationship to their governmental sponsors. On the other hand, airports that handle commercial service aircraft are able to negotiate the terms and conditions of their agreements with their major users and creditors. The source of airport development funds sets the different limitations and obligations that influence how project money can be raised and spent. The availability and conditions of one source of funding may also influence the availability and terms of other sources of funding. The two financing sources for airports with the most significant federal involvement are the AIP and PFC programs. As mentioned above, the dependence on AIP to pay for capital needs varies greatly according to airport size categories, with the smaller airports being more dependent on AIP funding. Large and medium-hub airports finance much of their capital expenditures by using bonding and PFCs, and rely on AIP for only 16% and 29%, respectively, of their total capital spending. For small-hub airports the dependence on AIP grants rises to 51%. For non-hub commercial service airports AIP dependence rises to 89% and for other non-hub airports to 94%.

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