Federal funding sources are key to stability-that’s key to solve
KIRK 2009 Specialist in Transportation Policy Congress Research Services
The structure of AIP funds distribution reflects legislatively set national priorities and objectives of assuring airport safety and security, stimulating capacity building, reducing congestion, helping fund noise and environmental mitigation costs, and financing small state and community airports. There is less federal involvement in the four other sources of airport development funds. The main financial advantage of AIP to airports is that, as a grant program, it can provide funds for a known range of capital projects without the financial burden placed on airports by bond or other debt financing.
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KIRK 2009 Specialist in Transportation Policy Congress Research Services
Airports’ grant applications are conditioned on assurances regarding future airport operations. Examples of such assurances include making the airport available for public use on reasonable conditions and without unjust discrimination; charging air carriers making similar use of the airport substantially comparable charges; maintaining a current airport layout plan; making financial reports to the FAA; and expending airport revenue only on capital or operating costs at the airport. Within the AIP context, assurances are an important means of guaranteeing the implementation of federal policy. When airport managers or interest groups express concerns about federal regulation and the “strings attached” to AIP funding, they are usually referring to AIP grant assurances.
Prefer our comparative ev-federal funding solves best-it’s not just a question of sufficiency but of necessity
GAO 2011 United States Accountability Office, Congressional center for infrastructure regulation and research reports < http://www.gao.gov/new.items/d11358t.pdf>
Additionally, the Future of Aviation Advisory Committee recently proposed to the Secretary of Transportation that the federal government undertake a significant financial investment to accelerate efforts to equip aircraft and train staff to use key NextGen technologies and operational capabilities, including performance-based navigation (PBN), automatic dependent surveillance—broadcast (ADS-B), ground-based augmentation system (GBAS) and data communications. The amount of investment required will depend on how any financial incentives are structured. Financial assistance can come in a variety of forms, including grants, costsharing arrangements, loans, loan guarantees, tax incentives, and other innovative financing arrangements. One financing option proposed by the NextGen Midterm Implementation Task Force to encourage the purchase of aircraft equipment is the use of equipage banks, which would provide federal loans to operators to equip their aircraft. Another financing option, proposed in various forms by a variety of stakeholders, would involve setting up an equipage fund using private equity backed by federal loan guarantees. While the details of different proposals vary, they would all allow operators who purchase equipment through the fund to defer payments on the equipment until FAA makes improvements required for the operators to benefit from the equipment. As we have previously reported, prudent use of taxpayer dollars is always important; therefore, any financial incentives should be applied carefully and in accordance with key principles. For example, mechanisms for financial assistance should be designed so as to effectively target parts of the fleet and geographical locations where benefits are deemed to be greatest, avoid unnecessarily equipping aircraft (e.g., those that are about to be retired), and not displace private investment that would otherwise occur.
No private company will cooperate with any federal direction-means the CP fails
Stephen Goldsmith Harvard Kennedy School, Zachary Tumin Harvard Kennedy School, and Fred Messina Booz Allen Hamilton, March, 2010 (“Assuring the Transition to the Next Generation Air Transportation System A New Strategy for Networked Governance,” http://www.ash.harvard.edu/extension/ash/docs/nextgen.pdf)
Mandates. From FAA’s perspective, mandates are appropriate only when there is not—or never will be—sufficient incentive for operators to equip. However, mandates have the effect of reducing business uncertainty—which some operators might prefer, if intelligently applied and matched by government action. If, for example, FAA mandated the purchase of equipment of a certain level in order to operate in New York Class B airspace, this would be—according to one observer—“a no brainer. I can walk into my board meeting and get approval in 15 minutes.”
Lippman 2012 Contributer to “Governing” Magazine http://www.governing.com/topics/transportation-infrastructure/gov-5-biggest-us-infrastructure-projects-plus-5-at-risk.html
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.”
Advocates are often fond of looking to foreign cases when expounding the benefits of privatization. This is certainly true in the case of ATC privatization.5 Even a cursory 4 On November 19, 2001, President Bush signed legislation creating a federal Transportation Security Administration (TSA), which, among other things, employs and manages federal employees who conduct airport security screenings. 5 See, for example, Poole, Robert and Viggo Butler, “How to Commercialize Air Traffic Control,” Reason Public Policy Institute, Policy Study 278, February 2001. Review of private ATC provision in foreign countries, however, demonstrates the inherent dangers of the monumental change the U.S. is being urged to make. Three different “types” of privatization have been attempted abroad: (1) sell-off to a for-profit entity, (2) a private entity wholly owned by the government, and (3) establishment of a non-profit entity managed by a “stakeholders board”. These are reflected by cases of privatization in the United Kingdom, Australia, and Canada respectively. Reviews of international cases of each type directly contradict the ability of privatization to effectively address any of the blanket concerns expressed by advocates – price, technology, or funding. Privatization advocates often presume a private “efficiency” advantage. Several ATC privatization efforts have been successful at reducing total costs. However, the “at what price?” question is rarely asked. Evidence from Canada and Australia suggests that the price is safety and employee satisfaction, both of which bring new costs. In Canada, NAV CANADA has been successful at keeping costs low by negotiating with Controllers to keep flexible schedules. As a result, fewer Controllers need to be hired and labor costs are kept low. The second result of this cost containment strategy has been an operational irregularity rate of two per 100,000 aircraft movements – over twice that of the American rate for a system 7% of our size.6 Controllers in Canada are stretched to the point of being unable to perform their jobs.7 Cost saving work rules have so infuriated controllers in Australia that a series of strikes have crippled air traffic movement for hours at a time at a high cost to Australians as a whole. 8 In both of these cases, cost savings strategies have translated to new, more serious problems with safety and efficiency. A second claim of privatization advocates is that public bureaucracies have a poor record of providing modern technology and that private ATC systems would be innovative and speedy adapters of new technology. The Canadian, Australian, and British cases all demonstrate that this is in fact not the case. Technological “innovation” in Canada has consisted of waiting for the U.S. to develop new technology and then importing it. Cases where private ATC providers have attempted to hastily implement novel technology in response to “incentives” are even more disconcerting. In Australia, implementation of Airservices Australia’s, The Australian Advanced Air Traffic System (TAAATS) has led to several technological failures, including a twelve minute radar blackout.9 In the United Kingdom, introduction of new software has caused severe disruptions and system shutdowns.10 Controllers in a new London area facility have been unable to make out the call numbers of planes on their new Sony screens, which is a major safety hazard. Anecdotal evidence from newspaper reports has suggested major inefficiency and safety hazards associated with private implementation of new technology in this vital piece of national infrastructure. Far from supporting the argument that privatization brings better technology quicker, international cases demonstrate a substantial risk of technological failure. The third blanket claim common to most privatization proposals is that the funding stream associated with a private ATC provider would keep costs to users down, and isolate the government from the risk of escalating provision costs. Review of the Canadian and British cases both demonstrate cost escalations and increased user fees. In Canada user fees have increased several times since NAV CANADA’s inception, and particularly since the traffic downturn of the past year. The system is structured in such a way that even when the control fee charged to airlines decreases, passengers end up paying more. By 2002, the average fee per-traveler increased from $12 to $22.11 The user fee system in Canada has definitely hit travelers as ticket prices have increased dramatically. 9 Daily Telegraph, July 8, 2000 10 Daily Mail, March 28, 2002 11 The Toronto Star, July 8, 2000 11The situation in the United Kingdom is even more problematic. The British privatized their ATC services by selling a 46% stake to a consortium of seven airlines, and an additional 5% to employees. The government retained 49% plus an extra “golden share.” Over the past year the government has had to bail out the new National Air Traffic Services (NATS) twice, to the tune of $131 million – about two thirds of the original sale price. The private sector holds 46% percent of the equity in NATS, but as the recent government bailouts have demonstrated, the private sector is assuming none of the risk. Air traffic control is a vital public service, one in which a shutdown or catastrophic failure would cripple the nation. Regardless of technical or legal responsibility, the government will always be in a position of having to ensure continuing service. As has been made clear by the British case, market-based privatization of the air traffic control system means that the government surrenders its vital assets, but continues to assume the costs and final responsibility for ensuring continuing service. This situation could not possibly be described as “stabilized.”