Here’s how much you’ll pay to fly if Trump privatizes air-traffic control


June 7, 2017

Air travelers could be in for a bumpy ride thanks to President Trump’s plans to overhaul the country’s air-traffic control system.

June 7, 2017

Air travelers could be in for a bumpy ride thanks to President Trump’s plans to overhaul the country’s air-traffic control system.

If the GOP’s plan becomes a reality, the air-traffic control system would be removed from the auspices of the Federal Aviation Authority and turned into a nongovernmental nonprofit, with a board of directors including representatives for airlines, regulators and consumer advocates. Additionally, the air-traffic control system would move toward a model based on GPS technology, rather than the more rudimentary radar-based technology currently used, meaning — in theory, at least — that planes could operate more efficiently, use less fuel and charge less.

The idea of privatizing air-traffic control has been floated since the 1990s — Presidents Bill Clinton and George W. Bush at times supported the concept — without success. The current plan has received the backing of most major airlines and some consumer advocates — meanwhile opponents include many Democrats and some Republicans, according to Reuters. When Rep. Bill Shuster (R, Pa.) put forth a plan to accomplish this in 2016, it stalled on the floor of the U.S. House of Representatives.

The National Air Traffic Controllers Association, a union representing nearly 20,000 air-traffic controllers and other aviation safety-related professionals, supported Shuster’s 2016 legislation. “NATCA shares the administration’s commitments to infrastructure modernization and providing the National Airspace System (NAS) with a stable, predictable funding stream,” Paul Rinaldi, the association’s president, said in a statement. “We look forward to reviewing the specifics of the air-traffic control (ATC) reform legislation so we can evaluate whether it satisfies our Union’s principles, including protecting the rights and benefits of the ATC workforce.”

Proponents of the privatization plan suggest that implementing it could have myriad benefits — among them reduced delays and lower greenhouse gas emissions (arguing that planes could travel more efficiently.) “Today’s White House announcement puts consumers first — ahead of the status quo,” said Nicholas Calio, president and chief executive of airline industry association Airlines for America, in a statement.

Supporters of privatizing air-traffic control system say the consumers will save money by paying lowers taxes that would have otherwise have gone to the FAA. Consumers pay a tax when they book a flight that goes to the FAA to fund its operations, and airlines also pay taxes on fuel (which are then passed onto consumers via the cost of a ticket.)

Not all airlines are on board with privatizing air-traffic control — in part because air travelers may not end up saving all that much. The privatized air-traffic control entity would be funded through user fees, but a 2016 study by Delta Air Lines (DAL) notably the only major U.S. carrier not to support the privatization plan, found that passengers could be forced to pay between 20% and 29% more than they do currently in those fees when booking flights. According to the study, Canada’s air-traffic control fees rose 59% when the country privatized its system, and costs ticked up 30% in the U.K. when it revamped its own system. (Delta would not comment on its opposition to a private model, with a spokeswoman saying the company “looks forward to working with the administration and Congress on our shared goal of modernizing U.S. airspace.”)

In Canada, major carriers such as Air Canada (CA:AC) and WestJet (CA:WJA) charge fees based on the mileage traveled to cover the airline’s dues to Nav Canada, the country’s privately-run air-traffic control system, said Bob Mann, an industry analyst and president of R.W. Mann & Co., an airline industry consulting firm. “Implementing these fees would probably cause most customers to question whether this is a good deal,” Mann said.

But some consumer advocates believe that the privatization plan won’t prevent air travelers’ ability to secure cheap airfares. Low-cost carriers, such as Ryanair (RYAAY) , have thrived in Europe as a result of the European Union’s deregulation of the industry, even though many countries there have privatized their air-traffic control systems, including the U.K., France, Germany and Switzerland.

In fiscal year 2017, Ryanair served 120 million customers, up 57% from 2011. U.S. airlines experienced 27% passenger growth between 2011 and 2016 comparatively, per data from the Bureau of Transportation Statistics.

“Ryanair is going bonkers over there,” said Charles Leocha, chairman and founder of consumer advocate organization Travelers United, referring to the European low-cost carrier that flies in many countries that have privatized air-traffic control. “If we have to suffer the same way they are, I say bring it on,” he added. (A spokesperson for Ryanair said that the company welcomes “any initiatives which improve [air-traffic control] functions for our customers and lower costs.”)

A complete overhaul like the one Trump supports may not even be needed. Delta uses software that optimizes flight arrivals among the airline’s fleet, so that its planes land in an order that best serves consumers. Consequently, the airline has among the best ratings when it comes to on-time arrivals in the industry, boosting overall customer satisfaction with the airline. No other major U.S. carrier has implemented the technology. “I’m puzzled why airlines simply won’t do what’s in their best interest,” Mann said.

Ultimately, how much consumers benefit from a privatized air-traffic control system may also depend on who leads the nonprofit that would oversee it. “Right now one of the number one issues I have with the bill is the formation of the board of directors,” Leocha said. “The airlines cannot control the board of directors — if they have control of the system, then consumers get screwed.”

Courtesy: MarketWatch