Air Traffic Privatization Is Toothless Sans Union Reform

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The Federal Aviation Administration's funding extension lasts until July. The House version of the FAA reauthorization includes spinning off Air Traffic Control into the ATC Corporation, a federally chartered, not-for-profit monopoly. The Senate version does not include this measure. Congress needs to pass a bill by the end of July, or the FAA will run out of funding.

Competitive Enterprise Institute fellow Marc Scribner is puzzled that I oppose the pseudo-privatization provisions in the House's Aviation Innovation, Reform, and Reauthorization Act of 2016. He asks whether I have lost my mind or my principles. He describes me as leading the conservative opposition to the pseudo-privatization of the nation's air traffic control system. Scribner flatters me, but I am just one of a growing number of people and organizations concerned about the flawed policy provisions.

As former chief economist of the U.S. Department of Labor, I understand the disadvantages of the power given by the bill to the air traffic controllers' union, the National Air Traffic Controllers Association. Such power would make it harder to achieve the efficiencies that should come with privatization. With no competition, no freedom of entry, and powerful unions, innovation opportunities would be limited.

The same union would continue "as the exclusive representative for those employees..." until another one is chosen. Since it's time-consuming to decertify a union, workers are likely stuck with NATCA.

Scribner, along with Chairman Bill Shuster, writing in National Review, asserts that employees would not be able to strike. Everyone is "able" to strike-the question is: is there a significant penalty (including being fired and large fines) to act as a deterrent?

Fact: new employees would not be government workers, so they would not have to take an oath not to strike, as they do now, and so they would not risk being fired if they decided to do so.

Yes, the Federal Service Labor-Management Relations Statute applies and states that striking is an unfair labor practice. But there's no financial penalty for an unfair labor practice, such as being fired or fined.

If there were a strike, the General Counsel of the Federal Labor Relations Authority would investigate the unfair labor practice charge and then could serve a complaint on the union. "The Authority then conducts a hearing on the complaint not earlier than 5 days after the date on which the complaint is served," (italics added) according to the U.S. Code (5 U.S. Code § 7118).

That means that travelers would have to wait for at least 5 days while the air traffic controllers are on strike before even getting a hearing-and the hearing can take days to resolve. Americans cannot manage that long with air traffic controllers on strike.

At the risk of repeating what I have written elsewhere, the existing union contract would hold for the new ATC Corp, including wasteful "official time" provisions. "Official time" is time spent working for the union instead of the taxpayer. In 2012, the latest data available, 19 air traffic controllers, 18 of whom earned six-figures salaries, were on full-time official time. Removing this perk would save over $3 million annually-but it could not be done in the near future under the existing bill.

The union would negotiate with the ATC Corp on all compensation and conditions of employment, and it would have to approve which services and personnel were transferred from the FAA to the new ATC Corp, and vice versa.

True privatization allows the entity to cut costs and adopt new technology. The NextGen technology for air traffic control systems requires less manpower than does today's technology. Under the proposed bill, unions would be able to prevent the technology from being implemented-or require workers to be kept on, even though they might not be needed.

Amtrak and the Post Office are federally chartered unionized entities, similar to the proposed ATC Corp. Amtrak lost over $300 million last year, and the Post Office lost over $5 billion. Scribner's coworker, CEI's Vice President for Strategy Iain Murray, wrote in 2010, "[Amtrak's] failures are not due to a lack of funds, but to chronic mismanagement, which is inevitable under Amtrak's current organizational framework...Dishing out money to a single company-such as the Post Office-that faces no competition is a recipe for waste and mismanagement."

The Competitive Enterprise Institute cannot recommend that the union provisions be dropped from the bill because it is not a disinterested player. It is partnering with a lobbying organization, AirportsUnited, set up in 2014 by the Airports Council International-North America (ACI-NA) and the American Association of Airport Executives (AAAE), to shepherd FAA reauthorization through Congress.

In December 2014 ACI-NA CEO Kevin Burke told Airways News, "This time, we're working not only with airports, but outside groups and communities...Our goal is to get 218 [House of Representatives] members to clear it and the majority of the Senate. If we do that, we've done our job."

Reason Director of Transportation Policy Robert W. Poole, Jr., wrote in 2013, "The ATC corporation, by removing its employees from the constraints of the civil service system, could seek and attract highly skilled engineers and program managers, compensating them at market rates-and holding them accountable for delivering results. " The House bill as structured would not free government workers from these civil service constraints so these benefits are less likely to occur.

The proposed ATC Corp keeps the worst of the civil service system while throwing out its benefits, such as the no-strike oath. True privatization would be beneficial, but the House needs to remove the union favors and add a no-strike clause before its bill becomes law.


Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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