Trump Backs Air-Traffic Spinoff to Fix ‘Broken’ System

(Bloomberg) -- Donald Trump on Monday unveiled his proposal to hand over control of the U.S. air-traffic control system to a non-profit corporation, fulfilling a long-standing wish of most airlines and calling the current system an antiquated, wasteful mess.

The proposal, part of a week-long push for his infrastructure plan, is designed to lower costs and improve efficiency of the system that oversees flights. It would transfer about 15,000 controllers and thousands of other managers and technical workers to a new government-sanctioned corporation, according to a plan Trump sent to Congress.

Trump used blunt language to attack his own Federal Aviation Administration, saying it wasted billions of dollars in technology and accusing it -- without offering proof -- of using equipment that dated back decades. His language echoed the arguments of such companies as American Airlines Group Inc. and Southwest Airlines Co.

“They didn’t know what they were doing,” he said of previous efforts to modernize the system. “A total waste of money.”

The plan drew immediate support from most airlines but faces some stiff opposition from private aviation groups and in Congress. Most Democrats and some powerful Republicans have resisted transferring this critical service outside of the government.

American, the world’s largest carrier, said it looked forward to working with the Trump administration “to make air travel cleaner, safer and more efficient.”

“The antiquated system we rely on today is inefficient and causes thousands of avoidable flight delays,” Shannon Gilson, a spokeswoman for American, said in an emailed statement. “If we aren’t able to modernize and innovate using the latest technology, the impacts to the traveling public will continue to grow.”

Political Foes

Representative Peter DeFazio, the ranking Democrat on the House transportation committee, cited concerns about estimates that the plan would increase the deficit and diminish safety.

“There is no consensus on this short-sighted privatization proposal,” DeFazio, of Oregon, said. “Committee Democrats are working on targeted reforms to help speed up the FAA’s modernization efforts without privatizing the system. We hope these reforms will be bipartisan."

In an attempt to gain support for the plan, which fell short in Congress last year, the White House said the 13-member board of directors for the new corporation should be insulated from industry stakeholder groups. Critics had charged the proposal last year gave too much power on the board to airlines.

The plan is part of the White House’s goal to transform U.S. infrastructure. Later this week Trump is expected to travel to Ohio to garner support for his strategy -- a key campaign promise -- to channel $1 trillion into the nation’s roads, bridges, inland waterways and other public facilities.

Trump’s View

Even though the FAA is spending more than $1 billion a year on air-traffic modernization efforts, Trump has embraced the spinoff because it jibes with his vision of shrinking government and making it more efficient, said DJ Gribbin, a special assistant to the president who gave a briefing on the plan Monday morning.

“All of those elements line up very nicely with the president’s view” of how to run government, Gribbin said.

Trump’s harsh words about the current system overstated some of the problems the FAA has encountered in recent decades, according to agency records and reports by the Transportation Department’s Inspector General and the Government Accountability Office.

More than 50 years after the creation of the U.S. air-traffic system, “the government is still using much of the exact same outdated technology,” Trump said.

Upgrades to System

While airlines would prefer the FAA adopted technology faster, the agency has gone through multiple generations of upgrades to its radars, communications and computers, according to the reports. The FAA has already installed a network to monitor planes using satellite navigation instead of radar, though most planes aren’t yet equipped with the devices.

The president said the current system causes “flight delays and crippling inefficiencies, costing our economy as much as $25 billion a year in economic output."

Flight delays caused by the government are actually down, according to U.S. data. While FAA-caused delays have gradually declined, those triggered by the airlines’ own actions have gone up as a percentage of total late flights, according to the Department of Transportation’s Bureau of Transportation Statistics.

"The performance of the system is as good as it’s ever been," said John Hansman, director of the Massachusetts Institute of Technology’s International Center for Air Transportation who also serves as an adviser to FAA. "The level of traffic is high. The delays are down compared to historic standards. Generally our fuel efficiency is good."

Shuster’s Bill

Trump’s air-traffic control proposal is based largely on legislation introduced in 2016 by Representative Bill Shuster, the Pennsylvania Republican who is chairman of the House Transportation and Infrastructure Committee.

Trump Monday signed a decision memo, and sent a letter to Congress on the principles in his air-traffic control plan at the White House. It would create a new user fee on aircraft using the system to replace current taxes on aviation fuel and airline tickets.

Critics of the air-traffic plan have said it would jeopardize small airports by giving too much power to airlines and large hubs.

While the FAA is already years into a technology upgrade known as NextGen, the efficiency improvements it promises can be better accomplished outside of direct government control, say backers of the White House plan. The FAA would continue to monitor safety and write air-traffic regulations under the plan.

The proposal is opposed by private-plane groups, who say they don’t want to pay a user fee for flying.

“We applaud President Trump’s calls to invest and improve our nation’s infrastructure including our airports,” said Mark Baker, CEO of the Aircraft Owners and Pilots Association, in an emailed statement. “However, the U.S. has a very safe air traffic system today and we don’t hear complaints from our nearly 350,000 members about it.”

About 60 countries, including Canada and the U.K., have gone to similar semi-private management of their air-traffic networks.

Infrastructure Tour

On Wednesday, Trump plans to visit Cincinnati, located on the Ohio River on the border with Kentucky. The event will highlight the locks, dams and other elements of the inland waterways system crucial for moving agricultural products and other goods. The key principles of Trump’s plan, released May 23, called for a fee on commercial navigation to finance future capital investments.

On Thursday, Trump will host governors and mayors at the White House for a bipartisan listening session.

Trump plans to finish the week at the Department of Transportation offices in Washington to discuss its efforts to streamline the regulatory approval and permitting process for road and rail projects. Approvals that can take 10 years should be done in two years or less, Trump administration officials have said, and the White House has convened a task force of 16 agencies to examine policies, rules and laws that should be targeted to speed up the process.

--With assistance from Jennifer Jacobs Mary Schlangenstein Michael Sasso and Benjamin Katz

To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net, Mark Niquette in Columbus at mniquette@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman