Power Grab from Above

The Sky's No Longer the Limit for the Airline Industry

Written by Alex Cohen and Scott Zimmerman, Common Cause interns, on June 6, 2017


President Trump’s plan to turn air traffic control (ATC) over to the private sector would shift millions of dollars worth of public assets into private hands and potentially provide a multi-billion dollar shot in the arm to the airline industry, a reliable contributor to Trump’s Republican allies on Capitol Hill.

Under Trump’s proposal, announced Monday, a private, nonprofit corporation with a 13-member board dominated by airline executives would assume responsibility for regulating air travel across the U.S. The Washington Post reports that the new corporation would be responsible for about 300 airport towers and other flight tracking centers, plus 35,000 workers, including 14,000 controllers and 6,000 technicians.

The administration plan is modeled on a 2016 bill by Rep. Bill Shuster, R-PA, chairman of the House Transportation and Infrastructure Committee. Shuster has received more donations than any other member of Congress from the airline industry - more than $791,349 since 1989, including $284,399 during the 2016 cycle alone, according to the Center for Responsive Politics.

The industry is a major campaign contributor to Republicans and Democrats in Congress, donating more than $52 million since 1990. Just over half of that - 55 percent - went to GOP candidates, according to the center’s analysis of campaign finance reports.

The Federal Aviation Administration (FAA)  oversees ATC. Its work has been the subject of bipartisan criticism for its reliance on outdated technology, but given universal praise for keeping U.S. skies safe. Trump’s proposed replacement would be a quasi-government entity, similar to Fannie Mae or Amtrak.

Federal regulation of aviation began in 1926 at the request of the fledgling aviation industry, whose leaders “believed the airplane could not reach its full commercial potential without federal action to improve and maintain safety standards.” The government’s role grew throughout the Great Depression and World War II, and in 1958 the FAA was officially established.

ATC has been a significant function of the FAA ever since. Calls to privatize the industry also are longstanding. The move to privatize ATC started as early as the 1978 Airline Deregulation Act, which placed routes and fare-setting in the hands of the free-market. While this act lowered airfares, it has hastened the collapse of many smaller aviation companies and led to the mergers of some of the largest. Deregulation also has led some to describe the industry as a “near-monopoly.” Further privatization could give a corporate few even greater control over this important form of transit. 

Shuster’s proposal was scored in 2016 by the nonpartisan Congressional Budget Office (CBO), which concluded that it would drive up airline revenues at consumer expense. Shuster’s plan also would “increase net [federal] deficits stemming from revenues and direct spending by about $19.8 billion.”

According to the Congressional Research Service (CRS), there is no evidence that Shuster's plan would be an improvement over government control. “There does not appear to be conclusive evidence that any of these models is either superior or inferior to others or to existing government-run air traffic services, including FAA, with respect to productivity, cost effectiveness, service quality, and safety and security,” CRS said.

The Atlantic reports Trump’s decision to kick off his “Infrastructure Week” with an obscure policy proposal seems to be an attempt to get a win. “To some extent, the momentum for privatization has grown out of frustration with Congress,” as industry leaders believe lawmakers have not sufficiently funded the FAA, the magazine argues. Congressional Republicans meanwhile, reportedly have grown frustrated with the FAA’s requests for financing.

Even so, Trump’s proposal does not enjoy unanimous support from the president's own party. Sens. John Thune, R-SD, and Jerry Moran, R-KS, both gave skeptical responses when asked about FAA privatization.

On Twitter, Moran wrote that “proposals to privatize air traffic control threaten the reliable transportation options provided by small airports and the general aviation community for millions of Americans [...] privatization eliminates the chance for Congress and the American people to provide oversight [...] and is likely to raise costs for consumers.” According to FiveThirtyEight, Moran has previously voted alongside Trump’s position 100 percent of the time. It’s unclear whether his break with the president on ATC is ideological or an issue of funding. Moran’s major donors, including Fedex, have supported the FAA’s reform plan, NextGen, while key Trump and Shuster donors prefer deregulation.

Trump met with several airline executives at the White House in February, including the CEOs of Delta, Southwest, American and United Airlines. The executives pitched the privatization of ATC to Trump, who responded favorably. Southwest CEO Gary Kelly told the president that “the single biggest opportunity for aviation is to modernize the air traffic control system.” The executives claimed that privatization would be simple and would save the industry $25 billion.

This isn’t the first time that the airline industry’s interests have converged with those of Trump and the Republican Party. In September 2016, Delta CEO Ed Bastian said that “with the rhetoric that’s going on about trade and the U.S. having been taken advantage of, I think there is a much bigger ear there than ever before . . . [a]nd we’re not going to stop.”

Overall, Trump’s plan to privatize ATC does nothing to “drain the swamp.” Monday’s proposal during “Infrastructure Week” would give a slice of corporate America oversight over its own operation. Likewise, the plan would make it easier for the major carriers whose executives will dominate the new nonprofit ATC board to muscle small, regional airlines out of profitable routes and flight schedules. It has been driven by people and companies that stand to profit from its implementation, is likely to increase the cost of air travel to consumers, and is a direct consequence of the influence of big money in politics.

Office: Common Cause National

Issues: Money in Politics

Tags: Fighting Big Money

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