End the Unions' Costly Monopoly of the Air Traffic Control System

Report Jobs and Labor

End the Unions' Costly Monopoly of the Air Traffic Control System

September 24, 2003 4 min read
Ronald Utt
Ronald Utt
Visiting Fellow in Welfare Policy

Ronald Utt is the Herbert and Joyce Morgan Senior Research Fellow.

By threatening to use his veto against legislation that would protect federal air traffic controllers from competition, President George W. Bush succeeded in getting House and Senate conferees to endorse his management reform program and to produce a clean bill to reauthorize the Federal Aviation Administration.


Prior to his threatened veto, the original versions of the FAA bills included language that excluded federal air traffic controllers and related positions from the President's effort to improve government services and reduce costs by requiring competitive contracting for commercial-type jobs.


Opposing Competition
In response to this victory, Senator Frank R. Lautenberg (D-NJ), who was responsible for the contracting prohibitions in the original bill, promises to do what ever he can to defeat any effort to expose the controllers to competition.  In taking this stand, Lautenberg claims that: "This bill the Bush Administration wants passed represents a threat to the safety of the traveling public that both bodies of Congress voted to outlaw. The White House is pushing their malformed 'privatization/contracting out' agenda so far that they would nickel and dime our safety and security."


As it turns out, the record of controller performance over the past several years indicates that Senator Lautenberg's concerns are misplaced, and that he has been misinformed about the comparative safety records of those controllers he wants to exclude, and the unions he is attempting to protect.


Private Sector is Safer…
An April 2000 study by the Office of the Inspector General (IG) at the U.S. Department of Transportation found there was "little difference in the quality or safety of services provided at Level 1 towers whether they were operated by the FAA or by contractors." In fact, the contracted towers were slightly more error-free (0.05 errors per 100,000 operations) than comparable FAA towers (0.06 errors per 100,000 operations). 


A more recent report by the IG, published in September 2003, found that towers operated by the private sector recorded an even wider difference in error rates as compared to the federally operated towers. According to the IG, in FY 2002 Visual Flight Rule (VFR) contract towers had an error rate of 0.49 incidents per million operations, while the 71 FAA-staffed VFR towers recorded 2.70 incidents per million.


…And Costs Less
Reflecting the sort of inefficiencies in the federal operations that the contracting program was created to cure, the 2000 study also found that the 187 Level 1 towers that FAA had contracted out to private operators (as of 1999) saved the agency $250,000 per tower per year. The report also estimated that extending the contracting program to 71 additional FAA-staffed VFR towers could yield an even greater annual savings of $881,000 per tower because of a new FAA pay system for government controllers.


As it turns out, the IG's projected savings may have been too cautious. In the more recent report, the IG found that in 2002 the average cost to operate the 189 full-funded FAA contract VFR towers was $365,608, while the average cost to operate the 71 FAA-staffed VFR towers was $1,741,935 - a difference of nearly $1.4 million per year. In effect, the government is paying 4.8 times more for FAA-staffed operations that yield 5.5 times more errors in operation. It is for such differences in costs and safety that the Bush Administration is so adamantly committed to including the federal controllers in its competitive contracting program.


Although there are many reasons for these cost differences, an important factor is the generous compensation they receive in comparison to other public and private workers. Since 1998, federal air traffic controllers have seen their annual compensation rise by 47 percent to $106,000 today, excluding premium pay and overtime.


Impact on National Security
Senator Lautenberg also claims that in this age of terrorism and hijackings only federal workers can ensure a level of security within the aviation system that private workers cannot. But this is an odd assertion given that much of our commercial aviation system is privately owned and operated.  Both here and abroad the private sector performs the following duties:

  • Private-sector companies manufacture the planes now in service,
  • Private-sector pilots fly the planes through the air while private sector flight attendants help maintain comfort and security in the passenger cabins,
  • Private-sector mechanics check the planes for malfunction, and make the necessary repairs,
  • Private-sector baggage handlers load and unload the planes, and
  • Work in tandem with thousands of other private sector companies and workers who man the airports and service the planes that fly millions of Americans safely to their destination.

Indeed, the Department of Defense, which has the lead responsibility for national security, has aggressively embraced competitive contracting for a variety of vital services and has been doing so for several decades. Money saved on contracted services can be redirected to defense needs, and competitive contracting frees highly trained uniform personnel for more vital tasks. From 1995 to 2000, the DOD conducted 286 separate competitions under the guidelines of Office of Management and Budget (OMB) Circular A-76 with an estimated annual savings of $290 million. Examples of contracted national security services range from the simple to the highly sophisticated and include housing, tank repair, communications, supply management, and aircraft maintenance, including the B-2 stealth bomber. As is evident from the military's recent swift successes in Afghanistan and Iraq, DOD's aggressive use of competitive contracting does not seem to have undermined military performance.


Veto Threat Remains
However much proponents of unionized controllers argue that the proposed FAA prohibition reflects a special situation, it is in fact just another legislative effort to preserve the status quo and shelter government workers from the competitive forces with which most Americans comfortably exist. President Bush was correct in threatening a veto and congressional conferees wisely responded by stripping the counter-productive prohibitions from the final bill.  Any effort to undermine these reforms should be rejected and Secretary of Transportation Norm Mineta's recent reminder of the Presidential veto threat should discourage members of Congress from joining with Senator Lautenberg to preserve excessive privilege among a select group of government employees.  


Ronald D. Utt, Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.


Ronald Utt
Ronald Utt

Visiting Fellow in Welfare Policy