Privatize the Skies

Within Transport was the Canadian government’s Air Navigation System, which cost the feds $200 million in annual subsidies. In 1996, partly to save money and partly to improve air navigation, the feds sold the system to a private nonprofit company called Nav Canada. The transaction netted the feds a cool $1.4 billion. That doesn’t sound like much, but remember that this was Canada, whose economy is approximately 10 percent of the size of the US economy. Remember also that this was in 1996 dollars.

One quick change from the old model to Nav Canada was in funding. Whereas the federal government had funded the Air Navigation System with a tax on airline tickets, Nav Canada is financed with fees to airplanes that are based mostly on the weight of the airplane and the distance flown.

This is from David R. Henderson, “Privatize the Skies,” Defining Ideas, January 18, 2023.

And:

If you want to see a quick comparison of technology with Nav Canada and “technology” in US air traffic control, check out this 2009 video. Compare US technology at the 1:23 point of the video with Nav Canada’s technology at 5:15.

Thanks to Scott Lincicome at the Cato Institute for the link to the 2009 video.

And:

In a 2008 study for the Brookings Institution, economic scholar Dorothy Robyn, who had been a special assistant for economic policy during President Clinton’s time in office, catalogued the failings of air traffic control in the United States. Foremost among them were flight delays. In 2007, she estimated, flight delays cost passengers and airlines between $12 billion and $14 billion in lost time and fuel. She noted, for example, that the time taken to fly from New York to Los Angeles was twenty-five minutes longer in 2007 than in 1997. She attributed the problems to poor governance, another term for bad incentives. Because Congress and federal budget rules constrained the FAA, it was ill-suited to run “what amounts to a capital-intensive, high-tech service” business. Also, the use of passenger taxes to fund air traffic control “encourages overuse of scarce capacity” and deprives the FAA of feedback from aircraft operators. While Robyn called aircraft operators the FAA’s “real customer,” in fact the structure of control and financing means that its real customer is Congress.

Read the whole thing.