PRIVATIZATION OF ATC IN U.S

Impact of Privatization of Air Traffic Control System in the US

Privatization is the transfer of ownership and control of a government-owned business to private investors either in full or in partially. Most businesses that have been established in the private sector tend to thrive successfully because they are profit oriented. However, critics claim that private investors are detrimental to the economy given more ownership power. For instance, they can exploit control power at the expense of broader social costs. Presently, the current president of the United States Donald Trump has proposed for the privatization of air traffic control in the U.S. Regardless  of  the vast success stories that have stemmed from privatization of public owned agencies, subjecting the air traffic control system to private  hands remain argumentative. Therefore, this paper is designed to explore the benefits that may be accrued from the privatization of air traffic control system in the United States. 

With the current state of maturity in the air transport industry, privatization of airport has become a trend in the modern world. Airport privatization simply means handover of ownership or administration or both of publicly owned airports to the private sector. According to Wensveen (2016), the management and ownership of airports were left in the hands of the federal governments. However, the air transport industry has since evolved to become a mixture of both private and public ownership. With the rising competition in the industry, airports in the US must position themselves to compete effectively with other airports across the world. it is under this premise that concerns were raised that government ownership of the airports might not be the best towards achieving a global competitive edge.  As pointed out by Forsyth (2016), airports in the US are required to have the freedom that allows them to strive at the commercial level and not only to offer services to the traveling individuals. 

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Privatization of airports aimed at improving the capabilities of airports to advance a customer-focused commercial plan. Privatization does not entirely mean the whole transfer of ownership from the government to the private sector. There are many types of privatization. However, the following are  some of the most common types; the transfer of operations from the public sector the private sector, transfer of proprietorship to the private sector, sharing of matters arising in the airport, trade-sale, concessions whereby control of airports is handed on to the private sector for a given period (Gonzaga-López & Marco-Simó, 2016). In addition, private operatives can finance the construction of new facilities and make annual payments to the government for a given period.  Another type of privatization is a management agreement where the private operator manages airport gaining a fee, or the government gains a certain amount of revenue (Wensveen, 2016).  The best way to go about the privatization of airports is where both the public and the private sector share ownership of the airport.

There are many reasons why many states have opted for the privatization of state-owned corporations. Fist, there has been a rising concern that government-run corporations are becoming a burden. In addition, while subsidies are escalating, managements are not alert to highly changing consumer needs, this has led into highly influential unions. Another element is that many consumers have shown an increased dissatisfaction in the manner in which state corporations are run causing an increased tension concerning the government and administrators of state corporations.  Since the government has the ability to transform from one administration to another has reduced the efficiency in which the state organizations are governed (Gonzaga-López & Marco-Simó, 2016).  Government goals can be different with efficiency or make the most of the social welfare. Moreover, because it is not possible for states to let public corporations to be offset by bankruptcy, the managers of these businesses are exposed to little pressures of any improvement of efficiency. Another reason for privatizations of these kinds of firms is to increase government financing by increasing government revenue earned from the involvement of private stakeholders (Elias, 2017). Another probable reason for privatization of state corporations is to improve the marketing environment by promoting healthy competition. The competitive market is greatly associated with improved efficiency and success of businesses.

For successful privatization of airports control systems in the US, the US government must contemplate the operating environment in respect to privatization extensively. Moreover, the environment at which the operations are carried out must be made favorable to allow for the success of the proposed privatization (Putnam, Clabbers & Osit, 2017). The external forces in the market will highly influence the success or failure of the transfer of ownership of airport from the public to privately owned corporations. However, the US government must consider the effects of privatization of airports in other countries. In the UK for instance, the regulatory modifications came against a milieu of prosperous liberalization of many other markets, relatively strong macroeconomic development and with fairly well distinct objectives (Oster & Strong, 2017). Privatization could not advance in deficiency of these factors. The common operating factors to consider include availability of competition for investor dollars with other types of real estates. The willingness of many developers to work with government bodies is another factor to take into consideration. Some private developers might not be enthusiastic to work with government bodies that monitor and control airports or they might not be ready to be tied to a long-standing investment. In addition, potential private investors may be hindered-by labor-conventions that are in place during the transfer of ownership from public to private investment enterprise. The private investors may be discouraged by the potential profit for airport investment since most airport real estate comprises of empty land (Sawicky, 2016). Other factors that need to be focused on privatization of airports in the US are growth and development in the air traffic, strategies employed in airports, security, and competition likely to be encountered as well as international incidences such as terrorism. A political intervention is also an important factor to take into consideration.

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There have been many arguments concerning the current proposal of president Trump about the privatization of US air transport. Some people have embraced the proposal for the privatization of the air transport industry while others have given contrary opinions about the proposal. Supporters of the proposal have given their reasons for supporting the privatization citing various advantages such as reduced financial dependency on the government, improved security, and improved efficiency (Putnam, Clabbers & Osit, 2017). Critics have argued that going ahead with president Trump’s proposal will result in increased flight charges on the travelers, there is fear of the plan to fail in case of implementation, and this will result in an increased burden on the taxpayer to revive it in case of failure (Bruno, 2017).Taking into consideration all the controversies that surround this topic, it is of great importance to analyze the pros and cons of ATC privatization.

Benefits of Airport Privatization

Economic Benefits 

Privatization of public owned airport will result in efficient economic gains. Since publicly owned enterprises focus on offering services to members of the public rather than making profits, privatization of such business will result in economic gains for both the government and private investors. According to Forsyth (2016), the economic benefits associated with the privatization of airport control system are likely to be acquired from privatization include upgrading in operating productivity: the private profit-oriented business model results to increased explorations for various means of reducing costs and expenditures while increasing revenue earned than when the operations are run by the government (Forsyth, 2016). The introduction of new efficient management styles by the private proprietors and ability to make better investment decisions. 

Since private holders are interested in earning more profits, they focus on cutting down costs. The lesser the costs incurred, the higher the profits realized. The private sector is also highly driven by competition from other providers of the same services. The resultant competition to earn a contract among the private investors in the airport traffic control will result in a decreased cost to the public and the taxpayer for the stated level of service. Public owned enterprises die not attract competition hence privatization brings about healthy completion that benefits all the parties involved.

Private firms highly exhibit a high degree of creativity and innovation. They possess the capability of using different approaches to offer given products and services. This is in contrary to the government-owned enterprises that they will tend to stick to the traditional ways of providing services to the public (Gonzaga-López & Marco-Simó, 2016). In addition, the government is faced with difficulties associated with long procedures and bureaucracy to making changes in offering given services. The flexibility that is seen in the private sector will allow the investors to carry out research and make changes in the air transport. The research carried out can facilitate the acquisition of capital equipment connected directly to the provisions offered. On yhe conctrray, the government is not often ready to allocate finances in the same manner due to many competing loads for tax dollars (Forsyth, 2016).

Denationalization is economically effective in that there are reduced operating costs. Businesses operated by the government experience increased costs because of large bureaucracies. This discourages entry of new businesses into the market. Privatization of US air traffic control will result in reduced government control in the industry or the services provided, and it will make bureaucracies manageable. 

Improved quality of services provided

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Privatization of the airport in the US will benefit the public regarding the quality of services provided. Since the private sector operates in a highly competitive environment, they tend to improve the manner in which they provide their services for them to remain competitive in a highly competitive market. Public owned businesses tend to operate in a non-competitive business environment which results in them to be less concerned with the welfares if their consumers. This results in the government-owned businesses offering to the public poor quality services. Due to increased competition, the private sector tends to focus on improving in the ways they provide services to the public. As a result, the public can benefit from the improved quality of the services provided (Gonzaga-López & Marco-Simó, 2016).

Reduced political interference

Ownership and management of airports by the government have been full of political interferences and interventions. Politicization of publicly owned corporations has a great impact on theefficiency of operations. Since the government has the upper hand in the management and operations of these corporations, it is held responsible for these enterprises causing unceasing political influence on the running and development of the state-owned airports (Rozsa & Geary, 2016). Transfer of ownership or operations to the private sector will result in reduced political interference in the way these businesses operate or the way they are managed. This will lead to improved efficiency in these corporations.

Improved accountability

Public owned firms in the past have been faced with the challenges of accountability. Privatization of US air traffic will lead to improved accountability of running these businesses. As pointed out by Wensveen (2016), Managers of private owned organizations show high accountability towards their owners and to consumers at large. This is difficult to managers of public airports since they are required to show accountability to the whole community at large and political stakeholders (Putnam, J. E., Clabbers, et al., 2017). This reduces their competency to directly and effectively address the needs of their customers, and this causes them to make biased investment judgments from otherwise commercialareas.

Reduced corruption

Since most public owned corporations are monopolies, they are susceptible to corruption.  Monopolies faced with corruption because decisions are principally influenced by political reasons, individual gains by the ones involved in making the decisions rather than the economic benefits to be acquired. Privatization is a better way of curbing this problem of corruption. However, while carrying out the process of privatization, corruption can occur which result in underselling of the airport assets. This allows for instant and efficient corrupt allocation of value –not only from current cash flow but also from the entire period of the asset stream (Kriesler, 2016). More often, such transfers are hard to reverse. 

Wider share of ownership

Privatization of public corporations attracts individuals to invest their finances on past public owned enterprises. Through privatization, individuals who are interested in investing in air transport industry are granted an opportunity through privatization. Privatization of the air traffic control in the US will offer a competitive environment that will be able to attract interested parties to emerge and invest in the business. This will result into a wide-share of ownership of the US airport by the interested parties, which will result in improved and efficient air transport services and widespread benefits to many private investors.

Increased choices

Transfer of ownership of airport from state-owned corporations to privately owned enterprises would benefit the public. The consumers will be able to experience the benefits of having a variety of services from which to choose. Due to competition offered by many competitors, private investors can differentiate their businesses from those of their competitors to attract new or retain their customers. These way airlines will offer services that are different from those offered by their competitors. This will give the consumers an option of choosing an airline that favors their preferences.

Improved care of airports

Private proprietors are strongly driven to keep up upkeeps of their assets to preserve the assets worth of investment in the aptitude. Public owned airports often suffer from poor maintenance because administrations tend to defer maintenance due to political concerns with the consequent effects resulting in amplified overall long-term costs.

Increased flexibility

State-ownedairports suffer from lack of flexibility due to fixed laws and regulations that surround their operations. Privatization gives state officials more flexibility to meet program requirements. Officials have the power to change the private firm if it is not meeting the agreement of the contract, cut back on amenities, increase services during peak seasons or practice downsizing when appropriate.

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Lower tax burden

Denationalization of publicly owned airports will result in reduced running costs. Decreased administration of administration and management of the public airports will result in decreased government expenditure. This will result in saving of the taxpayers’ money decreasing the burden of tax paid by the public. With regulated and proper guidelines on charge user fees, passengers in the aviation industry are likely to experience low cost due to exemption from taxes levied upon them (Edwards, 2016).

Increased government revenues

The private investors of the public owned airports will generate revenue to the government. The private investors will pay revenue through fees applied, license and payment of tax to the government. The revenue generated by the government from privatization of the publicly owned airports will be used to finance other sectors of the economy, and other departments will benefit from increased revenue generated by the government.

Enhances air security

Private proprietors in air traffic control have the potential to improve security than the government. This is because private firms can embark on a quick modernization exercise in relation related to what can be permitted within the government resources. Evaluating the case in Canada and Australia, the private investors in the ATC industry could acquire new technologies instantly upon privatization of ATC (Sawicky, 2016).

Time saving

Air traffic control is highly dependent on technology.Availabilityof modern technology willresult in reduced flight times, ready planes from turbulence quickly and reduces delays. In addition, availability of better tools due to improved technology will improve security of the people using the planes. The privatized air traffic control providers in Australia, Canada, and the UK, have shown that privatization of airports upgrades at a faster rate as compared to the Federal Aviation Administration (Kriesler, 2016).

Solving short-term political views

Government administrators have a tendency having short-term views about the next election. This gives them a choice of not investing in the improvement of infrastructures meant to offer long-term benefits since their major concern is to provide projects that will render them support before the election ((Edwards, 2016). Privatization will help solve this problem since the investors are concerned with projects that will offer long-standing profits.

National cohesion

Transfer of ownership to private owners will foster national cohesion amongst major stakeholders among the aviation industry.  The major stakeholders include the three parties that include; the government, private and the citizens. In most instances, the private sector feel neglected and left out while on the other hand, the public feels that the government imposes on them rules and taxes. Involvement of the private sector and the citizens will make them feel that they belong in the running of public affairs. This will result in improved relations between the government, citizens and the private sector help in fostering peace and unity among the stakeholders.

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Increased Development

The private sector is mainly focusedon making profits, and due to increased competition as a result of increased entry of investors, the service providers will have to improve the environment in which they operate to be competent. They tend to improve on social amenities and infrastructure surrounding airports in an attempt to maximize on profit income. This is not only an achievement on the part of the private firm but also in the state and also to the citizens at large. This will lead to the development of areas surrounding the airport. In addition, more citizens will get employment in this newly developed infrastructure. This will result in increased value for money.

Demerits of Air Control Privatization

Nature has its way of balancing out.  According to physicists, every action has an equal reaction force. The cons of privatization of air traffic control ATG are numerous having a significant impact on this industry. Regarding business privatization of ATG would impact negatively on small businesses (Rozsa & Geary, 2016). The Alliance for Aviation whose clients across America includes small business and airports as well as private operators strongly defends its clients against such detrimental effects. Privatization would mean private entities lack a way to generate traffic to their side hence enhance their resources. This finding is in tandem with the fact that 2000 out of 5000 airports in the U.S are operated under private firms. By the end of the day, there is a serious concern about their business being taken away from them by both government and non-government organization. This loss of revenue could lead to their exit from the market. These concerns are supported by the fact that that the FAA is and has been doing more than fine when it comes to controlling of air traffic (Elias, 2017).

Cost Implication on the government

There are also other cost implications that would come to play. Some countries have tried privatization of the ATC such as Canada and the U.K, and there has in fact led to increased cost of operations contrary to the foreshadowed benefits. In Canada, the cost has increased by 59% and in the U.K by 30% (Wensveen, 2016). It is arguably correct to presume that people both private and government work hard to cause change that makes lives easier and in the end helps to save and conserve resources by lowering costs. 

Poor infrastructure

President Triumph and the proponents of privatization of ATC are convinced that the action will result in decreased traffic, congestion and result in increased cost-effective flight. This is supposed to result in decreased delays in the air travel industry. Here it is vital to address problems from the root to a lasting solution (Gonzaga-López & Marco-Simó, 2016). The key concerns of air travel delay are inadequate infrastructure. Instead of privatization, the proponents need to address this sleekness and not the symptoms it is presenting with. A better suggestion would be to expand the infrastructure and build ultra-modern airports with enhancing capacity to handle the ever-rising demand of passengers to travel via plane. There is a dire need to improve Americas both air control system and aviation infrastructure to lessen delays and not just to pick a single item (Sawicky, 2016).

Jeopardizing the efforts of FAA

The Federal Aviation Administration has had a shaky but progressive delivery of its promise to the realization of the vision for service delivery. The government can take criticism for delaying such transition. This has been shown year in and out such as the case were in 2013 where there was a critical decrease in budget funding FAA and a year later the complete closure of the entire federal government. It is important to notice that you cannot starve a plant and expect it to bear fruit. Despite all these FAA has been thriving and instead of weakening this system and starting new ones, strengthening the existing institution and working for its benefits with a few modifications can results in better control rather thanadapting to a new venture privatization of air traffic control (Bruno, 2017).

Lack of guarantee for safety

Opponents are critical about privatization guaranteeing safety, protection of national security, expedite new technology and keep our aviation system solvent. According to Bruno (2017), it is a very serious concern that must be addressed. Questions such as guaranteed safety of such transition must be adequately assured. It should be in the good interest of the state to ensure its aviation industry does not collapse as this equates to the collapse of the nation. The nonpartisan Government Accountability Office (GAO) that validates the concerns of several reports.

Protection of national security

Another intriguing concern is the protection of the national security following privatization of the ATC. According to the department of defense, privatization would need to sever ties between a private entity and the DOD making a likelihood of infiltration of the national security a possibility. There is serious need to keep such institutions aside from any potential and non-potential intruders. Before embarking on such an adventure, the privatization of air traffic there needs to ensure that the alleged benefits are measurable outcomes that are achievable. It is surprising to notice that even GAO cannot assure that privatization of ATC would speed up FAA’S work as well as modernize the air control. There is no proof it would work. It is easier to strengthen the institution already at work that engages in a trial and error activity with no clear future. It is simply such a big risk to engage in. (Bruno, 2017).

Long transition period required.

Certain true links between privatization of ATC and slowing of the Next Gen do exist. The Mitre Cooperation has conducted research that shows a complete transformation from FAA to a private entity would take seven years. It is wise to agree that seven years is such a long time to get things running. The big concern is that all the above-addressed concerns would remain unaddressed for such a long time endangering the industry and putting the lives of the passenger through such an insurmountable risk. In the past, the U.S. airlines have been adversely affected by computer networks failure resulting in delayed flights and sometimes cancellation of the entire flight. These have happened year in and out. This raises eyebrows with the concern that the government has failed to invest in better quality control for the computer networks system, what surety is where they would invest in any future problems that result from privatized ATC? Is there likelihood that in the event a challenge presents they will seek ways to exit? Is there a chance of having a vicious circle of trying and leaving at the fast inconvenience (Rozsa & Geary, 2016)? 

Exploitation through user fees

Any government must show an interest in the protection of its citizens, issues about the exploitation of passengers by private firms running ATC regarding air ticket charges are imminent. This private, airline-dominated air traffic control corporation would have the power to set passenger user fees to pay the system, to set flight routes with competitors, to determine which airports they will invest in, and to control ultimately, who will have access to the system. According to the draft bill, there is a likelihood of giving away free billions of taxpayers’ money to fund assets of a private investor.

Loss of jobs

The government does not only protect its citizens by ensuring legislation that enables people them pay less for more but ensuring these people have a means to earn a livelihood. Thisis accomplished by the creation of work avenues that utilize the skills of the people and pay them for that in the quest of nation-building and achieving the American dream. All these are at risk with the privatization of the air traffic control since these would mean turning-off dozens of people from their jobs. Thousands of technicians and air traffic controllers would have to be laid off the government payroll. This has serious economic implication in all spheres of life. The government would lose a source of revenue; the people will not have a means to fend themselves. Note that a hungry man is an angry man and can result in violence and law-breaking activities. 

Fluctuations in the number of users

It is vital to consider that the operations and success of a private firm in the management of ATC are user fee depended. On keen analysis, it simply means the empire is set to encounter a massive failure should people boycott. Unlike government-owned agencies that receive funding regardless, some level of truth do imminent from the taught that the private entity operates at the mercy of the people. It’s true to evaluate the dangers that are posed by the possibility of infiltration by terrorists. These would mean thetotal collapse of the entire plan. 

Revision of aviation curriculum

Education has for long been the back born of many societies and nations throughout the world. One such type of education is the one in the magnificent field of aviation. The schools that train in the field of aviation has used unimaginable resources already invested the schools as well as to their students who are already running this industry of aviation post-school. The new proposition of privatization of ATC seems to clash to some extent with the curriculum. There is need to change or alter the syllabus so that it can take into consideration these changes. Since the schools already have graduate students, there may need to recall them back into class to equip them with such changes. Time is of essences, so what happens in the meanwhile as aviation schools embark on such to comply with the new demands in the market (Rozsa & Geary, 2016).

Unequal distribution of infrastructure

Infrastructural development is supposed to be equal to bridge the gap of unequal distribution of wealth. This will ensure all taxpayers across the entire country are in a position to be beneficiaries of all the activities happening. With privatization of the ATC, the operations cease to benefit all people by taking a more business inclination. The danger with this is that infrastructural development will be determined by the profit margins that are likely to be generated out of the adventure. This is the fact that the private firms will get an opportunity to choose where they want to develop regarding specifically which airport should be considered. As much as it sounds like an amazing idea, it will lead to other areas and states developing more while their counterparts lag behind in their development. This not only has an economic inclination but a political one as well. It will mean that governors who come from such areas that gain advantage by such happenings will appear to work better while in essence, someone is working on their behalf. It can also be used to frame other people if other people to commit partial acts can infiltrate the private firm (Wensveen, 2016).

Division among stakeholders

For a venture to be successful, it is important that all it is major stakeholders be n board about that specific issue. If everyone agrees, it will ensure a smooth transition with a higher probability of greater success (Edwards, 2016).  This is not the kind of scenario that the privatization of ATC bill has faced. In contrast, there has been massive criticism about the ability to be practical and actualization of such ventures. It is important to notice that a significant number of stakeholders in this industry are not on board. Speaking for the private jet owners and operators, the National Business Aviation Society stated categorically of the negative concerns of their clientele (Kriesler, 2016).

Complexity of the aviation industry

The U.S. is just a superpowerregarding its politics, but this is reflected closely to the size of its aviation industry. It follows suit that the aviation industry is too big and complex. This capacity seems to cause grumbling among the opponents of the privatization of the ATC systems. This is excessively big to leave under the arms of one agent to run. Failure if such a firm will affect every different department of the air traffic control on the contrary to if the government ran it continuously. The FAA has different branches that perform the tasks independently but as a team to achieve a common goal (Edwards, 2016).

Differing political views

The current administration of president Triumph with the majority of the Republicans seems to be on the side for privatization. This is eminent in their speeches. This then raises a lot of ‘what if’s?” or what happens when such a regime comes to an end? Are there any protective measures against Privatization to protect it, ensures its long lasting, and not subject to change based on who is the boss of the day. It is inevitable to take such matter into proper consideration to prevent future repeals depending with what the political climate is. Appropriate legislation is required before embarking on the privatization of the air traffic control as a means of protection (Kriesler, 2016).

 The U.S. as a role model

In a humble submission and a noble one, it is important to consider the U.S. as a role model thus a pacesetter both to the developed and developing countries. As such, the mentees look up to what the mentor is doing and are likely to follow suit. Although this is an advantage, it must be considered with immense criticism since it could be a plan for such young developing nations to fail. Privatization requires a lot of money that is evidently lacking in underdeveloped countries. A trial to emulate the U.S. can lead to catastrophic failure or even worse a collapse of their economy.

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Change in priority

Going back to what the original goal of the government is, a government is supposed to ensure cost effective and efficient service delivery not to be a business entity as these may compromise the commitment to service delivery. Privatizations of ATC with partial involvements of the government certainly pose a risk to a shift in the focus of the government (Rozsa & Geary, 2016).

Lack of accountability

With privatization of ATC systems, the government appears to transfer some of the core responsibility to a third party. There is yet the fact that everything can have its downs, failures, or simply not work as expected, then the question that lingers in the minds of many is who then takes responsibility for such a case? 

Conclusion

Privatization of air traffic control refers to a phenomenon in which the government has little if any involvement when it comes to communicating with pilots to help them navigate through a day’s tasks of taking off, flying the journey and ensure a safe landing. It should be understood that either the government as with the case in the U.S. of its FAA or a private firm as in Canada its Nav Canada performs this function. There are both reasons for and reasons against that each side of the divide seeks to address. In use, a bill to pass privatization is being deliberated on yet to take effect. Privatization of air traffic control is a debate, an idea that has stuck the mind of the aviation industry for far too long. This should be noted that it is not only in America but across the globe. Every independent state seeks to venture into practices as well as technologies that will see its people benefit more, have safe travels and avoid unnecessary and sometimes very costly delays. It is for this reasons that the proponents of this shift are extremely passionate about a smooth yet careful transition to their vision. They are convinced that an idea whose time has come can now be put on hold.

On the other hand, there are still people who term such an act as treason. They argue against it insisting on the lack of the professed benefits that the supporters base their argument. They base their augments on a lack of evidence as the possibility of the program working. Some cons are drawn from the demerits being experienced by countries that have already implemented such a technique (Putnam, Clabbers & Osit, 2017). They are against the privatization with a clear concise of fighting for the true spirit of the ancestors of the U.S. in honor of them not to lose the country, their pride. It is also true that a compromise can be reached where the existing organization addresses the concerns of each party, the FAA or the private firm can be co-owned with the government to help shun a situation of delegating such a crucial task to the hands of one private party. In conclusion, privatization of the US airport control system will be of more demerits compared to the benefits.