Filed Under:Markets, E&S/Specialty

Bill to privatize U.S. air-traffic would ban in-flight calls

An air traffic controller labors in the tower at Newark Liberty International Airport, Thursday, May 21, 2015, in Newark, N.J. (AP Photo/Julio Cortez)
An air traffic controller labors in the tower at Newark Liberty International Airport, Thursday, May 21, 2015, in Newark, N.J. (AP Photo/Julio Cortez)

(Bloomberg) -- The U.S. air-traffic control system would be spun off to a nonprofit corporation and airline passengers wouldn’t be allowed to talk on mobile phones under sweeping legislation unveiled Wednesday to set aviation policy for the next six years.

The job of guiding planes would be taken away from the Federal Aviation Administration and put under the auspices of a new nonprofit funded by fees on commercial flights that would replace most current airline taxes, said Representative Bill Shuster, chairman of the House Transportation and Infrastructure Committee.

"I believe that what we are doing is taking this organization out of a bureaucracy that doesn’t manage the costs well," said Shuster, a Pennsylvania Republican, in an interview. "Taking it out, I think, you can have a much more efficient corporation."

The measure Shuster introduced also would ban passengers from talking on mobile phones while in the air, force carriers to refund bag fees if luggage arrives too late, and overhaul the way new aircraft are approved to make U.S. manufacturers more competitive.

Within minutes of Shuster’s press conference, the National Air Traffic Controllers Association, a union representing almost 15,000 controllers, announced it was supporting Shuster. The stance was a break in a decades-long policy opposing such a move.

Democrats on Shuster’s committee called the plan poorly designed and said such a major transition may cause delays in the adoption of new air-traffic technology known as NextGen, which uses satellite-based navigation instead of radars.

NextGen setback

“I believe that at this critical point in acquiring the NextGen technology, that it would be a huge disruption and a setback for that progress,” Representative Peter DeFazio, an Oregon Democrat who is his party’s highest-ranking member on the committee, said in a briefing.

DeFazio said he plans to introduce separate amendments when the bill is debated next week that would reform FAA without splitting off its air-traffic function.

The legislation will test Shuster’s reputation for mustering broad support on transportation measures in an increasingly divided Congress.

Political interference

But Shuster said the measure would remove the system from political interference and federal budget woes, thereby making it more efficient and able to adopt new technology. The FAA would continue to set air-traffic regulations and provide safety oversight. He said he plans to hold a hearing next week.

“I’m somewhat confident, somewhat optimistic,” said Shuster, who announced plans to introduce the air-traffic legislation in June. “The argument is on our side to do this, to do it right.”

Related: Drone-plane safety incidents seen quadrupling, U.S. FAA says

The last time lawmakers took up an FAA bill it was mired in years of delay that led to a partial agency shutdown in 2011 before it became law in 2012. The FAA was also disrupted in 2013 by automatic budget cuts known as sequestration triggering furloughs of air-traffic controllers and flight delays. The law authorizing the FAA allows the agency to operate through March 31.

Funding issues

Giving the new nonprofit the ability to raise money by fees would smooth the agency’s funding issues, Shuster said. One of the reasons some lawmakers oppose the proposal is that it would reduce their control over the agency’s budget, he said. Private aircraft owners, including business-jet operators, would be exempt from the fees, retaining existing fuel taxes so they wouldn’t pay more under the new system, he said.

The chairmen of the budget-writing appropriations committees, Senator Thad Cochran, a Mississippi Republican, and Representative Hal Rogers, a Kentucky Republican, have each gone on record opposing the plan. They were joined by the highest-ranking Democrats on those committees.

“While FAA can and should improve and accelerate the development of modernized air-traffic systems, we do not believe the solution is less oversight and less accountability,” Rogers and three other Appropriations leaders wrote in a letter Monday to House leadership.

NextGen impact

The air-traffic provision may also create uncertainty for companies building the $42 billion air-traffic upgrade known as NextGen. These companies include Harris Corp., Lockheed Martin Corp. and Raytheon Co.

A similar proposal to shift control of air traffic to a corporate entity failed in the 1990s under then-President Bill Clinton after it was attacked by Democrats and unions. Since then, most of the world’s industrialized nations — including Canada, Australia, the U.K. and Germany — have shifted to such semi-private control.

Related: Cockpit cameras would improve safety on airplanes

Prior proposals were opposed by NATCA, the controllers’ union. President Paul Rinaldi and other union officials had made numerous visits to Canada and other nations with similar air- traffic operations. Union members in recent years had been frustrated by FAA budget uncertainty, Rinaldi has said. 

“After extremely careful review, consideration, and deliberation, we have reached a decision: NATCA supports this bill,” he said in the union’s release.

Pilots disagree

The Air Line Pilots Association, the largest pilot union, said in a statement it would not endorse the legislation because it fails to advance aviation safety. The group said the measure doesn’t address the serious risks presented by the unregulated carriage of lithium batteries, creates an unfair funding system for the new air-traffic organization and fails to protect access to the cockpit through reinforced doors. DeFazio vowed to include language allowing the government to enact stricter rules on bulk lithium battery shipments.

Most U.S. airlines support Shuster’s plan, the Airlines for America trade group said in a statement. The new system could shave billions of dollars off the costs of the system in terms of fewer delays, the group said. Delta Air Lines Inc., which split off from A4A last year, opposes the plan, saying it will cost consumers more to fly.

The bill, H.R. 4441, contains dozens of aviation policy measures governing everything from airlines to tiny unmanned aircraft.

After lobbying by aircraft manufacturers such as Boeing Co., Shuster is proposing smoother approvals of new aircraft designs. Companies would get more leeway to sign off on the safety of equipment with their own employees instead of FAA inspectors, expanding an existing program.

Passenger protection

This proposal, along with several other key provisions unrelated to the air-traffic measure, was negotiated with Democrats on the House transportation panel and has broad support, Shuster said.

The legislation would prohibit voice calls on flights, which many lawmakers fear would make airline cabins even louder and chaotic, Shuster said. New technology makes mobile calls easier from the air and the Department of Transportation has asked for comments on whether to allow such calls. They currently aren’t permitted.

Airlines would also have to refund fees they charge for carrying bags on flights if the luggage arrives more than 24 hours late on domestic flights under the proposal. Airlines would have to notify families before they book tickets if they are assigned seats that aren’t together on the plane.

Shuster has also added several provisions to speed the adoption of civilian drones. The legislation would promote more use of the six drone test sites chartered by the FAA, push for more research on technology to allow unmanned aircraft to automatically steer clear of each other and allow easier approvals for commercial use.

--With assistance from Derek Wallbank.

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