Business Ethos Blog

Once Again Flying the “Friendly Skies”

Dr. David Mielke, Retired Dean, College of Business at Eastern Michigan University

 

Dr. David MielkeWe heard a lot about the impact of the sequester budget cuts as the FAA furloughed traffic controllers leading to many flight delays.  After a few days of major inconvenience Congress rushed to pass and President Obama signed a bill to allow the FAA to move funds in their budget to stop the furloughs and to get flight schedules back on track and in addition prevent the closure of 149 control towers at smaller airports.  Under the bill, the FAA was directed to reallocate $253 million from other areas of its budget to shore up staffing and operations.  The Senate voted unanimously for the bill and the House passed it 361-41.  Was this bill really necessary and was the FAA acting responsibly when implementing the furloughs?  Was their action the “Right Thing to do?”  Let’s look at some issues:

1. Fliers directly fund two-thirds of the FAA’s budget trough 17 airline taxes and fees—about 20% of the cost of a $300 domestic ticket, up from 7% in the 1970s.

2. The sequester cuts about $637 million from the FAA, which is less than 4% of its $15.9 billion 2012 budget and limits the agency to what it spent in 2010.  The White House decided to translate this 4% cut that it has the legal discretion to avoid through a 10% cut for air traffic controllers.  Though controllers were furloughed for one of every 10 days, 4 of every 10 flights didn’t arrive on time.

3. In 2009 Congress passed a law that makes flight delays illegal when a plane sits on the tarmac for 3 hours or more.  The FAA induced delays were in many cases 3 or more hours.  Airlines could have been fined millions of dollars per plane for the delays.

4. The FAA has about 31,000 employees, 15,000 are air traffic controllers.  It was possible under the sequester to prioritize the furloughs to the 16,000 other non-essential workers.  They did not   They could have prioritized the airports affected—they did not, but applied the cuts equally.

5.  The FAA still uses ground radar and voice based communication that were the best technology in the 1950s.  Many planes are now equipped with advanced avionics that enable more direct and precise flight paths, but they are not allowed to fly these faster, safer routes because the FAA can’t track these navigation methods.  The FAA has promised for more than a decade to modernize and make the civil aviation system more efficient and reliable, but they instead have generated delays and cost overruns.  The project, NextGen is 4 years off schedule, one part is $330 million over budget and even then the FAA paid the contractor $150 million in bonuses that were supposed to be an incentive for making the budget targets.  The overruns are now at $500 million.

6. The bill to change the funding specifically identified $253 million in discretionary unspent airport grants that can be used for air control instead—this is among the $34 billion in so-called unobligated funds that the Department of Transportation has on hand despite the sequestration.

7. Since 1998 there is a larger workforce in charge of a smaller workload as the number of flights has dropped 23%.

Were the furloughs the “Right Thing to do”?  As one FAA employee stated in an email to a member of Congress,”the FAA management has stated in meetings that they need to make the furloughs as hard as possible for the public so that they understand how serious this is.”  What Congress should really consider is to abolish the FAA and privatize the air navigation system the way that Canada and other developed countries have.  A nonprofit corporation funded by user fees would make better cost-benefit decisions, tap capital markets, replace old fashioned technology in a timely way and discipline high labor costs.  NavCanada, Germany, France, Australia and more than 50 others have made the transition to commercial airspaces.  After all, we already pay 70% of the FAA costs for their “Friendly Sky” services.