


Last month, to rally support for a massive infusion of funding to fix the troubled U.S. air traffic control system, Transportation Secretary Sean Duffy staged a public horror show of the Federal Aviation Administration’s outdated technology. It included 1980s zombies like floppy discs, bulky monitors and a favorite prop for those who have been pushing for improvements for decades: paper flight strips.
At most U.S. air traffic control towers, when a new plane is about to enter its airspace, they’re handled exactly the same as in the 1970s in one key way: a printer spits out a strip of paper with the callsign of the flight and other information. Controllers arrange the flight strips on a board, scribbling notes and moving them around to help choreograph the complicated ballet of planes in the sky.
News flash to America Firsters: Canada switched over completely to a computerized system 16 years ago with great success. Some say our neighbor to the north is a model for how the U.S. could better go about modernizing its hopelessly outdated air traffic control systems.
The Trump administration’s fix: more money. Duffy has called for Congress to give the FAA tens of billions more to accelerate its modernization programs, claiming upgrades can be accomplished in three years that had previously been budgeted to take as long as 15 years.
Bob Poole, a transportation policy greybeard at the Reason Foundation, argued that more money is not the solution to the unremitting decay of the U.S. air traffic control system. The FAA’s troubled procurement staff struggles to define how upgrade programs should be carried out and how the technology should be configured within three years, and amid the chaos in Washington, it's not clear if Congress will come up with the money. “This is just a pipe dream—it could not possibly happen,” Poole told Forbes.
A better way, he said, would be to follow Canada’s lead and privatize air traffic control.
In 1996, the Canadian government spun out its air traffic control department into an independent corporation, Nav Canada. That gave it the ability to raise its own funds, and freedom from the narrow interests of lawmakers, who would bridle at any attempts to move jobs out of their districts.
“It was immediately empowering,” Joel Morin, a former Canadian air traffic control manager and executive at the International Air Transport Association, told Forbes. “We became masters of our own domain, and what we did was totally focused on the air traffic system, not on anybody else's priorities.”
Over the next 20 years, Nav Canada carried out a sweeping makeover of air traffic control, upgrading technology and improving safety and efficiency. The rate of instances in which planes fail to maintain minimum required separation from others has fallen by over half since 2001. They are now at a level that appears to be six times lower than in the U.S., Forbes estimates using federal data, with costs roughly a third lower than those of the FAA.
By bringing systems development in-house and reducing use of contractors, Nav Canada was able to cut its capital spending to half of that of its government days, said the organization’s founding CEO John Crichton. Better yet, it delivered three times as much new technology twice as fast, he said.
Privatization of air traffic control agencies has occurred in various forms in over 60 countries, starting with New Zealand in 1987. In the U.S., it’s an idea that’s been explored periodically since the 1970s. The last serious attempt – legislation introduced by former House Transportation committee Chairman Bill Shuster (R-Pa.) — failed in 2018. It faced fierce opposition from influential lobby groups for business jet owners and private pilots, who believed it would favor airlines and lead to higher fees.
Meanwhile, America’s air traffic control infrastructure has continued to crumble after decades of chronic underinvestment. More than a third of the FAA’s 138 ATC systems can no longer be reliably maintained, due to shortages of spare parts and funding, and another 39% were at risk of deteriorating beyond repair, the Government Accountability Office reported last year.
Leaking roofs, busted elevators that force controllers to climb 15 flights of stairs and ancient HVAC systems also threaten controllers with more prosaic failures that have taken facilities offline. For example, last week, the air conditioning failed at the Phoenix air traffic control tower in over 100 degree heat. The FAA was forced to evacuate staff and shift oversight to another already stressed nearby air traffic control facility.
“An air traffic controller shouldn’t have to worry, ‘are these tiles over my head going to fall down and is it going to pour water on me while I'm around all this electrical equipment today?’ ” said Nick Daniels, president of the National Air Traffic Controllers Association.
Such quotidian problems only exacerbate one of the biggest challenges facing air traffic control: persistent understaffing. The FAA has about 10,800 fully certified controllers, roughly 3,800 short of its staffing target. In practice, that means about 40% of controllers are working six days a week, 10 hours a day. “The stress is absolutely at an all-time high. Morale's at an all-time low,” said Daniels.
There haven’t been any accidents attributed to a systems failure, but beyond luck, that’s largely because when there is a major problem, as recently occurred at the short-staffed center overseeing Newark airport, which has suffered brief radar and communications outages, controllers compensate by delaying and spacing out flights – to travelers’ great frustration. In the worst case, like the 2023 collapse of a pilot safety notification service, the FAA can halt flights altogether.
Air traffic controllers monitor airport traffic in the Nav Canada tower at Ottawa International Airport in 2016.
© 2016 Bloomberg Finance LPPoole, who’s credited with coining the term privatization, has stopped using “the P word” given its negative connotations in some circles. Instead he talks about converting the FAA’s air traffic control organization into a public utility, akin to power and water companies, a move that could expedite its modernization.
“Having this embedded in the federal budget, it starves the air traffic organization from the kind of capital investment that is needed.”
Crucially, it would eliminate the financial uncertainties of an organization whose budget is controlled by lawmakers. Once converted into a corporation, funding typically comes from usage fees charged to airlines and private planes, a revenue stream that can be used to support the sale of bonds to raise money to carry out big projects quickly.
The FAA, whose funding comes in annual drips and drabs, has had to stretch out modernization programs over 10- to 15-year periods, in what it euphemistically calls “waterfall schedules.” These baked-in delays often mean that by the time the last facility is “updated” 15 years later, it may already be obsolete. “It’s a crazy way to do business,” said Poole. “Having this embedded in the federal budget, it starves the air traffic organization from the kind of capital investment that is needed.”
Most privatized air traffic control organizations are still owned by their government. At the extreme end of privatization, there are two for-profit, partially investor-owned companies. Great Britain’s NATS includes airlines and pension funds among its shareholders, with the government holding a 49% stake; while Italy’s ENAV has 49% of its shares up for trading on the Milan stock exchange.
Then there’s Nav Canada, which is a nonprofit governed by a board of directors appointed by airlines, private aviation, labor unions and the government.
In most of these cases, operations have improved post-privatization. “You get better value for money and you get more focus,” said Andrew Charlton, a Switzerland-based aviation consultant who formerly ran a think tank devoted to privatization of air traffic management services. “And the staff get paid more over time because they're outside the government pay scales. So that makes it easier to attract talent.”
That’s certainly been the case for Nav Canada, which in the 1990s faced a situation not unlike what the FAA faces now. Its technology was hopelessly dusty and in need of replacement and there was a significant shortage of air traffic controllers to manage a busy airspace second only to the United States.
Freed from government control, CEO Crichton, a former airline executive and trade group head, moved to cut fat. He trimmed the workforce by 25% in the first three years, largely by getting rid of superfluous administrators and middle management.
Crichton also ended Nav Canada’s dependence on outside contractors who’d spiked development costs for new air traffic control systems. The organization had plenty of engineers and programmers on staff, but they’d largely been doing project management. Crichton put them to work developing new air traffic control systems in house calibrated for the people who would ultimately use them. “We said from now on, if you're an engineer, you're going to do engineering. If you're a computer geek, you're going to do geeking,” Crichton told Forbes. “And we're going to make sure the system is designed exactly for what we want and no more.”
Success came quickly. In 2009, Nav Canada finished rolling out a system called EXCDS, which replaced antiquated paper flight strips with touchscreen computers. The first of its kind, the organization went on to sell it to air navigation service providers in other countries, including the United Kingdom, Denmark, Australia and India.
The computerized flight progress strip used by air traffic controllers is seen in the Nav Canada tower at Ottawa International Airport in 2016.
© 2016 Bloomberg Finance LPThen in 2014, it began using text messages to communicate route and altitude changes to pilots on domestic flights, reducing the risk of misinterpreting crackly radio messages. The FAA only completed adopting the technology this year.
As a private company, Nav Canada has made other canny moves to maximize profits and bring better service to its customers. It bought a major stake in Aireon, a company with a satellite-based airplane tracking service that monitors flights over oceans and other remote areas without radar coverage. Aireon’s system has allowed Nav Canada and NATS to safely reduce spacing between planes on heavily traveled cross-Atlantic routes, letting them fly more efficient routes and reducing fuel burn.
Consistent funding also allowed Nav Canada to overhaul foundational infrastructure like its buildings and communication and power systems, said Sid Koslow, Nav Canada’s chief technology officer until his retirement in 2017. “If you fall behind, you have a mountain of stuff that you have to do, and your budget gets eaten up by maintenance,” he said.
The FAA has been struggling for years to replace its ancient copper-wire based telecom system. Nav Canada switched over to an internet protocol backbone in the early 2000s.
Nav Canada’s costs have been consistently lower than the FAA’s. In 2022, its ATC operations cost $369.44 per flight hour for aircraft operating under instrument flight rules, 37% below FAA, according to a report from CANSO, an air navigation trade group.
That’s surprising, says Poole, given that there are significant economies of scale in air traffic control. “As the world's largest by rights the U.S. ought to have the lowest unit costs, other things equal,” he said. “Clearly we don't.”
And Nav Canada has been able to hold down fees for its users. It raised customer service charges a steep 30% amid the pandemic as air traffic and revenue plunged. But it’s still charging customers 57% less on an inflation-adjusted basis than in 1999.
It’s hard to compare safety across countries but by one measure – the rate of failures to maintain proper separation between planes — Nav Canada is outperforming the FAA.
Nav Canada reported that its rate of loss of separation of planes under instrument flight rules was 0.53 per 100,000 movements in fiscal 2023. The FAA doesn’t report those statistics, but combining numbers that it does suggests that its rate of loss of separation was 3.3 per 100,000 movements in the same year.
But little of this seems to have registered in the U.S., where a broad coalition of airlines and other aviation groups has come together to support Duffy’s decidedly questionable do-15-years-of-upgrades-in-3-years plan, calling for Congress to allocate at least $31 billion. And it’s not clear if that’s coming.
Meanwhile, Rep. Scott Perry (R-Pa.), a member of the transportation committee who supported Shuster’s privatization legislation, told Forbes they’ll have to take a “hard look” at Duffy’s plan to “make sure that this isn't just another government kind of boondoggle.”
A bipartisan group of lawmakers is beginning to look at a range of options to improve the air traffic control system, and privatization could be among them, Perry said. “We have a secretary and a president that are interested in making fundamental, foundational changes,” he said. “While that circumstance exists, we ought to explore the possibility of making the improvements that, quite honestly, the American people demand, have paid for and certainly deserve.”
That would mean overcoming opposition from naysayers who argue the successful record of privatization in other countries doesn’t apply in the U.S., which has 10 times the air traffic as Canada. That includes Daniels, the head of the controllers union, which opposes privatization and is backing Duffy’s plan. “No one runs as much traffic that’s as diverse and dynamic as what we do,” he said.
Crichton begs to differ. “It doesn't matter whether you're in Canada or you're in Ireland or in Italy or in Australia, it's the same business,” he said. “If you have the right formula that produces efficiency and productivity, there's no reason it shouldn't work regardless of the size of the enterprise.”