AIA’s concerns tipping the ATC Privatization Debate Scales?

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ATC Privatization Debate

Aerospace Industries Association (AIA)

The new Chairman and President of the Aerospace Industries Association, David F. Melcher, has expressed “concerns” about the privatization of the Air Traffic Control system. In light of the election of Mr. Trump and the reappointment of Rep. Shuster as Chair of the Transportation & Infrastructure Committee, that is a significant entry into this very contentious debate.

For more than two years, thanks to the of Chairman Shuster’s early initiation of the FAA Reauthorization Legislation consideration process, the Washington Aviation Advocates have been battling the issue of ATC Privatization. AIRR, the Chairman’s specific proposal on privatization of the ATC organization, was introduced early in 2016, but failed to pass both Houses. Some saw some serious technical flaws to the proposal, but the battle line was drawn over “the control” of the proposed federal corporation. The opposition was generally major airlines (A4A) [except DL which broke from ranks on ATC and left A4A] versus GA/BA (AOPA/NBAA).

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A4A’s view, in brief, was that moving this “business unit” into a federal corporation with access to the private capital markets would result in a more efficient ATC. The contrary position was that A4A would dominate the “board governing” this new institution and the future design/operation of the system would favor the large carriers. At the end of March, the bill passed the House but failed to be adopted by the Senate. The two “user” groups had their respective “home court” and legislative equipoise was achieved.

With the new Congress convening in January, with Rep. Shuster aligned with A4A and with suggestions that the President-elect supports (?) some form of privatization, the balance appears to be tipping toward a change.

In this context, Mr. Melcher’s interview is significant.

First, prior to being elected as AIA’s CEO, he was President and CEO of Exelis Inc. In its previous incarnation as ITT, that company was the primary installers of the ADS-B system, one of the key elements of NextGen. It can be said that from that time he can speak with expertise about the FAA’s business and acquisition acumen. Further, his current members currently are the primary sources for the technology for this future system.

Second, he expressed doubts about whether this transformation will facilitate the implementation of NextGen. He was of the view that creation of a new legal entity would be disruptive to existing research, contracts and implementation of this satellite-based navigational system.

Third, he did not espouse any view that any greater efficiency would result if AIRRwas passed in 2016. The comments were not central to his luncheon talk; so he did not touch on the divisive “control” issue.

It will be interesting to see if the AIA comments impact the scales of this debate?

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Aerospace Association Head ‘Wary’ about ATC Restructuring

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