WASHINGTON – In a kickoff to President Trump’s proclaimed “Infrastructure Week,” administration officials on Monday announced plans to transfer the U.S. air traffic control system from the Federal Aviation Administration to a new private nonprofit entity that could borrow funds.
But response to the proposal was somewhat tepid from airport groups, which wanted to see administration infrastructure proposals on the ground as opposed to in the air. One group questioned how the proposal would affect the Airport Improvement Program, which provides grants to airports that are often used to augment tax-exempt bonds.
“Any plan to reform air traffic control must address the significant infrastructure needs of airports,” said Kevin Burke, president and chief executive officer of the Airports Council International-North America. “Our latest study outlines the nearly $100 billion in infrastructure needs facing U.S. airports over the next five years.”
“Airports have long advocated that user fees are the most sustainable and affordable way to provide self-sufficiency for airport infrastructure,” Burke said. “Today’s proposal does not specifically outline how the Airport Improvement Program will continue to be funded.”
"As the President and his team know all too well, 'the art of the deal' lies in the details, and the principles outlined this week by the Administration represent a good start in filling in some of the current gaps in the debate; we'll look to advance additional airport priorities in the policy discussions in the weeks ahead," said American Association of Airport Executives President and CEO Todd Hauptli.
Senate minority leader Chuck Schumer, D-N.Y. blasted the plan for its focus on privatization. "If this week is all about privatization, it will be another broken promise that President Trump made to the working people of America.”
"Privatization, whether its for construction of roads and bridges or in aviation, often leaves the average American with the short end of the stick and gives big corporations way too much power," he said.
Asked by reporters during a conference call why the air traffic control system reform was heading up infrastructure week when lots of roads and bridges need repair, D.J. Gribbin, special assistant to the president for infrastructure, said Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee, “did a very good job of pulling together a package and having a proposal ready to go” on the FAA reform.
Shuster introduced legislation last year that would separate the air traffic control system from the FAA. Administration officials said the president supports Shuster's Aviation Innovation, Reform and Reauthorization (AIRR) Act but believes it can be improved.
In addition, Gribbin said, this initiative “serves as a great template for how wenk about infrastructure.”
rdish, assistant to the president for intragovernmental and technology initiatives in the White House Office of American Innovation, said, “This is a great model for how proper infrastructure can be accomplished, getting a state of the art system without expense to the taxpayer.”
“It’s a precursor to the larger overall infrastructure package which will follow it,” said Cordish.
Cordish said there’s no shortage of capital for investment in U.S. infrastructure, but it’s hampered by the burdensome permitting process and “a lack of revenue centers associated with infrastructure.”
ng to the president's "principles" for modernizing the air traffic control system, the ATC system would be transferred from the FAA to a private nonprofit entity that would have the power to borrow funds and enter into contracts, leases, and other arrangements. The entity would be able to to issue bonds or pledge future revenue streams to fulfill the terms of financial arrangements and other transactions. It will also be able to sell of transfer assets.
The new entity would be financially fully self-sufficient through the imposition and collection of fees paid by users of the airspace system that would be sufficient to cover the ATC's costs of operations and recapitalization. Taxes currently covering these costs would be terminated, with the exception for some existing aviation taxes necessary to continue to fund the Airport Improvement Program, with the rest of the FAA funded by general fund revenues.
The new entity would be managed by a board of directors who would have a fiduciary duty to it. Gribbin said there would be a CEO and the board would include two representatives from the airlines, two from unions, one general aviation person, one representative of the airports, and two will represent the government as a whole. Those eight board members would select four other independent board members.
Asked about timing, Cordish said that will depend on Congress, which will have to approve legislation authorizing the transfer of the air traffic control system.
Gribbin told reporters that the air traffic control system would be moved “off budget.” The plan is to eliminate the taxes that are currently levied on airlines that used the system and to shift to a user fee system,” he said, adding, “We’re moving the revenue stream and the liabilities and the operational responsibility and the cost … to a new nonprofit.”
The plan will reduce the size of the government because the 30,000 air traffic controllers will move from the federal government to the private, nonprofit entity, he said.
Gribbin said the nonprofit entity will be overseen by a 13-member board, eight members of which will be selected: two representing the airlines; two from unions, one from general aviation, one from airports and two that will represent the government as a whole. These eight members will select four independent members. There will also be a CEO.
On Wednesday, the president will travel to Cincinnati, Ohio to talk about how to move freight over inland waterways. On Thursday, he will meet with governors and mayors at the White House to discuss infrastructure. On Friday, he will visit with Department of Transportation officials to talk about how to expedite the permitting process.