Nav Canada – A Model for Commercializing Public Enterprises

Frontier Centre, Publications, Role of Government, Uncategorized

EXECUTIVE SUMMARY

Over the past 15 years, nearly two dozen countries have commercialized their air traffic control (ATC) systems, as self-supporting government corporations, as private nonprofit corporations or as regulated, for-profit corporations. We strongly recommend the nonprofit corporation approach, as implemented successfully in Canada in 1996. Since it took over ATC operations, Nav Canada has speeded up modernization, dramatically increased efficiency and productivity, and cut user fees by one-third.
The most important feature we have adapted from Nav Canada is the concept of a stakeholder board. This approach ensures that the different interests of, say, major airlines, low-fare airlines, regional airlines, cargo carriers, corporate jets, air taxis, and light plane owners are all taken seriously in the corporation’s decision-making, without any of these interests being able to dictate to the others.

Of crucial importance is a workable system of ATC fees and charges. Drawing on international practice, as well as guidelines from the International Civil Aviation Organization, we recommend replacing most current aviation excise taxes with a simple weight-distance fee structure similar to current practice in Canada and Europe, but modified to take into account operations at severely congested airports. Overseas ATC corporations have achieved cost savings of about one-third, which have been passed along in the form of lower user fees.

ABOUT THE AUTHORS

Robert W. Poole, Jr. is Director of Transportation Studies at the Reason Public Policy Institute in Los Angeles, California. A former aerospace engineer with B.S. and M.S. degrees from M.I.T., he has authored a number of policy studies on airport and air traffic control issues and advised both the Reagan and Clinton administrations on ATC reform.

Viggo Butler, the Chairman of United Airports Limited and former CEO of Airport Group International, has served as a U.S. Air Force captain supervising air traffic control. Holding a B.A. from California Polytechnic and an M.B.A. from Pepperdine, he is currently a member of the Federal Aviation Administration’s Research, Engineering & Development Authority Advisory Committee.

Full Text of Policy Series No. 11 – (PDF, 14 pgs, 335Kb)