What Is The Privatization Of The ATC System?

The sector employs more than 3 million people. Prior to the 1990’s, the air transport industry in Europe had been traditionally highly regulated and dominated by national carriers and state owned airports. Since then a single market for aviation has been created. The single market has seen the removal of all commercial restrictions for airlines flying within Europe. These include restrictions on routes, number of flights and the setting of prices.

This case study will discuss the pros and cons of operating an airport with a government-operated system of security versus returning to a privately owned and operated security organization. The Transportation Security Administration (TSA) was introduced to the airline industry after the attacks on September 11th, 2001. Complaints of slow wait times during periods of heavy traffic and the ability to manage the labor force have recently sparked an interest of Airports switching their security to a privatized company.

Although there was a deregulation of the airline industry, the one significant component that did not change was the infrastructure of the airline industry. Constrained by the limitations of the airports and the air traffic control system, airlines did not see significant increases in profits despite the large growth and operations. As the airlines increased the number of flights and structure, the air traffic control system did not experience the same increase. Because the ATC system was still controlled and owned by the government, growth was, and continues to be slow.

The odds are that at some point in time, most people in America will travel by air. What most of these people do not realize is that a simple flight is in reality a well-oiled, complex machine unlike any other air navigation service provider in the world. After the Wright brothers took their first successful flight, America embraced air travel.  The Federal Aviation Agency (now Administration) officially began operations in May of 1958, and later developed a sophisticated air traffic control system that is responsible for the largest volume of air traffic in the world (“A Brief History of the FAA”). Today, however, many politicians believe that government involvement in air traffic control is inhibiting the overall performance of air traffic control. Several bills have been proposed to Congress since the 1970s in attempt to separate air traffic control (referenced as ATC) from the FAA by privatization, corporatization, or other means (Elias 2). The most recent of these bills has caused serious debate in the aviation world over economic policies, safety regulations, and overall effectiveness of the current ATC system. The Aviation Innovation, Reform, and Reauthorization Act (21st Century AIRR Act) as proposed by Representative Bill Shuster should not be passed by Congress because it would privatize air traffic control by removing it from the Federal Aviation Administration. This would entail the creation of a board of stakeholders who would have the power to make regulatory

In 2003, Don Carty, a chairman and the chief operating officer of American Airlines resigned to avoid the company from entering bankruptcy (Wong, 2003). Prior to his resignation, Carty spent 12 hours with three of the union’s representatives to discuss new contracts. These new contracts included five instead of six year contracts and a new cash incentive plan (Wong, 2003). The unions he negotiated with were the Allied Pilots Association, transport Workers Union, and the Association of Professional Flight Attendants (Wong, 2003). In the provided video, Don Carty addresses two challenges he believes is driving the airline industry. The first challenge of being able to find an accepted price that both the consumers and the suppliers can agree on as fair or at a level that brings in profitable traffic to the business. The second challenge, relating to the air traffic industry, in finding a better way to conduct labor relations in the airline industry without the help of American government agencies.

With a big airline such as Delta, this should say something to the people who are for the effort. The backbone to an airport is its infrastructure,and how well it can run may come into question with the new sector of privatization of ATC. Airports across the U.S. have been interviewed on this issue and many come to the same conclusion NO to privatization. An article discusses an interview with high level officials at D.C. area airports

The national aviation system is under increasing demand for more and more flights as air passenger numbers continue to rise. The Federal Aviation Administration (FAA) Aerospace Forecast Fiscal Years 2015-2035 report estimates an annual growth of 2.0 percent per year from 2016-2035. This will equate to an average of 1.14 billion passengers flying within the U.S. per year by the end of year 2035 (n.d., p. 47). As the number of aircraft flying increase to accommodate passenger demand, the number of aircraft delays and risk to flight safety are also likely to increase. The current air traffic control (ATC) infrastructure evolved from the World War II era and wasn’t designed to handle the predicted air traffic loads of the 21st century (Hopkin, Wise & Garland, 2010). In order to update the ATC system to increase its capacity, the FAA, along with other select governing bodies have started implementing NextGen.

The competence of air travel depends largely on the coordination of grid and flow investment as well as operating decisions. Air transportation has become popular among travelers to different destinations due to economic liberalization. Even though economic liberalization has brought about numerous gains, there are substantial, fundamental issues that plague the industry. Currently, there is only one major corporation that has full control of air transportation. Unfortunately, this has caused travelers who want to take quick trips between cities pay higher prices while having few options on flights. Business owners and various advocates have argued that the dire situation has caused reduced air access to air transportation for those who require it. Subsequently, this issue requires a policy that targets certain aspect of the air transportation industry that will benefit the vast amount passengers who fly. These benefits should include increased travel options that are convenient, fair pricing, higher customer satisfaction, and greater flight frequency that enhances the overall travel coordination. Thus, this paper will discuss policy alternatives that will mitigate air transport issues.

At the onset of the airline industry in the United States, major network airlines were the sole providers of air travel. This multifaceted industry was a difficult industry to break into as a consequence of “sophisticated customer segmentation, hub-and spoke models and costly information systems for reservations, fare wars and intense competition” (Thompson 2008). Shrinkage in airline ticket prices augmented the demand for airline travel. Many markets were simply deserted or over-looked by major network airlines; this is a region a fresh “second tier of service providers” could enter into. This endeavor proved to provide a consumer savings of billions per year. Thus in June of 1971, after a tumultuous battle with other Texas-based

The civil aviation industry of world has expanded its wings by letting in private organisations. Privatisation in the domestic and the international circuit can help in foreseeing the future of the aviation industry at a mark up rise, and gaining

A drop in fares has been the best result of the Airline Deregulation Act of 1978. It has been the impetus for the increase in the number of flights, which in turn has spurred a drive for greater safety in airlines. But with the current airline market, this development has given us one negative. Since ticket prices have dropped to new lows, the realities of an industry which operates on such economies of scale dictates that only a few competitors have the capacity to operate within the market. This is not the desired effect of either political side on this issue, but it is an economic necessity with the environment that has been created, very similar to that of public utilities and phone companies.

The Airline industry has experienced continual problems with rising costs with both fuel and maintenance which has caused them to increase their fees to the consumers to pay for those rising costs. This paper will help explain what an airline such as Delta does to help alleviate such costs without forcing its consumers to flip the bill through high fees that consist of tickets, baggage fees and food. The costs of doing business in aviation today have spiraled out of control making it very expensive for both airlines and the

The Airline Industry is in an interesting situation. Simply adding a low cost alternative is not enough in the industry. The Internet has made the power of buyers grow with the transparency of ticket prices. This is not something that will change any time soon. Because of this profitability is predominately reserved for low-cost yet distinctive carriers. No consumer wants to ride what they consider a “lesser” airline. Airlines need a way to distinguish themselves from one another while also acknowledging the increased power of buyers.

Barriers to Entry – High cost of entry and market domination limits entrants into the industry. The upfront cost for new airlines is capital intensive. In addition, it’s difficult for new airlines to obtain airport slots for takeoff and landing which are determined by the airports. Established airlines already hold the monopoly over slots at certain airports, making it harder for new airlines to infiltrate (Airlines Industry Profile, 2014). The industry is also dominated by five key airlines; American, United, Delta, Southwest and JetBlue which make it difficult for new airlines to gain market share. At 40 of the 100 largest U.S. airports, a single airline controls a majority of the market. At 93 of the top 100, one or two airlines control a majority of the seats (Koenig & Mayerowitz, 2015). In addition, with fuel being the number one cost for airlines, the volatile fuel prices make it hard for new airlines to make a profit. Domestic airlines in the U.S. spend a combined $2 to $5 billion on jet fuel every month. As a stat up airlines, the price paid for fuel is the same weather planes are full or empty which could stop new airlines from entering the industry. Lastly, the FAA has strict regulations which discourage new airlines from entering the industry. All new entrants must abide by Federal Aviation Authority regulations on airworthiness, pilot competence, and related issues (Airline Industry Profile, 2014). Overall, entry into the airline industry is high and there is

Nowadays, the commercial competition has surpassed the limits of the previous era in which dominant markets are protecting their set market shares. Mega commercial activity back then was completely regulated by the government. The United States has privatized a lot of sectors related to energy, telecommunication, and transportation sectors. In response, the USA introduced the deregulations in the aviation industry to increase the competition in the aviation market.