The "Size Matters" Argument in Air Traffic Control

by Bob Poole, Reason Foundation.

In a Viewpoint column in the April 21^st issue of Aviation Week, the NBAA's Ed Bolen argued that the Nav Canada business model "isn't scalable" because its system is only one-tenth the size of the U.S. air traffic system. And, for good measure, he repeated the point regarding the corporatized systems of Australia, New Zealand, and the U.K.

This has always been a bogus argument. If one kind of funding model—airspace users paying their air navigation service provider directly for services received, rather than paying a tax into a politicized funding allocation system—is demonstrably better and more sustainable, that model should be applicable to ANSPs over a wide range of sizes. Similarly, if one kind of governance model—a corporate form governed by a board of directors representing all the key stakeholders—is demonstrably better than a government agency accountable to numerous overseers, none of whom specializes in aviation, then that, too, should be independent of size and scale.

But these points are even more compelling when we take into account the large economies of scale that exist in the provision of air traffic management. That fact underlies the overall difference in cost-effectiveness between air traffic control in Europe and the United States, and is one of the prime driving forces for creation of a Single European Sky. The November 2013 report from Eurocontrol's Performance Review Commission comparing ATC in Europe and the United States (2012 data) reveals the following:

Europe

United States

Geographicarea (km²)

11.5

10.4

ANSPs

37

1

En-route Centers

63

20

Total staffed facilities

756

696

Controllers

17,700

15,930

Total staff

58,000

38,130

IFR flights (M)

9.5

15.2

IFR flight hours (M)

14.2

22.4

ATC cost (B)

$11.27

$10.45

From these numbers, it is easy to derive two key performance indicators. Cost per IFR flight hour averages $794 in Europe versus $467 in the United States. And annual IFR flight hours per controller are 802 in Europe versus 1406 in the United States. Clearly, the U.S. system delivers far more bang for the buck than the fragmented system in Europe. That reflects significant economies of scale.

But it gets even more interesting when we turn to the latest Global Air Navigation Services Performance Report 2013, produced by CANSO, likewise covering 2012. Although only 23 of CANSO's 84 full members (i.e., functioning ANSPs) provided complete data, the results on the above two key performance measures, by country, are revealing. For this article, I am using data from only the six reporting ANSPs from developed countries. And due to some differences in terminology, the numbers in the CANSO report are not identical with those in the Eurocontrol report. But here are the 2012 numbers for six developed country ANSPs in the CANSO report:

Cost/IFR flight hour

IFR flight hours/ controller

Nav Canada

$339

1739

Airways New Zealand

$431

  697

FAA ATO

$454

1729

Nav Portugal

$565

1434

Finavia

$702

  620

Naviair

$741

1033

As you can see, despite their smaller size (and hence less economies of scale to take advantage of), both Nav Canada and Airways NZ are delivering first-rate air traffic services at a lower cost per flight hour than the FAA's ATO (with its large economies of scale). Nav Canada is also delivering slightly more flight hours per controller than the ATO. The other three have both much smaller airspace and lower flight activity, hence less potential economies of scale.

My take-away from this is that the cost-effectiveness and productivity of the ATO—already high—could be even higher if it were reorganized as a self-supporting ANSP, with de-politicized funding and governance.