Sunday, October 18, 2015

Nav Canada Draws Interest in U.S. • Northern air-traffic system is attracting attention as model for U.S. privatization fans

Air traffic controllers at Montreal-Pierre Elliott Trudeau International Airport in 2012 using management systems by Nav Canada, which some American officials see as a model for a U.S. privatization.

The Wall Street Journal 
October  18, 2015 5:30 a.m. ET

OTTAWA—The headquarters of Canada’s air traffic control corporation is becoming a busy destination for U.S. transportation officials and airline executives looking for a model to privatize U.S. airspace management.

John Crichton, chief executive of Nav Canada, has hosted more than a dozen U.S. delegations in the past 18 months as Congress considers stripping U.S. air-traffic control from the Federal Aviation Administration—much as Ottawa did 19 years ago.

Mr. Crichton’s company directs air traffic in the second-busiest swath of sky in the world by traffic volume, after the U.S. A former First Air airline executive who has led Nav Canada since its creation, Mr. Crichton is an evangelist for the Canadian model, in which an underfunded service with backward technology was removed from a national agency and turned around.

U.S. admirers—including Rep. Bill Shuster (R., Pa.), chairman of the House Transportation and Infrastructure Committee—advocate similarly extricating air-traffic control from the FAA and its parent, the Transportation Department. They say that would assure more reliable funding than the current mix of taxes and congressional appropriations, and could help advance NextGen, a $40 billion FAA air-traffic modernization program criticized by government watchdogs for being delayed and over budget.

Mr. Shuster has been preparing a bill that could establish a Nav Canada-like corporate structure for the U.S. He may introduce it as soon as November, people familiar with the matter said.

It is an appealing story: Nav Canada operates through user fees that Mr. Crichton says are 35% lower than the government formerly levied in ticket taxes, not adjusted for inflation. The operation is safer while handling more traffic with fewer people, he says. It can sell bonds to fund upgrades, unlike the FAA, and airlines save fuel through more efficient altitudes and routes, Nav Canada says.

“This business of ours has evolved long past the time when government should be in it,” Mr. Crichton argues. “Governments are not suited to run…dynamic, high-tech, 24-hour businesses. When they try, they mess up.”

Skeptics note that Canada has many fewer flights—roughly 3 million a year for which flight plans are filed—than the complex U.S. airspace, with about 15 million. Canada has 2,000 flight controllers operating out of 44 airport towers and seven en route centers that manage higher altitude flights. The U.S. has 15,000 civilian controllers and 230 air-traffic control facilities.

U.S. opponents of emulating Nav Canada include corporate-jet operators, a group presenting private pilots and, alone among big commercial carriers, Delta Air Lines Inc. They argue that Canada’s model wouldn’t scale sufficiently, costs of using airspace could jump, and the transition could be rocky and distracting.

Rep. Peter DeFazio, an Oregon Democrat on Mr. Shuster’s committee, agrees there is room for improvement but has questioned whether privatizing air-traffic control is constitutional and whether it could solve the FAA’s bureaucracy and procurement issues. And he has said he would favor a government corporation, but the U.S. Postal Service is clearly not the model.

Paul Rinaldi, president of the union that represents U.S. controllers, has questioned whether Nav Canada is scalable, but said he is willing to consider the idea. On a panel last month, he bemoaned aging U.S. air-traffic control infrastructure and the FAA’s “broken” procurement process, saying “the status quo is completely unacceptable.” Mr. Rinaldi has visited Ottawa and says Nav Canada has developed “possibly the best equipment out there.”

The FAA said its administrator is open to discussing alternative models, but that any proposed changes would need to address its challenges and not set back progress.

About two dozen nations in the past two decades have created state-backed corporations or public-private partnerships to take air-navigation control from government bureaucracies.

The foremost concern in such changes is maintaining flight safety. Auditors from the Transportation Department’s Office of the Inspector General recently visited four overseas air-navigation providers and concluded that “separating air navigation and safety/regulatory functions has not impacted safety” in Canada, France, Germany and the U.K.

Mr. Crichton says Nav Canada has cut the rate of loss of separation—a key risk indicator that measures how often planes get too close—to under 0.8 per 100,000 flights last year from more than 1.4 when the government was still running things.

Canada’s government remains its safety regulator, but it holds just three seats on Nav Canada’s 15-member board, which also has representatives from airlines, private pilots and union groups.

Early on, Mr. Crichton says, unions were skeptical although all eight agreed to the plan. Nav Canada had to let go many of the middle-managers it inherited. To win over private pilots, Nav Canada eliminated fees based on aircraft weight and distance flown, instead charging flat annual fees of 68 Canadian dollars or C$227, depending on the size of the plane. Bernard Gervais, CEO of the Canadian Owners and Pilots Association, says many of his 17,000 members are happy with the service they receive.

Nav Canada has brought in-house much of the engineering and software development previously done by contractors, which has helped cut costs while freeing it to launch new products and services. Sid Koslow, chief technology officer, said Nav Canada doesn’t favor expensive, “big bang” projects like the FAA’s NextGen. But it has widely rolled out some technology the U.S. doesn’t yet have, such as data communications between pilots and controllers, or isn’t finishing installing, such as automated air-traffic management systems at all of its facilities.

It also is trying to capture revenue for its know-how. Nav Canada has sold its tower automation system to eight Australian airports. It developed a Web-based viewer that monitors airport activity and helps airports and airlines avoid congestion. And it owns 51% of a company that plans to launch satellite-based air-traffic surveillance covering the planet. Nav Canada and its partners will sell those signals to other air-navigation service providers.

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