TCS Daily

The Sky Is Not Falling

By Jan Arlid Snoen - June 20, 2002 12:00 AM

OSLO -- European air traffic was in chaos on Wednesday, as the air traffic controllers went on strike to protest a proposal from the European Commission to create a unified EU air traffic control (ATC) system. The project, known as "single sky", aims to improve efficiency and allow ATC services to adapt to expected growth in air traffic. Without reform, delays due to "crowding" of European airspace are likely to become even more common.

Unions see the proposal as the first step towards Europe-wide commercialisation and later privatisation, although this is not a necessary part of the EU proposal. Their selfish interests in stopping efficiency measures are, as usual, thinly veiled by concerns for safety. The unions also point to the problems encountered by the British ATC company as proof of the problems of privatisation. National Air Traffic Services (NATS) was partly privatised last summer, although the British government remains the dominant owner. Due to the unprecedented drop in air traffic after September 11, NATS had to ask for a cash infusion and exemption from the strict price regulations. Instead of price reductions, the company asked for permission to raise charges slightly over the next three years. This application is currently under consideration by British aviation authorities, but is unlikely to be accepted. Anyhow, the extraordinary strains the September 11 events have put on the whole air travel industry is hardly proof of the failure of privatisation.

A better picture of the future of commercialised air traffic control is gained by studying the Canadian experience. In 1996, Canada became the first country to privatise the ATC system by selling it to Nav Canada -- a non-profit company whose board represent airlines, general aviation, unionised workers and the public.

Looking to Canada, air traffic controllers have reason to be concerned about their jobs. Nav Canada cut payrolls from 6,300 people to 5,200 in the first three years, mostly by laying off administrative workers. Lately, the number of staff in Nav Canada has grown somewhat, as traffic volume increased by some 20 percent from 1996 up to September 11. It is reasonable to believe that productivity increases in Europe can be significantly higher than in Canada, as a large number of small national ACT companies makes little commercial sense in such a small area as Western Europe. Travelling within the EU, a pilot has to deal with up to four separate ATC operations. Even without the single sky project, NATS has announced that it intends to shed 1,200 of its 5,700 staff by 2006.

The remaining Nav Canada staff has seen large wage increases. Charges have also been cut. Under the old system, airline passengers paid for ATC services through the air transportation tax. Today, the costs are borne first hand by the airlines. Charges in 2001 were 35 percent below what they would have been under the old system. At the same time airline related delays have declined and customer service improved. It is therefore safe to conclude that productivity gains have been significant and shared between remaining staff, airlines and travellers.

Unions will always claim that state ownership is necessary to ensure safety. Most privatisations, given proper regulations, prove them wrong. Nav Canada has remained one of the safest ATC operators in the world. The number of operating safety irregularities dropped by 20 percent immediately after privatisation, and has stayed at slightly more than two incidents per every 100,000 aircraft movements ever since.

According to a five year "report card" in Business & Commercial Aviation last October "the consensus among the three major Canadian aviation associations is that, on the whole, Nav Canada has developed into a customer-service-oriented company that operates an excellent, continually improving air navigation system. Moreover, they feel that Nav Canada is introducing new technology to improved system safety and efficiency at a faster pace than could have been expected if the federal government's Department of Transport was still operating the system." Rich Gage, president of Canadian Business Aircraft Association (CBAA) concluded, "We are much further ahead in the use of these technologies and procedures than we would have been if the system were still run by the government. Government agencies just can't work that quickly."

It is safe to predict that the single sky project will increase the productivity of European air traffic control systems without jeopardising safety. Further gains can be realised by commercialisation and privatisation. Even so, air travellers should not count on improvements any time soon. Strike-prone France is hardest hit by the air controllers' actions, and the new French government has already voiced concern over the project. The anti-globalising French probably would prefer to live under French clouds, rather than a single sunny sky.



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