Think tanks suggest privatization


February 25, 1991|By Tom Belden | Tom Belden,Knight-Ridder News Service

The time has come to operate airports and the air-traffic control system more like private-sector businesses, according to analysts at two think tanks that favor less government involvement in the economy.

Although the proposals from the Heritage Foundation and the Reason Foundation have many critics, there's little disagreement over the problem they seek to solve: Air traffic spawned by deregulation of airlines is growing faster than the nation's airports and air-control system.

The foundations contend that the only way for the system to keep pace with the growth efficiently and safely is to let the profit motive take over where government management isn't working.

Studies by the think tanks were released as Congress considered whether to clamp more regulation on airline service or airfares because of the growing concentration of power in a few very large airlines.

William Laffer, a Heritage Foundation economist, says the air system's problems are the result of "unfinished deregulation." Air traffic congestion is not the result of too many new passengers trying to crowd onto too many jets trying to use just a few hub airports, according to Laffer.

"The real problem lies with the failure to deregulate the other components of America's air transportation network -- the airports and the air-traffic control system," he said. "These components were left in the hands of federal, state and local governments and are subject to sharp regulatory restrictions.

"As a result, the basic infrastructure available to handle the increased number of flights remains at pre-deregulation levels."

The best way to reduce congestion, Laffer's study said, is to scrap the traditional method of charging fees on takeoffs and landings at airports, replacing it with a system that charges more land at busy times and less for off-peak hours.

The traditional method -- basing fees simply on the weight of aircraft -- does nothing to encourage the use of airports at off-peak hours, Laffer said.

"If airports were free to charge premium prices . . . during 'rush hours,' or on particularly busy days, then some travelers would choose to fly at other, less-congested times, when landing fees, reflected in the prices of airline tickets, were lower," the economist contended. Likewise, smaller private planes might choose to avoid big airports at busy -- and more expensive -- times.

Laffer also suggested a system of auctioning "landing slots" -- the right to land or take off in a particular time period -- at all busy airports.

A landing-slot system, run by the Federal Aviation Administration, is in use only at four of the nation's busiest airports: Kennedy and La Guardia in New York, Washington National and Chicago's O'Hare.

In addition, the Heritage Foundation study called for letting private companies own and run major airports, all of which now are operated by state or local governments. The best example of successful private ownership of airports is in Britain, where the government sold seven large airports to the British Airports Authority, a private company.

Privatization not only would allow pricing freedom for managers of individual airports, but it also would make airports run more efficiently, at lower cost, and provide passengers and airport tenants with better service, the study contended.

Laffer said construction projects were a prime example of how money and time could be saved if airports were in private hands. A $100 million project completed in three years instead of four would save $12 million in interest costs, he said.

"Private firms often take only half the time the public sector takes to plan and construct facilities," he said.

The Reason Foundation studied whether a revamping of the air-traffic control system could reduce accidents and delays.

Robert Poole, president of the foundation and author of the study, said three recent fatal accidents -- the January 1990 crash of an Avianca 707 over Long Island, the collisions of two Northwest Airlines jets at Detroit, and the collision of a USAir jet and a commuter plane at Los Angeles -- might have been averted if the air-traffic system had been operating separately from the government.

"All three accidents were the result of a combination of errors, which included overworked and underpaid controllers, obsolete and malfunctioning equipment, and understaffed towers," Poole said.

He called for four steps to "gradually wean the [air-traffic control system] from the bureaucratic mess of government":

* Increase the pace of hiring private firms to manage small FAA control towers, a program already under way.

* Expand the private contracting to medium-size control towers to free more controllers to move to the busiest airports.

* Permit large airports to manage their towers. Big airports can better afford to upgrade radars and computers and pay wages sufficient to attract and keep experienced controllers, two major problems for the FAA as a whole.

* Turn over the "en-route system," which controls the airspace between airports, to a private corporation, as Switzerland and New Zealand have done. Private owners would charge user fees that would raise money needed to modernize the system.

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