Analysis & Opinions - The Washington Post

Larry Summers: The Problem With Privatization

| June 12, 2017

We tend in modern economies to take progress for granted and debate only its pace.  This is not true with respect to air travel times. A look at airline time tables reveals that today the 8:26 a.m. flight from Boston to Washington National took 103 minutes. The 8:15 a.m. flight in 1982 took 82 minutes. The difference is similar, if not greater, on other routes. For example, flights from Boston to Charlotte typically took 125 minutes in the early 1980s compared to 160+ today.

Why has this happened? The distances have not changed. Nor have we lost knowledge of aeronautical engineering. Perhaps fuel efficiency has something to do with it, but real fuel prices are actually lower today than they were in 1981. Almost certainly, the problem is increased congestion of finite facilities, airspace and air traffic control capacity.

I have, therefore, long been interested in the issue raised by the Trump administration last week of improving our air traffic control system. I remember well meeting a group of airline CEOs at the beginning of the Obama administration as they argued for inclusion in the President’s Recovery Act for a NEXTGEN system that could, over the next two decades, transform American air traffic control.

I said I shared their aspiration. I then, perhaps too cheekily, observed that “I know this is a big project, but 20 years is a long time. We put a man on the moon in less than 10.  We won World War II bringing 13 million men under arms in 3.5. Can't we have something that will show results faster?”

They came back with a modified proposal that we supported, yet I think it is fair to say that there has been non-transformative progress since that time.  We should be able to do better, so I am very interested in President Trump’s proposal to privatize air traffic control.

I am sympathetic. It is hard to imagine air traffic control becoming more obsolete than it already has under the management of the FAA, so maybe any change in governance is good. But the records of Amtrak and the Post Office hardly offer enormous encouragement about the prospects for highly dynamic management. The main reason to privatize something usually is because a profit motive drives efficiency. That argument does not apply here, because what is envisioned is not a for-profit corporation.

The crucial problem historically has been less competence than mobilizing adequate resources for improvements in the air traffic control system. Industry wants the general government to pay. Government wants industry to pay. The standoff means too little is spent.

There is the further question as to whether any fees or taxes should be levied per passenger or per flight. After all, it does not take a 747 with 400 people on it any longer to land than it takes a NetJet with one passenger. An important question about the not-for-profit structure is who will decide on fees? If the new corporation has the authority, the question of the composition of its board; and also the question of whether Congress will really allow it to burden, to an appropriate extent, private aviation, will become very important.

Where does this leave me? We should replace regress with progress with respect to travel times. That can happen when we have an aggressively managed program with adequate funding derived from levies on flights rather than on passengers. If setting up a nonprofit corporation is the way to achieve these goals, than I am all for it. But the president has not yet made such a case.

For more information on this publication: Please contact the Belfer Communications Office
For Academic Citation: Summers, Lawrence.“ Larry Summers: The Problem With Privatization.” The Washington Post, June 12, 2017.

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