OVERHAULING AIR TRAFFIC CONTROL

OVERHAULING AIR TRAFFIC CONTROL

Last week's repeated break-downs of antiquated air traffic control equipment in Chicago dramatize the need for fixing an air traffic system that cannot do the job. Most observers now agree that federal procurement, civil service and budgetary constraints severely handicap the Federal Aviation Administration's efforts to run a 24-hour-a-day high-tech service business.

Unfortunately, the conventional wisdom in Congress is that further tinkering will do the job. The leading proposals on Capitol Hill call for ''reforming" FAA civil service and procurement regulations, removing the agency from the Transportation Department, and granting a fixed term to the FAA administrator. But this "independent FAA" would still be a federal bureaucracy whose budget is doled out each year by a Congress under severe

pressure to cut federal spending. And it would still be subject to micromanagement by congressional committees.Ten other countries, including Britain, Germany and New Zealand, have identified the same problems in their government-run air traffic control (ATC) systems. All are spinning off ATC into a separate corporate entity, outside the government budget process, funded directly by users. These ATC corporations function as businesses, with streamlined procurement, business- like personnel systems and the ability to issue debt to pay for modernization.

The results are very encouraging. New Zealand has completed two technological upgrades in the past eight years, while cutting the cost of ATC operations by 33 percent. Germany's newly corporatized ATC system has cut airline delays by 40 percent. Britain's National Air Traffic Services procured on-time and on-budget a $500 million en-route system from IBM - in contrast to the FAA's horrendous delays and cost overruns with the same vendor. Britain is now taking the further step of converting its system into a fully private company.

Vice President Gore's National Performance Review studied the FAA's problems and this international experience in 1993 and concluded that corporatizing ATC was by far the best solution. So did 1993's National Airline

Commission. A DOT oversight committee verified these findings in 1994. By switching from partial tax support to 100 percent user fees, the plan would save taxpayers nearly $2 billion a year.

Defenders of the status quo pronounced the administration's 1995 ATC corporation measure dead on arrival. Many of the old guard can't bear the thought of not being able to micromanage ATC. And they are also highly sensitive to the fears of well-organized small-plane owners, who are fighting hard to preserve their current subsidies.

But the main issue being raised is not loss of turf or loss of subsidies but safety. Again and again, it is alleged that corporatization or privatization might put at risk the world's safest aviation system.

In fact, improving air safety is the No. 1 reason to spin off air traffic control. In the broadest sense, safety is a product of technology. With a procurement system that takes seven to 10 years to obtain new equipment, the FAA can't provide state-of-the-art radar and computers. Other 24-hour-a-day, high-tech industries - telecommunications and gas pipelines, for example - quickly and efficiently buy new technology; a corporate ATC enterprise would have no trouble doing the same. And because it would have a predictable revenue stream from user fees, the corporation could issue bonds to finance major modernization rather than waiting for annual appropriations.

Safety also would be enhanced by separating the provision of ATC services

from air-safety regulation. Today, when it comes to ATC, the FAA is regulating itself, whereas all other components of the aviation system - airlines, aircraft makers, pilots and mechanics - are at arms-length from the FAA. Every country that has corporatized its ATC system has kept the safety operation within government, spinning off only the service-delivery function. America separated nuclear power regulation from nuclear power research and promotion back in 1975. We should do the same with air safety.

In addition, safety would be enhanced by a requirement that the new ATC corporation purchase liability insurance. Such insurance is available in the marketplace: the German, Swiss and New Zealand ATC companies each carries about $1 billion worth. Insurance carriers, to minimize their own exposure, would provide a new layer of safety oversight, supplementing the FAA's.

As strong as the case for an ATC corporation is on its merits, the administration's proposal has failed to win much support from congressional Republicans. Some of this is simply "not-invented-here" politics. But some represents genuine concern that a government corporation could become another Amtrak or Postal Service rather than a new Conrail or Comsat. There is also some legitimate sympathy for private pilots' concerns that an ATC corporation would be dominated by airlines.

What's needed, therefore, is a fresh approach that minimizes government while protecting the interests of all aviation users. One model is the nonprofit user co-op. Instead of a government corporation, this would be a private, not-for-profit corporation created and owned by a mix of aviation groups. The federal charter would spell out the number of board seats allocated to each group, with the airlines, by charter, having less than an absolute majority. But the quid pro quo for places at the table would be a willingness by all user groups - Piper Cubs, business jets and airlines alike - to pay some kind of user fee.

Happily, there is an outstanding example of just such a nonprofit user co- op already in the aviation field. Arinc is a $225 million business set up in 1929, mostly by airlines, to provide a variety of aviation communications services. Arinc created the first U.S. ATC facilities, and it set up similar user co-ops that provided ATC for decades in Cuba and Mexico (until those systems were nationalized). Highly respected, Arinc shows that the nonprofit user co-op can work well.

Corporatizing air traffic control could be a showcase both for Republicans who want to downsize government and Democrats who want to reinvent it. Together, both Houses should unite against the defenders of vacuum tubes and micromanagement. America's air travelers will be eternally grateful.