Time to Privatize U.S. Air Traffic Control—Copy Canada’s Model

By Alex Tabarrok.

"Yesterday, the FAA grounded flights at Reagan (DCA) because there weren’t enough air traffic controllers. By mid‑afternoon, thousands of flights were delayed nationwide. The same thing is happening at major airports across the country.

The proximate cause is that the FAA is short about ~3,500 controllers, forcing the rest to work mandatory overtime, six days a week, and now, during the shutdown, sometimes without pay! The more fundamental problem is that we have a poorly incentivized system. It’s absurd that a mission‑critical service is financed by annual appropriations subject to political failure. We need to remove the politics.

Canada fixed this in 1996 by spinning off air navigation services to NAV CANADA, a private, non‑profit utility funded by user fees, not taxes. Safety regulation stayed with the government; operations moved to a professionally governed, bond‑financed utility with multi‑year budgets. NAV Canada has been instrumental in moving Canada to more accurate and safer satellite-based navigation, rather than relying on ground-based radar as in the US.

NAV CANADA – in conjunction with the United Kingdom’s NATS – was the first in the world to deploy space-based ADS-B, by implementing it in 2019 over the North Atlantic, the world’s busiest oceanic airspace.

NAV CANADA was also the first air navigation service provider worldwide to implement space-based ADS-B in its domestic airspace.

Meanwhile, America’s NextGen has delivered a fraction of promised benefits, years late and over budget. As the Office of Inspector General reports:

Lengthy delays and cost growth have been a recurring feature of FAA’s modernization efforts through the course of NextGen’s over 20-year lifespan. FAA faced significant challenges throughout NextGen’s development and implementation phases that resulted in delaying or reducing benefits and delivering fewer capabilities than expected. While NextGen programs and capabilities have delivered some benefits in the form of more efficient air traffic management and reduced flight delays and airline operating costs, as of December 2024, FAA had achieved only about 16 percent of NextGen’s total expected benefits.

Airlines bleed money when planes idle, gates clog, and crews time out. The airlines have every reason to demand reliability, capacity, and modernization—Congress does not. Thus, fund air traffic control with user fees paid by those who depend on performance. Put the airline executives on the board of the non-profit, as in Canada. Give them the power to tax themselves to benefit themselves.

Align power with incentives and performance will follow."