The Truth about FAA Privatization

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President Trump has lent his support to efforts to privatize the air traffic control functions of the FAA and predictably the Democrats are setting their hair on fire. Every possible reason has been brought up from worse services to increased costs on consumers due to fees being passed on. Senator Schumer even stated that the airline companies could raise taxes on their consumers which normally only the government can do.

Service

The truth is this bill shifts the burden of paying for air traffic control from the taxpayers to the airlines and may even lower costs as well for consumers. The function would fall onto a non-profit company who would then be funded by fees from the airlines themselves as opposed to funds from the budget which of course comes from taxes. The same exact employees who are handling the job now would be handling the job in the non profit organization, which is why some unions who work with air traffic control are ok with this when they are normally against privatization. The same exact equipment used now would still be used then. We get the same service but we get the program of the government books.

There is also an argument being made that it would be easier as a non-profit to upgrade your equipment than it is as a government entity and anyone who has dealt with the government before on a business capacity would agree with this.

Fees

When a consumer hears about fees they assume that the company that the fee targets will automatically pass it on to them. Nothing could be further from the truth.

Let me show you examples from two industries. First lets take a look at telcos. All the companies you love to hate. ATT, Comcast, Verizon, etc. The moment you charge any of them fees they will automatically pass it on to consumers without question. Do you notice the similarities between these companies? They are all effective monopolies with no incentive to try to retain customer loyalty. After all if you do not like your Comcast you have nowhere else to go. Now let us take a look at another industry: credit cards. Most major credit cards are available in all major cities so they effectively compete with each other all the time. In this environment a company like Capital One offers no foreign transaction fees. Does that mean that the underlying legislation somehow exempts one company from paying fees while requiring the rest of the industry to? After all they are not passing it on to the consumer. Or is it more likely that Capital One is absorbing the costs to offer an advantage to customers that its competitors don’t?

At this point even the most ardent liberals have to admit that companies do not automatically pass fees onto consumers. The determining factor is competition. If the companies have competitors then they sometimes absorb the fees to be more attractive to consumers and if they don’t have competitors then they pass everything on.

We finally get to the airline industry. We have to determine which one of these models best fits it. When you fly along a major route do you have the choice of one airline or multiple ones? Do you see budget airlines pop up like mushrooms who then to proceed to cut everything they can cut in an effort to undercut their competition? Do you see apps get designed for the sole purpose of making sure you get airline tickets at the lowest price possible? Airlines are already doing everything they can to undercut each other. Any fees charged will be just another thing they use in this battle.

This issue is admittedly a small one if we look at the size of the budget and economy. It does go a long way in showing the blind partisanship of democrats that they would be against something that would both lower the cost to the government and to the consumer just because it came from President Trump.

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