O Canada!


Carson, Ed, Reason


Our northern neighbor privatizes its air traffic control system. But privatization plans are still circling Washington.

The Canadian government - fresh from privatizing the Canadian National Railway - is selling the nation's air traffic control system to the airline industry for 1.5 billion Canadian dollars (US$1.09 billion). The deal is similar to proposals to spin off the U.S. air traffic system, but so far those plans are just getting stale.

On April 1, the Canadian government will transfer all air navigation operations, equipment, and employees to a new company, Nav Canada. The nonprofit company, comprising Canada's major airlines, private aircraft owners, the pilots union, and the air traffic employees, will rely completely on user fees to meet operating costs. Profits will be used to modernize the system. The government had been running annual deficits of CDN$200 million on the system.

Other countries, notably Germany and New Zealand, have turned their air traffic systems into government corporations. But Canada is the first country to go through with full privatization.

In Washington, the Republican congressional leadership has endorsed full privatization, and President Clinton has proposed turning the system into a government corporation. But no privatization of any kind ever left the House Transportation Committee. Instead, Congress exempted the Federal Aviation Administration from federal procurement rules.

The official story is that Transportation committee members believed the Congressional Budget Office's estimate of the government's take from selling the ATC system wasn't firm enough or high enough to justify the sale. The original CBO estimate was $18 billion, but technical changes in the model used to score the savings cut that to between $6 billion and $7 billion. Also, committee members were concerned that airline crashes in the future would be blamed on privatization. …

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