Major airlines are battling an alliance of low-cost airlines and private plane owners and operators over what to do in the wake of the expiration of the 10 percent airline ticket tax last year.

• Without the tax, three of the Federal Aviation Administration's four ongoing functions -- air traffic control, safety regulation and airport grants -- are currently funded by drawing down the accumulated balance in the Aviation Trust Fund, where the tax revenues normally go.

• But the Fund will be drained dry before election day.

• Without agreement on a revenue source, Congress would have to take general revenues away from other programs, or shut down the aviation system.

The major airlines want to replace the ticket tax with some sort of user fee for air traffic control services. The low-cost carriers flatly oppose user fees and want to reinstate the ticket tax.

Free-market advocates suggest a third alternative: create a non-government corporate entity to take over air traffic control, paid for directly by aviation users.

• The FAA and its technologically backward air traffic control system are constrained by an inflexible bureaucracy and stifled by rigid civil service and procurement rules.

• Some 16 other countries -- ranging from Britain to South Africa -- have already dealt with similar problems by establishing such a corporate entity.

• In nearly every case, safety regulation remains within the government agency, but at arm's length from the controllers -- thus permitting the agency to focus solely safety regulation.

Advocates say these corporations have produced dramatic gains:

• New Zealand has reduced air traffic control costs by more than one-third over nine years.
• Germany cut air traffic delays by 25 percent in its first year.
• Canada is selling its air traffic control system to a not-for-profit, user-funded and user-controlled corporation, which will move over a two-year period from tax support to 100 percent user fees.

The Clinton administration failed in its attempt to shift air traffic control to a government corporation in 1995. The difference in Canada is that the principal aviation groups united behind the privatization plan.

Policy analysts suggest Congress should combine a shift to user fees, as proposed in a bill before the Senate, and move the air traffic control system from the Transportation Department, parent agency of the FAA, as proposed in a House bill.

Source: Robert W. Poole Jr. and Viggo Butler (Reason Foundation), "How to Make the Skies Safer," Wall Street Journal, June 24, 1996.