NCPA - National Center for Policy Analysis

Three Years After Canada Privatized Air Traffic Control

October 25, 1999

In 1996, Canada took the radical step of selling its air traffic control system, Transport Canada, to a nonprofit company whose directors represent airlines, general aviation, unionized workers and the public. Now the new entity, Nav Canada, is the only private company in the world to run a national air traffic control system.

The system is financed by fees charged to planes -- based primarily on weight and distance flown.

How well has the experiment worked? Delays have been reduced and managers say the system is safer because regulation is now independent of operations.

  • Payrolls have been cut from 6,300 people to 5,200, mostly by laying off administrative workers -- allowing pay increases ranging from 17 percent to nearly 40 percent.
  • Whereas the U.S. wound up with a system that could not handle high traffic levels when technological upgrades were attempted, Nav Canada significantly upgraded its system in just 16 months -- by ignoring government contracting regulations.
  • Airlines which would have had to pay $528 million in taxes to operate under the old system are now being charged just $355 million a year.
  • Total flights per employee have increased from 258 in fiscal 1997 to 341 in fiscal 1999.

Extracting air traffic control from politics has had a number of benefits. The system is being run for the benefit of users, rather than the convenience of the government. The company cut overhead partially by compressing six regional offices into two and eliminating duplicate functions. Observers say that move would have made sense under the old regime, but would never have happened.

Source: Matthew L. Wald, "Canada's Private Control Towers," New York Times, October 23, 1999.


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