Air Traffic Control:

Analysis of Proposal to Create a Government Corporation

T-RCED-95-139: Published: Mar 15, 1995. Publicly Released: Mar 15, 1995.

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GAO discussed the proposal to reform the Federal Aviation Administration's (FAA) air traffic control (ATC) system by creating a wholly-owned, not-for-profit, self-sufficient government corporation. GAO noted that: (1) the corporation could be financially viable if budgetary, cost, and revenue assumptions are realized, which will depend on exempting the corporation from spending caps, achieving operating efficiencies to minimize costs, excluding certain pension and post retirement health care costs, and growth in the economy and business travel; (2) the corporation's funding sources would include user fees, trust fund payments, and, under one scenario, debt financing; (3) under the proposal, FAA would continue to provide safety oversight, but there are concerns about the division of safety decisionmaking responsibilities and the resolution of regulatory disputes between the two entities, and FAA oversight of the new corporation given its past oversight deficiencies; (4) FAA may have difficulty monitoring the new corporation because of the loss of experienced ATC personnel to the new corporation; and (5) the corporation may underserve aviation sectors whose financial support may not equal the value they receive due to its emphasis on operating like a business.

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