A History of Air Traffic Control Provision in the United States

January 22, 2016

(Ed. Note: Since the House will soon be considering legislation that will fundamentally restructure the way in which air traffic control (ATC) services are provided in the U.S., we thought it would be a good idea to provide readers with some background. Fortunately, Eno has on staff the guy who wrote the book on air traffic control reform. Here is a short history of air traffic control in the United States by Rui Neiva, Ph.D.)

Among most developed nations, air traffic control (ATC) has been moving to corporatized forms of provision, with management that is independent from political actors and funding derived from user fees. There is, however, a major outlier in this trend towards corporatization: the United States. Here, the Federal Aviation Administration (FAA), a government-run and tax-funded entity, runs the system. At a time when the U.S. Congress along with several aviation stakeholders, are once again discussing potential avenues of reform. This article, derived from a larger report from the Eno NextGen Working Group, will analyze how the current system came to be, what reform efforts have been proposed in the past, and why have they failed.

Early years of aviation – 1926-1945


Archie League, first air traffic controller (via: Wikipedia)

The federal involvement with aviation began in 1926 with the Air Commerce Act. As it evolved, the federal role in aviation ultimately encompassed the economic regulation of airlines, safety oversight over the entire aviation industry, and the provision of air traffic control. (Ed. Note: It was once said that prior to the 1926 Act, the only laws governing aviation in the U.S. were Isaac Newton’s.)

In the beginnings of aviation industry, there was no formal ATC. Pilots had to be aware of their surroundings, and separate themselves from other traffic. In the 1920s, technologies like radio communications and ground beacons started to be used to make flying safer. This would not be enough. In 1936, after a series of accidents, the federal government took over the provision of en-route air traffic control, while control at airports remained a local issue. In 1941, in preparation for the war effort, the federal government took over control at airports, and thus began the current system where both en-route and terminal services are provided by the federal government.

The Post-War Era – 1945-1980

Following World War II, ATC experienced exponential growth. However, several high profile accidents caused serious concern about the safety of the skies. In response to this, ATC radar was introduced in the 1950s and the Federal Aviation Agency was created in 1958. In the following decade, with the creation of the US Department of Transportation (USDOT), FAA became a modal administration of this larger cabinet-level department. Thisbecame the basic structure for what we have today.

Introduction of radar (credits: https://www.rwf2000.com/atc/ATC-Hist-04.htm)

Introduction of radar (via: https://www.rwf2000.com)

In terms of funding, ATC infrastructure and operation was initially funded by general funds, appropriated annually by Congress. However, in the 1960s, air traffic began to increase at an unprecedented rate. This increase in demand necessitated an expansion of the system, posing a financial challenge. In an effort to provide the necessary resources for the system, the Airport and Airway Trust Fund (AATF) was established in 1970 (based on a proposal developed in 1968 by the Johnson Administration). Funding for the AATF came from a set of taxes on the aviation system, including fuel taxes and ticket taxes. From the outset, there was contention about whether AATF should be used as a capital account or if it should be used for both operational and capital expenditures. This ambiguity was not solved until 1982, when the Airport and Airway Improvement Act was passed, reauthorizing the collection of aviation taxes dedicated to the AATF.

First Attempts at Governance Reform – 1980-1990

Discussion of FAA reform began in earnest in the 1980s with the Reagan administration. The concept of privatization of the entire ATC provision in the country would be brought forward in 1983 and was described as being “good for the country”, but there were concerns that the proposed model had not been tried before and reform did not occur.

By 1985, the airlines joined the conversation, with the Air Transport Association (ATA, now Airlines for America) releasing a report suggesting that there may be benefits associated with a “business-like” approach, and that the current FAA governance would not properly foster modernization.

In 1986 Congress passed the Aviation Safety Commission Act, which established a commission to study “how the Federal Aviation Administration may most effectively perform its responsibilities and increase aviation safety.” In the next year, the Reagan administration established another commission that would become know as the “President’s Commission on Privatization.” ATC was among the responsibilities that this commission evaluated. During the same year, legislation (S. 1159, 100th Congress) was introduced by Senators Inouye (D-HI) and Stevens (R-AK) to establish an independent user-fee supported government corporation to provide ATC, but the bill never left its committee. The Aviation Safety Commission published their final report and recommendations in 1988. The report recommended that “FAA be transferred from USDOT and be established as a user-funded authority.”

Meanwhile, outside the US, reform efforts were taking hold in several countries. The late 1980s saw the first efforts to corporatize ATC provision in other countries, with New Zealand in 1987 being the first country to do so. More than 50 ATC systems have been corporatized since then, with most of them becoming 100 percent state-owned corporations. There are two major exceptions: one is NATS Holdings, the British provider, which in 2001 became the only ATC system operating under a Public-Private Partnership (P3) scheme where 51% of the shares belong to the private sector and the remaining 49% to the British state; the other is NAV CANADA, a nonprofit user co-op private corporation that became the Canadian provider in 1996.

The move to corporatization in these other countries was mostly due to two factors: financing and budgets constraints, and the need for efficiency improvements which were unattainable as a government bureaucracy. On the other hand, there were forces making the case for public provision of ATC, pointing concerns about the military-strategic importance of the airspace as well as safety, as non-governmental forms of ownership might lead to other priorities, like profits, disregarding safety as the number one priority of providers. The resulting financial successes and continued safety improvements from these international corporatized providers helped to fuel reform talks in the US, starting in the 1990s.

The early 1990s and the USATS Proposal– 1990-1996

The 1990s brought new, and more vigorous, attempts at reform. These efforts would eventually materialize in the reorganization that created the Air Traffic Organization (ATO) within the FAA. This followed a long series of reports and studies published throughout the decade and another attempt to introduce legislation in Congress to corporatize the system.

The decade began with the Transportation Research Board’s (TRB) 1991 publication, “Winds of Change: Domestic Air Transport Since Deregulation.” This report suggested that only a public corporation “would provide the authority and discretion needed to improve operational performance without severing links between regulatory and operational functions, which may compromise safety”. Following the TRB report, two other significant studies were conducted: a report produced by the “Commission to Ensure a Strong Competitive Airline Industry,” headed by former Governor of Virginia Gerald Baliles (the “Baliles Commission”), and the “National Performance Review” (NPR) from the White House.

The Baliles Commission, created in 1993, aimed to develop policy recommendations that could improve the aviation industry. While it was not an initial goal of the Commission to suggest the restructuring of the FAA, its analysis of the aviation industry concluded that governance reform would be necessary to improve the system. Among the Commission’s recommendations was the creation of a new entity within the USDOT to provide ATC.

Simultaneously, the National Performance Review – an initiative to streamline governmental duties created by President Bill Clinton in 1993 and run by Vice President Al Gore under the heading of “reinventing government” – also suggested corporatization. Unlike the review during the Reagan administration, the primary aim of this review was not to promote privatization but instead to revisit how the government functioned. NPR released its initial report in 1993 titled “From Red Tape to Results,” which stated that ATC should be spun off into a government-owned corporation supported by user fees and governed by stakeholders. These two reports would eventually lead to the Air Traffic Control Corporation Study published in 1994.

This proposal highlighted the need for change to allow the FAA to keep up with rapidly advancing technology, including the use of satellite-based navigation systems, and to change procurement procedures that increase costs and delay deployment of new technologies. Additionally, the difficult budgetary situation of the federal government was also pointed as a catalyst for change. All of these themes still resonate today.


A vacuum tube, similar to those that the FAA still widely used in the early 1990s, 40 years after the invention of the transistor. At the time, the FAA was the largest buyer of vacuum tubes in the world, and had to procure them in former Soviet countries that still produced them. The vacuum tube would become the symbol of FAA’s failure to modernize, and ended up on the cover of the USATS proposal to corporatize ATC. (via : Wikimedia Commons)

To address these issues, the report proposed the creation of a federal government corporation to provide ATC – the United States Air Traffic Service Corporation (USATS), closely modeled after Airways New Zealand, the government corporation created in 1987 to serve as the country’s provider. This corporation was to be a not-for-profit (unlike Airways New Zealand, which operates as a for-profit public corporation paying dividends to the state), financially self-sufficient, businesslike enterprise, with no reliance on appropriated funds. Funding would have come from user fees charged to airspace users. These users, along with the corporation employees, would be represented on the governing board, having a direct voice in decision-making. To help modernization efforts, this new entity would not only have been freed from procurement procedures that the FAA was subjected to, but it would also have had the ability to borrow money on capital markets. The FAA would have continued to exist as the safety regulator of the aviation system. In sum, the proposal would have created a system in the U.S. much in line with what has subsequently been implemented in many other nations.

On April 6, 1995, Representative Norman Mineta (D-CA) introduced “H.R. 1441 – United States Air Traffic Service Corporation Act,” which aimed to “provide for the transfer of operating responsibility for air traffic services currently provided by the Federal Aviation Administration on behalf of the United States to a separate corporate entity”. Like the 1987 Senate proposal, this proposed corporation would charge user fees to airlines, have budget autonomy from Congress, have permission to issue revenue bonds, and would be subjected to distinct procurement procedures from the rest of the federal government. Lacking support from the airlines, general aviation, and many members of Congress, this bill died before leaving committee.

This USATS proposal and other efforts of the early 1990s were thwarted by the stakeholders – specifically the commercial airlines, general aviation – and Congress. More concerned with their financial situation, the airlines were not supportive of the ATC governance restructuring efforts. While the majority of airlines were ambivalent about a new set of user fees, Southwest Airlines differentiated itself from the industry through its strong opposition to user fees. The general aviation community was also not supportive of reform, fearing that user fees would be imposed on them (although none were proposed in the USATS study). Finally, Congress was reluctant to lose oversight power over appropriations if the system moved to user fees and bond financing. The combination of these fears resulted in none of the proposals moving forward.

The Mineta Commission – 1996-2000

The opposition from the general aviation community and the lack of support for the airlines was sufficient to temporarily move the conversation about corporatization out of the spotlight. However, the White House continued to push for reform, and in 1996, the National Civil Aviation Review Commission that was tasked to perform an independent assessment of FAA financial requirements. Chaired by former Representative Mineta, the Commission became colloquially known as the “Mineta Commission”. During the same period, Congress also passed provisions to make FAA’s procurement and personnel rules exempt from some federal regulations, with the aim to make them more flexible and adjusted to the FAA’s technical and operational environment. The implementation of the provisions in the 1996 legislation is considered to be unsuccessful. This has been attributed to FAA improperly managing their implementation, as well as other government agencies with oversight roles acting as a barrier to their full implementation.

The Mineta Commission’s report was released in 1997, evaluating both funding for civil aviation and aviation safety. It was critical of the current funding mechanism based on excise taxes and appropriations from Congress, stating that federal budget rules were “crippling” and “inappropriate” and were a hindrance to capital investments that were needed to modernize the system. From a governance perspective, it concluded that the system had “too many cooks” – FAA, USDOT, White House, Congress – making accountability and authority “too diffused to run a 24 hour-a-day, high technology, rapidly changing operating system for a major commercial industry.”

Although the report did not suggest corporatizing the system, it recommended “broad and sweeping changes in the ways the FAA was managed,” set priorities, and defined performance outcomes. It also suggested new methods for funding the system, including the move towards user fees and the ability to issue bonds to finance capital expenditures.

Following the release of the Mineta Commission’s report, the discussion on how to reform FAA governance continued. In 1996, Canada had corporatized their system as a non-profit user co-op governed by aviation stakeholders, and some US stakeholders, including airlines, voiced their support for a similar solution to be implemented in the United States. Labor unions, on the other hand, were still opposed to taking ATC out of governmental control. This view prevailed and a Performance-Based Organization within the FAA was believed to be the best achievable alternative in political terms.

The Establishment of Air Traffic Organization – 2000-2008

On December 7, 2000, president Bill Clinton signed Executive Order (EO) 13180 creating such a Performance-Based Organization, the ATO. Although the terrorist attacks of September 11, 2001 delayed its implementation, the ATO was fully operational by February 2004, with around 36,000 FAA employees being moved to the new organization. This was the last time that significant changes in ATC governance were enacted in the United States.

But the debate about reform continued. This included a proposal to remove the ATO from the FAA and create a new modal administration within USDOT. This proposal would separate ATC provision from its regulation, thus removing the inherent conflict of interests created by having the FAA performing both functions. Although not considered a perfect solution, it was seen as a first step towards a new and better-suited form of governance. Having other political priorities, the White House did not support this idea and the ATO would become the last reform proposal enacted.

During the Bush years, the subject of ATC reform popped-up again in the President’s Budget for Fiscal Years 2007 and 2008, but the focus shifted to an ATC tax and charge reform, and did not suggest governance reform. By 2009, the aim was to move toward a user-fee system “to create a direct relationship between revenue collected and services received”. Like in the USATS proposal from the previous decade, only commercial airlines would pay these user fees, and general funds would continue to pay fuel taxes (which would be increased and would now fund airport grants). The proposal also included demand and congestion pricing at airports. Proposed at a time when fuel prices were increasing significantly and delays were becoming headline news, the focus of attention shifted, and this proposal was also not enacted.

The Situation Today – 2008-Present

Currently, the FAA is the largest component of USDOT, with over 46,000 employees. FAA’s Administrator, who is appointed to a fixed five-year term (currently Michael Huerta), reports directly to the Secretary of Transportation. Within FAA there are two primary units: ATC and everything else (including certification, safety regulation, airport oversight, and grant programs). FAA is headquartered in Washington, DC, its Technical Center is in Atlantic City, and its Aeronautical Center (which includes controller training) is in Oklahoma City. FAA also has nine regional offices and hundreds of staffed operational facilities. It is a relatively devolved administration with most day-to-day operations occurring at the regional offices and numerous staffed facilities.


New computer system for NextGen, ERAM. (via www.faa.gov)

Created in 2000 by EO and opened in 2004, the ATO is responsible for ATC within the FAA. ATO is also the largest arm of the FAA, employing about 75 percent of its employees. ATO was in part founded on the principles of separating ATC from the regulatory arms of FAA, introducing more business-like performance standards. ATO has separate management and a separate organizational structure from the greater FAA, and provides some degree of separation between regulatory components of FAA and provision of ATC. The ATO Chief Operating Officer (currently Teri Bristol) heads ATO, with leadership shared among seven vice presidents. There are two primary service units within ATO: air traffic services, responsible for en-route and terminal air traffic control, and technical operations, responsible for infrastructure management and maintenance.

In terms of funding, while the AATF was created to provide the majority (but not all) of the funding necessary for the FAA, general fund appropriations have become an important factor in supplementing the AATF contribution. From 1990 through 2015, an average of 23 percent of FAA’s budget has been appropriated from the general fund. However, with the budget sequestration of 2013, funding levels from general funds were decreased, and the relative contribution of the AATF increased in 2014 and once again in 2015, to a 16-year maximum of 93 percent.

Since the 1980s, there have been several attempts to modernize the system to accommodate future growth in demand. However, the FAA has been criticized for its inability to expediently implement these plans and update the numerous systems that ATC is composed of. This criticism has catalyzed the internal reorganization of FAA multiple times. The most substantial change in governance was the introduction of a performance-based organization (the ATO) in 2000. Since then, the agency has been involved in implementing its latest iteration of modernization: the Next Generation Air Transportation System (NGATS), later re-branded as NextGen, which was introduced in 2003.

This began to change with the budget sequestration and federal government shutdown in 2013. With the FAA reauthorization approaching in 2016, key stakeholders have once again started to discuss the possibility of funding and governance reform in order to make ATC less vulnerable to Congressional politics and expedite the implementation of NextGen.


Many attempts at FAA reform have been since the early 1980s. Some of these efforts were anchored around the idea that an ATC provider outside of the government would operate in a more efficient manner. In the 1980s, the concept of ATC corporatization was still a fairly new idea, and garnering stakeholders for such a novel idea was a significant challenge; proposals to separate the FAA from USDOT were met with significant skepticism and concerns about safety. By the early 1990s the concept had already been tried elsewhere. In 1994 corporatization was attempted, but lack of agreement and support from some stakeholders impeded progress. The late 1990s brought the Mineta Commission, which eventually led president Clinton to create the ATO, an organization established within the FAA and based on the commission’s recommendations, but without the budget autonomy it envisioned.

A constant theme within each reform previous effort was the lack of consensus among key stakeholders on what reform should entail. Without that consensus, Congress was hesitant to support any moves towards substantial reform. It is likely that Congress will be unwilling to take up any future substantial reform effort without a larger number of the more significant stakeholders agreeing on what that reform should look like.

Presently, FAA is focused on implementing NextGen, their most-recent technological initiative. However, more than a decade since NextGen was introduced, there are still challenges in implementation. The dependence on appropriations from Congress, the effects of the 2013 budget sequester and federal government shutdown, and the lack of a funding structure that allows for more efficient ways of implementing major capital projects like NextGen has led to a situation where stakeholders are once again discussing the possibility of institutional reform.

(Much more information on past efforts to reform the FAA can be found on Eno’s FAA Reform Reference Page.)



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