Research on privatization of airport traffic control towers: Contracting out level I VFR airport traffic control towers

In 1982, the Federal Aviation Administration (FAA) created the Low Activity I VFR Control Tower Program (Tower Program). The Tower Program made it possible to contract out the operation of the level I VFR ATCTs, which were operated only by the FAA. The primary research question is whether contracting out airport traffic control towers (ATCTs) can reduce the operation costs without sacrificing air traffic safety. To answer this question, two different types of models are tested: cost models and outcome (safety) models. After testing the primary research hypotheses, this research tries to answer why the implementing process of contracting out level I ATCTs has been so long delayed by the FAA. The statistical tool for the cost models is multiple regression analysis based on ordinary least square (OLS) estimation. The OLS and weighted least square (WLS) are employed to test the outcome models. The unit of analysis in both costs and outcome models is level I VFR ATCTs. The main data were collected by mail order to FAA regional offices. The results of cost models indicates that the annual operation of contractor ATCTs costs much less than that of FAA VFR level I ATCTs. It is possible that difference in a total annual operation costs between FAA Level I VFR ATCTs and contractor ATCTs results from a difference in the number of staff, but this study cannot test this conjecture because contractor towers did not provide data on staff. Moreover, the statistical results of the outcome models show that the safety record of contractor ATCTs is not inferior to that of FAA-operated ATCTs. In conclusion, the FAA may not make full use of staff members while the contractor may more efficiently allocate each staff. The FAA's seemingly inefficient use of staff (overstaffing) results not only from the lack of well-specified outcome (appropriate safety indicators), but also from the ineffective congressional oversight. This research also argues that the delay of implementing the Tower Program is due to political factors rather than economic reasons.