The US aviation industry is highly concentrated, with only four major airlines left in the country; for years, they've been lobbying to get rid of the FAA and take over their own safety oversight.
In an announcement that included near-verbatim quotes from several aviation Big Four lobbyists, Donald Trump announced plans to shut down the FAA and let the incumbents regulate themselves.
If Trump can stop tweeting horrible things long enough to let the lobbyist-funded swamp-dwellers in his cabinet and Congress make this happen, there will be two enormous problems with this arrangement. First and most obviously, the industry will cut corners on safety and people will die. Corporations are pathological externalizers: any costs that can be put off to other parties are. That's why corporations pollute, kill their workers, and defraud their customers: in the next-quarter-focused version of shareholder capitalism, anything that adds an extra dollar to this quarter's balance sheet is the duty of management.
But the second problem is, if anything, more pernicious: letting a highly concentrated industry regulate itself inevitably leads to rules that prevent any new competitors from appearing on the scene. New entrants will come up with practices that are different, and potentially superior, to the ones in place now — practices that are difficult to match if you've already sunk billions into the old system. By refusing to consider these practices on their merits — and simply ruling them out on the basis that they're not compliant with the old rules — the incumbents can create a system where any improvement is literally illegal.
These two are a deadly combination. Without competition from new entrants, the incumbents can deliver less and less value to the country (and retain more and more value for their shareholders) without the fear of losing customers to an upstart. Privatizing aviation safety allows the Big Four to treat us worse and make us less safe, and removes any floor on such bad behavior by eliminating competition.
Trump used blunt language to attack his own Federal Aviation Administration, saying it wasted billions of dollars in technology and accusing it — without offering proof — of using equipment that dated back decades. His language echoed the arguments of such companies as American Airlines Group Inc. and Southwest Airlines Co.
"They didn't know what they were doing," he said of previous efforts to modernize the system. "A total waste of money."
The plan drew immediate support from most airlines but faces some stiff opposition from private aviation groups and in Congress. Most Democrats and some powerful Republicans have resisted transferring this critical service outside of the government.
Trump Backs Air-Traffic Spinoff to Fix 'Broken' System
[Alan Levin and Mark Niquette/Bloomberg]