On most days, America’s air traffic control system is invisible. The radar screens flicker, the controllers thread needles as planes approach and depart, and millions of passengers move through the sky supported by a grid they never see. We are reminded of its fragility only when something breaks.
The most recent federal government shutdown provided just such a reminder. The system strained not because of storms or technological failure, but because Washington stopped paying its bills. Controllers continued working without pay, modernization projects halted, safety inspectors were furloughed, and as a result, flights were canceled. This was an institutional failure. If the skies darken whenever Congress deadlocks, the problem is not aviation, but governance.
The United States funds air traffic control (ATC) through the Airport and Airway Trust Fund, fed by ticket and fuel taxes that are, in principle, user fees. That mechanism should supply financial stability. But before they can be spent, those revenues must be appropriated by Congress. When Congress fails to act, the Trust Fund’s faucet dries up, and the system grinds to a halt. A national utility that controls a $6 trillion economy’s daily commerce becomes hostage to whatever unrelated issues are holding up the budget process.
The shutdown revealed something deeper than the usual political dysfunction: it suggests we’ve been using the wrong model entirely. Air traffic control is a safety-critical operation that should be financed continuously and governed predictably. Instead, America has fused operations, safety oversight, labor policies, and salaries into a single agency whose revenues can be cut off at the very moment they are most needed.
The remedy begins with a principle the country once understood instinctively: transportation infrastructure works best when those who use it fund it. The “user pays” principle is simple and elegant. Those who benefit directly from a service finance its operation and upkeep, ensuring that costs and benefits are internalized, that funding remains reliable, and that investment aligns with need rather than politics. This is not some neoliberal scheme to extract money from users, nor is it a novel idea—it’s how British turnpike trusts operated in Adam Smith’s era.
The local parishes, which had been charged with maintaining the King’s highways, could not or would not do so effectively. Parliament, therefore, authorized trusts to levy tolls and dedicate proceeds entirely to road repair. Smith defended this arrangement against those who preferred outright nationalization, pointing out how directly appropriate “tonnage” tolls were to the maintenance of wear and tear caused by the ton weights of wagons.
The same principle underpinned the early canal and port companies of the nineteenth century. Barges, shipowners, and traders paid for access, and revenues financed dredging, lock gates, and quay improvements. For decades, this was considered utterly normal. Infrastructure was an investment supported by the commerce that depended upon it. Nobel Laureate Ronald Coase pointed out how even the lighthouse system, an early precursor of ATC, often regarded as a classic example of a public good, was funded by user fees in England.
F.A. Hayek would have recognized this as part of a broader constitutional logic. The state need not build or operate infrastructure directly; its role is to define predictable and impartial rules for access and pricing. A network governed by clear rules and direct payment is far more stable than one funded at the whim of legislators. Rules, not appropriations, preserve steady service.
The same logic applies today to roads and highways. For most of the twentieth century, the gas tax approximated a user fee: heavier or more frequent drivers paid more into the system than lighter or occasional ones. The problem is that this mechanism is eroding. Vehicles are more fuel-efficient, and increasing numbers of electric vehicles contribute little or nothing. Highways’ needs remain while revenues atrophy. A direct user-based charge—such as a vehicle-miles-traveled or weight-distance formula—restores cost precision and allows infrastructure finance to track actual use.
It is therefore unsurprising that modern aviation already embodies user-pays. Airlines and passengers finance ATC through direct charges in nearly every advanced jurisdiction, because airspace management resembles a network utility: it requires constant capital renewal, highly trained operators, and continuous technological upgrades. The economic logic is the same as the turnpike: the party that benefits should fund the service.
In the United States, however, this sensible principle has been attached to a brittle institutional structure. User revenue flows into a trust fund, but it is filtered through political appropriation, undermining insulation, predictability, and financial continuity. The shutdown did not merely suspend paychecks; it suspended America’s ability to modernize its own airspace. Complex systems cannot survive on short-term appropriations—they must plan continuously and invest regularly, or stagnate.
International experience is instructive. Britain and Canada both restructured their ATC systems during the 1990s. Both embraced user funding and recognized the need for capital modernization outside annual appropriations. Yet their structural choices diverged sharply.
The British model, NATS, is a regulated utility. It is nominally commercial, owned jointly by the government and a consortium of airlines, but its revenues, investment plans, and performance targets are controlled by the Civil Aviation Authority (CAA) through five-year regulatory cycles. Charges are set according to allowed revenue formulas, collected through EUROCONTROL, and periodically reviewed. The model provides transparency, enforces investment discipline, and ensures broad cost recovery from users. It is rule-based in the bureaucratic sense, with detailed performance targets and incentive structures.
Yet NATS has proven vulnerable to outside shocks. After 9/11, a sharp collapse in traffic revenue left NATS in severe financial trouble; the government had to step in with a loan. During COVID, traffic disappeared again, and the CAA allowed deferred cost recovery over a decade. The regulated model is stable under normal conditions but requires state liquidity and regulatory smoothing under stress. While it is rule-governed, it is not fully self-resilient.
The Canadian model, NAV CANADA, is more successful in this respect. Created in 1996 as a non-profit, non-share corporation, NAV CANADA is governed by its users: airlines, general aviation, employees, and public representatives. It cannot distribute profits and must reinvest surpluses or hold reserves. Revenue comes from direct user fees, with freedom to borrow for modernization. Crucially, safety regulation is separate. NAV CANADA operates the ATC system. Regulatory oversight is external and independent.
The results speak for themselves. NAV CANADA has weathered both 9/11 and COVID without taxpayer subsidy or shutdown. It has financed modernization internally, pioneered ADS-B satellite surveillance, and deployed remote tower technology. Operational priorities are driven by users who bear the costs directly; financing is continuous and project-driven rather than tied to appropriations. Accountability is internalized: the users who fund the system also help govern it.
Thus, the Canadian model embodies a more genuinely Hayekian rule structure than Britain’s. NATS operates within the modern British web of regulatory commands—price caps, performance metrics, and cost allowances. These are rules of administration rather than the rule of law. NAV CANADA, by contrast, functions under a few general, constitution-like constraints: it must recover its costs from users, consult stakeholders on rates, maintain safety standards, and refrain from distributing profit. Within that framework, local knowledge and operational judgment guide decisions. The structure limits discretion not by dictating outcomes but by securing responsibility.
Britain fell for the fatal conceit, trusting the regulator’s intelligence. Canada, by contrast, did the historically British thing: it trusted the rules of the game. In a national system operating in an international environment that demands constant reinvestment and rigorous safety discipline, the Canadian strategy has proven superior.
The US debate periodically revisits this question, and the shutdown has given it renewed urgency. The American ATC system is technologically capable, professionally run, and staffed by some of the world’s best controllers. Its weakness is governance: revenue collected at the point of use cannot be spent without Congressional consent, and the same agency that operates the system is also the safety regulator. That is a structural conflict: one side must prioritize continuous operations and efficiency; the other must enforce safety and compliance. Mixing the two guarantees that financial pressure becomes a safety problem, and vice versa. The tragic plane-helicopter collision at Reagan National earlier this year is an example.
The solution is surprisingly straightforward. Congress should legislate the separation of ATC operations from safety regulation, as recommended by Reason’s Bob Poole, and convert the operational system into an independent, non-profit ATC corporation modeled on NAV CANADA. This corporation would fund itself directly from user fees, reinvest surpluses, hold reserves, and be empowered to borrow for modernization. Safety regulation would remain a government agency function, where its independence could be fully exercised. The corporation would be insulated from revenue risk and political bargaining, but transparently accountable to its users through a stakeholder board.
The result would be safer skies because the rules are sharper. An external regulator can enforce safety standards without fear of conflicting priorities, while controllers and engineers can plan staffing, training, and technology on multi-decade horizons rather than budget cycles.
The political objection that “this is privatization”—with the implied accusation that it sells out the national interest to profit-seekers—misunderstands the point. NAV CANADA is not a private, for-profit enterprise. It is a public-interest, user-funded utility with no shareholders and no profit extraction. It has proven cheaper, safer, and more innovative precisely because it aligns control, cost, and accountability while insulating operations from political volatility, all within a framework of the rule of law.
The shutdown served as a warning: the American ATC system is too important to be turned off by legislative impasse. If one of the foundational rules of a free society is that those who use a service should pay for it, then the institutional flipside is that those who pay can keep it running. The classical liberal principle that served the turnpikes can serve the airways. And if we rebuild our transportation networks around users rather than appropriations, the only things left grounded in Washington will be Congressmen hiding in the cloakroom to avoid votes—not airplanes.
