• Discrepancy in air traffic controller numbers and resignations
• Post-mortem on advanced air mobility
• Update on ATC “privatization”
• Europe’s conundrum on air travel
• Scott Kirby is wrong on slots for Newark
• Is the moon race heating up?
• $20 billion more for ATC?
• News Notes
• Quotable Quotes

Controllers Discrepancy

During the government shutdown, we read article after article about the loss of air traffic controllers. Not only were some controllers calling out sick, but some reportedly were taking part-time jobs to make ends meet, and others took the shutdown as an opportunity to retire.

Yet once the shutdown ended, the media were full of news stories, based on updates from the Federal Aviation Administration, that controllers were returning, as USA Today reported on Nov. 16, “FAA Ends Shutdown-Era Flight Limits as Controller Staffing Rebounds.” Aviation Daily on Nov. 14 headlined that, “FAA Freezes Flight Cuts as Controller Callouts Decline Rapidly.” Within a week or so after the government shutdown ended, airline flights were reported as being essentially back to normal, just in time for Thanksgiving weekend.

There is something wrong with this rosy picture. To begin with, recall that controller staffing pre-shutdown was far below FAA norms, with six-day workweeks and 10- to 12-hour shifts for controllers at some key facilities. If all controllers who were on the roster the week before the shutdown returned to their jobs within the week after it ended, many air traffic control (ATC) facilities would still be seriously understaffed and controllers would still be overworked. Instead of allowing a return to all flight activities as they were pre-shutdown, the FAA could have considered what it would take in terms of targeted flight reductions to reduce the number of six-day controller work weeks and 10-hour shifts.

Adding to my concern are statements by Transportation Secretary Sean Duffy during the shutdown. In Politico on Nov. 9, Duffy said the following: “I used to have four controllers a day retire before the shutdown. I’m now up to 15 to 20 a day are retiring, so it’s going to be harder for me to come back after the shutdown and have more controllers controlling the airspace. So this is going to live on in air travel well beyond the time frame that this government opens up.” (italics added)

Let’s do a bit of arithmetic here. The federal government shutdown lasted 43 days. The net increase in retirements, per Duffy, was 11 to 16 controllers per day. At the low end, 11 retirements per day times 43 days equals 473 retirements. On the high end, 16 retirements per day times 43 days equals 688 controllers retired during the shutdown. The average of those two numbers for Duffy’s retirement claims is 580 fewer air traffic controllers today than before the shutdown.

So how could air traffic controller staffing possibly be back to pre-shutdown levels? Secretary Duffy owes us an explanation. Perhaps Congress should ask him. If the system is actually staffed with 580 fewer controllers than it had before the shutdown, it’s hard to see how they could be safely handling pre-shutdown levels of air traffic.

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Post-Mortem on Advanced Air Mobility  

This year has turned out to be the time when reality imposed its judgment on the plethora of advanced air mobility (AAM) start-up companies. In a lengthy article in Aviation Week (Oct. 27-Nov. 9), Ben Goldstein summarized the many losers and the handful of survivors.

This trend was already underway in 2024, which saw the demise of Lilium, Rolls-Royce’s Electrical unit, Universal Hydrogen, and Volocopter. Then came 2025’s deluge of bankruptcies. They include the City Airbus project, Germany’s APUS Zero Emission, Spain’s Crisalion Mobility, Cuberg/Northvolt, Eviation, Guardian Agriculture, Overair, Supernal, and Textron eAviation.

Left standing are the U.S. big three: Archer Aviation, Beta Technology, and Joby Aviation. All three have decent funding, a path toward FAA certification, and some potential as ongoing businesses, whether only as producers of aircraft or also as operators. The same issue of Aviation Week had another article on the growing number of AAM companies in China, none of which appear to be planning to seek FAA certification. Both Joby and Archer aim to launch actual electric vertical take-off and landing (eVTOL) air service in the United Arab Emirates as early as next year, with or without FAA certification.

Why have we seen so many failed start-ups? It’s not because eVTOL (the primary aim of these start-ups) is impossible, because we see the survivors’ aircraft flying. One serious problem is the business model. Because battery-powered vertical flight requires a very large amount of power, and batteries are very heavy, an eVTOL’s payload and range are both very limited. Instead of the mass-market fantasy of “flying cars” and go-anywhere air taxis, this is looking more and more like a high-end luxury service for niche markets. In addition, most of the failed start-up companies probably had no idea of both the long time and high cost of obtaining FAA certification.

This is why we are seeing non-eVTOL AAM concepts being developed and tested. One alternative is hybrid propulsion, which can significantly increase payload and/or range. Another is including actual wings on some of these aircraft for cruise flight. And once wings are taken seriously, we have seen Electra.aero demonstrate its blown-wing innovation that enables its EL2 to take off and land in less than 150 feet—and it’s a hybrid-electric. Its larger EL-9 can handle a 1,000-lb. payload and still land and take off in less than 300 ft. The U.S. Air Force is seriously interested in the EL-9. This kind of aircraft is a hybrid STOL.

Giving up vertical flight and battery-only power are two keys to more viable advanced air mobility. These lessons are being learned the hard way, but that is what competitive technology development requires. Imagine if a central planner like NASA had defined eVTOL as the “one best way” for advanced aerial mobility?

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Update on ATC “Privatization” 

My ongoing effort to shift the terminology for de-politicizing U.S. air traffic control by ceasing to call it “privatization” (as opposed to a self-funded public utility) has thus far not caught on here in the United States. As I noted in this newsletter, I switched my terminology several years ago to “public utility” because that is what these air traffic control entities are in all serious proposals today.

Since last month’s newsletter, I’ve continued to do interviews, most notably with Scott Simon on Nov. 15 for NPR’s Weekend Edition, which mentioned privatization in the online version’s headline. The Washington Post editorial board endorsed the idea of corporatization and cited my work in an editorial on Nov. 23, but the headline used the word privatize. Similarly, my Reason colleague Marc Scribner and Cornell Prof. Rick Geddes were interviewed by Dan Levin for Straight Arrow News in a piece that noted the plan would be “more akin to a public utility” but was headlined “The Quietly Powerful Group Keeping US Air Traffic Control Privatization Grounded.”

I was pleased to see an earlier op-ed in The New York Times by Binyamin Appelbaum, which explained the FAA’s limitations and cited “stand-alone corporations in Australia, Canada, and Germany” without resorting to using privatization. Former U.S. Department of Transportation official Diana Furchtgott-Roth had a good piece in The National Interest headlined “How to Modernize America’s Air Traffic Control,” but the unfortunate subhead was “Privatizing air traffic control could help prevent flight delays over the holiday season.” Oh, well…

As I explained last month, opponents of last decade’s House bill to create a U.S. version of nonprofit air traffic control corporation Nav Canada repeatedly attacked this idea as being “for profit” and “dominated by major airlines,” neither of which was true. And the strongest opponents then (and now)—private aviation groups AOPA and NBAA—continue to attack air traffic control “privatization” as if that were the case. In fact, nearly all 95 countries that receive ATC services today from user-funded, de-politicized air navigation service providers (ANSPs) are neither private nor for-profit. That is why, two years ago, I began using the term air traffic control public utility, since that is what the vast majority of depoliticized ATC systems are.

So, to this newsletter’s readership group, I repeat my request from last month’s issue: If you support depoliticizing the low-tech, underfunded Air Traffic Organization, please don’t refer to this as “privatization.” That helps only the opponents of this much-needed reform miscast what is actually being proposed.

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Europe’s Conundrum on Air Travel

Much of the discussion of air travel in Europe seems to be driven by environmental groups such as Transport & Environment (T&E), which calls for cancelling airport expansion plans, increasing taxes on airline passengers, and other measures. Most airport expansion projects are still going forward, but in parallel with that, the European Commission announced on Nov. 5 a plan to spend $400 billion of taxpayers’ money to greatly expand the current 12,128 km high-speed rail network between now and 2040. The stated goal is to shift travelers from short-haul flights to rail travel.

There is no sign in aircraft sale projections from Airbus and Boeing that air travel will not grow or shrink. T&E warns that if all French airport expansion plans were carried out, 38 million more people would travel through French airports by 2050, compared to a hypothetical no-build scenario. In its Nov. 14 article on this subject, Aviation Daily notes that the current Groupe ADP airport expansion plan would mean an increase by 2050 from 82 million to 105 million annual passengers.

A few European airports are attempting to limit increases in air travel. Schiphol Airport in the Netherlands is still battling airlines over its attempt to reduce the number of annual flights, ostensibly due to noise exposure. In Germany, Vienna Airport recently decided not to proceed with adding a third runway. But those anti-growth efforts are swamped by planned expansions. In non-EU member, the United Kingdom, long-sought runway additions have this year been approved for both Heathrow (LHR) and Gatwick (LGW). The ongoing expansion of Germany’s Frankfurt Airport (Terminal 3) will add capacity for between 19 and 24 million annual passengers. And there’s also the ADP expansion plan noted above.

Groups like T&E and the European Commission (EC) seem to be ignoring what is going on in the rest of planet Earth’s airspace. Air travel in India is growing by leaps and bounds, and many airport expansion projects are underway in that country. In the Middle East—especially Dubai and the United Arab Emirates—air travel is booming. Andrew Charlton, in his December newsletter, reported on the Dubai Airshow in mid-November. He noted that a “small order” for new aircraft in this region is 100, with an option for 50 more.

The International Air Transport Association (IATA) reports that Europe accounts for 26.7% of global air travel. So if the EC were to succeed in restricting air travel in its domain, three-fourths of the world would continue expanding air travel: the United States because of its affluence and the developing world (China, India, the Middle East), as their economies continue to grow.

I have written previously that the de facto premise of most climate activists and their followers in government is that every sector of every economy must reduce its share of greenhouse gases (GHGs), regardless of either how costly that is to carry out or the benefits of the activity that generates those gases. If I were an environmental policy central planner, my policy would be to figure out the cost per ton of GHG reduction in every sector of the economy—and focus first on all the low-hanging fruit. My guess is that the cost/ton in aviation would be on the high end, and the economic benefits of air travel would also be high. That would suggest looking for relatively lower-cost air travel measures rather than very costly measures, such as spending $400 billion to expand European high-speed rail.

For background reading on approaching climate change policy rationally, I once again recommend Steven Koonin’s important book, Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters, BenBella Books, 2021. Koonin was Undersecretary for Science at the U.S. Department of Energy during the Obama administration. Earlier in his career, he was a professor of theoretical physics at Cal Tech. He has held numerous governance positions at national laboratories.

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Scott Kirby Is Wrong About Newark Slot Controls
By Gary Leff

United Airlines CEO Scott Kirby recently laid out the major benefits that fixing air traffic control would mean for improving air service in the United States, reducing delays and cancellations. I don’t think the FAA as a service provider can ever actually do it – you need the regulator to be different from the actual air traffic organization. The FAA regulating itself has meant zero accountability for decades.

However, Kirby goes on to argue that there still need to be limits at Newark airport, where United has a hub. His point about “simple math” doesn’t imply the solution that he thinks it does.

“Newark, for what it’s worth, always should have been capped. I mean it was the only airport left in the world that was a large airport that was over-scheduled that doesn’t have slots. It’s the only one and it used to have slots and the reality is at Newark the FAA says in the best of times with full staffing on perfect weather day they can handle 77 operations per hour and they were letting it be scheduled at 86 operations per hour for hours in a row. And that is simple math.”

We should improve throughput at Newark, because there’s a lot of demand for air travel out of Newark. We can’t do that because of air traffic control and because we don’t build things in the United States well anymore.

However, if Newark is overscheduled, the answer isn’t to hand the exclusive right to operate most of the flights to United, blocking competitors and future new entrants, as a free gift (subsidy) from taxpayers. That’s what slots are – the right to take off and land at an airport, generally given for free, despite huge economic value. Slot controls allow incumbents exclusivity and block anyone else from competing with them. That airlines have succeeded in regulatory capture to make this standard practice doesn’t make it any less bad policy.

Here’s the better approach: congestion pricing.

Slots are a blunt rationing instrument (and a subsidy to the incumbent airlines). Since they’re “use it or lose it,” we get unnecessary flying on small planes hardly anyone wants to fly, just to squat on flight times. Prices encourage airlines to allocate flights to the right aircraft and the right routes that match passenger demand.

Think of a runway like a heavily used road approaching its capacity. As use approaches 100% of capacity, planes have to queue. Each additional flight imposes delay costs on everyone else, but the airline only internalizes its own delay cost. So airlines are incentivized to overschedule.

Slots try to deal with this by capping the number of flights in a period. Congestion pricing says: “You can operate whenever you like, but you must pay the actual total cost of the delay you impose on others.”

Slots are a crude cap: “X movements per hour.” They’re allocated via grandfather rights and use it or lose it. They’re adjusted infrequently and administratively. Once you have the slot, the flight becomes “free” regardless of the delay it causes.

Charging per flight that approximates the marginal delay cost to others works better. When the system is uncongested, the price is low or zero. As demand approaches or exceeds capacity, prices rise sharply. Airlines operate a flight in that time slice if they are willing to pay – if the value of the flight to passengers and the airline is greater than the congestion charge.

That way, you get the flights that generate the highest value relative to the delay they cause. You also get natural spreading of flights to shoulders or off-peak times, reducing congestion and lowering their costs. Pricing can encourage the use of larger aircraft (“up-gauging”) to spread the cost out across more passengers.

A slot freezes peak delay – a “50 slots per hour” rule means you get 50 flights per hour, regardless of delay and irrespective of whether those are 50 regional jets or widebodies. There’s no incentive to move any of those flights 20 minutes to spread out peak loads.

Slots are also bad at handling weather events and air traffic control problems. Those might reduce an airport’s capacity from (say) 60 to 35 flights per hour. That’s when we get ground delay programs and ad-hoc rationing. Congestion pricing can do the work for you and prioritize the most valuable flights. Instead of stressing the system, airlines contribute towards paying for a better one.

Ultimately, the same price applies to everyone – incumbent airline or new entrant in the market. “Airlines would hate this!” Yes, of course incumbents would. They’re getting a valuable property right for free, and instead they’d be charged (though it could be done as revenue-neutral).

You’ll likely hear that “congestion charges” will just cement incumbent dominance, which is silly, because that’s what the current slot system does. The claim, though, is that incumbents have deep pockets to pay peak charges, while others get pushed out, worsening competition.

• Under slots, incumbents own peak access for free (or were often cheaply acquired in the past). They can sit on grandfathered rights indefinitely. New entrants are often shut out completely.
• If a new entrant sees high value in a particular peak flight, they can buy in. Under a fixed slot regime, there may literally be no access at any price.
• If policymakers still want to support entry (they will, usually for their own constituents rather than the public good), they can offer rebates for new carriers on specific routes and use competition policy to scrutinize predatory practices rather than locking in those practices with slots.

There will also be a class argument that peak times will become “rich people’s time slots,” with lower-income travelers getting pushed into inconvenient off-peak times or other airports. That’s often what happens now, getting pushed to Spirit and Frontier for lower fares at other airports. And lower-income travelers would face fewer delays! In any case, especially if congestion pricing encourages up-gauging, we’ll likely see more major carriers with excess capacity to discount – at peak times. But if you want redistribution, then do it explicitly, not via hidden cross-subsidies embedded in slot allocation.

A fair concern is that low-value flights that few passengers value – often on smaller regional jets to low-volume airports – will lose peak-time service. That’s because these flights are less valuable! But if we’re really going to design policy around these flights, don’t do it in a way that also inefficiently allocates flights, causing delays for the entire air system. Make the subsidy cost of these flights explicit rather than burying it.

A system that sets prices by day and time seasonally, by 15 or 30 minute increments, and is published in advance is easy for airlines to plan for. Then, major weather or air traffic control outages can have surge pricing with a capped multiplier (e.g., 2x). This is easy for airlines to deal with – they manage variable fuel pricing and demand risk constantly. And this will lower costs from ground delays.

Newark shouldn’t get slot controls. We should abolish them at New York’s JFK and LaGuardia and Washington National as well. They’re a rationing mechanism that locks in incumbents and treats all flights in the same time window as equivalent, regardless of the systematic delays they create. And they provide no real incentive to move a flight time or up-gauge.

And slots turn scarcity value into privately-owned assets of the airline, rather than revenue streams to improve system capacity. Congestion pricing does the opposite! Anyone can access takeoffs and landings if the value of their flight is high enough to warrant paying peak prices.

Editor’s Note: This article is a slightly condensed version of Gary Leff’s “View from the Wing” column published Nov. 21, 2025, and is used with the author’s permission.

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Is the Moon Race Heating Up?

While NASA continues to plan to launch its first SLS/Orion human lunar launch as early as February, some observers (including the editor of this newsletter) are very concerned about risking the lives of four astronauts on a spaceship that has flown only once (in 2022), and whose Orion capsule’s heat shield was partly destroyed during re-entry. Instead of fixing the heat shield, NASA is counting on an untested, gentler re-entry path to bring the astronauts back to Earth.

The only reason I can think of for this risky decision is the multi-billion-dollar cost of each SLS/Orion launch. By contrast, because SpaceX and Blue Origin space launchers cost a small fraction of that, they sensibly carry out repeated uncrewed test launches to be sure that when it’s time to launch people, every system and subsystem has had ongoing improvements to increase its operability and level of safety.

I’m encouraged to see both Blue Origin and SpaceX talking with NASA about alternative ways to get people and cargo to the Moon and back. Eric Berger reported in Ars Technica (Nov. 13) that NASA’s acting administrator, Sean Duffy, asked both companies for more nimble plans for their respective lunar landings.

SpaceX disclosed that it has “shared and are formally assessing a simplified mission architecture and concept of operations that we believe will result in a faster return to the Moon while simultaneously improving crew safety.” Could that mean not using the flawed Orion capsules? Berger did not suggest this, but he thinks it might mean working with others beyond those directly involved with Artemis III. He went on to suggest two ideas that might be put forth by SpaceX: expendable Starships and using the company’s proven Dragon (presumably instead of Orion). For the former, instead of depending on propellant transfer in orbit (from one Starship to another), the idea would be to use expendable tankers, which would reduce their launch weight and might reduce the number of tanker missions by up to 50%.

Using SpaceX Dragons instead of Orion would increase safety and reduce cost, though Dragons would need a new heat shield for re-entry to Earth from lunar missions. Berger lays out a mission relying on a combination of Starships and Dragons, which is too complicated to summarize here, but none of its steps involves an SLS or an Orion. This would be a major change from using NASA’s minimally tested vehicles. It would also appear to eliminate having to use the costly (and behind-schedule) Lunar Gateway.

On Dec. 3, the Wall Street Journal reported on new proposals from Blue Origin. It has already been planned, for next year, to send a Blue Moon Mark 1 cargo mission to the lunar surface. This could be followed by a larger version of the cargo rocket to transport astronauts to the Moon in 2028 for a shorter stay than planned for Artemis III. The modified rocket would use storable propellants, which are intended to eliminate in-space fuel transfers. No details are available on that propulsion system.

NASA, per the WSJ report, “will evaluate proposals for a simpler astronaut landing on the Moon from Blue Origin and SpaceX, as well as any other proposals it might receive.” And assuming that Jared Isaacman gets confirmed promptly as NASA administrator, that assessment will be in good hands.

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What About that “$20 Billion More” for ATC Modernization?

Aviation media reports late last month focused on DOT Secretary Duffy’s call for Congress to provide the “additional” $20 billion for air traffic control modernization that a broad aviation coalition has called for, all of them deeming the $12.5 billion in borrowed money that Congress provided earlier this year as merely a down payment.

Until now, when capital investments in the ATC system were called for, Congress allocated funds from the Airport and Airway Trust Fund, whose dollars come from aviation user fees, primarily the airline passenger ticket tax. Aviation (or at least airlines) has long relied on user-funded infrastructure, for both airports and ATC. Highways are likewise supported largely by user fees, both fuel taxes and tolls.

The balance in the Aviation Trust Fund is expected to be around $20 billion by late 2025, but a large fraction of that will be drawn upon for the FAA’s 2026 operating and facilities and equipment budget needs. So what is the responsible answer to the “additional $20 billion” for ATC modernization?

Increase the aviation user fees. At a time when the federal budget is running a $2 trillion annual deficit, there is no justification for aviation to add to that total, which directly increases the national debt to unsustainable levels.

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News Notes

Port Authority Plans P3 for Newark Terminal B
Infralogic’s Eugene Gilligan reported (Nov. 13) that the Port Authority of New York and New Jersey’s $45 billion capital plan includes using a long-term public-private partnership for its new Terminal B. Gilligan’s article noted that infrastructure investment firms have held discussions with Port Authority officials regarding the use of a P3 procurement model for replacing the aging existing terminal. The agency in recent years has used such P3s for new terminals at both Kennedy (JFK) and LaGuardia (LGA) airports. The capital plan also includes a new AirTrain Newark and an “EWR Vision Plan” for revitalizing the airport.

SpaceX Starship Cleared for Cape Canaveral Launches
Politico Space reported (Dec. 5) that the Space Force has cleared SpaceX to launch its huge Starship launch system from its launchpad SLC-37. SpaceX hopes to launch up to 76 Starship flights per year from that site within the next few years. Other launch companies expressed concerns about interference with their own launch plans, but the Space Force accepted SpaceX’s plans to identify any new “blast danger areas” that need to be cleared near SLC-37.

First Digital Tower in the Middle East
Hamad International Airport (HIA) in Qatar has received certification for the first virtual/digital control tower in the Middle East. The Virtual Tower was developed by Searidge Technologies, with partners ADB Safegate and NATS, the UK air navigation service provider (ANSP). The vTWR provides 360-degree views of the entire airport, which was not possible from its conventional tower. The new system has two controller workstations in the existing conventional tower and two in HIA’s Backup and Approach Training Center.

Blue Origin Lands New Glenn Booster
On its second launch, Blue Origin’s New Glenn booster lofted two NASA payloads toward Mars and recovered the reusable booster for the first time. This was the first successful New Glenn booster recovery. Blue Origin plans to use it for many future launches, similar to SpaceX’s growing track record with Falcon 9 and Falcon Heavy launch vehicles.

Nav Canada Breaks Ground for Its First Digital Tower Center
Kingston, Ontario, is the site where Nav Canada has begun construction of an interim digital tower facility. The Kingston Digital Facility (KDF) is intended to lay the groundwork for a future digital tower center that is intended to serve up to 20 airports. Upon completion in 2026, the KDF will initially provide tower services for Kingston and one other airport, as the first digital tower facility in Canada. It is also the first stage in Nav Canada’s Digital Aerodrome Air Traffic Services (DAATS) initiative. Nav Canada’s technology partner on this endeavor is Kongsberg.

DOT Seeks Information on Dulles Airport Revamp
Responding to a White House request, the US DOT on Dec. 3 issued a Request for Information on plans to “revitalize” Washington Dulles Airport (IAD). The RFI includes the idea of public-private partnerships (P3s), like those that have been used to replace aging terminals at LaGuardia (LGA) and Kennedy (JFK) airports. IAD is an airport I avoid whenever possible, in part because of its slow, dangerous people movers called “mobile lounges,” which have no seats and are generally wall-to-wall with standing passengers and luggage. The airport really could use a serious rethink, and it could be a good fit for design-build-finance-operate-maintain (DBFOM) P3s.

JSX Plans Passenger Service from Santa Monica
Public charter carrier JSX has announced daily flights between Santa Monica (SMO) and Las Vegas (LAS) to begin before the end of December. This will be JSX’s first route to use turboprop aircraft (ATR 42-600s). JSX holds options to acquire as many as 25 additional ATR turboprops, if its early routes are successful. Even if it is successful, the SMO-LAS route will not be long-term, since SMO is due to shut down entirely at the end of 2028.

Fengate Plans to Sell its ConRAC
One of the pioneer developer/operators of consolidated rental car centers (Con RACs) is planning to sell its pioneer project at Los Angeles International Airport (LAX). Infralogic reported (Nov. 26) that Fengate is in negotiations with BBGI Global Infrastructure to sell the LAX ConRAC and a public school P3 in Prince George’s County, MD. BBGI, which owns 56 P3s in the United States, Canada, and Europe, was recently taken private by British Columbia Investment Management Corporation.

NASA Bans People from Next Boeing Starliner Flight
Ars Technica reported that NASA has approved renewed missions to the International Space Station for Boeing’s ill-fated Starliner capsule, but this first set of new missions will be for cargo only. Assuming this cargo-only mission is a success, Starliner will be approved to fly three passenger missions to the Space Station before the ISS is de-orbited, as planned. The original 2014 NASA contract called for Starliner to operate six crewed flights to ISS.

U.K. Takes Steps to Bolster GPS Position, Navigation, and Timing (PNT)
In response to increasing levels of GPS/GNSS spoofing and jamming, the U.K. government has committed £155 million for three projects. First, £71 million will be invested in a new enhanced LORAN program, a system with higher power and a far different spectrum than used by GNSS. Second will be £68 million to continue the development of a National Timing Center aimed at providing nationwide timing that does not rely on GNSS. Another £13 million will fund a new UK GNSS interference monitoring program.

Eurocontrol Calls for Increased Use of Text Messaging
The 42-government agency Eurocontrol has called for air navigation service providers (ANSPs) and airlines to make significantly more use of controller-pilot-data-link-communications (CPDLC), Aviation Daily reported (Nov. 14). Greater use of text messaging would relieve congestion on voice radio communications channels. Eurocontrol’s Paul Bosman reported at a recent conference that in European airspace, flights average only two data link messages per flight, adding, “This technology has been available for 20 years; can’t we do better?”

FAA Seeks Input on Replacing ERAM and STARS
On Nov. 20, the FAA released a Request for Information (RFI) about creating a common automation platform that would replace separate systems that manage en-route flights (ERAM) and terminal-area flights (STARS). The Common Automation Platform (CAP) sounds good in principle, and FAA is wise to seek a single, state-of-the-art platform to replace the two older systems, developed during different time frames. FAA noted that it is open to several potential approaches to “re-architecting” existing platforms. Responses are due Dec. 19, which does not provide much time for serious brainstorming.

Lockheed Martin Plans Commercial Orion
Aviation Week (Oct. 13-26) reported that the prime contractor for NASA’s Orion moon capsule is planning a commercial version. Lockheed acknowledged NASA’s contract for the Artemis moon missions, but with that program likely to be cut short after only a few launches, it is looking for possible commercial customers. I am happy to refer them to last month’s article on Orion’s potential shortcomings, beginning with its hardly-proven re-entry heat shield. If even half the problems cited by ex-NASA scientist Casey Handmer (in last month’s issue) are valid, my advice is caveat emptor.

Blue Origin Partners with Luxembourg Space Agency on Lunar Prospecting
Project Oasis was recently announced by the space launch company in conjunction with Luxembourg’s space agency. The plan is to remotely surveil lunar water ice to identify Helium 3, rare earth elements, and other resources that might support lunar production of materials and fuel that would not have to be transported from Earth. To the extent that promising lunar resources are identified, the project’s second phase, called Blue Alchemist, will experiment (here on Earth) with turning such raw material into useful materials that could later be produced on the Moon.

Airport P3 Activity in Brazil
In October, airport operator Motiva announced that its Brazilian airport concessions were for sale, with a value estimated at $1.8-2.2 billion. Twelve airport groups initially expressed interest, including the world’s second-largest (AENA Airports) and fifth-largest (Vinci Airports). In early November, AENA announced that it was working on a $986 million bond issue for its Brazilian airport P3 concessions. It also announced that its partially-owned Mexican airport company GAP would merge with its strategic partner AMP. It looks as if more airport deals will be forthcoming soon in Brazil.

Stockholm Arlanda Airport OKs Curved Landing Approaches
Aircraft equipped and certified for required navigation performance (RNP-Authorization Required) may be allowed to make continuous descent approaches on curved arrival paths at Arlanda. Swedavia expects that this will lead to more landings per hour and lower aircraft emissions. RNP-AR has been approved by Nav Canada for two airports in that country, Calgary and Toronto. I am not aware of any US airports approved by the FAA for this kind of landing

Newark Controllers Have Two More Years in Philadelphia, Per FAA
When the FAA shifted control of arrivals and departures at Newark from the troubled New York TRACON (N90) to the Philadelphia TRACON, 14 controllers moved to the Philly TRACON. The time period was indefinite, but on Nov. 17, the FAA announced that those controllers would remain at Philly TRACON for two more years.

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Quotable Quotes

“The economics of urban air taxis are difficult. An aircraft costing millions must fly many hours per day at high load factors to cover capital and operating costs.  Battery energy density limits range and payload. Downwash, noise, and turbulence make rooftop or street-level operations problematic. Wind and weather limits reduce availability. Certification requires thousands of flight hours and proven safety redundancies. Air traffic management for autonomous or semi-autonomous craft is not ready. Public acceptance of low-flying craft over dense cities remains uncertain. . . .  Supernal’s folding is symbolic. The era of hype is ending. The sector is moving into an attrition phase where many firms will fail, a few will survive, and the market will settle into niches. The original promise of eVTOLs as a mass urban transport solution is receding. The story now is about how a vision of the future met the hard reality of physics, economics, and regulation, and how an industry will be reshaped in the aftermath.”
—Michael Barnard, “From Kitty Hawk to Supernal: The Shrinking Future of eVTOLs,” Clean Technica, Sept. 11, 2025

“I enjoyed your piece in the Wall Street Journal [on ATC reform]. As someone on the front lines, I can tell you that things are certainly not getting better. The most frustrating part of my day is battling all the chatter on the radio. Many times we can’t get a word in edgewise. Meanwhile CPDLC (controller-pilot-data link- communications) just sits unused. It’s very rare for controllers to use it for anything other than frequency changes. Many of its numerous functions are not even activated, including free text messages. One concern I have is that the feds are going to spend billions on a new elaborate ground-based system, when a better and less-expensive aircraft AI system may be just around the corner. While I seriously doubt that the ground-based network will be eliminated any time soon, I could see significant reductions in the need for hardware, particularly on the en-route part of the system.”
—Greg Ross, email to Robert Poole, May 10, 2025, used by permission. Mr. Ross is a 737 captain for a major U.S. airline.

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The post Aviation Policy News: Air traffic controller staffing and resignation claims appeared first on Reason Foundation.

• More trouble for the Key Bridge replacement
• Spain de-tolls motorways; problems arise
• Brightline West: Xpress West Reborn
• Fixing the Highway Trust Fund
• BBC report on electrifying passenger rail
• News Notes

More Troubles for the Key Bridge Replacement

Things are not looking good for a speedy replacement of the destroyed Francis Scott Key Bridge in Baltimore. To begin with, last month, the National Transportation Safety Board (NTSB) cited Maryland officials’ failure to conduct a critically important risk assessment (based on guidelines from the American Association of State Highway and Transportation Officials) on the adequacy of bridge protections from collisions with major ships.

NTSB correctly identifies the Maryland Transportation Authority (MDTA) as having been at least partly responsible for the bridge’s collapse. NTSB noted that countermeasures such as “dolphins” could have been implemented if MDTA had performed the AASHTO risk assessment. As I have reported previously in this newsletter, MDTA also ignored “repeated warnings” from the Baltimore Harbor Safety and Coordination Committee about the lack of meaningful protection of the bridge piers. I believe it can be argued this is what attorneys call “contributory negligence.”

The second bad news was that the estimated cost of the replacement bridge will be between $4.3 billion and $5.2 billion, much higher than the previous estimate of $1.7 to $1.9 billion. The reasons for this include the fact that the new bridge will have a longer span, will be much higher, and (of course) have pier protections. I think Maryland officials should be taken to task for this. First, they claimed that the bridge would be a simple “replacement” of the old bridge, and therefore no environmental impact study would be needed. But then they went ahead and developed specifications for a very different and obviously much more costly bridge.

Politico recently reported that Senate Environment & Public Works Committee Chair Shelley Moore Capito (R-WV) is outraged by this double-cross, given Congress’s over-hasty commitment to paying 100% of the replacement bridge’s cost. In relating her conversation about this with Gov. Wes Moore, she told Politico that, “I felt it was unfair for Maryland to ask for 100 percent on $1.7 billion, when now it’s $5.2.”

Moore said that, at this point, she would not be leading a charge to alter the federal commitment, which she said would need to clear the 60-vote filibuster threshold in the Senate.

My own view is that, due to its contributory negligence in not protecting the Key Bridge piers, in no way should all U.S. taxpayers be on the hook for the new bridge’s construction cost. Maryland should provide funds based on the following sources:

• The amount of revenue bonds it could issue based on reinstating tolls on the new bridge;
• Proceeds from its own bridge insurance policies; and,
• Proceeds from the shipping industry’s insurance pools, which are capable of providing up to $3.1 billion per ship collision.

As Rep. John Garamendi (D-CA) told Bloomberg TV last year, “I don’t think this has to be federal taxpayer money. Let’s go first to the insurance side of it, and then we’ll see what’s left over.”

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Spain De-Tolls Motorways; Problems Ensue

In 2018, the national government of Spain began de-tolling the country’s long-distance motorways, in an apparently populist move to make all of its extensive highway system (the world’s third-largest) available for free. The consequences were not exactly what the government expected.

Until 2018, nearly all the major motorways were operated and managed via long-term public-private partnerships (P3s). The motorway companies charged tolls, which paid for improvements as well as operating and maintenance costs. They also paid corporate taxes to the national government.

How the government is de-tolling is by failing to renew these long-term P3s as they reach their final year. Once a P3 is terminated, the tolls are removed, and the obvious consequence is that far more cars and trucks move onto the “free” motorways. The initial de-tolling has led to nearly 40% more personal vehicles and 89% more trucks. Most of these increases were from nearby roadways, but in the freight sector, some of the increased truck traffic has been a shift from rail to truck.

Thus far, according to Julian Nunez, head of the Spanish Association of Construction and Infrastructure Concession Companies, the government is losing €409.8 million per year in tax revenue from the former tollway operators and spending an additional €89.7 million per year in motorway maintenance costs. And this is just the beginning. In 2029, three more long-term P3 agreements are set to expire, potentially de-tolling another 527 km of motorways.

Nunez points out that because there is no dedicated fuel tax to pay for highways in Spain, all the cost of building, upgrading, and maintaining de-tolled motorways comes from the national government’s general budget. By contrast, users of Spain’s railways pay €690 million in taxes per year, maritime transport pays €515 million per year, and airport users pay €2.24 billion per year. But users of the de-tolled motorways pay nothing.

The motorway association has proposed to the government a replacement tolling plan for the entire 13,000 km motorway system. Under the plan, light vehicles would pay €0.03 per km and heavy vehicles €0.14 per km. This plan has also been submitted to the European Commission. That plan includes over €18 billion in motorway investments. It also proposes new long-term P3 concessions with 25-year terms.

Nunez says the Spanish government appears to be awaiting support for the plan from the European Commission before making any decisions. But it’s pretty clear that the government did not think through the consequences of de-tolling the country’s motorways.

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Brightline West: Xpress West Reborn

Engineering News-Record reported in its Oct. 22 issue that the estimated cost of the planned Brightline West high-speed rail line between Las Vegas and Rancho Cucamonga, CA, has ballooned from $12 billion (the Dec. 2023 estimate) to $21.5 billion. To cover most of the shortfall, the company has applied for a $6 billion loan from the federal Railroad Rehabilitation and Improvement Financing (RRIF). That would be a very high-risk loan.

On Nov. 17, Infralogic, an infrastructure finance newsletter, reported that Brightline West is in deep financial trouble, with mandatory redemption of $2.5 billion in revenue bonds that were due by Nov. 30 and many other dire problems. (See “Brightline West Faces USD 2.5 Billion Bond Redemption Amid Financial Uncertainty—2Q Credit Report”)

We’ve seen this high-speed rail story before, and it did not have a happy ending. The previous attempt to provide a privately financed high-speed rail line between Las Vegas and (in this case) Victorville was called Xpress West. In Aug. 2012, Reason Foundation published “The Xpress West High-Speed Rail Line from Victorville to Las Vegas: A Taxpayer Risk Assessment,” authored by consultant Wendell Cox. Like Brightline West, it planned to use right-of-way in the median of I-15, the primary highway route between Southern California and Las Vegas (which would make future expansion of that highway far more expensive).

The report assessed a number of risks, but the most serious was a speculative consumer market. “There is no parallel for large numbers of drivers and airline passengers to travel well outside the urban areas in which they live to connect to a train to any destination, much less one so close to Southern California as Las Vegas.”

Hence, ridership and revenue would likely be a fraction of what Xpress West projected, making repayment of its federal loan difficult, if not impossible. The study also pointed out that there are six commercial airports throughout the LA metro area that are far more convenient for most Las Vegas-bound travelers than driving out to Victorville. And those air fares are very economical. Hence, the Express West traffic and revenue numbers were highly exaggerated.

The story did not have a happy ending for Xpress West. Like Brightline West, it had applied for a federal RRIF loan. In March 2013, Rep Paul Ryan, then chair of the House Budget Committee, and Sen. Jeff Sessions, ranking member of the Senate Budget Committee, sent a letter to Transportation Secretary Ray LaHood opposing the RRIF loan. They also asked the Government Accountability Office to evaluate the project. Those actions led to a U.S. Department of Transportation (DOT) letter on June 28, 2013, rejecting their RRIF loan request. And that was basically the end of Xpress West, though it lingered on for a number of years trying to find other funding.

Brightline West, with its much higher estimated cost and similarly dismal ridership potential, is likely not much longer for this world.

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Fixing the Highway Trust Fund
By Marc Scribner

In November, the Tax Foundation released a new report by Alex Muresianu and Jacob Macumber-Rosin, “How to Refuel the Highway Trust Fund.” Their brief focuses on the federal Highway Trust Fund’s (HTF’s) persistent structural deficit and examines four alternatives that could eliminate the revenue-outlay imbalance. While these are not the only options for addressing the HTF’s fiscal problems, they are under somewhat serious political consideration. Most importantly, the authors’ comparative analysis accurately highlights the advantages and disadvantages of each approach. However, some of their policy conclusions and recommendations will generate criticism even from those who directionally agree with them.

Muresianu and Macumber-Rosin examine four potential revenue fixes to the Highway Trust Fund, assuming continued baseline growth of HTF expenditures:

• Option 1: Replacing all existing HTF taxes with mileage-based user fees (MBUFs);
• Option 2: A combination of replacing existing truck taxes (including the diesel tax) with a truck MBUF, establishing a new flat registration fee on electric vehicles (EVs), and increasing the gas tax;
• Option 3: Raising gas and diesel taxes and indexing the rates to inflation; and
• Option 4: Replacing all existing HTF taxes with flat registration fees.

The Option 1 full MBUF approach uses a rate schedule dictated by a gross vehicle weight rating formula (see Appendix Table 1), which is in part based on Oregon’s existing weight-distance tax for heavy trucks. Adopting this rate schedule would roughly double the per-mile tax liability on commercial trucks, while gas-powered passenger cars would face a tax burden similar to what they pay today. This approach would be propulsion-neutral, so hybrid-electric vehicles and EVs would pay to support the system they currently use and future-proof it for any subsequent advances in vehicle propulsion technologies.

The Option 2 hybrid approach recognizes that scaling an MBUF regime for all vehicles may be administratively or politically challenging. So, the authors propose instead to impose MBUFs on heavy trucks only, add a $100 annual fee for EVs, and increase the gas tax by 2 cents, each of which would be indexed to inflation. Muresianu and Macumber-Rosin estimate that total HTF revenue would grow slightly slower under Option 2 than under Option 1, but it would still be sufficient to cover baseline HTF expenditures over the next decade.

Option 3 is the most “conventional” of the alternatives: simply raising fuel tax rates and indexing them to inflation. This has long been proposed in Congress, but raising a tax on nearly all Americans has rendered it a political dead-end. The Tax Foundation proposal would increase gas tax rates from 18.4 cents to 28 cents per gallon and diesel tax rates from 24.4 cents to 40 cents per gallon. Out of the four options, this approach scored the worst. While a large fuel tax increase would be sufficient to cover baseline expenditures for a few years, it would fail to eliminate the HTF’s structural deficit because rising fuel economy and electrification are expected to dramatically decrease per-mile fuel tax collections going forward.

Option 4 is the most dramatic departure from the status quo: abolishing any tax relationship from the intensity of system use (i.e., gallons of fuel consumed while driving, miles driven) and imposing flat annual registration fees. Tax Foundation’s registration fee rate schedule (Appendix Table 2) is based on the gross vehicle weight rating formula from Option 1. Under this approach, a 4,000-pound passenger car would pay $68.14 per year, a 6,000-pound full-size SUV or light-duty pickup would pay $118.84, and an 80,000-pound Class 8 semi-truck would pay $7,354.31.

Replacing existing HTF taxes with registration fees has been proposed by the American Highway Users Alliance (NAPA testimony, page 5), under which most passenger cars would pay $135 per year, large SUVs and pickups would pay $165, and the heaviest trucks would pay $4,600. There are clearly vast differences in who would bear the burden in these registration fee proposals, with the Tax Foundation concentrating tax liability on heavy trucks that cause most of the wear and tear on roads and the American Highway Users Alliance shifting the burden to smaller passenger vehicles.

This question of who wins and who loses in a registration fee scheme would likely become a major source of political controversy. The concept itself faced strong backlash earlier this year when House Transportation and Infrastructure Committee Chairman Sam Graves attempted to attach his own registration fee proposal to the Republican reconciliation bill, which was quickly rejected as a new “car tax.” Under the Tax Foundation’s Option 4, registration fees also appear to be a weak revenue-raiser, with HTF baseline outlays exceeding projected revenue by year eight of the 10-year budget window.

Muresianu and Macumber-Rosin conclude that the Option 1 full MBUF approach “is the most efficient and sustainable option for US highway funding amid rapidly changing markets and technologies. It best achieves the user-pays principle, aligning taxes paid with actual road use, vehicle weight, and infrastructure costs.”

However, they acknowledge that a national MBUF system for all vehicles would be difficult to establish and administer, with significant implementation and operating cost uncertainties. They suggest that the Option 2 hybrid approach—which would establish truck-only MBUFs and EV registration fees, as well as modestly increase the gas tax—would deliver most of the benefits of Option 1 with fewer policy challenges.

While it is certainly true that a national truck MBUF and EV registration fee is less complex to administer, the politics on the ground are less favorable to Option 2. The trucking industry has been clear that it will fiercely oppose any MBUF proposal that singles out trucks. As such, MBUF advocates for years have been stressing the importance of developing collection methods capable of scaling across the entire vehicle fleet. A truck-only MBUF could generate a political backlash that kills MBUFs for all. Tying this counterproductive strategy to another proven political lead balloon—federal gas tax increases, however modest—likely dooms not only Option 2 to failure, but potentially Option 1.

As unsatisfying as it may be, there are likely no politically viable Highway Trust Fund fixes that can sustain current baseline expenditures. Perhaps addressing excessive spending rather than insufficient revenue would be more fruitful. One option Muresianu and Macumber-Rosin did not consider is aligning HTF expenditures to expected tax receipts and then relaxing federal constraints on tolling and public-private partnerships. This would make states less dependent on federal-aid grants and expand the users-pay principle at the individual facility level. To be sure, fiscal restraint also faces strong immediate political headwinds, but it might prove to be the most realistic option as entitlement programs become insolvent and the national debt explodes as anticipated over the next decade, as we at Reason Foundation have suggested.

See Alex Muresianu and Jacob Macumber-Rosin’s full Tax Foundation analysis, “How to Refuel the Highway Trust Fund,” which is well worth reading.

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BBC Report Touts “Electrifying Rail”

In an odd news article, BBC technology reporter Chris Baraniuk wrote that passengers on a British train leaving Aldershot station may not notice a cluster of solar panels beside the tracks. But, he writes, they would be surprised to learn that “the train they are on is drawing power from it.”

Hurrah, the BBC seems to be reporting. And the headline writer penned the story’s headline as, “This is the big one—tech firms bet on electrifying rail.” Well, one of the great many things I learned by earning two engineering degrees from MIT is that solar power is very, very diluted. It might light up a few bulbs, but in no conceivable way could it power any train (apart from a model railroad).

But the story goes on to quote the co-founder of start-up company Riding Sunbeams, Leo Murray, who says, “On a sunny afternoon, if you are catching a train through Aldershot, a little bit of the energy for the train will come from those solar panels.” His company installed the solar panels beside the tracks in 2019. They produce 40 kilowatts on a sunny day. Murray adds, “If you are a railway, this is the cheapest energy you can buy.” Also, the most diluted.

So what is solar power actually used for?

It’s never made clear, but Murray is quoted as saying that his panels are the only solar array in the country that delivers power directly to the rail to move trains. Nowhere does the article explain how a tiny bit of electricity fed into the track can help power the train, which does not appear to be powered by electricity. Moreover, by paragraph 12, the story notes that solar panels produce direct current (DC) while overhead lines used to power trains use alternating current (AC). The piece goes on from there to discuss various electric-powered rail ideas in a number of European countries. But it never explains how the tiny bit of solar electricity connected to the track at Aldershot makes any difference at all.

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News Notes

Work Begins on $4.6 Billion Georgia 400 Express Toll Lanes
The Georgia Department of Transportation’s largest public-private partnership (P3) thus far got underway in October. The entirely privately funded project will add priced express lanes in both directions to sixteen miles of this north-south expressway in the Atlanta metro area. The toll-financed P3 project has a 50-year term. In addition to passenger vehicles, the express lanes will be used by a new MARTA Bus Rapid Transit line, and the P3 project will construct several BRT stations along the right of way. The P3 consortium, SR400 Peach Partners, is led by ACS Infrastructure, Acciona, and Meridiam.

Replacing the Cape Fear Bridge May Be a Toll-Financed P3
North Carolina DOT has concluded that the aging steel lift bridge across the Cape Fear River is functionally obsolete and needs to be replaced. With an estimated cost of $1.1 billion, and only one third of that available from a $242 million federal grant and an $85 million state grant, NCDOT and its Turnpike Authority are considering both tolling and a public-private partnership (P3) to finance and manage the replacement. David Roy of the Turnpike Authority pointed out at a recent public hearing that a state agency is not allowed to provide toll discounts to any kind of user, but that a P3 concession company would be able to do that –e.g., for local residents.

South Carolina May Consider I-77 Toll Lanes
In its $3.2 billion express toll lanes project, North Carolina DOT will be adding express toll lanes to I-77 between Charlotte and the South Carolina border. Unless South Carolina adds lanes on its side of the border, there will be a huge bottleneck as 10 NC lanes meet far fewer lanes on the South Carolina side. SCDOT director Justin Powell is aware of the problem. He told the Rock Hill Herald on Nov. 24 that he plans to discuss this with his North Carolina counterpart in the near future.

New Zealand Moving to Road User Charges
Last month, the New Zealand Parliament passed a bill to authorize nationwide road user charges. Local agencies are encouraged to partner with the NZ Transport Agency. The proposed charging is called “time-of-use charging,” with higher rates applying during the busiest hours for roadway use. The Auckland Council is expected to be the first local government to engage with the Transport Agency. Also, in late November, the Agency announced that tolls and road user charges will be indexed to inflation, as measured by the NZ Consumer Price Index.

EPA Changes Definition of Waters of the United States
For decades, the Environmental Protection Agency defined waters of the United States (WOTUS) very comprehensively, to include even ditches that were often dry. Litigation over many years challenged this policy as inconsistent with the legal definition of those waters as “navigable.” On Nov. 17, the EPA announced a revised definition, consistent with a 2023 Supreme Court decision, which has led to cheers from highway organizations.

I-10 Bridge Replacement to Begin in March
Louisiana DOTD has announced that construction of the $2.4 billion I-10 Calcasieu Bridge replacement will begin in March. The bridge is to be designed, built, financed, operated, and maintained by Calcasieu Bridge Partners, formed by Plenary Americas, Acciona Concesiones, and Sacyr Infrastructure USA under a 50-year toll-financed public-private partnership. That river has something of a pirate history, so a Louisiana pirate symbol of crossed pistols will be incorporated into the bridge’s four towers.

Express Toll Lanes Expanding in California’s Bay Area
18 miles of new express toll lanes are nearing completion on I-80 in Solano County, from Red Top Road in Fairfield to I-505 in Vacaville. Variable tolls will be charged between 5 AM and 8 PM, and a FasTrak tag will be required, as on other express toll lanes in the region. Vehicles with two occupants and a switchable FasTrak will pay half price, and those with three will go at no charge with the FasTrak set at 3.

Brightline Florida in Trouble
The privately financed “higher-speed” passenger rail line between Miami and Orlando is in financial trouble. Its tax-exempt revenue bonds are trading at below their nominal value, and non-insured bonds have recently traded in the low 80s. While ridership has increased over the last year, it is well below projections. Moreover, due to a number of collisions with motor vehicles and pedestrians, in recent years, the rail line is under attack in Miami media. Separately, Brightline and Florida East Coast Railroad are in litigation over Brightline’s planned commuter service, which FEC claims violates Brightline’s agreement on its use of FEC trackage.

Four Dallas Suburbs May Withdraw From Rail Transit System
The cities of Plano, Irving, Farmers Branch, and Highland Park have scheduled referenda for next March on whether they should withdraw from the regional rail transit system DART. The agency says its 93-mile system is the largest light rail system in the United States. Thirteen cities dedicate a share of their sales tax revenue to DART, but these four cities say their sales taxes to DART cover far more than what the agency spends on their DART service. In the Dallas/Fort Worth metro area, only 0.6% of commuters used transit in 2024, down from 1.2% in 2019 and 3.4% in 1980.

Metro Pacific to Sell Shares in Its Toll Roads
Metro Pacific Investments Corporation announced plans to sell 20-30% stakes in its Indonesian and Philippine toll roads via private placement, according to the Manila Standard. MPIC chief finance officer June Cheryl Cabal-Revilla said the sale will involve 20-30% of the Indonesian toll road and a similar stake in Metro Pacific Tollways Corp. MPTC CEO Gilbert Sta. Maria said the company is in talks with overseas and local investors for the private placement.

Japanese Maglev Project Costs Have Doubled
The cost of the main segment of the Chuo maglev line planned for Tokyo to Nagoya is now double the original estimate. That section—between Shinagawa and Nagoya—is now expected to cost $72 billion, compared to less than half that in 2014. The reasons for the large increase were cited as price surges, responses to challenging construction work, and enhanced specifications. This news is based on an article in Infralogic dated Oct. 30, 2025.

Nashville Loop Project in Trouble?
ENR reported late last month that the $240 million Music City Loop tunnel project has experienced a walkout by local contractor Shane Trucking & Excavating partway through boring the nine-mile tunnel. Boring Company CEO Steve Davis, on a Nov. 24 livestream, discussed worker safety innovations and said the project remained on schedule.

Vietnam Considering $1.4 Billion Expressway
Infralogic (Nov. 28) reported that the Vietnamese government is considering a public-private partnership for a 141 km expressway linking two other expressways in Lam Dong province. The national Ministry of Construction has asked the Lam Dong government to assess the pros and cons of a P3 for this project.

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The post Surface Transportation News: Key Bridge replacement costs soar appeared first on Reason Foundation.

• Protecting aviation from the next shutdown
• Time to retire the P word
• NASA’s huge risk in Artemis II mission
• Airport privatization back on Canada’s agenda
• Protecting passengers from defective regulation
• Carry-on bags and emergency evacuation
• News Notes
• Quotable Quotes

Protecting Aviation from the Next Shutdown  

The longest federal government shutdown has finally been ended by Congress. Air travel will likely take weeks to recover, in part due to an even larger shortage of air traffic controllers due to the higher-than-usual number of controller retirements during the past month and a half.

The Federal Aviation Administration’s Air Traffic Organization was already far short of standard air traffic controller staffing, and the next few years will be even worse. Transportation Secretary Sean Duffy says that an average of 15 to 20 controllers retired per day during the shutdown. If that’s the case, multiply 15 retirements by 43 days and you get 645 fewer controllers post-shutdown. Therefore, the Federal Aviation Administration (FAA) is likely to retain some flight restrictions indefinitely based on the post-shutdown level of controller staffing at towers, TRACONs, and high-altitude centers.

The shutdown may be over, but now is the time for policymakers to think seriously about protecting air travel from the next government shutdown, because there are sure to be more. The most effective means to that end is to do what nearly 100 other countries have done since 1987: de-politicize air traffic control (ATC). What the vast majority of those countries have done is to remove ATC from the government’s budget by (1) separating the air traffic control provider from direct government funding, and (2) enabling it to charge airlines and business jets International Civil Aviation Organization-compliant weight-distance charges for all flights.

Policymakers and opinion leaders should understand that U.S. airlines and business jets pay those user fees whenever they fly in non-U.S. airspace. The business jet lobby group, the National Business Aviation Association (NBAA), pulls out all the stops to prevent its members from facing those fees in the United States because they currently pay only a very small fuel tax that covers about 10% of the cost of the air traffic control services they receive. As an Aug. 10 video editorial from The New York Times explained, whenever an airline passenger pays the ticket tax (which is the FAA’s primary revenue source), part of that tax is used to cross-subsidize business jets.

The other obstacle to modernizing U.S. air traffic control is, alas, Congress. It has twice rejected serious proposals to depoliticize our ATC system: once by rejecting the Clinton administration’s proposal to create a federal ATC utility and again under the first Trump administration, where a Republican proposal for a nonprofit ATC corporation modeled on the very successful Nav Canada didn’t move forward.

Perhaps the air travel chaos of this historically long federal government shutdown will prompt Congress to think more seriously about making air traffic control shutdown-proof, as many other countries have done.

As The Wall Street Journal editorialized on Nov. 5:

“This is a ludicrous way to run the air transportation system of any country, much less the richest and most powerful one in the history of the planet. The answer is to hand off the job of air traffic control to a nonprofit funded by user fees instead of taxes. This model is already present in Canada and elsewhere, so it isn’t some pie-in-the-sky idea. President Trump backed such a plan during his first term, but parochial opposition kept it grounded.”

Former U.S. Department of Transportation Undersecretary for Policy Jeff Shane reminded me several months ago of a 2007 bill introduced in both houses of Congress to accomplish some of what other countries have done. It would have enabled ATC user fees instead of current aviation excise taxes (notably the ticket tax and aviation fuel taxes) and, via a kind of “permanent appropriations” process, enable the user-fee revenues to go directly to the ATC system. It would also have provided borrowing authority for the FAA to use to finance ATC capital investments. The Senate bill was S.1076, 110th Congress.

That approach is not my preference, but it would be a major improvement over today’s “ludicrous” status quo for America’s air traffic control system. We need to take air traffic control out of the federal budget, insulating it from the next government shutdown.

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Time to Retire the P word

Both friends and foes of air traffic control reform frequently refer to proposed changes as “privatization.” In an abstract, academic sense, shifting a function from the public sector to some form of non-government management can be dubbed “privatization.” But that word has acquired a serious negative meaning when it comes to air traffic control. This dates back to the initial efforts by then-Rep. Bill Shuster, who chaired the House Transportation & Infrastructure (T&I) Committee last decade, to craft 2017 legislation to replace the FAA’s Air Traffic Organization (ATO) with a nonprofit, stakeholder-governed corporation modeled after Nav Canada. This plan originated from a working group (of which I was a part) of the Business Roundtable. I also served as a (non-paid) subject-matter expert on this effort for the House T&I Committee. In parallel, a working group on air traffic control reform at the Eno Center for Transportation came up with a similar recommendation.

By the time the House T&I Committee released the first draft of its nonprofit air traffic corporation bill, the proposed stakeholder board was a disaster. The 13 stakeholders were to include four seats representing the major airlines, three representing general and business aviation, and six others representing air travelers and others. This led to a business-jet/private-pilot media campaign denouncing the bill as a takeover of ATC by the big airlines. NBAA bankrolled a new organization called Alliance for Aviation Across America (AAAA) that denounced the bill as having “a private board dominated by the big airlines” that would short-change rural states and small airports.

Despite a later version of the bill having a far more balanced set of stakeholders (including regional airlines and airports, and provisions ensuring the continuation of the Contract Tower program), the same AAAA talking points continued about a big-airline takeover and making profits at the expense of the rest of aviation. And this likely made it impossible for there to be a companion bill in the Senate.

When I review recent reports from organizations opposed to separating air traffic control from the FAA, they consistently label this change “privatization” and imply that it would be a profit-making private company.

A 2015 report from the Center for American Progress defines what they are against as “a private entity with a profit motive.” Yet the same report assumed that a privatized ATC entity would require “a steady stream of tax revenue to cover operational costs” and procurement of improved infrastructure. It went on to state that this would be “a bold attempt to carve out operations and procurement activities along with all or most of [Aviation Trust Fund] funding while dumping responsibility for remaining FAA functions onto taxpayers.” It also assumed airline control of the privatized entity, assuming that they would seek to ensure funding did not go to a major hub of a competing airline.

A more recent 2025 piece from “In the Public Interest” repeats claims such as, “Privatizing ATC would hand significant control of the airspace to the major airlines, allowing them to consolidate their power and dictate rules that prioritize their bottom lines over the public interest.”

In short, the meme is out there that “privatization” means “profits” and “control by airlines.” This does not reflect the situation in any of the nearly 100 countries that now receive air traffic control services from air navigation service providers (ANSPs) organized as public utilities, the vast majority of which are government corporations funded by ATC user fees.

That is why I switched my terminology several years ago to “public utility,” because that is what these entities are. In a U.S. context, they are analogous to electric utilities (including the Tennessee Valley Authority, which gets its funding from its electricity customers, not from Congress). TVA also issues long-term bonds to finance major capital improvements.

I urge fellow supporters of air traffic control public utilities to dump the ‘P’ word and start referring to public utilities as I wrote in my study, “Air traffic control as a public utility.” That is what the Clinton administration proposed in 1994, as its largest “reinventing government” project, the U.S. Air Traffic Services (USATS) corporation. It was to be funded by air traffic control user fees and regulated at arm’s length by the safety regulator, the FAA. I remember testifying in favor of USATS, but it never got beyond a single House committee presentation.

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The Huge Risk in NASA’s Artemis II Mission

As reported by Eric Berger in Ars Technica, NASA plans to launch its Artemis II mission early next month. Its giant, once-flown Space Launch System (SLS) rocket will launch its only-once-flown Orion capsule with four astronauts on board for a trip around the Moon and return to Earth. On the only previous launch (without crew) Orion’s heat shield partly disintegrated during re-entry. Once NASA engineers analyzed the damage, they decided that the fix would be to perform the next Orion re-entry on a different trajectory on which heat would not build up as much. But this has not been tested.

That bothers Casey Handmer, who has posted a very long critique of Orion, which I read in preparation for writing this article. Who is Casey Handmer, and why do I take him seriously? He received his PhD in theoretical physics from Caltech, worked at NASA’s Jet Propulsion Laboratory, and later founded Terraform Industries to make synthetic natural gas. Several space policy experts that I know and respect think he’s very credible.

His lengthy piece presents a technical case arguing that the Orion capsule is poorly designed, particularly in its heat shield. After many detailed pages, he summarizes Orion as follows:

• Orion does not have a “reference mission,” and Orion is not needed to go to the Moon.
• Orion is hugely expensive; the Orion program spends more in a year than SpaceX spent in total on its first space capsule.
• Orion has been delayed endlessly; in 2013 it was so far behind schedule that it could not be included in any serious space exploration architecture. And 12 years later, it has still not flown humans.
• Orion is irredeemably unsafe; the systems engineering was compromised from the beginning. Most obvious is the flawed heat shield. But nearly every other subsystem is either unstable, untested, or unfit.

Obviously, Handmer thinks it is wrong to risk four human lives on this very flawed vehicle. Remember, both the SLS launch rocket and Orion have flown only once. Contrast this with SpaceX’s approach. It has flown 11 Starship spacecraft thus far, none with humans on board. Each mission (and I’ve watched them all) is intended to test different design changes, flight tracks, and other details. Each one is a learning experience that leads to continuous improvements. A good overview of this approach is Irene Katz’s two-page article on Mission 11 of Starship Version 2. (“Next Up: Starship Take 3,” Irene Katz, Aviation Week, Oct. 27-Nov. 9, 2025) It’s a great illustration of SpaceX’s learning by doing.

NASA’s approach typifies the central planning “one best way”. It comes up with a concept and works extensively to fine-tune it on paper. It ends up being so costly that multiple test flights are unaffordable, so after just one SLS/Orion launch, it’s ready to fly with humans. That is an extremely risky way to proceed, but at $4 billion per launch, NASA has painted itself into a corner.

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Airport Privatization Back on the Agenda in Canada

Canada’s federal government has once again raised the subject of airport privatization, which was discussed briefly last year, but did not go anywhere. The government’s aim is to attract private capital to invest in the country’s airports, both the four major hubs (Calgary, Montreal, Toronto, and Vancouver) and also the larger regional airports. The government is looking for a way for equity investors, such as pension funds and infrastructure investment funds, to upgrade these airports.

What’s different this time, per a recent brief by Jody Aldcorn and Ken Silverthorn of McCarthy Tetrault that crossed my screen recently, is that today’s federal government has deficit constraints, the Canadian Airports Council is open to reforms, and Canadian pension funds are interested in airport investment at home, as they have been doing globally for many years.

Back in 1992, when the national government owned all the principal airports, it began devolving control to local non-profit airport authorities—but required that they pay annual rent to the federal government. The rent is a percentage of each airport’s annual gross revenue, and can be as high as 12%. The airport authorities hate this because they have to charge large fees to airport passengers, which makes air travel more expensive, on average, than in the United States.

When this subject arose last year, I had several suggestions, which I will repeat here, since I think they still make sense. The airport authorities want to get rid of the annual rent payments, but that would reduce a long-standing revenue source of the federal government. My suggestion was—and is—for the federal government to enact legislation enabling local authorities to opt out of annual rent payments if they enter into a long-term public-private partnership lease with an investor group (potentially including pension funds) and the investor group then agrees to compensate the federal government for the loss of rents from that airport. Thereafter, the airport authority and the P3 group would develop plans for modernization/expansion, etc., financed by equity and debt, as Canadian pension funds are involved worldwide.

This is potentially a win-win for the federal government, the airport authorities, and would-be airport investors, including Canada’s outstanding public pension funds, with their long track record of investing equity in airports worldwide.

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Protecting Consumers from Defective Consumer Protection Regulation
By Marc Scribner

Federal authority to police unfair and deceptive airline practices was first established in 1938 and has been largely unchanged since 1958, when consumer protections were extended to sellers of airline tickets. The commercial aviation industry has changed a great deal, as have consumer protection best practices that apply to most other businesses. In recent years, the outdated aviation consumer protection authority has been wielded to regulate air transportation in a variety of questionable ways, which are threatening the gains consumers realized following the Airline Deregulation Act of 1978. Fortunately, the U.S. Department of Transportation recently proposed a rule aimed at modernizing aviation consumer protections for the 21st century and protecting consumers from defective regulation.

The Department of Transportation’s aviation consumer protection authority long predates the DOT itself. Its basic structure was enacted by Congress as part of the Civil Aeronautics Act of 1938, which included protections against unfair or deceptive airline practices modeled on those contained in the Federal Trade Commission (FTC) Act passed months earlier in 1938. The Federal Aviation Act of 1958, which established the FAA, also extended aviation consumer protections to ticket agents. Since then, the statute has largely been unchanged (49 U.S.C. § 41712).

In contrast, the FTC’s authority to police against unfair or deceptive practices outside the air transportation industry has evolved significantly since 1938. These changes were driven by court decisions and internal practice in the decades that followed the enactment of the FTC’s consumer protection statute, an approach that was summarized[?] in the FTC’s 1980 Policy Statement on Unfairness.

Congress codified FTC’s modern practices in the 1994 FTC Act amendments, which importantly added three standards of proof to the statutory definition of “unfairness” (15 U.S.C. § 45). For conduct to qualify as unfair under the law, it must be (1) “likely to cause substantial injury to consumers,” (2) not “reasonably avoidable by consumers themselves,” and (3) “not outweighed by countervailing benefits to consumers or to competition.” This updated definition of “unfairness” was also included in the Dodd-Frank Act of 2010, which covers the enforcement duties of the Consumer Financial Protection Bureau (12 U.S.C. § 5531). Thus, a consensus on what “unfairness” means exists in every  federal consumer protection context other than commercial aviation.

While bipartisan recognition of the problem of ill-defined “unfairness” exists in virtually every other federal consumer protection context, Congress has so far not moved to reform the Department of Transportation’s similar aviation consumer protection authority. This failure to act has enabled regulators in recent years to engage in a variety of re-regulatory activities, including new restrictions on airfare advertising that prohibit government taxes and fees from being “displayed prominently” (14 C.F.R. § 399.84(a)), outlawing true nonrefundable ticketing (14 C.F.R. § 259.5(b)(4)), which puts upward price pressure on airfares due to the forced risk transfer from consumers to air carriers, and an inflexible tarmac-delay rule (14 C.F.R. § 259.4) suspected of increasing flight cancellations—particularly at smaller and more-rural airports.

Each of these aviation consumer protection regulations has been criticized as harming consumers, some with stronger evidence than others. But without the FTC-style standards of proof and evidentiary hearing procedures, the scales were tipped in favor of regulators.

Despite congressional inaction, DOT moved to bring the aviation consumer protection in line with FTC-style definitions and procedures in Dec. 2020. While this rule certainly improved airline and ticket agents’ defensive positions against allegations of unfair or deceptive practices, it would have required regulators to explain themselves along the way and give consumers better insight into how decisions that affect them are made. In this way, it should be understood as promoting regulatory quality and consistency in enforcement.

But the Biden administration moved quickly to reverse these reforms. Pursuant to an executive order, it published a rule in Feb. 2022 modifying procedures for discretionary aviation consumer protection regulatory proceedings in several ways that watered down process rigors. This change in policy opened the door for future discretionary rulemaking guided more by political whims than careful empirical analysis. DOT’s recent history of aviation consumer protection rulemakings suggests that past regulatory analysis was not sufficiently robust to avoid perverse harm to consumers.

The good news is that the new Trump administration is seeking to reinstate its previous reforms. Earlier this year, Reason Foundation urged DOT to restore the aviation consumer protection hearing procedures established in the Dec. 2020 rule. On Oct. 30, DOT published a proposed rule to do just that. While this latest shift in policy is welcome, it underscores the need for congressional action. A future administration can reverse these reforms just like the Biden administration did. Amending the aviation consumer protection statute, as Reason Foundation has recommended, would promote aviation consumer protection regulation and enforcement that actually protects consumers, regardless of who sits in the White House.

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Overhead Bags and Cabin Evacuation

Air travelers’ dependence on bringing travel luggage on board and stashing it in overhead bins is a serious problem. Not only does it increase boarding time; it also hinders emergency evacuations. As Sean Broderick reported in Aviation Week (Oct. 27-Nov. 9), a detailed study of evacuations revealed that retrieving bags from overhead makes it impossible to evacuate the cabin in the standard 90 seconds.

The study was carried out at the University of Greenwich. The researchers built a model so they could run thousands of scenarios, modeling a 180-seat narrowbody airliner with FAA-standard exits. In the base-case scenarios in which no passengers retrieved luggage, the median evacuation time was 121 seconds—well above the 90-second requirement. In the worst-case scenarios with many passengers retrieving luggage, total evacuation time averaged 199 seconds, with an average of 63 passengers left behind after 90 seconds. I note that in most scenarios, not all exits were modeled as usable, which is also realistic.

These are dismaying findings. The 90-second standard should not be increased, given the danger of fire and toxic fumes entering the cabin in many cases. So what kind of measures would improve evacuation times? Banning carry-on luggage (or locking the overheads until safe arrival at the gate) is not likely to be considered feasible. But what about providing economic incentives?

One reason so much luggage is brought on board is that airlines charge a lot for checked bags but charge nothing for carry-ons. What if checked luggage fees were cut in half? (I’d say eliminated, but airlines depend on that revenue.) But suppose they also started charging for most or all luggage carried on? We’ve seen the reverse of that when Southwest recently began charging for checked bags, leading to a large increase in carry-ons. So if airlines started charging for any carry-on larger than an under-seat briefcase, requiring a paid carry-on tag affixed to each such carry-on, some fraction of roll-aboard suitcases would end up in the hold, rather than in overhead bins.

This change should reduce boarding delays due to fewer suitcases being stored overhead and also improve evacuation times. Sounds like a winner to me.

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News Notes

Trump Renominates Isaacman for NASA Administrator
President Trump has formally re-nominated former astronaut Jared Isaacman to be the new NASA administrator. The nomination took place a few days after Politico unveiled Isaacman’s 62-page non-public concept paper for re-inventing the agency, which appears to reflect the ideas he discussed with Aviation Week reporter Irene Klotz’s two-page interview with Isaacman, summarized in the July 2025 issue of this newsletter. Politico quotes him as saying the document’s vision is “fully consistent with what I discussed in my Senate Hearing and in my responses to the Commerce Committee’s questions for the record. And I stand by it.”

Iridium Plans GPS Alternative on a Chip
Iridium Communications has announced an 8mm x 8mm chip that can provide position/navigation/timing information based on PNT data from its 66 low-earth-orbit communications satellites, reported Graham Warwick in Aviation Daily (Nov. 4). Iridium is seeking partners to conduct beta trials of the chip. CEO Matt Desch pointed out that the Iridium signal is 1,000 times stronger than GPS signals. The company plans to license the chip and PNT service to value-added resellers such as Collins Aerospace, Honeywell, and Skytrac Systems.

Archer Leases Hawthorne Airport for LA Air Taxi Market
Electric vertical take-off and landing (eVTOL) startup Archer Aviation has paid $126 million to lease, for 45 years, Hawthorne Airport for its planned Los Angeles air taxi service and to test various new aviation technologies. The airport is owned by the City of Hawthorne. It was built in the 1920s and was once known as Jack Northrop Field. It is three miles from LAX and close to major attractions, including SoFi Stadium, The Forum, and Intuit Dome.

SpaceX Details Progress on Starship as Lunar Lander
In response to criticism from acting NASA Administrator Sean Duffy, SpaceX released (Oct. 30th) a detailed progress report on its Starship-based Human Landing System for the agency’s Artemis III mission. It reported upcoming in-space trials of in-flight refueling and the development of a Starship HLS crew cabin. In addition, SpaceX issued the following statement: “In response to the latest calls [from NASA], we’ve shared and are formally assessing a simplified mission architecture and concept of operations that we believe will result in a faster return to the Moon while simultaneously improving crew safety.” This information comes from a Garrett Reim article in Aerospace Daily & Defense Report.

Beta Raises $1 Billion on the New York Stock Exchange
In an initial public offering, Beta Technologies sold 29.9 million shares at $34 per share. That puts Beta in the same funding category as Archer Aviation and Joby Aviation, all three now having each raised close to $3 billion. Beta is developing two versions of its Alia aircraft—conventional takeoff and vertical takeoff. It expects FAA Part 23 Type certification for Alia CTOL by late 2026 or early 2027, followed by Alia VTOL certification in late 2027 or early 2028. Beta says it has firm orders for 131 CTOL and 158 VTOL aircraft.

Macquarie Seeks Control of London City Airport
Infralogic reported (Oct. 15) that Macquarie Asset Management has reached an agreement to acquire a 50% stake in London City Airport from two Canadian pension funds: Alberta Investment Management Corporation and OMERS. That is in addition to its previous purchase of a 25% stake from Ontario Teachers’ Pension Plan, giving Macquarie 75% control of London’s third-largest airport. Earlier this year Macquarie acquired a 55% stake in Bristol Airport and a 26.5% stake in Birmingham Airport.

Quiet Supersonic Jet Makes First Flight
NASA’s X-59 Quest supersonic test aircraft made its first flight on Oct. 28 from Palmdale to Edwards Air Force Base in the California desert. The one-hour and 7-minute flight was at subsonic speeds between 170 and 250 knots. The X-59 is designed to reach Mach 1.4 and an altitude of 55,000 ft. During the next year, the flight envelope will be expanded in altitude and speed, after which acoustic measurements will be made to find out how quiet the aircraft is at various altitudes and (especially) supersonic speeds. A third phase will focus on community response to X-59 flights.

Blue Origin Opens New Glenn Factory at the Cape
The Orlando Sentinel’s Richard Tribou reported on the opening of a $3 billion manufacturing plant for the company’s New Glenn launch rocket. It provided a media tour of the factory, which will produce workhorse reusable New Glenn launch vehicles and also the version selected by NASA for its Human Landing System, to be called Blue Moon Mark 2. It is scheduled for the Artemis V mission, following SpaceX’s moon-lander version of Starship for Artemis III and IV. Blue Origin already had another plant nearby producing the uncrewed Mark 1 version.

New York Times Highlights Collegiate Controller Schools
Reporter Karoun Demirjian interviewed administrators at some 20 colleges that offer an FAA-vetted air traffic controller training curriculum. This program has not been widely known, despite its longevity and the addition of nine more colleges in the past year or two. I was pleased to learn that DOT Secretary Sean Duffy freed up enough FAA funds to keep these college courses in operation during the federal shutdown. That is a wise investment, given the increase in controller retirements during the shutdown. On the other hand, Demirjian reports that hardly any students in these programs have been trained to work in FAA’s high-altitude centers, which are considered the toughest assignments for new controllers.

Microwave Imaging Will Speed Travelers Through TSA Screening
MIT Lincoln Laboratory spent years developing a new kind of walk-through screening device for TSA checkpoints, to replace current walk-through metal detectors. The Department of Homeland Security (DHS) funded the project. The prototype uses antennas on flat panels that send out low-energy radio waves to reflect any hidden objects. This creates an instant image that the TSA agent scrutinizes. The technology has been licensed to Liberty Defense, and under the name “Hexwave” it was approved by DHS in 2024 to replace conventional walk-through metal detectors in TSA PreCheck lanes.

SpaceX Getting Close to Launching Starship Version 3
Starship Version 3 will be the successor to the Starships that have continued to provide huge amounts of data on operational performance this year. The first V3 launch is planned to, among other things, be the first to test orbital propellant transfer—a key factor in planned longer-term Starship flights, including its Human Landing System for NASA Moon landings.

Venice Airport Operator SAVE Is Being Bought by Infrastructure Funds
A consortium led by infrastructure investor Ardian has reached an agreement to acquire Italian airport operator SAVE, whose portfolio includes the Brescia, Venice, Verona, and Treviso airports, plus a stake in Belgian airport Charleroi. Being bought out under this transaction are infrastructure funds DWS Infrastructure and InfraVia Capital Partners. Infralogic estimates the deal is worth €1.1 billion.

JSX Introducing Turboprops
Public charter operator JSX is planning to introduce turboprop aircraft to its fleet; all other U.S. carriers have phased them out. JSX plans to add ATR 42-600s and possibly ATR 72-600s. JSX aims to provide the same kind of service offered by its small-jet flights. Its current all-jet business is up 30% over last year, with yields continuing to rise, reports Chris Sloan in Aviation Week (Sept. 29-Oct. 12). A number of legacy airlines are sponsoring legislation to treat public charters the same as scheduled (Part 121) carriers. Two airlines—United and JetBlue—are investors in JSX and are not supporting that bill.

Philippines Plans to Privatize Nine Regional Airports
Infralogic reports (Oct. 8) that its government plans to privatize nine regional airports, via two separate bundles. Both the Asian Development Bank and the International Finance Corporation are advisers for the planned auctions.

Iraq Selects Winner for Baghdad Airport
With bids from both Dublin Airport Authority and Corporacion America as finalists, the government in October selected the latter. The International Finance Corporation will negotiate with the Corporacion America consortium. The plan calls for the winner to construct a new passenger terminal (estimated at $400-$600 million) as part of the 25-year concession.

Error in Last Month’s Issue
Not one but two aviation professionals (whom I know) pointed out an error in last month’s lead article. The 17-country ATC utility in Africa is ASECNA, which I know. I plead guilty to sloppy proofreading.

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Quotable Quotes

“The reliance on overworked controllers is particularly dangerous because the FAA relies on outdated technologies that it has struggled to upgrade or replace. As in so many other areas, the United States has fallen behind other nations that use more-modern technologies to guide more airplane safely through crowded parts of the sky. . . . One possible corrective is to remove the government from its role. Other nations—including Australia, Canade, and Germany—have created stand-alone corporations, funded by industry, to operate their air traffic control systems. The FAA already collects a large portion of its funding directly from the industry. It could be fully funded in the same way. . . . Shutdowns cause unpredictable and lasting damage. If our elected representatives once again fail to perform their basic responsibilities, and the government again shuts down, other things will break—and the consequences will be with us for a long time.”
—Binyamin Appelbaum, “Why Is Your Flight Always Delayed? Blame Government Shutdowns“, The New York Times, Sept. 29, 2025

“Lack of competition in the airline industry stems from antitrust law enforcement. That’s what former Delta and Northwest CEO Richard Anderson suggested on the Airlines Confidential podcast this week, when he joined ex Wall Street Journal airline reporter Scott McCartney and ex-American CEO Doug Parker. Spirit Airlines is in bankruptcy. They’ve already said they’re giving up half their fleet. The whole thing was going to be flying if they’d been acquired by JetBlue, but the government stopped that. The Biden administration said they wanted those planes all flying under an ultra-low-cost model, and that’s why they blocked the JetBlue merger that would have saved Spirit.”
—Gary Leff, View from the Wing, Oct. 12, 2025

“The Artemis III mission, a key priority for NASA acting Administrator Sean Duffy, is set to launch in 2027. But given the high-stakes engineering feats planned for the mission, both people inside and outside NASA say that’s impossible—making it more likely by the day that China beats the U.S. back to the Moon. The program’s tight schedules—compounded by a massive wave of resignations at the agency—will make it ‘awfully difficult, if  not impossible’ to make 2027, another congressional staffer said.”
—The Spotlight, Politico Pro Space, Oct. 3, 2025

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The post Aviation Policy News: Protecting air traffic control and travelers from the next government shutdown appeared first on Reason Foundation.

Over the past nine years, Congress has funded a growing number of state mileage-based user fee (MBUF) pilot projects, which have had generally positive receptions from the very small fraction of a state population that participated. But state and federal elected officials are all over the map on how to replace fuel taxes, with some calling for a new federal vehicle registration fee and others wanting electric vehicles to pay twice as much per mile as petroleum-fueled vehicles pay today.

In the Infrastructure Investment and Jobs Act, Congress authorized a national road user charge (RUC) pilot project that would charge real fees. It asked the Biden administration to appoint a steering committee to design and oversee that program. The Biden White House dithered but eventually appointed that committee last year, but failed to announce the members. It has not convened, and so it has not defined the national pilot project. The Trump White House has said or done nothing about it. So there will be no results from a non-existing national pilot project to provide lessons learned for next year’s surface transportation reauthorization bill, as originally intended.

Given this lack of progress, we need a better way to actually begin this needed transition from fuel taxes to mileage-based user fees. That requires figuring out a workable approach for large-scale per-mile charges, including the rates to be charged to various types of vehicles, as well as affordable technologies.

However, to win political and popular support, transportation policymakers must also address the very real concerns of motorists, truckers, and elected officials. The most important concerns and issues about mileage fees are:

• Privacy: People fear the government—“Big Brother in your car”—tracking everywhere they go. 
• Drivers also view mileage fees as double taxation or a new tax that they’d pay in addition to the current fuel tax.
• Transportation officials are concerned about the high cost of collection compared to the gas tax.

Several years ago, I suggested that instead of beginning with some type of vehicle (e.g., EVs), we should begin with one type of roadway. My suggestion is to begin this transition with Interstates and other limited-access highways, using all-electronic tolling. This first step would address all three of the above concerns.

• Privacy: The only miles recorded would be from on-ramp to off-ramp, so there would be no data suggesting the trip purpose. Millions of people drive on tolled Interstates and turnpikes today, and the electronic tolling does not seem to raise privacy concerns.

• New tax: The answer to concerns about double taxation is to provide refunds of the fuel tax paid for the miles traveled on the newly priced highways. That’s a simple calculation that both the Massachusetts Turnpike and the New York Thruway have been doing for many years for truck fleets using those toll roads.  

• Cost of collection:  The cost of collecting fuel taxes for personal vehicles is about 2% of the revenue collected. With all-electronic tolling, the cost is as low as 5% of the revenue. By contrast, consulting firm WSP last year estimated the cost of collection for scaling up technology used in recent state mileage fee pilot projects as between $4 and $9 a month per vehicle. That is clearly not ready for prime time. So we should start where it is feasible to use relatively inexpensive all-electronic tolling.

Starting the transition to per-mile charges with limited-access highways should not be mandated by Congress. But it should be allowed by Congress in the 2026 reauthorization. Reason Foundation has recommended this as the best way to jump-start the transition from per-gallon fuel taxes to per-mile charges. If all U.S. limited-access highways were converted, that would be more than one-third of all vehicle miles of travel.

The bill should make use of an existing but never-used federal program: the Interstate System Reconstruction and Rehabilitation Pilot Program (ISRRPP). Instead of being open to only three states, the program should be open to all 50 states. And instead of allowing a participating state to convert only one Interstate, it should be able to convert any or all of them.

Potentially more controversial, but crucially important, is refunding fuel taxes for the miles driven on newly priced highways, to avoid double taxation. This is actually a good deal for state transportation departments because the rate charged on tolled Interstates is typically at least twice as much per mile as what is paid in fuel tax for driving the same highway. That’s because the toll rate must cover the capital and operating costs of the more costly limited-access highway. The state DOT would be freed from devoting any of its fuel tax money to those expensive Interstates, so those dollars would be available to do a better job of sustaining and improving state highways. (I crunched the numbers on this in a peer-reviewed paper in the Transportation Research Board’s journal, Transportation Research Record, in 2023.) A similar proposition is potentially true for federal fuel taxes, whose proceeds would no longer be needed for Interstates that transitioned to per-mile charges.

While this program would begin as a pilot test of the concept, there is good reason to expect several states to volunteer as early adopters. Over the last decade or so, the following states have commissioned detailed studies of the feasibility of converting some or all of their Interstates to toll financing: Connecticut, Indiana, Michigan, Minnesota, and Wisconsin. In addition, four states took part in a federally funded Corridors of the Future study that would have allowed rebuilding I-70 with toll financing and dedicated truck lanes (Missouri, Illinois, Indiana, and Ohio). After participating in two of these studies, Indiana this year became the first state to pass legislation for converting its Interstates to toll financing.

The first few states to take part in this mileage fee program will serve as role models for others, just as California, Florida, and Virginia have done for express toll lanes. Over the next decade or two, as states transition their limited-access highways to per-mile charging, the tech industry may develop low-cost, privacy-respecting technology for per-mile charges on all other types of roadways. And that would be the beginning of converting the other two-thirds of vehicle miles traveled to paying by the mile, rather than by the gallon.

A version of this column first appeared in Public Works Financing.

The post Starting the transition from gas taxes to per-mile charging appeared first on Reason Foundation.

• Express toll lanes’ strong performance
• Bicycles, cars, and economic productivity
• U.S. traffic congestion at record high levels
• Reforming environmental litigation
• Feds ease off driverless truck regulation
• Transit shifts to light rail and bus rapid transit
• News Notes
• Quotable Quote

Express Toll Lanes’ Strong Performance

In news that I missed when it came out earlier this year, Fitch Ratings has increased its investment-grade ratings on toll-financed express toll lanes (ETLs). In its June 24, 2025 “Peer Review of Managed Lanes” report, Fitch explains why it increased the ratings on seven of the 13 express toll lane projects that it has been tracking since they were first implemented (or in the case of two that are not yet in operation, since they had progressed far enough for data on their corridor and planned capacity being available).

The ETLs whose ratings Fitch increased are as follows:

• I-77 Mobility Partners (NC): from BBB to BBB+
• LBJ Infrastructure Group: LLC (TX): from BBB to BBB+
• 95 Express Lanes LLC (VA): from BBB to BBB+
• Riverside County Transportation Commission (SR-91): from BBB+ to A
• Plenary Roads Denver LLC (CO): from BBB- to BBB
• NTE Mobility Partners (TX): from BBB to BBB+
• Colorado HPTE (C-470): from BBB to BBB+

Two high-rated express toll lanes projects that were not upgraded this year were already at the top of the list:

• Orange County Transportation Authority (SR-91): AA-
• Texas DOT (I-35E): A-

The world’s first express toll lanes, SR-91 Express Lanes in Orange County, opened to traffic in December 1995, so their 30th anniversary is coming up. (I was present at both the ground-breaking and the ribbon-cutting, and I still have my hard hat.) At that time, popular opinion and media coverage were both skeptical: either so few people would pay to avoid congestion that the project would fail, or so many would crowd in, resulting in congestion. The same objections were raised when the Florida Department of Transportation opened its first ETLs (on I-95 in Miami in 2008). Express toll lanes have come a long way since then.

The Fitch report provides a lot of interesting details on these projects. Of the 13 that are in operation, six are managed by various government entities, and the other seven were developed and are operated under long-term public-private partnerships (P3s). Appendix D provides details under 10 headings for all 13. One of those details is the pricing policy. Those financed and operated as P3s are listed as using “revenue maximization” as their pricing policy, which the not-yet operational Hampton Roads project (a public-sector project) also plans to use. All the other government-run projects are listed as using “Blend of throughput and revenue maximization.”

With more than 60 ETL projects in operation, the largest fraction of them are conversions of HOV lanes, sometimes (as in Miami) with the addition of a second lane each way. These conversion projects are not financed by toll revenues, and since most have low capital costs compared to toll-financed ETLs that involve building new lanes, they can often cover their operating and maintenance costs from their toll revenue.

The investment-grade ratings of the revenue-financed express toll lanes reflect the public-private partnership companies’ careful selection of very congested corridors in large metro areas. The few (so far) government-sponsored toll-financed express toll lanes appear to have followed the P3 companies’ lead in selecting similar corridors for their projects.

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Bicycles, Cars, and Economic Productivity

The Economist remains my favorite source for worldwide news and analysis. But sometimes, its reporters let their opinions get in the way of facts. A case in point is a two-page article, “Four Wheels Good, Two Wheels Better” in the Oct. 11 edition. The author glibly asserts that electric bikes are transforming travel in European cities (and Montreal) and portrays this as very positive for cities and their residents.

This portrayal misses two very significant points. One key is access to jobs, and the other is how mobility relates to the economic productivity of metro areas. Since the audience for this newsletter is overwhelmingly the United States, my focus here is on access to jobs in U.S. metro areas.

For nearly a decade, the University of Minnesota’s Center for Transportation Studies (CTS) has published annual “Access to Destinations” reports, using data from the 50 largest U.S. metro areas. Their individual tables focus on the extent to which a given mode (auto, bike, transit) enables users to reach a fraction of available jobs within a given time period. I have not been able to find a CTS table that directly compares access to jobs by auto, bicycle, and transit. My Reason Foundation colleague Marc Scribner crunched the numbers from CTS’s 2023 data to enable direct comparisons between modes.

For all 50 metro areas, the average results for jobs reachable within 30 minutes are: cars 42.2%, bikes 2.1%, and transit 0.9%. In 50 minutes, cars reach 84% of jobs, while bikes reach 5.4% and transit 4.5%. The same general pattern prevails in the large majority of the 50 metro areas. For example, Kansas City residents can reach 60% of jobs by car in 30 minutes, 1.7% of jobs via bike, and 0.5% via transit. In Minneapolis, the comparable numbers for 30 minutes are 49% via car in 30 minutes, 2% by bike, and 0.8% by transit. And within 50 minutes in Minneapolis, it’s 87% of jobs by car, 5.2% by bike, and 3.9% by transit. The good news for cyclists is that in the large majority of metro areas, biking beats transit for access to jobs. However, bikes are in a distant second place after cars.

One of the most important functions of a large metro area is to provide a huge array of job opportunities for people with a very wide array of skills and experience. For this to work well, a transportation system needs to enable this for a large majority of its population. That is not possible with concepts like the “15-minute city” beloved by some urban planners.

Among those who have educated me on the relationship between transportation and urban area productivity is former World Bank urban planner, Alain Bertaud (now at NYU’s Marron Institute). In his book Order Without Design: How Markets Shape Cities (MIT Press, 2018), Bertaud explains the relationship between an urban area’s economic productivity and its transportation system.

The underlying idea is that a large urban area makes possible a far greater number of high-value connections between potential employers and potential employees. Bertaud and a number of other economists have pointed out and quantified the relationship between access to jobs (as in the CTS studies) and the urban area’s economic productivity. As Bertaud puts it, “The effective size of the labor market depends on travel time and the spatial distribution of jobs.” The ability to reach a large number of jobs in as short a time as possible is the key factor in the increased economic productivity of an urban area.

One of the first studies to quantify this effect was by Remy Prud’homme and Chang-Woon Lee (Urban Studies, Oct. 1999). They found that, for a sample of 22 French metro areas, a 10% increase in how far one can travel in 25 minutes increased the productivity of a metro area by 1.3%. Others who have done similar studies include Robert Cervero, David Hartgen, Alan Pisarski, and Steven Polzin. In a large 2012 policy study of potential transportation improvements in the metro areas of southeast Florida, I proposed and analyzed a three-county express toll lanes network. I drew on the above research to estimate the economic productivity gains from my estimated reductions in vehicle hours of travel. Based on computer modeling done for me by the regional planning agency, I estimated the projected increase in gross regional product was 0.5%, amounting to $3.5 billion per year.

These economic benefits will not be generated by increasing the commute share of bicycles and transit, at least in the large majority of U.S. urban areas. European governments can dream on about carless cities, but at the expense of continued economic stagnation.

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U.S. Traffic Congestion at Record High Levels

The Texas A&M Transportation Institute (TTI) has released its 2025 Urban Mobility Report, which analyzes traffic congestion nationwide. The study includes data from 494 urban areas. The headline message is that urban roadway travel has more than recovered from the COVID-19 pandemic years and, as of 2024, traffic congestion reached the highest levels ever recorded.

But travel has changed significantly since the pandemic. Hybrid (home/workplace) working and the ongoing increase in online purchases with commercial delivery have changed when and where travel occurs—but have not led to a reduction in congestion. And due to the latter, truck congestion is 19% worse than in 2019, compared with total vehicle congestion being up only 10%.

Here are a few summary statistics to give you an overview of the five-year change between 2019 and 2024.

The TTI report also provides graphs illustrating the reduced morning peak and a significantly increased evening peak in vehicle travel, along with an increasing weekend peak in the mid-afternoon.

The report’s second section, beginning on page 45, consists of numerous tables showing congestion specifics for very large, large, medium, and small urban areas. These tables generally compare data from 2024 with 2023. Here are a few examples from the top five urban areas in each group.

Note that for the metro areas’ congestion cost data, the metro areas are listed in order of their per-motorist congestion cost, which accounts for lower aggregated numbers in smaller metro areas, such as San Francisco and Baton Rouge.

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Reforming Environmental Litigation, Continued

In my 2024 Reason Foundation policy paper, “Reforming Environmental Litigation,” my research found that the kind of lengthy, time-consuming, and project-cost-increasing litigation was not a part of the original National Environmental Policy Act (NEPA) but was invented by appeals courts and then became part of environmental regulation. My research found that this kind of after-the-environmental-review-studies litigation is unusual among peer countries in Europe and Australia/New Zealand.

The study also documented Stanford University research on the extent and outcome of such litigation. While litigation actually stopped relatively few infrastructure projects directly, it more often led to significantly increasing their cost, which led to some being terminated—not by the litigation but by the increased cost making the project no longer viable to construct. Finally, the study summarized an array of litigation reforms suggested by think tanks and academic researchers.

I’m pleased to see that interest in reforming such litigation is picking up support. Some of this is coming from supporters of green energy projects, such as wind, solar, and high-voltage transmission lines. But my assessment of potential political support suggested that the most likely path to success would be a bipartisan coalition of groups supporting both transportation and energy/environmental infrastructure.

That’s an overly long introduction to a recent proposal from the Breakthrough Institute called “Reboot NEPA,” written by Marc Levitt, Breakthrough’s Director of Environmental Regulatory Reform.

Levitt begins by explaining what he means by a “reboot” of the NEPA legislation, signed by President Nixon 55 years ago. “Rebooting NEPA means returning the law to its originally intended purpose as a tool for environmentally informed infrastructure planning and for public engagement.” NEPA’s drafters “did not set out to create a litigation machine,” he writes, and points to NEPA’s intellectual architect, Lynton Caldwell, as emphasizing planning and public exposure as NEPA’s core purpose.

Levitt goes on to explain that the Supreme Court’s Seven County decision narrowed the scope of environmental reviews, and another decision eliminated the Council on Environmental Quality’s authority to issue regulations. So it makes sense to figure out a rethinking of how environmental reviews should  be carried out going forward, and fixing the litigation problem should be a major part of this reboot.

The paper then sets forth several specific reform proposals, as follows.

• Codify (early) meaningful public input to improve projects and mitigate impacts. Specifically, he proposes that agencies open a 60-day public comment period when they announce a planned environmental study.
• Limit project-stopping relief to cases of substantial undisclosed adverse environmental effects.
• Use AI and modern software to evaluate project eligibility for categorial exclusions, check completeness of applications, and integrate public comments into the environmental study.
• Mandate and fund an interagency NEPA platform and cross-agency data-sharing.
• Establish a centralized NEPA court or procedural review body.
• Codify Seven Counties limits on environmental review scope.
• Require agency follow-up on mitigation measures (because EPA has no such mechanism).
• Modernize EPA’s Clean Air Act Section 309 review role.
• Eliminate ineffectual page and time limits.

Some of these go into details that I am not competent to assess. But the overall thrust of this approach strikes me as reasonable and realistic. It would preserve useful public input at the start of the review process, rather than attacking environmental reviews after they have been completed. And a designated review court or body could prevent venue-shopping by project opponents.

Those are my initial reactions, as an engineer/policy analyst with no legal training. I hope these proposals lead to significant discussion and generate needed NEPA reform by Congress.

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Federal Regulators Clear Driverless Truck Barrier, For Now
By Marc Scribner

Fully automated semi-trucks without a driver onboard were put into commercial service for the first time earlier this year. Aurora Innovation began driverless operations on a route between Dallas and Houston, with plans to quickly expand in the Sun Belt and beyond. However, the company’s expansion plans were threatened by an obscure federal regulation mandating the use of roadway warning devices. Aurora requested and then was denied a waiver from the rule, which spawned a legal challenge from the company. In a turn of events, regulators decided to grant Aurora its waiver last month, clearing the path for more driverless truck deployments. But this remedy is temporary and highlights the need for durable regulatory reform to support automated vehicle deployments.

The challenge begins with a decades-old federal regulation on safety procedures when commercial motor vehicles are stopped on or along roadways (49 C.F.R. § 392.22). The rule requires that within 10 minutes of stopping, warning triangles or flares must be placed in three locations around the stopped vehicle to alert approaching motorists of the potential hazard. This is no easy undertaking when there is no driver in the truck cab to place these devices.

In Jan. 2023, Aurora and Waymo petitioned the Federal Motor Carrier Safety Administration (FMCSA) for a waiver from the warning device rule. Granting a waiver is conditioned on a finding of safety equivalence, so the companies proposed adding light beacons that would be mounted on the outside of the truck cabs and presented research showing the warning beacons would be more effective at alerting drivers than conventional warning triangles or flares.

This did not prove persuasive with FMCSA, which in Dec. 2024 denied Aurora and Waymo’s waiver request. The agency argued the evidence provided by the companies was insufficient to demonstrate safety equivalence. But just weeks later in Jan. 2025, FMCSA announced a study on warning devices, conceding that it had no empirical evidence to support the existing rule. So, companies seeking relief from the warning device requirement faced the impossible task of demonstrating safety equivalence to a nonexistent standard.

This regulatory catch-22 was not lost on Aurora, which quickly filed suit challenging the denial of its waiver. The good news is that FMCSA ultimately relented in Oct. 2025, granting Aurora its waiver. The terms and conditions of the waiver give Aurora a three-month reprieve from the warning device rule until Jan. 9, 2026. It also allows other motor carriers operating autonomous trucks to gain relief from the rule if those carriers first notify FMCSA and certify that they will comply with the terms of the waiver.

During that period, motor carriers operating under the waiver must inform the agency of any crashes involving trucks equipped with warning beacons within five days. Carriers must also file a performance report with FMCSA within 30 days of the end of the waiver’s term (or within 30 days of prematurely ceasing operations under the waiver). If FMCSA is satisfied that the terms have been met after the three-month waiver period, it will reissue the waiver.

While FMCSA’s about-face on the warning device rule is welcome, it is still a temporary solution. Given that it has already admitted that there is no safety evidence to support the underlying rule, the agency should move quickly to establish a permanent compliance pathway for driverless trucks. Reason Foundation has developed draft legislation that would order FMCSA to codify a permanent exemption for driverless trucks equipped with warning beacons.

But the legacy requirement on warning device placement is only one regulatory barrier facing autonomous trucks. Numerous other rules are written in a manner that presumes a human driver is seated in the cab operating the vehicle and should be updated. To that end, Rep. Vince Fong (R-CA) introduced the AMERICA DRIVES Act (H.R. 4661) in July.

In addition to ordering FMCSA to interpret warning beacons as compliant with the warning device rule, Rep. Fong’s bill would order the agency to clarify human-centric requirements such as those that apply to hours of service, drug testing, and commercial driver’s license do not apply to autonomous trucks. It also importantly forbids the secretary of transportation from promulgating any regulation in the future that would discriminate against or unduly burden motor carriers operating autonomous commercial motor vehicles relative to their conventional counterparts and thereby establishing a technology-neutral mandate.

Rep. Fong’s AMERICA DRIVES Act has yet to be considered by the House Transportation and Infrastructure Committee. Including it in the forthcoming surface transportation reauthorization bill due next year would go a long way in modernizing outdated federal regulations for autonomous vehicles.

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Transit Evolves from HRT to LRT to BRT
by Baruch Feigenbaum

When light rail (LRT) burst onto the transportation scene 45 years ago, it was envisioned as a way of bringing the benefits of heavy rail (HRT) at a much lower price. And that first light rail line in San Diego succeeded. However, as transit agencies soon found out, constructing light rail, was on average, about 75% of the costs of constructing heavy rail. And, in general, LRT was slower and could carry significantly fewer people. Over the last 10 years, a growing number of transit agencies began choosing bus rapid transit (BRT) instead. A recent Eno Transportation Weekly article detailed the strength of this trend.

How prolific is the change? Examining the number of projects receiving federal funding provides a clue. Several federal programs can fund LRT but the Capital Investment Grants (CIG) program is the most extensive. In 2007, 28 projects were funded by the CIG program. Fifteen were light rail projects and only one was BRT. In 2017, when 31 projects were funded, 10 were light rail, six were BRT, and five were streetcar projects. In 2024, among the 50 projects seeking CIG funding, 30, or the majority, are BRT projects. It should be noted that in 2007 and 2017 Republicans controlled the White House. In the past, Democrats have been more likely to support rail projects than Republicans. The fact that the Biden administration was such a big supporter of bus rapid transit shows how times have changed.

Nationwide BRT ridership has also rebounded from COVID-19 more robustly than LRT ridership. According to the most recent numbers from 2023, BRT ridership is at 60 million, less than 5% from its 2015 high-water mark of 63 million. LRT’s 300 million riders may sound more impressive, but its 2017 ridership peak was 500 million. Streetcar’s ridership was almost 60 million in 2017 and is now below 40 million. More new BRT systems have been added than new rail systems in the last five years, but not in proportion to the ridership numbers.

What has led to the change in project selection? The biggest factor is cost. BRT is doing to LRT what LRT did to HRT. The difference is BRT is significantly less expensive than LRT. A BRT-heavy line with its exclusive guideway costs $103 million per mile in Canada, while the Maryland Purple Rail LRT, which shares part of its running way with automobiles, costs $562 million per mile. The Metropolitan Atlanta Rapid Transportation Authority (MARTA) reduced its costs by more than 50% by swapping out an LRT line for a BRT line. 

Another factor is the flexibility. All BRT systems have running ways that give buses priority, enhanced stations, larger vehicles, enhanced use of technology, including off-board fare collection, intelligent transportation systems such as transit signal priority, and more frequent service. Many also have level boarding platforms and electronic signage. However, there are three types of BRT service, heavy, lite, and freeway. BRT Heavy operates in a dedicated lane and is best for corridors with 20 or more buses per hour. Constructing a dedicated lane has costs, which transit agencies must fund. But if there is a sufficient number of buses, the cost is justified. BRT Lite operates in mixed traffic, which means automobile drivers pay the cost for the lane. One of the things that separates BRT Lite from regular bus service is the use of transit signal priority (TSP) and queue jumps. These technologies provide buses with an early green cycle or an extended green cycle and use of a lane (often a right-turn lane) at intersections to bypass traffic. BRT Freeway operates on limited-access highways. Some lines include stops in the median, making it quicker and easier for buses to pick up passengers than if they had to exit and reenter the highway.

Contrast this with LRT. Traditional LRT, which operates in a dedicated guideway (track and overhead wires), is more expensive than a lane of pavement. Streetcars, which operate in mixed traffic, are cheaper but slower, and they cannot change lanes. As a result, streetcars often get stuck behind slow-moving vehicles. The average Streetcar speed is 4-5 mph, about the same as a fast walk. BRT Lite averages 20 mph. LRT and BRT are both heavy, averaging about 25-30 mph, while BRT Freeway averages 55 mph.

Congress also played a role. In 2005’s Safe, Accountable, Flexible, Efficient, Transportation Act: A Legacy for Users (SAFETEA-LU), Congress added Small Starts to the Capital Improvement Grants, which encouraged transit agencies to pursue smaller, less-expensive projects. In 2015, the Fixing America’s Surface Transportation (FAST) Act eliminated the requirement that CIG-grant recipients provide frequent service on the weekends. Because project planning, environmental review, and construction in transportation projects often takes 5-10 years, legislation may not lead to policy changes for 10-20 years. Hence, the recent uptick in BRT activity. 

However, some places are sticking with rail. Los Angeles Metro is adding nine miles and four stations to the A Line, part of an ambitious slate of 28 infrastructure projects the region is building for the 2028 Olympics. Kansas City is doubling the length of its streetcar system. Yet, most places have made the decision that the lower costs and flexibility of bus rapid transit make it a better choice than rail.

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News Notes

Louisiana Governor Suspends P3 Bridge’s Tolls
On Oct. 3, Gov. Jeff Landry and Louisiana DOTD ordered a stop to toll collection on the P3-developed Belle Chasse Bridge in Plaquemines Parish. The replacement bridge was developed under a long-term design-build-finance-operate-maintain P3 concession with a consortium led by Plenary. Toll revenue is the primary source of funds to pay the project’s bondholders and (they hope) a return on the equity investors’ capital. The cash toll is $2.26, and with a GeauxPass transponder it’s only 25 cents. But late fees for toll payments have aroused residents to protest to public officials. DOTD has begun negotiations with Plenary over technical issues and what residents regard as overly aggressive collection efforts on overdue bills.

FDOT Announces Project to Add 17 Miles of Express Lanes to I-4
While the Orlando portion of I-4 has 20.8 miles of express toll lanes, which are relieving considerable congestion there, FDOT announced on Oct. 21 that it will now add 17 miles of ETLs to I-4 in Hillsborough County, in the Tampa region of the state. Most of the ETLs in Orlando are two lanes each way, but funding constraints have led to this initial project adding one lane each way for the 17 miles to be added in Hillsborough County. FDOT told Construction Dive that this project has been in FDOT plans for 15 years. This initial project can fit within I-4’s existing right-of-way.

Missing Link on Capital Beltway Managed Lanes Postponed
The National Capital Region Transportation Planning Board, on Oct. 16, voted not to add the I-495 Southside Express Lanes project to the region’s long-term strategic plan. The final vote on this decision will take place on Dec. 7 by the Metropolitan Council of Governments. The reason for holding off is that Maryland officials have not approved this express toll lane’s terminating point to be across the Woodrow Wilson Bridge in Maryland. If the lanes stop short on the Virginia side of the bridge, they will accommodate far less traffic, and hence generate a lot less toll revenue, which reduces the ability to finance this missing link based on projected toll revenue, as all the rest of that network has been financed.

Toll Road to Orlando Sanford Airport Approved
The Central Florida Expressway Authority last month decided to proceed with a proposed project to add a $200 million, two-mile toll road between SR 417 and the Orlando Sanford Airport. The rationale for the project is to reduce congestion on East Lake Mary Blvd. by nearly 50%. The agency is also planning a $1.59 billion toll road designated as SR 534 to alleviate severe congestion on Narcoossee Road. Construction is planned to begin in 2027.

Waymo Reports Far Fewer Serious Accidents Than Other Vehicles
In September, autonomous vehicle developer Waymo released a report on the 45 most serious crashes in which its vehicles were involved in recent months. Its fleet of AVs has logged 96 million miles of travel as of June 2025. Waymo estimates that typical human drivers would have gotten into airbag-triggering crashes 159 times in that amount of travel. But the Waymo vehicles had only 34 airbag crashes—79% less. Similarly, for injury-causing crashes, Waymo data showed that its vehicles has such crashes 80% less often. More details are in a column by Kai Williams.

Potential North Carolina Toll Lanes on I-40 Near Asheville
The MPO of French Broad River, NC is considering a feasibility study of adding 16 miles of toll lanes on I-40 from Exit 44 to Exit 27. Interest in the concept has been sparked by the benefits of such lanes in Charlotte and Raleigh.

Pennsylvania DOT Reports Unsolicited P3 Proposals
On Oct. 1, PennDOT announced that it would welcome unsolicited proposals for P3 transportation projects, Infralogic reported. Proposals were due by Oct. 31, not enough time to prepare something large and costly, so the responses may focus more on services than on infrastructure. Proposals will be reviewed by the seven-member Public Private Transportation Partnership Board.

Louisiana DOTD Moving Forward on St. Bernard Corridor
According to an Oct. 1 news release, the Port of New Orleans and DOTD have signed an agreement to work together on planning the St. Bernard Transportation Corridor, a new roadway to connect the planned Louisiana International Terminal to the Interstate highway system. The corridor is intended for freight traffic, reducing the burden on local roads. It is also intended as a hurricane evacuation route for St. Bernard Parish and its surroundings. No cost estimates are available, but tolls have been mentioned in some discussions of the project.

Arkansas DOT Launches I-49 Extension Project
In September, ARDOT held a groundbreaking for a new bridge across the Arkansas River near Barling, AR. It is the first step in a project that will add 14 miles of four-laned I-49, at an estimated cost of $1.3 billion. The project will build I-49 between Barling and Alma. The long-term vision of Arkansas and several other states is an I-49 that extends from the Gulf Coast to the Canadian border, but many stretches remain unbuilt.

Alabama Approves Plan for $3.5 Billion Mobile River Bridge
The Alabama Toll Road, Bridge, and Tunnel Authority has approved a plan for this new toll-assisted bridge. Personal vehicle tolls will be capped at $2.50, but heavy trucks will pay $15-18. The existing causeway, two tunnels, and another small bridge will remain non-tolled. With the project no longer viable as a long-term P3, as originally planned, the bridge will be built by a design-build contractor, Kiewit. Moreover, the plan calls for removing the tolls once the bonds have been paid off—a very 20th-century model.

Pennsylvania Plans Statewide Truck Parking Expansion
On Oct. 6, PennDOT announced that it plans to add 1,200 truck parking spaces at 133 locations statewide by the end of 2026. PennDOT says the new facilities will be added near Interstate on-ramps, at weigh stations, and various other locations along highway rights of way. PennDOT Secretary Mike Carroll noted that he holds a commercial driver’s license himself and fully appreciates the need for more truck parking along major highways.

Highway Trust Fund’s Record Users-Pay Deficit
Jeff Davis reported in Eno Transportation Weekly that the federal Highway Trust Fund ran an all-time high deficit of $30.6 billion in FY 2025. That’s an increase from the previous year’s deficit of $26.7 billion. The user tax revenues increased by only $1.2 billion, but total highway and transit spending increased by $5.2 billion, “pushed upward by the massive funding increase provided by the IIJA infrastructure law,” all of which is borrowed money.  

Missouri DOT Under Way on Statewide I-70 Reconstruction and Widening
Because Missouri legislators have never approved tolling, rebuilding aged I-70 (one of the earliest-built Interstates) cannot use toll financing, as Indiana now plans to do. Instead, it is using $2.8 billion in state general funds in a decade-long effort to rebuild and widen (to three lanes each way) all 200 miles of I-70. More than a decade ago, Missouri was part of a four-state Corridors of the Future project whose consensus result was to rebuild the four-state corridor with heavy-duty truck toll lanes. The current project will spend $350 million to rebuild the portion between Blue Springs and Odessa. It is the third of eight such projects, all being paid for by general taxpayers rather than Interstate users.

Oklahoma Turnpike Widening
The state’s busiest highway, the 31-mile John Kilpatrick Turnpike, will be widened to three lanes each way and will add interchanges. The Oklahoma Turnpike Authority will spend $375 million of its toll revenue for the project, the agency announced in early October.

New Zealand Considering P3 Toll Roads
Back in June, the New Zealand Transport Ministry hired Citi to examine the potential of P3 toll roads, as the ministry considers P3 concessions for several potential new toll roads. Infralogic (Sept. 23) reported that Australian toll road company Transurban has partnered with Canadian pension fund La Caisse and NZ pension fund New Zealand Super in anticipation of potential toll road P3 concessions. Transport Minister Chris Bishop told Infralogic that the agency wants to learn of potential interest in such concessions for any or all of the three proposed toll roads.

Czech Republic Plans Two New Highway P3 Projects
Two planned motorway projects are likely to be procured as long-term P3s, according to Infralogic (Sept. 24). One is the Prague to Voracice portion of the D3 motorway; the other is the Bzenec-Breclav section of the D55 motorway. The projects will be procured as 25-30-year design-build-finance-operate-maintain (DBFOM) concessions financed based on availability payments. Both are planned to be operational by 2033.

Italian Court Vetoes Sicily Bridge Project
Politico reported that Italy’s Court of Auditors rejected the government’s plan to build a €13.5 billion suspension bridge across the Strait of Messina between Italy and Sicily. The 3.7 km suspension bridge would be the world’s longest, if built. Prime Minister Giorgia Meloni deemed the ruling “an act of overreach.”

Bridge Across Long Island Sound Proposed
Newsweek reported that a proposed 14-mile bridge between Long Island (NY) and southern Connecticut is currently being debated. Connecticut developer Steve Shapiro has revived an idea dating back to New York’s powerful Robert Moses in the 1950s. The bridge cost has been estimated at $50 billion, but Shapiro estimates that the toll revenue (at $39 per crossing) would pay for the construction in 48 years.

Tunnel Boring Machine Completes Virginia Tunneling
ENR reported (Oct. 13) that the tunnel boring machine for the Hampton Roads Bridge-Tunnel expansion project in Virginia has completed its second (final) bore for the $3.9 billion project. When completed, the project will accommodate two GP lanes and two express toll lanes in each direction.

MassDOT to Re-Procure Service Plaza P3 contract
Infralogic reported (Oct. 16) that Massachusetts DOT will carry out a new procurement competition for a company to operate and manage the 18 service plazas on the Massachusetts Turnpike. Negotiations with Applegreen, which won the initial selection, led the company to withdraw.

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Quotable Quote

“We believe an important step . . . is to reboot NEPA [National Environmental Policy Act]. The regulation has mutated far beyond what its drafters intended, becoming a vehicle for costly and overwhelmingly ineffective litigation. Comprehensive reform would place clearer bounds on the original function of NEPA—informed planning and public engagement—preventing the administrative bloat that has characterized the law since its passage. Rebooting NEPA would prevent the administrative ping-ponging that has become standard over the last two decades, as Democrats and Republican administrations each weaponize the statute for their own aims. And it will avoid the unintended consequences of some well-meaning proposals, such as environmental review page limits that merely shuffle content to report appendices, or the neutering of a regulation under a Republican president that could easily be revived on Day One of a Democratic successor.”
—Alex Trebath, Marc Levitt, and Elizabeth McCarthy, “Keeping the Window Open,” The Ecomodernist, Oct. 27, 2025 

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The post Surface Transportation News: The strong performance of express toll lanes appeared first on Reason Foundation.

• Air traffic chaos: Only in America
• DOT Inspector General post-mortem on NextGen
• Airports and “use it or lose it”
• Airlines vs. spaceships: Florida’s looming problem
• Time to reform TSA airport screening
• Don’t move the ATO to DOT
• News Notes
• Quotable Quotes

Air Traffic Chaos: Only in America  

As this article is being written, the federal government shutdown is dragging on, and reports of overstressed controllers taking sick leave are reflected in late arrivals and departures at more and more airports (following the ‘air traffic control zero” event at Hollywood Burbank Airport on Oct. 6, when there were zero controllers in the tower on the evening shift).

The tragic aspect of this fiasco is that it could not have happened in 98 countries that, since 1987, have depoliticized their air traffic control systems by taking them out of the government budget and converting them into user-funded public utilities (analogous to toll roads and electric and water utilities). New Zealand was the first, spinning off its air traffic control (ATC) system as Airways New Zealand, and transferring the International Civil Aviation Organization (ICAO)-compliant weight-distance ATC fees so that instead of being paid to the New Zealand government, they were paid directly to Airways. And since aviation is a growing industry, that revenue stream became bondable, making it possible to long-term finance ATC modernization, of both technology and facilities.

Of the 98 countries that have made this transition thus far, three can be considered to have “privatized” their air traffic control systems: Canada, Italy, and the United Kingdom. In 61 cases, the self-supporting air navigation service provider (ANSP) is a government corporation (analogous to our federal Tennessee Valley Authority and various state and local government electric, gas, and water utilities). All of these have bondable revenue streams, enabling long-term financing of new facilities and modernizing their technologies. Six countries in Central America are served by a multi-state ATC utility called COCESNA, and 17 in Africa are served by a multi-state ACESNA. You can find a complete listing of how countries provide for ATC services in Table 5 in the 2025 edition of Reason Foundation’s Annual Aviation Infrastructure Report.

Since these ANSPs are self-funded via ICAO-compliant ATC user fees, they are outside their governments’ budget and hence not affected by their governments’ fiscal problems. Our airlines, passengers, and air traffic controllers would be spared the present miseries if Congress were to depoliticize our Air Traffic Organization (ATO) by separating it from the Federal Aviation Administration (FAA) and enabling it to charge ICAO-compliant user fees and issue revenue bonds based on that revenue stream.

Notice what word I have avoided: ‘the dreaded P word.’ As noted above, only three can be described as to some degree “privatized.” Separating the air traffic control provider from the government budget is not privatization. Nor is allowing it to emulate 98 other countries in charging airlines and business jets the same ICAO weight-distance fees that those aircraft pay nearly everywhere else on the globe.

Support for converting U.S. air traffic control into a public utility has historically had bipartisan support. Vice President Al Gore was impressed by the formation of Airways New Zealand, and doing likewise in this country was a key objective of the Clinton administration’s U.S. Air Services Corporation proposal. When the plan got to a House Transportation and Infrastructure Committee hearing, I testified in favor. But neither the airlines nor the air traffic controllers supported it at that time.

But in the aftermath of a 2013 government shutdown, in which controllers (like today) went without pay until the shutdown ended, controllers’ union, the National Air Traffic Controllers Association, supported the 2016-2018 air traffic control corporation bills, along with nearly all the major airlines and the editorial support of nearly all major newspapers’ editorial boards (except The New York Times). That effort began with a blue-ribbon task force convened by the Business Roundtable, and was championed in Congress by Rep. Bill Shuster, then-chairman of the House Transportation and Infrastructure Committee.

The next FAA reauthorization is due to be debated in the 2028 fiscal year, Between the FAA’s serious safety gaps concerning the risks of helicopter routes at Reagan Washington National Airport (highlighted by the National Transportation Safety Board) and the current air traffic debacle, perhaps public opinion would support one of more of the following: (1) separate the ATO from safety regulator FAA, per ICAO policy since 2001, (2) allow the independent ATO to implement ICAO-compliant weight-distance fees, and (3) give it bonding authority, to allow long-term financing of facility consolidation and large-scale technology replacements. Calling that “privatization” would be a lie. It would follow the global trend of air traffic control modernization. This change is long overdue in the United States.

P.S.: Not everyone remembers that President Donald Trump’s 2018 infrastructure plan included a call for air traffic reform, and Trump supported Shuster’s House bill via a White House event at the time. Politically, if Trump were to renew that part of the plan, he might encourage MAGA Republicans to take this idea seriously, and it could also be appealing to some Democrats.

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DOT Inspector General Post-Mortem on FAA’s NextGen

On Sept. 29, the Department of Transportation (DOT) Office of Inspector General (OIG) released what it calls a “capstone memorandum” on the FAA’s more than 20-year NextGen lifespan. It draws on 50 audit reports OIG produced, beginning in 2005. While there is nothing “new” here, pulling this all together amounts to a devastating critique of the much-touted NextGen program that was supposed to reinvent U.S. air traffic control.

The planned $36 billion effort (by the FAA and U.S. airlines) was intended to transform the system via advanced technology by 2025. Overall, this summary report estimates that by the end of last year, NextGen had achieved only 16% of its intended benefits. It also notes that despite the 2024 FAA reauthorization legislation calling for the FAA to “operationalize all key NextGen programs and terminate the Office of NextGen by the end of 2025,” the FAA will continue to deploy several NextGen systems over the next three years.

Here are a few conclusions set forth in OIG’s post-mortem. The first of these is that “FAA is delivering a less-transformational NextGen than originally envisioned, resulting in reduced benefits.” Early on, the Joint Planning & Development Office estimated $213 billion in benefits by 2025. FAA has on multiple occasions presented (ever-downward) benefits estimates, with the most recent (2024) being somewhere between $36 and $63 billion. That compares with an actual number, by the end of 2024, of just $9.9 billion. OIG also notes that the benefit estimates depend in part on airlines equipping their fleets with new technology, such as DataComm, which is far from complete.

Another key finding is that “FAA is currently implementing a version of NextGen that will be less-transformative than the original vision.” Instead of fundamentally transforming how air traffic is managed, as the National Research Council pointed out in 2015, the FAA had switched to a NextGen outcome based on “replacing and modernizing aging systems.” In most cases, “programs would remain nearly identical to existing capabilities.” The FAA also removed the NextGen Future Facilities program, which was intended to consolidate and modernize ATC facilities.

Another key finding is that “Many key programs and capabilities are over budget and delayed until 2030 or beyond. The report cites many examples, such as the delays and downsizing of the Terminal Flight Data Management program, which is not only late but has been scaled back from the planned 89 airports to only 49 (meaning only those 49 will get electronic flight strips for tower controllers; the others will still be stuck with paper flight strips).

Summing up, the report says, “Overall, FAA has delivered a delayed, over-budget, and less-transformational NextGen than originally planned. Many challenges continue to persist, even as FAA transitions to its new modernization plans in 2025.”

The OIG report also provides a set of lessons learned from the NextGen fiasco. The first is that FAA has a problem developing and implementing realistic long-term plans and assessing risk—and that this is due to a lack of meaningful requirements for projects (a subject that has been discussed in this newsletter—and this issue’s Quotable Quotes). Vulnerabilities in FAA acquisitions include not establishing fair and reasonable pricing, not promoting competitive procurements whenever possible, not mitigating against conflicts of interest among award-selecting officials, and not establishing effective contract management.

Another ongoing problem is sustaining “legacy systems” that were supposed to be replaced by NextGen systems. As the FAA’s independent 2023 National Airspace Safety Review Team report explained, the cost of maintaining obsolete systems (often with no spare parts available) eats up a significant proportion of facility and equipment budgets that were intended to pay for new technology. The report does not point out that if the Air Traffic Organization (ATO) had the kind of revenue bonding authority that airports have, it could finance new technology and implement it across the system within a year or two, rather than having to dole out the new tech in dribs and drabs over 15 or more years.

There is more, but I will stop here, simply to note that the much-hyped “Brand New ATC System” does not address any of these shortcomings, so don’t expect it to be more successful than NextGen.

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Airports and “Use-It or Lose-It”

A Chicago Tribune story crossed my screen on Oct. 2, “United Airlines Gets Additional Gares at O’Hare, while American Loses a Few: Competition Keeps Fares Lower.” As you may know, Chicago O’Hare (ORD) is a rare case where two major airlines each maintain a hub. Each would prefer to offer more flights than the other, to offer passengers more choices of destinations and/or frequencies. In the old days of long-term lease-and-use agreements, airlines sought to lock in control of as many gates as possible for many decades. Critics rightly referred to it as gate-hogging.

In the last several decades, we’ve seen an evolution in how U.S. airports handle gates. I’m not aware of any U.S. airports that assign gates dynamically, as I’ve experienced at some European airports (where you don’t know your departure gate until about 30 minutes before boarding time). But a growing number of U.S. airports have shifted to more-flexible gate assignments. According to the Tribune article, ORD changed to a “use-it-or-lose-it” provision in its airline use agreement in 2018. Each year, gates are allocated to airlines based on their use the previous year. Under that “use-it-or-lose-it” policy, starting this month, United will gain five more gates while American will lose four.

For a relatively recent example of gate-hogging, I recall an Atlanta trip where I ended my business early and got to Hartsfield (ATL) about three hours before departure time. When I checked the board after getting through TSA, I saw my gate already listed with my Delta flight number. I did not see any earlier flight to my destination, but I decided to spend my time waiting in the DL concourse where my gate was. To my surprise, when I got to the gate, it was empty—and it remained that way for about two hours more while other flights arrived and departed. That seems like gate-hogging to me.

In a landmark study from the National Bureau of Economic Analysis (NBEA) that I wrote about in the April 2024 issue of this newsletter, I learned that in a study of 2,444 airports worldwide, the ones that were being managed under long-term private concessions that included an infrastructure investment fund had more airlines, more airline competition, lower average fares, and higher productivity by several measures than other airports. Clearly, U.S. airports on average could achieve some of these gains by operating them more like businesses (which is what the infrastructure funds bring to the table, in addition to more robust long-term financing).

Another aspect of productivity (or lack of same) is how nearly all airports deal with more flights than their runways can handle. The landing slot system widely used in Europe (and some other countries) generally begins by grandfathering in the airlines and their slots, which represent the status quo at the time the system is implemented. What a way to intervene on the side of “in’s” at the expense of “out’s.” And many slot-controlled airports have a loosely enforced “use-it-or-lose-it” provision; a slot-holder is considered to be fully using its slot if it flies 80% of what full use would be.      

I have long argued that a far more economically productive variable runway pricing system would increase an airport’s productivity and foster competition (see my co-authored 2007 paper, “Congestion Pricing for the New York Airports“). The only airports that have even tiptoed into variable pricing are London’s Heathrow and Gatwick, which have peak and off-peak rates, plus noise charges.

The reformist government in Argentina has recently altered its conventional slot system at Buenos Aires’ Jorge Newbery Airport. The new rules allow airlines to trade slots under the supervision of a regulator and a “silence-positive” provision, which ensures that if the facilitator fails to take action on a slot request within a required period, the change is approved. These are small changes. But if the current libertarian-oriented government wins re-election, I would not be surprised to see more serious reform—perhaps even variable runway pricing.

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Airlines vs. Space Ships: Florida’s Looming Problem

As a life-long “space cadet,” growing up with science fiction and closely following the Apollo Moon landings, I watch SpaceX Starship launches and am a big fan of how SpaceX’s innovation continues to slash the cost of getting payloads into space. But as a Florida resident and still a frequent flyer, I stand to be personally affected by the coming growth of space launches and recoveries from Florida’s spaceports at the Cape.

Next year alone, SpaceX plans 120 Starship launches from Florida—76 from Air Force Space Launch Complex 37 and another 44 from the Kennedy Space Center Launch Complex 39-A. Assuming most or all 120 succeed, in addition to 120 launches, there will be up to 240 returns—of both the Starship itself and its Super Heavy booster. In addition, in the near term, the company expects to launch (and mostly recover) 50 or more Falcon 9s (though the company plans to phase down Falcon 9s as Starship matures).

The Air Force and FAA have conducted environmental impact studies of these launch and recovery operations, as well as the gradually increasing volumes of Blue Origin’s New Glenn launches and recoveries. One major impact is on (mostly) north-south air travel between the Northeast/Midwest and Florida. This greatly increased space flight activity will ramp up the operations of the Space Data Integrator at the FAA Command Center in Warrenton, VA.

How many flights will be affected on, say, a Starship launch day? Orlando Sentinel reporter Richard Tribou cited a federal report estimating that as many as 12,000 commercial flights per year could be delayed due to increased launch activity at Cape Canaveral.

Based on launch/recovery plans, plus expected telemetry data, FAA staffers must define and refine the “aircraft hazard areas” for each launch and each recovery. The volume of these will increase dramatically next year. In a series of articles in the Orlando Sentinel, reporter Tribou reported that SpaceX says these aircraft hazard areas “are extremely conservative by nature and are intended to capture a composite of the full range of worst-case outcomes, but not any single real-world operation.” The company anticipates that the “actual, implemented areas will be far smaller in geographical scope and far shorter in duration, validated by the robust flight data we are building.”

Needless to say, safety is the FAA’s number one priority as the federal aviation safety regulator. So it is likely to err on being conservative, rather than taking chances on some kind of air/space disaster that could have been prevented.

I don’t have an answer to this dilemma, but I want to bring up a subject that’s not being mentioned thus far in this debate: paying for the airspace used. Worldwide, airlines and business jets pay ATC user fees for the services they receive. They paid nothing in the early days of aviation, but once a complex, costly ATC system was brought into existence, it made sense for those who benefitted from it (rather than all taxpayers) to pay for its capital and operating costs.

When it comes to in-atmosphere launch/recovery traffic, there are currently no user fees—but there should be. If 400 airline and business jet flights are delayed due to space launch/recovery operations, what is the cost to those airlines and their passengers? This is what economists call an externality, and one way to deal with externalities is to price them. I have no idea what the cost to aircraft operators will be from launch/recovery delays, but it’s time for economists to start figuring this out. Space launch companies would certainly be motivated to invest more in precision launch and recovery operations if the use of this valuable airspace were no longer “free.” And in response to such prices, launch companies might figure out ways to provide the FAA with real-time data on flights, so that the FAA might be able to reduce the size and duration of hazard warning areas.

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It’s Time to Reform TSA Airport Screening
By Marc Scribner

The impact of the October government shutdown on the air traffic controller workforce has received wide attention owing to the travel delays caused by shuttered FAA facilities. If the shutdown continues and federal employees go unpaid, we can expect additional travel chaos from the TSA’s frontline security screeners calling out sick or quitting. As with the FAA’s Air Traffic Organization, airport security screening is too important to be left to the political strife of Congress. Instead, security screening operations should be devolved to individual airports, with the TSA reorganized as a dedicated regulatory agency to oversee this reformed system. To that end, Reason Foundation has produced draft legislation to implement these reforms.

Forbes reported on Oct. 7 that one-fifth of the mid-Atlantic screening workforce had called out sick, according to the regional union representative. As of the second week of the shutdown, TSA checkpoint problems had yet to materialize. However, this may change soon if the government shutdown continues and TSA employees do not receive their full paychecks, as the agency has warned. During the 35-day shutdown in Dec. 2018 and Jan. 2019, airports in Miami and Houston were forced to close terminals because TSA could not staff security checkpoints.

Despite a major pay increase in 2023 that was credited with reducing annual attrition rates from 20% to 11%, TSA screener turnover is still roughly double the average federal employee attrition rate. Their comparatively low wages and monotonous workplaces make TSA screeners more likely to depart for better jobs even when the government is meeting payroll. A single missed paycheck is likely to lead many screeners to call out sick and seek employment elsewhere to address their sudden financial hardships.

This is no way to run airport security screening. Peer countries do not rely on a single national agency to self-regulate and provide screening services that are then funded by the federal legislature. The current TSA dual provider-regulator model presents an inherent conflict of interest, while its monopoly and dependence on general government funding creates a high-cost single point of failure. To mitigate these inherent risks of the status quo TSA airport security model, three reforms are necessary.

First, the provision of airport security screening services should be separated from the TSA, which would be converted into a dedicated security regulator. Screening operations would be devolved to individual airports. This reform is in keeping with global best practices established by the International Civil Aviation Organization. Annex 17 of the Convention on International Civil Aviation, commonly known as the Chicago Convention, states that parties to the agreement—which includes the United States as a founding signatory and the treaty’s depositary—should ensure the “independence of those conducting oversight from those applying measures implemented under the national civil aviation security programme.”

Second, airports newly responsible for security screening should be allowed to contract directly with private security providers. Two months after the Sept. 11 terrorist attacks, the Aviation and Transportation Security Act of 2001 nationalized airport security screening operations previously provided by airlines. The law includes a provision that allows for contract screening—the Screening Partnership Program (SPP)—but this program is fundamentally flawed.

Today, airports seeking SPP screening are given merely an advisory role in a TSA-dominated process that selects, approves, and then funds eligible private screeners. Airports are not party to SPP screening contracts and have no control in the process beyond their initial decision to apply to the TSA. As a result, SPP has been an unattractive option for most airports, with just 20 airports currently enrolled in the program. Instead, airports should be allowed to contract directly with private security providers, who would be selected from an approved vendor list maintained by TSA. Airports should also be allowed to self-provide screening, subject to TSA certification, just as is required of private screening companies.

Third, airports should be authorized to directly collect passenger security fees to pay for screening services. Airports would understandably oppose an unfunded mandate to provide security screening. This dynamic is what led to the creation of the TSA in the first place, with airlines lobbying for a federal takeover of the screening services they had previously been required to provide at their own expense.

To address this legitimate concern, Congress should reform the existing security service fee assessed on airline tickets, commonly called the 9/11 Security Fee. Currently, airlines are required to collect security fees and remit the revenue to the TSA. However, since 2013, Congress has raided one-third of fee revenues for deficit-reduction purposes. Instead, these fees should be directly remitted to individual airports to cover the costs of the screening services provided, much like the passenger facility charge is collected today for airport capital project financing.

Reforming the TSA to a model widely used in affluent European and Asian countries would permanently insulate airport security screening from the risks posed by government shutdowns. It could also help advance improvements to practices and technologies, leading to a better passenger experience. And it could do all of this while saving federal taxpayers money.

Reason Foundation’s draft TSA Reform Act is available here.

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Don’t Move the Air Traffic Organization to the DOT Headquarters

As noted in last month’s issue, the FAA has announced plans to move a portion of its Washington, D.C. staff from the two aging FAA office buildings to DOT headquarters, often referred to as “Navy Yard.” Because there is not enough office space at the Navy Yard, the FAA administrator needs to decide who moves there and who relocates to an unspecified “elsewhere.”

Politico Pro reported on Oct. 3 that a Sept. 30 document they reviewed calls for moving the Air Traffic Organization staff to Navy Yard’s East building, by around Dec. 10.

This is the worst choice. For several decades, dating back to the Clinton administration’s reinventing government efforts, it has become clear that the ATO is a high-tech service business that does not belong embedded in the national aviation safety regulator. There is ample evidence that FAA safety regulation of the ATO is not as rigorous as its safety regulation of airlines, airports, flight schools, repair stations, etc.

Consequently, the ATO should be functionally and physically separated from the aviation safety regulator, eliminating the current built-in conflict of interest. Given the FAA’s failure to take seriously a host of pilot reports of the safety hazard presented by Helicopter Route 4 crossing under the final approach to DCA runway 33, I’m hoping the NTSB will recommend organizational separation between the ATO and FAA.

The responsible decision would be to move the ATO outside DOT, to a location adjacent to the Command Center in Warrenton, VA. That is already a key ATO facility, and if it does not have the space to house the D.C.-based ATO staff, nearby office space could be leased. The rest of the FAA’s D.C.-based staff would be appropriate to move to the Navy Yard.

One other benefit of moving the ATO out of FAA would be to comply with ICAO policy that, since 2001, has called for organizational separation between a country’s aviation safety regulator and entities such as airports and air traffic control providers. The United States is one of the last major countries that has failed to adhere to this principle.

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News Notes

Isaacman Again in Line for NASA Administrator
Bloomberg and Politico have reported that President Trump has met with Jared Isaacman to discuss re-nominating him as NASA Administrator. This would be a very positive step, as I explained in the July 2025 issue of this newsletter, based on a two-page interview with Isaacman in the June 30-July 12 issue of Aviation Week. Read one or both to see why this would be such a meaningful change for NASA.

Saudi Arabia’s First Digital Control Tower
On Oct. 1, Saudi Arabia’s General Authority of Civil Aviation approved the country’s first remote digital tower, to be located in Jeddah at King Abdulaziz International Airport, to control traffic at A1Ula International Airport. Saudi Air Navigation Services (SANS) is working with Spanish company Indra to implement the project. If SANS can do this, why can’t the FAA?

Arora Group Submits $33 Billion London Heathrow Plan
Arora’s specially created company, Heathrow West, formally submitted its proposal to the U.K. government on Sept/ 2. The plan would include U.S. company Bechtel, whose global airport track record includes the new second airport for Sydney, Australia, and many others. The Arora proposal competes with Heathrow Airport’s own $66 billion plan (which would build the new runway over the M25 motorway) by proposing a shorter new runway instead. Both plans aim to complete the expansion by 2035.

New NOTAM System Getting Trial Run
Politico Pro reported (Sept. 30) that the FAA has begun a trial period of its new Notice to Airmen (NOTAM) system with “early adopter stakeholders” for testing and validation. The new system has been developed, under FAA contract, by Virginia-based CGI Federal. FAA Administrator Bryan Bedford said the replacement system is “resilient, user-friendly, and scalable. The current schedule calls for the new system to replace the antiquated NOTAM system in Feb. 2026.

Islip Shortlists Three Teams for Airport Terminal Project
Long Island’s MacArthur Airport (ISP) is in the market for a new terminal. The three pre-qualified firms submitted their proposals during the first week of October, reports Eugene Gilligan in Infralogic (Oct. 3). The airport owner (Town of Islip) hopes to select the winner by February and execute a pre-development agreement with the winner. ISP is located adjacent to the Ronkonkoma railroad station, which provides service to both Penn Station and Grand Central Station in Manhattan.

Gatwick Second Runway Approved
U.K. Transport Secretary Heidi Alexander has formally approved London Gatwick Airport (LGW) converting the taxiway that parallels its runway into a second runway. That would allow for 80 million annual passengers compared with 43.2 million in 2024. U.K. Chancellor Rachel Reeves said, “A second runway at Gatwick means thousands more jobs and billions more in investment for the economy.” Green Party leader Zack Polanski opposes this decision, saying that “Aviation expansion is a disaster for the climate crisis.” LGW is 50.01% owned by Vinci Airports, the world’s fifth-largest airport firm, according to the Reason Foundation’s “Annual Aviation Infrastructure Report: 2025.”

American to Remove Gate Bag Sizers
Starting this month, American Airlines plans to start removing the bag sizers at its boarding gates, billing the change as “simplifying the boarding process.” My impression (as a two-million-mile AAdvantage member) is that this change will more likely lead to longer delays in getting the boarding door closed, because more passengers will bring aboard too-large bags that will have to be removed at the last minute.

NASA Plans February Launch of Artemis II Mission
On Sept. 23, NASA announced that it plans to launch its huge SLS rocket for only the second time, carrying four astronauts on a 10-day trip around the Moon. SLS’s Orion capsule had a troubled re-entry on its first (uncrewed) launch (in 2022) and has not been modified. The Artemis 2 orbit will take it 5,000 miles past the Moon before swinging back toward Earth for its return. As noted here last month, each Artemis flight costs $4 billion.

First SpaceX Starship Version 3 Will Launch near Year-End
The new version of Starship will make its debut launch in either December or January, reported Aviation Week Network on Sept. 16. The new version has an improved upper-stage heat shield as well as other improvements. It will also be the first Starship equipped for propellant transfer in space, a key capability for its role in the Artemis program.

Blue Origin Planning Second New Glenn Launch
Jeff Foust reported in SpaceNews that Blue Origin is preparing its second New Glenn rocket for launch this month. Its payload will be a NASA Mars mission. The company will try again to recover the reusable first stage by landing it on a barge. New Glenn is a potential provider of a Moon lander for NASA, as is the SpaceX Starship. The Orlando Sentinel separately reported the opening of Blue Origin’s $3 billion New Glenn assembly plant and launch site on Merritt Island, Florida.

Adani Plans Additional $3.4 Billion to Expand Mumbai Airport
Infralogic reported (Oct. 7) that Adani Group is planning to invest $3.38 billion to expand the capacity of Navi Mumbai International Airport in India, primarily for the new airport’s second terminal, which is planned to open in 2029. The new investment is a combination of equity and debt. The project is a long-term public-private partnership (P3), in which the Maharashtra government holds 26%.

FAA to Require 25-Hour Cockpit Voice Recorders
A new air safety regulation, now in final review by OMB/OIRA, will require all newly manufactured commercial aircraft to be built with 25-hour cockpit voice recorders. The National Transportation Safety Board has long recommended this change, since in a number of accidents and other mishaps, the current two-hour recorders get written over by new material and are then useless in NTSB investigations. Unfortunately, there is no requirement for airlines to retrofit 25-hour recorders in their existing fleets.

Beta Planning a Larger Electric Hybrid
Electric vertical takeoff and landing (eVTOL) developer Beta Technologies has unveiled plans for a 19-seat hybrid eVTOL, as a follow-up to its six-seat Alia eVTOL. Like the existing Alia, the new aircraft will have wings. Thanks to its hybrid propulsion system, the new 19-seat aircraft is expected to have a much longer range than electric-only VTOLs. Its existing six-seat Alia is designed to make conventional takeoffs as well as vertical ones. To raise funds to develop the new 19-seat hybrid, Beta has filed with the SEC for an initial public offering of shares. Aviation Daily notes that Alia’s MV250, aimed at military missions, has a range of 250 nm. Aviation Week (August 11-21) notes that Archer, Joby, and Vertical are also developing hybrid-electric aircraft with longer range and higher payloads.

China Leads the Pack in Advanced Air Mobility
SMG Consulting, relied on by Aviation Week for assessing the viability of eVTOL and related aircraft, now ranks Chinese developers EHang and Volocopter in first and second place in its 2025 rankings. In the next four places are U.S. companies Beta, Joby, and Archer, followed by two more Chinese and two more U.S. developers (Robinson and Wisk).

Archer and Joby Bid for Bankrupt Lilium’s Assets
According to Aviation Daily’s Jens Flottau, the two U.S. eVTOL developers have joined Advanced Air Mobility Group to bid for the intellectual property of now-defunct German eVTOL startup Lilium. A decision by Lilium’s creditor committee is expected by the end of October. 

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Quotable Quotes

“The bottom line is that there will be no cancellation of SLS, Orion, or Lunar Gateway in the near future. Congress wants all three and is willing to throw money at them for years to come to keep them alive. Though [SpaceX’s] Starship might delay things a bit, as Bridenstein claimed. The reason China will get its lunar base built first will be because of SLS, Orion, and Gateway, not Starship. SLS and Orion are inefficient, cumbersome, and too expensive, and Gateway puts our assets not on the Moon but in space. You can’t build a manned lunar base with a rocket and capsule that launches at best once a year, carrying four people. Nor can you do it building a lunar space station in an orbit that makes landing on the moon more expensive and difficult.”
—Robert Zimmerman, “Yesterday’s Senate Hearing on Artemis: It’s All a Game,” Behind the Black, Sept. 4, 2025

“The FAA has 14 business units, heavily siloed, intensely fortified. I do think the [DCA] incident was a wake-up call for the agency that we have to think differently, act differently, and move quicker with modernization . . . . We’re innovating at about the same pace as aircraft manufacturers are redesigning. But the world is changing. Demand for the [National Air Space] is growing exponentially, and our innovators are innovating at about the pace of an iPad, not the pace of the new mid-market aircraft. The FAA also has to increase its agility, which is going to create some challenges for us.”
—FAA Administrator Bryan Bedford, in Sean Broderick, “FAA’s Bedford: NAS Modernization Not Just About Technology,” Aviation Daily, Sept. 10, 2025

“Over the years, FAA’s acquisition and airways facilities organizations have experienced a significant cultural shift, moving away from a mission-driven, engineering-centric approach. Once supported by a robust systems engineering capability via the Martin Marietta Systems Engineering and Integration (SEI) contract, the organization now faces significant challenges due to diminished engineering leadership and oversight structures that lack technical depth and NAS experience. Issac Asimov once said, “Science can fascinate, but if you want something built, call an engineer.” This shift has led to delays, cost overruns, and a loss of mission focus, putting efficiency ahead of safety and security. To restore effectiveness, FAA must appoint a deeply and broadly NAS-experienced Chief Systems Engineer, who will lead the re-establishment of a world-class systems engineering organization informed by current and continuous operations research. . . . Reinvesting in experienced systems engineering and engineering program acquisition management will be essential to modernizing the NAS’s aging systems and will create a cultural shift that will once again attract the very best leaders back to FAA.”
—Mitch Narins, Strategic Synergies LLC, retired from FAA after more than 26 years as program manager and eventually Chief Systems Engineer for Navigation

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The post Aviation Policy News: Government shutdown causes air traffic control problems appeared first on Reason Foundation.

The controllers had called in sick due to the federal government shutdown. During the shutdown, air traffic controllers are not being paid for their often six-day, 10-hour-per-day work weeks. While President Donald Trump has floated the idea of not paying all federal workers back pay this time, controllers have typically received back pay for time worked during shutdowns.

All evening long, flight arrivals and departures at Burbank Airport were delayed, as the FAA’s regional TRACON (Terminal Radar Approach Control) facility took over for the local tower and handled the reduced traffic into Burbank. Outgoing flights from Burbank were delayed an average of two and a half hours.

Air traffic controller staffing shortages were also slowing flights at airports in Las Vegas, Denver, and Newark, among many others.

That’s the bad news. The good news is that this did not have to happen and can be prevented from happening again.

In fact, this kind of situation cannot occur in nearly 100 other countries around the world, because those countries fund air traffic control, much like airports, from customer user fees and long-term revenue bond financing.

By contrast, the FAA, which includes the country’s Air Traffic Organization, is mostly funded by federal aviation user taxes. Because they are taxes, the money goes to the federal government, and Congress must appropriate the funds for FAA and the Air Traffic Organization. When Congress fails to pass budgets and shuts down the federal government, even though airline passengers continue to pay their ticket taxes, the money does not reach controllers or the air traffic system.

This system is also a significant reason why American air traffic control technology is outdated and lags behind that of large air traffic control systems in countries such as Australia, the United Kingdom, Canada, Germany, and others.

In 1987, New Zealand separated its air traffic control provider from the government, which enabled its new Airways Corporation to retain the revenue from the user fees paid by the airlines, just like electric and water utilities charge their customers. The success of Airways New Zealand led to dozens of countries doing likewise within a decade. Today, nearly 100 countries receive their air traffic control services from air navigation service providers, which are funded directly by user fees paid by airlines and business jets.

With their own revenue source, these air navigation service providers are unaffected by government shutdowns. They are also better able to fund long-term projects and technological improvements because they aren’t beholden to the dysfunctional political battles in Congress that determine aviation funding every few years.

The New Zealand success inspired Bill Clinton’s presidential administration to study and then recommend creating a U.S. counterpart, which was detailed in a large-scale study by the office of the U.S. Secretary of Transportation. Unfortunately, opposition by private pilot groups killed it.

Those ideas were revisited after the 16-day shutdown in 2013 caused air traffic control problems and closed the academy that trains new controllers. That shutdown prompted the National Air Traffic Controllers Association to support efforts to transfer the nation’s air traffic control system from the FAA to a self-supporting nonprofit corporation.

This effort was championed by then-Rep. Bill Shuster, who chaired a House transportation committee that twice passed the reforms. President Donald Trump endorsed that plan during his first term, but the administration didn’t push it, and the bill never even made it to the House floor.

Today, the primary opponents are members of Congress who don’t want to lose control over the system and the business jet community, which doesn’t want to pay user fees. But it is still possible to take air traffic control out of the federal budget, insulating it from recurrent government shutdowns.

It’s time for the U.S. to join the rest of the world in recognizing that governments should regulate safety but not run air traffic control, which is a high-tech business that should be directly funded by fee-paying airlines and operated like a public utility or nonprofit corporation.

A version of this column first appeared at The Orange County Register

The post Only in America: Government shutdown causes air traffic control problems appeared first on Reason Foundation.

Airports Council International maintains a database indicating that in Europe, 75% of passengers use privatized airports. In Latin America, the figure is 66%, and in the Asia-Pacific region, it’s 47%.

Here in the United States, only 1% of passengers use privatized airports. The public-private partnership lease of the San Juan, Puerto Rico, airport is responsible for that 1%.

This significant disparity has puzzled many people in both industry and government. So, I was pleased to receive an invitation last fall from Ed Glaeser of Harvard University to submit a proposal for a research paper on a current problem and a potential policy-change solution for it. The problem I suggested was the dearth of U.S. airport privatizations. My proposal was one of a half-dozen that were accepted. The project was managed by the American Enterprise Institute and the Brookings Institution, and the paper went through rigorous peer review. It was released in August, and I hope it has a significant impact on improving airports. 

In the years following the privatization of the British Airports Authority by former Prime Minister Margaret Thatcher in 1987, there was significant interest in enabling similar transactions to take place in the United States. In 1996, Congress enacted an Airport Privatization Pilot Program under which five airports could be P3-leased. (Outright sale of U.S. airports was and remains against federal law.) 

A handful of small airports were P3-leased, but none were successful. In 2012, Congress made modest changes to the Airport Privatization Pilot Program (APPP). Under this program, Chicago attempted to lease Midway International Airport twice, and Puerto Rico successfully leased Luis Muñoz Marín International Airport in San Juan. 

Eventually, in 2018, Congress substantially revised the program, renaming it the Airport Investment Partnership Program (AIPP). The most important change was that the (generally up-front) lease payment can now be used by the airport owner’s jurisdiction (city, county, or state) for any governmental purpose, rather than being limited to being spent on airport improvements. 

Many of us thought this would finally lead to airport public-private partnership leases, but the only serious effort to lease one was St. Louis Lambert International Airport. In 2018, the Lambert effort was terminated by the city due to opposition from other governments in that metro area. This was despite very significant private-sector interest in a lease and support from the airport’s airlines.

My research topic was to review the literature on U.S. airport privatization and come up with policy changes that could open the door for long-term public-private partnership (P3) leases. I reviewed a major Transportation Research Board study from 2012 and several reports on the topic by the Governmental Accountability Office (GAO), Congressional Research Service, and others. One theme stood out to me: the non-level tax playing field between the United States and the rest of the world. U.S. airports are financed via tax-exempt bonds, which do not exist in Europe, Latin America, or the Asia-Pacific countries. This problem had not been addressed in the succession of changes made by Congress relating to airport public-private partnerships.

Fortunately, I had also saved the text of the major 2018 White House infrastructure report researched and written by D.J. Gribbin during the first Trump administration. I’d had occasional discussions with Gribbin while he was serving as the leading strategist of President Donald Trump’s $1.5 trillion infrastructure plan, and I remembered that it addressed the tax-exempt bond situation. The transportation portion of Gribbin’s report was also released as a report by then-Secretary of Transportation Elaine Chao, and it included the same discussion of tax-exempt airport bonds as a barrier to U.S. airport public-private partnerships.

In the new report, I propose two federal tax policy changes that were discussed in the White House report: (1) allow an airport’s existing tax-exempt bonds to remain in force, but with subsequent debt service becoming the responsibility of the private-sector partner, and (2) expand the availability of surface transportation tax-exempt private activity bonds (PABs) to airports and seaports, as proposed in 2014 by a bipartisan House Committee on Transportation and Infrastructure working group on P3s.

Congress’s Joint Committee on Taxation (JCT) and the U.S. Treasury Department generally oppose any expansion of tax-exempt debt. Their stated reason is their assumption that anything financed via expanded tax-exempt debt would have otherwise been financed via taxable debt—hence, the government would miss out on tax revenue if tax-exempts were expanded.

For U.S. airports, this is simply incorrect, as I explain in the report. Treasury receives no taxable revenue from airport finance today, since nearly all airport bonds are tax-exempt. No new U.S. airport public-private partnership leases are taking place, so Treasury is not getting any tax revenue from non-existent leases. 

Under the changes I propose, if airport P3 leases start to occur, there would be no immediate increase in federal tax revenue. However, as for-profit public-private partnership firms enter the U.S. airport market, assuming they are successful businesses, they will be subject to federal corporate income taxes. This could develop into a new U.S. industry, similar to what has occurred in surface transportation, thanks to long-term public-private partnerships for highways and transit. Today, the United States has a whole new tax-paying corporate sector of highway/transit public-private partnership companies, like what could develop as a new airport P3 industry in the years ahead.

The most important question is whether these tax changes would actually lead to more than the current single long-term airport public-private partnership lease. 

In my new report, I draw on my 2021 Reason Foundation study on airport P3 leases to estimate the impact those tax changes would make. Under current law, in an airport P3 lease, the airport owner (city, county, or state) must pay off its outstanding bonds before the deal can be finalized. 

In Europe, the airport owner receives the estimated gross value of the airport, generally based on a multiple of its EBITDA (earnings before interest, taxes, depreciation and amortization). But for a U.S. airport, under current law, the owner would receive the net value (gross value minus the bond payoff). That can make a significant difference in what can be considered as a major one-time financial windfall that the city, county, or state can use for any governmental purpose, under the current AIPP law.

For example, based on my 2021 analysis, which estimates the market value of 31 large and medium U.S. airports, for Hartsfield–Jackson Atlanta International Airport, the gross up-front payment would be $9.2 billion, compared with a net payment of $6.1 billion.

For the Los Angeles International Airport, the gross value of $17.9 billion contrasts with a net value of $10.6 billion. Similarly, for San Jose Mineta International Airport, the gross value is $2.5 billion versus $1.3 billion in net value. 

To make this even more tangible, the report compares the one-time windfall for each of 31 airports with the unfunded liability of that jurisdiction’s public employee pension funds. Atlanta, Los Angeles, and San Francisco are some of the cases with the gross value being more than sufficient to fully eliminate their pension system’s unfunded liabilities. In many of the 31 large and medium airports examined, the payment would make a significant dent in the jurisdiction’s public pension debt. 

Still, the question remains: would any U.S. airport owner consider such an airport lease to be worthwhile? 

I quote a former director of Miami International Airport explaining to Sadek Wahba of I Squared Capital how much elected officials enjoy micromanaging airports. That’s a real phenomenon, but this leads me to a question: What do elected officials think an airport P3 is? 

My hypothesis is that most think a P3 is a de facto sale. Even if their city or state already has one or more long-term DBFOM (Design-Build-Finance-Operate-Maintain) public-private partnership highway projects, they might not see that a long-term airport P3 lease is an ongoing partnership between the airport’s government owner and the selected private sector company or project entity. They may not be clear about the respective roles of the public and private partners in the long-term agreement. To be sure, elected officials will not retain their micro-managing ability of an airport if it is P3 leased, but they will have a significant role in major future decisions, such as expanded terminals or runway extensions, made by the airport. 

So, the airport P3 industry has an important educational role to play with policymakers and stakeholders. And despite my AEI/Brookings paper having the word “privatization” in the title, my first recommendation is to avoid using this term with regard to U.S. airport long-term public-private partnership leases. In the examples and cases described here, they are not sales; they are long-term partnerships that research has shown lead to significantly improved airport performance.

One encouraging word comes from Kevin Burke, chief executive officer of Airports Council International- North America. In an interview with Aviation Week reporter Aaron Karp last fall, Burke lamented Congress’s repeated failures to increase the amount of the federally authorized passenger facility charge (PFC), which has not been increased for 20 years and has lost half of its purchasing power. Without a near-term PFC increase, Burke said, U.S. airports would likely turn to “public-private partnerships to fund the multiple billions of dollars it takes” to improve airports. He noted that airport lease transactions would likely follow the financing model used in Europe and other regions where companies oversee airport management and development in decades-spanning leases with governments.

In looking for another reason for potential optimism, I’d also remind readers that the key tax changes proposed in my paper were first spelled out in the 2018 Trump White House Legislative Outline for Rebuilding Infrastructure in America. It would be wise for the current Trump administration to return to some of the proposed changes that Gribbin and the 2018 document outlined to help spur the modernization of airports through public-private partnerships. 

As I conclude in the study, Congress should make these changes to enable U.S. airports to improve their performance and compete on a level playing field with airport P3s in Europe, Latin America, and the Asia-Pacific.

A version of this column first appeared in Public Works Financing.

The post How Congress can spur the modernization of U.S. airports appeared first on Reason Foundation.

• Preparing states for when the federal money runs out
• How personal travel has changed post-pandemic
• Why U.S. taxpayers should not pay for Maryland’s new bridge
• Road safety in the post-pandemic era
• California high-speed rail’s last-ditch effort
• Let’s reconsider commercializing Interstate rest areas
• News Notes
• Quotable Quotes

Preparing States for When the Federal Money Runs Out

For the past year and a half, I’ve written columns and chaired a conference panel on the looming insolvency of the federal government, which is now projected as early as 2033. When the Social Security and Medicare trust funds reach “empty,” Congress’s most likely choice will be to reduce all kinds of other federal spending in order to replace the 20%-25% shortfalls of those two entitlement programs’ annual funding. If Congress were instead to commit to filling the gap in entitlement funding via massive additional borrowing, forever, the U.S. government’s credit rating would move from investment-grade to junk, making debt service on the greatly increasing national debt even more expensive.

Yet, in the transportation world, Congress is gearing up to reauthorize the highway and transit program using the borrowed $674 billion added by the Infrastructure Investment and Jobs Act (IIJA) legislation as its baseline. Doubling fuel taxes to fund that spending increase is not even thought about in Congress, let alone being suggested by anyone as a wiser remedy than borrowing.

Yet, fiscally responsible members of Congress ought to be proposing reforms that would at least start to get state departments of transportation (DOTs) and state legislators to prepare for the day when federal transportation money is no longer available. This would be a massive, unexpected change, unless at least some transportation leaders start paving the way for this financial earthquake.

With that as an introduction, here are some provocative ideas from my friend and colleague, D. J. Gribbin, who drafted the White House infrastructure plan during the first term of the Trump administration. Gribbin recently published his thoughts on federal transportation funding in a short paper for the Eno Center for Transportation on Aug. 27. Gribbin sets forth several important points that could lay the groundwork for the major changes needed in federal transportation policy.

First, federal transportation trust fund money is not “additive,” Gribbin notes, meaning it all originates from state and local taxpayers (except for recent years’ egregious borrowing from future generations). Every state is entitled by law to receive back at least 95% of what it generates in federal user tax revenue.

Second, the prospect of getting “free federal money” at some future date can lead a state agency to hold off on launching a project that has some prospect of having a large fraction paid for by “the feds.” We have all seen state policymakers hold off on committing their own funds to needed projects, in hopes of future federal largesse.

Third, as we know but often ignore, federal funding increases a project’s cost. Davis-Bacon, Buy America, and all kinds of other rules and regulations make a project that gets federal dollars cost a good deal more than if it were entirely state (and privately) funded. D.J. cites a Government Accountability Office (GAO) study that in the 2014-18 period, found that a federal building cost 14%-25% more than if it had been state/local funded. He also cites a Georgia study finding that road widenings with federal money took four times longer to carry out than state-funded widening projects.

Finally, Gribbin cites a growing body of work that documents the large increase in highway construction costs due to the IIJA. Jeff Davis of Eno reported that construction cost inflation has consumed $57 billion of IIJA’s spending increase.

Based on these points, D.J. suggests several modest changes in federal law.

First, give each state a legal right to 95% of the Highway Trust Fund money that originated in that state. And then amend Title 23 so that those funds, since they are each state’s property, are exempted from all federal regulations.

Would Congress balk at such a change? Perhaps not, he suggests, because all the IIJA-type borrowed money would still be subject to the usual federal regulations and would be available for Members of Congress to earmark, as they love to do (at least while the borrowed money lasts).

This agenda would be a way to revive the highway funding devolution proposal that became popular in the 1990s, when it was endorsed by mainstream thinkers such as Alice Rivlin (Brookings Institution) and David Luberoff (Harvard Kennedy School). I wrote a 1996 Reason Foundation policy paper, “Defederalizing Transportation Funding,” and spoke about the subject at several conferences. Sen. Connie Mack (R-FL) and Rep John Kasich (R-OH) sponsored a bill that would have phased out, over two years, all but two cents of the federal motor fuel taxes. California Gov. Pete Wilson and the state’s 1996 Commission on Transportation Investment supported this devolution.

Discussing these kinds of ideas should get started now, so that state and local governments are not left unprepared when the Social Security and Medicare crunch occurs, as early as 2033. State and local governments own nearly all the U.S. roadway and transit systems. It is their responsibility, as owners, to ensure that these vital systems remain funded when the federal government is no longer able to be their backstop.

Transportation thought leaders need to engage on this vital subject because it’s clear that Congress apparently does not see this coming. Somebody needs to start thinking through the needed transfer of responsibility to the owners and operators of this infrastructure. If not us, who? And if not now, when?

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How Personal Travel Has Changed Post-Pandemic

How has commuting changed since the COVID-19 pandemic? How far has transit ridership recovered? How many of us are working at home full-time?

These are among the questions answered by two decades of data from five reputable transportation surveys. My colleague Steven Polzin of Arizona State University (and his ASU colleagues Ram Pendyala and Irfan Batur) have compiled these findings in both tabular and graphical form. Their graphical summary is now available. Here are some of the highlights.

From the 2024 American Community Survey (ACS) conducted by the U.S. Census Bureau, we find that commuting alone in a motor vehicle has declined from around 76% pre-pandemic to around 69% today. But those commuters did not shift to transit, whose average has declined from around 5% to around 3.7% in 2024. Walk, bike, and other modes are basically unchanged at around 4.5% (higher than transit’s share). Where former commuters and transit users went is to “working at home.” The ACS data show 13.3% working at home “usually,” compared with 3% to 5% pre-COVID. The American Time Use Study (ATUS) figure for “work at home always” is 19.6% (which has declined from 25% in 2020).

The graphical data adds additional information about what has changed since 2005. For example, average commute time increased pretty steadily from 25.1 minutes in 2005 to 27.6 minutes in 2018. But post-pandemic, it has climbed back from 25.6 minutes in 2021 to 27.2 minutes in 2024 (despite the smaller fraction of solo commuters). Far more dramatic is the average daily trips per person. That shows a steady downtrend from 4.2 trips in 2003 to 3.5 trips in 2018. That plunged to 2.5 trips during COVID but has slowly increased to 2.88 by 2024, basically continuing the long downtrend. The amount spent per day on travel also experienced a gradual downtrend from 2003 (75.3 minutes) to 2018 (69.4 minutes). After a large decrease during COVID, by 2024, it was up to 61 minutes.

One of the most surprising changes is what people are using their trip time for. Even back in 1990, commuting was only one-third as much as shopping and errands, per the ATUS data. But the shopping fraction by 2022 was half of what it was in 1990. And in 2022, total daily household travel, as measured by ATUS, had declined from 3.76 hours to 2.28 hours. It’s pretty obvious, as Polzin has written elsewhere, that travel time for shopping has been slashed due to online ordering and delivery, as well as home services partly substituting for things like trips to Home Depot. One graph in the presentation shows e-commerce retail sales having climbed from less than 1% of total retail in 1999 to over 16% in 2025.

Consistent with all of the above is the change in vehicle miles of travel (VMT). Between 1945 and 2005, VMT grew at 4.22% per year. Since then, after a dip 2008-2011, it resumed growing but at a significantly lower rate (apart from a COVID-19 dip). But the most dramatic change is in VMT per capita. During that same 1945-2005 period, it grew at 2.95% per year. But after peaking in 2005, it has been in a slight downtrend since then. This is consistent with the above data on things like reduced household travel.

The anti-highway/anti-car organizations still like to portray Americans as car-crazy people who get in their cars for anything and everything. They assume that adding lanes to congested freeways is futile, since there is a reserve army of drivers waiting to fill up every new lane-mile. But travel behavior has changed, thanks to trends like working from home, service delivery companies, and online retail sales and delivery. Transportation planning needs to take these major trends into account.

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Why U.S. Taxpayers Should Not Pay for Maryland’s New Bridge

Following the collapse of the Francis Scott Key Bridge last year after one of its piers was struck by a cargo ship, Maryland officials pulled out all the stops to get a pledge from Congress that taxpayers would pay for the bridge’s estimated $2 billion replacement cost. And to ensure a speedy replacement process, they announced that the new bridge (although a different design) would be built in the same location; hence, no years-long environmental impact study (EIS) would be needed.

That was then; this is now. First, we learn that, based on a preliminary design by the planned contractor, the replacement will cost $5 billion, rather than the initially estimated $2 billion. And second, the bridge will follow a different route than the original bridge (but never mind about no need for an EIS). Congress should not fall for this bait-and-switch. Taxpayers in 49 other states should not be stuck with a $5 billion tab for this project.

In fact, the case for federal taxpayers to pay for the bridge at all is very weak. As I pointed out in the aftermath of the Key Bridge collapse, that bridge was a toll bridge, and there is no reason to ignore the users-pay principle for its replacement.

Second, while realistic toll revenues would very likely fall short of paying for a $5 billion bridge, Maryland has a number of other funding sources. The bridge was insured against the loss of toll revenue via a $350 million policy, so that is one source. The company that operated the ship that collided with the bridge was also insured. As The Wall Street Journal reported at the time, it was insured by Britannia P&I Club, one of a dozen such maritime insurance clubs. Those clubs pool their resources in the event of a major disaster, and up to $3.1 billion is available per ship.

In addition, it’s very clear that Maryland officials dropped the ball on the need for heavy-duty protection of the bridge piers. The Maryland Transportation Authority ignored repeated warnings over the years from the Baltimore Harbor Safety and Coordination Committee about the lack of meaningful protection of the bridge piers. So it was not an innocent victim of the bridge collapse. This negligence suggests that Maryland taxpayers should bear part of the cost of the replacement bridge.

Let’s hope members of Congress from the other 49 states resist Maryland’s new drive for a $5 billion federal windfall. The federal government is operating at a huge budget deficit, and $5 billion is hardly spare change.

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Addressing Road Safety in the Post-Pandemic Era
By Marc Scribner

In the last half-decade, the United States experienced the most dangerous roads in years. The National Highway Traffic Safety Administration (NHTSA) reports that nationwide traffic fatalities exceeded 40,000 in 2021 for the first time since 2007. Accounting for the growth of the population and travel yields similar results in terms of fatality rates. This traffic safety problem spurred many dramatic policy proposals, most of which failed to deliver any safety benefits. The good news is that the recent surge in dangerous driving seems to have subsided. But questions about the role of public policy in improving roadway safety will continue and should be informed by evidence and realistic assumptions.

The onset of the COVID-19 pandemic coincided with a rise in what could be generally termed “bad behavior.” In the United States, increasing violent crime in major cities received the most public attention, but other examples abound. Public health agencies observed substantial increases in substance abuse and overdose deaths. In transportation, a troubling outbreak in “air rage” incidents on commercial airliners coincided with the air travel recovery. Pilot-reported “laser incidents” also dramatically increased during this period. America’s roadways were not spared.

The fatality rate per 100 million vehicle-miles traveled increased by 22% between the third quarters of 2019 and 2020, marking the highest fatality rate since 2005. This period coincided with relaxed pandemic restrictions while commuter travel remained minimal due to working from home, which opened up many previously congested roads for high-speed misbehavior. Traffic enforcement by police also fell, in part due to public health concerns about maintaining social distancing.

Both the number of traffic fatalities and the fatality rate have declined steadily from their peaks over the last few years. Last month, NHTSA released its initial estimate of U.S. traffic fatalities for the first half of 2025. In very welcome news, the fatality rate of 1.06 deaths per 100 million vehicle-miles traveled is lower than the 1.07 deaths observed in the first half of 2019, suggesting that the pandemic era of roadway carnage may be behind us.

So what might explain this recent positive change in road safety? Urban traffic congestion came roaring back in metropolitan areas across the country, limiting opportunities for high-speed misbehavior. Renewed emphasis on high-visibility enforcement by law enforcement might play some role, although there isn’t strong evidence to support this claim.

What about engineering infrastructure to be safer? Supporters of this approach generally advocated traffic-calming measures whereby the design of roads was to be modified to encourage drivers to alter their behavior. Changes such as narrower roadways and lanes have been widely demonstrated to reduce driver speeds. Unfortunately for traffic-calming advocates, re-engineering roadways is the most costly and time-consuming type of safety intervention, so it is unlikely to have been responsible for the recent decline in dangerous driving to pre-COVID levels.

Further, in addition to the high costs and time-consuming nature of traffic-calming interventions, these programs in practice have often been poorly targeted. For instance, the 2021 Infrastructure Investment and Jobs Act established a grant program called Safe Streets and Roads for All (SS4A). SS4A aimed to fund Complete Streets traffic-calming projects favored by urbanists. But as I noted in the June 2022 issue of this newsletter, because SS4A eligibility criteria were overly focused on relatively safe urban streets owned by municipalities, the program in practice prohibited funding to the U.S. roadways where more than half of fatalities occur. If the goal was to make a material difference in the safety outcomes on America’s most dangerous roadways, SS4A failed spectacularly by its own poor design.

I’m no psychologist, but my strong suspicion is that Americans’ bad behavior has demonstrated something like a reversion to the mean in the years since the initial shock of the COVID-19 pandemic. This has been observed in violent crime, unruly airline passengers, substance abuse and overdose deaths, and even aircraft laser strikes. So why not misbehavior by motorists, too?

It has long been known that the critical factor in the vast majority of motor vehicle crashes is driver behavior, whether error or misdeed. The implementation of behavioral-focused traffic safety countermeasures, such as those catalogued and evaluated by NHTSA, has historically proven successful in reducing crashes and the injuries and fatalities caused by them.

However, in the years immediately before the pandemic, traffic fatality rates had plateaued. This led to growing concern among policymakers that the “low hanging safety fruit” had been picked, a dubious assertion given that U.S. traffic safety policy often neglects the centrality of driver behavior. Nevertheless, this led some to suggest that improving road safety in the future means advancing the most-costly, less-immediately-effective, and often-unpopular interventions. These interventions, such as traffic calming, often present stark trade-offs between road network efficiency and safety.

Fortunately, automated vehicle technology increasingly being deployed in various forms might be as close to a safety silver bullet as we can get. Fully automated driving directly addresses driver behavior—the critical factor for more than 90% of crashes—by assuming responsibility of the dynamic driving task. And it does so in a way that minimizes public expense with the potential to also improve traffic flow, rather than sacrificing roadway efficiency for safety through costly and gradual infrastructure treatments.

Automated driving developer and robotaxi operator Waymo has analyzed 96 million miles of driverless operations and persuasively estimates its technology has produced 91% fewer serious-injury or worse crashes and 80% fewer any-injury crashes compared to a human driver baseline. To be sure, many of these driving automation technologies are not in widespread use—especially the most advanced automated driving systems that completely remove human beings from the driving loop—and they will take time to mature and deploy at scale. But we may be on the cusp of realizing unprecedented traffic safety improvements. This is something Congress should consider as it works to develop the various programs contained in its surface transportation reauthorization due next year.

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California High Speed Rail’s Last-Ditch Effort
By Baruch Feigenbaum

High-speed rail (HSR) has proven to be very expensive to build in the United States. A taxpayer-funded line in Florida was vetoed years ago, and today, there is the less-expensive but still costly public-private Brightline project. A proposed, privately funded high-speed rail project in Texas connecting Dallas and Houston sits in a zombie state, waiting for funding. But the original and most expensive project of them all—California’s planned high-speed rail line between Los Angeles and San Francisco—is still alive. The project’s existence has more to do with political convenience than transportation needs.

Last month, Gov. Gavin Newsom and California legislative leaders reached a general agreement to provide long-term funding for the high-speed rail (HSR) line from the Cap and Invest (previously known as Cap and Trade) program. While that might sound encouraging, this new funding plan relies on some creative accounting that doesn’t exactly meet the standards of the Government Accounting Standards Board.

As Jeff Davis at Eno Transportation Weekly first reported, the combination of scope increases, cost escalation, closeout costs, and completed designs would virtually double the starter segment’s cost from $26 billion to $51 billion. At the same time, the Trump administration has clawed back $4.1 billion in federal funding that was previously awarded by the Biden administration. As a result, the California High-Speed Rail Authority (CHSRA) needs to close a significant budget hole.

The state identified design and sequencing changes that it says would reduce the cost of the Merced to Bakersfield starter section of the rail system by $14 billion. It also plans to close the gap by extending the timeline of the Cap and Invest funding from 2030 to 2045, but that would cause delays in construction.

As a result, the state is trying to identify expansions beyond the starter segment that might yield an operating profit to help finance the expanded project. The authority is examining expanding the starter segment northward, southward, and eastward. The most viable option it could find is a San Francisco to Palmdale route, which might yield $11 million in operating profit over 40 years. But those extensions would cost another $60 billion to construct.

In reality, this new budget is an accounting shell game. It tries to use revenue generated from operating services without counting shortfalls incurred from construction costs.

But given California’s existing transportation network and decisions other states have made regarding HSR, it is worth asking why California is still pursuing this project. And the answers are less compelling than they were 15 years ago.

High-speed rail isn’t a big win for the environment. High-speed trains operating at capacity between L.A. and S.F. would produce fewer greenhouse gas emissions than half-full airplanes flying between the same regions. But the trains would not reach the line endpoints until at least 2050. And there is no indication that they will be full.

Meanwhile, most airlines fly inter-California routes at 90% capacity. Aircraft engines are becoming more efficient; several electric and hybrid aircraft propulsion systems are under development. And building an HSR line is extremely energy-intensive, much more than the construction of a new airport or highway. The irony of using Cap and Invest dollars meant to remediate energy-intensive uses for the energy-intensive construction of HSR is apparently lost on California decision-makers.

It’s also not clear why California needs high-speed rail. Airplanes are faster and don’t require taxpayer subsidies. An intercity bus provides a budget option. And driving is the customizable option for folks traveling outside the city centers or who need to stop between the central cities.

Other countries built their HSR network for two reasons. The first was to relieve crowding on conventional passenger rail systems. There is no conventional passenger rail between LA and San Francisco, and hence no overcrowding. The second was to stimulate development before they had a limited-access highway network. California already has a robust freeway network, including I-5 and US 101, connecting Southern and Northern California. Widening I-5, where needed, wouldn’t be cheap, but it would be a fraction of the cost of HSR.

Using general fund revenue (which Cap and Invest is) to build HSR is a wealth transfer from the working class to the business class. Trains often have roomier seating and better food options, but taxpayers subsidize those perks. All but three high-speed rail lines worldwide have required subsidies to build, and many require subsidies to operate.

Contrast high-speed rail with local transit, particularly local buses, which are used most by lower-income residents. While government subsidies should always be minimized, there is more justification for subsidizing local lower-income transit riders who might not be able to access employment without the service.

From a political perspective, it may seem an odd policy for Democrats to support a project for the wealthy. What makes it potentially politically savvy in California is the number of jobs the project can provide to unions, which have typically been a core constituency of the Democratic Party, and the illusion that the project reduces greenhouse gas emissions in the short term, which the environmental wing of the party supports. But that doesn’t make the rail system a good policy for taxpayers or the state’s future. Perhaps this latest creative accounting is so egregious that some Democrats in the state legislature will pull the plug on the project.

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Let’s Reconsider Commercializing Interstate Rest Areas

Last month, I received an email from a corporate official who had just discovered Reason’s 2021 policy study, “Rethinking Interstate Rest Areas.” It made the case, based partly on the minimal facilities at Interstate rest areas (forbidden by law to offer any commercial service), partly on the need for safer overnight truck parking spaces, and partly on the then-emerging need for electric vehicle charging stations. His email suggested that, given limited state and federal highway funding, perhaps it is time to revive this idea.

The context in 2021 was the Biden administration holding the presidency and Democratic majorities in both the House and Senate. We made common cause with groups working hard to legalize EV charging at rest areas, and at one point, it looked likely to be included in pending legislation. But opposition from the trucking and truck-stop industries (plus the organization of fast-food franchisees whose locations at on-ramps and off-ramps felt threatened by rest area competition) killed the effort.

Today, the safe overnight truck parking shortage remains in play, and while EV charging has increased, it would be much more convenient for range-anxious drivers to know they could charge up at Interstate rest areas. Plus, we are in a very different political environment, with the opposite party in control of the White House. I was recently reminded that the 2018 Trump White House infrastructure proposal included both expanded Interstate tolling and commercializing Interstate rest areas.

So what might increase the prospects this time around? First, many state DOTs would like to expand truck parking but can’t afford to expand the small acreage of their existing rest areas—which any of the companies that develop and operate toll road service plazas would be glad to do. A number of state DOTs favored repealing the ban on commercialization four years ago, and very likely still do.

Second, the trucking industry is not uniformly opposed. In the roll-out of our 2021 study, I learned that the Owner-Operator Independent Drivers Association (OOIDA), the organization of owner/operator truckers, has long favored commercialization. (I made a guest appearance on their radio program to talk about this.) Potentially very important is that two of the major truck stop operators—Pilot and Flying J—as of 2024 are wholly owned by Warren Buffett’s Berkshire Hathaway, a champion of free markets and competition.

Third, one possible sweetener for both the breadth of services at rest areas and the expansion of truck stops would be for state DOTs to include not only expanded safe overnight parking but also truck-stop-like facilities such as showers and trucker-friendly retail. Indeed, some commercialized rest areas might offer to host truck stops as part of their commercial expansion.

The economic case made against commercialized rest areas reflects a zero-sum view of the world. Any new service offered at a rest area is assumed to deprive that amount of service from a gas station or fast-food outlet at an off-ramp. Since trucking is projected to be one of this country’s fastest-growing businesses in the coming decades, that zero-sum view is wrong. But it’s also (how can I put this) anti-American. In a free-market economy, any business must expect competition and has no right to expect the government to prevent it. Yet that is what the federal ban does. Moreover, the opponents of commercialization are not companies such as Burger King or Coca-Cola—they are associations of franchisees of such companies. Advocates of rest area commercialization should recruit the big-name companies that eagerly offer their services at toll road service plazas and would be glad to do likewise at commercialized rest areas..

Reason’s 2021 study has lots of still-useful information for policymakers and the transportation industry.

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News Notes

Company to Auto Producers: Get a Horse!
Making its debut at last month’s annual Munich Motor Show was a 1.5-liter engine designed to enable auto manufacturers to convert their electric vehicles (EVs) to hybrids. Called the Horse C15, it is the size of a large briefcase. Its four cylinders deliver up to 94 horsepower for B and C-segment vehicles. A larger 161-horsepower version is available for larger cars. Horse says the C15 can run on gasoline, ethanol, or methanol flex fuels. With EV sales tapering off and hybrids in many markets out-selling pure EVs, Horse might have a viable product, depending on its price and installation cost.

Waymo Gets Permit for San Francisco Airport
Last month, city officials announced that Waymo was receiving a permit to take passengers to and from SFO, the Bay Area’s largest airport. The move enables SFO to compete better with San Jose Mineta International Airport, which announced that its Waymo service will launch by the end of the year. With no driver costs, the Waymo service is expected to be less expensive than taxis and ride-hailing companies such as Lyft and Uber. No start date was announced for Waymo at SFO, but that is also unlikely to begin until the end of this year.

IBTTA Supports User-Based Funding in Federal Reauthorization
In a recent news release, the International Bridge, Tunnel, and Turnpike Association (IBTTA) has recommended that Congress strengthen user-based highway funding when it reauthorizes the federal highway program next year. Given the huge and growing shortfall in the federal Highway Trust Fund, IBTTA called for expanding the scope for tolling and road pricing on Interstates and other federal highways. It also called for streamlining project delivery via full implementation of the One Federal Decision policy and advancing alternatives to fuel taxes, such as mileage-based user fees (MBUFs).

Congress Takes Another Look at Federal EV Fee
While a growing number of states have some kind of a tax or fee on electric vehicles, at the federal level, EVs pay no federal highway user taxes, unlike conventional motor vehicles. Lacking an easy way for the federal government to charge some 289 million vehicles for their annual miles driven, the simplest option appears to be a flat annual fee/tax. This would presumably be collected by state motor vehicle departments and remitted to the federal Highway Trust Fund. There is still talk about charging $250/year for EVs and somewhat less for hybrids. The average personal motor vehicle pays $100-150/year in federal fuel taxes, so $250 seems excessive, despite the somewhat higher weight of EVs compared with comparable internal combustion vehicles. $150 would seem more like it, perhaps with an adjustment for gross weight and inflation.

More Ports for Panama Canal Proposed
The Panama Canal Authority plans to auction two greenfield ports, as it continues to counter fears of undue Chinese interest in the Canal. The agency hopes to have two new operators selected by year-end. Those known to be preparing to do so include European companies CMA-CGM and AP-Moller-Maersk, according to Infralogic (Aug. 27).

Florida Continues Expanding Its Toll Roads
With more tolled lane-miles than any other state, according to Federal Highway Administration (FHWA) data, fast-growing Florida continues to expand its toll roads. For example, in the Tampa Bay area, the Selmon Expressway (which includes a reversible upper deck for faster suburbs-to-downtown commuting) has public support to extend the expressway eastward to the suburb of Riverview. Recent surveys show 95% support in that suburb. And in the Jacksonville metro area, the First Coast Expressway continues to expand westward, with current plans calling for it to grow to 46 miles. The Expressway will provide a shortcut between I-10 and I-95 once a new bridge over the St. Johns River is completed.

Virginia Express Toll Lanes Missing Link
Oct. 15 is decision day for Virginia DOT and the Metropolitan Washington Council of Governments. The latter’s Transportation Planning Board will vote on whether to move forward with the extension eastward of the existing express toll lanes network, by including it in the regional Visualize 2050 transportation plan. If that decision is yes, whether or not the project (I-495 Southside Express Lanes) will be procured as a long-term public-private partnership (P3) will remain to be decided. That will depend on whether projected revenues would be enough to support a revenue-financed P3 procurement. That depends, in part, on whether Maryland planners approve extending the lanes across the Woodrow Wilson Bridge to MD 210 in Prince George’s County.

India Planning 68-Mile Elevated Toll Road
The New Indian Express reported that the Greater Bengaluru Authority’s technical committee has approved a detailed report on a new cross-city elevated toll road. It would be procured as a long-term public-private partnership, as many Indian toll roads have been. The toll road would have entry and exit ramps at strategic locations.

Brightline West Revamping Its Financing
Infralogic’s Stephen Pastis reported (Sept. 5) that Brightline West is updating the financing plan for its proposed 218-mile high-speed rail line from Las Vegas to Rancho Cucamonga in San Bernardino County, California. CEO Mike Reininger said the company will finalize contracts with construction firms within the next 90 days, enabling the company to finalize its financing. Pastis reported that the company will increase its equity investment to “well above” the previous $1 billion in earlier plans. The revised financing will also require more debt. The company had an Aug. 31 deadline to secure $6 billion in senior debt financing and is now within a 90-day grace period to revise its financing plan.

Queensland Government Cancels Light Rail Project
A long-planned project to extend an existing light rail line by 13 km to Brisbane’s southern suburbs, whose cost had escalated to an estimated A$9.85 billion, was terminated early last month. Community support ended up largely negative, due in part to only light rail being considered, objections to its impact on a national park and popular creek, and likely further cost increases. The government promised to embark on a multimodal study taking greater account of public concerns.

Tolls Removed: Congestion Blossoms
Highway 407 ETR is a P3 toll road in the Toronto suburbs, and it was one of the first large-scale transportation P3 projects in Canada. It was an extension of the existing state-operated 407, which was also financed based on tolls. On Aug. 14, the premier abruptly abolished tolling on the state-operated portion, and significant congestion appeared. Interestingly, Green Party leader Mike Schreiner criticized the government for removing pricing, which encouraged far more people to drive.

Reduced Bridge Tolls Agreed for Strait Crossing
Infralogic’s Eugene Gilligan reported (Aug. 25) that Transport Canada and Strait Crossing Bridge Limited (SCBL) had agreed to reduce tolls on the Confederation Bridge. Infrastructure P3 company Vinci owns 85% of SCBL, which has the P3 concession that developed the bridge, and which runs until 2032. Transport Canada negotiated the toll reduction agreement, from $C50.25 to $C20 for all vehicles until 2032, but also agreed to subsidize SCBL to make up for lost toll revenue. The bridge is eight miles long and connects Prince Edward Island with New Brunswick. It was developed by a previous P3 consortium, starting in 1993 and completed in 1997.

Luxury EV Charging Stations in the Los Angeles Area
The Economist reported that Los Angeles now has two luxury EV charging stations. One is the Tesla Diner, with sleek, retro-science fiction architecture and food served in boxes shaped like a Tesla Cybertruck. A competitor has opened in nearby Orange County, competing with diner Rove; it includes an on-site lounge and an upscale grocery store. This concept will work as long as it takes 20 to 30 minutes to charge an EV, so people need something else to do. If or when super-fast charging comes about, then any gas station could be converted to an EV charging station.

New York State Thruway Goes Electronic
Despite being a latecomer to the all-electronic tolling trans, the Thruway seems to be doing an excellent job. The International Bridge, Tunnel, and Turnpike Association (IBTTA) reports that, in 2024, 95% of all Thruway tolls were collected via E-ZPass, with toll revenue topping the $1 billion level. The numbers are derived from the agency’s audit of 2024 operations..

Correction to Last Month’s Lead Article
The article on China’s high-speed rail excesses came to me from a D.C. think tank, CSIS. But last week I heard from Zichen Wang, who writes the Pekingnology newsletter on Substack. It was his post that I discussed, but CSIS did not originate it (although it did host a recent podcast from him). He works for the Center for China and Globalization in Beijing, a non-governmental think tank. He also explains that he is a journalist, not a transportation expert, and that he recently posted a rebuttal to the Lu Dadao criticism.

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Quotable Quotes

“Based on projected fuel-efficiency gains, the federal gas tax revenue will lose $3.9 billion (16% decline) in 2030 alone. Over 80 percent of that loss is because vehicles are going farther on a tank of gas. Although EVs are not the primary cause of the revenue problem today or in 2030, as EV adoption accelerates, our ability to rely on fuel taxes will further erode. The billions lost is a jaw-dropping number, but it is invisible to users of the road, as we never receive a bill for transportation cost. Rather, taxes on our fuel are baked into the price at the pump. As wrapped up as Americans are in driving, we are largely oblivious to how roads are paid for.”
—Patricia Hendren, Eastern Transportation Coalition, in “Transportation at a Crossroad: User Fees, Emerging Technology, and the Value of Transportation,” Eno Center for Transportation, Aug. 27, 2025

“Current federal fuel taxes average about $100-124 per year per personal vehicle—often less than one’s monthly bill for internet and cell phone service. While mileage-based user fee concepts will mature over time, administrative costs and outstanding issues regarding deployment prevent them from being near-term solutions. If we want to build big, beautiful stuff, we should not dump more debt on future generations.”
—Steven Polzin, Arizona State University, “As Travel Changes, So Must Transportation Governance,” Eno Center for Transportation, Aug. 27, 2025

“Let’s be candid about [environmental] litigation. Challenges to project approvals cost time and money. More importantly, litigation risk creates uncertainty for project development, especially for those supported by private-sector investment. Reauthorization is not the best vehicle to debate how much or how little litigation should be permitted. But Congress could create a streamlined litigation process for challenges to surface transportation projects. The statute of limitations for lawsuits addressing projects funded by federal aid should be 150 days, without exemption. Legal challenges should skip federal trial court and go directly to the federal appellate court, like most major rulemaking challenges. Even these modest reforms could reduce the uncertainties created by litigation.”
—Fred Wagner, Jacobs, “Improvements to Project Review and Permitting Built on a Solid Foundation,” Eno Center for Transportation, Aug. 27, 2025

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The post Surface Transportation News: Funding state transportation projects when federal money runs out appeared first on Reason Foundation.

• Cautions on a “brand new ATC system”
• Why has the U.S. avoided airport privatization?
• Perspectives on the air traffic controller shortage
• Commercial launches for the Moon program
• Drone BVLOS regulations finally issued
• FAA moving time
• News Notes
• Quotable Quotes

Cautions on “Brand-New ATC System”

With proposals due Sept. 21 from would-be “integrators” of the proposed “brand new air traffic control system,” my in-box has been filled with questions and concerns about the viability of this very ambitious effort. Aviation experts with long memories are pointing to a similar project from 1983 to 1994 called the Advanced Automation System, AAS. It was intended to be a sweeping overhaul of the system, including large-scale facility consolidation and numerous technology modernizations. The prime contractor/integrator was IBM. From an initial budget of $2.5 billion in 1984 to its cancellation in 1994, the cost had grown to $5.9 billion ($12.8 billion in today’s dollars), and the net modernization result was next to nothing.

One of the longest emails I received was from a former high-level Department of Transportation (DOT) aviation expert, now retired. Referring to the current program, he wrote “We’ve seen this movie before (AAS) and it didn’t end well…I’ve scanned the Request for Solutions (RFS), and it’s breathtaking in both the breadth of requirements and the 3.5-year deadline, meaning that the next administration will have to answer to Congress for the likely failure to deliver on time and the inevitable increases in cost…The integrator is made accountable not only for its own performance, but also for the performance of its subcontractors…And of course, FAA has to approve a great many decisions along the way, one of the reasons AAS was such a disaster.”

A high-level Federal Aviation Administration (FAA) official, recently retired, wrote to say, “I read through the RFS this morning. It’s an impossible task. Despite all the intimidating clauses about ‘no excuses,’ I think there is still substantial risk that they accomplish nothing at all by the end of 3.5 years.”

Aviation reporter David Hughes interviewed several air traffic control experts who were willing to include their names. His article is in the current issue of Air Traffic Technology International, dated Sept. 9, 2025. Here are some of their concerns:

• Charlie Keegan, the first head of FAA’s NextGen program, expressed concerns about the single contractor, whose every move will need to get FAA approval. He also noted that to have any hope of changing things within 3.5 years, the project will need to buy commercial off-the-shelf systems from European companies that are used worldwide—but are not currently FAA-certified.
• Dave Ford, former manager of implementing the STARS program, said the new program “needs a new concept of operation for ATC; otherwise, it’s all speed and no vector.” He also called for outcome-based service contracts with enforceable performance goals.
• Steve Fulton, retired expert on RNP and performance-based navigation, said any new ATC system should aim to implement trajectory-based operations (TBO), networking all trajectories and providing strategic de-confliction.  
• John Walker, former FAA airspace director, told Hughes that FAA has not embraced lessons learned from the failure of AAS, which was cancelled in 1994 (as noted above).
• Gene Hayman, Keegan’s consulting partner, said that any serious ATC reform should separate FAA safety oversight from the air traffic control system—as nearly a hundred other countries have done over the past 30 years.

As noted philosopher George Santayana wrote in his 1905 book, The Life of Reason, “Those who cannot remember the past are condemned to repeat it.”

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Why Has the United States Avoided Airport Privatization?

According to the Airports Council International, 75 percent of airline passengers in Europe use privatized airports that have either been sold to investors or long-term leased via public-private partnerships (P3s). In Latin America, the corresponding figure is 66 percent, and in the Asia-Pacific region, it’s 47 percent. By contrast, the U.S. figure is one percent, represented only by the airport in San Juan, Puerto Rico, which was long-term leased as a P3 in 2013.

Congressional and other studies have most often cited unequal tax treatment between the United States and other countries—specifically the use by U.S. airports of tax-exempt bonds. That creates a non-level financial playing field for investors. I believed that argument for many years, but after researching and writing a new research paper, released last month, I’ve changed my mind. Here is the reasoning.

Despite this disparity in tax treatment, in the few cases when a U.S. airport has been made available for a long-term P3 lease (airport sales are not legal here), there have been eager bidders. That is true not only for the successful San Juan lease, but also for two attempts to P3 lease Chicago’s Midway Airport and a 2019 effort to lease St. Louis’s Lambert Field. In this most recent case, 18 teams submitted qualifications, and a dozen of the best-qualified ones made presentations in St. Louis. There was no lack of investor interest; it was regional politics that led the St. Louis mayor to abruptly terminate the planned P3 lease.

In my new paper, commissioned by a special project managed by the American Enterprise Institute and the Brookings Institution, I conclude that the problem is not lack of buyer interest; it’s lack of seller interest. But it turns out that a significant factor is the non-level financial playing field. The paper, titled “Incentivizing US Airport Privatization,” was released in August by the sponsoring think tanks and is now also available on the Reason Foundation website.

Before explaining my new assessment of the problem, I want to first remind you of an outstanding National Bureau of Economic Research (NBER) Working Paper by Sabrina Howell and others that assembled data on over 400 airports worldwide and compared performance on a large number of metrics. Their findings are summarized in an article in the April 2024 issue of this newsletter. Very briefly, airports that were acquired or long-term leased by entities that included a global infrastructure investment fund performed notably better than government-run airports, but also better than airport privatizations/P3s that lacked an infrastructure fund. The advantages included more airlines serving the airport, lower average air fares due to more competition, increased airport productivity, and greater passenger satisfaction.

Then why aren’t city, county, and (occasionally) state government airport owners eager to gain these benefits via a long-term P3 lease? The main conclusion I reached in the new paper is that U.S. airport owners have no idea what a gold mine they own. It is also widely observed that elected officials with a major airport in their jurisdiction enjoy micromanaging that airport. But would that be true if the airport were credibly worth billions, and they could retain some critical roles in charting the airport’s future?

On the first of these points, the unequal tax treatment makes a very large difference—not so much to the “buyer” but to the “seller” (actually the lessor and the lessee, in a U.S. context). Under current U.S. tax law and policy, when an airport (or other infrastructure that has been financed via federally tax-exempt bonds) changes hands, the existing tax-exempt bonds must be paid off by the airport owner. Drawing on my 2021 Reason Foundation study, I estimated the gross value of 31 large and medium U.S. airports, and subtracted the amount of tax-exempt airport bonds the owner would have to pay off in case of a P3 lease. Most of the 31 airports had very large amounts of tax-exempt bonds to pay off, reducing considerably the amount they would net (up-front 50-year lease payment minus bond payoff). In some cases, if the airport owner could receive the gross value (as is the case in Europe and other regions), the proceeds would be enough to pay off the jurisdiction’s entire unfunded public employee pension liability. This new policy paper provides some examples from my 2019 study.

Would billion-dollar windfalls do the trick? They would only be available if Congress and/or the U.S. Treasury revised current policy regarding tax-exempt bonds and the change of control. In the new paper, I argue that a long-term public-private partnership is not the same loss of control as would result from a sale of the airport. As we know from dozens of long-term P3s in highways and transit, the public-private partnership is shared governance of the asset. To be sure, no serious infrastructure investor would agree to elected officials micromanaging small-scale airport business matters, but the long-term agreement would spell out how shared governance would work in cases such as adding or expanding terminals, lengthening or adding runways, etc. And the FAA would retain oversight of airport safety and other public interest aspects, as it does today for the P3 airport lease in San Juan.

One additional point noted in the new paper. Back in 2018, the Trump White House released its detailed infrastructure plan, drafted by D.J. Gribbin. It included the tax law changes proposed in my new paper, and the same set of policies was endorsed by then-Transportation Secretary Elaine Chao. So there is some potential that if these changes were put forth again, as first-term proposals not yet implemented, they might gain acceptance.

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Some Perspective on the Air Traffic Controller Shortage

In what amounts to a follow-up to the recent Transportation Research Board study on air traffic controller staffing (see the July issue of this newsletter), the FAA has released a new Air Traffic Controller Workforce Plan, 2025-2028. It offers perspectives on how the agency plans to cope with the projected controller shortage.

You may be surprised to learn that the FAA expects increased attrition in this four-year period, partly due to a larger number of controller training failures (at both the Academy and in subsequent on-the-job training). On the other hand, the FAA projects an increase of more than 2,000 controllers by 2028.

One problem that the FAA faces, which most other air navigation service providers (ANSPs) don’t have, is government shutdowns, another of which might occur at the end of this month. The report notes the FY 2013 “discretionary sequester” that led to a hiring freeze and the 35-day government shutdown in FY 2019. The reason that nearly 100 ANSPs do not face this risk is that their budgets are self-generated, via ATC user fees paid directly to each ANSP by airspace users. By contrast, the FAA depends on Congress to provide its budget, and Congress is not 100% reliable.

On page 12, the new report breaks down an expected loss of 6,872 controllers during 2025-2028. The breakdown is as follows:

This is why adding N thousand new hires does not necessarily increase the total controller workforce. Those numbers are further broken down on pages 18-20.

One of the most interesting parts of the report (to a data geek like me) is the Appendix, which provides a breakdown of 2024 staffing at every high-altitude center (ARTCC), every TRACON, and every airport control tower. For each of these facilities, the 10-page Appendix lists its target staffing, the actual staffing breakdown into certified controllers (CPC), CPCs in training, and developmental controllers. It’s then easy to compare the total with the target for each facility, showing which ones are understaffed and which ones (surprisingly) are overstaffed. The overall total at facilities is 13,774 controllers versus a 2024 target of 14,633—an overall shortage of 859). By now, you should realize that this is a moving target, since every year going forward will have changes such as retirements, deaths, promotions of controllers to supervisors, etc.

One topic the report does not address is potential transfers of controllers from over-staffed to under-staffed facilities. Based on the report’s Appendix, I did those calculations for ARTCCs and TRACONs, with the following results. For ARTCCs, 11 of these facilities have more controllers than the FAA’s target: the total surplus for ARTCC controllers is 234, compared with a shortfall of 148 controllers at the 11 ARTCCs with shortfalls. Thus, in principle, there is no controller shortage at ARTCCs overall. FAA’s report makes no mention of any program aimed at making it worthwhile for controllers to relocate from a surplus facility to an understaffed one. Since these are the most complex facilities, they are difficult for Academy graduates to master (compared to an experienced ARTCC transferee). Large (nationwide) companies make such transfers all the time. Why doesn’t the FAA at least look into this?

The Appendix lists towers and TRACONs together, so I had to select only the TRACONs for a similar comparison of shortages and surpluses. The surpluses are fewer and smaller than the shortages. Only eight TRACONs have modest surpluses, with Chicago’s C90 having six more controllers than the target. The largest shortfall is Northern California TRACON, short 40 controllers. Overall, 16 TRACONs are short 224 controllers, while eight have a small surplus totaling only 29.

The potential windfall is with ARTCC staffing, if the FAA could figure out a workable incentive package to motivate some controllers to relocate from a surplus-staff ARTCC to one with a shortage. Alas, the report makes no mention of this possibility.

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Commercial Launch Gets a Boost for Artemis Moon Program

As Ars Technica’s Eric Berger wrote on Sept. 8, “From the beginning, the second Trump administration has sought to cancel the costly, expendable [Space Launch System] rocket. Some officials wanted to end the rocket immediately, but eventually the White House decided to push for cancellation after Artemis III.” But as reported in this newsletter’s August issue, Sen. Ted Cruz added to the One Big Beautiful Bill extra funding to continue SLS through Artemis IV, V, and VI. But on an early September podcast, Acting NASA Administrator Sean Duffy questioned SLS’s $4 billion cost for each SLS launch.

A second positive factor for commercial launch playing a larger role was what Aviation Week headlined as “Starship Goes the Distance,” (Sept. 1-14 issue), referring to its flawless Starship Flight 10 that “puts SpaceX’s program back on track.” That includes not only its planned role as a lunar landing craft but also its potential role as part of the replacement for the hugely costly SLS launch program.

Ars Technica reported big news on Sept. 10, under the headline, “Congress and Trump May Compromise on the SLS Rocket by Axing Its Costly Upper Stage.” Actually, the change would eliminate not only the upper stage but also the new launch tower that would be required if the overall SLS vehicle used a taller second stage. Both the Extended Upper Stage (EUS) and the larger launch tower are way over budget. Although part of the cost overrun has already been spent, cancelling both now would save about $1 billion every year going forward.

In related news, SpaceX CEO Elon Musk on Sept. 10 said he is confident that Starship can start delivering 100 tons of payload to orbit next year, while re-using both stages. That would be critically important in an SLS replacement program in which multiple Starship and Blue Origin New Glenn rockets launched all the components for Moon landings into Earth orbit for assembly. This scenario was explained in the recent Reason Foundation study, “Why Commercial Space Should Lead the U.S. Return to the Moon,” released last month.

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Drone BVLOS Regulations Finally Released
By Marc Scribner

On Aug. 7, the FAA released its long-awaited proposed rule on beyond visual line of sight (BVLOS) operations for unmanned aircraft systems (UAS). This rulemaking project had first been announced in Fall 2022, with a target release of the proposed rule set for Feb. 2024. While it came 18 months late, the proposed rule is a milestone moment for the UAS industry, which has faced steep deployment barriers for more sophisticated operations necessary to unlock the commercial potential of drones.

Over the last decade, Congress and the FAA have established UAS operational limitations, remote pilot certification and operating responsibilities, and remote identification and marking requirements for aircraft. FAA has been gradually relaxing operational limitations and integrating drones into the airspace, most notably in a 2021 rule that allowed qualified UAS operators to fly at night, over people, and over moving vehicles without a waiver.

But from the inception of commercial UAS and continuing today, drone operators have generally been permitted to fly only within visual contact of a remote pilot stationed on the ground unless they obtained a Part 107 waiver to operate beyond visual line of sight. These waivers also applied to the pilot as an individual, creating substantial paperwork and liability complexities for coordinated corporate activities. The nature of seeking mission-specific prior permission, as well as the FAA’s waiver procedures, together created a major barrier to advanced commercial drone operations.

The BVLOS proposed rule would create a new operating framework under Part 108, which is principally aimed at enabling the growth of commercial UAS. It is also an attempt at a performance-based approach to regulation, with requirements and permissions depending on particular UAS operating characteristics.

To start, there are two primary pathways to receive permission to operate BVLOS under Part 108: permits and certifications. Permits may be issued to operators of less-complex missions in areas with lower population density and with fewer and smaller aircraft. The FAA anticipates permits could be issued quickly. The other tier is certification for more complex operations involving larger fleets of heavier aircraft operating over areas with denser populations. Certification will entail a thorough review, and operators seeking certification will be required to develop a safety management system and personnel training program.

Depending on whether a permit or certificate is sought, and for what type of operation, operators will face more stringent limitations. For instance, a permit for package delivery will authorize up to 100 aircraft weighing no more than 55 pounds each and operating over an area of moderate population density (with the density limit defined as within 0.5 statute miles of a cell of 99 people, calculated by Oak Ridge National Laboratory’s LandScan USA tool, which would include some larger-lot suburban subdivisions). Hazardous materials are strictly prohibited from being delivered under a permit, which would include the lithium batteries present in many consumer electronics. The upshot is that parcel delivery operators seeking to build out a nationwide network serving dense urban areas with a diverse array of common consumer goods will need to seek Part 108 certification rather than permitting.

FAA’s proposed BVLOS rule would also create a new class of regulated entities called automated data service providers (ADSPs), with ADSP requirements established at Part 146. ADSPs would be certificated to provide UAS traffic management and real-time data to operators in both the permitted and certificated tiers. An ADSP is tasked with strategic deconfliction with other planned flights and “conformance monitoring” to make other airspace users aware of any UAS that are deviating from expected operations. Part 108 drone operators would be free to choose their own ADSP or provide those services themselves if they are properly certificated under Part 146.

While the proposed BVLOS rule maintains the current 1:1 operator-aircraft ratio, the FAA indicates that it plans to normalize multi-aircraft operations as industry standards are developed. This is in keeping with the proposed rule’s general preference for automated operations overseen by flight coordinators, rather than direct remote pilot control. Automated operations would, in fact, be mandated in certain circumstances, such as the proposed requirement that drones approved to operate in Class B or C airspace must be able to detect and avoid conventional manned aircraft, including those not broadcasting their positions by ADS-B.

FAA’s proposed rule on normalizing drone BVLOS operations represents a major step forward for both the UAS industry and the agency. It also suggests the FAA is getting more serious about aircraft autonomy, which has much broader implications. The FAA is accepting public comments on its BVLOS proposal until Oct. 6.

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FAA Moving Time

Transportation Secretary Sean Duffy last month announced that at least some of the FAA’s DC-based staff will “gradually” be relocated to DOT headquarters in Southeast Washington, often referred to as “Navy Yard.” The FAA currently occupies two buildings on the Mall, the Orville and Wilbur Wright buildings. They are on a list of federal buildings that will be considered in a future round of disposals by the Public Buildings Review Board.

Since it’s pretty clear that there will not be enough space at Navy Yard to accommodate all of the FAA’s DC-based staff, the question before us is who should be relocated elsewhere. FAA has three primary functions. It is the U.S. aviation safety regulator, the dispenser of grants to and oversight of airports, and the operator and manager of the air traffic control system. The ATC function is the obvious candidate for being housed separately.

To begin with, in its regulatory function, FAA is at arm’s length from all the key players in aviation (airlines, airports, pilots, mechanics, repair stations, etc.)—all except air traffic control. Self-regulation is a conflict of interest. In 2001, ICAO recommended that aviation safety regulations should be organizationally separate from the provision of airports and ATC. Since then, nearly 100 countries have separated ATC from government transport ministries that house their air-safety regulator. The United States is one of the very few outliers. It’s also worth noting that the Heritage Foundation’s 2025 report calls for the separation of the Air Traffic Organization from the FAA.

The ATO should be physically separated from the FAA, and now is the time to make this change. While it would take legislation to make the ATO a separate modal agency of DOT, moving it to a different location is an administrative decision that does not require legislation. The ATO already has a facility in Warrenton, VA, which is one possible location.

When the National Transportation Safety Board (NTSB) issues its final report on the fatal collision near Reagan National Airport (DCA) in January, I would not be surprised if it recommends separation of the ATO from the FAA, given the FAA’s failure to act on the numerous pilot reports of collision hazards at that airport, reflecting the failure of FAA’s self-regulation. Physical separation now would be a good first step.

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News Notes

Nav Canada Launches Remote/Digital Tower Program
Canada’s air traffic control provider has broken ground on the first of many remote digital tower facilities. Located in Kingston, Ontario, it is described as both an operational digital tower and a transitional facility for a system of Air Traffic Services hubs. This initial facility is planned to be operational by summer 2026. It will serve as the foundation for the ATC utility’s first permanent digital hub, hosting remote services for up to 20 airports. Nav Canada sees the project as the beginning of a broader Digital Aerodrome Air Traffic Services initiative, like similar programs underway in 16 other countries, mostly in Europe.

“FAA Runs Tests While Winter Haven Preps for Remote Tower”
That was the headline on an Aug. 28 article in the AIN monthly magazine. It contrasted the state-funded remote tower project under way in Winter Haven, Florida with the 30-odd such facilities already in operation overseas—and FAA’s slow start on this cutting-edge improvement. FAA is currently testing a system developed by RTX and Frequentis to serve an airport in Colorado, from which a previous provider withdrew due to FAA foot-dragging. The article notes that aviation groups such as the Aircraft Owners & Pilots Association (AOPA) support remote towers because they can enable more general aviation airports to have the safety benefits of a control tower at a lower cost than a sticks-and-bricks tower.

Rocket Lab to Begin Testing a Reusable Rocket
Launch vehicle company Rocket Lab has developed a reusable rocket called Neutron to tap into the market for launching medium-sized satellites. It plans the first Neutron launch from the Wallops Island, Virginia space port, where it has built its Launch Complex 3, completed last month. The company’s original launch pad is nearby and is used for launching its smaller Electron rockets. The new Neutron rocket stands 141 feet tall and can launch payloads up to 38,660 lbs. to low Earth orbit. Its first stage is fully reusable and will return to land either at Wallops Island or on a recovery barge. Earlier this year, the U.S. Air Force announced a planned Neutron mission to test point-to-point cargo delivery.

The New York Times Targets Business Jets
In a video editorial last month, the NYT documented the pittance that business jets pay for ATC services compared with airliners. Since bizjet organization NBAA is the most powerful opponent of ATC public utilities, getting people to understand how subsidized bizjets are may help advance a needed shift to bizjets in this country paying the same kind of weight-distance charges that bizjets pay everywhere else.
 
U.S Applications for Aireon’s Space-Based Aircraft Tracking
Runway Girl Network last month included an article calling for the U.S. air traffic control system to start making use of space-based ADS-B surveillance that is available worldwide for airspace that lacks radar surveillance (oceanic, mountainous, etc.). The article quotes Aireon headquarters as suggesting space-based ADS-B in the Caribbean, rather than the FAA’s current intention to install only ground-based ADS-B. While the FAA is also responsible for a huge fraction of Pacific Ocean airspace, the benefits of space-based ADS-B would not be as large as those in the crowded North Atlantic airspace, where Aireon’s service has dramatically improved traffic flow as well as air safety.

Southwest Airlines Deploys Secondary Cockpit Barriers
Aviation Daily reported that Southwest, on Aug. 29, took delivery of a Boeing 737-8 equipped with an Installed Physical Secondary Barrier. Although Congress granted a one-year extension of the date to begin such equipage, Southwest expects to take delivery of 26 IPSB-equipped aircraft by year-end. Boeing is delivering barrier-equipped aircraft to all its U.S. customers. Southwest also plans to equip its existing planes with IPSBs once re-equipage has been certified by the FAA.

French Hybrid eVTOL Under Development
Although nearly all European electric vertical take-off and landing (eVTOL) start-ups have failed, French company Ascendance is moving forward with what it hopes will be a viable aircraft. Potential success factors include hybrid rather than all-electric propulsion, seating four passengers in addition to a pilot, and range of 215 nm. In other words, it is targeting regional service for low-demand flights, a potentially plausible market niche, if the cost is low enough. Flight testing will begin in 2026. The aircraft will be equipped with wings, reports Aviation Daily reporter Thierry Dubois (Aug. 28).

Study Calls for Freeing Canadian Airports from Federal Rents
A new study by the Montreal Economic Institute argues that “exorbitant” rental fees are raising passenger ticket prices to uncompetitive levels. Several decades ago, Canada’s passenger airports were divested from the national government and restructured as local nonprofit airport authorities. But the feds continue to own the airports’ land and charge annual rent, based on each airport’s gross revenue (up to 12%). Airport authorities recover this via a tax on airline tickets. The average charge is $38 (far more than a U.S. passenger facility charge), and on some domestic routes, the charge can be as much as 43% of the ticket price. The study supports the airport authorities’ long-standing call for abolishing the rental fees. One approach to doing this (not in the study) would be for the national government to enact an airport privatization policy, under which airports would have the option of long-term leasing their airport, and sharing the up-front lease proceeds with the national government. That way, the national government would be compensated for the loss of airport rental income.

Ninth Collegiate Training Institute Approved
The FAA announced on Sept. 15 that Embry-Riddle Aeronautical University’s Prescott, AZ campus has met the requirements to become the ninth educational institution to qualify as a member of the Enhanced Air Traffic Collegiate Training Initiative (E-CTI). This program certifies college programs that replicate the curriculum of the FAA Academy in Oklahoma City, thereby expanding the number of controller candidates who can graduate each year. Assuming the CTI graduates pass the required aptitude and medical tests, they can be assigned to an ATC facility for on-the-job training without attending the Academy.

Freakonomics Podcast on ATC Reform
On Sept. 5, the economics-based podcast company released a 70-minute podcast on the topic of “Is the U.S. ATC System Broken?” I was interviewed for this some months ago, but my comments did not make the final cut. Long-time ATC reform expert Dorothy Robyn effectively made the case for the United States to join the rest of the world in separating its ATC provider from the government aviation safety regulator and converting it into a utility in which users pay fees for ATC service, which provides a bondable revenue stream for facility and equipment modernization. Some of the presenters did not agree with this approach.

Blue Origin Developing Lunar Mining and Production
On Sept. 10, Blue Origin unveiled an ongoing project aimed at using lunar regolith to extract metals and oxygen in order to manufacture facilities and equipment on the lunar surface. The project is called Blue Alchemist. If these techniques turn out to be feasible, it could make permanent settlement on the moon more feasible. What must be kept in mind, for each potential material (oxygen, glass, solar panels, etc.) is the cost of transporting a pound of that to the lunar surface, versus the cost of producing it there. Blue Alchemist says its goal is to make lunar production 60% less costly than bringing materials from Earth.

JetZero Looking Into Hydrogen Fuel for its BWB Airliner
While JetZero continues development work on its blended wing body (BWB) Z4 airliner, it is now looking into the potential of hydrogen fuel, under a NASA-funded study with SHZ Advanced Technologies. The technical feasibility of hydrogen is aided by the considerably larger interior of a BWB aircraft, compared with a conventional tube and wing structure. Guy Norris summarized the project in the Aug. 29 issue of Aviation Daily.
 
Joby Studying Hybrid eVTOL
Joby Aviation has contracted with L3Harris to evaluate a hybrid version of its S4 tilt-prop eVTOL. The potential application is a military version (optionally piloted) with a much longer range. A brief article by Graham Warwick in Aviation Week (Aug. 11-31) notes that other eVTOL developers Archer, Beta, and Vertical are carrying out similar studies.

Nav Canada Profiled in Boston Globe
Columnist Jeff Jacoby published a good overview of Canada’s nonprofit air traffic control provider. He draws a contrast between the troubled FAA air traffic system and the self-funded, de-politicized system that is far ahead in 21st-century technology, such as electronic flight strips and space-based ADS-B surveillance. With its bondable revenue stream, Nav Canada is able to issue long-term revenue bonds to finance major projects and to equip all its facilities with new technology in a year or two, instead of up to 15 years for FAA upgrades, due to annual funding from Congress.

How Can JSX Operate at Airports That Ban Scheduled Airlines?
In his Aug. 1 blog “A View from the Wing,” Gary Leff explains how JSX can serve customers at Teterboro Airport, where scheduled airline service is not permitted by the Port Authority, which owns the airport. JSX’s operations at the airport are not offered to the public as scheduled flights. They are offered only to members of Club JSX, a membership program for frequent JSX customers. Pretty clever!

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Quotable Quotes

“I was handed [on my second day as Administrator] the 670-page binder for how we were gonna procure the new [ATC] system. Like, ‘just sign right here, Mr. Administrator.’ I’m not gonna sign that . . . I haven’t read it, I don’t know what’s in it. It doesn’t look good. We ended up tossing that into a trash can and starting over.”
—FAA Administrator Bryan Bedford, in “Bedford Speaking at NATCA’s Annual Aviation Safety Conference,” Politico, Sept. 16, 2025

“While both Archer and Joby stocks are making substantial pullbacks from their record highs, investors may soon have an ideal entry point to build a long-term position at a smart price-point. But they should plan to hold the stocks for years to come. Investments in eVTOL companies should be viewed as long-term speculative bets on an industry that could reshape the future of mobility in the coming years—or go bust.”
—Ben Goldstein, “EVTOL Stocks to the Moon? Not So Fast,” Aviation Daily, Aug. 25, 2025

“Here is my one concern. If Artemis I, Artemis II, and Artemis III are all $4 billion a launch . . .At $4 billion a launch, you don’t have a Moon program. I don’t think that exists. We have to bring the price down. And so I have to think about and work with Congress. What does Artemis IV, V, and VI look like? . . . What is the answer? I don’t know, but those are things I think about. You look at what the private sector has done for access to space. For the private sector, you can have a satellite and get it into space for a little over a million dollars. That was unheard of 20 years ago. What’s happened to drive the price down of these vehicles? That’s what we have to think about, because the $4 billion figure is too massive to think we could be sustainable at that number.”
—Acting NASA Administrator Sean Duffy, in Eric Berger’s article, “Congress and Trump May Compromise on SLS Rocket,” Ars Technica, Sept. 8, 2025

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The post Aviation Policy News: Cautions on a ‘brand new air traffic control system’ appeared first on Reason Foundation.

• China’s high-speed rail boondoggle
• Ideas for 2026 surface transportation reauthorization
• Reason Foundation’s reauthorization proposals
• Cost-effective Northeast Corridor proposal
• A P3 option for deficient bridges
• Immigration raids on construction sites
• News Notes
• Quotable Quotes

China’s High-Speed Rail Boondoggle

Last month, I received an email from Zichen Wang of Pekingnology, which is affiliated with the Center for Strategic and International Studies, a think tank in Washington, DC. Attached was a long report by an academic named Lu Dadao of the Chinese Academy of Science. (He is also a former president of the Geographic Society of China, and he has drafted plans for the State Planning Commission.) His lengthy report, translated into English, is titled “The Glory of High Speed Rail: What About Its Problems?” Everyone interested in potential U.S. high-speed rail projects should read this authoritative report.

China’s high-speed rail system began as part of China’s 11th five-year plan, which called for a network of four basically north-south high-speed rail (HSR) lines and four east-west ones. By 2012, there were 18,000 kilometers of such lines, and the 13th five-year plan called for a system totaling 37,900 kilometers—but that was soon superseded by the China Railway Group’s 2021 plan for a 70,000 km system by 2035. However, the soaring costs and growing concerns about bad planning led to an “emergency brake” halt to new lines as of 2022.

What seems to have happened goes beyond extensive overbuilding by the state-owned railroad company. Lower-level governments added numerous (often far too short) links to the system as prestige projects. Over 100 of these too-short lines now exist. According to Lu’s analysis, the vast majority of the HSR “system” (which he terms a “hodge-podge”) loses money, due to low passenger demand. This is partly because a great many stations have been located well outside the centers of metro areas, and without direct local highway or light rail connections. He devotes an eight-page section just to “absurdly located and excessively costly grand HSR stations.”

By the author’s analysis, only six high-speed rail lines (all between major metro areas) break even on operations, and none of them cover more than a small fraction of their construction costs. As of 2023, China’s cumulative HSR debt had reached 6 trillion yuan ($839 billion).

China calls itself a communist country, with decisions about nearly everything decided by allegedly rational central planners. That clearly has not happened with China’s implementation of HSR. The system that has been implemented makes no sense, with numerous short lines that duplicate existing passenger and freight rail service. But the bizarre “planning” goes beyond that. As he notes, “Along several major passenger and freight corridors, the authorities overseeing different modes of transport have each proposed major trunk line projects, yet coordination across sectors remains lacking.” And he adds that “Even among departmental specialists, there is often a lack of objectivity when analyzing and forecasting supply and demand.” And “As a result, transport sectors operate in isolation, stations are constructed on an excessive scale and are increasingly far from residential zones.”

There is an underlying reason for these failures of central planning. It’s explained by a discipline called “public choice theory,” which some have referred to as studying the economics of politics. One of its pioneers, James Buchanan, won a Nobel Prize in economics in 1986 for his role in pioneering this field. In basic terms, public choice theory postulates that public officials are influenced by the same kinds of self-interest as participants in markets. Hence, the interests of planners and bureaucrats may be to win plaudits for grandiose monuments rather than projects that make economic sense.

It’s not clear whether the author is familiar with public choice theory, but he grasps the basic concepts. For example, he writes:

“Debts incurred today won’t come due while they [planners] are still in office. So why not borrow? Why not pursue grand construction schemes? The more HSR projects a region has under way, the more funding it attracts from multiple sources, and the greater the rewards for local leaders. Over time, this has given rise to an addiction to large-scale construction.”

There are lessons here regarding proposed U.S. high-speed rail projects, as well as for infrastructure plans that fail to analyze supply and demand or fail to insist on rigorous benefit/cost analysis. Thanks to Prof. Lu Dadao for this provocative new study.

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Ideas Proliferate for 2026 Surface Transportation Reauthorization

Transportation groups have been sending open letters to Congress on their ideas for the upcoming reauthorization bill, which needs to be passed by Sept. 30 of next year. I like some of their ideas and dislike others, so for what it’s worth, here is a brief overview. Marc Scribner reviews Reason Foundation’s proposals in the following article in this newsletter.

To me, the most disturbing proposal is that Congress, at a minimum, should provide a transportation funding level that matches what was provided in the Infrastructure Investment and Jobs Act (IIJA) legislation, a large fraction of which was borrowed from future generations (i.e., increasing the federal budget deficit each year and hence the national debt). This is highly irresponsible, given the downgrading of federal bonds by the big three rating agencies and the looming 2033 insolvency of both Social Security and Medicare. All or nearly all of a 29-member coalition of business and transportation infrastructure organizations have nevertheless supported this as the minimum funding level.

On the other hand, that same coalition does call for “fixing” the Highway Trust Fund, which would mean increasing federal fuel taxes by a whopping percentage and adding a corresponding federal highway user fee for electric and hybrid vehicles. (But unlike a recent suggestion from the House Transportation & Infrastructure Committee, the rate per mile for electric vehicles should be comparable to the rate per mile for petroleum-fueled vehicles.)

Several groups advocate further federal efforts toward working out a future propulsion-neutral road user charge/mileage-based user fee (RUC/MBUF) for all roadways, which also makes sense, but we aren’t close to getting there, because the cost of collection (using current technology) would be 10 times what it costs to collect fuel taxes.

There is also broad support for further infrastructure permitting reform, despite recent progress via a Supreme Court decision and reforms to the White House Council on Environmental Quality. The remaining major reform, as I wrote last month, is to reduce or eliminate environmental litigation that takes place after completion of detailed environmental studies.

If Congress were to take seriously the impending fiscal insolvency of the federal government, it would start to narrow the scope of the federal program. One idea, suggested to me by Argentine colleague Eduardo Plasencia last year, would be to rescind the 44% expansion of what is now called the Enhanced National Highway System, which, in the MAP-21 reauthorization, added 70,000 miles of mostly suburban and urban roads to what had been an NHS made up of highways linking cities. Undoing that would remove federal regulations and federal funding from those added roadways. Remember that the original national system consisted solely of the Interstates, which were the only new highways that were 90% funded by the federal government. The states own all important roadways, and they should resume stewardship of those non-highway components. Another potentially doable reform would be to eliminate all discretionary grants, in a bipartisan recognition that these amount to “executive branch earmarks.”

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Reason Foundation’s Reauthorization Proposals
By Marc Scribner

Last year, Reason Foundation’s transportation policy team began developing recommendations for the federal surface transportation reauthorization due by the end of Sept. 2026. Earlier this year, we submitted our recommendations to congressional committees of jurisdiction for their consideration. In July, the U.S. Department of Transportation (DOT) issued a request for information asking what it should include in its reauthorization proposal to Congress. Reason Foundation responded to DOT’s request, making our recommendations public. Below are summaries of Reason Foundation’s nine reauthorization recommendations, in which topic headers link to our full explanations. Each recommendation includes suggested legislative text or reform principles.

A Fiscally Responsible Surface Transportation Reauthorization Bill: Programs under recent surface transportation reauthorizations have become increasingly fiscally irresponsible. The expansion of discretionary grant programs, especially under the current Infrastructure Investment and Jobs Act of 2021, has created a vast catalogue of executive branch earmarks that are poorly targeted and managed. Further, Congress has been bailing out the Highway Trust Fund with general tax revenue, degrading the users-pay principle that underpins the trust fund. Rising public debt and a looming social entitlement program crisis underscore the urgency of surface transportation fiscal stabilization. Restoring fiscal responsibility to federal surface transportation programs will require eliminating—or at least minimizing—discretionary grant programs, aligning Highway Trust Fund outlays with expected user-tax receipts, and increasing the flexibility of states to finance their own infrastructure improvements.

Give States a New Option for Converting from Per-Gallon Taxes to Per-Mile Charges: States generally understand the need to shift from per-gallon fuel taxes to propulsion-neutral mileage charges, but progress toward that goal has been very slow for both technical and political reasons. One alternative to jump-start this needed transition is to allow mileage charges on the limited-access Interstate highways, from on-ramp to off-ramp. This would be relatively simple to implement and would address privacy concerns by forgoing the collection of trip-specific data. To enable this change, Congress could modify the existing Interstate System Reconstruction and Rehabilitation Pilot Program to allow any state to toll any of its Interstates. To address “double taxation” concerns, the program should require states to provide fuel-tax rebates to motorists and truckers for all miles traveled on the converted Interstates. Read Reason Foundation’s recommended legislative text here.

Expanding Private Activity Bonds for Major Transportation Projects: Tax-exempt private activity bonds (PABs) for surface transportation were first authorized by Congress in 2005 and have become an important financing component in infrastructure megaproject public-private partnerships (P3s). Prior to their authorization, P3s in transportation projects were rare in the United States, despite the large fiscal and delivery benefits. These PABs were meant to level the playing field between conventional procurement that has long had access to tax-exempt government bonds and P3s, and have proven highly successful. The original PABs legislation included a cap of $15 billion in lifetime bond issuance, which was doubled to $30 billion in the Infrastructure Investment and Jobs Act of 2021. But there are at least $31 billion in P3 construction costs expected to reach the financing stage over the next several years, and as of August 15, 2025, the Build America Bureau estimated that the remaining PABs capacity was only $1.1 billion. To remedy this problem, Congress should eliminate the PABs lifetime volume cap and expand eligibility to seaports and airports. This would bring better financing parity to P3s and traditionally procured projects and deliver better value to taxpayers. Read Reason Foundation’s recommended legislative text here.

Reforming the TIFIA Loan Program: The Transportation Infrastructure Finance and Innovation Act (TIFIA) program was created by Congress in 1998 for the purpose of addressing capital market gaps for promising surface transportation infrastructure projects. As of 2022, TIFIA loans had helped to finance 98 projects in 22 states. Originally, TIFIA loans were limited to 33% of the project budget and required two investment-grade ratings. These limitations led to the program’s very low loss rate. In recent years, TIFIA’s eligibility criteria have been weakened: projects can now receive loans up to 49% of budgeted costs and only one investment-grade rating is required. The scope of eligible projects has expanded to transit-oriented development, INFRA grant projects, state infrastructure banks, airports, seaports, and natural habitats affected by infrastructure. There is a very real risk of at least the perception of TIFIA being transformed into a traditional discretionary grant program, with the associated reduced accountability. To minimize both financial and political risk to TIFIA, Congress should restore the original requirements on loan size, loan terms, investment-grade ratings, and project eligibility. Read Reason Foundation’s recommended legislative text here.

Discretionary Grant Programs Need to Be Reformed: Under IIJA, discretionary grant funding ballooned to $200 billion that was spread over dozens of different programs, accounting for approximately one-fifth of total transportation funding. Several new programs were established to directly aid local governments, which had little or no experience with federal grant programs. This unprecedented environment led to severe delays, poor documentation, and questionable award decisions. A growing consensus recognizes that the Department of Transportation’s discretionary grant programs lack focus, have been overly political, and cannot be executed in a timely manner. To address these challenges, Congress should reduce the number of discretionary grant programs to one per mode, focus on core national transportation priorities, establish quantitative project scoring criteria, and mandate increased quantity and quality of documentation explaining the award process.

Prioritizing Maintenance in Federal Transit Programs: In recent decades, approximately 20% of funding in each surface transportation reauthorization has been allocated to public transit. For large transit systems, federal grants are generally limited to capital improvements, with the federal government typically paying 80% for eligible projects and the local sponsor providing a 20% match. Transit systems are in poor shape throughout the United States in part because federal grant programs do not sufficiently encourage maintenance before expansion. With nationwide transit ridership down one-fifth since the pandemic and growing fiscal challenges, Congress should prioritize maintenance over capital expansion projects. Specifically, the federal share for New Starts, Small Starts, and Core Capacity grants should be capped at 50%, while the maximum federal share for State of Good Repair grants should remain at 80%. Read Reason Foundation’s recommended legislative text here.

Improving Public Transit Efficiency: With nationwide public transit ridership remaining depressed at roughly 80% of pre-pandemic levels, transit agencies are facing growing financial problems. However, while transit productivity collapsed following the onset of the COVID-19 pandemic, it had been steadily declining for decades. Operating expenditures make up two-thirds of transit agency costs, with labor accounting for a majority of operating costs. A central problem is a 1964 labor law known as Section 13(c), which establishes strict labor protections for transit agency employees as a requirement to be eligible for federal funding. Because Section 13(c) supplements other government employee labor laws, transit agency employees are arguably the most protected class of U.S. workers. This law has inhibited modernization of transit operating practices for 60 years, preventing the adoption of competitive contracting and automation that are increasingly mainstream outside the United States. Adopting these practices and technologies could reduce transit operating costs by one-third to one-half, and thereby pull agencies back from their approaching fiscal cliffs. Congress should repeal Section 13(c) in its entirety, which is presently codified at Section 5333(b) of Title 49, United States Code.

Clearing a Bureaucratic Roadblock to Safer Driverless Trucking: Autonomous commercial motor vehicles have great potential to improve roadway safety and logistics efficiency. Developers have been successfully validating their technology on U.S. public roads for years and have recently launched limited commercial service. However, expansion throughout the United States faces regulatory challenges. In particular, a requirement that drivers of commercial motor vehicles must place warning triangles or flares around their vehicles that are stopped or disabled along highways presents a unique barrier to driverless trucking that Congress can quickly address. In lieu of placing warning devices, a number of companies have proposed alternative means of compliance through truck-mounted warning beacons that likely achieve a greater level of safety than the status quo. Congress should instruct the Federal Motor Carrier Safety Administration to allow truck-mounted warning beacons as an alternative means of complying with the general warning-device rule. Read Reason Foundation’s recommended legislative text here.

Advancing Performance-Based Rail Safety Regulation: New automation technologies are increasingly reshaping transportation systems in a variety of ways for the benefit of safety and efficiency. In the case of freight rail, the ability to adopt new technologies in the face of increasingly automated trucking is also a competitive imperative. Yet many of the rules governing the freight rail industry are decades-old and highly prescriptive, often referencing outdated technical standards. One example is automated track inspection, which has faced an uncertain path due to inflexible regulations and interest-group politics. Another is a century-old statute requiring automatic couplers on railcars, which pose a barrier to entry of a new automated rail technology tailor-made to compete with short- and medium-haul trucking. To reorient federal rail safety regulations toward the future, Congress should require the Federal Railroad Administration to consider performance-based regulatory alternatives whenever proposing or adopting a rule, streamline the waiver petition process, and conduct periodic comprehensive reviews of rules, orders, and guidance documents to assess their effectiveness, consistency, and whether they reflect the current best technologies and practices.

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A Cost-Effective Fix for Amtrak’s Northeast Corridor

Over the past decade or two, there have been many grandiose proposals for high-speed rail in the Northeast Corridor: Boston-New York-Washington. Most have had enormous estimated costs, and the expectation of mostly federal funding, so none of them have come anywhere close to being built. A new approach proposed by the Marron Institute at New York University might turn out to be the exception.

To begin with, let’s ignore the ridiculous super-high-speed rail fantasies and focus on more recent proposals. In July 2021, Jeff Davis of the Eno Center for Transportation wrote about a proposal from the Northeast Corridor Commission: a 15-year plan estimated to cost $117 billion. It was presented as saving 26 minutes for an Acela trip from DC to New York and saving 28 minutes between New York and Boston. The plan itemized a long list of station and track improvements. Davis pointed out that only two months before, Amtrak CEO William Flynn told the House Transportation & Infrastructure Committee that it had a $50 billion plan whose trips would be slightly faster than the Commission’s proposal, at less than half the cost. I’ve never seen that disparity resolved—and neither proposal is being implemented.

But a project team at NYU’s Marron Institute recently released a new Northeast Corridor plan that would cost only $17 billion and lead to even faster trips: just under two hours for either of the two main legs of the Corridor. The key to the Marron proposal is its radically different approach to what needs to be changed. As Alon Levy explained in a Wall Street Journal interview, their approach was to learn from what have become standard practices in Europe, especially Switzerland, but which have never been applied to very conservative, tradition-bound U.S. railroading.

One of these is to make modest improvements in tracks and switching to save time in small increments that really add up. Another is to standardize schedules and run them all day, with the trade-off being that some small station stops would be eliminated so that all trains served all the same stops. Yet another change would be modest speed increases at certain points on the route—on sharper curves, approaching stations, etc.—which are standard in Europe and legal in the United States, but are not used due to traditional super-cautious practices. To be sure, some commuter trains would still operate at slower speeds than Acela, so some of the improvements would be strategically located passing sidings.

Another factor in the faster trips would come about because the set of changes would enable much of the “padding” built into current schedules to be eliminated (again, as in Europe). Still another factor would be changing all the locomotives to electric power. Electric trains accelerate faster and brake faster, which enables local trains to be able to operate closer to express trains, reducing the need to add passing tracks.
 
Levy told the WSJ that they have done detailed simulations to test how these features would work together. I don’t know to what extent their proposal has undergone peer review, but if this has not yet been done, it would be important that some of the reviewers be very familiar with European (especially Swiss) passenger railroads.

As I was writing this article, another Wall Street Journal article reported that Amtrak’s new-model Acela trains are actually slightly slower, Boston-New York City and NYC-DC, than the regular Acelas—again, due to obsolete infrastructure and operating practices.

I was impressed last year with the Marron Institute’s large Transit Costs Project that sought to identify reasons why new rail transit projects generally cost far more in the United States than in many European countries. One of their transportation experts served as a peer reviewer on one of my 2024 policy studies. I hope their new Northeast Corridor study gets serious attention.

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The P3 Option for Deficient Bridges
By Baruch Feigenbaum

Building and maintaining safe bridges is one of a department of transportation’s core tasks. Structurally deficient bridges are both a roadway quality measure (similar to pavement condition) and a safety measure (similar to fatality rate). Each year, Reason Foundation’s Annual Highway Report evaluates states in 13 categories, including bridge quality. Given the report’s expected release later this year, it’s worth assessing not just where bridge condition is today but how much it has improved over the last handful of years.

Some states excel in bridge quality, others struggle, and most are in the middle. The good news for states that are struggling is that there is a proven alternative delivery method that can improve bridge quality on a widespread scale.

In 2023, five states, led by Arizona, had fewer than two percent of their bridges classified as structurally deficient. Yet nine states, with West Virginia being the worst, had more than 10% of their bridges as structurally deficient. The good news is that unlike the fatality rate, which has been uneven, and spending, which has increased even adjusting for inflation, bridge condition has continued to improve. Back in 2017, only two states had fewer than two percent of their bridges as structurally deficient, while 17 states had more than 10% of their bridges as deficient. In 2017, the worst state, Rhode Island, had more than 23% of its bridges in poor condition. By 2023, the worst state, West Virginia, had fewer than 20% of its bridges in poor condition.

The average is also improving. In 2017, the mean state had about 8.5% poor condition bridges. By 2023, the average had declined to 6.2%.

While DOTs are often criticized for being slow bureaucracies, the data show that they have clearly prioritized improving bridge conditions. Many anti-highway advocates claim DOTs aren’t focused on maintenance or safety. According to their narrative, DOTs just want to build more infrastructure regardless of safety. But those advocates are very wrong.

There is no clear geographic rationale as to why some states are excelling and others are struggling. While some metrics, such as fatality rate, tend to favor denser, more urbanized states, and others, such as spending, tend to favor more rural states, bridges are different. In 2023, the top 10 states with the best bridges were sunbelt states with newer infrastructure, led by Arizona and Nevada. But Delaware and Vermont, two Northeastern states with old infrastructure and little population growth, also ranked highly. The bottom 10 states were even more of a mix. Five were Rust Belt states: Illinois, Maine, Michigan, Pennsylvania, and Rhode Island. Three others were Great Plains states with somewhat newer infrastructure: Iowa, North Dakota, and South Dakota. And two stood alone: Louisiana and West Virginia. Clearly, management and priorities are the major factors in bridge condition.

There are several steps states can take to improve their bridges. One is to develop an asset management plan to better manage conditions over the lifecycle of the infrastructure. Another is to take part in peer exchanges. A struggling Northeastern state, such as Maine, could benefit from speaking with a fellow Northeastern Association of State Transportation Officials member, Vermont, that is excelling. States can also make better use of technology; many states use drones or robots, finding that technology has a better view of the bridge carriage or can more easily access parts of the bridge. Finally, states can dedicate funding to bridge improvements. There are many competing priorities for limited funding, but maintenance should be a higher priority than expansion, and roadways should be a higher priority than bicycle paths.

However, states with more than 10% of their bridges that are structurally deficient need to take more drastic action. Pennsylvania shows how an availability payment P3 can help provide financing and transfer risk for bridge improvements. The $1.12 billion Pennsylvania Rapid Bridge Replacement Project P3 replaced 558 structurally deficient bridges throughout the Commonwealth. The bridges were bundled in a single contract, accelerating construction. Under the design-build-finance-maintain model, Plenary-Walsh-Keystone partners is responsible for maintaining each of the bridges for 25 years after reconstruction concludes.

When Pennsylvania undertook the project it had the worst bridge conditions in the country. More than 25% of its bridges were structurally deficient, and the state did not have the resources to make the needed improvements. Without the P3, some bridges would have had weight limits, and others would have been closed entirely. Through the Rapid Bridge P3, the state was able to transfer risk, use a more business-like approach, and tap the private market to finance improvements. Today, Pennsylvania ranks 45th in bridge condition. This might not seem like a great ranking (although it’s better than the state’s 50th place ranking 10 years ago), but the state has reduced its percentage of deficient bridges by half in 10 years. Recently, the state closed on the Major Bridges P3 project, a similar approach for six Interstate highway projects throughout the state. Too few states have chosen this approach to rebuilding their bridges. All states with more than 10% of their bridges as structurally deficient should be examining the P3 option.

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Where’s the Outcry Over Immigration Raids on Construction?

An editorial in the Aug. 11 issue of Engineering News-Record was titled, “What to Do About Our Workers Under Siege.” The piece begins:

“U.S. Treasury Secretary Scott Bessent described President Trump’s trade policy approach as an exercise in ‘strategic uncertainty.’ Regarding the administration’s stepped-up undocumented worker raids, however, we remain unconvinced there is anything strategic about it. Instead, we see confusion, disruption and economic harm Rather than focusing on ‘the worst of the worst,’ as promised during his campaign, the administration has increasingly treated the construction sector as a primary enforcement target.”

The editorial went on to note that undocumented immigrants have long made up at least 12-15% of the U.S. construction workforce, accounting for $30 billion in annual payroll taxes, without those workers receiving benefits.

An article in the same issue of ENR noted that Hispanic workers have long been a key demographic in construction, making up 33.8% of this workforce in 2023 and likely to exceed 35% this year. The article described ICE raids on construction sites in Alabama, Florida, Louisiana, Texas, and elsewhere. The Associated Press and many other outlets have widely reported raids on places such as Home Depot parking lots, where would-be construction workers congregate early in the morning.

The White House says it has offered relief from the immigration raids to the agriculture industry, where fruit and vegetables are often harvested by seasonal workers, typically immigrants. However, Politico reports “the White House does not appear close to a policy decision — and farmers are getting frustrated with the delays.” The agriculture industry still holds out hope because, as Politico puts it, “In Trump’s first term, the White House paid out $28 billion in financial relief for farmers hurt by his trade policies” and because he has expressed some understanding of the large role played by often-undocumented immigrants in the hotel industry, which he knows extremely well. Like fruit-picking and the manual labor portion of construction, these tend to be jobs that most American citizens don’t seek.

ENR’s editorial urged construction trade organizations to “make a full-throated call for a temporary visa system, grounded in labor demand and compliance oversight.” These construction and transportation organizations also need to make the case for the need for these workers and infrastructure projects to the media and the public. Transportation construction costs, in particular, have increased dramatically over the past decade, and an ongoing labor shortage will likely lead to further delays and even higher costs.

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News Notes

Kansas Introducing Its First Express Toll Lane Project
Though it’s only six miles long, the new express lanes being added to U.S. 69 in Overland Park, KS are the first in the Midwest. To accommodate the new lanes, the four-lane highway has been expanded to six lanes, with the new express lanes separated from the general-purpose lanes by a double-white-line buffer area. During the last week of August, electronic tolling equipment was being installed in the northbound express lane, and a period of testing will follow. The lanes are expected to open to paying traffic in January.

Tennessee Identifies Shortlisted Teams for Nashville Express Lanes
On Aug. 20, Infralogic reported that four qualified teams have been short-listed for the I-24 express toll lanes design-build-finance-operate-maintain P3 project. The four teams are headed by ACS/Meridiam/Acciona, ASTM North America/FCC, Plenary/Shikun &Binui/Sacyr, and Transurban/Cintra. This project will be the first of four planned express toll lanes projects in the state.

Iceland Will Be First with RUC for All Vehicles
A transportation expert I’ve known for many years informed me (after reading the August issue of this newsletter) that the first country to implement a road user charge (RUC) for all vehicles will not be New Zealand (which plans to accomplish this within the next several years) but Iceland. As of Jan. 2026, all 315,862 registered motor vehicles (including trucks) will pay an annual fee based on the number of kilometers driven. It’s not clear if the 12,482 semi-trucks will pay a higher rate. Motorists will be able to make online payments during the year, rather than having to pay the annual total at year-end.

Record Pipeline of Transportation Projects vs. Dwindling Private Activity Bonds
The good news released by DOT’s Build America Bureau in late August is that the pipeline of approved P3 highway projects is at an all-time high, with most of them being express toll lane projects in Georgia, North Carolina, Tennessee, and Virginia. The bad news is that the remaining capacity of the current $30 billion Private Activity Bonds (PABs) program is now down to just $1.1 billion. Fortunately, Congress can fix this in the upcoming 2026 surface transportation reauthorization bill. Reason Foundation is arguing that the current $30 billion cap is obsolete, because the PABs program is no longer an experiment. Removing the cap would mainstream PABs; there is no federal cap on tax-exempt municipal bonds.

Georgia Removes Some I-85 Toll Exemptions in Atlanta
After Sept. 30, some vehicles that used to be exempt from the variable pricing on the I-85 express toll lanes will pay tolls. Henceforth, electric and alternative-fuel vehicles will have to pay the posted toll rate on all single-occupant trips. Carpools will still be exempt. In recent years, about 20% of all vehicles using the express lanes were toll-exempt.

Florida DOT Expands Tampa-Area Express Lanes
In a recently begun project, FDOT has launched a $340 million project to add two express toll lanes each way to 7.5 miles of I-275 in Pinellas County. To accommodate the new lanes, the project is also reconstructing four interchanges and modifying four bridges.

NEVI Reforms Should Speed Up EV Charging Station Implementation
U.S. DOT last month announced reforms to the troubled National Electric Vehicle Infrastructure (NEVI) program. The headline on most news stories focused on the removal of the requirement for state DOTs to add a charging station every 50 miles on their selected highways, but the reforms cover more than that. Gone are former requirements for labor union participation, small-business mandates, and required participation by businesses owned by minorities and women, many of which might be difficult to accomplish in rural states and/or may increase project costs.

Truck Producers Sue California Over ZEV Sales
A group of truck manufacturers has filed suit against the California Air Resources Board (CARB), arguing that since Congress overturned the regulation that led to the state’s “Clean Truck Partnership,” the state’s program is illegal. When the federal regulation was in place, the companies agreed to meet certain zero-emission requirements. After Congress overturned the regulation, the U.S. Justice Department sent CARB a “cease and desist” letter calling for it to drop its effort to continue the program despite Congress’s action.

Life Insurer Invests in U.K. M6 Toll Road
Life insurance company Just Group last month made a £20 million loan to the M6 toll road public-private partnership, owned by IFM Investors, which invests in infrastructure on behalf of public pension funds. The toll road company, Midland Motorways Group, received a 22-year refinancing loan to support upgrades, including a modernized electronic tolling system. The 27-mile, six-lane toll road in the West Midlands is the only such toll road in the U.K. Just Group deploys pension fund capital into revenue-generating infrastructure.

Delaware River Bridge Implements Protective “Dolphins”
ENR reported that the twin-span Delaware Memorial Bridge is installing “dolphins” to protect the bridge piers from collision damage from large ships. The two-year, $93 million project is adding eight stone-filled concrete 80-ft. diameter cylinders near the piers, with completion expected this fall. The project is under the auspices of the Delaware River and Bay Authority.

Cube Highways Buying India Toll Road
Indian firm Reliance Infrastructure is selling its Pune Satara Toll Road concession to Cube Highways and Infrastructure, owned by infrastructure investment fund I Squared Capital. In 2020, Reliance sold its Delhi-Agra Toll Road to Cube Highways. Both projects were developed under India’s Build-Operate-Transfer toll model.

Philip Howard’s Answer to Infrastructure Obstacles
In a policy paper for the Manhattan Institute, long-time government reform advocate Philip K. Howard sets forth a three-part agenda in “Escape from Quicksand: A New Framework or Modernizing America.” The first proposal would create a new framework for infrastructure projects, designating a lead agency with final authority to approve major infrastructure projects, constraining today’s extensive judicial review. Second, a National Infrastructure Board would approve projects, shielding elected officials from political backlash. Third, a nonpartisan Recodification Commission would work out the details of these reforms. I’m not sure this is the best approach. But I’m glad to see qualified people proposing solutions to the roadblocks that delay or kill much-needed infrastructure improvements.

Driverless Trucks on Highways at Night
In another step toward autonomous long-haul trucking, Aurora Innovation has been operating autonomous trucks at night between Dallas and Houston. Aurora says its new LIDAR system can spot obstacles 300 yards ahead and react 11 seconds sooner than a human driver. Competitor Kodiak is operating trucks between Atlanta and Dallas and between Houston and Oklahoma City. Long-haul trucking is the most difficult sector for retaining drivers. Moreover, a truck that does not have “hours of service” driver regulations should be able to operate far more hours per day, increasing productivity as well as saving on operating costs.

Ship Pilots Testing Remote Guidance
The Wall Street Journal reported that maritime pilots in Denmark are testing a new form of remote work. “Remote pilotage” is an emerging technology that enables an experienced pilot to guide a ship into and out of port from a console on shore (or in the case described, on a houseboat). The article reports that the technology from a firm called Danelec is the first to enable remote pilotage, using data transmitted from the ship being piloted. The International Longshoremen’s Association is coordinating the first Global Anti-Automation Conference in November, in Portugal. DanPilot, developer of the technology, says there are enough use cases to gain interest from pilots in Australia, Singapore, Finland, and Sweden thus far.

GDOT’s Russell McMurry Wins Award
The Commissioner of Georgia DOT, Russell McMurry, last month received the Lifetime Achievement Award from ITS America. This honor is awarded annually to a transportation professional who is recognized as a thought leader in intelligent transportation systems. McMurry has led GDOT since 2015 and is a long-time champion of transportation system management and operations (TSMO) and connected vehicles to everything (CV2X).

National Intercity Bus Atlas Published
A project managed by the Transportation Research Board (TRB) has released a booklet, “Implementation of the National Intercity Bus Atlas.” It summarizes the National Cooperative Highway Research Project that developed three guides: a user guide for intercity bus carriers and related companies, a user guide for transportation agencies, and a guide for maintaining and improving the intercity bus atlas.

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Quotable Quotes

“While this [IIJA] deficit spending allowed us to continue making important investment in infrastructure, it is fundamentally unsustainable. State and local governments, engineering and construction firms, and their workers understand that they cannot continue to rely on general fund revenue in order to make the robust investments in our infrastructure that are needed. We therefore need to find a new way to pay for these investments.”
—John Drake, VP, Transportation Infrastructure, U.S. Chamber of Commerce, letter to Hon. Sam Graves and Hon. Rick Larsen, April 30, 2025

“In favor of a merger, interchange between railroads at Chicago, Kansas City, and a few other sites is the bottleneck of all bottlenecks. A container might spend three days getting from Los Angeles to Chicago and another three days getting across a Chicago rail yard. The division of the country into east and west rail sectors can also be a problem for certain midwestern shippers, since their nearest carrier may have little interest in the short-haul portion of a longer trip that financially benefits a rival railroad.”
—Holman W. Jenkins, Jr., “Mergers Test ‘Madman’ Trump,” The Wall Street Journal, July 30, 2025

“Underpinning the concept of market-driven city planning is an acceptance that spontaneous order emerges without design. Labor markets create cities, ensuring that, even as millions of people make unpredictable decisions, equilibrium is maintained. Price signals lead to more housing where it’s needed, and at no point are millions of workers left without a home. . . . The location of jobs is decided by the market. In order to respond as efficiently as possible to maintain this spontaneous order, the location of housing should be, too. Urban planning has a place, but it’s in responding to what infrastructure people say they need—not breaking ground where planners think housing ‘should’ be built. In short, planners should respond to the labor market and not try to shape it themselves.”
—Alain Bertaud, “How to Build a City,” NYU Marron Institute of Urban Management, July 15, 2025. Bertaud is the author of Order Without Design, MIT Press, 2018

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The post Surface Transportation News: China’s high-speed rail boondoggle appeared first on Reason Foundation.

Transportation is one of many research areas we engage in. Among Reason’s transportation principles are the user-pays/user-benefits principle, market pricing, federalism (where each level of government is responsible for its transportation infrastructure and operations), and the idea that benefits should exceed costs, wherever possible. This leads to Reason supporting road pricing, toll financing of major infrastructure, public-private partnerships (P3s), and devolution of some functions from higher to lower levels of government.

In anticipation of reauthorization of the federal surface transportation program in 2026, our transportation team has developed a set of eight policy recommendations, which are posted on our website. Not all of the principles are relevant to the focus of this newsletter, so I will summarize three of the most notable for this audience here, and another one next month.

The first principle is to implement a more fiscally responsible federal surface transportation reauthorization bill. From its creation in 1956 until 2008, the Highway Trust Fund (HTF) was self-supporting—meaning that the spending it authorized each year was covered by federal highway user tax revenues collected.

However, over time, Congress has undercut this basic principle. It has not increased federal gasoline or diesel taxes since 1993, but it has continued spending far more than the gas tax brings in.

Secondly, Congress gradually converted the Highway Trust Fund into a more general transportation fund, providing grants for transit, sidewalks, bike paths, and other projects.

So instead of viewing fuel taxes as highway user fees, taxpayers increasingly see them as just taxes—and Congress refuses even to consider raising them to meet the needs of today’s highways. Reason doesn’t support tax increases. Reason supports highway users paying for the full costs of building and maintaining the highways they use. If roads require more funding, users, not general taxpayers, should be responsible for the costs.

If federal gas tax rates were adjusted for consumer price inflation since 1993, they would bring in more than double their current amount. Instead, Congress began (and continues) to bail out the Highway Trust Fund with general funds. Jeff Davis of Eno Transportation Weekly puts the total transfers from the federal government’s general fund to the HTF since 2008 at $272 billion. Since the federal government has been operating with budget deficits since 2000, all general fund transfers can be considered to consist of borrowed money, increasing each year’s budget deficit and the overall national debt, now over $37 trillion. 

What should Congress do in the upcoming reauthorization bill?

Sooner or later, the federal government’s unfunded borrowing must cease, not only in transportation, but across the board. So Reason’s first recommendation calls for making the Highway Trust Fund’s spending equal its revenues. Congress can achieve this either by a substantial increase in federal highway gas taxes, which is unlikely politically, or by making significant reductions in Trust Fund spending, equivalent to approximately $40 billion per year, based on figures from the Congressional Budget Office.

We don’t really expect Congress to cut spending or increase the gas tax to reflect inflation since it was last raised. However, one step in that direction, which already has some supporters, would be for Congress to eliminate discretionary grants (also known as “administrative earmarks”) in the transportation bill. The Government Accountability Office cites discretionary grants, primarily due to the Infrastructure Investment and Jobs Act legislation, as costing $110 billion over five years, or approximately $22 billion per year. Reducing that spending would certainly be a start.

To offset a potentially significant decrease in Highway Trust Fund spending, Congress could consider increasing federal support for tolling and public-private partnerships, which are also discussed in several other Reason reauthorization proposals.

A fiscally responsible reauthorization bill would send a message to states that the days of so-called “free” federal money need to end to avoid the increasingly predicted federal insolvency expected when both Social Security and Medicare exhaust their current trust funds within the next decade.

Accordingly, a second Reason Foundation recommendation is to significantly increase tax-exempt private activity bonds (PABs), which enable eligible public-private partnership projects to utilize tax-exempt financing for surface transportation infrastructure. This idea is likely a no-brainer for Public Works Financing readers, who are well-aware of the vast array of highway and transit projects in the P3 pipeline today.

From their initial authorization in 2005, it took until 2023 for the initial $15 billion in private activity bonds to be issued for P3 projects. However, with the rapid expansion of such projects, the revised $30 billion total had already decreased to around $4 billion by the end of 2024.

The original volume caps on private activity bonds imposed by Congress ($15 billion, later raised to $30 billion) were perhaps justified at the time because surface transportation PABs were experimental—no one knew how much demand there would be for them. That concern is no longer relevant; these PABs have proven their value.

Therefore, Reason proposes simply mainstreaming tax-exempt surface transportation bonds. There is no federal cap on tax-exempt municipal bonds; neither should there be a cap on tax-exempt PABs for transportation projects. We also suggest expanding their scope to airport and seaport P3 projects.

A third Reason recommendation for the reauthorization bill concerns the successful Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which provides low-interest federal loans as gap-closers for projects that can get investment-grade bond ratings. Our concern is that recent congressional and administration actions to expand TIFIA—financing 49% of project cost rather than 33%, offering much lower interest rates to rural projects, and accepting marginally transportation projects (transit-oriented development, state infrastructure banks, cleaning up lands disturbed by construction) could weaken the historical soundness of the TIFIA loan portfolio—or encourage Congress to expand the program’s scope even wider, further weakening its portfolio.

However, as reported in last month’s PWF issue, the Department of Transportation’s Build America Bureau and Transportation Secretary Sean Duffy announced administrative liberalization of TIFIA: allowing all loans to be for 49% of project cost, and potentially opening the program to transportation-marginal projects like land restoration and transit-oriented real estate projects.

At the mid-July American Road & Transportation Builders Association (ARTBA) public-private partnership conference, presenters generally welcomed the “expansion” of TIFIA (despite all loans at 49% using up available loans on fewer projects), and ARTBA itself has included this kind of expansion in its reauthorization recommendations.

Another panel at this conference brought praise for this revamp from representatives of the U.S. Chamber and the American Association of State Highway and Transportation Officials.

My political concerns over this administrative change remain. On one hand, legislators may see this “modest” expansion as encouragement to make TIFIA even broader in scope, adding further risk to its currently very sound loan portfolio. On the other hand, I can imagine populist members targeting the expanded TIFIA as a future enabler of boondoggles and therefore calling for its elimination.

We have a very different Congress and presidential administration today than we have been accustomed to over the last several decades. So Reason’s recommendation for the reauthorization bill is to return TIFIA to its original limited project scope and the 33% limit on loans. Besides being more prudent, this would also allow more projects to get TIFIA financing each year.

That’s all I have space for this month. Next month, I will discuss Reason’s potentially very large policy change for jump-starting the transition from per-gallon fuel taxes to mileage-based user fees.

A version of this column appeared in Public Works Financing.

The post 3 top priorities for the surface transportation reauthorization bill appeared first on Reason Foundation.

On behalf of Reason Foundation, we respectfully submit these comments in response to the Office of the Secretary’s (“OST”) request for information on advancing a surface transportation proposal that focuses on America’s most fundamental infrastructure needs.

Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas, including transportation. Since 1978, Reason Foundation has led the development and implementation of innovative solutions to complex transportation problems—emphasizing the roles of markets and choice in delivering durable transportation improvements. Our approach is aligned with the Department of Transportation’s four major policy themes that it aims to advance in a forthcoming surface transportation reauthorization proposal: enhancing safety, accelerating project delivery, increasing opportunity, and strengthening partnerships.

Our policy proposals are divided into topic areas. Each proposal contains either legislative reform principles or recommended legislative text.

Jump to policy proposal topic areas:

• A fiscally responsible surface transportation reauthorization bill
• Give states a new option for converting from per-gallon taxes to per-mile charges
• Expanding private activity bonds for major transportation projects
• Reforming the TIFIA loan program
• Discretionary grant programs need to be reformed
• Prioritizing maintenance in federal transit programs
• Improving public transit efficiency
• Clearing a bureaucratic roadblock to safer driverless trucking
• Advancing performance-based rail safety regulation

A fiscally responsible surface transportation reauthorization bill

The U.S. government’s fiscal situation is going from bad to worse. Rising concerns about the federal government’s fiscal solvency are likely to have a negative impact on transportation programs that depend on general fund support.

Congress faces the need to reauthorize federal surface transportation programs in 2026, and a top priority should be increasing the long-term resilience of these programs by insulating them from the federal government’s worsening fiscal problems. If Congress wanted to put transportation investment on a sound, longer-term basis—meaning no more unfunded programs based on irresponsible federal borrowing—what kind of measures could they consider?

One idea that already has some congressional supporters is to abolish discretionary grant programs in favor of going forward only with formula funding. These discretionary grants are essentially executive branch earmarks. Just as congressional earmarks should be banned, so should executive branch earmarks. Short of abolition, more modest reforms of federal discretionary grant programs are discussed later in this memo.

A second key change would be to make the federal Highway Trust Fund self-supporting, as it was until 2008. That means formula funding would be limited to the revenue from federal user taxes. The Congressional Budget Office in January estimated that this change would require increased revenue of $40 billion per year or reduced spending of the same annual amount. Highway users should be paying for the highways they use, rather than having the true cost disguised by federal borrowing.

Those are relatively modest changes, but state DOTs and legislatures will undoubtedly be concerned because they have gotten used to the funding levels provided by recent surface transportation reauthorizations based on that irresponsible federal borrowing. This is why Congress should also give states opportunities for greater transportation investment.

One option would be to expand financing mechanisms for large-scale public-private partnerships (P3s). For greenfield projects (e.g., replacing major bridges), removing the cap on qualified private activity bonds and expanding TIFIA loans would have minimal effects on the federal budget but could foster increased state and local use of P3s. Recommended reforms to both of these federal financing programs are discussed in greater detail later in this memo.

Another program change could be to liberalize the never-used Interstate System Reconstruction and Rehabilitation Pilot Program (ISRRPP) by opening it up to all 50 states and allowing them to use toll financing to rebuild any or all of their Interstates needing reconstruction. Gradually shifting Interstates from federal funding to toll financing would enable the gradually shrinking federal and state fuel tax revenues to be reserved for non-Interstates.

As is explained later in this memo, liberalizing ISRRPP could lead to the first large-scale shift from fuel taxes to road usage charges (RUCs). The Interstates and other limited-access highways handle about one-third of all U.S. vehicle-miles of travel, so converting them to per-mile toll charges could be the first large-scale transition away from fuel tax dependence. Per-mile tolls cost far less to collect than any projected large-scale RUC system now being considered. With the future of the planned national RUC pilot project mired in uncertainty, the Interstate tolling alternative could be a feasible replacement, as individual states opt into it.

An underlying reality too often forgotten is that states own virtually all of this country’s highways. The federal Highway Trust Fund was created in 1956 for the sole purpose of building the Interstate highways. It was never intended to be an ongoing federal-aid program for highways and transit. It gradually morphed into that after most of the Interstates were built.

A fiscally responsible 2026 surface transportation bill could also convey a message to state legislatures and their DOTs: The federal government can no longer afford ever-expanding borrowing to support projects that states and metropolitan areas could finance themselves as infrastructure owner-operators. If there really is a federal fiscal collapse within the next 10 years, states and metro areas need to start planning now for how they will cope when the “free” federal money runs out.

Unlike the federal government, states must balance their budgets each year. Relying more on their own financing capabilities to issue both revenue bonds and general obligation bonds—and with increased use of long-term P3s where feasible—states should be able to phase in state responsibility for their highways.

As for mass transit, California has long provided a model via its self-help counties. Every county that includes one or more large metro areas has long embraced dedicated transit sales taxes, usually approved by voters for several decades at a time. This approach localizes the funding, instead of requiring rural residents to help pay for urban transit systems that they will never use.

The coming end of free federal money for highways and transit is in sight, though few have begun to realize this. The 2026 reauthorization should be crafted with this impending change in mind.

Recommended reform principles:

• Eliminate, or at least minimize, discretionary grant programs supported by the general fund.
• Align Highway Trust Fund outlays with expected user-tax receipts.
• Increase flexibility for states to finance their own infrastructure improvements.

Give states a new option for converting from per-gallon taxes to per-mile charges

Most state DOTs understand the need to shift from per-gallon fuel taxes to per-mile charges dedicated to highway funding. But progress toward this goal has been very slow. Seventeen states have carried out pilot projects, but none have enacted a permanent program that applies to all vehicles. And Congress’s plan for a national pilot program is three years behind schedule and will not have any results useful for the 2026 reauthorization.

Very real problems have held back progress, despite some lessons learned from state pilot projects. First, there are still serious concerns about privacy—about being “tracked” on every trip one makes. Motorists and taxpayers are also concerned that a new per-mile charge would be in addition to their current federal and state fuel taxes—“double taxation.” And many experts on potential technology for per-mile user fees for all types of roads have concerns about collection costs that may be 10 to 20 times more than the cost of collecting fuel taxes.

One alternative that could help start this needed transition is the following. Instead of starting with one kind of vehicle (such as electric cars), states could start with a type of roadway. The Interstate highways (some of which are already tolled) would be relatively easy to convert to per-mile charges.

Consider the privacy concern about all journeys being “tracked” and reported to the government. Interstates (and other “limited-access” highways) have only a small number of entry and exit points. A trip on an Interstate would be charged from the on-ramp to the off-ramp, revealing no details about where the trip originated or terminated. Motorists on today’s turnpikes express no concerns about the electronic tolling that charges them from entry to exit.

The concern about double taxation is very real, and this has been a long-standing concern of the trucking industry in particular, when they must pay tolls and fuel taxes on the same tolled highway. The solution would be for a state that opted for per-mile charging to provide fuel-tax refunds for the miles traversed on its converted Interstates.

As for technology, today’s electronic tolling with pre-paid accounts has a cost of collection as low as 5% of the revenue for cars (and less than that for trucks). That compares with 2% to 3% cost of collection for fuel taxes. But 5% is much less than the 10-20% estimated for large-scale systems by per-mile-charging experts today.

Starting the transition to per-mile charges with the Interstates and other limited-access highways would offer several additional benefits. Were all states to make this transition, about one-third of all vehicle miles of travel would be shifted from fuel taxes to per-mile charges. And by providing refunds of fuel taxes for the miles driven on converted highways, states would demonstrate that there would be no double taxation involved.

To implement this change, Congress could modify an existing federal statute that has never been used: the Interstate System Reconstruction and Rehabilitation Pilot Program (ISRRPP). This program allows only three states to convert one Interstate highway to tolling. Such a conversion is currently politically unviable because singling out only one Interstate to have tolls would lead to protests from users of that one corridor (as happened when North Carolina proposed using ISRRPP for I-95). Instead, ISRRPP would be opened to all 50 states and all of each state’s Interstates.

To prevent “double taxation,” the legislation would require participating states to provide fuel tax rebates to motorists and truckers for all miles traveled on the converted highways. Calculating those rebates would be a simple function of the per-mile charging software. Similar rebates are being provided today on two U.S. toll roads: the Massachusetts Turnpike and the New York Thruway.

To participate in this new program, a state transportation department would apply to the Federal Highway Administration. The two parties would negotiate and sign an agreement to comply with the terms of the legislation.

View Reason Foundation’s recommended legislative text here.

Expanding private activity bonds for major transportation projects

Surface transportation Private Activity Bonds (PABs) are tax-exempt bonds first authorized by Congress in 2005 as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Their purpose is to create a level financial playing field for highway and transit projects developed under long-term public-private partnership (P3) agreements. Traditional state and local government-financed transportation projects routinely use tax-exempt municipal bonds, which have lower interest rates than the taxable bonds historically available for privately financed projects. Thus, tax-exempt PABs enable the financing costs for P3 projects to be nearly the same as for traditional government-financed projects.

Prior to the advent of PABs, transportation P3 projects were few and far between. The early projects relied on bank debt at typical bank loan interest rates. Only three such projects were financed between 1995 and 2007. Between 2005 (when PABs were authorized) and 2023, there were 14 highway P3 projects financed by revenue and 12 highway and transit P3 projects financed based on availability payments. PAB-supported P3 projects have been implemented in 13 states, from California to Virginia.

The original PABs legislation included a cap of $15 billion worth of such bonds. By 2020, as more states began implementing P3 surface transportation projects, the cap was on the verge of being reached. In the Infrastructure Investment and Jobs Act (IIJA) of 2021, Congress increased the cap to $30 billion. Since then, the demand for P3 projects has increased dramatically. There are at least $31 billion of P3 project construction costs expected to reach the financing stage over the next several years. Yet, as of June 1, 2025, DOT’s Build America Bureau estimated that the remaining PABs’ capacity was only $500 million.

Congress could increase the surface transportation PAB cap again in the forthcoming reauthorization, but the better option would be to eliminate the cap altogether. When the original legislation was enacted in 2005, PABs were seen as an experiment, and it took 16 years before the original $15 billion cap was reached. But in only four years, the additional $15 billion is already close to being allocated. Surface transportation PABs are no longer an experiment and should now be mainstreamed as a proven tool for financing transportation P3s.

Removing the cap on PABs was first suggested by the bipartisan Special Panel on Public-Private Partnerships convened by the House Transportation and Infrastructure Committee in 2014. That panel also suggested that transportation PABs be extended to projects at airports and seaports. These proposals were endorsed as part of the Trump administration’s first-term infrastructure plan, “Legislative Outline for Rebuilding Infrastructure in America,” released in February 2018.

It is important to understand that transportation PABs are non-recourse bonds. They are obligations of the P3 entity: neither federal not state taxpayers are at risk if the bonds run into trouble. Equity investors and bond-buyers alike understand this point, and they have no basis for expecting a federal or state bailout in the event of revenue shortfalls.

Both the U.S. Treasury and Congress’s Joint Committee on Taxation (JCT) often express concern about expanding the scope for tax-exempt bonds. Their concern is that projects that get financed via PABs would likely otherwise be financed via taxable bonds, so the Treasury would be losing revenue from such taxable bonds. But evidence suggests this assumption is incorrect. The very slow progress of transportation P3 projects between 1995 and 2007 suggests that the private sector rejected the alternative of using taxable bonds. The few large surface transportation projects that took place during those 12 years were evidently financed by state and local governments using traditional tax-exempt municipal bonds—which are not subject to any volume cap.

Contrary to the assumptions of the Treasury and JCT, eliminating the PABs volume cap and expanding eligibility could increase federal tax revenue. The $62.5 billion invested in transportation P3 projects through 2023 via infrastructure developers and infrastructure investment funds is expected to lead to profits for these entities, resulting in their paying federal corporate income taxes. These projects are designed, built, financed, operated, and maintained by companies from this new industry, with project terms ranging from 35 to 70 years. There is every expectation that this new industry will be an ongoing source of federal corporate income tax revenue.

View Reason Foundation’s recommended legislative text here.

Reforming the TIFIA loan program

The Transportation Infrastructure Finance and Innovation Act (TIFIA) was created by Congress in the 1998 TEA-21 reauthorization. The purpose was to deal with capital market gaps for promising surface transportation (highway and transit) projects. Applicants could apply for construction-related loans for new projects, limited to 33% of the project budget. To qualify, projects had to receive two investment-grade ratings. As of 2022, TIFIA loans had helped to finance 98 projects in 22 states.

These limitations were key to the project’s success and the program’s very low loss rate. An external review conducted for the U.S. Department of Transportation, TIFIA at 25, found that through 2022, the average initial ratings of financed projects were BBB+, and the average of the portfolio in 2022 had increased to A-.

Legislative changes since MAP-21 in 2012 have gradually reduced the safeguards that have ensured the soundness of the TIFIA loan portfolio. First, the maximum loan amount was increased to 49% of project costs. More recently, new project categories were added: transit-oriented development (TOD), INFRA grant projects, state infrastructure banks, and a Rural Project Initiative that offers interest rates at one-half the Treasury rate. These new projects can all receive TIFIA loans at up to 49% of their proposed budgets.

In addition, the term of TIFIA loans can now be as long as 75 years (compared with 35 originally), and only one investment-grade rating is required. The scope of projects has recently been expanded even further to include projects at airports, seaports, and natural habitats affected by infrastructure. As of early 2025, the Build America Bureau has not approved any loans for state infrastructure banks or the Rural program, and only one for a TOD project.

Nevertheless, these changes could pose a risk to the credit quality of what has been a very successful program. As the program begins to resemble traditional competitive grant programs (which award, rather than loan, funds), sponsors of all kinds of projects may urge further expansions of TIFIA’s scope. In response, those concerned about increasing federal spending may seek to abolish TIFIA, along with earmarks and competitive grant programs.

The alternative to this would be to enact reforms that return TIFIA to its original purpose: to provide gap funding for projects that support surface transportation improvements only. Among the policy changes that would strengthen TIFIA’s credit quality are the following:

• Limit loans to the original 33% of a project’s construction budget;
• Limit TIFIA loan terms to the original 35 years;
• Restore the requirement of two investment-grade ratings; and
• Eliminate the recent additions of TOD, INFRA, state infrastructure banks, Rural, and natural habitats. 

Some recent applicants for TOD and passenger rail projects have applied for both TIFIA and Railroad Rehabilitation and Improvement Financing (RRIF) loans, with the most recent expression of interest coming from Amtrak, seeking a combined $19 billion for its proposed Texas high-speed rail project. RRIF has historically been underused. With that separate program available for passenger rail projects, there is no good rationale for TIFIA to be investing in passenger rail projects. Further, while airport and seaport projects would likely not impair the credit quality of the TIFIA portfolio, both facility types can already issue both general obligation and revenue bonds, and generally do so more rapidly than obtaining a TIFIA loan.

In several recent years, Congress has reduced the TIFIA budget, apparently based on a perception of limited demand. Yet the projected demand for revenue-risk highway and bridge P3 projects over the next three to five years was estimated in the December 2024 issue of Public Works Financing as $31 billion. Since projects of this kind average TIFIA loans for 17% of project cost, this category alone would account for more than $5 billion in new TIFIA loans.

View Reason Foundation’s recommended legislative text here.

Discretionary grant programs need to be reformed

Historically, most federal transportation funding has been awarded through formula funding. Congressional authorizers crafted multi-year transportation bills that awarded funding based on criteria including population, highway lane miles, and bridges.

The biggest problems with discretionary grants emerged under the Infrastructure Investment and Jobs Act (IIJA). But the problems started during the Obama administration, whose grants were focused on local projects with a limited nexus to transportation. A Reason Foundation analysis evaluated the Transportation Investment Generating Economic Recovery (TIGER) I, TIGER II Capital, TIGER II Planning, and TIGER III grant programs at the U.S. Department of Transportation (USDOT). The analysis found:

• The metrics that USDOT used to evaluate the applications lacked quantitative components.
• Certain funding applications contained incorrect information that USDOT used in press releases to justify the funding of those applications.
• USDOT provided limited information to the public explaining the process.
• Grant funding was not determined by rigorous application of USDOT’s own evaluation criteria: USDOT funded almost as many “Recommended” projects (25) as “Highly Recommended” projects (26). Meanwhile, only 23% of the 110 projects ranked “Highly Recommended” were funded. The TIGER Review Team offered no official written explanation for its selections. The Review Team offered notes in draft form and a memo, but these limited explanations only raised more questions because, in many cases, the projects selected were not deemed better than the projects that were not.
• A disproportionately large number of projects were funded in Democratic congressional districts. In TIGER I, TIGER II Capital, TIGER II Planning, and TIGER III, congressional districts represented by Democrats were awarded a higher percentage of grants than their overall proportional representation. In TIGER III, districts represented by Democrats received 69% of the funding despite Democrats holding only 47% of the total congressional seats.
• Many of the “transportation” projects awarded funding to environmental or economic development causes with, at best, a tenuous connection to moving people and goods.
• Many of the projects were purely local in nature with no plausible national nexus, such as recreational trails or local transit lines. 

In the IIJA, discretionary grant funding ballooned to $200 billion, which was spread over dozens of different programs, accounting for approximately one-fifth of total transportation funding. Similar to many of the grants awarded during the Obama administration, the project documentation of IIJA grant programs has been severely deficient. Details on why certain projects were awarded funding over other projects have not been provided. Local projects and those unrelated to transportation continue to receive funding. In the face of questionable and politicized grant awards, the Florida Department of Transportation took the unusual step of launching an advocacy campaign criticizing USDOT’s discretionary grant programs: “Build Infrastructure, Not Political Agendas.”

But an even bigger problem has emerged. Despite a nearly 10% increase in USDOT staff, the Biden administration was unable to process the grants in a timely manner. For instance, as of January 31, 2025, the National Infrastructure Investments grant program (currently known as BUILD; previously RAISE and TIGER) had only obligated 20.4% and outlaid just 2.4% of funds available under its $10 billion in IIJA budget authority. USDOT claimed that the grants were slowed due to “accountability” factors. But an analysis of the program showed that much of the internal USDOT documentation was missing, which belies accountability justifications. Regardless, discretionary grants fail to serve a purpose if USDOT does not disburse the funds.

In summary, USDOT discretionary grant programs lack focus, have become overtly political, and cannot be executed in a timely manner. It’s time for Congress to reduce, consolidate, and refocus DOT discretionary grants. In doing so, Congress should codify in statute quantitative scoring weights that guide the selection of projects based on their performance to the following criteria: reducing congestion, improving mobility, improving safety, and facilitating interstate commerce.

Recommended reform principles:

• Reduce the number of discretionary grant programs to a maximum of one per mode of transportation.
• Focus on the core national transportation priorities of reducing congestion, improving mobility, improving safety, and facilitating interstate commerce.
• Establish quantitative project scoring criteria in statute to ensure the reformed discretionary grant programs consistently meet national transportation priorities.
• Fund transportation projects only. Federal transportation funding should not be used for environmental or community development projects. The federal government has other programs to fund those projects if they are justified.
• Increase the quality and the quantity of documentation explaining the decision-making process. Review Team meetings should include officially recorded notes of all projects, indicating the reasons for approval or rejection of each project. All notes should be posted online to the USDOT website.

Prioritizing maintenance in federal transit programs

In recent decades, approximately 20% of the funding in each surface transportation reauthorization bill has been allocated to mass transit. The federal government typically allows transit capital projects (such as those funded by the New Starts, Small Starts, and Core Capacity programs) and transit maintenance projects (State of Good Repair program) to be funded with 80% federal money and 20% local money.

Many of the mass transit systems across the country are in poor shape, in part because they direct money to costly new capital projects rather than needed maintenance. When Congress writes and passes the next surface transportation reauthorization bill, it should encourage maintenance projects by lowering the maximum federal share for capital projects.

State highway systems are generally in good condition. Reason Foundation’s most recent Annual Highway Report found that of the nine categories focused on performance, the states made significant progress in six of them. In contrast, many rail transit systems are increasingly in poor condition. Major mass transit agencies are using federal funding for new capital projects that should not be priorities due to the significant backlogs in maintenance and other system needs. 

For example, the Washington Metropolitan Area Transit Authority built the Silver Line in largely low-density suburban Virginia and is studying a new $40 billion line connecting National Harbor with Rosslyn. Meanwhile, its existing rail network has been plagued by collisions, derailments, and increased crime in recent years. Similarly, New York’s Metropolitan Transportation Authority (MTA) has had a series of service breakdowns and faces major public safety problems. Many other major transit systems are encountering similar problems.

Unfortunately, many transit agencies prioritize capital projects over ongoing maintenance needs. Part of this problem is structural. Most of the mass transit agency boards across the United States are composed of political appointees, who often favor big new projects that enable ribbon-cuttings and photo opportunities. As a result, there is often a built-in bias towards building new rail projects over improving existing transit services. This dynamic helps explain why there have been more than 20 new light-rail lines added over the last 20 years, despite many of the rail projects failing to increase transit ridership.

Additionally, new rail expansions can sometimes mean cuts in bus service. When the Dallas Area Rapid Transit (DART) Authority and Houston Metro added new light-rail services, for example, they cut existing bus service. This resulted in fewer riders using public transit after adding rail service at great cost.

With reduced transit ridership due to the COVID-19 pandemic, this is not the time to add costly new capacity. As of January 2025, ridership on U.S. rail transit systems is at 78% of 2019 levels. Prior to the pandemic, many systems had seen ridership declines over the preceding decade. Rail transit ridership is increasingly unlikely to recover to 2019 levels within the next decade, if ever. Remote work remains several multiples above transit’s share of commuting and is likely to persist at high levels. Long-term trends in ride-hailing services and the future availability of automated vehicles are also likely to reduce transit ridership.

Given these circumstances, Congress should prioritize maintenance over capital expansion projects by capping funding for New Starts, Small Starts, and Core Capacity grants at a 50% maximum federal share. The maximum federal share for the State of Good Repair grants should remain at 80%.

View Reason Foundation’s recommended legislative text here.

Improving public transit efficiency

Following the onset of the COVID-19 pandemic, public transit systems throughout the United States experienced an unprecedented ridership collapse as people stayed home and avoided crowded public spaces. While most disease mitigation measures have since been abandoned, the impact of the pandemic continues to be felt in various ways, including persistent changes in travel behavior. One consequence has been a muted transit ridership recovery, which stands at approximately three-quarters of the pre-pandemic ridership level in the United States. Depressed transit ridership has been met with unprecedented public subsidies, especially from the federal government. These two trends resulted in a steep decline in transit productivity.

This decline has alarmed policymakers. However, while conditions have substantially worsened in recent years, public transit productivity has trended downward since the end of World War II, largely due to increasing household incomes, growing private automobile ownership, and the dispersal of households and then workplaces into the suburbs. Between 1960 and 2019, the inflation-adjusted operating costs more than quintupled while ridership remained flat.

Following the onset of the COVID-19 pandemic, public transit ridership collapsed. As of 2024, nationwide ridership had only recovered to approximately 78.4% of 2019 levels. More recent estimates from May 2025 show transit ridership at 80.6% of 2019 levels. Much of this ridership decline can be explained by changes in work travel. Many transit systems were designed to facilitate journeys to and from work in central business districts, and working from home remains two to five times its pre-pandemic share of “commuting”—and four to eight times the share of mass transit commuting—depending on how it is measured.

Depressed ridership led Congress to authorize unprecedented federal subsidies for transit agencies. Supplemental COVID-19 appropriations during FYs 2020 and 2021 provided $69.5 billion in emergency support for transit agencies, equivalent to nearly five years of pre-pandemic federal transit funding. The Infrastructure Investment and Jobs Act, enacted in FY 2022, increased federal transit funding by 67% over the levels previously authorized by the Fixing America’s Surface Transportation (FAST) Act of 2015 in nominal dollars.

This large increase in federal funding allowed transit agencies to continue to provide service close to pre-pandemic levels, with transit service provided between 2019 and 2023 falling by only 10.3% (in vehicle revenue miles) despite ridership declines of 29.3%. These dynamics had predictable effects on transit labor productivity, with productivity declines almost entirely driven by decreased ridership.

As historical experience with transit subsidies has shown, advancing transit efficiency is not a simple question of additional funding. Making better use of existing resources must be prioritized to avoid counterproductive subsidy policies that merely deepen and prolong the transit’s productivity crisis. Two strategies to advance transit productivity show particular promise:

• Competitive contracting: Under public-private partnerships, transit agencies can contract out transit service provision to private firms. The agency would serve as the coordinating and oversight entity, developing performance requirements and ensuring private partners adhere to those requirements embedded in their contracts. A 2017 study estimated that contracting out bus service in the United States could reduce operating costs by 30%.
• Transit vehicle automation: Urban rail transit is increasingly automated outside the United States. A 2023 study comparing rail lines in the United States and fully automated lines abroad estimated automation could potentially reduce U.S. operating costs by 46%. In addition to rail transit automation, numerous companies are developing automated road vehicles. One rubber-tire automated transit company that is developing two projects in California claims it can reduce operating costs by approximately 80% compared to average costs faced by conventional transit systems.

Unfortunately, both competitive contracting and automation face substantial deployment barriers in the United States. Section 13(c) of the Urban Mass Transportation Act of 1964 established transit worker labor protections. This provision was included to ensure collective bargaining agreements continued to be honored during the period when transit systems and their workforces were transitioning from heavily unionized private ownership to—at the time—sparsely unionized government ownership.

Section 13(c) requires transit agencies that receive federal funding to certify employee “protective arrangements” with the Department of Labor. As a consequence, transit agencies are greatly constrained in enacting any operational change involving employees. Section 13(c) generally requires transit agencies to either incur substantial upfront costs to buy out affected employees or delay the realization of labor-saving benefits. Transit agencies largely dependent on annual government appropriations face a strong financial disincentive to adopt practices and technologies that would improve service and reduce growing operating subsidies.

Transit employee labor protections included as part of the Urban Mass Transportation Act of 1964 were designed to address the particular circumstances of the time, when just 2% of state and local government employees were authorized to collectively bargain. But this transition period has passed, and all affected employees have long since retired. Further, most states have authorized public-employee collective bargaining since the 1960s, with 63% of state and local employees being authorized to collectively bargain as of 2010.

Section 13(c) exists alongside federal, state, and local labor laws that apply to public-sector workers. Importantly, federal transit labor protections supplement rather than substitute for other general labor protections. As a result, Section 13(c) provides transit workers—and only transit workers—with special protections beyond those enjoyed by other government employees.

This has two important implications for policymakers. First, eliminating Section 13(c) special transit worker labor protections would merely level the playing field between transit workers and other government employees. All other federal, state, and local labor policies that apply to government employees would continue to apply. Second, repealing Section 13(c) would not automatically usher in transit public-private partnerships or automation. Rather, it would remove an impediment to transit agencies seeking to negotiate more flexible labor contracts in the future.

Reason Foundation’s recommended legislative text:

(a) Section 5333 of Title 49, United States Code, is amended by striking subsection (b).

Clearing a bureaucratic roadblock to safer driverless trucking

Autonomous commercial motor vehicles have great potential to improve roadway safety and logistics efficiency in the United States. Developers have been successfully validating their technology on U.S. public roads for years and are now prepared to enter commercial service. However, outdated federal regulations will pose challenges. One in particular—the requirement that operators of commercial motor vehicles stopped on or on the side of highways place warning triangles or flares around their disabled vehicles—presents a unique barrier that Congress can quickly address.

The Department of Transportation has long required operators of commercial motor vehicles that are disabled in highway traffic lanes or shoulders to immediately exit their vehicles to place reflective warning triangles or flares in order to alert other motorists of the potential hazard. The requirement for the placement of roadway warning devices makes intuitive sense, despite the limited empirical safety evidence supporting it.

The warning device rule poses a unique challenge for driverless operations of automated commercial vehicles because it implicitly assumes an operator will be seated in the vehicle and able to immediately exit the cab to place warning devices. This rule was never intended to apply to driverless commercial motor vehicles, which had not yet been conceived when the warning device placement requirement was promulgated in 1972.

In January 2023, automated vehicle developers Aurora and Waymo petitioned the Federal Motor Carrier Safety Administration (FMCSA) for an exemption from the warning devices requirement. To ensure the broader safety intent was preserved, the petitioners proposed that driverless, autonomous commercial vehicles would, in lieu of the warning device placement requirement, be equipped with cab-mounted warning beacons.

The warning-beacon system Aurora and Waymo proposed would consist of at least one rearward-facing light mounted on each side of the cab and at least one forward-facing light mounted on the front of the cab. The warning beacons would be installed at some point between the upper edge of the sideview mirrors and top of the cab for both forward- and rearward-facing lights. The companies provided two studies showing that cab-mounted warning beacons would achieve a level of safety at least equivalent to the warning-device requirement.

In December 2024, the FMCSA denied the exemption petition, citing a lack of data on the safety equivalence of cab-mounted warning beacons. This justification was especially odd because the agency concedes it has never conducted any research on the effectiveness of its warning-device requirement in enhancing safety. The suggestion from FMCSA seems to be that there is no official safety baseline by which to compare alternatives to warning devices, which thereby renders the agency unable to consider alternatives—even those that offer superior safety. If true, this greatly undermines the supposed safety basis for the existence of this longstanding rule.

Setting aside the arbitrariness of FMCSA’s warning-device rule, Congress can easily resolve this bureaucratic roadblock to safer driverless operations by requiring the agency to promulgate amendments to its regulations to explicitly exempt commercial motor vehicles from the warning-device requirement if those vehicles are equipped with cab-mounted warning beacons.

View Reason Foundation’s recommended legislative text here.

Advancing performance-based rail safety regulation

New technologies are increasingly reshaping transportation systems. Various types of automation technologies can significantly improve transportation safety and efficiency. With respect to freight rail, the ability to adopt new technologies in the face of increasingly automated trucking is also a competitive imperative.

One problem is that freight rail safety regulations promulgated by the Federal Railroad Administration (FRA) are often overly prescriptive, which limits alternative means of compliance as technology and practices evolve. Related to this problem is that these regulatory requirements often reference outdated technical standards. Figure 1 below compares the standard edition years of nearly 750 specifications, recommended practices, and standards contained in the AAR Manual of Standards and Recommended Practices with the edition years of the standards incorporated by reference in FRA regulations. While this is not quite a like-for-like comparison, it shows a roughly 10-year lag between the latest railroad industry standards and those referenced in railroad safety regulations.

Most FRA regulations incorporating nongovernmental technical standards do not contain update trigger mechanisms (such as the one for FRA brake standards at 49 C.F.R. § 232.307), so any updates will require conventional rulemaking proceedings. This gives agencies more discretion over any potential regulatory changes and increases the length of time to complete a change. Given this cumbersome and uncertain process to address outdated standards already referenced in regulation, the persistent conformity gap between standards and regulations should not be surprising.

One simple example of the problem of overly prescriptive rail safety regulations is related to automated track inspection (ATI). The benefits of ATI include more reliable defect detection, more robust maintenance data analysis and planning, redeployment of visual inspectors to higher-need areas and for infrastructure that cannot be inspected by ATI equipment, reduced human exposure to safety hazards in the field, and reduced delays to trains in revenue service.

While it has long acknowledged the benefits of ATI, FRA in 2021 reversed course by denying multiple ATI waiver requests, BNSF Railway challenged FRA’s decision to deny it an expanded ATI waiver in federal court, which ruled in March 2023 that regulators violated the Administrative Procedure Act’s prohibition on “arbitrary and capricious” acts and ordered FRA to reconsider its decision. In June 2023, FRA again denied BNSF’s ATI petition. BNSF challenged this second denial in the same federal court, which in June 2024 again ruled against FRA and ordered the agency to grant BNSF’s ATI waiver petition.

A more complex example of the problem relates to the automation of revenue-service rail vehicles that do not resemble conventional freight trains. In August 2023, two short-line railroads owned by Genesee & Wyoming (G&W)—the Georgia Central Railway and Heart of Georgia Railroad—submitted a petition to test new rail technology developed by Parallel Systems. The proposed pilot would take place on 160 miles of track between Pooler near the Port of Savannah to a large inland distribution hub in Cordele in central Georgia.

Parallel was founded in 2020 by two former SpaceX engineers and has developed battery-electric, self-propelled railcars designed to transport standard 40-foot shipping containers weighing up to 65,000 pounds at up to 25 miles per hour. Parallel’s railcars can be operated individually or in platoon formation. When operated in a platoon, Parallel’s railcars won’t be mechanically coupled; instead, they are equipped with bumpers and will touch one another but remain individually powered and controlled. This allows them to reduce stopping distance by 90% compared to conventional freight trains. Perhaps most significantly to the broader economy, the technology is designed to serve local container markets traditionally dominated by trucks—breaking the so-called “500-mile rule” after which rail is competitive with trucks.

In January 2025, FRA granted the G&W/Parallel test petition. Testing was scheduled to begin in April. But to conduct this test under FRA approval, G&W needed to receive a waiver granting relief from 33 FRA regulations, including:

• Part 218 Operating Practices
• Part 229 Locomotive Safety Standards
• Part 231 Railroad Safety Appliance Standards
• Part 232 Brake System Safety Standards for Freight
• Part 236 Signal and Train Control Systems
• Parts 240 and 242 Engineer and Conductor Qualifications

If this test is successful, waivers would still be required to operate Parallel’s rail vehicles. The next step for FRA would be to begin the lengthy process of updating the implicated regulations so that they can accommodate this new technology. While most of these requirements can by changed by FRA through rulemaking, the automatic coupler requirement is statutory (49 U.S.C. § 20302(a)(1)(A)). This means that for Parallel-style self-propelled railcars to be entered into mainstream commercial service, Congress will need to modernize its legacy coupler statute.

These are just two examples of the problems of overly prescriptive, outdated rules. New technologies will inevitably be invented and will run into the same policy barriers. To ensure that freight rail can remain a competitive mode of cargo transportation in the future, Congress should examine structural regulatory reforms to identify and modernize rail safety regulations in a performance-based manner.

Recommended reform principles:

Congress should consider the approach proposed by the RAILS Act (S.1451) in the 115th Congress. That bill included future-oriented provisions that could be adopted, such as:

• Requiring FRA to consider performance-based alternatives whenever proposing or adopting a rule;
• Streamlining the waiver petition process for innovative approaches to safety;
• Integrating the improved safety innovative waiver process with regulatory modernization; and
• Requiring FRA to conduct periodic comprehensive reviews of its rules, orders, and guidance documents to assess their effectiveness, consistency, and whether they reflect the current best technologies and practices.

In addition, Congress should modernize its legacy automatic coupler statute at 49 U.S.C. § 20302(a)(1)(A) to ensure that novel rail vehicles that do not rely on couplers are not subject to these requirements.

The post Recommendations for the surface transportation reauthorization bill appeared first on Reason Foundation.

While the United States has mostly private utilities and has had several decades of long-term public-private partnerships in highways and transit, all but one of its commercial airports are government-owned. By contrast, as independent researchers have identified the benefits of airport privatization—such as significantly better performance—governments in Australia, Europe, Latin America, and portions of Asia have privatized large fractions of their commercial airports, via either outright sale or long-term public-private partnership (P3) leases.

Congress has enacted several versions of a law to permit government airport owners to enter into long-term P3 leases of their airports. To date, only San Juan, Puerto Rico, has entered into such a lease, although planned leases of Chicago Midway and St. Louis Lambert attracted significant investor interest.

Several federal bodies have looked into why airport privatization has not caught on in the United States. Airline opposition is no longer a significant factor, with airline-friendly lease terms worked out for the three cases noted above.

The policy that could most likely open the US airport privatization market appears to be tax changes to put US airport financing on a level playing field with countries where airport privatization and public-private partnerships are widely used.

This report explores two tax law changes. One would remove the requirement that tax-exempt airport bonds must be paid off before there is a change in control, such as a long-term lease.

The other would expand the scope of successful surface transportation tax-exempt private activity bonds (PABs) to include airports and other transportation infrastructure.

These changes would enable airport owners to receive an amount closer to their airport’s gross value, rather than the net value after paying off the outstanding tax-exempt bonds. Data in this report show that long-term P3 leases could yield windfalls for the owners of many large and medium hub airports. In some cases, the airport owner’s proceeds could be enough to pay off a significant portion or all of the jurisdiction’s unfunded public employee pension liability. The proceeds could also go toward needed but unfunded infrastructure projects or toward reducing other indebtedness.

Introduction

Over the past three decades, airports in many developed countries have been privatized, via either sale to investors or long-term leases generally referred to as public-private partnerships (P3s).

Data from Airports Council International (ACI) before the COVID-19 pandemic found that in Europe, 75% of passengers used privatized airports. Similar figures were found for passengers in Latin America (66%) and the Asia-Pacific (47%).

By comparison, only 1% of passengers in North America use privatized airports.

The only privatized US commercial airport is San Juan’s Luis Muñoz Marín International Airport, which was leased as a P3 in 2013.

With more than 400 airports worldwide either sold or long-term leased to investors, researchers now have enough data to analyze privatized airports’ performance compared with traditional government-owned, government-operated airports. The largest of these studies, a 2023 working paper by Sabrina T. Howell et al., found many benefits at airports where the investors included infrastructure investment funds, which operate airports as real businesses. The changes include

• More airlines, serving a larger number of destinations;
• Lower average airfares due to increased competition, including from low-cost carriers;
• Increased airport productivity; and
• Greater passenger satisfaction, as measured by ACI’s annual Airport Service Quality survey.

One factor in these improvements is the rise in airport groups (such as Aeroports de Paris, Aena Aeropuertos, Fraport, VINCI Airports, and Flughafen Zurich). By managing multiple airports, such airport groups benefit from economies of scale, standardized practices, and a pipeline of experienced managers who can move up to larger airports.

Congress has encouraged US airport privatization since enacting an Airport Privatization Pilot Program (APPP) in 1996, which allowed up to five airports to be leased as a P3. That program was expanded to 10 airports in 2012.

Most recently, in the 2018 Federal Aviation Administration (FAA) reauthorization legislation, Congress replaced the APPP with broader legislation, the Airport Investment Partnership Program (AIPP). It opened the program to all US commercial airports, reduced other restrictions, and, for the first time, allowed the proceeds from an airport P3 lease to be used for general government purposes by the airport owner (rather than being restricted to investments in airport improvements).

Yet since that landmark legislation, not a single US airport has been leased as a P3, though several have tried. St. Louis in 2019 offered a long-term P3 lease of Lambert International Airport. Eighteen international teams responded, and the highest-ranked dozen made detailed in-person presentations to the city government and its advisers. In addition, the airlines serving the airport developed a pro forma agreement with the airport. But the mayor terminated the process due to regional political opposition.

This report explores a possible way to make US airport privatization more attractive to airport owners by proposing a level financial playing field for potential private-sector airport investors, similar to what already exists for US surface transportation P3 infrastructure. Those changes would result in larger upfront lease payments, in addition to the performance improvements noted by Howell et al.

This paper was produced under a joint AEI-Brookings project.

The post Incentivizing US airport privatization appeared first on Reason Foundation.

• New Zealand road user charge
• Boring Company’s Nashville loop project
• Union Pacific/Norfolk Southern railroad merger
• Streamlining NEPA: a good start
• Transit’s worsening financial crisis
• Impact of reduced electric vehicle sales
• News Notes
• Quotable Quotes

New Zealand’s Road User Charge Transition

Based on recent announcements from New Zealand’s Transport Minister, Chris Bishop, his country is likely to be the world’s first nation to transition completely from motor fuel taxes to road user charges (RUCs) for roadways. To bring this about, the transition will involve innovative technology and a radical reduction in collection cost, assuming everything works as planned.

One advantage is that New Zealand is an island nation, so it does not have to deal with unequipped vehicles driving across its borders. It also has years of experience with trucks paying a road user charge, so the big change will affect motorists, who currently pay for roads via fuel taxes. As in other countries, the growth of hybrids, EVs, and higher-mpg internal combustion engines means that the viability of the “petrol tax” is decreasing, and that appears to be the reason for shifting to RUC going forward.

The national government Cabinet has agreed to a series of legislative and regulatory changes that will end up replacing the petrol tax with an electronically paid RUC. Transport Minister Bishop summarized these as follows:

• Removing the need for physical licenses, allowing for digital driving licenses;
• Enabling a range of electronic RUC devices, including those already available as new-vehicle telematics;
• Enabling flexible payment models, such as post-pay and monthly billing;
• Separating the NZ Transport Agency roles as both RUC regulator and retailer to enhance competition; and,
• Allowing the bundling of tolls and time-of-use pricing into a single payment.

The RUC revenues, like the petrol tax revenues, will continue to be sent to the National Land Transportation Fund, retaining the existing users-pay/users-benefit principle. And Bishop has promised that the RUC system will be like paying for an electric bill online. There will be a Code of Practice for RUC providers.

So, how soon will all this happen? Bishop expects the needed legislation to be enacted in 2026, and once this happens, Bishop says his agency will engage with the market to assess potential technologies and delivery timelines. And both the Transport Agency and the police forces will upgrade their systems for “enforcement in a digital environment.” His goal is that by 2027, the RUC system will be open for business, with third-party providers offering innovative payment services approved by the Transport Agency.

As I set out to write this article, a transportation colleague in New Zealand sent me his own overview of this planned transition. He tells me that companies are already developing in-vehicle devices to provide the data needed to assess the RUC amounts due, based on miles traveled and whatever other specifics get incorporated into the RUC (vehicle weight, for example). Four electronic system providers have been approved by NZTA. One of those companies, he noted, is already active in the United States (EROAD).

If New Zealand implements this ambitious plan, it will provide a model for other countries. I will be especially interested to learn what the cost of collection of the new RUCs will be, since at this point in the U.S., estimates of the cost of collection are 10 to 20 times what it costs to collect fuel taxes. If New Zealand can get this down to a few percent of the amount charged, that will be a major breakthrough.

The other complication for the United States is that state and local governments own and operate nearly all the roadways. So each state government or transportation department will need to figure out how to deal with out-of-state vehicles.

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Boring Company Launches Nashville Loop Project

Elon Musk’s Boring Company has been in the news since a media blitz late last month announcing an agreement with Nashville, TN, to build and operate a 10-mile underground Music City Loop linking downtown to the Music City Center and the Nashville International Airport. Boring Company states that the system will be entirely privately financed as a public-private partnership with the city of Nashville.

The company evidently did its public affairs homework before making the announcement, because it has been endorsed by Gov. Bill Lee, Sen. Marsha Blackburn, the city and state chambers of commerce, and U.S. Transportation Secretary Sean Duffy. As a long-time supporter of transportation public-private partnerships (P3s), I’m inclined to be favorable to such projects. But at this point, I have many questions.

Most fundamentally, I don’t understand the business model. The project obviously needs a revenue source in order to provide a return on the major investment needed to build the tunnels that comprise the Loop and equip it with the vehicles that will transport passengers. The only operational model is the Boring Company’s Las Vegas Loop, of which only 2.1 miles of a planned 68 miles are completed and in operation as of last year. The fare to use one of the Teslas using the Loop is in the $4-$6 range. No published data exists on the number of daily trips and the revenue they are generating, and without that information, it’s difficult to see how financially viable the Vegas Loop may turn out to be when it is fully built out and in operation.

The Boring Company proposed similar Loops for Chicago, Los Angeles, and Washington, D.C. in 2017-18, but those projects never materialized. Other cities where post-pandemic presentations were made include Miami and Fort Lauderdale, where they attracted considerable interest from local officials, but never went further. Boring Company’s only other active project is in Dubai.

Another question is whether using Teslas as the vehicle is the best alternative. In Vegas, the Teslas are being driven by Boring Company drivers, though Tesla’s “self-driving” capability should be easy to use in this highly constrained one-way tunnel (as compared with mixed traffic on city streets). So, automated operation would reduce operating costs somewhat. But still, why not 10-passenger electric shuttles? To be sure, if the model is to offer customers an immediate departure when they show up, an immediately available vehicle is superior. But this policy would also limit passengers per hour that the system could handle. It’s far from clear how the revenue model would generate enough to service construction bonds and provide a return on the initial investment.

A public-private partnership (P3) of the design-build-finance-operate-maintain (DBFOM) model, in particular, needs to have a detailed long-term concession agreement. This document spells out the roles of the public partner and the private partner. Generally, the public partner has considerable oversight responsibilities, and the extent of its role in various policy questions (schedule, user charges, duration, future decision during the term of the agreement, etc.) is spelled out in the agreement. Also critically important are termination provisions. These typically are two possible ways in which the agreement may be terminated by the public partner: for cause (serious failure to comply with the terms of the agreement) or for convenience (the public partner changes its mind some years into the agreement, and commits, in advance, to compensation for this kind of early termination).

There has been no mention of any kind of P3 agreement. If such an agreement exists, or is negotiated and made public, some of the many citizen concerns and complaints about the project might be satisfied.

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Maximizing the Benefits of a Transcontinental Rail Merger
By Marc Scribner

On July 30, two of the largest U.S. freight railroads notified federal regulators that they plan to apply for approval to merge. Under the proposed deal, the largest Class I carrier, Union Pacific, would acquire the fourth-largest, Norfolk Southern. The combined carrier would be the first truly transcontinental railroad, serving 43 states over 50,000 miles of track and linking roughly 100 seaports on the East and West Coasts. There is little overlap between the two railroads’ current networks, so the competitive effects of a merger are likely to be positive. While an expanded Union Pacific could certainly realize network efficiencies, realizing the full benefits of this transaction will require regulatory modernization.

According to their July pre-filing notice submitted to the Surface Transportation Board (STB), the national railroad economic regulator tasked by Congress with reviewing and approving industry mergers and acquisitions, Union Pacific and Norfolk Southern plan to submit a formal application to consolidate on or before Jan. 29, 2026. The most recent major rail merger between Canadian Pacific and Kansas City Southern in 2023 took 15 months to gain approval from the STB. A similar timeline is likely in this case, so we can perhaps expect final approval in the first or second quarters of 2027, assuming everything goes smoothly.

Union Pacific operates primarily west of the Mississippi River, while most of Norfolk Southern’s operations are in the east. Intra-rail competition between the two carriers is very limited given their geographic separation, with the vast majority of overlap occurring in Missouri, where both railroads operate between Kansas City and St. Louis. The STB has long recognized that end-to-end mergers like the one proposed by Union Pacific and Norfolk Southern can potentially reduce intra-rail competition and service quality. As a result, their Missouri operations will be a major focus of the STB’s merger analysis and approval conditions. The railroads will need to propose remedies to mitigate and offset any competitive harms arising from their merger if they are to secure STB approval.

In addition, Union Pacific and Norfolk Southern are likely to emphasize how offering single-line, coast-to-coast intermodal rail service will increase competition with long-haul trucking. This is because the STB’s major merger regulations since 2001 have required that carriers demonstrate that the transaction would enhance competition, rather than the previous requirement that competition not be degraded under consolidation.

While the network efficiency benefits arising from a combined Union Pacific and Norfolk Southern are potentially very large, maximizing those benefits to carriers, shippers, and consumers will require regulatory modernization by the Federal Railroad Administration (FRA), the nation’s rail safety regulator.

One problem is that the FRA’s rail safety regulations are often highly prescriptive, which limits alternative means of compliance as technology and practices evolve. Related to this problem is that these regulatory requirements often reference outdated technical standards. Based on my analysis of the principal rail standards compendium—the Association of American Railroads’ Manual of Standards and Recommended Practices—and the FRA’s regulations that incorporate those standards by reference, there is a roughly 10-year lag between the latest standards and those referenced in rail safety regulations. Unless Congress establishes a consistent mechanism requiring the FRA to consider regulatory updates whenever new standards are published, this conformity gap between standards and regulations is likely to persist and grow.

Another problem is that the FRA has adopted an inconsistent approach to new technologies and practices, often driven by special interest politics. During the Biden administration, FRA political appointees overruled agency career staff to restrict the use of automated track inspection technologies, despite the FRA’s own data showing the technology was far more reliable in detecting track geometry defects than traditional visual inspections. This action was driven by the union representing track inspectors. The Association of American Railroads currently has a waiver petition pending with the FRA to recommit the agency to this proven technology, which Reason Foundation supported in comments to the FRA.

Similarly, the FRA during the Biden administration finalized a regulation establishing a general requirement that trains operate with at least two crew members, despite conceding it could not quantify any benefits of the rule. The practical result is that U.S. railroads will find it difficult to leverage automation technology increasingly available around the world and even single-crewmember train operations that have long been the default in Europe. And similar to the political interference on automated track inspection, the FRA’s crew-size regulation fulfilled an explicit campaign promise made to unions representing train engineers and conductors by then-candidate Biden.

The trucking industry is anticipated to become increasingly automated in the coming years. Earlier this year, driverless truck startup Aurora launched commercial operations in Texas and has ambitions to expand driverless service throughout the Sun Belt over the next two years. Driver wages and benefits account for nearly half of truck operating costs, so the potential savings from driverless operations are large.

To give freight rail a fair shot at competing with trucking, FRA leadership should seek to restore evidence-based policymaking at the agency, rather than deny railroads superior technology for arbitrary and capricious reasons. Congress can also play a positive role, such as by passing legislation that would require the FRA to consider performance-based regulatory alternatives, streamline the waiver petition process, and periodically conduct comprehensive reviews of its policies to assess their effectiveness and compatibility with the current best technologies and practices.

The potential acquisition of Norfolk Southern by Union Pacific could enhance freight transportation competition in exciting new ways. But the ability of intermodal rail to compete effectively with increasingly automated trucks into the 21st century hinges on the ability of the freight rail industry to innovate. Innovation will require business and engineering savvy, to be sure, but also an accommodating regulatory environment.

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Streamlining NEPA—Good Start But More to Be Done

The first seven months of 2025 have seen significant policy changes to the interpretation of the National Environmental Policy Act (NEPA). The Supreme Court and the White House have both reduced the adverse impacts on major infrastructure projects that resulted from decades of executive orders and legislation. But one of the most serious problems—excessive post-assessment litigation—remains largely untouched.

The first big change came from the Supreme Court. In a 9-0 decision, the Court ruled that an organization opposing a new short-line railroad line in Utah had gone way overboard by considering potential environmental impacts more than a thousand miles away from the railroad’s location (Seven County Infrastructure Coalition v. Eagle County). The decision found that NEPA itself “imposes no substantial restrictions” on development. Justice Brent Kavanaugh wrote that NEPA is supposed to be “a procedural cross-check, not a substantive roadblock.” The judgment was unanimous, but three liberal justices did not join in Kavanaugh’s written opinion.

The second change came from the Council on Environmental Quality (CEQ), which was empowered to issue regulations (not just policy advice) via Executive Order 11991, issued by President Jimmy Carter in 1978. President Trump voided that E.O. back in January. The revamped CEQ on July 3 released revised implementing procedures for a large array of federal agencies, explaining that these rules are purely procedural in nature, which do not “impose substantive environmental obligations or restrictions,” per Rebecca Higgins’ summary for the Eno Center for Transportation. U.S. Department of Transportation (DOT) subsequently released two revisions to what had been regulations. One revised rule clearly states that the question of whether an impact is “significant” is a matter for the agency’s expert judgement (apparently building on the Supreme Court’s Seven Counties decision).

In my transportation policy (non-legal) assessment, these are important and welcome changes that should streamline environmental reviews and enable much-needed energy and transportation infrastructure projects to move toward implementation with less delay and somewhat lower cost to users and taxpayers.

However, there is still a huge elephant in the room: post-review environmental litigation. None of the above reforms directly limit such litigation, though they may reduce the kinds of arguments litigants can make successfully. The good people at the Breakthrough Institute are continuing to focus on this problem, as discussed in their new study, “The Procedural Hangover: How NEPA Litigation Obstructs Critical Projects.” Their team examined 1,400 NEPA cases subjected to litigation between 2013 and 2022. The median project in the dataset spent 19 months in litigation, with 7% spending more than six years. They also found that only 26% of the litigations ended up with a legal flaw in the agency’s review. They also found that environmental nonprofits were involved in 75% of the judgments in these cases.

Readers of this newsletter may remember an article in our July 2024 issue discussing a then-new Reason Foundation study that focuses primarily on environmental litigation. Part 5 of that study offers a large array of potential litigation reforms, one of which—removing CEQ’s power to issue regulations—has already happened. Others include limiting the types of potential litigants eligible to sue, having Congress impose a higher standard for injunctive relief, or not entertaining public comment after a final Environmental Impact Statement has been released. Given the major changes that have taken place in the last six months, this menu of potential litigation reforms is newly relevant.

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Transit’s Worsening Financial Crisis
By Baruch Feigenbaum

Despite the economic recovery of cities, transit systems are still facing significant economic headwinds. Recent reports from three of the six legacy rail systems and a nationwide analysis by the Government Accountability Office (GAO) show the severity of the problem. For some systems, transit ridership has been slow to recover from COVID, still below 80% of 2019 levels. And rail, particularly commuter rail, has been slower to recover than bus and paratransit, sometimes at less than 50% of 2019 levels. Yet rather than trade the Titanic in for a seaworthy vessel, agencies seem to be hoping that the giant iceberg they hit five years ago will just melt away.

The GAO report examined the nation’s 31 commuter rail lines. It found that while overall service (the number of trains and buses operating) was above 2019 levels, ridership was 31% lower in fiscal year 2023. Operating more services with fewer riders leads to budget holes that need to be plugged. To plug these holes, agencies relied more on government funds, primarily from federal, local, or other sources. These agencies also relied heavily on COVID-19 relief funding, which has since been exhausted.

Most of these agencies’ long-term fiscal plans seem to be to replace farebox revenue with state subsidies. One example is Virginia Railway Express (VRE), which operates commuter rail service between the southern and western suburbs of Washington, D.C. and the city itself. Between 2019 and 2023, service levels remained similar, but ridership dropped by 65%. In 2019, fares and agency-generated revenue were the largest funding source, 40% of the total. State funding made up less than 30%. But by 2023, fares and agency-generated revenue totaled 8.5% while state funding provided more than 51% of the total revenue.

Several heavy-rail operators are also struggling with ridership. To begin with, in FY 2026, Chicago’s transit operators are facing a $770 million budget deficit. The Chicago Transit Authority is threatening to shut down half of the city’s “L” lines and eliminate almost 60% of bus routes. The legislature could provide state funding, but lawmakers want to reform the Regional Transit Authority, which oversees the Chicago Transit Authority, suburban PACE bus lines, and the METRA commuter rail line.

In San Francisco, the Municipal Transit Agency is facing a $322 million budget deficit. The agency is examining a series of budget cuts and ballot measures to enact new taxes. The agency has a little more time—until May 2026—to deliver its recommendations.

Finally, in Philadelphia, the Southeastern Pennsylvania Transportation Authority is threatening to increase fares from $2.50 to $2.90 in September. It will implement a hiring freeze and eliminate additional services, bringing the total cuts to half its services. Earlier this month, Pennsylvania lawmakers introduced dueling assistance plans, with a Democratic plan increasing funding for highways and transit, and a Republican plan using money from an existing statewide transit fund and indexing fares to inflation.

To be fair, agency leaders have taken some corrective actions. They have redesigned bus networks and added microtransit. They have embraced technology and partnered with ride-hailing companies for last-mile service. But they have not been able to solve the big problem: costs are too high and riders are too few. Agencies cannot control the past, but to solve the problem for the future, they need to make the following changes.

First, cut service to match actual ridership levels. After the initial COVID-19 surge, many transit agencies quickly restored former service levels. Reducing transit service can deter ridership. But increasing headways for rail lines operating at less than half of their capacity is a needed change.

Second, do not rely on any type of emergency funding. Many agencies used COVID-relief dollars as a crutch. Rather than make long-term structural changes, they ran up charges on Uncle Sam’s credit card. Now that the federal government has ceased pandemic-related stimulus and bailouts, most transit agencies are in a much worse position today than if they had started on the road to reform three years ago.

Third, try to control labor costs. The Congressional Research Service estimates labor is 62% of transit system costs. There are legal limits to what transit agencies can do, but adopting best practices in management and contracting for new service are two obtainable goals.

Fourth, don’t exacerbate problems by making transit service fare-free. Zohran Mamdani, the democratic socialist running for mayor of New York City, wants to make buses fare-free. While not paying fares sounds attractive, it doesn’t help poorer residents, who already have fare-free or heavily discounted transit cards. But it does help upper-middle-class residents, who don’t need a subsidy and are a large share of transit riders in the legacy rail regions. In the New York Metropolitan Transportation Authority (MTA’s) case, free transit, if including the subways, could blow a $668 million hole in the budget.

Finally, states and localities can cap general funding to transit. That might seem like tough love, but to ensure agencies adopt recommendations one through four, a change-forcing mechanism is necessary. Unlike highways, which can and should be funded entirely from user fees, transit cannot realistically operate without subsidies. Reason Foundation has justified providing subsidies to lower-income workers using transit on the grounds that providing cost-effective transportation to work is better than welfare programs. However, there has to be some cap. Farebox revenue supplemented with other revenue sources (tax increment financing from transit-oriented development, advertising, etc.) should provide 40% of the funding for large agencies, 30% for medium agencies, and 20% for small agencies. Pre-COVID, these were numbers that almost every transit agency in the country could attain. If agencies cannot meet them today, they have too much service, too low fares, or too much inefficiency.

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Reduced EV Sales and the Impact on Mileage-Based User Fees

These are not good times for electric vehicles (EVs) in the United States. The most recent AAA poll on this subject revealed the following:

• Only 16% of adult Americans say they are likely or very likely to buy an EV as their next vehicle, the lowest percentage since 2019. The fraction saying such a purchase is unlikely or very unlikely increased to 63%, the highest since 2022.
• The reasons most-cited in the AAA survey were concerns about charging, high battery repair costs, and purchase price, in that order.
• One third of those unlikely to buy cited safety concerns, while others worried about being unable to have a charger at their residence.
• The percentage who believe that most cars will be electric within 10 years declined from 40% in 2022 to 23% in this year’s survey.

Reinforcing motorist concerns are several political developments. One is the coming elimination of the $7,500 federal tax credit, which will make an EV comparable in size to a conventional vehicle even more expensive to purchase. And because EVs depreciate considerably faster than internal combustion engine (ICE) vehicles, more potential EV buyers are shifting to the used-vehicle market. Since those EVs are already in the vehicle fleet, a purchase from a used-car dealer adds nothing to the total EVs in use.

Recent Wall Street Journal headlines included “EV Makers Rev Up Incentives to Shift Sales Out of Reverse” followed by “Detroit Quickly Pivots as America Rediscovers Love for Gas Guzzlers.” But Ford is taking a gamble, announcing a plan to spend $2 billion to convert a plant in Louisville, KY, to produce a small EV it plans to sell for $30,000. This comes after Ford lost $5 billion on its existing EVs in 2024.

The one bright spot in the U.S. EV market is hybrids. Sales of hybrids now exceed those of fully electric vehicles. In the first quarter of this year, conventional hybrids accounted for 12% of new vehicle sales, with plug-in hybrids adding another 2%. A report from Bank of America projects that hybrids will account for 20% of new-car sales by 2028.

What do these changes mean for transportation policy? Projections from several years ago that were relied on to support the transition from per-gallon fuel taxes to per-mile charges need to be revised, given the likely slower growth of EVs over the next decade or two. That will provide time for more states to plan and carry out pilot projects to test mileage-based user fees (aka road user charges). The longer time frame will also enable more research and development on lower-cost ways to collect per-mile charges (which currently would cost 10 to 20 times as much as fuel taxes, as a fraction of the revenue collected). This will also give Congress more breathing room to agree on increased revenue sources for the Highway Trust Fund, other than just borrowing ever more money from future generations.

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News Notes

$11 Billion Express Toll Lanes Financed in Georgia
Georgia DOT reported (Aug. 5) that it had reached financial close with a private consortium on the $11 billion SR 400 Express Lanes project. The consortium is led by Meridiam, Acciona, and ACS Infrastructure. The project will add two express toll lanes each way on 16 miles of SR 400 in northern Atlanta. The financing includes $3.4 billion in tax-exempt Private Activity Bonds (PABs), the largest ever federal TIFIA loan ($3.9 billion), and $3.36 billion in private equity. The design-build-finance-operate-maintain P3 concession term is 56 years. The project will also add two stations along the route for express bus service that will make use of the faster and more reliable express lanes. This is the first of several express toll lanes P3 mega-projects in the Atlanta metro area.

Pennsylvania DOT Reviewing Express Lanes Proposal
Eugene Gilligan reported in Infralogic (July 23) that PennDOT is reviewing a $3.25 billion express toll lanes project for the Philadelphia metro area, submitted as an unsolicited proposal by Cintra. It would add ETLs (two such lanes each way) to a congested 17-mile stretch of I-76 known as the Schuykill Expressway. The DBFOM project would have a term of 50 years. If this project goes forward, it would be the first P3 express toll lanes north of Virginia and the first such lanes in a metro area that developed prior to the automobile age. Gilligan reports that the Cintra proposal was first submitted in Oct. 2021, and a PennDOT source told him that “Due to the complexity of the project, it is still under consideration.”

Shifts to Electronic Tolling in Europe
While several European countries have long relied on tolling (e.g., France, Italy, and Spain), many others use a permit system called Eurovignette. But as of next summer, the Netherlands will shift from that method to a new electronic toll system for truck traffic. It will apply to all trucks weighing more than 3.5 tonnes, whether Dutch or from other countries, and the revenues will be dedicated to Dutch highways. Switzerland has unveiled a similar plan. It has its own Swiss vignette for vehicles under 3.5 tonnes that use motorways and expressways. But for trucks, it is underway with a revised electronic tolling system to be implemented by Kapsch TrafficCom and the Swiss company LostnFound. Under an eight-year deal, the joint venture will provide onboard units that interface with a satellite tolling system; the contract calls for the delivery and installation of 55,000 onboard units to be installed in Swiss trucks.

Rivian Introduces Electric Commercial Van
Rivian Automotive, in recent years, has provided more than 20,000 of its electric custom delivery vans to Amazon. With that impressive track record, the company is now offering a new Rivian Commercial Van to delivery firms nationwide. There are two versions, the 500 for city streets and the larger 700 for larger amounts of cargo. Their respective ranges are 161 miles and 153 miles. The vans come equipped with automatic emergency braking, collision warning, and 360-degree visibility. Both models have been in test service with several large fleets, according to an article in FleetOwner (Feb. 10, 2025).

DelDOT Toll Increase Will Charge Non-Delaware Vehicles More
The three toll roads in Delaware plan to implement toll increases later this year, in the vicinity of a 25% increase, according to Delaware DOT (June 15). Two aspects of the plan strike me as bizarre. First, DelDOT charges the same amount for E-ZPass and cash customers, even though its costs are higher for cash. Second, the increases will be greater for out-of-state vehicles than for Delaware-registered vehicles. I’m not a constitutional scholar, but it seems to me that the Constitution’s interstate commerce clause prohibits such discrimination against non-state citizens. That was one of the founding principles of the Constitution. I’m sure litigation over this discrimination will take place if DelDOT actually goes through with this plan.

First Highway P3 Announced for Newfoundland and Labrador
Infralogic reported (June 10) that its first P3 highway procurement is underway. The project involves upgrading 150 miles of the Trans-Canada Highway in the northern part of Newfoundland. Under a 30-year concession, the selected team will design, build, finance, and maintain the rebuilt highway. The article reported that Plenary, Fengate, and Municipal Enterprises Ltd. submitted responses to a Request for Qualifications in January. The Request for Proposals had been expected in the spring, but “procurement decisions are taking longer than expected,” reporter Liam Ford explained in June.

Sec. Duffy Cancels Funding for DC-Baltimore Maglev Project
Long-time readers of this newsletter may recall several critical assessments of unanswered questions about proposed maglev projects. Yet the planners’ dreams continued, with one example being the proposed $20 billion line from Washington, D.C. to Baltimore. It was first proposed in the 1990s, but generated a wide array of objections. It finally received a modest $26 million grant from the Federal Railroad Administration in 2016, but with little observable progress since then. DOT Secretary Sean Duffy on Aug. 1 announced the cancellation of those grants.

Florida Brightline Sued by Railroad Partner
Higher-speed passenger rail company Brightline Florida runs mostly on the tracks of the Florida East Coast (FEC) Railway. It seemed like a natural partnership for the startup, for-profit passenger rail company, and the freight railroad whose right of way has some degree of excess capacity. But last month, FEC sued Brightline for, FEC says, concealing its plans to start a commuter rail line from West Palm Beach to Miami on the FEC right of way. FEC says this violates its agreement with Brightline because it would overload the freight railroad’s capacity. Meanwhile, Brightline saw its bonds downgraded by both Fitch Ratings and S&P, after posting a $550 million net loss last year.

Ups and Downs in India’s Toll Road Industry
Rouhan Sharma reported last month in Infralogic (July 8) that toll roads operator Abertis is seeking partnerships for toll roads in India. Less than a month later, the same reporter spotted two such opportunities. Macquarie Asset Management has begun a process to sell a portfolio of nine Indian toll road concessions. A separate article on the same day (Aug. 6) revealed that KKR is planning to sell a $300 million stake in Vertis Infrastructure Trust, which has a portfolio of Indian toll road concessions. That article also noted that I Squared Capital is planning, with KKR, to offer toll road concessions from Vertis and Cube Highways Trust.

Major Tunnel Projects Under Way in Australia
Twin tunnel boring machines are at work on a pair of tunnels for the North East Link project in the Melbourne metro area. The A$16 billion project is building the tunnels, each to handle three lanes of traffic. They will be 6.5 km long and at a depth of 45 meters. The overall project, aiming to reduce congestion in the metro area, includes upgrades to the M80 ring road and the Eastern Freeway. Meanwhile, in Brisbane, twin 6 km tunnels are being bored under the Brisbane River. These tubes will serve to extend Brisbane’s existing rail transit system to the rapidly growing South East Queensland metro area. Originally budgeted at A$5.4 billion, some estimates put the total as likely to be A$17 billion.

North Carolina Express Lanes Extension Construction to Begin in 2030
The Charlotte Regional Transportation Planning Organization and NCDOT have announced that the $3.2 billion project to extend the I-77 express toll lanes 11 miles from downtown Charlotte to the South Carolina line will begin in 2030. NCDOT plans to procure the project as a revenue-financed long-term DBFOM P3, similar to the way the existing express lanes were procured last decade.

Sacramento Express Toll Lanes Network Under Way
Caltrans is adding express toll lanes to I-80 in Yolo and Solano Counties, as reported by CBS Sacramento last month. Derek Minnema, Executive Director of Connector JPA in Sacramento, tells me these links are part of a plan for a network of such lanes in the Sacramento metro area. Most of the projects will convert existing HOV lanes to HOT-3 lanes, in which carpools of three or more will not be charged, but all other vehicles will pay the variable toll. Similar express toll lane networks exist and are being expanded in the metro areas of Los Angeles, San Diego, and the San Francisco Bay Area.

Massachusetts Moving Forward to Revamp Service Plazas
The 18 service plazas on the Massachusetts Turnpike will be rebuilt and modernized under a 35-year P3 lease agreement with Applegreen. In winning the concession, the company committed to spending $750 million in improvements to the plazas and will share a portion of the revenues from the plazas with MassDOT. This agreement is similar to the way other toll roads have modernized and upgraded their plazas. Since 2010, six other toll road providers have signed similar P3 leases in Connecticut, Delaware, Florida, Indiana, Maryland, and New York.

More Road Diet Funding Is Unlikely—U.S. DOT
DOT Secretary Sean Duffy last month announced that its agencies will look “less favorably” on proposed projects that would reduce lane capacity for vehicles. The warning came in a Notice of Funding Opportunity for the Safe Streets and Roads for All Program. Anti-auto groups (such as Streetsblog) are very upset about this change, with their usual talking points about “excess road capacity.”

Hawaii Road User Charge Begins
Since July 1, EV owners in Hawaii will have the option to pay either a road user charge of $8 per 1,000 miles or a flat annual fee of $50. Both options replaced the previous $50 EV annual registration surcharge. Implementing such a program is simpler in Hawaii because no out-of-state vehicles use its roadways.

Massive Bridge Project Under Way in Italy
A $15.6 billion bridge will span the Strait of Messina that separates Italy from Sicily. The long-dreamed-of span has won government approval, and a contract has been awarded to a consortium that includes Italian contractor Webuild. The bridge will include highway lanes and a railroad line. Its suspended span will be 10,827 feet, the longest in the world. The financing plan is not clear, but the Italian government says the bridge will qualify as supporting national defense under a new NATO policy.

Australia Selects Japanese Builder for New Navy Ships
In a prior article in this newsletter, I suggested that the U.S. Navy could upgrade its aging fleet faster and less expensively by contracting with the world-class shipbuilders of Japan and South Korea. Australia is now pursuing that course, with a contract to produce its new frigates awarded to Mitsubishi Heavy Industries. Under the agreement, the first three frigates will be produced in Japan and the remainder in Australia. The frigate is an upgraded version of the Mogami frigate being procured by the Japan Maritime Self-defense Force.
  
Stop the Bleeding on California High Speed Rail, Analyst
In a July 7 online commentary, Baruch Feigenbaum argued that “walking away from the decades-late, largely unfunded California HSR project is the least-bad way forward.” The article first appeared in the Orange County Register and was subsequently posted on the Reason.org website.

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Quotable Quotes

“I have a report from an international HSR [high speed rail] association [which finds that] HSR construction generates huge amounts of GHG [greenhouse gases] but projects that it takes 5-10 years after the beginning of HSR operations to reach break-even. The situation in California is even worse because (1) the GHG benefits of HSR have been significantly overstated because the state has projected passenger loads higher than any HSR in the world has ever achieved, and (2) if California HSR ever commences operations, it will be in the Central Valley, which has the lowest population, lowest density, and the least projected ridership. Since this generates the biggest ‘last mile’ problem along the alignment, it will be particularly difficult to attract passengers who will have to find ways to access the HSR origin and destination stations, rather than just drive themselves.”
—Thomas A. Rubin, transportation consultant, email to Robert Poole and others, July 17, 2025

“This project [Maryland maglev] lacked everything needed to be a success, from planning to execution. This project did not have the means to go the distance, and I can’t in good conscience keep taxpayers on the hook for it. We will continue to look for exciting opportunities to fund the future of transportation.”
—Sean Duffy, U.S. Secretary of Transportation, DOT news release, Aug. 1, 2025

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The post Surface Transportation News: New Zealand’s road user charge transition appeared first on Reason Foundation.

• NTSB hearing details FAA institutional failure
• Using commercial space for a return to the Moon
• Problems with U.S. remote air traffic towers
• Will a helicopter company be a winner for Joby?
• Will secondary cockpit barriers be delayed again?
• News notes
• Quotable quotes

NTSB Hearing Details FAA Institutional Failure

The three-day hearings of the National Transportation Safety Board (NTSB) on the Ronald Reagan National Airport collision (July 30-Aug. 1) revealed more than most people knew about how U.S. air traffic control works—and doesn’t work. Former NTSB official Jeff Guzzetti called the hearing “the FAA’s day of reckoning,” focusing on both more flights than Reagan National Airport (DCA) can safely handle and the airport’s inadequate air traffic controller staffing. But much of the witness testimony revealed deeper Federal Aviation Administration institutional problems.

The FAA makes use of a database, developed by MITRE, called the Aviation Risk Identification and Assessment (ARIA) tool. During a three-year time period prior to the fatal collision in January, ARIA flagged 874 incidents at Reagan National for review via Preliminary Action Reports (PARs). Out of all those PARs, the Air Traffic Organization (ATO) chief operating officer (Nick Fuller) said, none were identified as near-mid-air collision risks (NMACs).

But that was not the only source of information about the hazard of helicopter Route 4 crossing under the approach to Runway 33, where the collision occurred. NTSB also pointed out a second source of data: the NASA-managed Aviation Safety Action Program (ASAP), under which aviation participants can report hazards anonymously—including pilots, controllers, and others. Between Feb. 2020 and Oct. 2024, there were 85 ASAP reports from pilots about close calls between helicopters and commercial aircraft near DCA. NTSB Chair Jennifer Homendy expressed amazement that none of those reports had led to any known concerns or action by the FAA.

Other testimony reported that an ad-hoc group of air traffic controllers in the D.C. metro area had surveyed the airspace around Reagan National and proposed removing Route 4, but an FAA manager, they said, declared that such a change was “too political” to take any action on. Controllers working at DCA had also asked management to reduce the level of arrivals and departures at the airport, but that recommendation likewise went nowhere. After the first day’s hearing, Chair Homendy commented as follows:

“FAA is so bureaucratic that nobody can take what is clearly a safety issue and get it up through the offices that should be making the decisions to ensure safety in the airspace. Or, somebody is ignoring them, maybe. I also have concerns that there’s a safety culture problem within the Air Traffic Organization of FAA.”

As I wrote in the first paragraph, the problem is institutional, as Homendy suggested. We all know that “FAA’s number one job is aviation safety.” But is that how it actually operates?

FAA regulates airlines, general aviation, pilots, mechanics, aircraft producers, engine producers, repair stations, airports, etc. It does this at arm’s length, as any regulator should. Yet the Air Traffic Organization is unlike all the other regulated aviation entities: it is housed within the FAA. That means the ATO has never been regulated at arm’s length, like Delta Airlines, Boeing, LAX, and all the other players. Self-regulation has dramatized its failure in the horrible tragedy that took 67 lives in the crash near Reagan National.

This dangerous conflict of interest has been illustrated by the failures NTSB is documenting. But this is hardly a new subject. FAA self-regulation has been criticized for many years by former FAA administrators, ATO chief operating officers, and numerous aviation safety experts. In their excellent book Managing the Skies (2007), Clinton Oster and John Strong explained the inevitable conflicts of interest that arise in self-regulation at the FAA. They also noted that, “Throughout the world, when air traffic organizations have been reorganized along commercial principles, countries have consistently taken the step of separating regulation of the air traffic control system from its operation.”

They also provided examples of ways in which “FAA has allowed itself to short-change safety in ways it would not tolerate in air carrier, commuter, and corporate flight operations.” Moreover, organizational separation of air traffic control and aviation safety regulation has been ICAO policy since 2001. The United States is one of the last holdouts.

If Congress were serious about reforms to the FAA in the wake of the Reagan National tragedy, it would enact legislation to separate the Air Traffic Organization from the FAA, making it a separate modal agency within the transportation department. The much-smaller FAA (as safety regulator) would be analogous to the Department of Transportation’s other safety regulators, and should be physically located at the DOT headquarters, not in the “FAA building.”

Yet during the same week these NTSB hearings were going on, the Senate Appropriations Committee included in its FY2026 spending bill for DOT a prohibition on using any DOT funding to “plan, design, or implement the privatization or separation of FAA’s Air Traffic Organization functions.” Needless to say, there is no pending legislation on “privatizing” the ATO. But separating it from the FAA is precisely what NTSB’s findings indicate to resolve long-standing problems that led to the DCA tragedy.

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Using Commercial Space for Returning to the Moon  

According to a just-released Reason Foundation study by aerospace engineer Rand Simberg, NASA’s return-humans-to-the-Moon program is failing in its goal of returning Americans to the Moon this decade.

Conceived as a modernized version of the Apollo program of 50 years ago, NASA’s program is based on a massive launch vehicle (SLS), an adaptation of the Apollo capsule, and uses “proven” components from the fatally flawed Space Shuttle program—refurbished engines and modified solid rocket boosters. All are being delivered under sole-source, cost-plus contracts, and all are years behind schedule and hugely over budget. And all but one of the key components are not reusable, a major innovation that this program largely ignores. The SLS program has already consumed $90 billion and has thus far carried out only one SLS test launch. If NASA proceeds with all six planned SLS launches through 2031, the average total cost of each mission would be around $30 billion.

Instead of continuing this failed program, the study calls for cancelling it and replacing it with competitive, fixed-price public-private partnerships like those NASA is using to transport cargo and crew to the International Space Station, procure lunar landers and lunar rovers, and even obtain new space suits. Terminating the SLS program, including the Orion capsule, the Upper Stage (EUS), the new launch tower (ML-2), and the Gateway lunar-orbit station, would free up $5.25 billion a year for mostly reusable launch vehicles and other components.

The Reason Foundation report by Simberg identifies five potential launch vehicles for the revised program: Falcon 9, Falcon Heavy, New Glenn, Vulcan, and (soon) Starship. Multiple launches would deliver components and fuel into Earth orbit for assembly into Moon mission systems. Orbital assembly was used to build the International Space Station over many years. Moon mission systems, aided by rapid launches of reusable vehicles, would change that from many years to many months.

Reflecting increasing concerns by space technology experts on the huge cost and delays of the SLS program, the White House mini-budget for NASA called for terminating SLS after only two more launches. But study author Simberg argues that this approach is still too costly and too risky, given the overall SLS program track record. The study calls for “stopping the bleeding” by terminating the program now and quickly refocusing on the commercial space alternative.

Unfortunately, at the last minute in crafting its version of the One Big Beautiful Bill Act, the Senate added a little-noticed provision to give NASA billions of dollars more for SLS Missions 4, 5, and 6, plus billions more for over-budget components, including the lunar-orbit Gateway station. The expedited House vote to approve the bill on President Donald Trump’s timeline before July 4 likely meant that most Republican House members may not have read it or known that this provision was in the bill they voted for. Vice President J.D. Vance cast the tie-breaking vote for the bill, which only received Republican votes in the Senate. It is unclear if Vance and President Trump, when he signed the bill, were aware of this provision that countermanded the declared White House policy on the SLS program.

Fortunately, those new outlays would be years in the future, and a new NASA administrator who appreciates the potential of commercial space could make a solid case for not spending those additional billions on what is increasingly viewed as a colossal boondoggle.

The full study, “Why commercial space should lead the U.S. return to the moon,” is here. And Simberg and I answer some frequently asked questions about this study here.

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Problems Continue to Plague U.S. Remote Towers
By Marc Scribner

Remote/digital air traffic control towers are increasingly mainstream around the world. As documented in a recent Reason Foundation report, covered in the May issue of this newsletter, dozens of remote/digital towers are currently in operation around the world, providing superior air traffic services at a fraction of the cost of conventional brick-and-mortar towers. What’s more, countries as varied as Italy, Norway, and Thailand are planning to deploy remote/digital towers at dozens of additional airports over the next five years.

Despite having developed the initial “virtual tower” concept two decades ago, the FAA has not approved any to be deployed in the United States. This growing air traffic technology gap has gained increasing attention on Capitol Hill, although the political scrutiny has to date not spurred meaningful action at the FAA.

On July 4, President Trump signed the One Big Beautiful Bill Act budget reconciliation bill into law that contained $50 million (at Sec. 40003(a)(13)) to fund the Sec. 621 Remote Tower Program that was established by the May 2024 FAA reauthorization. In the following weeks, congressional appropriations committees in the House and Senate each approved their annual Transportation and Housing and Urban Development (THUD) spending bills for FY 2026.

The House THUD appropriations bill was passed by that chamber’s Appropriations Committee on July 17. It recommended $2 million in additional funding for the FAA’s remote tower program, as discussed on page 37 of the accompanying bill report. This was the same amount provided in the current FY 2025 appropriations law and $1 million short of what FAA had requested for FY 2026 (see FY 2026 FAA Budget Estimates – Facilities & Equipment page 56). The House THUD appropriations bill report also orders the FAA to brief the House and Senate Appropriations Committees within 180 days of enactment on the status of remote tower system design approval and deployment.

A week later, on July 24, the Senate Appropriations Committee approved its FY 2026 THUD appropriations bill. The accompanying bill report’s language on remote towers (page 44) recommended fully funding the FAA’s budget request at $3 million. In addition, the Senate’s oversight provision was significantly more aggressive than the House’s—ordering the FAA to report to the House and Senate Appropriations Committees on the agency’s remote tower program progress within 30 days of enactment rather than 180 days.

While it is too early to tell exactly what will happen as both chambers of Congress eventually negotiate FY 2026 THUD appropriations, the Senate appears to have an advantage. The House’s bill was highly partisan, passing the committee in a 35-28 vote with no Democratic support, due to a number of controversial provisions unrelated to air traffic control. In contrast, the Senate THUD appropriations bill was approved by the committee in a bipartisan 27-1 vote, which makes it a likely candidate to be fast-tracked to a floor vote by the Senate Majority Leader. The 60-vote threshold in the Senate requires the support of at least seven Democrats, so the odds do not favor the House’s partisan bill.

While Senate appropriators were more enthusiastic about remote towers than their House counterparts, it is good to see broad interest in Congress for this technology. The challenge will be sustaining that interest over time and ensuring the FAA follows through on what Congress has ordered it to do, especially from congressional authorizers on the House Transportation and Infrastructure and Senate Commerce Committees.

This is because, despite growing attention from Congress on the FAA’s remote tower program activities in recent years, the FAA is still moving forward at a glacial pace. Currently, a single vendor—a partnership between RTX (formerly Raytheon) and Frequentis—is undergoing system design approval testing at the FAA’s Technical Center in Atlantic City. RTX/Frequentis became the technology vendor for the Northern Colorado Regional Airport remote tower project after the original vendor, Searidge, quit in 2023 after five years of work due to the FAA’s Kafkaesque regulatory process.

According to internal FAA documents obtained by Reason Foundation earlier this year, the FAA’s sudden decision to publish new remote tower technical requirements on its website in June 2024 delayed the system design approval timeline for the RTX/Frequentis project by four months. While the RTX/Frequentis system is now installed and being tested at Atlantic City International Airport, testing is taking far longer than it should be due to a costly deviation from international best practices in a Sept. 2022 FAA decision.

FAA’s remote tower system design approval process requires vendors to install their technology in Atlantic City for initial evaluation and approval, rather than the standard global approach of testing candidate technology at the first airport where it would be deployed, if approved. A close observer of the FAA’s remote tower program tells me that one problem with the 2022 decision that all vendors must install their technology at Atlantic City International for system design approval testing is that the airport has a low volume of general aviation operations. This means that the FAA must hire aircraft to fly required test procedures—at substantial cost to the agency—rather than seeking volunteers at an airport with robust general aviation activity at no cost.

It is unclear by how much FAA’s centralized Atlantic City system design approval process is delaying remote tower progress, but best estimates for approval dates of the RTX/Frequentis system have slipped over the last year from Spring 2026, to Summer 2026, to sometime in 2027.

In Sec. 621 of the May 2024 FAA reauthorization, Congress ordered the FAA to expand the system design approval testing process to no fewer than three airports outside the Tech Center (codified at 49 U.S.C. § 47124(h)(3)). Unfortunately, the FAA has not begun implementing this directive. A Feb. 2025 video on the remote tower program produced by the FAA makes no mention of it. But even if the FAA had complied with this provision, restarting system design approval from intake likely would not save any time for RTX/Frequentis. And due to the FAA’s poor reputation among remote/digital tower technology vendors, no others are likely to enter the system design approval process unless RTX/Frequentis can prove that it is possible to complete it.

It is critical for Congress to maintain robust oversight of the FAA’s remote tower program, but it can only be expected to do so much. Secretary of Transportation Sean Duffy and FAA Administrator Bryan Bedford are in an excellent position to help and should closely examine the ongoing problems with the FAA’s remote tower program. Secretary Duffy, with President Trump’s support, has made modernization of air traffic control technology a top priority of the Department of Transportation. But if the FAA cannot certify a relatively basic new air traffic management technology that Romania successfully deployed in 2023, it bodes poorly for the administration’s much more ambitious “Brand New Air Traffic Control System.”

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Will Buying a Helicopter Company Be a Winner for Joby?

Joby is respected as one of a handful of electric vertical take-off and landing (eVTOL) startups that are likely to achieve FAA certification within a few years and begin commercial operations. In a surprise move early this month, Joby announced the acquisition of long-time commercial helicopter operator Blade Air Mobility. Aviation Daily’s Ben Goldstein greeted this news as a way to de-risk Joby’s market-entry plans—and at first glance, that seems on-target.

First of all, Blade has operating certificates not only in the United States but also in Canada and southern Europe. Blade carried 50,000 passengers last year and has access to landing sites and terminals in key cities, saving Joby a bundle of money and time as it begins eVTOL operations in several years. And since it will own Blade from now on, it will have an additional source of revenue during its early years of eVTOL operations. Blade has also agreed that Joby will be its eVTOL partner for its profitable organ transport business (which Blade is retaining). Goldstein also cites the positive impressions of the deal from eVTOL analyst Sergio Cecutta, whom I have quoted several times in this newsletter.

But here are a few cautions from an aviation observer whose knowledge I appreciate, expressed Aug. 5 on an invitation-only online aviation discussion group. Without elaborating on his statement, here are his initial impressions.

“Blade loses money on pax [passenger] trips and makes good money on medical, I am told. They [Joby] are only buying the pax biz. They have sheds on wheels for lounges in NY so they can be trucked away, if needed. They own virtually no hard assets. Joby prides itself on its new app, but Blade already has one that works. So, $125M ($95M if certain terms are met) for a company with no assets [and] is loss-making seems like the deal of the century!”

I am in no position to vouch for either assessment, but am simply presenting these two views for you to ponder.

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Will Secondary Cockpit Barriers Be Delayed Yet Again?

While the threat of armed takeover of commercial aircraft seems to have decreased considerably over the past two decades, Congress (and pilots’ unions) have continued to push the FAA to mandate secondary barriers. The idea is to provide stronger protection for the cockpit when a crew member must exit to use the forward lavatory. Today’s practice of positioning a flight attendant with a service cart just aft of the lav is not much of a barrier.

Under pressure from Congress to enforce a 2018 statute mandating such barriers, the FAA cited the need for it to follow procedural rules before setting a deadline for retrofitting airliners. In 2022, the FAA issued a draft rule, but Airlines for America argued that it should apply only to newly certified aircraft, not including aircraft already in production but not yet completed or delivered. Airline unions insisted that the barriers be required for all airliners, including cargo planes.

In 2023, the FAA finalized its secondary barrier rule, which would apply to all newly delivered aircraft, per previous legislation. This final rule called for installations to begin within two years. But here we are in 2025, and major airlines are calling for another two-year delay. They argue that the FAA has not yet approved a design, and there are no manuals, procedures, or training programs.

At this point, it’s worth pausing to consider whether this additional protection against terrorist takeover of an airliner cockpit is still a sufficient enough threat to warrant the cost of secondary barriers. This subject has been addressed by aviation security researchers, and two of the best are Mark Stewart and John Mueller, authors of technical papers and their excellent 2018 book, Are We Safe Enough? Measuring and Assessing Aviation Security. They also produced a 2019 report on this specific topic, “Security Risk and Cost-Benefit Assessment of Secondary Flight Deck Barriers,” Centre for Infrastructure Performance and Reliability, University of Newcastle, NSW, Australia.

The results depend on the assumptions made about both costs and benefits. In the book, they found the benefit/cost ratio to be 75. But their updated analysis in 2019, based on feedback about the book chapter, led to a more conservative benefit/cost ratio of 41. Both sets of calculations were made without cost data from the FAA. In a 2022 email to me, Stewart used new cost information from the FAA to yield a revised benefit/cost ratio of 10, meaning the benefits of reduced/eliminated attacks were found to be worth 10 times the cost of the program.

One of the questions worth asking about such analyses is “compared to what?” Stewart and Mueller carried out a similar benefit/cost assessment for the Federal Air Marshals (FAM) program. Unlike the secondary barrier, which has only a one-time cost, the FAMs program has an ongoing annual cost of around $1 billion. Their resulting benefit/cost ratio for FAMs is a pathetic 0.03. So if Congress wants to get more bang for its aviation security bucks, it should abolish FAMs and require companies to retrofit secondary barriers to all current and future airliners. Airlines should welcome the freeing up of two front-cabin seats on all flights currently carrying FAMs.

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News Notes

FAA Supports ADS-B/In Mandate for All ADS-B/Out Aircraft
In a move long recommended by the NTSB, the FAA has announced that it will mandate the installation of ADS-B/In for not only new aircraft but also for all in-service aircraft that are required to be equipped with ADS-B/Out. Two bills to this effect were already pending in Congress by the time the Air Traffic Organization’s acting COO made the announcement on Aug. 1. With ADS-B/In, the cockpit crew will be able to see nearby traffic, both in the air and on the airfield. Had the regional jet that collided with the Army Black Hawk helicopter at DCA been so equipped, its crew would likely have seen the helicopter and aborted its landing (if the latter’s ADS-B/Out system had been operational).

FAA Funding Bill May Stimulate Performance-Based Navigation
The $12.5 billion in general fund money that Congress recently included in the One Big Beautiful Bill, signed into law on July 4, included $300 million to “fully implement” Performance-Based Navigation (PBN). The language says PBN should be implemented “for all terminal and en-route routes, including approaches and departures at about 40 large and medium hub airports.” The aim is for PBN to become a “primary means of navigation.” Aviation Week’s Sean Broderick points out that this plan was already included in the 2024 FAA reauthorization bill.

London Heathrow’s $65 Billion Modernization Plan
On July 31, privately owned London Heathrow Airport (LHR) submitted its plan for a third runway and new terminals, aimed at increasing its annual passenger capacity from 84 million annual passengers to 150 million, and flights from 480,000/year to 760,000. LHR announced that the project will be entirely privately financed. The same day Arora Group submitted a rival proposal including a shorter new runway that would not extend over the nearby M25 motorway, which might reduce some of the local opposition to the expansion. The Arora Group proposal’s cost of £25 billion is about half the £49 billion LHR proposal, but the terminal projects may be smaller than LHR’s. Arora also says its plan will be privately financed.

Mexico Airports Undergoing Changes
July brought news via Infralogic about two airport companies in Mexico. First, the government abandoned a plan to purchase investment fund Aleatica’s 49% stake in Toluca International Airport, because the price Aleatica wanted was too high. The State of Mexico already owns a 26% stake in Toluca. And on July 25, airport operator GAP (Grupo Aeroportuario del Pacifico) announced its interest in buying the airport assets of CCR, a Brazilian company that has ownership in or operating relationships with 20 airports across Latin America.

Boeing’s Wisk Aero Plans Autonomous Air Taxi Service by 2030
The only U.S. eVTOL startup that is planning for autonomous commercial passenger flights has announced plans to begin commercial passenger flights in Houston, Los Angeles, and Miami by 2030, according to an interview in SmartCities Dive. Reporter Dan Zukowski noted that the four-passenger eVTOLs will be both produced and operated by Wisk, which is partly owned by Boeing. Zukowski reported nothing about where Wisk Aero is in the FAA certification process. As of Aug. 2025, no piloted eVTOL has received FAA certification. It seems likely that this multi-year process will take longer for automated eVTOLs than for their piloted counterparts from Archer and Joby.

Skykraft Launches Five Air Traffic Satellites
Via a SpaceX Falcon 9 launch from the Vandenberg launch site in California, Australian company Skykraft in late July lofted five satellites into orbit for its planned space-based ADS-B and voice communication system. The company plans to compete with Aireon and several European startup companies in providing satellite-based air traffic management services.

DOT Inspector General to Review Newark Control in Philadelphia
The DOT Office of Inspector General on July 29 announced an investigation into the FAA’s shift of air traffic operations at Newark Airport (EWR) from the New York TRACON on Long Island (N90) to the Philadelphia TRACON. The reason for the move was a severe shortage of controllers (and other problems) at N90. Besides, the transferred controllers had to learn a new facility, and the EWR data had to be transmitted to Philadelphia by ancient copper wire cable rather than modern fiber optic cable. These cables are now being replaced.

Ardian Becomes Heathrow’s Largest Shareholder
Infrastructure fund Ardian last month bought out Ferrovial’s remaining stake in London Heathrow Airport, and now owns 32.6%, as the airport’s largest owner. Ardian’s initial stake was 22.6%, acquired in Dec. 2024. Paris-based Ardian is the 13th largest infrastructure investment fund according to a tally of the top 100 funds by Infrastructure Investor, based on each fund’s most recent five-year total capital raised.

Helsinki Airport Introduces Double-Boarding Bridges
At Helsinki Airport’s west pier, dual passenger boarding bridges have recently been introduced. For a large aircraft, one bridge can be used for the front cabin and the other for the coach cabin. For smaller planes, the plan is to accommodate two planes at the same boarding gate. New or recently upgraded boarding areas in both the south pier and the west pier are equipped for dual gates to be installed.

Air Force Testing F-35 Collision Avoidance
The Air Force Research Laboratory is testing a “collision avoidance manual deconfliction” system on an F-35 fighter plane. The aim of the project is to protect against collisions between military and civilian aircraft. Commercial aircraft are equipped with TCAS (Traffic Collision Avoidance System), but “many” military fighters, bombers, and helicopters are not.

Breeze Replaces Avelo in Southern California
Within a week of Avelo announcing that it was leaving the Burbank, California airport, Breeze Airways announced that it will offer service from Burbank to five former Avelo routes: Bend, Eugene, Eureka, Pasco, and Provo. Breeze already serves LAX and John Wayne Airport in Orange County.

New Video Interviews Air Traffic Control Reform Expert
ReasonTV’s Eric Boehm interviews Dorothy Robyn, who has supported air traffic control reform since her days as a domestic policy advisor in the Bill Clinton White House. The new video is “Why Does the Government Run Air Traffic Control?“
 
Aviation Week Editorial on Digital Tower Centers
A guest Viewpoint editorial in Aviation Week makes the case for bringing to the United States the technology and productivity gains being realized in Europe by providing control tower services to multiple airports from a digital tower center. Bill Payne and David Hughes spotlight two proposed Colorado projects that would create such digital tower centers. For context, they discuss some of the cutting-edge examples in Europe. The Colorado projects would be models for what could be done on a much larger scale to replace aging control towers and to provide tower services to smaller airports that lack them. The piece is the full-page Viewpoint piece in the July 14-27, 2025 issue of Aviation Week.

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Quotable Quotes

“We’re not in the aviation system of the 1960s or 1970s. And the proposed [EU] legislation does not reflect a real analysis of what the traveling public wants. Over the past two decades, as LCCs have grown, we have seen a drop in ticket prices and a democratization of air travel, to the benefit of customers, tourism, and economies. But airlines have only been able to set the headline fare at a low price because they can break out other elements, such as faster boarding, inflight food or drink or a cabin bag. [Airlines] are commercial entities, and they have to make money, otherwise fares will go up, and that will exclude some people from travel.”
—John Strickland, in Helen Massy-Beresford, “Europe’s Airlines Say Cabin Baggage Changes Threaten Consumer Choice,” Aviation Week, July 14-27, 2025

“One big picture piece that I left out is really the role of Congress. Refusing year after year to grant budgets of long enough duration to implement large-scale projects absolutely eliminates the possibility of even remotely effective planning. Instead, every project decision FAA makes is reactive. Especially when funding levels are inadequate to meet safety needs, let alone pursue long-range innovation and development. All managers can do is respond to immediate developments—most often, sifting budget allocations that occur as managers attempt to balance competing project needs. I’ve seen these kinds of budget-driven developments occur over and over. I do have sympathy for those caught in this dilemma, [but] I lose patience when some of the short-term workarounds prove less efficient in the long term. But there is no shortage of contractors to provide FAA managers with seemingly attractive solutions.”
—A retired FAA systems engineer, email to Robert Poole, June 24, 2025

“As we all know, an airline seat that takes off empty can never be sold again. And carrying a marginal passenger comes at extremely low cost to an airline. Most of the expense of the trip is baked in—the plane, crew, fuel. Airlines have gotten much better at filling seats. And they try to maximize revenue—yet the real cost of a ticket has fallen over time, inclusive of fees. That’s no accident. Airlines will sell that marginal seat for almost any amount they can get for it. Except they don’t want to offer a lower fare to someone that would buy a seat anyway, at a higher fare. And so airlines go to great length to price discriminate, i.e., to segment customers. AI is a tool to get more granular with price discrimination. And so it seems reasonably likely that it will be used to figure out whom to offer those lower fares to, filling more seats at even lower fares but only offering those prices to people who wouldn’t buy at all at a higher price. This way, airlines can fill seats and generate incremental revenue without cannibalizing existing higher-yield traffic. Our best defense against AI pricing of the imagined parade of the horribles sort is competition.”   
—Gary Leff, post on online aviation discussion group, July 23, 2025 (Used with his permission)

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The post Aviation Policy News: NTSB hearing details FAA institutional failure appeared first on Reason Foundation.

In this post, we address a few basic questions, along with more detailed ones, about the report and efforts to return to the moon.

What are this study’s most important recommendations?

The study, “Why commercial space should lead the U.S. return to the moon,” has three main recommendations:

• NASA’s entire SLS/Orion program, including the new Mobile Launch Platform, the Exploration Upper Stage, and the lunar Gateway, should be terminated due to being hopelessly over budget and lacking prospects for scalability in activity level, and at significant risk of failing to land humans on the moon before China does.
• NASA should replace its sole-source, cost-plus Space Launch System contracts with competitive procurement of commercial launch services under fixed-price public-private partnerships similar to those it is already using for transporting people and cargo to and from the International Space Station and for other moon-related components such as lunar landers, lunar rovers, and space suits. Annual cost savings of at least $5 billion per year should be sufficient for this alternative way forward.
• To carry out this revised approach to NASA’s moon project, the nation’s policy must be more accepting of the risks and possible failure of individual missions, and even to the potential loss of astronauts, as was accepted in the Apollo program and prior missions. NASA’s current risk aversion has slowed progress in space and significantly increased costs.

What would be the best-case outcome if the Reason Foundation study’s recommendations were followed?

If all of the report’s policy recommendations were implemented, post-2030, the United States could have multiple crewed lunar bases, in multiple locations, mining the moon for water and other potentially useful materials for expanding our space capability. We might also see a market for lunar tourism and other private activities, potentially reducing the need for taxpayer dollars to drive not just lunar activity, but also future space exploration.

Why shouldn’t NASA do these projects internally?

NASA never could fully do such projects internally. Decades ago, the Apollo program was contracted out via cost-plus contracts to companies like North American/Rockwell, Boeing, McDonnell Douglas, Grumman, General Dynamics, and many others. NASA, as a government agency, has no industrial capacity, and in a market economy, we should have no desire for it to, given the dreary record of government-run industries. The issue is not whether NASA should issue contracts to the private sector, but the nature of those contracts, and incentives for success or failure.

Aren’t NASA, the US military and American national security interests already too reliant on SpaceX and Elon Musk?

To the degree that this is the case, and it’s not clear that it is, it is because NASA and much of SpaceX’s competition have failed to match SpaceX’s boldness and remain less competitive in many areas. SpaceX has reduced the cost of getting mass into space by orders of magnitude, with a strong likelihood of such further reductions in the near term, saving American taxpayers billions of dollars for both NASA and Department of Defense programs while enabling new capabilities for both the government and a burgeoning private space sector. 

The Reason Foundation study identifies other commercial launch vehicles that could play key roles in the revised moon program, including Blue Origin’s New Glenn and United Launch Alliance’s (ULA’s) Vulcan, in addition to SpaceX’s current Falcon 9 and Falcon Heavy (and the still-in-testing Starship/Superheavy).

Doesn’t this proposal simply help SpaceX and other big companies and crowd out other startups?

The recommendations in the study would benefit existing launch providers, such as SpaceX, by streamlining the development of new launch systems, which is crucial for the US timeline to return to the moon in the face of China’s competition. There are also opportunities for innovation in on-orbit vehicles and landers, as well as in areas such as space suits and robotics, which are currently the domain of smaller companies and startups. Beyond that, reducing the cost of getting to the moon will provide opportunities for companies currently building Low Earth Orbit (LEO) space stations to expand their business to bases on the lunar surface, and create entirely new businesses from established players and startups. 

How are taxpayers’ dollars and interests protected with this study’s proposals? How are NASA and taxpayers going to hold private contractors accountable or get their money back if the companies fail to deliver?

Private contractors have already failed to deliver in many ways and are part of the reason the SLS/Orion program is vastly over budget and years behind schedule. But, thus far, there haven’t been many calls for clawing back taxpayer funds NASA has sent to Boeing, Northrop Grumman, Lockheed Martin and others. The study recommends shifting to fixed-price contracts instead of the cost-plus contracts used by NASA. If there are multiple competitive fixed-price contracts, rather than sole-source, no-bid, cost-plus contracts, as with the SLS/Orion contracts, taxpayers are likely to get far more value for their money than they currently get with space contractors.

Why should taxpayers care if China takes the lead in these efforts? Why should taxpayers be the ones to pay for these lunar landings and moon developments? 

Some taxpayers won’t care who opens the next frontier to humanity, or what values the humans who do that take out into the solar system. And if taxpayers are also indifferent to the national security and defense implications of who dominates cislunar space in the coming decades, then there is little reason for caring. But many others, including the study’s authors, see key public interests in those things. The Chinese think long-term, and they have been very aggressive about claiming new territory in the South China Sea. There is reason to believe that if they are the first to make it back to the moon in over half a century, they will abrogate or withdraw from the Outer Space Treaty and claim the moon as their own sovereign territory. This would have many implications for the United States and potentially restrict the ability of the West to utilize vital lunar resources.

Why not let private companies pursue this on their own with their own money?

The private space industry has boomed in recent years, and no one is stopping private companies from spending money. There will likely be opportunities for profitable businesses on the moon in the long-term future. These might include tourism, providing propellant to people going back to Earth, or even construction materials for things that provide value to extraterrestrial markets and perhaps terrestrial ones, as well. But for now, there is almost certainly no return on investment for private companies to try beating China there by 2030, other than revenue from contracts from a government that wants to see that happen for the geopolitical reasons discussed above.

The Senate recently provided funding for five more SLS launches. Doesn’t this make much of your study’s plan to shift those efforts to the private sector impossible?

Most of the money for launches recently included in the ‘Big, Beautiful Bill’ won’t be spent until the out years. Additionally, as demonstrated with other spending recently, Congress can provide something in one bill and take it away in another. The shift away from the status quo and efforts to get back to the moon won’t happen until there is quality leadership and a plan from the executive branch.

How can small rockets like Falcon Heavy get astronauts to the moon?

Falcon Heavy is not a small rocket. It has almost as much payload capability (~140,000 pounds when fully expended) as NASA’s Block I SLS. It can launch large components needed for the moon mission into Earth orbit for assembly into the vehicle that takes astronauts to the moon.

What’s wrong with NASA using proven technology from prior space programs like Apollo and Shuttle? Isn’t commercial space launch far more risky than proven NASA technology?

The technology from those programs is proven mainly in the sense that it has proven to be very expensive and provides an extremely low flight rate. In terms of reliability, a vehicle that flies as seldom as SLS does is not going to be very reliable, compared to a rocket that has flown hundreds of times, multiple times per month, without failure, as the Falcon family has.

Won’t terminating SLS/Orion delay reaching the moon before China?

Terminating SLS/Orion would not delay efforts if the United States uses the resources currently being expended on SLS to instead fund a faster, more cost-effective and frequent way of doing the moon mission by partnering with the private sector. And alternatives like that exist, as the Reason study explains in some detail.

What’s wrong with cost-plus contracts? Space flight is risky.

Cost-plus contracts can be appropriate in situations where there is a significant amount of technology risk, with immature technologies and uncertainty as to how to accomplish the job. But cost-plus contracts also have built-in incentives for the contractors to increase costs because the profit is a function of the contract payments, and larger costs mean bigger profits. Cost-plus contracts are utterly inappropriate for NASA’s current efforts to get to the moon or a program that is vaunted as using “proven technology,” which should be very low risk.

What is NASA’s track record with commercial space programs? Are there other NASA programs based on competitive, fixed-price contracts?

With the exception of Artemis I, NASA has used commercial launch providers for the delivery to space of every NASA payload since the Space Shuttle retired, with very few, if any, failures. In so doing, it has saved taxpayers billions of dollars, compared to what the cost would have been had the Shuttle program continued. The Commercial Cargo and Commercial Crew programs that deliver cargo and astronauts to and from the International Space Station have been spectacular successes. They have also provided significant cost savings compared to using either the Space Shuttle or Russia’s efforts for those services. Boeing’s Starliner, on its fixed-price contract, has yet to become operational, but the delay and added costs for its mission failures have been absorbed by Boeing, not American taxpayers.

Isn’t assembly and fueling in orbit untried and risky?

We’ve been assembling things in space for over a quarter of a century, with the International Space Station. The kind of space assembly we’re talking about for lunar missions is basically just rendezvous and docking, which we’ve done many dozens of times. The Russians demonstrated propellant transfer in the 1980s. With the planned flight rate of SpaceX’s Starship, which, in addition to being NASA’s lunar lander, SpaceX will use to deliver the new upgraded Starlink satellites, there will be many opportunities in the next year to demonstrate and perfect on-orbit refueling with liquid oxygen and liquid methane. There are no technical showstoppers with the concept.

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The National Aeronautics and Space Administration’s (NASA) return-humans-to-the-moon program is a failure. Conceived as a modernized version of the Apollo program of 50 years ago, it is based on a massive launch vehicle (SLS), an adaptation of the Apollo capsule, and “proven” components from the failed Space Shuttle program—refurbished engines and modified solid rocket boosters. All are being delivered under sole-source, cost-plus contracts, and all are years behind schedule and tens of billions over budget. And none of the most expensive components are reusable. The program has ignored the advantages and cost savings of reusable launch systems.

A 2021 review by the NASA inspector general projected that the accumulated cost by 2025 would be $93 billion. Including the six planned SLS missions through 2031, the average cost of each would be ~$30 billion for only a handful of crew each.

This vision paper calls for the current SLS program to be canceled and replaced by a new approach that relies on state-of-the-art reusable launch vehicles, makes use of multiple launches on low-cost reusable boosters rather than a single giant vehicle, and would likely enable more moon landings sooner than is realistic via SLS and its related systems. The new approach could be funded by savings from the cancellation of most or all of the SLS components. Projected savings would be about $4.25 billion per year if the Gateway lunar satellite remains in the program or $5.25 billion per year if Gateway is also canceled.

This vision paper calls for rethinking the case for getting humans to the moon. As with Apollo’s premise of beating the Soviet Union to the moon, today, there is considerable support in the White House and Congress to beat China to the moon. If doing this is seen as essential, replacing NASA’s hugely costly, chronically late approach is vital.

Another historical reason for the SLS program was to maintain a large workforce at NASA centers in key states as well as large workforces at major aerospace contractor facilities. But given the massive cost overruns and missed deadlines in the SLS program, this rationale should no longer drive space policy. NASA would continue to oversee and foster space science and technology development, but it would not be the entity developing the launch vehicles. It would be far better to deploy those workforces to things that the commercial sector cannot do.

The keys to a cost-effective moon landing program are competition and reusability. NASA should adapt the public-private partnership approach that it has used successfully for cargo and crew delivery to and from the International Space Station. There should be no more cost-plus contracts. Potential partly or fully reusable launch vehicles include Blue Origin’s New Glenn, ULA’s Vulcan, and SpaceX’s Falcon 9, Falcon Heavy, and likely soon, Starship.

Instead of relying on one giant, expensive, and rarely flown launch vehicle, each moon journey would use multiple launches of fuel and equipment to be assembled in orbit for the trip to and from the moon. Potential landers include the already-planned Blue Moon and Starship HLS. An alternative to NASA’s troubled Orion could be a version of the SpaceX Crew Dragon. But the alternative architectures needed to expedite a return to the moon will require acceptance of risk at the same level as Apollo, and that the Chinese accept today.

NASA needs to bite the bullet and end its use of obsolete, non-reusable launch vehicles and sole-source, cost-plus contracts. It should shift to state-of-the-art reusable spacecraft and public-private partnerships like those now transporting cargo and people between Earth and the International Space Station.

The estimated annual savings from terminating the current program are as follows:

SLS launch vehicle                                      $2.0 billion

Orion capsule                                              $1.4 billion

Upper stage (EUS)                                       $0.6 billion

New launch tower                                      $0.25 billion

Gateway                                                       $1.0 billion

Total Estimate Annual Savings:            $5.25 billion

The more than $5 billion annual savings from terminating the current SLS program should be ample to fund a revamped program that accomplishes the goal, shared by the White House and Congress, of returning humans to the moon before the Chinese government does.

The White House draft NASA budget, released in early May 2025, calls for terminating the SLS program after the second and third SLS launches. That plan would terminate SLS, Orion, upper stage, new launch tower, and Gateway. This would save tens of billions in future SLS missions, but would unfortunately delay the $5 billion per year cost savings needed to finance the replacement commercial space alternative. It would also potentially result in an SLS program dragged out by a demoralized staff, rather than allowing the staff to transition to something more productive. A better approach is to end the program now.

Read the full study here:

Answering frequently asked questions about this study’s recommendations

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