WASHINGTON, D.C. — How to fund the FAA was the subject of still another hearing in the House of Representatives and the notion of user charges raised its ugly head higher, lifted by testimony from James May, president and CEO of the airlines’ Air Transport Association (ATA) and comments from several government witnesses.
In his prepared testimony, May said airlines “”accounted for only 66% of the IFR departures”” but pay 90% of the money in the Aviation Trust Fund. He added that airlines cannot continue to pay 90% while using just two-thirds of the services. May called for “”a funding mechanism which collects revenue from all users of the system in direct relationship to costs imposed,”” later complaining about airport improvement aid “”going to airports without commercial service.””
Witnesses representing various facets of general aviation rebutted some of May’s comments, but Kenneth Mead, Inspector General of the Department of Transportation, echoed them, noting that while commercial aviation pays 90% of the money in the fund, GA pays just 2%. After his testimony I questioned him on the figure, asking if it was not the passengers and shippers who pay the money, not the airlines. He agreed, and confirmed that the airlines receive a service fee from the government for collecting these passenger taxes. The airlines also do not have to turn the money over to the government for three months, meaning they have millions of dollars of “”float”” money to use or invest. Of their own money, the airlines pay a fuel tax representing only 5.8% of the total revenue going into the trust fund, offset by the service fee and float benefits.
Groups representing general aviation slugged back with telling points. Phil Boyer, president of the Aircraft Owners and Pilots Association (AOPA), said 96% of that association’s 400,000-plus members oppose user fees. He showed a video indicating how much a cost-per-use fee could add to a short GA flight, noting also that charges per operation could lead to safety problems by pilots skipping weather reports, flight plan filing and other essential activities.
Jim Coyne, president of the National Air Transportation Association (NATA), reminded committee members that on-demand air charter operators are classified as commercial carriers and collect the same ticket tax and flight segment fees as the scheduled carriers, yet the generally used figures do not credit these funds to general aviation.
Ed Bolen, making his first appearance before the Aviation Subcommittee since moving from head of the General Aviation Manufacturers Association (GAMA) to president and CEO of the National Business Aviation Association (NBAA) — stressed looking at what drives costs instead of just usage. “”Simply put,”” he said, “”general aviation does not drive the costs of our air traffic system in proportion to the commercial airlines.”” He noted that Washington’s Reagan National Airport has been closed to general aviation for three years, but the FAA’s costs there have not been reduced.
Members of the committee were openly opposed to user fees, including Rep. John Mica (R-Fla.) and ranking member Jerry Costello (D-Ill.), who declared that “”switching to user fees raises more questions than it answers.””
Rep. Robin Hayes (R-N.C.), a pilot, told FAA Administrator Marion Blakey and other government witnesses that a big portion of general aviation flies VFR and never — or infrequently — enters the air traffic system, yet pays about 20 cents a gallon fuel tax. Another pilot, Rep. Sam Graves (R-Mo.), commented that some in government are looking to GA as a big pot where a lot of money can come from to fund the FAA, but that this is an incorrect appraisal. He pointed out that excessive fees would reduce general aviation activity and further reduce the amount of money going into the fund.
The aviation trust fund — established in 1970 to help fund the airport and airways system and investments in air traffic control systems — has, in most years since its inception, had a surplus. Today, however, with FAA expenses rising rapidly and trust fund revenue slowing down after the Sept. 11 attacks, the FAA’s budget is expected to exceed trust fund revenues by $2 billion in fiscal year 2006.
The present tax laws to feed the fund expire in September 2007. Blakey said she is not looking at user fees “”at this time.”” She added that ATC problems are expected to increase, noting that more than 15 companies are in line waiting to be certified as air carriers, current airlines are moving to smaller aircraft for more direct flights, and the first of the micro-jets for corporate flying is expected to be certified next year, with production of this category of planes to reach 1,000 a year.
Lawmakers warned the administrator that the agency must get its costs under control as well as look to new funding possibilities.
Charles Spence is GAN’s Washington, D.C., correspondent.