I continue to be astonished by what appears to be the inability of both the FAA and those now debating its funding sources to perceive a blinding flash of the obvious that surrounds the passenger excise tax issue.
The portion of FAA income that does not originate from general fund revenues contributed by all income tax payers is derived from excise taxes imposed on the users of the system.
We are all familiar with the excise taxes that are paid on 100LL and Jet A fuels, both by general aviation operators, Parts 91 and 135 and the Part 121 airlines.
Of course, the airlines pass this fuel tax along to their fare paying customers, as a portion of the fare itself.
However, I have heard FAA Administrator Marion Blakey complain that, with carriers competing in “fare wars,” ticket prices have often been reduced, leading to diminshed revenues to fund her agency.
Charles Spence reports in his column in the March 24 issue that, “…airline passenger count is forecast to grow at a rate of 3% a year, but there will be more flights, with air carriers using smaller, regional airplanes with lower ticket costs. The FAA says this will reduce the amount of revenue coming to the goverment. These are some of the reasons why the FAA wants to overhaul its revenue sources (Translation, this is another argument in support of user fees).”
The fallacy in all of this is that the ticket tax is the only one of the two revenue sources that is a percentage of the sale. The fuel tax is a fixed number of cents per gallon. These gross revenues decrease only when fuel sales decrease, which may be happening now in GA, but has not, to my knowlege, ever happened in carrier transport. The airlines still buy a whole lot a Jet A.
By imposing a tax on ticket prices, which is a percentage of those prices, the FAA permits the airlines to control its revenue stream, intentionally or not, by the simple expedient of lowering ticket prices, as occurs during the periodic “fare wars” and now, as Mr. Spence reports, by greater use of smaller, regional jets.
Why can’t the FAA simply impose a fixed tax amount for each ticket sold without regard to the ticket price? This fixed amount could be adjusted, periodically, as the revenue needs of the FAA require. The airlines should not oppose such a tax, as their customers, and not their shareholders, would pay the tax and it would be imposed equally on all airlines, giving none any competitive advantage over the others.
This eliminates the ability of price competition, or changing business plans, to reduce FAA revenues and would allow the FAA a more flexible means of matching income to need. Maybe I am missing something, but if not…DUH?