April 5, 2005
There was little support for user fees among the representatives attending Wednesday's House aviation subcommittee hearing. Government witnesses (FAA Administrator Marion Blakey, DOT Inspector General Kenneth Mead, and GAO's Director of Physical Infrastructure Issues Dr. Gerald Dillingham) all testified that the aviation trust fund surplus would be exhausted sometime around 2007 and that current aviation taxes alone won't cover the FAA's budget.
FAA Administrator Blakey said, "The FAA needs a consistent, stable revenue stream, one that is fair to all users of the system, and one that is not tied to the price of an airline ticket, and reflects our actual cost to provide the service." User fees? Well, not just yet. "Now look, at this point I'm not endorsing new taxes or user fees," she told Congress, "but we must address the gap that exists between our costs and our revenues."
The members of the aviation subcommittee weren't ready to accept much of that, taking Blakey to task for both the FAA's costs and the hint of user fees.
While Chairman John Mica (R-Fla.) said, "We probably should take some time to review the possibility of converting to a user fee system in the United States," ranking member Jerry Costello (D-Ill.) said, "Switching to a user fee system raises more questions than answers."
Rep. Robin Hayes (R-N.C.), added, "Every time an airliner cranks up, it uses the system, while there are thousands of GA aircraft flying using nothing but the air - which I hope is still free." Rep. Leonard Boswell (D-Iowa) called user fees "unwise and harmful."
"I didn't like the fee idea much 10 years ago, and I don't like it much better today," said Rep. James Oberstar (D-Minn.).
Rep. Sam Graves (R-Mo.) said that everybody keeps looking at "GA as this great pot we're going to pull money from to pay for the system...but the vast majority of GA aircraft aren't using the system.... If you start taxing for flight service, for calling in to get a weather report, that's going to cause a safety problem in and of itself." And he noted that GA is paying a considerable amount into the system through the fuel tax.
In fact, there was considerable question about how much general aviation does use the system and what a "fair share" would be. While the airline representative stated flatly that commercial airlines pay 90 percent of the costs but are 65 percent of the users, Ken Mead, DOT inspector general, conceded that the IRS has problems identifying who is GA and how much they actually pay.
For that matter, the FAA still can't identify exactly how much it costs to provide the service. Remarking on the FAA's progress toward finally establishing a cost accounting system, Mead said, "Fifty-eight million dollars later, they almost have one."
Some of the representatives took shots at how much it costs the FAA to do business. "The only agency worse than the Pentagon at acquisition is the FAA," said Rep. Peter DeFazio (D-Ore.). Another representative grilled Blakey on why control towers can be operated so much more cheaply by contractors, with Chairman Mica demanding, "Ms. Blakey, you've been singing the blues about money, why haven't you taken action to institute contract towers and save money?"
The aviation subcommittee will be writing new legislation to fund the FAA. The current FAA authorization and aviation excise taxes expire in 2007.
House aviation subcommittee Chairman John Mica (R-Fla.) called it the "kickoff of a very significant debate." But there's no debate about where AOPA and its members stand on user fees. During a hearing running more than three hours today in the Rayburn House Office Building, AOPA President Phil Boyer used graphics and videotape to make sure Congress understands how general aviation pilots feel about funding the FAA.
"Mr. Chairman, we do a lot of research, and more than 96 percent of our members oppose the use of user fees in any form to fund the system," Boyer testified. "And don't forget, these are people who are your constituents." He said that the more than 400,000 AOPA members who own and fly personal aircraft "pay any fees out of their own pockets. They can't pass them on to paying passengers or a business."
And to show why members are opposed to user fees, Boyer showed Congress a video of a GA flight under user fees, with a cash register ringing up a charge every time the pilot contacted air traffic control. (The charges depicted were proposed in a 1993 Reason Foundation report. FSS charges were dropped in subsequent reports.)
To drive home the point, Boyer showed committee members letters from AOPA members in their districts, proving how pilot voters feel about general aviation user fees.
"I am forced on occasion to make payments to the privatized system in Canada. I'm not impressed," wrote a Minnesota pilot. "Our people and our system are really hard to beat. I hope we don't destroy something as good as this in the name of privatization."
An entrepreneur from Massachusetts wrote, "Without the benefits of the FAA system as presently configured, I would not be able to conduct and grow my business. In fact, if additional costs were imposed on the use of my airplane through a user fee-based system, it would limit severely our ability to grow and ultimately our ability to survive."
Boyer noted that general aviation is an incremental user of the air traffic control system, but GA is committed to lowering the FAA's cost of doing business.
Again using a cash register analogy, he "rang up" cost savings already in place, including more than $2 billion by outsourcing the flight service station system, plus another $13 million a year from eliminating redundant NDB approaches and not staffing some control towers during late-night hours at airports with little or no nighttime traffic.
In prepared testimony submitted for the record, AOPA told the aviation subcommittee that a user-fee system would denigrate safety. "A piecemeal system of fees and charges gives pilots a direct financial incentive to avoid using the safety features and programs provided within the National Airspace System." Noting that AOPA, through its Air Safety Foundation, has worked with the FAA to bring general aviation accidents down to an historic low, Boyer's testimony read, "It would be counterintuitive to allow the FAA to shift to a user fee-funded system after general aviation has had the lowest number of accidents and lowest accident rate since 1938."
The testimony also pointed out the inherent efficiency in the current -tax system. The IRS estimated in 1996 that the collection and administrative costs for the excise tax are only 0.001 percent to the total collected - $1.7 million to collect $5.5 billion.
"Collecting user fees would require a huge new accounting bureaucracy. The reality of such a system is that the users will have to pay much more in order to generate the same amount of net revenue for the FAA."
And Boyer pointed out that general aviation is not what drives FAA's costs.
"General aviation is an incremental user of the ATC system; a system designed solely for general aviation would look vastly different and cost much less than the current system," Boyer said.
Boyer added that general fund revenues should form part of the FAA's budget because the National Airspace System performs functions critical to public safety and the national economy.
Update: May 5, 2005
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Declaring this “a time for disruptors,” flamboyant MD Helicopters owner Lynn Tilton vowed to keep her storied company moving forward into her second decade of ownership.
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