User Fee Debate

Battle Brewing

February 1, 2007

Are user fees on the horizon?

This year, general aviation faces a huge challenge in the public arena. This time it's the framing of the FAA's reauthorization bill, which needs to be passed into law by the end of September. That's the law that determines who pays what and how much into the FAA budget. Forces are aligning that could call for general aviation to pay a bigger share in financing the FAA, and for the airlines to pay less. This article, the first in a series, begins by providing an overview of the situation as we now see it. In the months to come, we'll explore other aspects of the user-fee and other revenue-enhancing strategies, and the players in the unfolding political process. We'll even look at user-fee schemes in other nations, to discover how costs in a user-fee environment affect general aviation pilots.

How would you like to pay $30 each time you received a briefing from flight service? Or pay $1,000 to take a private pilot knowledge test? How about $31 to shoot an ILS approach? Or $70 for separation services as you cross air traffic control regional boundaries?

Of course you wouldn't. Under this sort of pay-as-you-go fee structure, it's easy to see how safety would be compromised, how general aviation would face a huge, unequal financial burden, and how its growth would be seriously impaired. But it's the possible imposition of just these sorts of fees — and more — that's at stake come September. That's when the FAA's current funding arrangement expires, and a new authorization bill must be passed to replace it.

Two paths

At this juncture there appear to be two principal paths this critical funding decision could be taking: Maintain the current method of funding through aviation excise taxes, or rearrange the funding structure in the form of user fees. AOPA maintains that the current system works very well, has worked well over the past four decades, and should be preserved. This system relies on three streams of income from airspace users: a fuel tax on each gallon of avgas (19.4 cents per gallon) or jet fuel (21.9 cents per gallon) purchased by general aviation operators; a tax on each airline ticket (7.5 percent of airfare) and another on each segment of an airline trip; and a tax on packages sent by air. This amounts to a contribution of some $11 billion, or 77 percent of the FAA's $14.2 billion budget.

The other 23 percent of the budget — $3.2 billion — is paid from the taxes that all citizens pay into the U.S. Treasury's general fund — often referred to as "the general fund contribution."

The existing funding structure is appropriate, provides adequate revenue, and is efficiently collected through an administrative process that's already in place. The amount of revenue is sufficient — just look at the FAA's Airport and Airway Trust Fund surplus ($2-plus billion and growing) even after numerous modernization programs have been carried out over the years. The trust fund, where the fuel, ticket, and cargo taxes are kept, is the principal source of the FAA's funding, and Congress' job — driven by several committees in the House of Representatives and the Senate — is to make sure that the trust fund remains in surplus.

A conflicting body of opinion — led by the airline industry, which would benefit the most — supports the notion of imposing user fees on general aviation pilots. AOPA is firmly against such a proposal and is mounting a vigorous counterattack. Under a user-fee arrangement, pilots would be assessed fees such as the ones mentioned at the beginning of this article, which were drawn from actual examples. That $30 weather briefing is a reality in the United Kingdom, the $31 ILS approach can be flown in Austria, and the $1,000 knowledge exam can be taken in the Netherlands. There are many, many other types of user fees that pilots flying in foreign nations must pay. In future articles, we'll explore these in more detail.

Contending views

AOPA's list of opponents in the user-fee issue is formidable. Opponents include the White House, the airlines, the FAA, and the Office of Management and Budget (OMB).

Imminent danger

By Phil Boyer

When I first took the AOPA left seat 16 years ago, general aviation was gasping for breath, slowly suffocating under a blanket of lawsuits. Special interests — plaintiffs and the trial attorneys representing them — were killing the goose for the golden eggs.

We had to do something, or GA would die.

The industry united, and we worked with our friends in Congress for product liability reform. The General Aviation Revitalization Act granted manufacturers some protection from frivolous lawsuits, and the rebirth of Cessna piston-engine aircraft, Piper Aircraft, the birth of new companies such as Cirrus and Columbia, and the avionics revolution were the result.

Now more special interests are attacking aviation for their own ends. They — the airlines, the White House, the FAA — tell us they're only concerned about the "system." They say they have no desire to hurt GA.

Individual trial attorneys probably had no desire to hurt general aviation, either. But the collective action of all of those lawsuits nearly killed us.

User fees and/or radical changes to the FAA funding system would eventually kill us, too. Cost or control — or both — would drive us out of the air.

The airline's FAA funding proposal gives the airlines majority control of the air traffic system. How long would it be before they created separate "commercial" and "non-commercial" airspace, or banned GA from hub airports and the terminal airspace around them?

And when the next economic downturn hits, will they increase the fees on themselves to keep the infrastructure operating, or will they go after other users?

The FAA benignly says that it just want to make the "revenue streams" match the costs — whatever they may be. The agency's past history of cost overruns and failed projects makes me very uncomfortable with a system where they could charge what it costs to do what they want.

And while the FAA is moaning that the current tax system just won't get them the money they need for the next modernization attempt, Congress has always made sure that the agency has had enough money to get the job done — even if it hasn't always been as much money as the FAA wanted.

The upcoming battle pits powerful special interests against us. But we have some powerful allies among the peoples' representatives. With your help, we will make our case to Congress for preserving a system that benefits everyone.

And we think Congress will listen.

The White House view seems to come as an offshoot of President Bush's privatization campaigns, designed to make government more efficient by shifting costs to users of government services. This month, Bush will present his budget proposal for the year. At that time, we'll know more about the specifics of his initiatives. However, all the signals from the Bush administration are telling general aviation to get ready for proposals to raise costs for the private sector, be it from user fees, increased gas taxes, or a mixture of both.

The airlines want user fees in hopes of shifting away several billion dollars of the passenger ticket taxes they collect — taxes that the passengers and not the airlines pay, with general aviation picking up the balance. Besides, airline representatives will tell you, general aviation airplanes threaten to clog up airways and airports. Moreover, they'll tell you that the multitude of new generation of very light jets will soon darken the skies, pushing controller workloads and system capacities to the bursting point.

But there are serious fallacies in the airlines' arguments. They claim that they use 69 percent of the system. But it's how and when they use the system that causes congestion and high workloads. Most major airlines operate in a hub-and-spoke route structure, a system that creates morning and evening "rush hours" when there are strings of near-simultaneous departures and arrivals at key airports. Add adverse weather and you've got massive delays as each airplane waits its turn to fly instrument departures or approaches.

However, most general aviation flights take place in good weather, and comparatively few involve instrument approaches and other high-workload procedures. So the notion that the airlines use "only" 69 percent of the system — if even accurate — doesn't reflect the true nature of their impact. It's the airlines that make most use of the system — a system built almost exclusively for them. And their assertion that ATC workloads don't distinguish between VFR and IFR traffic — reduced to the slogan "a blip is a blip" on a controller's display screen — is functionally incorrect.

Airline representatives have other motivations that, in their minds, dovetail with arguments for increased general aviation user fees, and even exercising control over airspace. They reason that they pay too much to use their share of the airspace; but, the fact is, the public does the paying — in the form of those ticket taxes borne by the passengers and only collected by the airlines.

The U.S. ATC system, under congressional oversight, remains the safest and most efficient anywhere — the envy of the world. And yet the airlines want to wrest control of the system from Congress. All you have to do is look at the pattern of airline bankruptcies to see that the airlines' powers of oversight are lacking.

The FAA likes the idea of user fees because they could serve as a source of funding that sidesteps the congressional budget process. The agency could then spend the money as it likes, without congressional scrutiny, or use it as a revenue stream to borrow against.

The FAA also claims that the aviation trust fund doesn't contain enough to finance future modernizations, and that less money is flowing into it because of falling ticket prices. But this, too, is incorrect. As anyone who flies the airlines knows, airfares are rising — they're 15 percent above last year's receipts — and AOPA's projections, based on the government's own data, are for a $4.2 billion surplus in the trust fund by 2011. That's the projected surplus even after significant annual increases in FAA spending.

As for OMB, its reasoning for user fees is simple: spend less from the Treasury's general funds, and by so doing help reduce the nation's skyrocketing budget deficit.

A busy timetable

The debate on potential general aviation user fees price hikes kicks off in earnest this month, when the FAA's authorization and the related budget proposals are first put before Congress. In early spring hearings in the House of Representatives and Senate will be under way. This will be followed by amendments and votes working toward passage and signing of a bill into law by the end of September.

We'll keep you posted as these crucial issues evolve and crystallize into more specifics, so check AOPA Pilot — and AOPA Online — for regular updates.

At times, AOPA may call on its 410,000 members to voice their concerns to members of Congress — especially with those who have seats on the three House and three Senate committees that will be conducting the hearings this spring. The hearings are bound to generate proposals that could adversely affect our ability to fly, our access to ATC services, and our safety. Of all the groups involved in this upcoming legislative drama, AOPA has by far the most clout, owing to its huge membership. Count on us to be at the forefront of general aviation interests in the debates at hand, and to make sure that our airspace system continues to be fairly administered.

E-mail the author at tom.horne@aopa.org.

Thomas A. Horne

Thomas A. Horne | AOPA Pilot Editor at Large, AOPA

AOPA Pilot Editor at Large Tom Horne has worked at AOPA since the early 1980s. He began flying in 1975 and has an airline transport pilot and flight instructor certificates. He’s flown everything from ultralights to Gulfstreams and ferried numerous piston airplanes across the Atlantic.