Small businesses sound off on user fees

House committee hears of ‘devastating’ impact

September 12, 2012

A restaurant-supply business with 48 employees and a promising future gets its competitive edge from general aviation, but could be “devastated” by proposed aviation user fees, said the company’s chief executive in congressional testimony Sept. 12.

“Without question, a $100-per-flight user fee would be catastrophic to general aviation, will not create jobs, will depress economic prosperity for the hundreds of thousands of businesses that rely on general aviation to move their goods, and is nothing more than an additional regulatory burden and harassment to our nation’s small businesses and communities that rely on general aviation as a means of livelihood,” said Brad Pierce, president of Orlando, Fla.-based Restaurant Equipment World.

Pierce testified on behalf of AOPA at a hearing of the House Small Business Committee, chaired by Rep. Sam Graves (R-Mo.). Graves convened the hearing, “ User Fees in the Aviation Industry–Turbulence Ahead,” to “discuss the negative financial and regulatory impact” of user fees on aviation in response to President Barack Obama’s fiscal 2013 budget proposal that included a $100-per-flight fee. A similar proposal was abandoned last year in the face of strong opposition in Congress.

Graves, an AOPA member, pilot, and co-chair of the House General Aviation Caucus, said that “new fees and taxes always put up a caution flag in a difficult economy. The committee shares the concerns of many aviation small businesses. They fly on tight budgets and pay taxes on fuel. A new fee, in addition to rising fuel costs, is asking too much.”

“General aviation carries 166 million passengers to around 5,000 communities over 27 million flight hours each year,” Graves added. “More than two-thirds of these flights are for business purposes. General aviation’s operations and manufacturing provides jobs for about 1.2 million people while putting $150 billion in our economy. This proposed fee would harm an industry that is already feeling the effects of a sluggish economy.”

Other representatives of companies that depend on or serve general aviation who testified at the hearing included Martha King, co-founder of King Schools, appearing for the National Business Aviation Association; and Marian Epps, chief financial officer of Atlanta-based Epps Aviation, who spoke on behalf of the National Air Transportation Association.

Much of the speakers’ testimony expressed concern about the possible effects the latest user-fee plan could have on their companies’ prospects for continued growth.

Pierce, an AOPA member since 1997, said his firm uses a Turbo Cirrus SR22 for business travel, and he has placed a deposit on a Cirrus Vision jet. He has personally flown the SR22 to 49 states, “and because the airplane allows us to set our own travel schedule, we can stay on site to make sure our business interactions are complete and our clients are satisfied; we don’t have to worry about catching a flight,” he said in prepared remarks.

A plan to switch from the current, efficient pay-at-the-pump system of collecting fuel taxes would create an unwieldy, expensive bureaucracy—snaring users in paperwork and consuming much of the revenue the system would supposedly produce, he said.

“For business owners like myself, there would be additional costs just to reconcile and pay the resulting invoices, making the added burden of this new tax even greater,” he said.

Pierce’s father founded the company 35 years ago, he told the committee. Since then it has sold products in all 50 states and 100 countries. The SR22 is the third airplane the business has used.

He predicted that a user-fee-based approach to funding the aviation system would “destroy flight schools, decimate the pilot population, put manufacturers and FBOs out of business, and kill off some of the 1.2 million jobs that now depend” on general aviation.

Pierce also pointed out that avgas users have agreed to accept an increase in the 19.3-cent-per-galon fuel tax in lieu of user fees and to ensure that general aviation pays a “fair share” of system costs. In contrast with user fees, excise taxes “are easy to collect and provide an equitable distribution of costs—if you fly farther, you use more fuel and pay more in taxes.”

Even during the current economic slowdown, the versatility of using the company aircraft to meet with customers on demand has been of strategic value, strengthening the company and allowing it to continue hiring when competitors in the sector failed, he said.

‘Put an end to this’

King related how King Schools grew from two employees—herself and husband John King—and continues to compete 37 years later, using a general aviation aircraft in support of the business.

“It is difficult to imagine how, at a time when a critical American industry is struggling the way general aviation is, people in Washington could be contemplating an onerous, regressive, and administratively burdensome new per-flight tax euphemistically called a ‘user fee,’” she said.

The proposed $100-per-flight fee on all turbine powered aircraft “would be devastating for thousands of small businesses like mine. I hope this important committee will put an end to this nonsensical proposal once and for all.”

Epps described the history of a family-run aviation business that has grown over 40 years to become the south’s “premier corporate and general aviation facility,” employing 160 people at a 21-acre facility at Dekalb-Peachtree Airport, and she noted industry-wide concern about the effects of user fees.

“The government’s first priority should be to create an environment in which business can grow and make important contributions to the national economy,” she said. “A user fee is little more than a punitive tax that would have a lasting negative effect on an industry that contributes significantly to the nation’s economy and its exports.”

A Sept. 5 memo from committee staff to the panel’s members noted that general aviation businesses are predominantly small businesses, and that imposing a $100-per-flight fee—or any other amount—had the strong potential to stifle job growth when Congress should be focused on job creation.

“We applaud Chairman Graves, a longtime supporter of general aviation and co-chair of the House General Aviation Caucus, for holding this important and timely hearing. We look forward to continuing to work with the committee, and others in Congress, to defeat this ill-conceived user fee proposal,” said Lorraine Howerton, AOPA vice president of legislative affairs.