AOPA Pilot Magazine
May 2007 Volume 50 / Number 5
FAA Funding Debate: A Bill's Blowback
Congress receives the FAA's and airlines' wish lists
Last month in our ongoing coverage of the FAA funding debate, we explored the European user-fee structure (see "FAA Funding Debate: Euro-Fees Fears," April Pilot). On AOPA Pilot's Web site you also can see video clips that vividly illustrate the onerous effects of user fees on European general aviation pilots. One clip takes you on an IFR flight, tallies up all the fees, and winds up with an approach to Frankfurt's Hahn airport in very low instrument meteorological conditions. Other video clips feature pilots expressing their opinions on the impact of user fees. It's a moving testament from your fellow pilots across the pond, one that's well worth a look. You'll come away with a better knowledge of what American general aviation could face.
And by all appearances, it certainly seems that the Bush administration also has been studying the European fee system very closely. The administration's long-awaited user-fee bill has been submitted to Congress, and it contains language that could have been lifted directly from the European playbook. The bill is formally titled "Next Generation Air Transportation System Financing Reform Act of 2007," and can be viewed in two parts, beginning with part one and finishing with part two. The bill is 88 pages long and contains many passages, and much legalese, but here we'll break it down to its essentials.
Winners and losers
We can sum up the bill's potential impact quite easily. For general aviation, user fees and tax hikes would impose a burden on pilots amounting to $968 million annually. Pilots of piston-powered aircraft would pay $100 million more under the bill's provisions, or 344 percent more than under the current arrangement. Operators and pilots of turbine-powered general aviation aircraft would pay $868 million extra, or 333 percent more than before, and in major metropolitan areas — user fees.
Meanwhile, airlines would enjoy major cuts in their payments.
Under the bill's provisions, the 7.5-percent airline ticket tax (which is paid by passengers, then merely passed along to the Airport and Airway Trust Fund) would be eliminated. So would the cargo waybill tax. Arrival and departure taxes on international passengers would be reduced.
In all, the bill would reduce the "legacy airlines" (such as American, United, Delta, and Northwest) payments to the trust fund by about 27 percent, or $1.7 billion per year, compared with the current arrangement. For the low-cost carriers, such as Southwest and JetBlue, payments channeled to the government would be cut by 15 percent, or about $286 million per year.
In place of these reduced contributions, airlines would pay user fees at a rate unknown but to the FAA administrator. Airports would boost their contributions to the trust fund via an increase in the passenger-facility-charge ceiling from $4.50 to $6 per head.
Last, but certainly not least, the bill turns the airlines into full partners with the FAA on matters of decision making. It would create a board dominated by airline representatives who would help set up the user-fee pricing schedules, and even help run the air traffic control system.
Authority and accountability
The bill is noteworthy for many reasons, but of paramount significance is its stance on fundraising authority. "The administrator of the Federal Aviation Administration shall establish fees for air traffic control and related activities, services, facilities, and equipment," states one passage. "The administrator may establish separate fees for aircraft operating in terminal, en route, or oceanic airspace," goes another. These words such as "shall," "may," and other prospective legal passages are liberally sprinkled throughout the entire document. In the eyes of the bill's authors, the administrator is a self-governing entity.
Here's the point: The bill gives a lot of power to a nonelected bureaucrat — the FAA administrator. The traditional — and highly important — oversight role fulfilled by Congress, along with its opportunity for input provided via debate in a public forum, is changed by the bill's language. If this bill is passed, the administrator can levy fees and other charges by publishing them in the Federal Register. This leaves the door open to fee increases and potentially sets the stage for deals that benefit one user over another.
En route, terminal airspace fees
In a dramatic change from the system of aviation excise taxes, the bill creates a series of user fees. The bill mentions en route fees in an indefinite way, saying simply, "In establishing fees for aircraft operating in [en route] or oceanic airspace...the administrator may base the fee on distance traveled, or on any other method that is consistent with the treaties and international agreements to which the United States is a party."
The FAA explains that general aviation would pay primarily through the fuel tax, however, GA pilots flying into congested airspace will also be subject to a user fee. Nearly half of AOPA's members live in the shadow of Class B airspace, where these fees would apply.
If experience in other countries is any indication, limited user fees quickly expand and cover more areas and grow in cost.
For the 'remarks' section
How would the FAA keep track of user fees for flying in terminal airspace? One method is spelled out in the bill: You'd have to identify your flight as a general aviation flight on your flight plan — presumably in the "remarks" section. Operations for compensation or hire also would have to be named — as would military, police, rescue, air ambulance, and other public service flights. The bill provides that military, public service, and noncommercial civil aircraft of a foreign government are exempt from user fees.
For general aviation, the bill attempts to give with one hand while taking away with the other. "Except for fees established for operations in terminal airspace for a large hub airport...no fees may be established...for air traffic control and related services," it says. Then comes the catch.
"The exception provided by this subparagraph shall cease to be effective if the rate of tax for fuel...is lower than 70.0 cents per gallon...."
In other words, GA must pay more than 70 cents per gallon in order to buy its way out of paying for flying in terminal airspace and for those vague "air traffic control and related services." This is a 360-percent increase above today's 19.4-cent-per-gallon avgas tax.
The proposed fuel tax is the central fundraising component of the bill. It's the huge increase in this tax that would allow the airlines to shoulder less of the burden of financing the upgrade of the ATC system, and shift more of the cost to general aviation. At least, that's what the bill's authors think. A survey of AOPA members revealed that 88 percent of respondents would fly less if higher fuel taxes were imposed, and 66 percent of those answering the survey said they'd cut their flying by 10 percent or more.
Other fees, in detail
Most of the bill's references to fees are vague, but in paragraph 45306 we see specific fees mentioned for registration and certification. These fees are set for large increases, or are new fees.
Here they are:
- $130 for registering an aircraft.
- $45 for replacing an aircraft registration.
- $130 for issuing an original dealer's aircraft certificate.
- $105 for issuing an additional aircraft certificate.
- $80 for issuing a special registration number.
- $50 for issuing a renewal of a special registration number.
- $130 for recording a security interest.
- $130 for recording a security interest in aircraft parts.
- $50 for issuing an airman certificate.
- $25 for issuing a replacement airman certificate.
- $42 for issuing an airman medical certificate (in addition to the medical examiner's fee).
- $100 for providing legal title opinions pertaining to aircraft transactions.
What is most disturbing about these fees is that the FAA wants them to help pay for part of its safety budget. Safety has always been deemed a function that should be paid by all taxpayers, not those targeted for FAA safety oversight.
General aviation gets huge tax hikes and user fees; the airlines get major tax breaks.
The airlines would have to pay user fees, but don't think that this will be without consequences. Those user fees would simply be passed along to passengers, buried in the price of each ticket. And remember, the pricing of these user fees, as mentioned earlier, has yet to be set. If the airline representatives to the decision-making process get their way, it will be to their suiting.
It's also safe to assume that the airlines will figure out other ways to try to make passengers bail them out of their financial difficulties. One airline has already advanced the idea of charging passengers $5 for the first checked bag — and $100 for each additional bag.
We also must contemplate that a fee- and tax-hike-based system may backfire. Revenue paid for our next-generation air transportation system may drop, as GA pilots reduce their flying. It's a thought that apparently hasn't crossed the administration's mind.
Another thought is that the airline business is cyclical. We're in an up cycle now, but what happens when the next downturn occurs? We know that ATC costs don't decrease when airplanes fly half-full, so user fees will have to increase at the times the airlines can least afford it, which also means either new user fees for general aviation or even higher fuel taxes than already proposed. (It's worth remembering that the bill provides for the adjustment of user fees each year, and fuel taxes every other year. The bill covers only the 2008 through 2010 time frame.)
In a larger sense, the bill's most significant dangers issue from the precedents it would set. It elevates the FAA administrator (meaning not just the administrator but also those in the administrator's inner circle, and its constellation of grasping lobbyists) to the role of unsupervised, unaccountable autocrat, with unlimited fiscal decision-making powers.
Any direction or oversight the administrator makes would come from the president who appointed him or her, a setup guaranteed to make the administrator little more than a puppet.
For all these reasons, some members of Congress are less than enthusiastic about the bill, and openly doubt its chances of passage. The proposal has even been called "dead on arrival" by Rep. Vernon Ehlers (R-Mich.), a general aviation supporter.
AOPA stands firm in its belief that the current revenue-raising system is adequate to fund the airspace system of the future. And the congressional investigatory arm, the Government Accountability Office, and the Department of Transportation's own inspector general agree as well. Trust fund surpluses — now at $2 billion — are rising, and will continue to rise under the current fuel-tax and airline-tax arrangement. AOPA will be advancing this argument in the hearings that have just begun. For late-breaking information on the FAA funding debate, and coverage of congressional hearing highlights, visit the AOPA Web pages dedicated to the subject.
As for what you can do to help, keep reading to become educated about this issue, and stand by. As the bill moves before key committees in Congress, we will be asking members in certain voting districts and states to contact their legislators about this important issue, the biggest threat to GA in decades.
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