User fees a likely part of future FAA funding plan

 - September 26, 2006, 10:36 AM

Congress may have approved FAA funding for Fiscal Year 2006 before it adjourned for the Thanksgiving holiday, but the drumbeat for user fees in future years continues. Within days of the passing of the $13.8 billion budget, FAA Administrator Marion Blakey was telling the Washington Aero Club that her agency needed a revenue stream that is tied to the actual cost of services.

“As you’ve heard me say many times before, the taxes that fuel the trust fund will expire in 2007,” she said. “What we need is a constant, stable revenue stream that’s related to the actual cost of the services we provide.”

She continued, “Our ability to pay the operations bills is literally tied to the price of a ticket,” she said. “With low-cost carriers driving the market…and more and smaller aircraft up there…we have reduced income and increased workload. It’s an equation that doesn’t work.”

In April, the FAA held a trust-fund forum with major aviation stakeholders during which a number of options for funding the FAA were discussed. The agency said that any new financing structure should allow it to maintain appropriate levels of service and make long-term investments, not only in modernization but also in the next-generation air transportation system.

That forum was followed in September by a notice in the Federal Register calling for new aviation financing reauthorization. The notice emphasized that the current taxes and fees paid into the Airport and Airways Trust, which currently funds about 80 percent of the FAA’s operations, expire on Sept. 30, 2007.

Meanwhile, the airlines have mounted a campaign for user fees, arguing that they are paying 90 percent of the FAA’s costs while using airspace only 70 percent of the time, conveniently ignoring the fact that it is the passengers who pay the ticket taxes. They also maintain that business aviation does not pay its fair share.

At the NBAA Convention in November, president and CEO Ed Bolen warned that general aviation operators might find themselves priced out of the National Airspace System if they do not actively oppose an airline plan to have the FAA adopt a user-fee system.

“There is a growing inevitability of a user-fee fight on Capitol Hill,” he said. “Some people have told me that user fees have been debated before, and everything turned out fine. [But] this time, things are different, and the situation is far more serious.”

Unlike past user fee battles, which pitted the low-cost carriers and regional airlines against the legacy airlines while largely ignoring business aviation, the airlines are more united than ever. They would like to see general aviation pay an additional $2 billion in costs.

Bolen noted that the airlines are advocating a system in which all aircraft–a single-engine turboprop or a 555-passenger Airbus A380–pay the same fee regardless of size. Unfortunately, that idea is gaining some traction in Washington, D.C., he added.

He called for strong grassroots participation from everyone involved in business aviation. “Our industry is now too large to remain silent,” he said. “Our visibility and successes have made us a target. There are 30,000 of us here; we all oppose user fees and Congress needs to understand that.”

FAA Eyes a Different Funding Structure

The FAA plans to send its proposed reauthorization legislation to Congress on February 28, and it will likely include a proposal for user fees. While the FAA’s current authorization does not expire until Sept. 30, 2007, the language on ser fees is good only through September 30 next year.

In her speech before the Washington Aero Club, Blakey said that the FAA must demonstrate through its ability to launch the next-generation ATC system and operate the agency like a business that a change in its funding structure is warranted.

Blakey claimed the FAA has been working with stakeholders, industry, Wall Street, the White House Office of Management and Budget and Congress to develop a proposal that is fair to all and that continues broad taxpayer support through the federal government’s general fund.

“The clear fact of the matter remains that we can’t wait until 2007 to take action,” Blakey said. “We have to have agreement on how we finance our system long before. We already have a good starting point for healthy debate and some of the elements for consensus.”