User fees get cool reception on the Hill

 - October 11, 2006, 6:38 AM

Calls to institute user fees to help pay for FAA expenditures in the future continue to generate little support in Congress, as evidenced by a hearing before the House aviation subcommittee early last month.

Rep. John Mica (R-Fla.), chair-man of the panel, said at the outset that Airport and Airway Trust Fund revenues are down significantly from the levels that were projected before 9/11. Trust fund revenues were on a downslide before 9/11, but the attacks, combined with economic conditions and lower air fares, resulted in three consecutive years of declining trust fund revenues– from $10.5 billion in Fiscal Year 2000 to $9.3 billion in FY03.

“Although revenues now appear to be on an upward trend once again, the uncommitted cash balance in the trust fund has been dramatically reduced–from $7.3 billion at the end of Fiscal Year 2001 to $2.4 billion at the end of Fiscal Year 2004,” he said.

Determining Business Aviation’s Share

Given the uncertainty sur-rounding these revenue projections and the possibility that revenues will be even less than currently forecast, Mica questioned what Congress should do to ensure the uncommitted cash balance does not reach zero before the next aviation reauthorization bill takes effect in FY2008.

The airlines have been calling for user fees for general aviation, primarily for turbine-powered busi- ness aircraft. James May, president and CEO of the Air Transport Association, told the aviation sub-committee that commercial aviation can no longer be expected to pay 90 percent of the ATC system costs but use 60 percent of its services.

“In contrast, business aviation, which currently uses between 20 and 30 percent of air traffic services, contributes only minimally to its support,” May contended. “Airline operations are subsidizing a significant and growing portion of system users.”

He said a Gulfstream IV looks a lot like an airline 737 to an air traffic controller. Although the GIV uses the same services and facilities, he added, its operator pays a fraction of the taxes and fees imposed on the airliner.

According to May, non-scheduled operations accounted for more than a quarter of IFR departures, and more than two million of these operations involved jet aircraft that are in most relevant respects indistinguishable from their counterparts in scheduled service. He emphasized that he was not talking about personal, VFR aviation.

Evaluating Cost Drivers

But NBAA president and CEO Ed Bolen claimed that IRS records of general aviation fuel receipts and surveys of fractional companies and charter operators show that general aviation operations are estimated to have contributed more than $600 million to the Airports and Airway Trust Fund last year. “This $600 million represents between 6 and 7 percent of the $9.2 billion collected last year,” he testified.

He conceded that GA operations (including fractional operations and charters) represent more than 30 percent of IFR operations. Turboprops account for 7.2 percent, pistons 11.2 percent and business jets 12.5 percent.

“However, as economists point out, operational percentages do not equate to costs imposed,” Bolen said. “Economists look at cost drivers rather than operational numbers when allocating costs.” He added that “GA is not the reason for the Chicago Tracon.”

Bolen argued that if general aviation were grounded tomorrow, the cost of the air traffic system would not decline appreciably. “After all, general aviation was grounded for a prolonged period after 9/11 and costs did not come down,” he told the legislators. “Ronald Reagan Washington National Airport has been closed to general aviation for three-and-a-half years, but the FAA’s costs associated with that airport have not gone down.”

Jim Coyne, president of the National Air Transportation Association, said that what the airlines are proposing is “a per-flight tax.” It presents no problem to the airlines because they fly the same routes and the same schedules to the same limited number of airports.

But the on-demand charter industry consists of 2,800 com-panies that make 1.5 million flights to 5,000 airports. “I submit the federal government is not capable of producing millions and millions of accurate bills a year, and our industry is going to pay the price,” he said.

Rep. Jerry Costello (D-Ill.), the ranking minority member on the House aviation subcommittee, showed little enthusiasm for any user-fee proposal, saying that the real question is whether the FAA’s revenue projections are reliable.

He said he strongly supports a contribution from the federal government’s general fund to help pay for the FAA, along with the aviation trust fund revenues. If the trust fund falls short, he said, the general fund should make up the shortfall. “The user-fee system raises more questions than it answers,” Costello added.

Rep. Robin Hayes (R-N.C.), one of several active general aviation pilots on the panel, said, “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.”

Another pilot, Rep. Leonard Boswell (D-Iowa), called user fees “unwise and harmful.” And Rep. James Oberstar (D-Minn.), the ranking member of the full Transportation and Infrastructure Committee, added, “I didn’t like the fee idea much 10 years ago and I don’t like it much better today.”

Gerald Dillingham, director of physical infrastructure issues for the Government Accountability Office, said talk of instituting user fees “disturbs me” and is the wrong direction for Congress to go. He expressed concern that a user-fee system might cause safety problems because general aviation pilots might begin to skip weather reports and stop practicing touch-and-goes to save money. “I think the perfect system is the fuel tax,” he concluded.