NBAA Convention News

User Fees Still on Business Aviation’s Radar

 - October 25, 2012, 9:00 AM
Ed Bolen, NBAA president and CEO

Whether you call it a user fee or a tax, the White House proposal to levy a $100 charge each and every time a turbine-powered, fixed-wing aircraft departs an airport is not sitting well with business aviation. “Technically, it’s a tax–by definition,” said NBAA president and CEO Ed Bolen. And he pointed out that the industry has been fighting user fees on an almost day-to-day basis for most of the past half decade.

“It has been a significant part of the FAA reauthorization debate, and one would have hoped–I certainly hoped–that when the FAA reauthorization bill was signed into law on February 14 of this year that it would have made the issue a moot point,” he said. “But the reality is, as we approach the fiscal cliff, as we approach sequestration, there certainly is an uneasy sense that we’re going to have an effort in Washington to try to find revenue anywhere and everywhere we can,” Bolen said. “This is an idea that has been proposed, it’s part of the President’s budget, so it’s on a list, and I think all of us view it as our responsibility to make sure everybody knows that this is a proposal that is fatally flawed.”

Calling the $100 fee a really bad idea, he argued that the aviation community is like every other industry in that it doesn’t want to pay one more penny in taxes than it absolutely has to pay. “We don’t enjoy paying taxes,” he continued. “And we certainly have been through a very difficult economic period, probably the most difficult economic period certainly in the last couple of decades in our industry’s history. We are nowhere near returning to where we were in 2007 and 2008.”

Bolen said the industry has always made it clear that if Washington is determined to raise revenue from this industry, the best mechanism for raising revenue is the fuel taxes, which are already in place, are understood and equate to use of the system. “There’s a lot positive about it,” he suggested, “and that stands in stark contrast to all of the problems associated with an entirely new, second tax system on top of the already existing tax system. I think what you hear from the community is frustration that people keep proposing this additional form of taxation.”

He acknowledged that the level of taxes can always be debated, but to take a whole new tax system and layer it on top of the existing tax system doesn’t make sense. “We can raise the fuel taxes, we can lower the fuel taxes, we can keep them as they are,” said Bolen. “But why would we even talk about creating a whole new bureaucracy, to go out and hire a bunch of billing agents, collection agents and auditors and force companies to try to start processing invoices and arbitrating billing errors. It doesn’t make any sense. It’s a bad idea. It’s fatally flawed and it ought to be killed.”

Emissions Trading Scheme

Another topic sure to come up this week is the European Union’s Emissions Trading Scheme (EU-ETS), which will begin extracting carbon dioxide taxes from every airplane flying into the EU beginning on January 1. NBAA was one of 19 aviation stakeholders that signed a letter to President Obama on September 17 urging him to “challenge the inclusion of international aviation” under the EU plan by initiating an Article 84 proceeding in the International Civil Aviation Organization (ICAO) forum. Both the House and Senate have passed bills making it unlawful for U.S. operators to go along with the EU tax.

Although both transportation secretary Ray LaHood and secretary of state Hillary Clinton have stated they are against participating, the White House has taken no formal action.

“I’m not going to presume to speak for the secretary of transportation or the secretary of state,” Bolen told AIN. Both have talked about sending letters expressing at a cabinet level their concerns about EU-ETS and their oppositions to it. “So there has been a pretty high degree of activity in both the executive branch and certainly the legislative branch,” he added.

According to Bolen, with the letter to President Obama, the industry was asking the government to go even further by filing the Article 84 complaint in the ICAO arena, which is seen by many as a last-ditch effort to stave off an all-out trade war. “It is not clear to us yet whether or not that an Article 84 action will or not be filed,” he added. The letter reminded the White House that an Article 84 proceeding under the 1944 Chicago Convention is the dispute mechanism to which all 191 ICAO member states have agreed to by treaty.

BARR Program

AIN also asked Bolen to provide an update on the Block Aircraft Registration Request (Barr) program. An attendee at a computer hacker event in August claimed to have a way around Barr, by sampling audio feeds of ATC-aircraft communications.

“I think it’s safe to say we have re-established the Barr program as it had previously existed,” Bolen said. “Undoubtedly as technologies continue to evolve, there will be new and different challenges that are going to be faced in every walk of life. And so at this hacker convention, someone talked about a way to hack into information, compare various data sources and proclaim pretty broadly what they can do.” He emphasized that this is not a situation where the government is providing to any and every person with an Internet connection the real-time movement of every aircraft, regardless of whether that person operating that aircraft wants to be followed or not.