User Fees: Not Dead Yet
Like a monster that keeps coming back to life in a bad horror movie, user fees have returned in the form of a mandatory surcharge on every flight of a business or commercial aircraft proposed in President Obama’s jobs creation/deficit reduction plan unveiled in September. In the words of the plan, “This proposal would create a $100 per flight fee, payable to the FAA, by aviation operators who fly in controlled airspace…The revenues generated by the surcharge would be deposited into the Airport and Airway Trust Fund. This fee would generate an estimated $11 billion over 10 years.”
The business aviation community, exhausted from battling the economic slump, has reacted with more puzzlement than outrage.
“A lot of us our scratching our heads wondering why the President put this proposal forward, especially when the House and Senate have rejected per-flight fees,” said Paul Feldman, the General Aviation Manufacturers Association’s vice president of government affairs.
But the plan does raise some puzzling questions, such as: how did the government calculate the $11 billion revenue figure? How would the fees be collected, and what would the cost of the collection be? Where would the money go? And what impact would such fees have on business aviation?
The source of the $11-billion estimate seems as elusive as the reason for the proposal.
“The administration hasn’t provided any background on the assumptions behind the figure,” said Feldman. “We really need to know more about the assumptions. We should not take that [figure] on faith.”
As for how the fee would be collected, “If you read the legislative proposal, clearly there’s an idea this would require a fee collection agency with the FAA that would be a bureaucracy unto itself,” Feldman said. “There would be bills to send out and disputes to be resolved. Furthermore, there would be an impact on the individual pilot or company, who would have to review and reconcile charges, and in the event of a dispute, deal with somebody in Washington about what they were being charged.”
Feldman notes that some years ago the FAA made an effort to collect fees from Canadian pilots who transited U.S. airspace but never landed in the U.S.“It was a very targeted effort to capture that rather small population [of pilots], and even with something relatively small, the FAA had a lot of difficulty dealing with that.”
The costs of such a collection agency cannot be determined, Feldman said, because the proposal doesn’t provide enough information about the proposed user fee program. But assuming the some portion of the $100 would be left over, where would the money go?
“It’s a little vague,” Feldman said. “As we understand it, it would go to replace the general fund contribution [to the FAA]. Basically overall spending for aviation would remain the same or decline, but the government would charge the industry more. It doesn’t increase spending for NextGen or other important aviation infrastructure.
“The aviation industry currently funds about 75 percent of the FAA’s activities,” Feldman continued. “Twenty-five percent has been historically been looked at as providing a public benefit,” and thus is supported by tax revenues. “This would reduce that 25 percent even more, when users of other modes of transportation aren’t expected to pay for those kinds of things.”
While the impact on the fortunes of business aviation are unknown, other countries that have imposed such charges provide clues. “The examples of the consequences are all bad,” Feldman said. “In Europe these kinds of fees had a dramatic impact on the industry in a negative way.”
And if and when a collection mechanism were put in place, what is the possibility that fees would soon escalate?
“I think that’s a very real concern,” Feldman said. “If this gets on the books, I think aviation will be looked at again and again as a place to collect more and more funds.”
And charging per flight without distinguishing between private and commercial flight seems unfair to some.
“Somebody with a small aircraft who goes to multiple locations in a couple of states is charged $500,” said Feldman. “Meanwhile a passenger plane flies from Los Angeles to Washington, D.C.[and the airline] would pay only $100. So inherent in this fee are some equity issues.”
Legislative blowback against the fee proposal has been encouraging. The House General Aviation Caucus sent a letter to the White House opposing the proposal, and more than 125 Democrat and Republican Congress members joined in signing a letter opposing the fees. In perhaps the strongest slap, Senate Majority Leader Harry Reid (D-Nev.) removed user fee provisions from the jobs bill introduced in the Senate on October 5. Yet those who have seen this monstrosity before aren’t about to declare it dead. At several press conferences here at NBAA, business aviation companies have noted important legislative issues are currently under discussion and urged attendees to get involved. Perhaps such activism could be the silver stake that can take down the specter of user fees once and for all.