User Fees Are Not the Way to Fund FAA Services

The Issue

For nearly four decades, excise taxes on general aviation fuel, airline passenger tickets, and cargo have financed the bulk of the expenses for airport improvements, modernizing the air traffic control system, researching new technologies, and the operations of the Federal Aviation Administration (FAA) air traffic control system. The taxes deposited into the Airport and Airway Trust Fund support nearly 87 percent of the FAA budget.

Some have argued that the FAA should be funded through user fees for ATC services and other FAA regulatory and certification requirement, rather than taxes on aviation users. This reduces the role of Congress in allocating the funds for FAA programs and providing management guidance and oversight. This could include transitioning the FAA into a government corporation or outright privatization of ATC services. The topic of privatization and user fees is typically connected.

Largely brought on by pressure from the airlines, the Administration and some members of Congress proposed user fees in 1995, when it said the FAA would face an insurmountable funding crisis as Congress moved to balance the federal budget. At that time, AOPA worked with its allies in Congress to bring about significant management reforms within FAA, including: creation of a Management Advisory Council (with an air traffic subcommittee), creation of an air traffic control COO/CEO, exemptions from federal procurement and personnel rules, a fixed term of service for the FAA administrator, a requirement that the FAA develop a cost accounting system, and funding reform to more closely align aviation tax dollars with FAA expenditures.

However, even with these management reforms in place, the user fee debate remained. President Clinton's 1997 budget request called for $300 million in new user fees in fiscal year 1998, followed by more than $8 billion in user fees in 1999. Under the user fee scheme, the FAA would charge user fees for services, such as air traffic control, aircraft and pilot certification, training, and licensing. This came under great opposition by AOPA and the general aviation community, and with the passage of AIR-21 — The FAA Reauthorization Act, Congress rejected the administration's user fee proposals.

In 2003, the issue again surfaced, this time in the new FAA Reauthorization Act — Vision 100. As a result of AOPA's efforts, both the House and Senate drafted legislation that contained prohibitions against privatizing air traffic control. However, President Bush threatened to veto the bill unless the prohibition against privatizing the air traffic control system was removed. Ultimately, Congress passed the legislation without including those assurances against privatization but received assurances that the FAA was not pressing for privatization.

The user-fee fight is far from over. As we enter 2005, airlines are renewing their campaign to impose a larger burden on general aviation pilots. Faced with bankruptcy and a thin bottom line, air transport organizations and airline CEOs are launching an aggressive campaign, asserting that airlines overpay for services and disproportionately fund federal responsibilities. The major airlines have argued that general aviation users should pay more and have suggested users fees should be implemented.

The airline industry's financial situation does not justify a need to overhaul our federal aviation system in order to assess user fees. Even if the FAA needs more revenue now or in the future, AOPA believes that user fees are not the best way to collect it for the following reasons:

• Assessing user fees for air traffic denigrates safety by discouraging aircraft operators from using the services.
• Collecting the current aviation excise taxes is extremely efficient with a low cost of collection and has been in place for nearly four decades, requiring very little government oversight. Collecting user fees would require a huge new accounting bureaucracy with a much higher cost to collect the fees.
• Implementing user fees removes critical congressional oversight, directing, and management of FAA resources that are key to an efficient national air transportation system.
• The air traffic control system is a public system designed to provide services for the airlines that is far in excess of that necessary for general aviation.
• Operators of light general aviation aircraft contribute $60 million a year and corporate jets pay $210 million annually to the trust fund through fuel taxes.
• General aviation also supports the aviation system with locally imposed taxes and charges on hangar and tiedown rental, fuel, and other assessments.
• Read AOPA's full 18-page response to the FAA's questionnaire on future funding.

Congress has determined that the nation needs a national air transportation system and has contributed to maintaining that system for the benefits of all citizens. The financial well being of one user of our national transportation system should not be used to establish policy affecting all citizens. Using relatively modest facilities with minimal impact on operational costs, general aviation contributes more than $100 billion in economic benefit to the U.S. economy.

AOPA will continue to strongly fight against the establishment of user fees.

Updated Monday, January 23, 2006 1:48:08 PM