It’s All About the Money

Industry reaches a crossroad over user fees, ATC, PFCs, rates & charges, and more

In February, the Federal Aviation Administration proposed the creation of an array of new user fees to fund the U.S. air transportation system. Much of industry gave the proposal a ‘thumbs down,’ with a key exception being the Air Transport Association which a year earlier had released a position paper that was very similar to the subsequent FAA proposal. Airports want the cap on passenger facility charges (PFCs) raised and indexed for

inflation. User groups (other than the airlines) are essentially calling for the status quo. It is up to Congress to make the final determination on how to fund the system while also modernizing the air traffic control system — the need for which all parties agree. Meanwhile, another debate has emerged involving money — a rates and charges showdown at Los Angeles International Airport — that could have long-lasting repercussions for airports and their tenants. In the final analysis, it is all a moving target, at best.

Interestingly, for much of aviation business is good. The air carrier segment is on the upturn, evidenced by the recent exit from bankruptcy of Northwest Airlines, despite volatile fuel prices. Business aviation continues to grow, almost unabated. Only the piston segment has slowed due to the price of avgas.

The debate over how the aviation system is funded is happening because Congressional authorization for what is in place expires September 30, the end of the federal fiscal year. A concern throughout the industry is that Congress will fail to pass any legislation by that date and the industry will have to suffer through a series of continuing resolutions to keep the system operating. That is a scenario, history has shown, that wreaks havoc on planning at FAA and airports.

ATA, which represents the major airlines in Washington, jump-started the debate in March 2006 when it called for 1) a new system of user fees that would extract more money out of business aviation users; and 2) push forward ATC modernization while also creating an oversight board on which user groups (read: airlines) could have a seat.

Comments ATA vice president and COO John M. Meenan, “I would say that they are co-equal goals. Our hope is that this becomes the trend-setting decision for the next several decades in aviation. Let’s create a mechanism that deals with both system modernization and funding in a definitive way.

“If we continue to see this shift from commercial to corporate aviation ... there ought to be a dynamic funding system in place that recognizes those shifts and adjusts funding accordingly.”

The ATA user fee proposal has met stiff opposition from the Aircraft Owners & Pilots Association, the National Air Transportation Association, and the National Business Aviation Association. The mood in Congress appears mixed, although it is anticipated that general aviation turbine users will see some increase, most likely in the fuel excise tax currently paid.

NBAA president Ed Bolen recently wrote to his membership, “NBAA will remain united with the rest of the general aviation community in supporting aviation system modernization using the current fuel tax system. Congress must understand that user fees would be very harmful to the businesses and communities that are part of the backbone of our economy.”

As we go to press, the U.S. Senate Committee on Commerce, Science and Transportation approved S.1300, the Aviation Investment and Modernization Act of 2007, which authorizes FAA and other programs through 2011. The U.S. House had yet to come forward with its reauthorization bill.

Comments NATA, “The Senate’s FAA reauthorization largely maintains the status quo...” It does not make changes to current aviation taxes, which fall under the domain of the Senate Committee on Finance. Some key S.1300 provisions:

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