An Era of Contradictions

Many in the aviation industry as well as the general media are predicting a summer of congestion in the U.S. skies and at airports as the air carriers return to pre-9/11 activity levels. At the same time, business aviation keeps charging ahead, despite high fuel prices, and the introduction of the first of the new very light jets this summer is predicted to expand bizav’s scope even further. Yet, storm clouds are brewing in Washington debate circles, where the airlines and the Federal Aviation Administration are calling for new mechanisms for funding the U.S. air transportation system. Meanwhile, the Transportation Security Administration, which in May released its long-awaited air cargo final rule (sidebar), is gearing up for its long-term initiative of determining the next phase in passenger screening.

According to the Air Transport Association, which represents the air carriers, a study conducted by the Campbell-Hill Aviation Group, Inc., estimates that U.S. commercial aviation drives some $1.2 trillion in output, $380 billion in earnings, and 11.4 million jobs. Yet, the airline industry has been losing billions annually in recent years. For those in the position of managing the business of U.S. airports, that fact has translated into increased pressure to reduce costs to the carriers. At the same time, the airlines are heightening pressure on airports to provide more basic facilities, ones that help reduce rates and charges to airlines.

And, in an era when many airports have turned to creative mechanisms and incentives to attract air service, some have begun to take a serious look at providing more of the aircraft handling services in an effort to facilitate the decision by an airline to serve their markets. This has the American Association of Airport Executives studying the need for an offshoot trade group, such as the Contract Tower Association, to help create guidelines on airline servicing.

For Airports Today, It’s All About Planning

According to Catherine “Kate” Lang, the FAA’s deputy administrator for airports, the uncertain situation with the air carriers has placed an increasing emphasis on planning for many airports. Lang, speaking at the annual AAAE meeting of airports in San Diego in late April, told managers that the preliminary analysis of the agency’s current update of the National Plan of Integrated Airport Systems (NPIAS) is quite telling.

Every two years, FAA updates the NPIAS, which serves as the initial guideline under which airports are eligible for federal funding. It’s also used to gauge capital improvement needs for the system.

Lang says that for the first time in decades, the NPIAS estimates show a drop in capital needs, from $46 billion to $39.5 billion. The biggest drops, she says, show up in terminal construction and access projects. At the same time, planning jumped some 53 percent, which Lang says “makes sense” because of the high degree of uncertainty brought about by the airlines’ ongoing financial challenges.

Few outside the Bush Administra-tion would argue, however, that such numbers indicate a reduced need for Airport Improvement Program funding, which is authorized for FY07 at more than $3.6 billion but which the Administration proposes to fund at $2.75 billion. This battle has moved to the top of the lobbying list for airport groups, who seek to restore funding at the authorized level.

While that debate ensues, airports and other industry groups are digging in for the larger, longer term battle over system authorization after FY07. At the center of that debate is a call by ATA and FAA for a new formula for funding the system, one based on “user fees.”

Exploring New Options: Feeding the Trust Fund

The Airport and Airway Trust Fund is the mechanism by which aviation taxes are collected and disseminated — for FAA operations and air traffic control, as well as AIP. The airlines, through a unanimous proposal via ATA, and FAA are making how the system is funded the center of the reauthorization debate, expected to heat up later this year. (The current system is “authorized” through September 30, 2007.)