Senate Plan for Financing Air Traffic Control Upgrade Could Ground FAA's Idea

The administration will have a tough time selling its plan to finance modernization of the nation's aging air traffic control system, after senators introduced a less radical alternative.

The Federal Aviation Administration (FAA) has proposed a wholesale overhaul of the current financing scheme, tying payments more closely to actual use. Bipartisan Senate legislation introduced last week instead would build on the current mix of excise and fuel taxes and general fund contributions.

The administration-backed bill (HR 1356) would eliminate the tax on the price of a plane ticket and replace it with a fee levied on airlines based largely on a plane's size. The idea is that a plane makes the same demands on an air traffic controller regardless of how many passengers are on board.

The measure also would reduce jet fuel taxes for commercial airlines by almost half, to 13 cents a gallon, while almost tripling the fuel tax on general aviation, to 70 cents per gallon.

The commercial airlines support the FAA plan, arguing their industry now bears an unfair financing burden when compared with general aviation airplanes that also use the air traffic control system. General aviation interests counter that the proposal is corporate welfare for big airlines.

A bill (S 1300) introduced last week by the top Democrat and Republican on the Senate Commerce, Science and Transportation's Aviation panel would leave the current system in place but add a $25-per-flight surcharge on all flights in the national airspace. Piston-powered planes and turboprops that operate outside of controlled airspace would be exempt.

Aviation Subcommittee Chairman John D. Rockefeller IV, D-W. Va., called the financing plan that he and ranking Republican Trent Lott of Mississippi developed the "best, fairest way to spread the cost of these much needed aviation improvements among the users of the system."

The Senate Finance Committee, on which Rockefeller and Lott also sit, shares jurisdiction over portions of the reauthorization dealing with taxes. It has not yet released a bill, but aviation lobbyists said they are not expecting the committee to make radical changes to the tax structure. While the airline industry has expressed a preference for the White House version, it has made positive comments about the Senate Commerce bill, as well.

The Air Transport Association, the major airlines' trade group, called the Senate bill a "good move" toward modernizing the air traffic control system.

"The important decisions of determining an equitable cost-and use-based tax to support the current system is a critical next step," the group said in a statement.

The FAA issued a cautious statement praising the Senate for "moving quickly on this bill," while not addressing the differences between the two measures.

But the National Business Aviation Association (NBAA), which represents companies that operate their own planes, said in a statement that it opposes the Senate bill's fee structure because it would affect mostly small and mid-size businesses, including those in rural areas with little commercial air service. The group considers the $25 surcharge in the Senate bill a type of user fee.

"It is regrettable that at a critical point in our transformation to the Next Generation Air Traffic System, the bill is proposing a sharp pivot away from a proven funding structure toward the foreign-style user fees that have been so harmful to small aircraft operators outside the [United States]," NBAA President Ed Bolen said in a statement.

Though the Senate bill rejects the administration's user fee proposal, it does retain the idea of establishing a quasi-governmental body of stakeholders to advise the agency on aviation matters. It would primarily approve and comment on capital expenditures related to air traffic control modernization.

The administration had proposed such a body that would, among other things, have rate-setting authority over the proposed user fees.

The Commerce bill has not yet been scheduled for a markup.

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