FAA Causes Uproar With Tax Talk

Most airline passengers pay their 7.5 percent ticket tax and continue about their travels.

Little do they realize that throughout aviation, people are gearing up for a knockdown, drag-out fight over whether and how to replace the ticket tax, which generates most of the money in a $10.2 billion trust fund.

Back when major airlines dominated the industry and people paid full fare for business travel, the ticket tax easily supported air traffic control and airports.

Now the Federal Aviation Administration sees travelers migrating to low-fare carriers, regional carriers and private jets. The FAA wants to overhaul its funding to support this new mix of traffic.

To explain the trend in the most simplistic terms, 300 people who used to cross the sky in one big plane are now likely to be divvied up among major airlines, regional jets and even private jets.

For the FAA and its air traffic control towers, that means more blips on the radar, but the tax base to support the work -- resulting from the tax per passenger ticket -- is the same.

The FAA has been watching this trend for several years but is pushing Congress for a change now because its taxing authority expires Sept. 30.

"It is the issue for airports and aviation in general," said Fredrick "Rick" Piccolo, chief executive of Sarasota-Bradenton International Airport.

The potential overhaul has pitted small aircraft and business pilots against the airlines.

The airlines want a new financing scheme that will redistribute the tax burden and allow air traffic control to safely handle more planes.

Independent pilots, who pay fuel taxes, say the burden created by smaller planes is overstated. They have vowed to fight any new schedule of fees, which they say would make flying small planes and jets an elitist enterprise.

The FAA has not yet made an official proposal, but the rhetorical war is well under way.

For example, Phil Boyer, president of the Aircraft Owners and Pilots Association, told his 409,000 members in a New Year's letter that one of his resolutions is to "Stand by to smash user fees."

"User fee" is the catch-all reference to a proposal by the Air Transport Association to end the ticket tax and redistribute the burden among all types of aviation users. The ATA wants a system of charges that "directly and proportionally" links system use with system costs.

Right now anyone who gases up a piston-engine plane or a jet for private use pays a fuel tax, while charter and fractional jet services collect and pay the ticket tax.

Although the smaller jets are paying, each blip that they create on the radar comes with fewer passengers, and therefore less tax revenue.

The National Business Aviation Association is with the Aircraft Owners and Pilots Association in the fight against user fees.

Their message is reaching members like Larry Harvell, a private pilot who flies a single-engine plane out of Sarasota-Bradenton International.

"Most pilots are aware of it and are dead-set against it," he said.

Airports have a stake in the battle, too. As ticket tax revenue flattens, the FAA dips deeper into the trust fund, which provides matching grants for airport upgrades, to cover its operating expenses.

"The air traffic portion of that keeps growing," Piccolo said. "It could be you need the whole trust fund just to pay for FAA operations."

Piccolo is chairman of the Airports Council International in North America, which is still working out its position on the FAA's reauthorization. The board of directors is scheduled to meet on Longboat Key on Feb. 2.

Because ACI represents major airports, which serve the airlines, the group will likely favor a change.

The proposal the FAA finally issues will likely be a compromise, said Robert Poole, director of transportation studies at the Reason Foundation, a libertarian think tank.

The straight pay-to-play fees the airlines want would be too extreme, he said. The FAA will probably spare the independent pilots any new expense, Poole said.

Poole advocates a system similar to the one he worked on for Canada in the 1980s, where airlines and business jets pay fees based on a combination of the weight of the plane and the distance traveled.

Poole recently studied how those fees would affect the bottom lines of business jets, based on typical planes and flying habits.

A Lear 60 that pays $22,000 a year in fuel taxes would pay $47,000 in fees under the Canadian model.

The change would whack the bottom lines of corporate jets, but it wouldn't mean much to jets that are in charter or fractional ownership programs.

The same jet that's part of a fractional service already collects $63,000 per year in ticket taxes, Poole said.

The same jet in a charter program pays $98,000 per year.

The business aviation group, which represents everyone from piston-engine to Lear jet fliers, has not exactly embraced Poole and his recommendations.

Poole, who said he gets no money from the airlines, said the Air Transport Association might not have realized when it began its campaign that some jets were already collecting the ticket tax.

The main benefit to the airlines is to eliminate its unintended subsidy of the regional carriers while generating more money for upgrading air traffic control.

"They see that as a big, big advantage," Poole said of the airlines. "And they're right. That's why all these other countries have done it."

Don't think the 7.5 percent line item would disappear from airline ticket receipts: The cost of any new fees would be built into fares, Poole said.

He is not the only one who foresees a compromise.

Fred Watts, manager of the Venice Municipal Airport, wants to see Congress take up the funding quandary so the FAA can keep paying for things like runway resurfacing in Venice.

If Venice gets a grant, the city would provide only $125,000 of the estimated $5 million cost.

The resurfacing is important to keeping jet traffic, which Watts guessed accounts for 15 percent of the roughly 173,000 takeoffs and landings at the airport each year.

"Despite the gnashing of teeth and the difference of opinions, we have no choice but to come together as an aviation community and make this happen."

WHAT'S THE ISSUE?

The Federal Aviation Administration says airline ticket taxes aren't generating enough to pay its bills and wants a new system that could be more expensive for owners of small aircraft.

Small aircraft owners and pilots are fighting the airlines over the change, which could occur with the new Congress.

The FAA's taxing authority expires Sept. 30, which has implications for everyone in the system.



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