Airline Industry Lobbies for Tax Reduction

The nation's airline industry is lobbying to cut as much as $2 billion in taxes from its annual tab, shifting those costs to smaller business aviation users and other aircraft.


Mar. 8--WASHINGTON - The nation's airline industry is lobbying to cut as much as $2 billion in taxes from its annual tab, shifting those costs to smaller business aviation users and other aircraft.

The Air Transport Association, which represents the largest commercial carriers, wants the Bush administration and Congress to overhaul the formula that funds the nations' air traffic system.

The controversial funding debate is expected to grow more heated over the coming year as Congress prepares for reauthorization of the Federal Aviation Administration.

The agency and the entire aviation sector agree that the current air traffic system needs updated technology, along with other infrastructure improvements, to handle the roughly 36 percent increase in flights expected over the next decade.

"In effect, the FAA is using typewriter technology in an age of Treos," James May, president and chief executive of the Air Transport Association, said in a briefing Wednesday about the group's plans.

Airlines say they expect to pay about $11 billion in taxes this year into an aviation trust fund, which is expected to total $12 billion, for operating the air traffic system's radars, controllers and other functions.

Lower ticket prices since airline deregulation in 1978 has decreased the money going into the trust fund, leading officials to consider a shake-up of the formulas.

The airlines want a funding system that allocates fees based on the number of departures daily and the time those flights stay in the air traffic system, regardless of how many passengers are flying.

The carriers say they've been bearing a disproportionate share of costs, about 94 percent compared with 4 percent for business aviation, under the current system of taxes on airline tickets.

Fort Worth-based American Airlines Inc. and Dallas-based Southwest Airlines Co. had differed on the funding issue during the last FAA reauthorization, Mr. May said. But all carriers recently agreed to the fee concept that the group is pushing.

Business aviation groups, meanwhile, oppose the user-fee proposal. They say it would force them to pay for higher costs that are largely generated by airlines' elaborate hub-and-spoke operations that drive congestion and require more resources to manage.

"There are different airplanes that require different levels of service," said Ed Bolen, president and CEO of the National Business Aviation Association.

At a single airport gate where two carriers operate, for instance, one could have forced up costs there simply because it uses larger planes that require more infrastructure, he said.

"The person who decides is dictating why the costs are what they are," Mr. Bolen said.

As part of its new campaign, the Air Transport Association unveiled a study Wednesday by the Campbell-Hill Aviation Group outlining the economic impact of commercial aviation in the U.S.

In 2004, commercial aviation drove $1.2 trillion in economic activity, $380 billion in personal earnings and 11.4 million jobs nationwide, the study found.

Texas, the nation's second-most-populous state, led the nation in the number of employees in the air transport industry with 65,939 workers compared with California's 50,689.

Texas was No. 2 in flights, with 949,183 compared with 999,455 in California, the report said.

E-mail sreddy@dallasnews.com

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