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2007: NEW CONGRESS- NEW FACES
Old issues and new challenges brought to business aviation

There’s an old saying that goes- “What is past is prologue.” In many ways- that old adage applies to looking ahead at issues of importance to the business aviation community in 2007. Pretty much everything has been around before; virtually nothing new hovers over the horizon. Nevertheless- what is out there is of critical importance to the business aviation community and the larger general aviation population- alike.

No matter to whom you turn- which group you ask- or the segment of aviation represented- the issue most often cited as the “Top Priority” for 2007 concerns the pending reauthorization of the Federal Aviation Administration- proposals floating around to change the agency’s funding structure and a push by the airline industry to remove Congress from its traditional role as the Board of Directors for the FAA.

The aviation community at large last faced this issue in earnest a decade ago- when the 105th Congress tackled FAA reauthorization in 1997. Business aviation and- more generically- general aviation- found itself facing an airline industry divided – divided between old-line legacy carriers and new-age low-fare airlines on the issue of control of the FAA’s Air Traffic Control operation and user fees.

In a nutshell- the legacy airlines wanted changes designed to disadvantage the upstarts – and the upstarts- lead by Herb Kelleher- then chairman of Southwest Airlines- pushed back… and pushed back hard. Congress coalesced around the status quo for the FAA funding system – fuel taxes- airline-ticket taxes- etc. – and rejected the push for a new funding paradigm.

This time we face a united commercial airline industry-” warned Ed Bolen- president and CEO of the National Business Aviation Association. “Make no doubt about it – this time the airlines are united around this issue and have a bull’s eye painted squarely on our backs.”

Other issues certainly exist and remain on the radar screens of groups representing private aviation interests: Security; the Washington- D.C. Air Defense Identification Zone (ADIZ); general aviation’s continuing limits on access to Washington National Airport (DCA); airports retention; airports expansion; and a variety of regulatory issues pending.

But to a degree somewhat unusual in the sometimes fractious community of general aviation users- Bolen’s position that FAA Reauthorization and user-fee proposals are the top issues garners universal concurrence from other groups and their executives… With good reason - Bolen’s point is accurate to a fault.

And that concurrence helped produce a general aviation front as united in its determination to beat back the airlines’ proposal as the carriers are in their drive to change the system to their benefit.

The Categorical Imperative
The airlines’ trade group- The Air Transport Association- started pushing its perspective as far back as May 2006- when the clock showed 16 months to go before the current FAA authorization – and the existing tax structures – expire at midnight- Sept. 31- 2007.

The top executive of one ATA-member carrier- Northwest Airlines- tilted at general aviation in a full-page column published in that airline’s on-board magazine even earlier. Though the vindictive in the column aimed more at spending on reliever airports around Minneapolis and St. Paul- the tone was set by claims that airline passengers were subsidizing rich people and their private jets.

The ATA since has devoted a considerable war chest of lobbying money to pushing its perspective. And in a case that hints of the Fox guarding the Henhouse- a couple of recent appointments to the FAA cause some business aviation people to cringe because the appointees came either directly from ATA or from a member carrier- places where they were involved in promoting airline control of ATC and user-fee funding for the FAA.

Fortunately November 7- 2006- brought about a change in the nation’s political balance that most see as positive for business- and general aviation users. That’s the day the Mid-Term Elections turned out the Republican majorities of both the Senate and the House of Representatives – and in both chambers returned to the majority many of the Democrats who helped turn back user-fee proposals in 1997.

Change in landscape portends friendly views
In 1997- Democrats held the Senate- Republicans held the House – and moderates of both parties united behind an FAA Reauthorization that resulted in an agency reorganized more along business lines with funding from fuel and airline ticket taxes and general fund contribution as the source of the agency’s revenues.

Conventional wisdom prior to November 7 held that the GOP-controlled Congress- urged on by allies in the Bush Administration- might well succeed in gaining a majority willing to privatize ATC and institute a system of user fees to fund the FAA. The airline industry is a rich campaign-funding source for many lawmakers and the outgoing majority had shown itself on many occasions willing to listen only to those who’d written campaign-contribution checks.

But many a moderate-to-liberal member of Congress still believe that controlling the world’s most-efficient- safest and lowest-cost ATC system is a public responsibility. The shift on power builds some strength under those beliefs.

Not that any business or general aviation organization is taking the change as a sign it’s safe to back off. “The change in leadership on both sides of Capitol Hill does bring a new dynamic to the issues-” said Chris Dancy- spokesman for the 410-000 member Aircraft Owners and Pilots Association (AOPA).

But neither AOPA nor- I suspect- the other alphabet groups- are taking the change as a green light to lighten up-” Dancy continued. “We know the airlines are adamant in their insistence to change the nature of FAA. And thus- we’re just as adamant in resisting those changes. We have a system that works and we don’t see any benefit in changing the way FAA is funded – let alone managed.”

NBAA’s Bolen echoed those same sentiments. “I think what it means is that the new Congress is going to be pre-disposed to give strong scrutiny and oversight to any administration proposal-” he told World Aircraft Sales Magazine in an exclusive interview in early December. “The Expectation is the FAA will come forward with a reauthorization bill that will suggest changes in the funding structure.

I don’t think the change in Congress has engendered any change in thinking about what the administration is going to propose. I also don’t believe the change in Congress has prompted the ATA to change its push to shift $2 billion in taxes to general aviation. The debate is coming and it will be a very significant debate.”

Cost and Effect: Airlines cost the most
The ATA’s campaign to undermine excise taxes as the foundation of FAA funding has focused on a discredited economic model the association labels- “A blip- is a blip- is a blip.” Under the ATA theory- the costs of handling air traffic should be evenly divided among all users- since they all show up on controllers’ radar screens as similar-looking “blips.”

But as Bolen notes- the airlines’ use of hub-and-spoke routing systems forces the FAA to create and staff infrastructure to handle swarms of airplanes flowing in and out of oversaturated hubs- driving up costs in those sectors. Conversely- more remote- non-pacing airports with lower airline traffic rates require fewer controllers and less supporting infrastructure to safely support traffic demand.

The airlines’ insistence that business aviation gets a free ride on the basis of airline-ticket taxes also fails to pass muster when you examine the experience at DCA after the terror attacks of September 11- 2001. For nearly four years- DCA was closed to all private aircraft traffic – yet the FAA’s cost for handling traffic in and out of Washington’s capital airport declined not at all.

The idea that funding the FAA can be spread across fees for runway use- en-route time- approach needs- flight-plan filing and weather briefings also ignores the new costs such a system would incur – costs the users would be forced to cover.

For example- to track- invoice- collect and account for fees levied would require an entirely new bureaucracy within the FAA’s Air Traffic Organization – thousands of people generating millions of invoices annually.

In Europe and Canada- air traffic has long been privatized and fee-based U.S. operators report a typical cost of $75 to $125 per invoice received for ATC services that- as Bolen puts it- “Amounts to a hidden tax business operators would have to pay” merely to open- process and pay the invoices from a fee-based FAA funding system.

Voices of reason
The FAA’s own proponent for a “new funding structure” is none other than Marion C. Blakey- the administrator now nearing the end of her five-year tenure. Blakey insists that the current funding mechanism is “broken-” that the agency can’t plan or budget for modernization because of unpredictable revenue levels from the current tax system.

But independent reviews of the Airport & Airways Trust Fund- the performance of the current excise-tax based system and general-fund contributions strongly contradict her claims. A Government Accountability Office report recently released found that trust fund revenues continued to grow long-term even after the traffic collapse following 9/11- and that funding continues to grow faster than spending – even as the FAA’s own work load declined to below 2000 levels.

So where’s the beef?
According to NBAA- AOPA- the Experimental Aircraft Association (EAA)- the General Aviation Manufacturers Association (GAMA) and the National Air Transportation Association (NATA)- the ATA’s current push is more about shifting costs and wresting control than it is about equity or funding stability. The ATA’s own rhetoric reverberates with lines about business and general aviation getting a free ride or getting off cheaper because of the current funding structure.

With this degree of unanimity among private aviation groups and a new Congress less accepting to a sea change in funding and control- the ATA faces an uphill fight to win its point.

We just want to be sure the community understands the challenges we face- that we’re all going to have to be active in the debate-” Bolen stressed. “But changes in Congress don’t mean we can slack off. We need to be as vigilant and driven as our opponents. We can’t afford otherwise.”

Other Issues Ahead
Although the duel-pronged issue of FAA Reauthorization and funding loom largest on the 2007 agenda of the business and general aviation groups- it is by no means the only issue of significance or importance. Alphabet groups from AOPA to NATA also see other items – most of them unresolved carryover items – as concerns.

The Washington ADIZ (Air Defense Identification Zone) and the issue of floating TFRs (Temporary Flight Restriction zones) are also areas we’ll be watching and working in 2007-” said AOPA’s Dancy.

More than three years after its creation as a “temporary” fix for securing the airspace around the nation’s capital- the ADIZ remains a sticking point for thousands of pilots using area general aviation airports- transients along the Eastern Seaboard- and for businesses impacted by the traffic reductions the ADIZ brought.

And there’s a lingering effort within security-agency circles to codify the ADIZ and make it permanent – something general aviation groups- pilots and air traffic controllers almost universally oppose.

Continuing the funding for general aviation airport development and improvement- retaining existing airports and resisting encroachment on airport spaces are also seemingly evergreen issues. But AOPA itself is targeting another issue of concern to business aviation: the creation and retention of new pilots to grow the overall pilot population.

Probably our single biggest push next year doesn’t have anything to do with government directly-” Dancy began. “But we see the need to expand the pilot population in the US and worldwide as absolutely critical to the health of aviation – for general aviation- business aviation and the airlines.”

So in mid-2006 AOPA relaunched its Project Pilot Program- an effort to recruit its 410-000 member pilots – many of them corporate pilots – to volunteer to mentor a student pilot and help the student complete training for their private pilot license- the first step toward a cockpit job for many.

It’s vital to everyone that we increase the number of pilots in the U.S. and worldwide-” Dancy noted. “We had a good launch of Project Pilot and a strong callout to our members. Imagine every one of our members recruited and mentored a new private pilot- what that would do for our community. It’s probably not realistic – but it’s a worthy goal.”

Airport Watch and the TSA
Finally- general aviation security lingers not far off stage as another latent issue of concern to business aviation.

Past calls in Congress to establish an airline-airport style security system for general aviation airports gained little traction – thanks- in part to the enormous costs implied and an unwillingness by the majority of lawmakers to commit such funds- and in part due to the position of the Transportation Security Administration itself.

TSA has- for several years- helped underwrite support for the AOPA Airport Watch Program- an effort to teach airport users to watch for suspicious activity coupled with a nationwide toll free number through which observers can report their concerns.

Airport Watch works-” noted AOPA president Phil Boyer during a roll-out last year of an updated Airport Watch Program. Testifying to the program’s effectiveness- he noted- is the TSA’s own endorsement of the effort and its financial and logistics support for the hotline (1-800-GA-SECURE).

But business and general aviation executives remain acutely aware that some lawmakers stand ready to put forth their own restriction proposals with only the slightest provocation or incident they can claim could have been prevented by screening passengers and baggage boarding private jets.

Vigilance is business aviation’s best weapon against such an occurrence – and the business aircraft operators’ knowledge of who flies on their airplanes remains the community’s main strength against the undesired occurring.

ED BOLEN ON 2007 & FAA REAUTHORIZATION
On December 7 – Pearl Harbor Day in the US – NBAA President and CEO Ed Bolen spent a few minutes discussing the upcoming year with World Aircraft Sales Magazine. The following is the text of his responses to our questions.

WAS: On November 7- the Midterm elections shifted the power balance in Washington toward a new point- with Democrats gaining majorities in both the Senate and the House. Can you give us NBAA’s assessment on what this change means for the upcoming fight over FAA Reauthorization and funding?

Bolen: I think what it means is that the new Congress is going to be pre-disposed to give strong scrutiny and oversight to any administration proposal. The Expectation is that the FAA will come forward with a reauthorization bill that will suggest changes in the funding structure. That certainly has been the tenor of all the (FAA) speeches of the past year and a half. That clearly is what the FAA has led the world to expect.

WAS: So how does that differ from the 109th Congress when Republicans controlled both chambers of Congress?

Bolen: I think the GOP Congress was predisposed to accept their president’s proposals; I think the Dem Congress is predisposed to say- “Prove it to me.” To that extent- I don’t think the administration’s proposal is a given as acceptable coming in.

I don’t think the change in Congress has engendered any change in thinking about what the administration is going to propose. I also don’t believe the change in Congress has prompted the ATA to change its push to shift $2 billion in taxes to general aviation. The debate is coming and it will be a very significant debate.

WAS: This was a hot-button issue a decade ago; how is this time different?

Bolen: It was contentious a decade ago – but I don’t think those of us in GA were aware of how contentious that debate was. What occurred 10 years ago was largely a contest between the Legacy carriers of the ATA and the newer Low-Fare Airlines- lead principally by Southwest Airlines.

They (both sides) spent millions in the fight- hired lobbyists- public relations operations- spurred employees to act – it was a very nasty- contentious fight. The effort inflicted a considerable amount of damage on each other – the result was billions of dollars in tax increases on the airlines.

WAS: So can you get any reading from the shift in power?

Bolen: I don’t think anyone can predict how this is going to go. We don’t know what the Administration is going to put on the table; in Congress we don’t know all the committee assignments and who the ranking members will be. It’s too early to have any idea what the final outcome will be.

WAS: So outline for us what happens next.

Bolen: The process will go something like this: The (Bush) administration will release its proposal (in the first quarter); what will follow is a lot of hearings in House and Senate – the expectation is sooner rather than later.

We know the expiration date for the taxes and FAA’s authority… so we have a deadline of sorts. Whether that (authority) gets extended by a continuing resolution- whether Congress will pass something as a stopgap measure- we just don’t know. There will be some surprises- some bumps - there always are.

WAS: So what is the most important message you could give in speaking to the business and general aviation community?

Bolen: We just want to be sure the community understands the challenges we face- that we are all going to have to be active in the debate. We think it’s going to be significant and very vigorous.

WAS: What would be NBAA’s ideal outcome if you could proscribe the final solution yourself?

Bolen: I think that the GA community would make all of its contribution to the Airport and Airways trust fund through the fuel taxes; we would like to see the FAA has the authority and funding necessary to operate the largest- safest- most diverse and efficient ATC system in the world.

We want to make sure we have the resources to modernize and expand the community. We want enough capacity- to be able to grow and we want to contribute to that through the fuel tax – the fuel tax is a particularly efficient way for us to contribute.

You see- another important distinction (between the user-fee and excise approaches) is that taxes are controlled by Congress; user fees are set by rate boards… we think Congress has done a good job in helping us have the best system in the world. We want them to continue to have the authority to oversee the best aviation system in the world.

WAS: Would higher taxes be acceptable to business aviation if proposed to help achieve those goals?

Bolen: We’d have to understand- if we were going to be asked to pay more- what they needed the added money for. General aviation got behind the Airport and Airways Trust Fund idea when it was first proposed in the 1970s because the government made a compelling point for what it could accomplish with the revenues.

If we’re asked to pay more- the question has to be- “Why? What’s the justification and the need?”

WAS: Thanks- Ed.

Find out more on the NBAA at: www.nbaa.org


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