Airlines and FAA versus GA & BizAv - and this time- it’ll get bloody. If the conflict ahead existed between two independent nations- the news networks would each have a clever logo and attention-grabbing theme music both tailored to coordinate with a catchy tag line to open and close their frequent updates- bulletins and special reports. But even though the February 5 submission of its 2008 Fiscal Year budget garnered some general media attention for the radical changes proposed for FAA ...
Airlines and FAA versus GA & BizAv - and this time- it’ll get bloody.
If the conflict ahead existed between two independent nations- the news networks would each have a clever logo and attention-grabbing theme music both tailored to coordinate with a catchy tag line to open and close their frequent updates- bulletins and special reports.
But even though the February 5 submission of its 2008 Fiscal Year budget garnered some general media attention for the radical changes proposed for FAA funding and ATC oversight- it’s a story unlikely to generate a single special report or break-in bulletin… Unless- that is- you’re part of the aviation community – those of us who follow such governmental rituals primarily because that’s where words like “user fees” and “increased excise taxes” carry maximum impact – for us- the story literally was everywhere.
Early that Monday the Bush Administration released it plans for reauthorizing the taxes and the FAA’s spending priorities for Fiscal Year 2008 and beyond. As expected from observing the industrial-grade storm clouds gathering for the past year- this proposal could change everything… but not without a ‘donnybrook’ of an argument between the two sides.
On the side of change- the White House- the DoT- FAA and the 21 member carriers of the Air Transport Association. On the side of something more status quo: the organization representing 411-000 U.S. pilots of all stripes and skill levels and most of the 600-000 pilots and 200-000 aircraft owners; the 7-000-plus members of the National Business Aviation Association – a collection that includes most of the Fortune 500 and Fortune 1000- plus hundreds of business aviation users who don’t belong to NBAA; the 175-000 member Experimental Aircraft Association; the National Air Transportation Association; NATCA- the union representing controllers. And even the Aircraft Electronics Association.
Now it might seem that the fight favours one side or the other – but that would be selling short the stakes here: about $2 billion in fees shifted onto business and general aviation and a change in oversight of the ATC system away from Congress. No- with major business horsepower on opposite sides of this issue- it’s going to be a real loggerhead between lobbyists.
Why now for this fight?
FY2008 begins at 12:00 the morning of Oct. 1- 2007; a minute earlier- spending authorization for the Federal Aviation Administration expires- as do the mechanisms for levying taxes to fund the agency. Between now and then Congress and the White House must reach concurrence on the mechanism for funding the agency and authorize it to spend money on its responsibilities and programs.
And the White House’s initial move in that direction was to propose the very system that’s been defeated during several previous reauthorizations – a system the Air Transport Association and the FAA have been hawking- not so subtly- for months.
The stakes for the protagonists stand as high in this debate as most stakes between most states in conflict. Think that an overstatement? Then consider these quotes:
• “The White House has decided to intro- duce a budget that shifts airline costs to other segments of the industry and gives airlines more control over the air traffic system. NBAA and the rest of the general aviation community will oppose this toxic mix of higher taxes- user fees and airline control-” (Ed Bolin- President & CEO- National Business Aviation Association).
• “This is real- and it’s just as bad as we thought it was going to be. It’s going to take an all-out fight by the aviation com- munity to defeat this-” (Phil Boyer- President- Aircraft Owners and Pilots Association).
• “With this proposal- the Bush Administration opened a Pandora’s Box of user fees which I can only hope Congress will be able to slam shut-” (Pete Bunce- President- General Aviation Manufacturers Association).
• “Before this radical proposal can be seri- ously considered- the FAA must answer important questions about its plan- includ- ing providing more information regarding the agency’s blueprint for modernizing the air traffic control system-” (James K. Coyne- President- National Air Transportation Association).
• “EAA remains categorically opposed to user fees. Such a system will not enhance safety- it will not improve services- and it will add barriers to thousands of recre- ational aviators while being a costly bur- den to the federal government-” (Doug Macnair- Vice-President- Government Relations- Experimental Aircraft Association).
All the above statements came within hours of one another on Feb. 5- 2007 – the day President George W. Bush submitted his $2.9 trillion budget proposal for Fiscal Year 2008. And the striking degree of unanimity from these disparate general aviation groups stands as graphic evidence of the stakes in this argument.
The long-awaited pitch is a miss for GA
What’s stirring this degree of enmity is a push by the FAA- the Transportation Department and the Air Transport Association to rewrite how to fund most of the FAA. In brief- the proposal eliminates airline ticket taxes in place of a schedule of fees to be levied on Part 121 carriers- quadrupling the fuel taxes paid by general aviation – and setting out a schedule of fees for general aviation aircraft which use certain airspace.
New fees on aircraft registrations and other administrative and certificating actions are also in the mix. The proposals also speak to a planned shift in ATC oversight responsibilities to an airline-dominated body and away from the elected “board” that is the U.S. Congress. The reasons for these proposals for radical changes? Fairness- reliability and the future of ATC- say proponents.
The Air Transport Association- representing more than a score of commercial passenger and cargo lines- contends that general aviation – specifically business-turbine operators – don’t proportionally share the costs. And whether an aircraft carries three or 300- says ATA President James May- “a blip is a blip” from the controller’s perspective of the radar screen.
“A system where users pay for the services they consume is essential to funding the ATC improvements the nation so desperately needs-” May added.
Said DoT Secretary Mary E. Peters; “Our plan puts incentives in place that will make the system more efficient as well as more responsive to the needs of the aviation community.”
And FAA Administrator Marion Blakey noted that the proposal continues general aviation’s main contribution as a fuel tax. Which brings us to the other side of what’s shaping up to become a pitched rhetorical and statistical battle across the next seven months – the claims made in favour of a user-fee system for funding the FAA.
For months- the claim has been made that the current system of taxes is “running out of money” or “not keeping pace” with demands- or is “insufficient” to fund the ATC system of the future. But is it really failing users?
Claims and Counterclaims
For about a year- user fee supporters made claims that the change was needed because the excise taxes were not a stable funding stream – and those collections were trailing expenses. Not so- said the Congressional Budget Office and the Governmental Accountability Office.
Then the fee proposal hit the streets on February 5; and by week’s-end Peters found herself on Capitol Hill- answering questions from Sen. Sam Brownback (R-KS) during a hearing of the Senate Appropriations Committee- Subcommittee on Transportation- Housing and Urban Development- and Related Agencies. Brownback asked Peters about the plans to implement user fees and significantly raise aviation fuel taxes.
But not before Brownback opened by noting that the President's budget proposal shows that the upcoming FAA reauthorization bill and its user fees and fuel tax scheme would raise less revenue than expected by merely extending the existing law and current tax rates.
It would seem the administration’s budget documents show that between 2008 and 2012- the new user fee scheme will raise approximately $1 billion less than the current funding mechanism.
Then the Senator asked- “How can you say your funding proposal is needed to modernize our nation's air traffic control system when you would raise less revenue over the next five years?”
Naturally- Brownback’s discovery generated considerable support from the supporters of the existing system of excise taxes. GAMA’s Bunce told reporters he applauds such questions: “I'm pleased to see that within days of the Administration releasing its budget- Members of Congress are asking tough questions about this ill-advised funding scheme. We hope that more Members of Congress will challenge the Administration's rhetoric that our aviation system cannot be modernized without implementing user fees.”
So what’s it all about?
One of the main protagonists for changing the excise tax-based system of funding the FAA started the drumbeat last March in a speech explaining how one blip on a radar scope is no different from another where the cost of service by the Air Traffic Organization of FAA is concerned. So- said James May of the 21-member Air Transport Association- a “cost-based” system of user fees is fairest and most needed to prevent a lack of progress in modernizing ATC.
Since then- voices inside the government and the airline industry have steadily hinted at their desire for a funding system based largely on fees for different FAA services. Meanwhile- business and general aviation interests heard the rhetoric and countered with some points of their own: Business and general aviation use only a fraction of ATC capacity- pay their fair share- and the current system of excise taxes promises to produce far more funds than the FAA’s upgrades will require.
But all the arguments were largely speculative- based on the abstract claims made by the three chief protagonists – until February 5. Now that the proposals are real- it’s clearer what the user-fee supporters see as the benefit- note several trade-group staffers. It’s about shifting costs – about $2 billion – away from airline passengers and onto business jet operators- in particular.
Ending the excise tax on airline tickets in favour of a fee-based system- the airlines say- will allow them to lower ticket prices below the total cost of tickets today with all the excise taxes- security fees and Passenger Facility Charges levied.
At the same time- increasing the excise taxes on jet fuel and adding fees for access to Class B airspace will increase the costs of flying business jets – which the airlines hope will stem an erosion of their business passenger base. And creating an industry-dominated board to control the fees and the ATC system guarantees that the airlines will always be able to keep the playing field tilted their way.
So in the end- it’s not really about bettering the system or the costs of a future ATC system upgrade. It’s the basic struggle for power and money. And it’s a fight business aviation interests cannot afford to ignore. Stay completely up to date on developments over User Fees- and be ready to act accordingly with the following groups:
Aircraft Owners and Pilots Association (AOPA): www.aopa.org
Experimental Aircraft Association (EAA): www.eaa.org
General Aviation Manufacturers Association (GAMA): www.gama.aero
National Air Transportation Association (NATA): www.nata.aero
National Business Aviation Association (NBAA): www.nbaa.org
GAMA LAUNCHES USER FEES BROADSIDE
by Mike Potts
Since our article ‘The Battle of the Titans’ was written- the General Aviation Manufacturer’s Association (GAMA) used the venue of its Annual Industry Review and Market Outlook to launch a major broadside against the aviation User Fees plan in U.S. President George Bush’s proposed 2008 fiscal year budget.
Citing what he labeled “myths the Administration has put forth regarding the need for an overhaul of the current funding mechanism (for the U.S. Federal Aviation Administration)-” GAMA President and CEO Pete Bunce presented a series of facts to demonstrate the business aviation industry’s contention that the current system is superior to what is being proposed.
Countering the Administration’s argument that the current system is unstable and unpredictable- Bunce noted that “over the past 10 years the U.S. Congress has routinely given the FAA more than the President asked for in the budget. You cannot get much more stable than that-” he said.
Citing a recently emerged analysis that shows the new plan would generate approximately $1 billion less than the current system (see main article)- Bunce said “the Administration’s proposed funding scheme is not about modernization. It is (about) shifting costs from the airlines onto general aviation.”
Bunce also questioned the portion of the new plan that would allow the FAA Administrator to set fees as required to cover the cost of running the agency. Under the current system the U.S. Congress sets the FAA’s budget. “We cannot afford to give the FAA a blank check-” Bunce said.
Finally- Bunce questioned whether a user fee-based system would be an efficient method to collect revenue. “You cannot implement user fees without also creating another bureaucracy to collect them-” he declared. “The current system of aviation excise taxes is an efficient and cost effective method to fund the FAA.
“No one is more committed to the modernization of the national airspace system than aviation manufacturers-” Bunce continued.
“We must move past this ill-advised user fee proposal and focus the efforts of our industry and government partners to design and implement a modernized air traffic management system-” Bunce concluded.