FAA’s air-traffic fee proposal sparks resistance

The Federal Aviation Administration (FAA) erred when it made a controversial proposal to increase taxes on small aircraft to pay for a modernized air-traffic control system, a representative of the commercial airline industry told The Hill.

The measure is intended to create a more equitable system to pay for the costs of the air-traffic control system. It would shift taxes meant to support a trust fund for the air-traffic control system from commercial airlines to “general aviation,” which covers corporate jets as well as smaller planes that run on piston and propeller engines.

But this move has triggered an outcry from the general aviation community, which last week announced it was forming a new coalition to fight the FAA plan, the Alliance for Aviation Across America. The group includes aviation interests as well as groups associated with rural America, including the National Farmers Union and League of Rural Voters.

They argue the increased costs on general aviation would ground planes and devastate small businesses and communities that do not sit on major hubs serviced by airlines. By contrast, commercial airlines would save about $1.7 billion in taxes if the FAA’s proposal were approved, according to the group.

In a conference call last week announcing the new coalition, the group cited an additional concern: Increasing taxes on general aviation could harm the access of smaller communities to medical care and emergency evacuation services, since these towns depend more on general aviation for their service.

“If costs go up significantly, it’s likely the public service missions will be hit first,” warned Rol Murrow, president of the Air Care Alliance, a coalition representing nonprofits that do volunteer missions.

Pointing to this outcry, the commercial aviation source who spoke with The Hill said he expected propeller and piston-engine planes to be excluded from any tax increases approved by Congress in FAA reauthorization legislation.

He suggested this change would undermine the argument that small communities would be unfairly impacted by a tax shift, and would put a greater emphasis on increasing the cost burden for the air-traffic control system on corporate jets, a fast-growing segment of the aviation industry.

However, a spokeswoman for the alliance, Selena Shilad, said commercial airlines are just trying to distance themselves from the FAA’s proposal, which she said they backed.

That proposal would replace a 7.5 percent ticket tax paid by passengers with a new user fee system and increased fuel taxes, which would go up from 19 to 21 cents per gallon to 70 cents per gallon. The fees and taxes would go into a trust fund meant to maintain and update the air-traffic control system, which the administration expects to modernize with new technologies to accommodate an expected increase in air traffic.

According to an FAA spokeswoman, the major U.S. airlines account for 73 percent of the air-traffic control system’s costs but contribute 95 percent of the monies in the system’s trust fund. “We’ve put forward what we think is a fair and equitable proposal,” the spokeswoman said.

But an internal Air Transport Association document obtained by The Hill indicates U.S. airlines paid about 74 percent of total contributions to the trust fund, and that the 95 percent figure comes only after taking foreign airlines and shippers such as FedEx into account. The commercial aviation source refuted that argument, insisting that total contributions from commercial airlines are about 94 percent.

Although the airlines have tremendous clout in Washington, they appear to face an uphill battle. House Transportation Committee Chairman Jim Oberstar (D-Minn.) opposes the plan, a committee spokesman said, and bipartisan leaders of the Senate Commerce, Science and Transportation Committee have also voiced skepticism.

However, the commercial aviation source insisted there is traction in Congress for arguments that corporate jets should pay more of the system’s costs. “The piston thing is not going to happen” the source said. “I do think there’s significant traction on the whole issue of corporate aircraft.”

The source also charged that the increased taxes on corporate flights from the FAA’s proposal would cost less than catering for many of those flights. Much of the costs would also be written off, the source said.

The FAA spokeswoman acknowledged some criticism of the FAA proposal, but also noted it remains the only FAA reauthorization proposal on the table at this time. The FAA’s current authority expires on Sept. 30.

However, Oberstar’s committee plans to introduce a bill before the Memorial Day recess, a committee aide said. A Senate bill, at least in draft form, could also be floated by then, the commercial aviation source said. He also noted the Senate Finance and House Ways and Means committees have jurisdiction over increasing taxes and will have a major role in changing the funding system.