I hope this isn't a 'divide and conquer scenario. First implement
user fees for airlines only, then once the fee structure is in place,
add GA to those paying user fees.




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AVflash Volume 11, Number 19a -- May 9, 2005
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USER-FEE AFTERMATH: OTHER OPTIONS EXPLORED...
Following last week's hearing on the state of the Aviation Trust Fund,
members of the House Aviation Subcommittee didn't seem very convinced
that user fees would be the answer to the FAA's funding woes.
"Switching to a user-fee system raises more questions than answers,"
according to ranking committee member Jerry Costello (D-Ill.). Other
financing alternatives discussed at the hearing included increasing
the current aviation taxes, fixing the annual contribution from the
General Fund, and providing the FAA with borrowing authority. Ken
Mead, inspector general for the Transportation Department, testified,
"The Congress and the aviation community need assurances that [the]
FAA is doing all it can to control costs before decisions can be made
about the adequacy of current funding levels and whether or not
additional revenue is needed."
http://www.avweb.com/eletter/archive...ll.html#189713

....AS REASON PREVAILS
Meanwhile, the Reason Public Policy Institute, a libertarian think
tank that has proven influential in some D.C. circles in recent years,
released a report* last week on the issue of funding the nation's air
traffic control system. The institute has long been a supporter of
user fees, but now has backed down somewhat on the argument as it
pertains to GA. The new report recommends that piston-powered GA
aircraft pay only the aviation fuel tax, and no user fees at all. "We
think [the report] still misses the point," said AOPA President Phil
Boyer. "GA shouldn't be charged for a system we don't need and for the
most part don't use."
http://www.avweb.com/eletter/archive...ll.html#189714




* http://www.rppi.org/ps332.pdf
R e a s o n F o u n d a t i o n
Resolving the Crisis in Air Traffic Control Funding
By Vaughn Cordle and Robert W. Poole, Jr.

Executive Summary
The air traffic control system is faced with a major funding crisis,
which puts at risk ambitious plans to double or triple the system’s
capacity over the next 20 years. Just over a year after the start-up
of the reorganized Air Traffic Organization (ATO), its ability to
modernize the system is seriously threatened.

The immediate cause of this crisis is dramatic reductions in average
airline fares, brought about by the lowcost-carrier (LCC) revolution
of the past five years. Intensified competition from LCCs has forced
large reductions in most airfares. But since the major funding source
for the ATO is a 7.5 percent tax on the price of airline tickets, the
ATO’s projected revenue over the next 5, 10, and 20 years is many
billions less than expected and needed. And in the current airline
financial climate, increasing taxes on this beleaguered
industry is simply not an option.

Therefore, it is time to rethink the way we pay for air traffic
control. It turns out the United States is the last remaining
developed country to use a ticket tax for this purpose. Nearly all
other countries follow the guidelines of the International Civil
Aviation Organization (to which the United States is a signatory) and
charge aviation users directly for air traffic services. Indeed, the
1997 Mineta Commission report, which led to the creation of the ATO,
strongly recommended that funding for the new ATO be based on payments
for air traffic services, paid directly by aviation users to the ATO.
The Mineta Commission pointed out that in addition to creating a
stronger customer/provider relationship, such direct user payments
would constitute a bondable revenue stream. That would permit funding
air traffic control modernization by issuing long-term revenue bonds,
rather than via annual appropriations.

This study recommends that Congress make the ATO a self-supporting
unit of the FAA, by authorizing it to charge aviation users directly
for its services. The ATO would also be authorized to raise money for
capital spending (modernization) by issuing long-term revenue bonds in
the capital markets. The FAA’s safety regulation and miscellaneous
other functions would still be supported, as they are now, by $2
billion per year of general fund monies. And the airport grants
program (AIP) would be supported by a modest tax on airline
tickets and cargo waybills (in the vicinity of 1 percent).

The transition period to bond-funding of modernization would produce
net savings to airlines of hundreds of millions of dollars per year,
especially in the early years. At the same time, modernization would
be accelerated, thanks to the ability to raise large amounts up front
to finance capital expenditures for which there was a demonstrated
business case. Modernization plans would first have to be approved by
a new ATO Board, consisting largely of aviation stakeholders. This
Board would also determine the structure of the new charges for air
traffic control services.

We recommend that only that small segment of general aviation which
makes extensive use of air traffic control services—jets and
turboprops—pay fees under the new system and be represented on the
stakeholder board. The large majority of piston-powered general
aviation would continue to pay the aviation fuel tax, which would help
to support the airport grants program. And we consider the Flight
Service Station program used by general aviation to be basically a
safety function, which should be paid for out of FAA’s safety
budget; in no cases should there be user fees for those services.
There is a real window of opportunity for reforming the way we pay for
air traffic control:

... The funding crunch urgently needs addressing, before serious harm
occurs thanks to the aging and deteriorating ATC infrastructure.

... The new ATO needs the basic tools the Mineta Commission
recommended, especially a dependable, bondable revenue stream that is
not constrained by federal budget problems.

... New technology, combined with the impending retirement of more than
half the controller workforce, offers a one-time opportunity to change
the way air traffic is managed, permitting a huge increase in capacity
without increasing the workforce.

... The ATO will soon have in place the cost-accounting system, which
is a precondition for developing cost-based charges for its services.

... The current aviation taxes sunset in FY 2007, making their
replacement an urgent topic for debate this year.

We are proposing a dramatic change, but it’s no less dramatic than the
change Congress authorized 20 years ago for the Washington, D.C.
airports. Like the ATO, Dulles and National airports were then part of
the FAA’s appropriated budget. They were unable to modernize, and they
were not directly responsive to what their customers wanted. Congress
had the wisdom in 1986 to permit those two airports to become
selffunding entities, outside the federal budget structure (though
still owned by the federal government).

Thanks to developing their own bondable revenue base, the airports
embarked on dramatic modernization programs to better serve their
customers. No one today would go back to the old model for these
airports.

What Congress did for the Washington, D.C. airports in 1986 it can and
should do for the Air Traffic Organization in 2005 or 2006.

....






On Wed, 04 May 2005 02:32:05 GMT, Larry Dighera
wrote in ::


Yet more smoke on the ATC User Fees issue:


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AVflash Volume 11, Number 18a -- May 2, 2005
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THE FUTURE OF FAA FUNDING...
You never get a bill for it, and there's no entry for it on your books
or your tax form, but that doesn't mean access to the National
Airspace System is free. And just how (perhaps more important, who's)
to pay for the increasingly expensive system was the subject of
invitation-only meetings between FAA officials and aviation industry
representatives last Monday and Tuesday. Nothing was resolved, but FAA
spokesman Greg Martin told AVweb aviation is changing and the FAA must
adapt its method of doing business to meet forecast increases in
traffic -- while revenues decrease. "To suggest that the status quo
remain in place is appallingly naive," Martin said in an exclusive
interview with AVweb. "It just doesn't add up." The FAA maintains that
a number of divergent factors have precipitated the current funding
situation.
http://www.avweb.com/eletter/archive...ll.html#189670

...WHO WILL PAY...
And it now appears the initial softening-up period on the potential
for user fees is over. The term was, until recently, banished from the
FAA lexicon, but the volatile verbiage is now clearly on the table.
"Some groups have some very strong views when terms like 'user fees'
are used," Martin acknowledged. At the same time, he insists they are
not a foregone conclusion. "I don't think there's any predetermined
direction to go in this," he added. But he did say the intention is to
dissolve the Trust Fund at the end of the current budget-allocation
period in 2007, and that the new system that replaces it will need
more revenue. "There is no revenue [now] for the FAA that matches up
with what it costs," he said. And, as he predicted, the U-word
provoked a voluble response.
http://www.avweb.com/eletter/archive...ll.html#189671

...FEES CAN BE COSTLY TOO...
While some of the attendees, Boyer included, came away with the
impression that user fees are the favored option, the National
Business Aviation Association's position is that the current system of
fuel taxes is perhaps the most fair. "There's no simpler and more
accurate way to distinguish between heavy and light users of the
system than to measure the amount of fuel burned," President Ed Bolen
said. He also noted that the introduction of user fees would require
establishment of another bureaucracy to administer, bill and collect
the money. He claimed it cost some user-fee-based agencies in Europe
up to $125 to process each transaction. And while opinions varied on
revenue creation, there was virtual unanimity on the need for the FAA
to get control of spending.
http://www.avweb.com/eletter/archive...ll.html#189672

...CRISIS, WHAT CRISIS?
The National Air Traffic Controllers Association (NATCA) weighed in
with a 52-page analysis of not only the FAA's funding situation but a
comparison with the way other countries fund and manage their aviation
systems. NATCA's broad conclusion is that aviation affects virtually
all facets of modern life and should therefore be a shared burden. The
report, authored by NATCA Executive Vice President Ruth Marlin,
acknowledges that direct consumers of aviation activities (i.e.,
passengers and cargo customers) should pay a significant portion of
the FAA's costs but "they should not be required to fund the entire
cost as there is a portion of the costs that is clearly in the public
interest and therefore appropriately funded by the general treasury."
The FAA's Martin said it's a simplistic argument considering the other
pressures facing the government.
http://www.avweb.com/eletter/archive...ll.html#189673