It Ain't Broke
July 30, 2009
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  • Editorial


    America’s Aviation system is funded largely through a mix of taxes on each aviation segment, which are paid into the Airport and Airways Trust Fund (AATF). The taxes going into the AATF are generating record revenues, and will be sufficient to fund all modernization programs. In fact, the Congressional Budget Office anticipates a continued increase in revenue through 2016, and the White House Office of Management and Budget expects the AATF to top $21 billion by 2012.

    Congressional authorization of the existing mechanism for funding the AATF will expire in September.

    Both the big airlines’ FAA proposal and the Senate’s new misguided proposal would harm small businesses and communities such as Pueblo .

    The FAA has introduced a new funding scheme, backed by the big airlines, which would transfer billions of dollars of the carriers’ tax obligation onto the backs of small and mid-size businesses that depend on general aviation. The Senate recently introduced an alternative proposal that includes a new per flight flat tax on all aircraft except the smallest piston-powered planes.

    This Senate proposal would officially put the FAA in the tax collection business, and would require a huge and costly new bureaucracy to assess, collect and process these new taxes. It also represents a radical departure from the proven and highly efficient “pay at the pump” funding mechanism that our government has had in place for years.

    The Department of Transportation Inspector General recently testified to Congress that under the big airlines’ FAA plan, the airlines would decrease their tax burden from $11.8 billion to $10.1 billion in fiscal 2009. Industry sources calculate that under the Senate’s proposal, airlines are likely to save $500 million annually due to a complete elimination of their fuel tax requirement.

    The Senate’s Commerce Committee has recommended that the fuel tax paid by many small planes be more than doubled, to 49 cents per gallon from the current 21 cents, in addition to requiring those same small planes to also pay the $25 per flight flat tax user fee. This would kill a large part of general aviation at a time when Pueblo Memorial Airport is developing new hangar capacity for GA aircraft.

    While 70 percent of airline passengers travel through the top 30 “hub” airports, general aviation flights can access some 5,000 non-hub airports such as those located around Southern Colorado . The access and connectivity provided by these airports are crucial to small town and rural economies, to national security and to mobility during catastrophic emergencies.

    Despite the importance of rural airports to the nation’s infrastructure, the airline-backed FAA bill slashes funding for the Essential Air Service Program and the Airport Improvement Program, and eliminates funding for the Small Communities Air Service Program, all of which are critical for the preservation of the airports. Essential Air is what makes possible Great Lakes Airlines flights between Memorial Airport and Denver International Airport .

    Many small airport operators fear that if general aviation activity decreases due to the dramatic increase in their taxes, aviation-related business activity also may decrease, thereby potentially forcing the smaller airports themselves to close.

    An old saw holds that “if it ain’t broke, don’t fix it.” The current funding mechanism works well. Congress shouldn’t fall for the big carriers’ proposal and it shouldn’t try to tax the life out of general aviation.

    Date: 2007-08-02