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Benjamin Spillman

Fight brewing over aviation administration's funding

5 March 2007

WASHINGTON, D.C. -- Battle lines are forming between airline passengers and private plane operators over who should pay for the nation's air traffic control system.

The battlefield is an upcoming bill in Congress to reauthorize funding for the Federal Aviation Administration, an agency that operates on about $14 billion annually.

The bill, which is yet to be introduced, would shift some of the burden for funding the FAA from commercial airline passengers to private plane and jet operators.

Airlines support the change because it would eliminate a 7.5 percent ticket tax passengers pay and, if air traffic control improvements result, reduce delays and cancellations.

"What we are doing is trying to build a new air traffic control system that can handle the loads," said David Stempler, President of the Air Travelers Association.

"A city like Las Vegas that is very dependent on air transportation ... would be really affected," he said.

Airline flights are responsible for about 73 percent of the cost of operating the nation's air traffic control system, according to the FAA.

But under the current system ticket taxes from airline passengers account for 95 percent of the FAA's trust fund, a pool of money that represents $11 billion, or nearly 80 percent of the FAA's annual funding.

"We are overpaying," said Stempler, whose organization represents airline passengers. "The people in the corporate jets, the charter jets ... they are not paying their fair share."

For example, a Boeing 737 like the kind Southwest Airlines would fly into McCarran International Airport, might use the same amount of air traffic control resources as a Cirrus SR22. But the 737 contributes a ticket tax from as many as 137 passengers on board.

The Cirrus, with four or fewer people, contributes only through fuel taxes.

General aviation, which the FAA says is responsible for about 16 percent of the cost, pays just 3 percent. Under the new system, general aviation's share of the bill would increase to 11 percent, according to the FAA.

Locally, about 402,000 commercial flights use the airspace of McCarran International Airport annually, carrying about 42 million passengers. In 2006 there were about 64,000 general aviation flights at McCarran, 197,000 at the North Las Vegas Airport and 58,000 at Henderson Executive Airport.

Independent pilots, air charter services and private jet users vehemently oppose the change because lost ticket tax revenue would be replaced by a near tripling of the fuel tax for general aviation craft. There would also be user fees for commercial airliners.

The private operators purchased nearly 29 million gallons of the most common jet fuel in 2006 at the three airports, meaning the new tax would have added about $13.8 million to fuel costs.

"If we thought we could raise prices, we probably already would have," said John Sullivan, CEO of Las Vegas-based Sundance Helicopters, a longtime Grand Canyon air tour operator.

"In the marketplace of things to do in Las Vegas, at some point we are just priced out of that market."

General aviation now pays a tax of 21.8 cents per gallon of jet fuel and 19.3 cents for aviation gasoline. Under the FAA's proposed budget, general aviation would pay 70 cents per gallon on both.

The tax commercial airlines pay for fuel would increase from 4.3 cents to 13.6 per gallon.

It also would allow airports to increase passenger facility charges to as much as $6. The charge at McCarran is now $3. It raised nearly $86 million in 2006, money that goes toward projects like runway and taxiway improvements.

"We find nothing in there that we would truly oppose," said Rosemary Vassiliadis, deputy director of the Clark County Department of Aviation.

People affiliated with general aviation, business and corporate travel and charters say they are especially worried because the amount of some fees hasn't been set.

"One thing we don't know is what the fees would be to fly into these airports," said Ira Eichenfield, owner of Corporate Flight International, a Las Vegas firm that stores and rents private jets. "The fees could be all over the place."

Small companies in the general aviation or private jet business would be the most likely to be hurt by the changes, Eichenfield said.

"It always dies from the bottom up," he said of the impact of higher costs on an industry.

The FAA says change is necessary because ticket price volatility makes the passenger tax unreliable and the agency needs to save money to replace the nation's dated ground radar control system with a satellite-based operation that would reduce flight delays.

The Next Generation Air Transportation System upgrade would cost between $15 billion and $22 billion and wouldn't be complete until at least 2025.

"We rely very heavily on ticket taxes," FAA spokesman Ian Gregor said. "There are several problems with that."

And with the price of airline tickets falling by about 50 percent since 1978, when adjusted for inflation, the percentage tax isn't enough to pay for needed air traffic control upgrades, Gregor said.

"We have to fund the current system and we have to set money aside to build the Next Generation system," he said.

The FAA wants the new funding structure approved before the existing structure expires Sept. 30.

The concept has already been rejected by some members of Congress and others have suggested they are open to the idea.

Whether the bitter fight will actually lead to safer and more efficient use of the nation's air space remains to be seen, no matter who pays the bills.

Vassiliadis said if the FAA could deliver on the new air traffic control system it would benefit McCarran.

"One of the most constraining parts of our airport is the airspace," she said.

But Michael Boyd, an airline consultant at the Boyd Group in Evergreen, Colo., said the FAA has promised and failed to deliver an upgrade to America's woefully dated air traffic control system for decades.

He said the building battle over FAA funding, no matter who wins, won't break the bureaucratic logjam he says is responsible for delaying the introduction of a satellite-based air control system.

"They have had the funding. They just can't manage money," said Boyd. "We have got to fix the FAA, not the funding of the FAA."