NBAA's Bolen Assails 'Inaccurate, Misleading and Unsupported' Claims Made About GA In Reason Foundation Report

NBAA President and CEO Ed Bolen has released a letter sent Tuesday to Reason Foundation President Robert W. Poole to point out several inaccurate, incomplete or misleading claims made in a report released by Poole Wednesday. Bolen's letter notes that Poole's report, entitled "Resolving the Crisis in Air Traffic Control Funding," inaccurately describes general aviation operations, and makes arguments that do not support the report's conclusions.

May 3, 2005

Robert W. Poole, Jr.
Vaughan Cordle
Reason Foundation
3415 S. Sepulveda Boulevard
Suite 400
Los Angeles, California 90034

Dear Mr. Poole and Mr. Cordle:

I am very concerned that your latest report inaccurately describes general aviation operations, contains many statements that are incomplete or misleading, and makes arguments that do not support your conclusions. In order to clarify these points, below are headings with a few examples that I believe support my assessment.

Inaccurate Description of General Aviation Operations

Your report says that business aircraft "nearly always fly from towered airports, fly at the same altitudes as regional and mainline commercial airlines, and make extensive use of ATC services."

THE FACTS: In reality, approximately 10 percent of the airports used by business aviation have towers. In addition, the turboprops and pistons twins (which make up the majority of the business aviation fleet) typically fly below the scheduled airlines while business jets prefer to fly above the airlines.

Your report claims that "planes in fractional-ownership programs are in the strange position of paying more for using the ATC system if they have opted to be regulated (for safety) under Part 135 than if they operate under Part 91 Subpart K."

THE FACTS: Fractional aircraft operations pay exactly the same taxes whether operating under Part 135 or Part 91 Subpart K. The IRS has long-held that fractional program flights are commercial. Operations conducted under Part 91, Subpart K are subject to the 7.5% ticket tax, $3.20/passenger segment fee, and 4.4 cents/gallon LUST and deficit reduction taxes on fuel - exactly the same as Part 135 flights. The chart on the next page outlines the various taxes and fees paid by the general aviation sector.

Your report claims that "business jets in general sell well in Europe."

THE FACTS: Despite Europe being similar to the United States in terms of population, geographic size, and economic strength, business jets sales there are only a fraction of what they are in the United States.

Incomplete or Misleading Statements

Your report touts, as justification for user fees, the fact that the 1997 Mineta Commission Report recommended that funding for the Federal Aviation Administration's new Air Traffic Organization (ATO) be "based on payments for air traffic services paid directly by aviation users".

THE FACTS: You fail to mention that the same report states that general aviation should continue to pay its contribution to ATO funding through the existing general aviation fuel taxes. In fact, the report explicitly states: "The Commission recommends a fuel tax for general aviation. A fuel tax is an efficient, easy to administer revenue collection mechanism." Since you advocate user fees for general aviation operations involving turboprops and turbojets, it seems you are quite selective in your support of the conclusions of the Mineta Commission Report.

As a justification for adopting user fees, your report states that "nearly all other countries follow the guidelines of the International Civil Aviation Organization and charge aviation users directly for air traffic services."

THE FACTS: Your report rejects the actual weight and distance formulas that are at the foundation of the ICAO guidelines and that have been adopted by the foreign countries that charge ATC fees. Frankly, I don't see how you can have it both ways-advocating the U.S. follow ICAO and the rest of the world in charging user fees but not follow ICAO and the rest of the world in the way they charge user fees. In our opinion, the fuel tax is as good or better a proxy of use of the system as weight-and-distance objectives.

You provide a table that compares the number of turbine-powered general aviation in the United States to the number of mainline and regional jet airliners in an apparent effort to suggest that turbinepowered general aviation aircraft place a significant burden on our nation's ATC system.

THE FACTS: In order to truly understand use of the system, you must focus on hours flown. Unfortunately, you fail to mention that commercial airlines typically fly more than four times as many hours per year as a typical turbine-powered business aircraft, as illustrated by the FAA data below.

US Total Turbine (airplane) Hours:

• Airlines Carrier: 13,726,000
• Regional Airlines: 6,284,000
• General Aviation: 4,640,000
  "FAA Aerospace Forecast, Fiscal Year 2005-2016"

Unsupported Conclusions

Your report states that piston operators are not big users of ATC services and should be exempt from ATC user charges but that jets and turboprops make "extensive use of air traffic control services" and should thus be subjected to user fees.

THE FACTS: Turboprops account for only 7.2 percent of all IFR operations while pistons account for 11.2 percent of IFR operations and business jets account for 12.5 percent of IFR operations. If use of ATC services is your criteria for applying user charges, is does not make sense that you would advocate subjecting the smallest of the three categories to user fees but exempt the middle category of users.

In rejecting the fuel tax, your report states that "paying for ATC via a fuel tax would mean charging far less to an RJ for the exact same services delivered at a much higher charge to a 767. So a fuel tax fails the test of being a cost-based user fee, as recommended by USATS, the Mineta Commission, and nearly all other ATC reformers."

THE FACTS: Again, the ICAO guidelines for user fees and the formulas used by ALL major countries that levy "cost-based user fees" have weight as a fundamental component of the charge. Thus, ICAO would also charge RJs a lower fee than a 767.

While I appreciate the significant effort you have put forward in generating this latest Reason Foundation Report, I felt it necessary to share with you a small sampling of my concerns. I would welcome the opportunity to meet with you personally to discuss the report in more detail.

Sincerely,
Ed Bolen
President and CEO

FMI: www.nbaa.org