As A Matter Of Fact, GA/BizAv Appear To Be Aggressively Targeted

Over the last few days and weeks, a number of credible and previously dependable sources have been sending ANN documents and reports that seem to indicate that FAA's lessened insistence on the User Fee debate (as some may have perceived) may be the calm before the storm. If you think that the FAA has given up on wanting User Fees, we seem to be seeing a LOT of recent evidence to the contrary.

While the current status of the documents involved (unless we get a response from the Feds) remains fluid until actual publication, what we have received leads us to believe that there is a strong movement within some government circles (with the apparent support of the airline industry) to force the User Fee issue to the fore and make it the law of the land.... though there is great expectation from a number of parties, that recent election results may weaken the User Fee movement.

The documents include alleged copies of the proposed FAA Reauthorization Bill that would institute a User Fee program, a number of studies involved in this debate, Powerpoint demos of key points in the program, internal memos and the like. Nothing we've seen contradicts other internal sources and reports recently received at ANN, and these documents are all (reportedly) just a few weeks old. Some of the data seems to have been obliquely discussed or hinted at by industry professionals in recent days and no one is contradicting what we're seeing. Requests to FAA, DOT and other sources have not been returned.

Some of what we're seeing is not exactly new (and has been conjectured for quite a while).... but the fact that some of this is being discussed, in a more detailed fashion, and in docs that are only a few weeks old, may be.

The general thrust of these docs is that not only is there a strong desire to institute User Fees, but a continued insistence on a significant overhaul of the way that aviation does business, and to a certain extent, who calls the shots... and none of it appears to bode well for GA or BizAv.

Some of the highlights of the docs include a TRIPLING of the GA Fuel Tax, Terminal Fees for GA use of any of some 30 "large hub" airports, and the continued potential for the airline industry to take a dominant political role in how aviation is run in the USA.

One thing that struck ANN in reading these docs was the fact that the FAA and DOT seem to have recognized that they would have problems forcing the previously discussed User Fee proposals on the GA and BizAv community. None-the-less, they seem to be looking for ways for the GA/BizAv segments of aviation to "pay their fair share" with the underlying assumption that GA and BizAv do not. One other onerous aspect of the documents we've seen is verbiage that suggests that the airline industry needs to be placated by the proposals that may eventually be put forward. For instance, in a table that discusses the "Political Feasibility" of additional fuel taxes for GA, there is a notation that states "The fuel tax is much more politically feasible. The fuel tax is the stated preference of all GA stakeholder groups and is acceptable to airlines as long as GA pays its fair share."

Our fair share of what?

In a draft of the FAA Reauthorization Bill leaked to ANN, the FAA seems content to kill the airline ticket tax and let GA pay the difference. It states that, "The existing 7.5% ticket tax, $3.30 (as of 2006) domestic segment tax on commercial air transportation, 7.5% tax on mileage awards, and 6.25% cargo waybill tax are allowed to expire as of the start of fiscal year 2008. The proposed user fees and fuel tax for turbine commercial aviation and aviation gasoline tax for piston commercial aviation replace these taxes."

Among the docs submitted to ANN, there is one that contains a number of postulated changes to the costs borne by a number of different aviation users in regards to certain scenarios.

These examples assume the following:

• Commercial jet and turboprop flights (including airlines, air taxis, charters, and fractionals) would pay a user fee with the following components, as applicable for a given flight:
• • 1) Enroute fee per mile in domestic U.S. airspace, based on great circle distance between origin and destination;
  • 2) Oceanic fee per mile in U.S.-controlled oceanic airspace, based on great circle distance between origin and destination;
  • 3) Terminal fee (unit rateA * (aircraft weight/100,000)0.9) for any flight arrival or departure at a large hub; this fee rate may be varied for congestion mitigation; and
  • 4) Terminal fee (unit rateB * (aircraft weight/100,000)0.9) for any flight arrival or departure at an airport that is not a large hub, but that serves over 100,000 enplanements annually.
• Commercial jet and turboprop flights would also pay one of the following taxes:
• • 1) Domestic flights pay a fuel tax OR
  • 2) International flights/passengers pay a head tax per passenger
• Commercial piston and all general aviation flights would pay:
• • 1) A fuel tax; and
  • 2) Terminal fee (unit rateA * (aircraft weight/100,000)0.9) for any flight arrival or departure at a large hub; this fee rate may be varied for congestion mitigation

Specific Examples Reported:

Commercial 757-200 from New York LaGuardia (LGA) to Miami (MIA)

• 953 enroute miles * $0.50 per mile = $477
• 2 large hubs * $105 unit rate * (220,000 lbs/100,000)0.9 = $427
• Total illustrative user fee: $903
• 2,900 gallons of fuel * $0.143 per gallon = $415 fuel tax
• Total ATO + AIP payment under proposal: $1,318
• • $19,320 passenger revenue * 7.5% = $1,449 ticket tax
  • 138 passengers * $3.20 = $442 domestic segment tax
  • 2,900 gallons of fuel * $0.043 per gallon = $125 fuel tax
  • Estimated FY05 Taxes: $2,015
• Increase / (Decrease) under proposal: ($697) / -35%

Commercial 737-300 from San Jose (SJC) to Los Angeles (LAX)

• 268 enroute miles * $0.50 per mile = $134
• 1 large hub * $105 unit rate * (124,500 lbs/100,000)0.9 = $128
• 1 non-large hub * $100 unit rate * (124,500 lbs/100,000)0.9 = $122
• Total illustrative user fee: $384
• 775 gallons of fuel * $0.143 per gallon = $111 fuel tax
• Total ATO + AIP payment under proposal: $495
• • $5,874 passenger revenue * 7.5% = $441 ticket tax
  • 89 passengers * $3.20 = $285 domestic segment tax
  • 775 gallons of fuel * $0.043 per gallon = $33 fuel tax
  • Estimated FY05 Taxes: $759
• Increase / (Decrease) under proposal: ($264) / -35%

Commercial (Air Taxi) Learjet 35 from Boca Raton (BCT) to Palwaukee (PWK)

• 1,030 enroute miles * $0.50 per mile = $515
• No terminal fee (both low activity towers)
• Total illustrative user fee: $515
• 1,360 gallons of fuel * $0.143 per gallon = $194 fuel tax
• Total ATO + AIP payment under proposal: $709
• • $3,500 passenger revenue * 7.5% = $263
  • 5 passengers * $3.20 = $16
  • 1,360 gallons of fuel * $0.043 per gallon = $58
  • Estimated FY05 Taxes: $337
• Increase / (Decrease) under proposal: $372 / +110%

General Aviation Gulfstream 4 from Teterboro (TEB) to Tampa (TPA)

• 1,083 gallons * $0.669 per gallon = $725
• 1 large hub * $105 unit rate * (73,200 lbs/100,000)0.9 = $79
• Total ATO + AIP payment under proposal: $804
• • 1,083 gallons * $0.218 per gallon = $236
  • Estimated FY05 Taxes: $236
• Increase / (Decrease) under proposal: $568 / +240%

General Aviation Bonanza 36 from Santa Monica (SMO) to San Carlos (SQL)

• 37 gallons * $0.669 per gallon = $25
• Total ATO + AIP payment under proposal: $25
• • 37 gallons * $0.193 per gallon = $7
  • Estimated FY05 Taxes: $7
• Increase / (Decrease) under proposal: $18 / +247%

Please note that in each case made in these (allegedly) government docs, the airlines wind up paying less and GA/BizAv pays more. Remember that, you're going to see that again.

And Then There Are The Actual "Fees/Charges/What-Have-You"

A tripling of Fuel taxes is tough, as is a penalty for using more heavily utilized airports -- for some users; but these onerous expenses seem but the tip of the iceberg -- as there are a number of true User Fees/Charges being espoused (in some case called "charges" instead of fees... as if that makes a difference) for a whole host of FAA "services."

The FAA does seem enamored of fees for "Selected Aviation Safety certification services (e.g., aircraft registration)." Examples imparted to ANN include a jump in registration fees to a possible $135, Airmen Certificates fees of over $100, and the like. Dozens of FAA services are reportedly under consideration for inclusion in a User Fee schedule.

Indeed, one doc notes under the heading of "Certification, Registration, and Related Fees", that "The Administrator shall impose fees to pay for the costs of 25 listed activities in the areas of certification and registration. Twelve activities have a specified amount to be charged to the operator for receiving the service. Thirteen activities are identified for which fees will be collected, but do not have an amount to be charged specified. The charge for these activities will be determined based on the available data derived from the agency’s cost accounting and cost allocation systems that measure all costs associated with capital, operation and maintenance, depreciation and overhead, including projected costs for the period during which the services will be provided. The Administrator may establish additional fees that are necessary to cover the cost of aviation regulation, certification and related services not included in the enumerated list, including any additional cost of providing services outside the United States."

There's more... much more, but wading through some of this stuff is like doing the backstroke through quicksand and verifying data when no one wants to talk is very difficult... so this is what we're seeing right now, and what seems to be the most recent play on what continues to be a contentious and potentially destructive turn of events for the aviation world. If the above comes to pass, the great gains made by aviation in the last decade could be destroyed in a matter of months and a recovering industry could be set back -- and possibly lost. 

We'll keep looking into it all and letting you know what we come up with... more info to follow.

FMI: www.faa.gov, www.dot.gov