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.