"Ideology As Much As Economics"

Many of the nation's biggest airlines are the strongest advocates for user fees for general aviation pilots -- but could user fees harm the carriers, too? The Aircraft Owners and Pilots Association (AOPA) says yes, citing a new study by aviation industry expert Darryl Jenkins.

The study, titled "Turbulence Ahead: How User Fees Could Ground The FAA",  shows user fees could hurt both consumers and the airlines -- as economic downturns that affect the amount of money user fees bring into an airport, also means less money brought in by GA pilots paying user fees, than would normally be taken in through the traditional way private pilots pay for airport services -- fuel taxes.

Jenkins, a visiting professor at Embry-Riddle Aviation University and recognized expert on airline economics, reiterated the association's position that the current FAA funding system works just fine.

"There is no evidence to justify radical changes in the aviation tax and fee system," Jenkins wrote. "Every available industry indicator relating to the FAA -- including passenger volume and yield -- are on the rise."

The bulk of the money flowing into the aviation trust fund comes from airline passenger ticket taxes, while fuel taxes help pay for general aviation's use of the system. And Jenkins notes that, while there was a short revenue downfall after 9/11, the trends are back up, with record-level revenues predicted in the immediate future.

"One thing all those who are publicly supporting user fees have in common is the mistaken belief that fares are going down," Jenkins said. "This argument is categorically wrong. Prices have been rising over the last year and with increases in the price of jet fuel, there is pressure...to raise prices further."

"Jenkins' research adds to the evidence that AOPA has been presenting against user fees," said AOPA President Phil Boyer. "A user-fee funded aviation system is bad public policy, strongly opposed by general aviation pilots, and, ironically, potentially harmful to the very people that it is supposed to benefit."

Jenkins says user fees would be "financial disaster" for U.S. airlines.

"The reason is that when revenue from user fees decreases for any reason (typically, a soft economy), airlines and other stakeholders will have to make up the shortfall. The result will be an increase in operating expenses when airlines are least able to afford it, and such scenarios have already occurred in Canada and Germany."

Jenkins also notes the airlines themselves could also legally avoid paying user fees, considering that several of the so-called "legacy" carriers -- among the most vocal user-fee proponents -- are today operating under the protection of bankruptcy laws.

"Airlines in financial difficulty could avoid paying millions of dollars in user fees by filing for Chapter 11 bankruptcy protection," said Jenkins. "The resulting shortfall would have to be made up by other users."

In contrast, a bankruptcy filing does not excuse payment of excise taxes.

Jenkins maintains user fees are a step in the direction of privatizing or commercializing air traffic control -- "for reasons of ideology as much as economics," he says.

"Do we really want air traffic control or other FAA services subject to the same economic vagaries that have ravaged the airlines? The damage to their human capital over the past two decades has been mind-numbing," Jenkins said.

"Could the FAA be improved, or made more efficient? Of course. But that hardly justifies abandoning a system that for all its faults has created the world's largest aviation system, which — on most days — performs with a reasonable level of efficiency and a remarkable level of safety," Jenkins concluded.

Jenkins was commissioned by the National Air Traffic Controllers Association to prepare the white paper study.

FMI: www.aopa.org, www.natca.org