"Commercial airlines look to correct 'imbalance' in user fees"

Monday, May 14, 2007

Commercial airlines look to correct 'imbalance' in fees
By Mike Sunnucks
The Business Journal of Phoenix (AZ)


Large commercial airlines are fighting charter jet companies and the general
aviation community over how to fund air traffic control systems and the
Federal Aviation Administration. 

The big airlines, including Tempe-based US Airways Group Inc., want general
aviation and smaller operators to pay user fees that would account for a
greater share of federal airport and air traffic control funding. The FAA,
which oversees airports and air traffic control systems throughout the U.S.,
is funded via jet fuel, passenger and flight taxes. 
 
"We'd like to correct that imbalance," said C.A. Howlett, a vice president
of US Airways. 

Howlett said he would like to see a $24 per flight departure fee for
corporate and charter jets as well as commercial carriers, and he would
consider a tax based on flight distance and number of passengers. 

One plan put forward by the Bush administration and favored by some large
airlines would replace the existing 7.5 percent ticket tax with airport user
fees and increased fuel taxes. General aviation fuel taxes would go from 20
cents to 70 cents per gallon, and commercial jet fuel taxes would increase
from 4.3 cents to 13.6 cents per gallon, according to the National
Association of Counties, which has concerns about the funding plans and
their impact on small and regional airports. 

General aviation pilots, small airports and charter businesses want the
existing system of fuel taxes and other levies kept in place. 

"The people who use the system a lot burn a lot of fuel and thus pay a lot
of taxes," said Tim McCulloch, an aviation attorney, flight instructor and
member of the Arizona Business Aviation Association. He also is active in
the Alliance for Aviation Across America, a coalition of aviation
businesses, rural airports and general aviation pilots. 

The alliance contends the changes would ease the tax burden for big airlines
by shifting those costs to smaller aviation companies. That would hurt rural
and regional airports, which often are key economic drivers, it says. 

Howlett said general aviation and private jet firms account for 16 percent
of airport use in the U.S., but pay only 3 percent of the fees and taxes for
such access. Citing FAA numbers, Howlett said big airlines comprise 70
percent of the use but pay 94 percent of airport fees and related taxes. 

US Airways also points out that a commercial airliner flying between Phoenix
and Dallas pays more than $1,900 in fees and taxes, while a private jet pays
$83. 

McCulloch said big airlines pay more fees and taxes because they account for
the vast majority of airport, airspace and air traffic control use. 

The Alliance for Aviation disputes the ratio of 16 percent to 3 percent that
Howlett cited. Other FAA statistics indicate general aviation pays closer to
9 percent of the taxes, according to the alliance. 

Congress is considering the funding changes this year as part of its 10-year
reauthorization of the FAA, federal airport spending and air traffic control
systems. 

The latter is in need of modernization and technical upgrades, Howlett said.


Jeff Schlueter, president of Southwest Jet Aviation in Scottsdale, supports
an FAA tax and fee system based on the type of airport being used. Larger,
busier airports used by commercial airlines need more money and services, he
said. 

"We believe any increases should be commensurate with the type of use and
based on the type of airport that is being used by the specific aircraft. In
many cases, business jet travel uses smaller regional and municipal
airports," Schlueter said.
 
Southwest Jet operates charter and business jets out of Scottsdale and Santa
Fe, N.M. 

Large carriers also want federal government to ease the tax burden on
airlines and their passengers on a variety of other fees and taxes. 

Howlett said 26 percent of an average commercial ticket cost goes toward
taxes and fees, compared with about 18 percent for items such as cigarettes
and liquor. The US Airways executive said airlines often have to eat the
cost of taxes and fees because of the highly competitive market and
consumers' focus on low fares. 

"There is a misconception we can just pass these taxes along to the
customer," Howlett said. 

The Alliance for Aviation and McCulloch, an attorney with Baird Williams &
Greer in Phoenix, argue that a shift in FAA fees and taxes away from large
airlines does not ensure those carriers will lower their fares. The savings
could be directed toward offsetting fuel costs and improving the bottom
line. 

Get connected 

Alliance for Aviation Across America: www.aviationacrossamerica.org

Southwest Jet Aviation: www.southwestjet.com

US Airways: www.usairways.com

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