Numerous press reports are buying the convoluted and wrong-headed logic of a new report by the Institute for Policy Studies and Essential Action which blames extra fees for checked bags, long security lines and crowded commercial flights on business jets used by the “ultra rich.” Worse, it comes at a time that airlines are predicting the loss of scheduled air service to 200 communities meaning their only link with the national air transportation system will not be regional airlines but general and business aviation. Calls to the two groups to get an explanation of this amateurish report that doesn't even meet the standard of a high school research paper, were not returned. The problem with letting such an obviously error-filled report, that most are assuming comes at the behest of major airlines, go unchallenged is that it tends to devide the industry at a time when it is having a difficult time getting critical legislation that would address congestion passed. That means everyone is hurt.
While user fees have nothing to do with airline service fees, the report, using stunning logic, favors user fees for business aviation, despite the fact that without business aviation those security lines and commercial flights would be more crowded. It also wants user fees paid by general and business aviation to subsidize rail projects instead of improving the airports.
The report praises European user fees based on aircraft weight and distance flown, but ignores the fact that general aviation fuel taxes reflect aircraft weight and distance flown without requiring the new government collection bureaucracy favored by airlines and government. The report also fails to acknowledge that the fuel tax creates incentives for development and use of cleaner, quieter, more fuel-efficient engines.

Fundamental Ignorance
The report – High Flyers: How Private Jet Travel Is Straining the System, Warming the Planet, and Costing You Money – suggests a fundamental ignorance of the role of business aviation in air transportation today to say nothing of completely ignoring the cost of fuel in airline decisions to cut capacity and raise more revenue through fees. Even airlines admit they are desperately trying to re-educate the public on the real costs of purchasing an airline seat. Airlines have been subsidizing passengers’ low fares since deregulation in an attempt to compete. How is that business aviation’s fault?
The Institute and Essential Action ignore a 2005 study by the General Aviation Manufacturers Association and National Association of State Aviation Officials which found general aviation contributed more than $150 billion to U.S. economic output. The report suggests that U.S. passenger airlines pay 95 percent of the air traffic control costs when they actually pay 77 percent of those costs, according to the National Business Aircraft Association. Even so, that ignores the fact that the system is designed, built and managed for the airlines and their passengers, and treats general aviation as second class citizens.

Only Air Link
The report also ignores the vital role in connecting many cities that have no air service to the national air transportation system. This is especially critical today as airlines cut capacity in order to survive. The Air Transport Association (ATA) is already predicting that as many at 200 communities could lose air service in the cuts already proposed by its members. Perhaps the Alliance for Aviation across America, said it best in the title of its release condemning the report – Big City Think Tanks Take Aim at Small Town Lifeline. The alliance includes Aircraft Owners & Pilots Association, League of Rural Voters, Air Care Alliance, National Farmers Union, Balloon Federation of America, Angel Flight, Mid-Atlantic, National Business Aviation Association, Experimental Aircraft Association, Aircraft Electronics Association, MedImpact HealthCare Systems Inc. Helicopter Association International, National Agricultural Aviation Association, National Association of State Aviation Officials, National Aircraft Resale Association and Management Association for Private Photogrammetric Surveyors.
“The consensus estimate among analysts is that the airline industry will have to shrink 20 percent to 22 percent,” said Business Travel Coalition Chair Kevin Mitchell, who represent’s the airlines’ business travelers, in recent Congressional testimony noting that recent capacity cuts scheduled for this fall, add up to just 12 to 13 percent. BTC has identified 150 airports that are at risk of losing commercial air services.
“If, as Goldman Sachs and others predict, oil reaches $150/barrel by July 4, then the industry would need to shrink further,” continued Mitchell. “At $200/barrel, the industry would need a 40 percent reduction. A major concern is that there is no assurance that the industry can successfully downsize without collapse, given the bunching-up of several airlines whose equity would be wiped out in the same relative timeframe, assuming $130/barrel oil.”

Industry Reaction
“The report starts with a ridiculous caricature of general aviation that has been heavily promoted by the airlines, but bears no relationship to reality,” NBAA President and CEO Ed Bolen. “Then, it throws a barrage of baseless, over-the-top claims against the wall to see if anything sticks. In the end, none of the allegations stick, because the report is both inaccurate and distorted. This report is 30 pages of nothing but outrageous claims and the warmed-over rhetoric used by the nation's big airlines. It is unfortunate that at a time when businesses are struggling and communities are losing air service, we see political screed masquerading as a policy report."
The Institute said the surge in private jets has “real costs to taxpayers, shareholders, and everyday air travelers. These high flyers arent [sic] just living large on their own privilege; theyre [sic] threatening our environment, security, and the cohesion of our country, at our expense.”
The report, jointly authored by Chuck Collins, Sarah Anderson, and Dedrick Muhammad of the Institute for Policy Studies, and Samuel Bollier and Robert Weissman of Essential Action, notes that, in the last decade, there has been “an unprecedented explosion” in private jet travel. Between 2003 and 2007 alone, annual worldwide sales of private jets more than doubled to $19.4 billion. Even so, according to NBAA, business aviation hours are actually flat.

Let Them Eat Cake
Again, in strikingly convoluted logic, the Institute would punish business aviation for the failures of the airlines and the government. But business aviation flying has little to do with congestion and delays that so infuriate passengers. That comes from airline over scheduling, airline preference to cancel or delay regional flights in favor of mainline service, the FAA’s failure to modernize the system and Congressional failure to give FAA the funding it needs. None of this has anything to do with the user fee debate since aviation fuel and ticket taxes have provided and still provide plenty of money to fund NextGen. Commentary
The report prefers to cast business aviation in the guise of the 18th Century French court while airline passengers play the role of peasants. “The rapid expansion in private jet travel has paralleled the growing inequality of income and wealth in our country,” said the report. “In the last 20 years, most of the growth in income and assets has flowed up to the wealthiest one percent of households - and within that, the top one-tenth of one percent. The expansion of private jet travel is symptomatic of these extreme inequalities – inequalities that need to be remedied if we are to rebuild an economy that works for working Americans.”
The Institute may be right on the growing wealth of the rich, the erosion of the middle class and growth of those living in poverty, but it has picked a really strange platform to foment its revolution. Indeed, the report makes a great us-vs-them sound bite. It is unfortunate that rather than bring unity to a critical economic debate, it has chosen to divide. This, at a time with Congress is only planning to extend the FAA budget for another six months, and failed again to pass a reauthorization bill that would fund what FAA promises to be a more efficient system which would alleviate congestion but do nothing about fuel prices.
The report recommends imposing a luxury tax on private jets and fixing the FAA’s funding structure to require private jets to pay their share of costs. The 60s-era organizations seem to have missed the impact of the last time luxury taxes were imposed. They hurt the guy who built yachts far more than those who bought them and resulted in a further worsening of the economy. The authors chose to ignore that general aviation directly or indirectly, employs more than 1,265,000 people whose collective earnings exceeded $53 billion. That is a lot of little people, not the ultra-rich, that benefit from a robust general aviation market.
The report suggests government subsidies spent on fixing small airports that largely serve private jets would be better invested in high-speed rail as an alternative to short-haul air travel. It suggests that the $870 million in general aviation taxes funneled every year into the Aviation Trust Fund should subsidize everything but business aviation. Never mind the critical role business aviation plays in the economy or the fact regional airlines use many of these airports as well.
Chuck Collins, senior scholar at the Institute for Policy Studies and coordinator of the Working Group on Extreme Inequality, suggests passenger problems rest squarely at the feet of business aviation tax breaks. Authors pointed to the tax break for purchasers of new aircraft as part of the 2008 Economic Stimulus Act adding, “Experts predict this wont [sic] actually help jumpstart the economy, and could worsen global warming.” The fact is the benefits afforded in accelerated depreciation apply to all significant capital equipment, not just aircraft.
The High Flyers report criticizes government inaction to rein in “gas-guzzling, sky-crowding private jets,” and the super-wealthy who dodge security restrictions, carbon costs, and taxes.
“The super-wealthy, private jet-set are shifting the costs of their high-flying indulgence on to the rest of us," said report co-author Robert Weissman, director of Essential Action. "They pollute more than commercial flight passengers, but don't pay. They don't pay a fair share of their air traffic control costs. And they have manipulated the tax code so we all subsidize the cost of private jet purchases."

Where are they getting their facts? According to the report, private jet travelers pay lower taxes and fees than ordinary commercial travelers, even though “this elite transport burns five times more carbon than commercial airplanes.” Private fliers also avoid a variety of fees added to the cost of a commercial ticket, such as a $3.40 segment fee, a $3 passenger facility charge and a $2.50 security fee, said the report, adding passengers on private planes usually avoid a 7.5 percent tax on the cost of airline tickets that is used to fund air-traffic-control services. It is more than likely these charges have nothing to do with the erosion of commercial passengers.
The Dallas Morning News bought the environmental argument, saying “private jet travel is far less efficient than commercial air flights, because so few people are transported on each private jet flight. Four passengers flying in a private Cessna Citation X from Los Angeles to New York, for example, would each be responsible for more than five times as much CO2 emitted by a commercial air passenger making the same trip. And that's a very generous calculation, given estimates that 40 percent of private jet flights are empty – as pilots return home rather than sit idle waiting for a return trip.”
First, the system is built, and run, for the major airlines.
Second, passengers pay exorbitant ticket taxes, passenger facility charges and the like, because they are no one’s constituent and local, state and federal legislators see them as convenient, no-risk, revenue generating targets instead of increasing income and property taxes. If the airlines are going to go after business aviation to pay more, they should also go after all those local, state and federal taxes if they are really interested in being fair to their passengers. Indeed, it is Congress which sets business aviation contributions, something the airlines want changed which only served to derail FAA reauthorization for two years.
Finally, commercial airlines have a much larger carbon footprint than general aviation planes. Environmental Protection Agency (EPA) data concludes commercial airlines account for two percent of total US greenhouse gas (GHG) emissions from transportation. General aviation airplanes account for 0.6 percent of (GHG) in the US, and 0.2 percent of total global GHG emissions.

Marketplace at Work
Co-Author Sarah Anderson suggests that corporate policies requiring management to use private jets for security reasons are just one more example of executive excess. But, clearly the authors do not understand that this is the marketplace at work. Again, this has nothing to do with business aviation. Rather, the airlines in the past decade or more have consistently provided deteriorating service that has been roundly criticized by none other than Former AMR CEO Robert Crandall on many occasions. Meanwhile, government increased the hassle factor with unreasonable security rules that require contortionist stripping at security areas. It is little wonder that so much traffic has leaked to a better product?
Couple this with congestion, delays and the fact business travelers are unable to work on board owing to security concerns and cramped conditions, and you have further reason to abandon commercial aviation. Recently two organizations actually quantified this erosion. The Travel Industry Association said the commercial airline hassle factor is driving passengers to avoid 41 million trips annually. Then, the Stanford Transportation Group (STG), a leading U.S.-based aviation consultancy, completed an analysis that indicates that business aviation has grown from 16 percent of all premium business traveler trips to 41 percent. Related Story
Indeed, business aviation is the last frontier is capturing any additional productivity gains from employees.

In conclusion, business aviation interests characterized the report as the latest round in the anti-business aviation rhetoric the Air Transport Association has been pushing for years and they are right. Consequently, airlines, ATA and the two research organizations should not only be embarrassed by the lack of accuracy in the report, which seems to have cobbled together disparate news reports to support an erroneous theory, they should join business aviation in condemning it. This thinly veiled attempt to turn the public against business aviation certainly hurts the credibility of ATA and the two organizations that authored the report. Indeed, they should be ashamed at allowing such misinformation to be published.