The Air Transport Association opened the door nearly three weeks ago to a different funding mechanism for NextGen when Delta (DAL) COO James Whitehurst testified before the Senate Finance Committee, airlines were proposing a new funding proposal which would drop the $25 user fee. Although, he said they still favor a user fee, last week, ATA announced that new proposal which, according to ATA President and CEO James C. May, “returns to the user-pays, cost-based funding principles implemented by Congress in the 1970s.”
Seemingly admitting that a blip is no longer just a blip, May testified before the Select Revenue Measures Subcommittee of the House Ways and Means Committee, saying the per-passenger tax, based on how far the passenger traveled, is more closely tied to the FAA projected costs, and allows FAA to better support long-term investments in technology and infrastructure by having a predictable revenue stream. The proposal did not address how other users would fund their share of the system and its modernization.
Delta’s Whitehurst also testified. “Our funding mechanism – a passenger tax – takes advantage of the existing tax collection infrastructure but is tied to projected costs,” he said. “The proposal is grounded in the principle that taxing departures and distance is the best way to recover the costs that aircraft impose on the air traffic and airport infrastructure.”
FAA Administrator Marion Blakey testified the proposed increases in general aviation fuel taxes that are part of H.R. 2881, are “far too modest.” She called for significant reform of the tax structure, saying with taxes as proposed, there will not be enough to fund what the bill authorizes “unless we see an historic increase in the contribution from the general fund of almost $1.4 billion in ’08 alone.”
Blakey also told legislators the current tax system is not reliable, stable, or equitable in the way the traveling public needs it to be. “It is not connected to our costs, and it does not reflect how various users drive our costs,” she said. “The GAO, CBO, and DOT Inspector General — along with seven independent commissions over the last two decades — have all noted numerous arguments for reforming the current funding system. Without adequate funding, there is no NextGen,” However, GAO testified last fall that the current system would provide enough funding. Related Story