Contact: Dan Hubbard at (202) 783-9360 or dhubbard@nbaa.org
Washington, DC, May 4, 2005 – In testimony before a House Aviation Subcommittee hearing held today to assess the financial condition of the Aviation Trust Fund, NBAA President and CEO Ed Bolen detailed how general aviation pays to use the system, challenged misperceptions about the general aviation industry and called for effective solutions to strengthen the national aviation infrastructure.
“Like the rest of the aviation community, NBAA Members have a vital interest in a strong and healthy aviation system,” Bolen began. “Hearings like this one encourage a forthright dialogue about what FAA’s costs are, how general aviation pays its share of those costs and what industry and government can do to make the system more efficient in the future.”
Bolen noted that, in recent weeks, some government and aviation industry officials have contended that the FAA is faced with declining trust fund balances, a reduced general fund contribution and increasing operational costs. These claims have prompted questions about how FAA services are funded, and whether changes to the funding mechanism – including user fees for general aviation – are needed.
In response, Bolen first outlined seven different taxes and fees through which the general aviation community pays for its use of the aviation infrastructure. Among these, Bolen highlighted the fuel tax, which operators pay at the pump when fueling aircraft.
“The general aviation community has always been very supportive of the fuel tax, and with good reason” Bolen continued. “Compliance with the taxes is high, a large bureaucracy is not needed to collect the taxes, the taxes are easy to understand and pay, and their existence discourages congestion and provides an incentive for purchasing cleaner, quieter, more fuel-efficient aircraft.”
Bolen pointed out that IRS records of general aviation fuel receipts and surveys of fractional companies and charter operators indicate that general aviation operations are estimated to have contributed in excess of $600 million into the Aviation Trust Fund in 2004 alone. This $600 million represents between 6 and 7 percent of the $9.2 billion deposited into the Trust Fund in 2004.
“It has recently been suggested by some that general aviation is not contributing its fair share into the Aviation Trust Fund,” Bolen continued. “The purported evidence for this allegation is the fact that general aviation represents over 30 percent of instrument flight rules [IFR] operations, but contributes a smaller percentage of revenue to the Trust Fund.
“Make no mistake about it: general aviation operations, including fractional operations and charters, do indeed represent over 30 percent of IFR operations,” Bolen said. “However, as economists point out, operational percentages do not equate to costs imposed on the system.
“Economists look at cost drivers, rather than operational numbers, when allocating costs. And, simply put, general aviation does not drive the costs of our air traffic system in proportion to the commercial airlines. In fact, if general aviation were grounded tomorrow, the cost of our air traffic system would not go down appreciably.”
As an example, Bolen noted that Ronald Reagan Washington National Airport has been closed to general aviation for more than three years, but the FAA’s costs associated with that airport have not been reduced.
“But what is even more important than who pays what into the Aviation Trust Fund is the bigger question of whether or not our nation’s air transportation system will have sufficient funding to meet future demand and remain the largest, most diverse and safest in the world,” Bolen said. “With FAA reauthorization coming up in two-and-a-half years, Congress must begin addressing our future air transportation system needs.”
Bolen presented a five-point set of principals for guiding decisions about planning for the future.
- Do No Harm. Today, the United States enjoys nearly 50 percent of all of the commercial aviation activity and 75 percent of all of the general aviation activity in the world. The nation’s air transportation system is 73 percent more productive and more efficient than the rest of the world’s, and enjoys the best safety record. Decision-makers must proceed in a deliberative and methodical fashion before throwing away a system that has achieved such results.
- Ensure a Strong General Fund Contribution. There is no doubt that every U.S. citizen benefits from a strong, safe and secure air transportation system regardless of whether or not they travel by airplane. As beneficiaries, the general public should continue to pay for a significant portion of the national air transportation system through their general taxpayer revenues. The General Fund contribution also is necessary to cover costs imposed on the system by the military and other government users of the system.
- Control FAA Costs. Over the past several years, the FAA has made tremendous progress with its costs. However, continued progress is necessary to ensure that any additional funding, whether it comes from industry or the General Fund, is not wasted.
- Clearly Identify the Technologies Needed for Modernization. It is clear that our future air transportation system will be more satellite-based than today’s ground-based navigation system. However, decisions must be made about what technologies will be used and what procedures will be adopted. These decisions, and the costs related to them, need to be understood and supported before investment gets underway.
- Keep the General Aviation Fuel Taxes. The Report of the National Civil Aviation Review Commission, which was chaired by the current Transportation Secretary, Norman Y. Mineta, endorsed the general aviation fuel taxes as the most appropriate way for this important segment of civil aviation to pay its share of system costs. NBAA agrees with the Secretary’s Commission.
“As leaders in industry and government work to determine the best means of preparing our national air transportation system for the needs of the 21st Century, NBAA welcomes the opportunity to participate in an industry-wide dialogue about solutions that best serve all parts of the aviation industry, as well as the American economy that depends upon it,” Bolen concluded.
Click here to view Bolen’s testimony.
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Founded in 1947, NBAA serves more than 7,000 Member Companies by promoting the aviation interests of organizations utilizing business aircraft in the United States and worldwide. The association provides more than 100 products and services to the business aviation community, including the NBAA Annual Meeting & Convention, the world’s largest civil aviation trade show. Learn more about NBAA at www.nbaa.org.
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