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Setting the Record Straight on Airline Mistruths and Deception
In recent weeks, the big airlines have taken to the airwaves to try to blame small aircraft for delays and congestion in the air traffic control system – delays that are actually caused by the commercial airlines themselves! This is all part of a larger campaign by the airlines and their lobbyists to spread mistruths about delays, what they pay into the air traffic control system, and modernization – all so they can try to justify pushing through another huge tax break in Congress at the expense of taxpayers. As the facts below clearly show, none of their claims pass the smell test.
CLAIM:
Small Aircraft Cause Delays to Passenger Aircraft
TRUTH:
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General aviation is not the cause of delays at our nation’s airports. At the top 10 busiest airports, small planes make up only 4% of traffic.1
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The Department of Transportation monitors delay statistics on a daily basis, and breaks down that data into five causes – none of which include general aviation. Over 50% of delays can be traced to airline over-scheduling and other poor business practices.2
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Airline over-scheduling is so extreme that the Department of Transportation is now actively investigating several airlines for purposeful “deceptive scheduling practices.”3
CLAIM:
The Airline Proposal is Necessary for Modernization of our Air Traffic Control System
TRUTH:
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Modernization of the air traffic control system is critical, but complete overhaul of a successful funding system is not necessary to accomplish those goals.
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The airline push for modernization is a thinly veiled attempt at yet another government handout. Budget documents show that the airline-backed “user fees” scheme would in fact cut modernization funding by at least $600 million. The Department of Transportation Inspector General has stated that the airline plan would cut their tax burden by over $1 billion.4
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The Government Accountability Office and the Department of Transportation Inspector General have testified to Congress that the current aviation tax structure is forecasted to raise enough revenue to cover the FAA’s anticipated modernization cost.5
CLAIM:
Commercial Airlines Pay 94% of the Taxes, Yet Only Drive 74% of the Costs. General Aviation Pays Only 6% of the Taxes, But Drives 16% of the Costs.
TRUTH:
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According to the FAA’s own documents, all U.S. passenger airlines combined only pay 77% of taxes. Air Transport Association internal documents show that they only pay 74%.6
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FAA’s same documents show that general aviation pays 8.6% of taxes.7
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The big airlines’ assertion of costs driven by general aviation is based on a flawed cost allocation study that ignores established economic principles and is at odds with accepted international practices.8
CLAIM:
Shifting the Airline Tax Burden Helps Consumers
TRUTH:
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Consumers would likely see no difference in their fares if the airline tax burden were lessened. In 2004, the Government Accountability Office warned Congress that airlines generally profit from tax savings, rather than pass those savings on to customers.9
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Airline management and their lobbyists have even said publicly that they are looking to improve their bottom line through this new “user fee” proposal.10
BOTTOM LINE:
The big airlines have put their spin machine into high gear, pushing mistruths about small aircraft, congestion and modernization - all so they can try to justify another billion dollar tax cut in Congress. After receiving billions in bailouts, benefits and tax breaks, now they have come back with their hand out for more. Its time to say enough is enough!
1 At the top 10 busiest airports in the US, FAA’s 2006 traffic count data for all towered airports shows that general aviation makes up less than 4.0% of all aircraft operations. FAA: OPSNET data for all towered airport operations in 2006.
2 The top reasons for airline delays, according to the Department of Transportation (DOT), are extreme weather, security, aviation system congestion (which includes airline-related delays), late-arriving aircraft and airline-related problems. In April 2007, over 75% of delays were related to weather or airline-related causes. Bureau of Transportation Statistics, Airline On-Time Statistics and Delay Causes.
3 “[T]he Transportation Department says it's launching an investigation into deceptive scheduling practices by some airlines, taking aim at carriers that operate chronically delayed flights without telling customers of the repeated problems.... The Transportation Department says it's already in proceedings with eight airlines to assess whether they disclosed on-time performance statistics … The latest investigation would look at the larger question of whether airlines are presenting unrealistic schedules to passengers.” “Transportation department to probe airline delays,” Dallas Morning News, April 20, 2007.
4 Administration budget documents show that the new user fee scheme pushed by the FAA and backed by the major airlines would cut modernization funds by at least $600 million. The Budget of the United States Government, Fiscal Year 2008 – Appendix.
The airlines’ insistence on changing the funding mechanism is nothing more than a flawed justification for a huge airline tax break. The Department of Transportation Inspector General recently testified to Congress that under the big airlines’ FAA plan, the airlines would decrease their tax burden from $11.8 billion to $10.1 billion in FY2009. FAA’s Financing Proposal, Statement of Calvin L. Scovel III, Inspector General, U.S. Department of Transportation, before the Committee on Transportation and Infrastructure, Subcommittee on Aviation, U.S. House of Representatives, March 21, 2007.
5 The Department of Transportation Inspector General and the Government Accountability Office have testified to Congress that Under the Current Excise Tax System, Forecasted Revenues into the Aviation Trust Fund could cover the FAA’s Anticipated Cost of $22 Billion in Modernization Spending for 2007 – 2025. Hearing, Committee on Transportation and Infrastructure, Subcommittee on Aviation, U.S. House of Representatives, March 21, 2007.
6 All U.S. passenger airlines combined pay only 77% of taxes into the airport and airways trust fund. “FY 2005 IRS-Certified Airport and Airway Trust Fund Tax Revenue,” FY05 FAA ATO Data Package.
“[A]n internal Air Transport Association document obtained by The Hill indicates U.S. airlines paid about 74 percent of total contributions to the trust fund, and that the 95 percent figure comes only after taking foreign airlines and shippers such as FedEx into account.” “FAA’s air-traffic fee proposal sparks resistance,” The Hill, April 17, 2007.
7 General aviation currently contributes 8.6% of the taxes that flow into the Airport and Airway Trust Fund. “FY 2005 IRS-Certified Airport and Airway Trust Fund Tax Revenue,” FY05 FAA ATO Data Package.
8 According to the Government Accountability Office and leading Transportation Economists, the FAA’s recent cost allocation study ignores established economic principles and is at odds with accepted international practices. GAO-07-773R: FAA Funding Comparison, U.S. Government Accountability Office, June 8, 2007; “FAA’s Cost Allocation Study – A Flawed Approach to Assigning Costs that Discards Mainstream Economic Fundamentals,” Michael W. Tretheway, Ph.D., InterVISTAS Development Economics, April 11, 2007.
9 Any improvement following a tax cut would likely be to airline profitability, not passenger ticket costs. According to GAO studies, “During the 1996 ticket tax lapse and 2003 security fee holiday, carriers generally raised ‘base’ airfares (i.e., airfares net of taxes and fees) compared with what they were in periods before the absence of the tax or fee. The effect of this to consumers was to maintain or increase gross fares.” Summary Analysis of Federal Commercial Aviation Taxes and Fees, U.S. Government Accountability Office, March 12, 2004.
10 “Look, if our tax burden weren't so high, there wouldn't be as much pressure to raise fares,” [Airline Executive] said. “At the very least, we could keep fares the same and make more money.” “Airlines to lobby for revamp of FAA funding next year,” Ft. Worth Star-Telegram, December 26, 2006.
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