Pilots See A Proposed Trip Fee As A Tax On Business
July 30, 2009
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  • By Andrew Webb


    Neil Hise, president of Belen heavy construction and mining machinery company CEMCO Inc., calls his Beechcraft King Air plane his “time machine.”

    “Right now, I’m in a customer’s office in Las Vegas, Nevada,” Hise said in a recent phone interview. “I’ve seen five customers today, and I’ll be back at home tonight.”

    But Hise says a proposal to subject private pilots and owners to a $25-per-flight “user fee” to help pay for modernization of the air traffic control system will push his already tight aviation budget – about $14 per minute including insurance and training – into the red.

    “There’s this concept in America that there’s just a bunch of fat cats driving around in Gulfstreams,” he says of the proposal, which has the support of the Bush administration and the enthusiastic backing of the airline industry.

    “But my airplane is a business tool. It’s my time machine. User fees are going to be absolutely devastating to New Mexico in particular, and aviation and business in general.”

    Hise’s is one of a groundswell of voices opposed to the fees, which are part of a proposed Federal Aviation Administration funding reauthorization bill working its way through the U.S. Senate.

    The FAA’s present funding expires in September. The agency says it needs to boost its $14 billion annual budget to upgrade its nationwide air traffic control system to handle traffic that is clogging airways, especially in the Eastern United States.

    The modernization would include advanced weather technology and switching from World War II-era radar to satellite technology for aircraft control.

    As it stands now, the FAA is largely funded by taxes on fuel and on commercial airline tickets, the value of cargo shipments, frequent flyer miles, and other fees. Reauthorization proposals have included leaving the funding structure as it is, increasing taxes on fuel and adding user fees.

    James May, president and CEO of airline trade organization The Air Transport Association, said during recent congressional testimony that the present system unfairly burdens airlines with the costs of maintaining and upgrading the system.

    The association contends the 18,000 private or corporate jet and turboprop aircraft consume 27 percent of the FAA’s resources, while contributing only 6 percent of the agency’s funding.

    “There is no correlation today between the revenue collected and services consumed,” May said. “Corporate aircraft cannot continue to get a free ride, congest the system and pass the costs they impose on to airline passengers and shippers.”

    In February, FAA administrator Marion Blakey outlined a proposal to shift about 23 percent of the airlines’ annual costs to other smaller commercial jet flights provided by air taxis and other endeavors by raising fuel taxes, and imposing flat user fees on commercial airliners only.

    “We’re looking a billion passengers square in the face by 2015, and two to three times the current traffic levels by 2025, so we’ve got to prepare now,” she said during a February speech in Washington, D.C.

    When the funding system was created 10 years ago, Blakey said, “(I)t didn’t contemplate the move by the majors toward smaller planes, the advent of very light jets and air taxi service, the drop in the price of an airline ticket.”

    In May, Sens. Jay Rockefeller, D-W.V., and Trent Lott, R-Miss., proposed extending the user fees to all turbine-powered flight, including business jets and turboprops flown by private or corporate owners and pilots.

    Their proposal was like one made by the Bush administration in its fiscal-year 2008 federal budget proposal.

    That’s raised the hackles of those in the general aviation industry, such as the National Business Aviation Association, which says the fees will increase general aviation costs by up to 550 percent for operators of small aircraft that might make more than one daily flights.

    “With user fees, they’d be charging a 747 nonstop from Los Angeles to New York the same amount as a King Air flying from Albuquerque to Hobbs with three people on it,” said Lowell Whitten, vice president and general manager of Cutter Aviation, an aircraft storage, fueling and service center at the Albuquerque International Sunport.

    Whitten says the proposed user fees would impact all general aviation activities and businesses, including fixed base operator, or FBO, businesses like Cutter, pilots like Hise who make multiple business flights a day to run a business in a sparsely populated region, to manufacturers like Eclipse Aviation.

    For instance, Whitten says, under the proposal, FBOs would likely be required to collect user fees from the pilots they serve.

    “If we had to become a collection agency, that would increase our administrative costs considerably,” he said.

    Eclipse’s founder, Vern Raburn, has testified before Congress on proposed user fees, which have been debated for more than a decade.

    Eclipse is building a $1.5 million, twin-engine jet aimed at making the upgrade from a propeller-powered aircraft to a jet affordable for a wider range of pilots. The Albuquerque company plans to eventually build and sell 1,000 Eclipse 500 jets per year.

    “User fees are a very hot topic for us,” Eclipse spokesman Andrew Broom said.

    Lynn Hogan, a marketing and sales manager for Albuquerque’s DeVore Aviation, said many in the industry worry the per-flight user fees will open the door for a range of new charges for interactions between pilots and air traffic controllers, such as calling in for weather reports or permission to take off.

    “The way it’s currently funded, by aviation fuel taxes, is very fair and equitable,” he says. “Those who burn the most fuel pay the most, those who burn less pay less. General aviation more than pays its own way already.”

    DeVore, founded in the early 1970s, makes lights used to make planes visible to other pilots, and employs about 40. Its customers include all categories of aircraft manufacturers and operators, including airlines.

    Hogan cites a U.S. General Accounting Office report, frequently touted by general aviation groups like the Aircraft Pilots and Owners Association, that says the current system will adequately fund the FAA’s expansion and upgrades for the foreseeable future.

    Besides, he says, “the FAA is such a huge government entity that it’s inherently inefficient as it is. They don’t even know where they’re spending their current money. That’s the irony in this proposal.”

    Politicians say:

    Sen. Pete Domenici, R-N.M.: Courtney Sanders, a spokeswoman for the senator, said Domenici does not support the user fee proposal, but that he did agree the system needs an upgrade. “He thinks it would probably be more appropriate for this to be dealt with from a tax perspective,” she said. “With all these small aircraft taking on the role of air taxis, it just doesn’t make sense for them to be saddled with a $25 fee for each leg of their trip.”

    Sen. Jeff Bingaman, D-N.M.: Jude McCartin, an aide, said Bingaman sits on two committees through which the proposal must pass. “Sen. Bingaman agrees we need to bring the whole air traffic control system into the 21st century, but he disagrees as to how to meet that need,” she said. A version of the funding reauthorization being drafted in the House would not include the proposed user fees.

    Rep. Heather Wilson, R-N.M.: “With companies like Eclipse Aviation and LoPresti Fury creating jobs in New Mexico, I will oppose this user fee change,” Wilson said through a spokesman.

    Rep. Steve Pearce, R.-N.M.: Brian Phillips, a spokesman for Pearce, said, “The congressman is absolutely opposed to any increase in user fees for general aviation. He’s been fighting against that for years.”

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