US airlines want bigger say in FAA modernization

By John Crawley

WASHINGTON (Reuters) – Major U.S. airlines want a bigger
say in how the U.S. air traffic system is modernized and
financed, saying on Wednesday that Congress and regulators must
yield ground on key decisions.

The Air Transport Association, which represents major
carriers, also formally proposed lawmakers scrap the long-held
formula of airline ticket and fuel taxes in favor of a system
that would extract more money from business jet and other
private operators to run the nation’s aviation system.

Airlines estimate that moving away from airline taxes and
fees would shift about $2 billion of annual costs elsewhere.

Airlines are the biggest consumer of air traffic services
but carriers complain their contribution to a federal trust
fund that covers much of Federal Aviation Administration budget
far exceeds their actual use.

The trust fund law expires next year and regulators plan to
offer financing alternatives for Congress to consider. Some mix
of user fees is expected, but whether the government will drop
its passenger and fuel tax system is unclear.

The trust fund is leaner now than in previous years mainly
because revenues from airline taxes are off due to low fares
and capacity cuts.

The FAA’s proposed budget for 2007 is $13.7 billion, with
trust fund receipts expected to fall short by $2 billion.
Airlines contribute about $11 billion.

“I’m suggesting there be a proportional fee tied to the use
of the system,” Jim May, chief executive of the airline trade
group Air Transport Association, told reporters.

Business jet operators, who pay a fraction of what the
airlines contribute, say the system is designed for airline use
and bristle at new funding proposals.

“User fees are costly and require a large bureaucracy to
administer and are an administrative burden to companies,” said
Ed Bolen, president of the National Business Aviation
Association. “It’s of no value.”

While airlines have previously argued for lower taxes on
their industry and have often criticized FAA management for
being slow and inefficient on modernization, they have united
around a plan to alter how Congress and regulators make
decisions about aviation priorities.

“People who use the system ought to have some say in
decisions of that system,” May said. “I think they (FAA)
certainly look to us for advice and counsel, but I don’t thinks
we have that kind of input now.”

For instance, May said Congress should reevaluate earmarks
for aviation programs. Earmarks or budget “pork” are a hallmark
of Congress that assign automatic spending priority to
initiatives requested by members. The process favors powerful
members, including committee chairmen.

He also said airlines should have a prominent role in the
development of air traffic modernization including equipment
purchases, which are heavily influenced by large contractors.

And the airlines insist FAA lower costs by closing
facilities that may not be needed but are operated mainly for
political reasons — much like underperforming trains are kept
going at Amtrak at the insistence of members of Congress who
control the rail network’s annual subsidy.