ATC User Fees

"Steven P. McNicoll" writes:

Start with a decent spec for air to air datalink and once pilots
can "see" other traffic, they can supply their own separation.
Competition is now between the vendors of radios that provide this
service.

I don't see any free market competition among providers of ATC services
there. It appears to me you've eliminated the provision of ATC services!
Who then is responsible for separation?

The pilots of course. They've always had the responsibility for the
aircraft, technology just now allows us to give them the information
needed to also have the ability to make their own decisions instead of
handing that job over to someone on the ground.

Sequencing is a little harder but not much. The easy way out is to
say that it's still done by people on the ground talking on radios and
the competition is simply that which comes from bidding on the
contract to execute this service for the various airports that need
it.

But then there'd be no free market competition among providers of ATC
services.

Right, the only competition is in the bidding process for the various
contracts to provide approach services at those airports that think
they need them. That's why I went on to describe what I think is a
better system; one that does away with the need and again puts
responsibility with the pilots, where it belongs.

The point I'd hoped to make was not my particular ideas of how to make
a better system for air traffic (though I'm happy to talk about that
too). My point is that the monopoly situation that we currently have
with ATC is a result of the particular design that came to be for good
reasons given the technology at hand. However, technology has changed
so much since the 40's (even though our planes haven't) that it seems
worth reconsidering the fundamentals, not just trying to push ahead
with the same old thing. The need for a monopoloy is not a given.

-Dave

"Jay Honeck" wrote in message
news:Srpce.26243$c24.22849@attbi_s72...
If I thought they would truly privatize ATC, I'd be for it. It would be
wonderful to truly take advantage of modern technology in a way that only
private business can roll out and employ.

However, you *know* what would happen. It would be "privatized" in the
same way that Chicago Tollways are "privatized", and become nothing but
sink-holes for graft and kickbacks.

Or, worse, it would be "privatized" like the Postal Service, or
Medicare --
both of which exist in a half-private/half-public netherworld that seems
to
combine the worst of both worlds...

Think: Amtrak

On Fri, 29 Apr 2005 12:07:14 GMT, "Jay Honeck"
wrote in
Srpce.26243$c24.22849@attbi_s72::

However, you *know* what would happen. It would be "privatized" in the
same way that Chicago Tollways are "privatized", and become nothing but
sink-holes for graft and kickbacks.

Or in the same way that energy was privatized in California:
http://www.westmarinalliance.org/glo...rgy_crisis.htm

Deregulation and Privatization of Public Services under FTAA

California’s energy crisis is quickly becoming old news. The
mainstream press is saturated with reports of exorbitant rates and
rolling blackouts that have plagued the state in the years since
its ill-fated move to deregulate and privatize utilities. Hardly a
soul in Sacramento these days would dare subscribe to the notion
that deregulation has been good for the California economy.
Thousands of utility workers have been laid off, union contracts
have been steadily eroded, the health and safety of low-income,
elderly and sick Californians – all of whom suffer the most
because of blackouts and rate hikes – has been put at risk. And
yet further deregulation and privatization of essential public
services is exactly what the federal government has in store for
us under the proposed Free Trade Area of the Americas (FTAA). ...


Can you say Enron? :-(

Here's the latest AOPA information on this issue:


AOPA DEFENDS MEMBERS' INTERESTS AT FAA FUNDING FORUM

There should be no doubt in the aviation community about where
AOPA members stand on user fees—no, no, and NO! That was the
clear message that AOPA leaders delivered at the high-level FAA
funding forum in Washington, D.C., Monday and Tuesday. Because tax
revenues are declining while the FAA's costs are increasing,
transportation officials have called for an overhaul of the FAA's
funding mechanisms when Congress reauthorizes the aviation trust
fund in 2007. And while the prevailing opinion at the forum seemed
to be that user fees were the "solution" to the FAA's
budget woes, AOPA President Phil Boyer said, "The FAA must
get its costs under control first." AOPA called on the FAA to
request recommendations from the industry on cost reductions,
noting that the association had stepped up to the plate by
supporting the FAA's efforts to find more efficient ways to
provide flight service information and its plans to decommission
underused NDB approaches. See
http://www.aopa.org/whatsnew/newsite...26funding.html


USER FEES GET COLD SHOULDER IN HOUSE SUBCOMMITTEE HEARING

Some of the first salvos in the latest user-fee battle were fired
last week in a House aviation subcommittee hearing room. The
committee called officials from the Government Accountability
Office (GAO) and the privatized air traffic control systems of
Canada and Germany. But so far there seems to be little support on
this committee for going down the same path in the United States.
On a cost-per-operation basis, most of the supposedly more
"efficient" privatized systems cost a lot more than the
FAA's government-run, tax-supported air traffic control system. As
it turns out, the average controller in the United States handles
about 3,500 IFR operations each year at a cost of $172 each. By
comparison, in Germany the average controller handles only 490
operations at a cost of $390 each. See
http://www.aopa.org/whatsnew/newsite...50426fees.html

Yet more smoke on the ATC User Fees issue:


-------------------------------------------------------------------
AVflash Volume 11, Number 18a -- May 2, 2005
-------------------------------------------------------------------

THE FUTURE OF FAA FUNDING...
You never get a bill for it, and there's no entry for it on your books
or your tax form, but that doesn't mean access to the National
Airspace System is free. And just how (perhaps more important, who's)
to pay for the increasingly expensive system was the subject of
invitation-only meetings between FAA officials and aviation industry
representatives last Monday and Tuesday. Nothing was resolved, but FAA
spokesman Greg Martin told AVweb aviation is changing and the FAA must
adapt its method of doing business to meet forecast increases in
traffic -- while revenues decrease. "To suggest that the status quo
remain in place is appallingly naive," Martin said in an exclusive
interview with AVweb. "It just doesn't add up." The FAA maintains that
a number of divergent factors have precipitated the current funding
situation.
http://www.avweb.com/eletter/archive...ll.html#189670

....WHO WILL PAY...
And it now appears the initial softening-up period on the potential
for user fees is over. The term was, until recently, banished from the
FAA lexicon, but the volatile verbiage is now clearly on the table.
"Some groups have some very strong views when terms like 'user fees'
are used," Martin acknowledged. At the same time, he insists they are
not a foregone conclusion. "I don't think there's any predetermined
direction to go in this," he added. But he did say the intention is to
dissolve the Trust Fund at the end of the current budget-allocation
period in 2007, and that the new system that replaces it will need
more revenue. "There is no revenue [now] for the FAA that matches up
with what it costs," he said. And, as he predicted, the U-word
provoked a voluble response.
http://www.avweb.com/eletter/archive...ll.html#189671

....FEES CAN BE COSTLY TOO...
While some of the attendees, Boyer included, came away with the
impression that user fees are the favored option, the National
Business Aviation Association's position is that the current system of
fuel taxes is perhaps the most fair. "There's no simpler and more
accurate way to distinguish between heavy and light users of the
system than to measure the amount of fuel burned," President Ed Bolen
said. He also noted that the introduction of user fees would require
establishment of another bureaucracy to administer, bill and collect
the money. He claimed it cost some user-fee-based agencies in Europe
up to $125 to process each transaction. And while opinions varied on
revenue creation, there was virtual unanimity on the need for the FAA
to get control of spending.
http://www.avweb.com/eletter/archive...ll.html#189672

....CRISIS, WHAT CRISIS?
The National Air Traffic Controllers Association (NATCA) weighed in
with a 52-page analysis of not only the FAA's funding situation but a
comparison with the way other countries fund and manage their aviation
systems. NATCA's broad conclusion is that aviation affects virtually
all facets of modern life and should therefore be a shared burden. The
report, authored by NATCA Executive Vice President Ruth Marlin,
acknowledges that direct consumers of aviation activities (i.e.,
passengers and cargo customers) should pay a significant portion of
the FAA's costs but "they should not be required to fund the entire
cost as there is a portion of the costs that is clearly in the public
interest and therefore appropriately funded by the general treasury."
The FAA's Martin said it's a simplistic argument considering the other
pressures facing the government.
http://www.avweb.com/eletter/archive...ll.html#189673

I hope this isn't a 'divide and conquer scenario. First implement
user fees for airlines only, then once the fee structure is in place,
add GA to those paying user fees.




-------------------------------------------------------------------
AVflash Volume 11, Number 19a -- May 9, 2005
-------------------------------------------------------------------

USER-FEE AFTERMATH: OTHER OPTIONS EXPLORED...
Following last week's hearing on the state of the Aviation Trust Fund,
members of the House Aviation Subcommittee didn't seem very convinced
that user fees would be the answer to the FAA's funding woes.
"Switching to a user-fee system raises more questions than answers,"
according to ranking committee member Jerry Costello (D-Ill.). Other
financing alternatives discussed at the hearing included increasing
the current aviation taxes, fixing the annual contribution from the
General Fund, and providing the FAA with borrowing authority. Ken
Mead, inspector general for the Transportation Department, testified,
"The Congress and the aviation community need assurances that [the]
FAA is doing all it can to control costs before decisions can be made
about the adequacy of current funding levels and whether or not
additional revenue is needed."
http://www.avweb.com/eletter/archive...ll.html#189713

....AS REASON PREVAILS
Meanwhile, the Reason Public Policy Institute, a libertarian think
tank that has proven influential in some D.C. circles in recent years,
released a report* last week on the issue of funding the nation's air
traffic control system. The institute has long been a supporter of
user fees, but now has backed down somewhat on the argument as it
pertains to GA. The new report recommends that piston-powered GA
aircraft pay only the aviation fuel tax, and no user fees at all. "We
think [the report] still misses the point," said AOPA President Phil
Boyer. "GA shouldn't be charged for a system we don't need and for the
most part don't use."
http://www.avweb.com/eletter/archive...ll.html#189714




* http://www.rppi.org/ps332.pdf
R e a s o n F o u n d a t i o n
Resolving the Crisis in Air Traffic Control Funding
By Vaughn Cordle and Robert W. Poole, Jr.

Executive Summary
The air traffic control system is faced with a major funding crisis,
which puts at risk ambitious plans to double or triple the system’s
capacity over the next 20 years. Just over a year after the start-up
of the reorganized Air Traffic Organization (ATO), its ability to
modernize the system is seriously threatened.

The immediate cause of this crisis is dramatic reductions in average
airline fares, brought about by the lowcost-carrier (LCC) revolution
of the past five years. Intensified competition from LCCs has forced
large reductions in most airfares. But since the major funding source
for the ATO is a 7.5 percent tax on the price of airline tickets, the
ATO’s projected revenue over the next 5, 10, and 20 years is many
billions less than expected and needed. And in the current airline
financial climate, increasing taxes on this beleaguered
industry is simply not an option.

Therefore, it is time to rethink the way we pay for air traffic
control. It turns out the United States is the last remaining
developed country to use a ticket tax for this purpose. Nearly all
other countries follow the guidelines of the International Civil
Aviation Organization (to which the United States is a signatory) and
charge aviation users directly for air traffic services. Indeed, the
1997 Mineta Commission report, which led to the creation of the ATO,
strongly recommended that funding for the new ATO be based on payments
for air traffic services, paid directly by aviation users to the ATO.
The Mineta Commission pointed out that in addition to creating a
stronger customer/provider relationship, such direct user payments
would constitute a bondable revenue stream. That would permit funding
air traffic control modernization by issuing long-term revenue bonds,
rather than via annual appropriations.

This study recommends that Congress make the ATO a self-supporting
unit of the FAA, by authorizing it to charge aviation users directly
for its services. The ATO would also be authorized to raise money for
capital spending (modernization) by issuing long-term revenue bonds in
the capital markets. The FAA’s safety regulation and miscellaneous
other functions would still be supported, as they are now, by $2
billion per year of general fund monies. And the airport grants
program (AIP) would be supported by a modest tax on airline
tickets and cargo waybills (in the vicinity of 1 percent).

The transition period to bond-funding of modernization would produce
net savings to airlines of hundreds of millions of dollars per year,
especially in the early years. At the same time, modernization would
be accelerated, thanks to the ability to raise large amounts up front
to finance capital expenditures for which there was a demonstrated
business case. Modernization plans would first have to be approved by
a new ATO Board, consisting largely of aviation stakeholders. This
Board would also determine the structure of the new charges for air
traffic control services.

We recommend that only that small segment of general aviation which
makes extensive use of air traffic control services—jets and
turboprops—pay fees under the new system and be represented on the
stakeholder board. The large majority of piston-powered general
aviation would continue to pay the aviation fuel tax, which would help
to support the airport grants program. And we consider the Flight
Service Station program used by general aviation to be basically a
safety function, which should be paid for out of FAA’s safety
budget; in no cases should there be user fees for those services.
There is a real window of opportunity for reforming the way we pay for
air traffic control:

... The funding crunch urgently needs addressing, before serious harm
occurs thanks to the aging and deteriorating ATC infrastructure.

... The new ATO needs the basic tools the Mineta Commission
recommended, especially a dependable, bondable revenue stream that is
not constrained by federal budget problems.

... New technology, combined with the impending retirement of more than
half the controller workforce, offers a one-time opportunity to change
the way air traffic is managed, permitting a huge increase in capacity
without increasing the workforce.

... The ATO will soon have in place the cost-accounting system, which
is a precondition for developing cost-based charges for its services.

... The current aviation taxes sunset in FY 2007, making their
replacement an urgent topic for debate this year.

We are proposing a dramatic change, but it’s no less dramatic than the
change Congress authorized 20 years ago for the Washington, D.C.
airports. Like the ATO, Dulles and National airports were then part of
the FAA’s appropriated budget. They were unable to modernize, and they
were not directly responsive to what their customers wanted. Congress
had the wisdom in 1986 to permit those two airports to become
selffunding entities, outside the federal budget structure (though
still owned by the federal government).

Thanks to developing their own bondable revenue base, the airports
embarked on dramatic modernization programs to better serve their
customers. No one today would go back to the old model for these
airports.

What Congress did for the Washington, D.C. airports in 1986 it can and
should do for the Air Traffic Organization in 2005 or 2006.

....






On Wed, 04 May 2005 02:32:05 GMT, Larry Dighera
wrote in ::


Yet more smoke on the ATC User Fees issue:


-------------------------------------------------------------------
AVflash Volume 11, Number 18a -- May 2, 2005
-------------------------------------------------------------------

THE FUTURE OF FAA FUNDING...
You never get a bill for it, and there's no entry for it on your books
or your tax form, but that doesn't mean access to the National
Airspace System is free. And just how (perhaps more important, who's)
to pay for the increasingly expensive system was the subject of
invitation-only meetings between FAA officials and aviation industry
representatives last Monday and Tuesday. Nothing was resolved, but FAA
spokesman Greg Martin told AVweb aviation is changing and the FAA must
adapt its method of doing business to meet forecast increases in
traffic -- while revenues decrease. "To suggest that the status quo
remain in place is appallingly naive," Martin said in an exclusive
interview with AVweb. "It just doesn't add up." The FAA maintains that
a number of divergent factors have precipitated the current funding
situation.
http://www.avweb.com/eletter/archive...ll.html#189670

...WHO WILL PAY...
And it now appears the initial softening-up period on the potential
for user fees is over. The term was, until recently, banished from the
FAA lexicon, but the volatile verbiage is now clearly on the table.
"Some groups have some very strong views when terms like 'user fees'
are used," Martin acknowledged. At the same time, he insists they are
not a foregone conclusion. "I don't think there's any predetermined
direction to go in this," he added. But he did say the intention is to
dissolve the Trust Fund at the end of the current budget-allocation
period in 2007, and that the new system that replaces it will need
more revenue. "There is no revenue [now] for the FAA that matches up
with what it costs," he said. And, as he predicted, the U-word
provoked a voluble response.
http://www.avweb.com/eletter/archive...ll.html#189671

...FEES CAN BE COSTLY TOO...
While some of the attendees, Boyer included, came away with the
impression that user fees are the favored option, the National
Business Aviation Association's position is that the current system of
fuel taxes is perhaps the most fair. "There's no simpler and more
accurate way to distinguish between heavy and light users of the
system than to measure the amount of fuel burned," President Ed Bolen
said. He also noted that the introduction of user fees would require
establishment of another bureaucracy to administer, bill and collect
the money. He claimed it cost some user-fee-based agencies in Europe
up to $125 to process each transaction. And while opinions varied on
revenue creation, there was virtual unanimity on the need for the FAA
to get control of spending.
http://www.avweb.com/eletter/archive...ll.html#189672

...CRISIS, WHAT CRISIS?
The National Air Traffic Controllers Association (NATCA) weighed in
with a 52-page analysis of not only the FAA's funding situation but a
comparison with the way other countries fund and manage their aviation
systems. NATCA's broad conclusion is that aviation affects virtually
all facets of modern life and should therefore be a shared burden. The
report, authored by NATCA Executive Vice President Ruth Marlin,
acknowledges that direct consumers of aviation activities (i.e.,
passengers and cargo customers) should pay a significant portion of
the FAA's costs but "they should not be required to fund the entire
cost as there is a portion of the costs that is clearly in the public
interest and therefore appropriately funded by the general treasury."
The FAA's Martin said it's a simplistic argument considering the other
pressures facing the government.
http://www.avweb.com/eletter/archive...ll.html#189673

Larry Dighera wrote:
I hope this isn't a 'divide and conquer scenario. First implement
user fees for airlines only, then once the fee structure is in place,
add GA to those paying user fees.

Do you seriously think there's any doubt that will happen? Of course it's divide
and conquer. The airlines are harping now (with very little real ammunition)
that GA isn't paying its way and they are. Once this goes in, they will be able
to "prove" that's true with very little (if any) slanting.

The airlines will use this exemption to argue that GA should be excluded from
"their" airports, and some politicians will be able to make political hay by
"correcting" this "inequity." From what I know about people in New Jersey, there
will be a strong public outcry to quit using "their" tax money to support those
"rich" people flying all those "noisy little airplanes."

We'll wind up being banned from major airports *and* have to pay user fees on
top of that.

George Patterson
There's plenty of room for all of God's creatures. Right next to the
mashed potatoes.

On Mon, 09 May 2005 18:45:26 GMT, George Patterson
wrote in adOfe.6049$EC6.1415@trndny06::

Larry Dighera wrote:
I hope this isn't a 'divide and conquer scenario. First implement
user fees for airlines only, then once the fee structure is in place,
add GA to those paying user fees.

Do you seriously think there's any doubt that will happen?

If the FAA revenue source if tied to fuel purchases, it will be more
difficult for airlines to squeeze GA out.

Of course it's divide
and conquer. The airlines are harping now (with very little real ammunition)
that GA isn't paying its way and they are. Once this goes in, they will be able
to "prove" that's true with very little (if any) slanting.

The 200% to 300% expansion in air traffic expected in the next decade
or two will not be a result of GA growth, and it shouldn't be funded
by additional taxes on GA.

The airlines will use this exemption to argue that GA should be excluded from
"their" airports, and some politicians will be able to make political hay by
"correcting" this "inequity." From what I know about people in New Jersey, there
will be a strong public outcry to quit using "their" tax money to support those
"rich" people flying all those "noisy little airplanes."

That's why, if ATC privatization should take place, there should not
be an exemption for GA; the revenue to fund ATC should be tied to fuel
sales so that those who use it the most and demand its expansion are
paying for it.

We'll wind up being banned from major airports *and* have to pay user fees on
top of that.

With the landing fees currently in effect at many large metro'
airports, GA is already effectively banned from their use.

In article ,
Larry Dighera wrote:

I hope this isn't a 'divide and conquer scenario. First implement
user fees for airlines only, then once the fee structure is in place,
add GA to those paying user fees.


And then, shift more of the burden onto GA in order to kill it, which I
suspect the airlines would just love.

I am a huge free market capitalist supporter, but the free market only
works when the market is free. Since the FAA will have a monopoly,
there will be little advantage for accountability and efficiency, and
potentially huge costs to those with the political short stick--which is
GA.

The trend toward user fees also needs to be accompanied by a reduction
in costs (won't happen if there's no competition) and a reduction or
elimination of the taxes currently levied to fund the FAA. The ability
of the FAA to operate with multiple revenue sources (taxes and user
fees) is nothing but a gravy train that demotes cost accountability even
further.



JKG

On Mon, 09 May 2005 14:54:49 -0400, Jonathan Goodish
wrote in
::

In article ,
Larry Dighera wrote:

I hope this isn't a 'divide and conquer scenario. First implement
user fees for airlines only, then once the fee structure is in place,
add GA to those paying user fees.

And then, shift more of the burden onto GA in order to kill it, which I
suspect the airlines would just love.

That's why I support keeping the source of FAA revenue tied to fuel
receipts. Those who burn the most fuel pay the most. There was 58
times more jet fuel than avgas sold last year.

I am a huge free market capitalist supporter, but the free market only
works when the market is free. Since the FAA will have a monopoly,
there will be little advantage for accountability and efficiency, and
potentially huge costs to those with the political short stick--which is
GA.

It's worse than that. Boeing has an ATC division that would love to
get the privatized ATC contract. Given Boeing's airline customer
base, that would be like putting the fox in charge of the hen house.

The trend toward user fees also needs to be accompanied by a reduction
in costs (won't happen if there's no competition) and a reduction or
elimination of the taxes currently levied to fund the FAA. The ability
of the FAA to operate with multiple revenue sources (taxes and user
fees) is nothing but a gravy train that demotes cost accountability even
further.

The National Airspace System, being a nationwide resource, should be
government operated. For the government to abdicate responsibility
for our skies to corporate interests is irresponsible. But the
Republicans have no more qualms about handouts to big business than
they have permitting oil drilling, logging, and mining in 1/3 of our
national forests as occurred last week.