GAO REAFFIRMS CURRENT TAXES CAN FUND FAA'S NEXTGEN (response from Robert Poole)

Here is the response I received from Mr. Robert Poole of the Reason
Foundation (the chief proponent for ATC privatization, and user fees):


On Fri, 1 Jun 2007 17:56:21 -0400, "Bob Poole" wrote
021a01c7a497$b0e45740$8d01a8c0@IBM51B8A3EC99C:

Dear Larry,

There was nothing new in GAO's letter, which merely cited the CBO
projection of FAA revenue that it presented last fall, and which I
criticized in Issue 38 of ATC Reform News (October 2006). I actually
got in touch with the CBO people who worked on this, and they did a
very simple projection of aviation excise tax revenues, assuming they
grow slightly faster than inflation and expected GDP, based on
historic relations between air travel and economic growth.

That kind of projection ignores the changes going on in how the total
number of passengers is being flown--in smaller and smaller
average-size units, thanks to the continued substitution of
narrow-bodies for wide-bodies on long-haul routes, of RJs for
narrow-bodies on medium routes, and (still to come) of more
fractionals and VLJs for short-haul airliners on short routes.
ATC workload (and hence costs) goes up directly proportional to the
number of aircraft in the system; but revenue goes up proportional to
the number of passengers and average ticket prices. The former will go
up at a significantly faster rate than the latter. This is completely
ignored in the CBO projection.

GAO knows better than this; their own report (GAO-06-1114T) from the
same hearing last fall provided much detail on how FAA revenue is
diverging from ATC cost drivers. But GAO has not done a revenue
projection of their own, so they have only the CBO projection to rely
on. And unfortunately, the FAA has not done this type of projection
either; they also still rely on historical relationships.

Nonetheless, Blakey made a good point at a hearing earlier this year
that--yes, FAA can proceed with NextGen implementation steps if
Congress fails to give it an additional funding source (or better
still, to change the basis of its funding, as FAA proposed, to
directly track flight volume).

But we won't get it done as fast or as effectively as if we could bond
much of the capital cost and pay off the bonds from a predictable and
stable source of revenue.

Best wishes,
Bob Poole

-----Original Message-----
From: Larry Dighera ]
Sent: Friday, June 01, 2007 10:30 AM
To:
Subject: GAO REAFFIRMS CURRENT TAXES CAN FUND FAA'S NEXTGEN

Dear Sir:

Below you appear to assert that ATC privatization and the resulting
imposition of user fees is necessary for NextGen ATC implementation:

http://www.reason.org/inthenews.shtml
Aviation Week & Space Technology
Aug 21
Urgent Need For Consensus On ATC User Fees
By Robert Poole, Reason
The Joint Planning and Development Office (JPDO)--the multi-agency
organization that is trying to craft a 21st century aviation
system for the U.S.--has made a persuasive case that the current
air traffic control model of separating planes by hand is not
scalable. Hence, without changing to a network-centric model, we
will be unable to double or triple the system's capacity over the
next 20 years. And if we don't at least double capacity, aviation
faces a future of ever-increasing congestion and rationing. But it
strains credulity to think that the present funding and governance
structure for ATC can give us the proposed NextGen system in a
timely and affordable manner. Three major problems cry out for
solution:


However it seems your NextGen funding analysis is at odds with the
House Space and Aeronautics Subcommittee and GAO:

GAO REAFFIRMS CURRENT TAXES CAN FUND FAA'S NEXTGEN

In a letter (http://www.gao.gov/new.items/d07918r.pdf) sent
Tuesday to follow up on questions arising from a March 29 House
Space and Aeronautics Subcommittee hearing on NextGen, Government
Accountability Office Director of Physical Infrastructure Issues
Dr. Gerald Dillingham reiterated that "the current FAA funding
structure can provide sufficient funding for NextGen--with some
caveats." He said that the FAA itself has estimated that "if the
current taxes remain in effect at their current rates, revenues
will continue to increase." According to projections prepared by
the Congressional Budget Office (CBO), revenues obtained from the
existing FAA funding structure will increase substantially.
"Assuming the General Fund continues to provide about 19 percent
of FAA's budget, CBO estimates that through 2016 the Trust Fund
can support about $19 billion in additional spending over the
baseline FAA spending levels CBO has calculated for FAA provided
that most of the spending occurs after fiscal year 2010,"
Dillingham noted.
http://www.avweb.com/eletter/archive...ll.html#195310

Are you able to provide any insight into the apparent disagreement
between yourself and the GAO?

Thank you.

Best regards,
Larry Dighera

In article ,
Larry Dighera wrote:

That kind of projection ignores the changes going on in how the total
number of passengers is being flown--in smaller and smaller
average-size units, thanks to the continued substitution of
narrow-bodies for wide-bodies on long-haul routes, of RJs for
narrow-bodies on medium routes, and (still to come) of more
fractionals and VLJs for short-haul airliners on short routes.
ATC workload (and hence costs) goes up directly proportional to the
number of aircraft in the system; but revenue goes up proportional to
the number of passengers and average ticket prices. The former will go
up at a significantly faster rate than the latter. This is completely
ignored in the CBO projection.

So by their own admission, the airlines are contributing to the very
condtion they are complaining about, ie... smaller jets clogging the
system.
But of course, they are their jets flying their passengers.

I liked that line in the ATA cartoon where the DC-3 says, "...they're
hogging our skies!"

The ATA message is so inconsistant and contradictory, but of course, the
general public never hears the whole story.

The Rove Strategy:

Let's see, if we fail to attempt to meet the staffing requirements for
Air Traffic Control for a few years, it should cause delays for
airline travelers, then we can use that to leverage our user fee
based, privatized NextGen funding into law, give the contract to
Boeing, and fulfill Bush's debt to corporate America, and get rid of
those pesky little airplanes in the bargain. That's it. Flight
Service Station privatization is working as planned; if the trend
continues, soon Lockheed-Martin's failure to meet the needs of General
Aviation users will make it possible to just collect the funds without
providing anything. It's good for the nation. :-(


BLAKEY TURNS UP FUNDING RHETORIC

FAA Administrator Marion Blakey is painting a bleak picture of the
future of air travel if her controversial formula to fund the
agency isn't adopted. In a speech
(http://www.faa.gov/news/speeches/new...fm?newsId=8968)
delivered during the Joint Planning and Development Office (JPDO)
Day on the Hill late last week, Blakey told members of Congress
that air traffic gridlock is on the horizon and the high-tech
solution to the problem needs the funding that her user-pay-based
proposal would provide. "If we're unable to have a financing
reform bill in place by September 30, when the current set of
taxes expire, the delays and the missed connections and the
headlines are only going to get worse --
much worse," she said. "Without a reliable funding stream, the
NextGen program will start to slow down, and when the bow wave of
delays hits, it'll be too late." Others, including the Government
Accountability Office, have questioned that view. (Click here
(http://www.avweb.com/alm?podcast20070618) to listen to the Reason
Foundation's Robert Poole on why aviation user fees would be good
for airspace users.)
http://www.avweb.com/eletter/archive...ll.html#195424

On Sat, 02 Jun 2007 00:47:52 GMT, Larry Dighera
wrote in :

Here is the response I received from Mr. Robert Poole of the Reason
Foundation (the chief proponent for ATC privatization, and user fees):


On Fri, 1 Jun 2007 17:56:21 -0400, "Bob Poole" wrote
021a01c7a497$b0e45740$8d01a8c0@IBM51B8A3EC99C :

Dear Larry,

There was nothing new in GAO's letter, which merely cited the CBO
projection of FAA revenue that it presented last fall, and which I
criticized in Issue 38 of ATC Reform News (October 2006). I actually
got in touch with the CBO people who worked on this, and they did a
very simple projection of aviation excise tax revenues, assuming they
grow slightly faster than inflation and expected GDP, based on
historic relations between air travel and economic growth.

That kind of projection ignores the changes going on in how the total
number of passengers is being flown--in smaller and smaller
average-size units, thanks to the continued substitution of
narrow-bodies for wide-bodies on long-haul routes, of RJs for
narrow-bodies on medium routes, and (still to come) of more
fractionals and VLJs for short-haul airliners on short routes.
ATC workload (and hence costs) goes up directly proportional to the
number of aircraft in the system; but revenue goes up proportional to
the number of passengers and average ticket prices. The former will go
up at a significantly faster rate than the latter. This is completely
ignored in the CBO projection.

GAO knows better than this; their own report (GAO-06-1114T) from the
same hearing last fall provided much detail on how FAA revenue is
diverging from ATC cost drivers. But GAO has not done a revenue
projection of their own, so they have only the CBO projection to rely
on. And unfortunately, the FAA has not done this type of projection
either; they also still rely on historical relationships.

Nonetheless, Blakey made a good point at a hearing earlier this year
that--yes, FAA can proceed with NextGen implementation steps if
Congress fails to give it an additional funding source (or better
still, to change the basis of its funding, as FAA proposed, to
directly track flight volume).

But we won't get it done as fast or as effectively as if we could bond
much of the capital cost and pay off the bonds from a predictable and
stable source of revenue.

Best wishes,
Bob Poole

-----Original Message-----
From: Larry Dighera ]
Sent: Friday, June 01, 2007 10:30 AM
To:
Subject: GAO REAFFIRMS CURRENT TAXES CAN FUND FAA'S NEXTGEN

Dear Sir:

Below you appear to assert that ATC privatization and the resulting
imposition of user fees is necessary for NextGen ATC implementation:

http://www.reason.org/inthenews.shtml
Aviation Week & Space Technology
Aug 21
Urgent Need For Consensus On ATC User Fees
By Robert Poole, Reason
The Joint Planning and Development Office (JPDO)--the multi-agency
organization that is trying to craft a 21st century aviation
system for the U.S.--has made a persuasive case that the current
air traffic control model of separating planes by hand is not
scalable. Hence, without changing to a network-centric model, we
will be unable to double or triple the system's capacity over the
next 20 years. And if we don't at least double capacity, aviation
faces a future of ever-increasing congestion and rationing. But it
strains credulity to think that the present funding and governance
structure for ATC can give us the proposed NextGen system in a
timely and affordable manner. Three major problems cry out for
solution:


However it seems your NextGen funding analysis is at odds with the
House Space and Aeronautics Subcommittee and GAO:

GAO REAFFIRMS CURRENT TAXES CAN FUND FAA'S NEXTGEN

In a letter (http://www.gao.gov/new.items/d07918r.pdf) sent
Tuesday to follow up on questions arising from a March 29 House
Space and Aeronautics Subcommittee hearing on NextGen, Government
Accountability Office Director of Physical Infrastructure Issues
Dr. Gerald Dillingham reiterated that "the current FAA funding
structure can provide sufficient funding for NextGen--with some
caveats." He said that the FAA itself has estimated that "if the
current taxes remain in effect at their current rates, revenues
will continue to increase." According to projections prepared by
the Congressional Budget Office (CBO), revenues obtained from the
existing FAA funding structure will increase substantially.
"Assuming the General Fund continues to provide about 19 percent
of FAA's budget, CBO estimates that through 2016 the Trust Fund
can support about $19 billion in additional spending over the
baseline FAA spending levels CBO has calculated for FAA provided
that most of the spending occurs after fiscal year 2010,"
Dillingham noted.
http://www.avweb.com/eletter/archive...ll.html#195310

Are you able to provide any insight into the apparent disagreement
between yourself and the GAO?

Thank you.

Best regards,
Larry Dighera