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Study: Business Jets Should Reconsider Air Traffic Control User Fees

Some user fee scenarios would reduce costs for many business jet operations, pave way for massive capacity improvements

July 28, 2006

Los Angeles (July 28, 2006) — The major airlines and business jet groups are locked in a ferocious lobbying battle over the future of air traffic control fees. Up to this point, all the general aviation trade groups have stood together against any shift toward user fees. However, a new report finds that business jet operators should seriously rethink their opposition to user fees because of potential cost-savings and network improvements.

Charter and fractional business jet operators would pay one-third less than the aviation taxes they currently pay if air traffic control shifted to a user fee system based on a weight-distance formula like that of NavCanada, according to a new Reason Foundation analysis.

The Reason Foundation study finds that fractionals and charters pay four to five times as much as corporate-owned jets for identical services in today's system. Thus, the identical plane can pay three greatly different amounts for the same air traffic control services, depending on who owns it.

"Many trade groups have taken positions against any consideration of user fees. But that opposition doesn't reflect the possible direct cost savings to many operators in shifting from taxes to fees. And it doesn't reflect the long-term gains all operators would reap from an improved air traffic system with double or triple today's capacity," said Robert Poole, author of the study and director of transportation at Reason Foundation. "The business jet community should support fundamental reform and modernization of the air traffic control system in order to prevent its imminent breakdown and to permit the timely doubling of capacity that they need as much as the airlines."

Even corporate-owned business jets that today pay the least would break even (today's taxes vs. a user fee structure like NavCanada) if the new user fee structure brings about a modernized air traffic control network that saves at least 3 to 5 percent of annual flight hours by reducing delays, a very realistic goal according to the report.

"Politics have long clouded the FAA's modernization efforts," stated Poole, who has advised the last four presidential administrations. "This study shows that some forms of user fees would significantly benefit the business jet community, and the benefits of an upgraded network could offset any increase in costs for most business operators."

The Reason study compared current aviation taxes with several hypothetical air traffic control user fee scenarios for 15 commonly used business jets, ranging from the Boeing BBJ (a converted 737) to the Eclipse 500.

Congress is set to reexamine the air traffic control system's funding structure next year. Marion Blakey, the FAA Administrator, and Norman Mineta, former Secretary of Transportation, have both called for a shift towards a user-fee funded system. Federal government reports predict the growing number of planes will overwhelm the air traffic system over the next decade. If the shift to a $20 billion next-generation air traffic control system is not made in a timely fashion, and currently there is no revenue stream to pay for that investment, the system will likely be forced to ration airspace. As a result, families would pay dramatically higher airline ticket prices and the burgeoning business aviation industry would be hit hard by rising costs and reduced access to runways and airspace.

"Business aviation has become a vital business tool and part of our economy," Poole declared. "Business leaders should look at user fees as the means, not the end. If they don�t embrace serious reforms, the alternative is rationed airspace that could cripple much of the aviation industry, including their own groups."

The report is Reason Foundation's latest call for the commercialization of the air traffic system. Poole's 2001 report, How to Commercialize Air Traffic Control (http://www.reason.org/ps278.pdf), was widely supported by aviation experts, including three former FAA Administrators.

Full Report Online

The full study, Business Jets and ATC User Fees: Taking a Closer Look, is available online at http://www.reason.org/ps347_business_jets_atc.pdf. A compilation of Reason's air traffic control research and commentary is available at http://www.reason.org/airtraffic/index.shtml.

About Reason

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason produces respected public policy research on a variety of issues and publishes the critically acclaimed monthly magazine, Reason. For more information, please visit www.reason.org.

Contacts

Robert Poole, Director of Transportation, Reason Foundation, (310) 292-2386
Chris Mitchell, Director of Media Relations, Reason Foundation, (310) 367-6109



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