Business aviation and the airlines could be reopening an old debate on how best to fund the as it attempts to build a $20 billion next generation air transportation system (NextGen) in the midst of potentially unstable government funding, in large part due to sequestration.
Leaders of both sectors, Ed Bolen for the National Business Aviation Association and Nick Calio for Airlines for America (formerly Air Transport Association), squared off at an industry event on June 27. But the debate is decidedly more civil than in past episodes between the two organizations.
“The fuel tax is really good for [the business aviation] industry,” said Bolen during a session on NextGen funding as part of a one-day event held by the Air Line Pilots Association (ALPA) and National Air Traffic Controllers Association (Natca). “That doesn’t mean it’s good for others.” He also acknowledged that “there are challenges” in figuring out how to use a fuel tax to fund an infrastructure program like NextGen.
In the heat of the user fees debate of 2007, Bolen was far more combative when discussing the topic with former Air Transportation Association head James May. Bolen’s position was that fuel taxes, paid at the pump, were the best way to collect fees from business and general aviation aircraft to help fund the FAA’s air traffic control system. May felt strongly that Bolen’s sector was not paying its share based on the limited number of passengers carried, and should be charged a new “user fee” for air traffic services rendered. Airlines pay fees through ticket taxes and other fees.
Bolen ultimately prevailed when bills to change the funding stream failed in Congress.
Calio did not specifically call for user fees during the ALPA/Natca symposium, but backed a new funding mechanism for the FAA, an agency he says took a disproportionate share of the Department of Transportation’s $637 million in sequestration cuts this year. “People say the FAA should run [NextGen] like a business, and they should,” he says. “To run something like a business you have to have a steady funding stream – you can’t have a start-stop-start-stop cycle.” One possible solution he discussed was going to private markets to fund NextGen, which would require a steady funding stream to pay the debt service.
“If the current system is broken you just don’t keep [using it], particularly with everything we know is coming – there’s going to be an increase in travel, there’s going to be more planes and foreign competition,” he says.
Bolen is not convinced the current system should be abandoned just yet.
“The belief around the country [is] that Washington is broken, that we need to blow it up and do something else,” he says. “As we begin to look forward to what we have and what the alternatives are, we ought to keep in mind that while we may have a lot of work to do and a lot of problems that need to be addressed, simply chucking the system and moving to something else may not necessarily be the answer.”
He says it is important to have the debate, but says “there’s a lot we need to be careful about.”
“There was a lot of talk when privatization was first mentioned in the 1980s and 1990s,” he says. “The idea was that we needed a stable and predictable funding system [because the existing mechanism] was not reliable, they said. The reality – if you go back and look at funding for the FAA over the past 15 years – what you will see is an almost unbroken line of increases. Increases despite the fact we had a technology bubble burst, terrorist attacks, and fought two wars.”
Bolen notes that the government’s General Fund contribution, which pays 25% of the FAA’s overall budget, is set at $4 billion this year and is expected to drop to $3.2 billion next year, based on the White House’s request. “Before we give up on the system, we ought to say, ‘Where’s that $4B going to come from?’” says Bolen. “I think we need to be careful that we look before we jump.”