A Bill to fund a long-awaited upgrade of the US air-traffic control system easily passed the House of Representatives on Thursday 20 September. But its taxation proposals look doomed. The White House has said it will veto the legislation if the bill''s tax structure is not amended when it is reconciled with the Senate''s version.
The House vote to authorise funding for the Federal Aviation Administration (FAA) till 2011 passed 267-151, with voting mostly on party lines. It will provide $68 billion for the agency that oversees US air traffic and regulates the country''s airlines.
Apart from providing the FAA''s operating budget, the legislation also finances a major upgrade to the nation''s present 1950s-era radar-based air traffic control system to one based on satellite-powered global positioning systems (GPS), which will cost $15 billion to $22 billion.
The House has proposed that the increased spending required would be partly financed by increasing the tax rate on aviation gasoline by 25 per cent, from 19.3 cents per gallon to 24.1 cents per gallon, and by 64 per cent, from 21.8 cents per gallon to almost 36 cents a gallon, for aviation-grade kerosene used in non-commercial aviation.
The bill also raises the fee that airports can charge passengers to a maximum of $7 a ticket from a $4.50, an increase that would go to expanding or improving airports, including projects to reduce noise.
It would require airlines and airports to have contingency plans to take care of passengers stuck in planes waiting at an airport for several hours. Excessive tarmac delays are part of a passenger''s bill of rights pushed by some legislators and consumer activists. The bill also includes a number of other changes, including raising the mandatory retirement age for commercial pilots from 60 to 65.
But the White House has threatened to veto FAA reauthorisation if the final legislation, after reconciliation with the Senate''s version, contains the same increased fees on airlines.
Before the House vote, the White House said the legislation fell "far short" of accommodating the reforms proposed by the Bush administration earlier in the year, including linking fees to fund the FAA with usage of the facilities the agency offers.
Aircraft operators should be taxed on how much use they make of the air traffic system, says the Air Transport Association (ATA), which represents commercial airlines, and has been heavily lobbying that aircraft pay for air traffic services on a ''per use'' basis.
Commercial airlines say they are paying much more than their fair share for the FAA''s operations. The ATA wants Congress to raise the tax rate on corporate jets. The association includes major carriers like American Airlines, United Airlines, Delta Air Lines, Northwest Airlines, Southwest Airlines and JetBlue Airways.
The House bill, says the ATA, does little to promote the next-generation navigation system or correct the subsidy of corporate jets by airline passengers, says the ATA. Instead, it imposes a $2.2 billion tax increase on passengers in the form of airport facilities charges.
The ATA says passenger-carrying commercial jets use 66 per cent of air traffic control services, but pay 92 per cent of the money that fund it. Corporate jets use about 16 per cent of services, but pay less than 8 per cent of the costs.
Meanwhile, JetBlue Airways has broken with the commercial airline industry on how the funding structure should be changed. It opposes the ATA''s FAA funding proposal.
CEO Dave Barger has sent letters to heads of pertinent committees in the House and Senate taking exception to two aspects of ATA''s proposal - the domestic distance tax and exemptions for the first 250 miles of a domestic flight.
JetBlue says the latter proposal means that hoping flights pay the same as direct flights, even though they use the ATC system more. Second, it exempts high-density short-distance routes like New York-Boston, Dallas-Houston and Miami-Orlando.
Meanwhile, the Aircraft Owners and Pilots Association, which represents more than 400,000 private aircraft owners and pilots, has come out strongly in favour of the House bill.
It is less enthusiastic about the Senate version, which would impose a surcharge of $25 per flight on owners or operators of passenger aircraft for air traffic control costs. The bill is still making its way to the Senate floor for a vote. General-aviation advocates say they worry about the precedent any user fees set.
Lawmakers have passed an extension to continue the current funding structure in case they don''t reach an agreement before funding runs out on 30 September. The bill has to go to a conference committee before it goes to the White House.
Meanwhile, the FAA has already started to award contracts for an upgrade of its antiquated air-traffic control system. In August, defense electronics-maker ITT, heading a team that includes phone giant AT&T and French communications specialist Thales, won a contract worth up $1.8 billion to build key technology for the satellite system.