Subsidies

Whos subsidizing whom? For months, the airlines and their trade association have been telling anyone who listens that airline passengers are subsidizing corporate jets and other non-scheduled air transportation system users. In-flight magazines, e-mail to frequent fliers and the odd editorial found in compliant newspapers, among other outlets, have been used to distribute this message.

Joseph E. (Jeb) Burnside

Wednesday, August 22, 2007 at 12:00 AM ET

Verified

Key Takeaways:

The article challenges airlines' claims of being subsidized by corporate jets, arguing that airlines actually receive substantial federal subsidies (e.g., $15 billion post-9/11 grants) and pay minimal fees for using the air transportation system, with passengers bearing most of the tax burden.
It criticizes current airline financial advantages, such as deductible jet fuel taxes, and advocates for the House's FAA reauthorization bill (H.R. 2881) over the Senate's (S. 1300), which proposes new per-flight user fees for turbine aircraft.
The FAA is transitioning to an all-electronic distribution system for Airworthiness Directives (ADs) and Special Airworthiness Information Bulletins (SAIBs), requiring aircraft owners to register an email address to receive these previously mailed safety documents.

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But omitted from the message is the amount of federal largesse handed out to the airlines over the years. For example, theres the $15 billion in direct grants and loan guarantees Uncle Sugar gleefully gave airlines in the days following September 11, 2001s terrorist attacks. As of earlier this year, only some $130 million have been paid back by airlines receiving guarantees.

Further, the airlines actually pay almost nothing to use the nations air transportation system, which is designed to meet their needs. Under present law, an excise tax of 4.3 a gallon is levied on jet fuel used “in commercial aviation,” but that amount is deductible by the airlines. The airline

passenger pays a 7.5 percent tax on their tickets price, plus any applicable segment fees, but the carriers themselves pay nothing. In addition to the federal governments massive and ongoing investment in ATC, navaids and pavement, the airports they serve incur massive costs. Each airport sets its own landing and gate-lease fees; however, these are not taxes levied by the federal government. Of course, GA operators pay landing fees, too.

Even though the airlines have a pretty sweet deal-an entire government bureaucracy and a well-funded program enabling them to do business-they want you and me to pay more through higher fuel taxes and per-flight user fees.

About the time you read this, Congress will be making final decisions on fuel taxes and user fees. At issue will be the Senates version of FAA reauthorizing legislation, known as S. 1300. This measure contains a $25, per-flight fee on turbine-powered aircraft. Far preferable is the House version, H.R. 2881, which lacks the Senates user fee. Now is a good time to let your Congress-critters know how you feel. You might not get another chance.

Going Digital

According to contributor Tom Turner, the FAAs Airworthiness Directives (ADs) and Special Airworthiness Information Bulletins (SAIBs) are going all-electronic. “Starting as early as September,” Tom writes, “the FAA will no longer mail ADs and SAIBs to registered aircraft owners or persons who subscribe to FAA AD/SAIB mailings. You must register an e-mail address with the FAA to receive these vital safety documents.”

Previously, the FAA would distribute ADs and SAIBs to the address on record for owners of registered aircraft free of charge and without being asked. Now, owners must opt in.

While relatively painless-and still free, for now-owners must ensure they choose the aircraft, engine and propeller models in which theyre interested. The Web site to visit is the agencys Regulatory and Guidance Library, found at

rgl.faa.gov. Click the link, “Subscribe to ADs and SAIBs.”

– Jeb Burnside