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Posted at 11:01 AM ET, 02/ 7/2011

FAA fund declines; fees could result

By Luke Rosiak

The Federal Aviation Administration's primary source of funds is drawing down unsustainably, according to a Government Accountability Office report released today. Increased fees on flyers are among the possible results.

Over the last decade, FAA expenditures increased 60 percent, but contributions from its primary funding source, the Airport and Airways Trust Fund, rose only 12 percent.

"The Trust Fund's uncommitted balance, which exceeded $7.3 billion at the end of fiscal year 2001, dropped to $299 million at the end of fiscal year 2009--the lowest balance over the past decade," the report said. The balance declined every single year during that timeframe.

A reduction in air travel due to the 2001 terrorist attacks and the recent poor economy are among the reasons for decreased revenue. "During the recent recession, Trust Fund
revenues declined from $12.4 billion in fiscal year 2008 to $10.9 billion in fiscal year 2009, in part because of the 7 percent decline in domestic passenger traffic during that period," the report said.

The trust fund receives money primarily from excise taxes and fees paid by airline customers and by purchases of aviation fuel from passenger and cargo airlines. It pays for facilities and equipment, including the air traffic control system; research and development on safety and mobility; and the airport improvement fund.

The availability of funding for airport facilities is important in part because of the FAA's new NextGen technology, which uses satellites instead of radar to track planes more precisely, the report notes. That will enable controllers to guide more planes through congested routes, as the Post's Ashley Halsey III wrote last week--but only if the runways can accommodate those planes, too.

The report warns that trust fund revenues in the future will be lower than they have been, and that Congress must be careful not to over-commit funds. Over the next six years, the feds are projecting about $25 billion less for the fund than they thought they'd see four years ago. And 9 out of 11 of the past years, beginning-of-the-year estimations over-projected income, causing too much money to be budgeted. In total, revenue over that period was overestimated by $9 billion.

One option would be to increase revenue by ramping up taxes or increasing surcharges on flyers.

"For example, we suggested that if Congress determines that the benefit of added revenue to the Trust Fund warrants taxation of optional airline service fees, such as baggage fees, then it should consider amending the Internal Revenue Code to make mandatory the taxation of certain or all airline-imposed fees and require that the
revenue be deposited in the Trust Fund," the GAO said.

By Luke Rosiak  | February 7, 2011; 11:01 AM ET
Categories:  Airlines, Airports, Transportation Politics  
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At long last!

Posted by: ceefer66 | February 7, 2011 2:46 PM | Report abuse

Funny that the biggest part of the budget is considered cast in stone. We as a nation need to reduce the federal workforce and its entitlements. NextGen will allow a reduction in the number of air traffic controllers because of automation and allowing flight crews to control their own separation. This primary advantage of NextGen is being legislated away however and the special interests seem destined to keep the high costs in place.
Also, airlines are being allowed to add surcharges to their customers, but those surcharges are not taxed like the actual ticket is. As Kelly Johnson used to say, simplicate, don’t complicate…

Posted by: Skyviewflier | February 8, 2011 2:12 PM | Report abuse

Let me see if I understand. Govt expenditures up 60% trust fund only up 12%.
Trust funds come from taxes and fees paid by airline customers and taxes on fuel sales. Recession root cause of tax loss. Tax current users more to generate income needed. Umm...I must be stupid. If I have less money I decrease my expenses and in turn pay less taxes. Suggest the govt live within its means before it closes up.

Posted by: FAAFundDeclines | February 8, 2011 2:53 PM | Report abuse

The Trust Fund is replenished thru ticket taxation and not thru surcharges like luggage etc. When you have so called discount airlines (like Spirit) that has a low ticket price and shifts the consumer's costs to luggage and other items, it's the airlines that reap the additional income since they are non-taxable. Hence, the Trust Fund loses out on income and the ability to fund improvements to air safety by way of AIP grants, improvements to the ATC infrastructure etc is lost as well. In a sense, it's a pay me now or pay me later (at higher costs) situation for all consumers/taxpayers due to the pricing structure of some airlines.

This taxation loophole needs closure. Consumers will benefit thru knowing the true cost of their transportation

Posted by: scll52 | February 8, 2011 3:31 PM | Report abuse

Two things you failed to mention in this article.
#1 The current administration has increased I forget how many on the dole at the FAA that their salary has increased to over $175,000. per year. I think the first year of Nobama was about 1000 people at FAA got a BIG increase. So much for a blown budget.

#2 Regardless of how you feel about gun control. The loony elected officials has no reason to bury gun control legislation in a FAA funding bill.

#3 I lied. I resent AOPA and alphabet groups for whitewashing the FAA. I see you as just another bunch of lobbyist

Posted by: Ravvi-Oli | February 8, 2011 4:28 PM | Report abuse

Maybe if the FAA didn't blow all that money on unnecessary security measures, they wouldn't be "precariously low" on funds. If I spent all my money on a fence around the yard, this summer then I wouldn’t be able to heat my house this winter. Unlike the FAA i can't go steal more money from my neighbor to make up the difference.
We don't need million dollar fences at tiny airfields like 76N Skyhaven in Rochester NH. We need funds to go to airfields like Jaffrey (AFN) New Hampshire to do REAL safety things like fix the runway lights. The FAA has Champaign taste on a Budweiser budget. I'm afraid the FAA is bankrupting the small airfields of America. And wake up you big air carriers, in another 10-15 years, you’re not going to have the pilots you need to keep the planes in the air since A) there are no more airfields or flight schools to train them, B) only stupid 20 year olds would pay $100,000 in flight training fees to get a job that pays $35,000, C) the military is only going to pump out remote control operators from now on.
Unsustainable? I'd say. Stop spending money you don't have FAA!

Posted by: inbriggs | February 8, 2011 6:02 PM | Report abuse

The FAA can reduce its spending by immediately stopping the "task force" approach to attacking those who disagree with them. They spend millions on un-warranted investigations by irreputable offices who have misplaced their chartered purpose of improving aviation safety and instead destroying any and all who don't tremble at the mere presence of an FAA thug. Might as well raise the fees as the other option will never happen.

Posted by: flyinsafe | February 8, 2011 9:30 PM | Report abuse

Just looking at the numbers, because I obviously don't havve a clue about the politics, etc., but seems like an unbelievably incredible loss of the fund, even more than anyone would have expected due to the economic down turn. To me this suggests the fund is in serious jeopardy and warrants an immediate investigation after which realistic options could be put forward to turn this around. Something this serious, which threatens the future of almost all aspects of American aviation might even warrant a special task force to get timely results. 7.3 billion to slightly more than a quarter million? Did I misunderstand the article?

Posted by: johnmackenzie | February 9, 2011 8:52 PM | Report abuse

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