AAAE: FAA shutdown: $125 million and counting in lost funds for aviation system upgrades

The Department of Transportation (DOT) estimates that $200 million a week in tax revenue that would otherwise flow to the Airport and Airway Trust Fund will be lost as a result of the inability of Congress to provide the FAA with taxing and program authority.

"The shutdown of FAA taxes and programs is having a real and well-documented impact on airports and the entire aviation system," AAAE President Chip Barclay said. "And, the potential permanent loss of an estimated $200 million a week in tax revenue that would otherwise fund critical aviation system upgrades threatens to make the already bad situation even worse. Given the very serious infrastructure needs at airports, in air traffic control and throughout the aviation system, we can't afford to have hundreds of millions of dollars diverted from its intended purpose."

AAAE, in a recent letter (.pdf) to key legislative leaders, has called on Congress to quickly pass a multi-year FAA reauthorization bill or a short-term extension that includes $3.515 billion in Airport Improvement Program (AIP) program authority -- the same amount that lawmakers approved as part of a budget agreement earlier this year. Additionally, the association has called for Congress to ensure that airlines -- most of which have raised fares to correspond with the amount they previously collected from expired aviation taxes -- eventually reimburse the federal government for foregone tax revenue to ensure adequate funding is available for critical airport and aviation system upgrades.

Notably, Senators Jay Rockefeller (D-W.Va.) and Maria Cantwell (D-Wash.) -- the respective chairs of the Senate Commerce Committee and Senate Aviation Operations, Safety, and Security Subcommittee -- have written a letter (.pdf) to the Air Transport Association urging the nation's airlines to "put all of the profits that they are making from the lapse of the aviation taxes into an escrow account so that they can be transferred back into the Airport and Airway Trust Fund when Congress reinstates the taxes."

Even before the current lapse in excise taxes, airline actions have resulted in a shortchanging of the Airport and Airway Trust Fund, AAAE noted. DOT recently reported that airlines collected $8.1 billion in ancillary fees in 2010. The airlines collected more than $3.4 billion in baggage fees alone, which are not subject to the 7.5 percent ticket tax. According to the Government Accountability Office, not subjecting the bags fees to the same tax cost the Trust Fund approximately $250 million in foregone revenue last year.

At the same time, the airlines inexplicably continue to resist airport calls to raise the cap on local Passenger Facility Charges. One carrier alone collected approximately $1.7 billion in baggage fees and reservation change fees in 2010 -- more than the entire airport community would have collected in additional revenue in the past year if Congress would have raised the PFC cap to just $7. Unlike revenue from bag fees, which go toward the airlines' bottom line, airports use local PFC revenue to build critical infrastructure projects and create jobs.

"Airport executives are absolutely committed to developing the infrastructure necessary to serve the needs of the communities they serve and the nation as a whole," Barclay said. "Congress can and must help in that regard by providing certainty, local flexibility, and continued user-funded federal support."