Corporate Jets Face Flight Fee in Obama Plan

President Barack Obama’s administration proposed a $100 per-flight fee on corporate jets and other turbine-powered planes that use the U.S. air-traffic system.

The fee would raise an estimated $11 billion over 10 years, according to the president’s recommendations to the 12-member congressional committee charged with finding ways to trim the deficit. The fee is aimed at private aircraft, which currently don’t pay their fair share of costs of operating the aviation system, the administration said today.

About two-thirds of the air-traffic system is paid for by aviation excise taxes, including levies on airline tickets and on fuel. Last year these taxes raised $10.8 billion, according to the Department of Transportation.

There is a disparity between what airlines and their passengers pay into the system and what users of private aircraft pay, the plan said.

An airline flight from Los Angeles to San Francisco would generate $1,300 to $2,000 in taxes, depending on the number of passengers and what they paid for tickets. A private jet, which requires almost the same services from air-traffic controllers, would pay about $60 in fuel taxes, the plan said.

“General aviation users currently pay a fuel tax, but this revenue does not cover their fair-share use of air traffic services,” the plan said.

Opposition Mounts

A coalition of nine U.S. associations representing users and manufacturers of corporate and private aircraft issued a joint statement “expressing our unified opposition” to the proposal.

“Mr. President, many foreign countries have imposed per flight charges on general aviation and the results have been devastating,” the e-mail statement said. “Please do not go down the dangerous path and cost jobs in our community.”

General-aviation pilots pay their fair share of fuel taxes and a new fee would create “a costly new federal collection bureaucracy,” the groups said.

The groups that issued the letter include the Washington- based General Aviation Manufacturers Association, whose members include General Dynamics Corp. (GD)’s Gulfstream and Textron Inc. (TXT)’s Cessna; the Washington-based National Business Aviation Association, with members including PepsiCo Inc. and Humana Inc. (HUM), the Aircraft Owners and Pilots Association, based in Frederick, Maryland, which has more than 400,000 individual members; and the Experimental Aircraft Association in Oshkosh, Wisconsin.

NetJets Reacts

Berkshire Hathaway Inc. (BRK/A)’s NetJets, the largest U.S. firm selling fractional shares of corporate jets, issued a statement from Chairman and Chief Executive Jordan Hansell agreeing with the trade groups. NetJets, based in Columbus, Ohio, has more than 7,000 customers worldwide.

A similar proposal introduced by President George W. Bush’s administration was defeated in Congress after opposition by the same groups.

That plan, which was introduced in 2007, was supported by the airline industry, which argued that corporate aircraft owners should pay a greater share. This time, the Air Transport Association, a Washington, D.C.-based group representing airlines including Delta Air Lines Inc. (DAL), has joined the opposition.

“We oppose any new taxes on airlines or their passengers,” ATA President Nicholas Calio said in a statement.

The Obama plan is aimed at pilots who fly under the supervision of air-traffic controllers.

Nearly all small private, piston-powered planes wouldn’t have to pay the fee, the proposal said. It would also exempt aircraft operated by the military or other government agencies, air ambulances and any flight that doesn’t require air-traffic guidance.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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