Commentary: How To End The Free Ride At The Faa

For decades, user fees have been a cornerstone of conservative economic policy. The marketplace-grounded idea is to make users of public services, not taxpayers, pay. If you drive on a toll road or have your disabled boat towed to port by the Coast Guard, you foot the bill.

Yet now that the Clinton Administration wants to impose user fees on airlines and general aviation, conservative Republicans are suddenly getting cold feet--despite the FAA's dire need for more cash to keep up with growth. The number of planes using the air-traffic-control system is projected to grow by more than 10% by 2000. Meanwhile, the decrepit radar-guidance network at major U.S. airports sorely needs an overhaul, estimated to cost $37.3 billion.

Unfortunately, calls to bring bottom-line business practices to the Federal Aviation Administration have been thwarted, largely thanks to the corporate- and business-plane lobby. Owners of small planes pay only a fraction of the costly FAA services they use, and planemakers fear that higher operating costs would cut into aircraft sales.

The industry has long had formidable boosters on Capitol Hill--Senate Majority Leader Bob Dole, Republican Senator Nancy L. Kassebaum, and former Democratic Representative Dan Glickman, now Agriculture Secretary. All are strong advocates of the market--except in this case. Why? Cessna and Learjet, the largest U.S. makers of small jets and business aircraft, are Kansas-based, and Dole, Kassebaum, and Glickman are all from Kansas.

Such allies have won impressive results for the private-jet industry: In 1991, corporate aviation consumed more than $817 million in federally subsidized airway services while paying only $95 million in fuel taxes, according to a 1995 study by Gellman Research Associates in Jenkintown, Pa. "The people who least need public assistance in this country are those who own their own planes," says Carol Cox Wait, president of the Committee for a Responsible Federal Budget. "Why should the general treasury bear this burden?"

Indeed, there's never been a better time to push FAA reform through Congress. Kassebaum retires next January, and Dole will be preoccupied through November with his Presidential campaign. Besides, a crisis looms: The 10% airline-ticket tax that goes to the aviation trust fund to pay for FAA operations wasn't renewed on Jan. 1 because of the budget impasse. The uncommitted $6 billion balance in the fund is expected to be tapped out by October. "The trust fund is being held hostage to politics," says Darryl Jenkins, head of the Aviation Foundation, a Washington think tank.

If Congress is serious about shoring up the FAA's finances to ensure a safe and modern aviation network, it will stand up to general aviation and others that are hitching a free ride on the FAA.

Here are some places to start:

-- Figure out the FAA's costs. A thorough analysis of the costs of the ATC system has yet to be done, even though the system is estimated to eat up 70% of the FAA's budget. Once details are known, users can be charged equitably.

-- Impose fees on users of the ATC system. Controllers expend as much time directing an eight-seat, twin-engine business jet carrying three executives as they do guiding a 400-seat 747. Under a new system, each could pay for every minute they speak to a controller. Then, airlines and general aviation could be charged on a sliding scale for the costs of the vast guidance system based on, say, a plane's weight, number of seats, passengers carried, or time of day flown.

-- Charge for FAA licensing and certification services. Aircraft makers can't sell many products without the FAA's imprimatur. FAA Administrator David R. Hinson says some 90 FAA engineers spent 125,000 hours certifying Boeing Co.'s new 777--all at taxpayers' expense. The feds can no longer afford to bestow such largesse on industry.

That's not the only place where the FAA has given away the store. The agency pays $400 million a year to maintain 136 flight-service stations, where general aviation can file flight plans and receive up-to-the-minute weather reports--all for free. When the FAA established takeoff and landing slots at four of the nation's most-crowded airports, it gave them away to airlines--who now buy, sell, and trade these hot assets for up to a million dollars each.

In March, FAA leaders announced new personnel and procurement rules, hailed as big steps toward making the FAA more efficient. That made for good press, but a refresher course in market theory--and some congressional backbone--would serve taxpayers better.

Before it's here, it's on the Bloomberg Terminal.