Airline ticket taxes fund corporate jets and execs

SAN FRANCISCO -- The federal government has taken billions of dollars from the taxes and fees paid by airline passengers every time they fly and awarded it to small airports used mainly by private pilots and globe-trotting corporate executives.

Some of these "general aviation" facilities used the federal dollars -- more than $7 billion over the past decade -- for enhancements such as longer runways and passenger terminals aimed at luring traffic, an Associated Press review has found. And the money comes with little oversight, and at the expense of an increasingly beleaguered air transportation system.

"They're making out like bandits," said Bob Poole, director of transportation studies at Southern California's Reason Foundation and author of several studies on air transportation costs. "It's not only that airline passengers are paying more than their fair share, but they're being overtaxed to give private jets a free ride."

Passengers pay as many as six separate taxes and fees on a single airline ticket, adding up to more than $104 billion since 1997, the AP found. Yet these assessments often are overlooked by the millions who click the "buy" button to purchase tickets online, even though they can exceed 25 percent of the total airfare.

Meanwhile, travelers deal with more hassles than ever. In 2006, more passengers were bumped, their flights delayed or their bags lost than in 2005, according to the annual Airline Quality Rating report released earlier this month.

"What are people getting for their money?" said Kenneth Button, a professor of transportation at George Mason University's School of Public Policy and an expert on air transit taxation. "Delays are increasing. How can consumers make a sensible assessment on how the money is being spent? You need an abacus to figure out all the costs."

Congress will decide later this year whether to curtail the huge public subsidy for small airports, while pilots' associations, airport managers and other interested groups are fighting to keep it.

Ed Bolen, president of the National Business Aviation Association, which represents 8,000 operators of private jets and other aircraft, said all Americans benefit from the proliferation of small airports throughout the country. They aid emergency preparedness and critical services such as medical evacuations and mail delivery, he noted.

Without help from the federal government in the form of passenger taxes, many would be unable to survive, Bolen said.

The taxes and fees finance the Federal Aviation Administration and its air traffic control operations, as well as passenger and baggage screening, federal air marshals and police presence at the nation's commercial hubs.

But hundreds of smaller airports also are among the beneficiaries.

These run the gamut from remote rural airstrips serving crop-dusters and hobbyists, to "executive" airports serving corporate jets and exclusive resort destinations.

-- J.T. Wilson Field in Somerset, Ky. got more than $12 million since 2001, much of it through the influence of local Rep. Hal Rogers, a longtime Republican member of the House Appropriations Committee who uses the airfield for trips home. Wilson Field is home base to 26 small planes and one jet. Despite millions in improvements, including a passenger terminal, the airport has yet to see scheduled commercial service.

-- California's Napa Valley Airport collected $6.3 million in taxpayer dollars over the past two years, even though it mainly serves private jets and small planes in addition to being a pilot training base for Japan Air Lines.

-- Sardy Field, in the ultra-rich mountain playground of Aspen, Colo., has received $27.2 million in funding since 2005. While Aspen does offer service by major airlines, private jets and other general aviation aircraft make up the majority of its traffic, airport officials said.

-- Austin Municipal Airport, about 90 miles south of Minneapolis, is home base for 25 small planes and three jets, at least two of which are owned by Hormel Foods, a Fortune 500 company with headquarters nearby. Since 2000, the airport received nearly $16 million in federal funding. More than two-thirds of the takeoffs and landing are by small, private planes.

-- Greenville Municipal Airport, on Maine's Moosehead Lake, received $4.1 million over two years despite being the home airport to eight small planes and seeing fewer than 6,000 takeoffs and landings per year.

-- Marion-Crittenden County Airport in rural Western Kentucky spent $4 million in federal dollars over the past five years to transform and lengthen a grass landing strip into a 4,400-foot, paved runway capable of handling jet traffic. The upgrade began in earnest after Tyco Corp. pulled out of the region, taking 300 jobs with it.

James C. Johnson, a former FAA employee and pilot who chairs the local airport board, said the runway allows "corporate decision-makers to get in and out of here in a manner they like to travel."

"We're not saying money shouldn't be going to those airports," said John Heimlich, vice president and chief economist at the Air Transport Association, a trade group representing the airlines. "We're saying it shouldn't be our money."

Passenger taxes are collected in noncommercial aviation only in instances involving the fractional ownership of private jets, air charter operations and small commuter flights. Instead, it contributes to America's air transit infrastructure in the form of a fuel tax that covers just a fraction of the services it uses.

A study released in February by the FAA said it cost $2.4 billion just to provide air traffic control for private and corporate planes in 2005. Yet the industry contributed just $516 million in fuel taxes that year.

Another $500 million annually pays for weather forecasts and other preflight data for private pilots. These contribute to overall air safety, according to Andy Chebula, executive vice president for government affairs at the Aircraft Owners and Pilots Association, which represents more than 410,000 pilots and is lobbying heavily for retaining passenger taxes.

If private pilots have to start paying for such things themselves, they just won't bother, Chebula said.

Advocates of private and corporate aviation, which accounts for more than half of all air traffic, say the industry also costs far less to operate than commercial carriers, with their giant aircraft.

"A Cessna Citation doesn't require the same Air Traffic Control resources as a 747," said Mike Tretheway, a consultant to the National Business Aviation Association. "What's driving FAA costs are the airlines."

The main source of federal funding for small airports and airstrips is the Airport Improvement Program, which has distributed $7.1 billion to airports of all sizes since 2005.

About $2.2 billion of that went to small airports with little or no passenger service, many of them near popular recreation or tourist destinations. Most of that money was collected from commercial airline passengers.

Some airports have used AIP money to buy up surrounding property to create noise barriers between aircraft and neighboring residential areas. But an FAA audit found that six airports that used AIP funding for noise mitigation later sold the land and used $82 million from the sales for unapproved purposes.

Other small airports have used their AIP money to extend and upgrade runways and taxiways for use by today's heavier private jets, which often is pitched as an incentive for local economic development.

The operators of Plattsburg International Airport, in upstate New York, used $12 million in AIP funds to outfit the former Air Force base with better runways, a state-of-the-art landing system and a new terminal. These improvements helped lure aircraft engine manufacturer Pratt & Whitney, as well as the Department of Homeland Security and other tenants.

Former airport manager Ralph Hensel said Plattsburg also is hoping to lure commuter traffic from nearby growth-restricted Clinton County Airport, and possibly entice scheduled service by commercial carriers.

Scores of other small airports spent millions on runway extensions, lighting and updated landing systems that airport managers say were not specifically for the benefit of private jets and business aircraft, but do lend themselves to such uses.

Congress now is considering new approaches to financing the FAA before its funding expires Sept. 30. The House and Senate Aviation Subcommittees have been conducting hearings on the topic since February.

The FAA wants to scrap many existing passenger taxes and replace them with higher fuel taxes and user fees that would put more of the burden on noncommercial aviation.

"We will need to invest resources in order to make the transition to a new system that will significantly reduce operating costs and better serve our customers in the long run," FAA administrator Marion Blakey told a Senate subcommittee on aviation in February.

But pilots' groups, business aviation organizations and small plane manufacturers are fighting the agency's proposal.

Bolen, the National Business Aviation Association president, said the nation's entire aviation infrastructure is geared toward commercial air travel and cargo.

"It's like going out to dinner and somebody buys the most expensive stuff and then says, 'Hey, let's divide this up among all the diners,"' he said. "Who should pay for that?"

Commercial airlines support the proposed changes and say private aviation has been collecting huge taxpayer handouts that should go to airports that serve the general public.

"We're saying users should pay in proportion to their share of system use," said Heimlich, of the Air Transport Association. "The current system isn't priced rationally."

The scrutiny from lawmakers comes ahead of a planned overhaul of the nation's aging air transit system. Air traffic is predicted to grow by more than 25 percent over the next decade, and experts say the growth will be driven by a proliferation of smaller passenger planes and private jets.

The ambitious overhaul will replace existing ground-based radar with satellites and is expected to cost $22 billion -- maybe more.

The FAA's poor track record of containing costs is well-documented. For example, in 2003, the Government Accountability Office, Congress' investigative arm, reported the agency's ongoing efforts to modernize air traffic control and found the price tag had reached $35 billion -- nearly three times the original estimate of $12 billion when the project began in 1981. Much of that money also came directly from airline passengers in the form of ticket taxes.

"Then was then, now is now," said FAA spokeswoman Laura Brown, adding that Blakey has drastically tightened FAA financial management since becoming agency administrator in 2002. "The way we manage programs is dramatically different."

Former Pennsylvania congressman James Coyne, now president of the National Air Transportation Association, said that doesn't negate the fact that the federal government has squandered aviation money over the past two decades.

"Certainly billions of dollars were wasted because of mismanagement," said Coyne, whose group represents charter, tour and commuter aviation operators and opposes eliminating passenger taxes. "Now, there must be some accountability."

---

Ticket tax breakdown

The taxes and fees currently attached to each ticket purchase, as compiled by The Associated Press:

TICKET TAXES: A 7.5 percent federal levy is attached to every plane ticket.

SEGMENT TAX: The Passenger Flight Segment Tax, currently $3.40, is charged each time a passenger takes off and lands.

INTERNATIONAL ARRIVAL AND DEPARTURE TAX: The current tax is $15.10 per passenger on all flights departing for or arriving from foreign destinations.

SECURITY FEES: These fees cost customers $2.50 per boarding, with a $5 maximum per one-way trip, even with multiple segments.

PASSENGER FACILITY CHARGE: A local tax collected by airlines and paid directly to the airport where it's levied. The FAA tells each airport how much it can charge.