Fuel Taxes and a Fair Share: What Should GA Pay for FAA Funding?

NBAA Convention News » 2013
Aviation fuel taxes imposed on general aviation raise $622 million annually, according to the FAA. General aviation lobby groups believe that the aviation fuel tax is the fairest and most efficient way to collect GA’s contribution to air traffic control system costs.
October 22, 2013, 8:15 AM

The debate rages on.

Should general aviation pay more toward the cost of the nation’s air traffic control system, especially if it would hasten the implementation of the NextGen air traffic control (ATC) system and depoliticize FAA funding? If so, is the current system of fuel and excise taxes the best way to do it?

Historically, the airline lobby has pressed policymakers to implement higher fees on general aviation (GA), claiming the industry does not pay its fair share. The official policy of GA, as espoused by the NBAA and others, has and continues to be that the current aviation fuel tax system is the fairest and most efficient way to collect GA’s contribution to ATC, even if that tax needs to be increased. The tax on jet-A currently amounts to 21.9 cents per gallon.

GA lobby groups have fought vociferously against any attempt to impose user fees, such as the $25 segment charge on turbine aircraft unsuccessfully proposed in 2008 to fund ATC modernization. Since then, the rhetoric from the leaders of some GA groups has hardened in the face of what is perceived as an increasing threat on an industry in a fragile economic recovery.

This summer, NBAA president Ed Bolen, addressing the user fee threat, warned a forum audience at EAA AirVenture: “The ability to tax is the ability to destroy.” In September, the NBAA announced that the House of Representatives General Aviation Caucus had grown to a majority of all members, giving GA added clout in any future user fee fight.

Aviation fuel taxes currently imposed on GA raise $622 million annually, according to the FAA. The FAA also collects a 7.5-percent excise tax on Part 135 passengers and a 6.25-percent excise tax on airfreight.The FAA currently collects$11.44 billion annually forairline passenger ticket, freight and international departure taxes.

Approximately 74 percent of the total$15 billionFAA budget, or about$11.18 billion(people and facilities), is used for ATC.The remainder of the FAA budget is used for regulation, safety oversight, research-and-development and compliance activities.

All fees and taxes due the FAA are deposited in the Aviation and Airways Trust Fund (AATF). Proceeds from the trust are supposed to fund all FAA activities, including the Airports Improvement Program (AIP). However, in recent years, proceeds from the AATF have been insufficient to fund the entire FAA budget, and a historical annual shortfall of $2 to $3 billion has been appropriated by the Congress, which must approve the entire FAA budget, regardless of the funding source. Recent shortfalls largely have been associated with the cost of developing and deploying NextGen ATC technologies.

GA’s Fair Share

Given these numbers, does GA pay its fair share of the ATC burden? The Department of Transportation’s Inspector General’s (IG) office attempted to determine that in a 2008 study. (“Use of the National Air Space System,” CR-2008-028) The IG found that GA used approximately 16 percent of all ATC services but contributed only 3 percent of the costs, findings that were roundly criticized by the NBAA and others.

Specifically, the IG found that “non-carrier” operations accounted for 59 percent of tower operations, 49 percent of terminal radar control (Tracon) operations and 17 percent of en route miles flown. The IG found that non-carrier jet operations accounted for 12 percent of tower services, 13 percent of Tracon services and 11 percent of en route operations. Towers and Tracons account for more than half of all FAA costs. The IG further found that during peak hour periods non-carriers accounted for 20 to 30 percent of all IFR approaches in the New York Tracon, 28 percent in Atlanta and 18 to 23 percent in Cleveland.

Eliminating all other sources of revenue and using the fuel tax to pay for ATC indiscriminately would level the playing field somewhat, but GA would pay more. According to a statistical sampling performed by the IG, universally applying the fuel tax would result in air carriers paying 96.9 percent of the ATC burden while operating 92.3 percent of the flights, while non-carriers, with 7.7 percent of all flights, would see their share of the burden increase from 1.2 percent to 3.1 percent, or an increase of about 35 cents a gallon in fuel taxes to 57 cents a gallon. That would be mitigated somewhat by undetermined cost savings associated with the elimination of record keeping now required for compliance with passenger and freight excise taxes.

Canadian System

Another means of leveling the playing field would be to switch to a Canadian-style system that assesses ATC based on aircraft weight and time in the system. This solution is espoused by several leading aviation analysts, including the Reason Foundation’s Robert Poole. Poole maintains that even with a representative increase in the fuel tax, GA would still be proportionately underfunding the FAA budget because GA fuel tax revenues are used in support of the AIP, and that a large share of that allocation benefits GA-only airports. “Something like a billion dollars a year our of the $3.5 billion annual AIP expenditures are spent on airports that do not have commercial service,” he noted.

Poole has concluded, after studying the Canadian and European systems, that it would be unreasonable to try to collect a proportional share of the ATC system costs from GA. “Nobody actually does that,” he said. “As a practical matter that isn’t going to happen. Even if we did shift to a higher fuel tax or direct fees and charges like Canada uses, they would not provide full cost recovery, but they would be more, certainly. But it wouldn’t be a ‘blip is a blip’ [on the radar] concept that the airlines were fighting for back in 2007 in the war they waged against business jets.

The Canadian system uses a terminal charge and an en route charge, and the en route charge is based on miles and gross takeoff weight. Putting weight into the equation scales the system. Piston airplanes like a small Cessna don’t pay any en route or terminal charges at all, just a small annual fee that is less than they would pay in fuel taxes in the United States. Canada and most of the rest of the world understand that you don’t want to put anyone out of business and make flying unaffordable.”

Direct Fees or Taxes?

Poole said the debate comes down to whether it is better to have direct fees or taxes. “Any tax legally goes into the federal treasury and the money can be spent only when Congress writes an appropriations bill, or it can be misappropriated. And that is why there is this extended conversation going on in Washington now among the various stakeholder groups in GA and the airlines about fee-for-service structures, where fees are provided directly to the service provider like Nav Canada, and they are not at all part of the government budget or political process. They are not subject to budget cuts. The aviation trust fund [AATF] was supposed to do that, but the system has really broken down.”

Poole thinks the current methods by which the FAA gathers revenues–passenger taxes, fuel taxes, excise taxes, waybills, trust fund investments and general appropriations–is “overly convoluted.”

However, he did admit that imposing the Nav Canada structure on U.S. GA would increase flight costs as compared to the fuel tax system currently in place. “It’s definitely an increase. It’s not more than double, but it is considerable.”

Yet if those increased fees were used to fund a more efficient ATC system, Poole maintains that operators would quickly break even, “if you could reduce flying hours by three to five percent thanks to more efficient routing or fewer holds.”

Share this...

Please Register



No Avatar
on October 24, 2013 - 2:28pm

Yes, the tax is the answer.  The other part is......WE ARE ALREADY PAYING IT!!

No Avatar
on October 24, 2013 - 3:19pm

Aren't fuel prices high enough as it is!? It's difficult as it is to fill up the tanks for a short flight let alone a couple hour flight. I call bu!!Sh!t...  Like culturechange said... We already pay it!

No Avatar
on October 24, 2013 - 3:21pm

Fuel tax is not an equal process for all. Pilots that use a non towered airport or fly from there own strip will be penalized unfairly with the tax.

PB's picture
on October 24, 2013 - 3:24pm

The Canadian system isn't a better alternative. They have huge fuel taxes there (which used to fund the ATC system) but the taxes went into consolidated revenue and the costs showed as a budget line item. When a greedy government chose to change this, it formed the ATC Canada system and 'sold' the system to itself for one billion dollars, and now charges interest on that debt - which is paid for through the ATC fees.  This helped their overblown budget since it showed one billion dollars of income, but the costs - plus interest - are now a burden on the users of the system.

Of course, the same taxes that existed prior still go into consolidated revenue.

Most GA flights are piston, and largely do not use ATC services (except for local tower service).  They still pay the fuel tax though.

The big issue that is never offered in these analyses is the government burden on ATC, none of which is funded.  Studies that show figures like a 3% contribution ignore the fact that about one third of ATC use is government - police, state and federal. Air Force One is a good example. While the military has its own air traffic control, much of it is shared, and no government payment is made which distorts the total cost and suggests that GA is not paying its fair share.

The 21.5cents per gallon should be adequate to pay for what I use. I'm often denied flight following if ATC is busy. The system is there for the airlines anyway, we all know that.





No Avatar
on October 24, 2013 - 5:31pm

As an En-route Air Traffic Controller for 24 years and a private pilot/aircraft owner I have a unique perspective on this matter.  I am not convinced that the NAV- Canada concept will work in the US because of the long standing and adamant opposition to user fees.  I pay the Aviation Gas Tax every time I fill up my plane. I complain about the price of fuel, like everyone else. However I see the benefits of paying for the ATC system.  My personal, NOT the Official FAA, opinion is that GA needs to be identifies as jet fuel general aviation and the users of 100LL, or its replacement.  By grouping these two engine types into one general aviation category the public is misled into believing that the aircraft are used for the same purposes.  Jet fueled general aviation is almost exclusively used for business or commercial travel, while 100LL users tend to be small single or twin engine aircraft used for personal, and some business, travel.

In my ATC experience I have seen a significant increase in the number of jet fueled general aviation aircraft to the point that I would estimate that 25-30% of the aircraft on my Radar screen are jet fueled general aviation aircraft.  These are the general aviation aircraft that are using the same airspace as the commercial carries, using the same ATC system as the commercial carriers and getting all the same ATC services as the commercial carriers but not paying anything other than the Aviation Gas Tax.  They pay no ticket excise tax and no freight excise tax. 

If fairness is the goal, then jet fueled general aviation needs to pay its share.

No Avatar
on October 24, 2013 - 5:42pm

The FAA went on a power grab about 45 years ago.  Controlled airspace increased to almost everywhere, Positive Control came down to FL180/18,000 MSL  FAA conytrol was forced on general aviation, then the FAA had to expand in order control the aircvraft forced to use the system.

Except for Federal airways raise Class G to a ceiling of 12,500 or 3,000 AGL, which ever is higher.  Positive Control, Class A begins at FL240.

The FAA has a primary function as National Defense air space management, including military and authorized civilian flights.  Think 9/11/2001.  Control of commercial airline operations is just an excuse to have a big FAA.

With ADS A & B coming on-line now, IFR on random routes in Class G airspace is legal and safe.  GA jet and turboprop aircraft would be limited to 250 KIAS until in Class A, a clearance to enter high altitude airspace IFR would not be difficult to do when flight plans are on-file.

Cut cost, allow modern tech to allow safet flight without an Air Traffic Coordinator, I really don't think te term Air Traffic Control fits te job description, ATC only coordinates airspace to reduce the collision prospects when 30 airliners are schedued to arrive at  ORD or JFK or ATL between 1800 local and 1815.

The airlines don't pay taxes, they pass the cost on to passengers and freight with surcharges [passenger ticket tax and fuel taxes]  General Aviation pays way above their real needs.




No Avatar
on October 24, 2013 - 7:53pm

Maybe the fair way to assess taxes would be by the number of people benefiting.  Although more GA aircraft use the services, commercial airlines carry far more people.  People pay taxes, airplanes don't.  So the current assessment of taxes would seem fair, especially since the airlines pass their costs on to their passengers.  Whatever happen to the big surplus that was being collected from the fuel tax???

PB's picture
on October 25, 2013 - 11:00am

Remember that the passenger ticket tax was 8% and the 8% was going to the Airways Trust Fund.

Clinton increased the passenger tax to 10%, with the 8% still going to the airways trusrt fund and the remaining 2% going to general government revenue. It;s a tax.

Perhaps it is appropriate to lobby to have that 2% paid to the Airways Trsut Fund rather than it being a worthless tax?

Heck, I remember the whining when so-called ticket price wars were lowering the overall revenue to airlines and the tax take to the feds was less, and the feds were complaining. It seems they can never have enough.

The single item that irks me is the discretion of ATC to deny me services unless I am filing IFR, and even then I'm thrown into the 'availability pool'. If I request flight following I am frequently denied, yet the taxes that I pay still go towards supporting the system. In other words, I pay the tax but frequently am denied the service in favor of IFR traffic (commercial and airline traffic).

I remember, too, the GA industry lobbying to permanently avoid user fees and having the tax raised from about 16c to the present 21.9c tax on fuel. Now the GI is proposing more than doubling this? It;s insane! Unjustified! Inappropriate! Let's propose that the 2% ticket tax be paid to the Airways Trust Fund instead - that'll make the feds squirm a bit!

No Avatar
on October 24, 2013 - 9:06pm

Have not seen anybody (on these pages at least) put forth this startling idea: Just as we pay for annual vehicle registration by vehicle weight, why should/could there not be a similar annual registration fee based on the aircraft weight?  (weight is an arbitrary sorter)  This way, if you INTEND to fly, you get your little sticker, put on the aircraft, and off you go, feeling good that you have done your duty, AND did not see an increase at the pump.  We drive our vehicles pretty much despite the fuel costs, but shrink from the idea of paying more at the pump for the planes.  I agree.  Once and done.  And, since the FAA is so efficient, paying your annual fee will automatically register the plane for that year, and will earn you kudos from the FAA.  Too simple, I know.  Better to have all sorts of other taxes, USER fees (which would cripple GA), increased prices...  Simple is better for revenue.  Pilots pay through the nose for the maintenance on the planes, pay for AMEs, pay for BFRs, so why not develop a fair registration system that approximates the GA use of the airspace.  Simple.

No Avatar
on October 24, 2013 - 11:44pm

As with most of Government, the problem isn't with income or revenue- it is with spending. The exhorbitant salaries would probably be OK without the inflated benefits, pensions , and other perks that those in the private sector don't get.  A lot of the AIP funds are spent for projects that are not needed. We have discovered that the world didn't come to an end as predicted with the Sequester. Cut spending and the tax increase won't be necessary

No Avatar
on October 25, 2013 - 2:05am

Nonsense, I was a Ft. Worth Center Controller for 26 years. Never were 16% of my planes GA. The only way that would be possible might be by  counting all the usless non FAA contract towers which are almost 100% GA. These towers were suppose to be cut in the Sequester, which the alphabets strongly opposed. I can name 4 of these on the south side of the DFW area which are utterly useless, except for 1  during the Cowboy games, and now there is another 1 about to open on the east side of the metro area. There are more of these which I fly through on a daily basis, flying pipeline patrol.  They provide very little for what they cost. Scrub these waste of taxpayer funded, city status, hazard to aerial navigation operations, and recount your numbers before you try to raise my taxes for services not rendered.

No Avatar
on October 25, 2013 - 11:54am

Well-said, pipeline pilot. Whether towers are contract labor or not, the un-needed ones should go away. The scare tactics that the alphabets and politicians were spewing about the sequester were wrong. I think closing a tower is more of a threat to some peoples' pride than it is a threat to safety. As mentioned earlier, the problem isn't with revenue-it's with spending.

No Avatar
on October 25, 2013 - 2:21pm

I wouldn’t mind paying somewhat more fuel tax if it quells the desires of those who want to impose user fees. First of all the total federal tax on 100LL is 19.4 cents per gallon and as the article states is 21.6 cents per gallon on JetA. Then there are additional excise tax and sales tax charged by some states but these do not go into the Aviation Trust Fund.  The federal excise taxes have not been increased in over 20 years while the cost of everything else has at least doubled, It is only fair that it should be increased somewhat.

A excise tax is one of the most fair taxes. The bigger/heavier the airplane is that you fly and farther that you fly it the more fuel you use and the more you pay into the Trust Fund. Remember the Trust Fund does not only cover ATC services which fewer piston drivers use but also helps fund the AIP. So some of the money goes back to even small local airports with little Jet  traffic.  Besides, nothing stops you from using ATC services. I always get flight following whenever I am on a trip.

According to Wikipedia in 2008 only 186million gallons of 100LL sold in the US that year. This number has been steadily declining. There is some Mogas being sold in a few airports so for sake of argument lets say that approx 200million gallons of fuel is used by pistons each year. Multiply that by the $0.194 per gallon means that the piston flyers in the US contribute less than 40 million dollars to the trust fund each year. The article states that fuel sales raise 622million dollars so that means approximately 580 million dollars comes from Jet-A sales. That sounds about right to me. At my home base (MMU) a busy GA only airport the fuel farm has five 8000 gallon Jet-A storage tanks and only one 8000 gallon 100LL tank. There are over 100 based piston aircraft  at my airport.

Jet-A users almost always use ATC services since they want to climb as high as possible for better efficiency and FL180 and above is positive controlled airspace requiring an IFR flight plan. They consume a lot more fuel and they fly a lot more often than pistons so the ratio of Jet-A to 100LL consumption makes sense to me.

A couple of years ago I recall reading that they wanted to increase the FET on Jet-A to 36 cents per gallon rather than impose user fees. That would be about a 50% increase in the amount GA pays into the trust fund to almost 900 million dollars. This would not affect piston drivers at all and would be inconsequential to the average jet owner. A mid-size business jet such as a Citation Sovereign cost about $5800/hr including all direct and fixed operating costs as well as depreciation to operate. In cruise it is burning about 220gal/hr of fuel but a lot more in climb and take off. Lets say 250gal/hr for the typical trip. A roughly 15 cent per gallon increase in fuel costs from raising the excise take would add on $37.50 per hour to the operating cost of that airplane. I think the heavy iron drivers can afford it.


Please Register
