WSJ: FAA Might Tap Private Money To Fund Upgrades

[question everything]

FAA Might Tap Private Money To Fund Upgrades

New Fees Levied to Cover
Agency's Bonds Could Shift
Burden to Business Jets
By LAURA MECKLER
Staff Reporter of THE WALL STREET JOURNAL
February 4, 2006; Page A1

WASHINGTON -- The Bush administration is considering a plan to free the Federal Aviation Administration from the uncertainty of annual congressional appropriations and allow the agency to levy fees that would force business jets to pick up more of the tab for upgrading the nation's air-traffic-control system.

A proposal under discussion would allow the FAA to issue bonds that it would pay back by charging user fees, according to people familiar with the discussions. Details of the proposal, which would need congressional approval, remain in flux, and the White House hasn't signed off on it. Administration officials, hoping to unveil their plan this spring, have been consulting Wall Street investment banks for advice.

The objective is to find a way to pay for costly capital improvements to the nation's overtaxed air-traffic-control system and to create a more reliable revenue stream for the FAA. Agency officials have long complained that the unpredictable annual congressional appropriation process makes planning difficult -- especially for a multibillion-dollar upgrade like the one being contemplated. Levying fees, rather than taxes, on air-traffic-control users would almost certainly mean a shift in some of the cost of maintaining the air-traffic-control system from commercial airlines to business jets and, perhaps, recreational pilots. In 2004, business jets accounted for 18% of takeoffs and landings but paid only about 5% of the total $9.6 billion collected in various aviation taxes.

Lobbies for business aviators and recreational pilots already are gearing up to fight the proposal. Labor unions involved in the industry also are likely to oppose any move that would, in effect, privatize funding for the system. But beleaguered commercial airlines are enthusiastic. Officials are taking a close look at agencies such as the Tennessee Valley Authority, a federal corporation with $26 billion in private debt. It's also examining Bonneville Power, an electric utility within the Department of Energy that owes $13.6 billion, including $7.1 billion borrowed from the Treasury and $6.5 billion borrowed from capital markets. Neither the TVA nor the private Bonneville debt is guaranteed by the Treasury.

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URL for this article:
http://online.wsj.com/article/SB113902637760365167.html (subscription)

[MercutioATC]

1. The AOPA would lobby against it...

...and they have come clout in Washington. I really don't see anything other than nominal user fees being assessed to general aviation.

[teryang]

2. This is pathetic!

Why don't they issue bonds to fund the war and have the oil companies and defense contractors pay the fees to make the payments to the creditors?

Better yet, why don't corporations and the wealthy return to the good old fashioned practice of paying taxes like they had to do during WWII and Korea?