[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
USER FEES IN THE AVIATION INDUSTRY: TURBULENCE AHEAD
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HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
HEARING HELD
SEPTEMBER 12, 2012
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 112-085
Available via the GPO Website: www.fdsys.gov
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C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Sam Graves.................................................. 1
Hon. Nydia Velazquez,............................................ 2
WITNESSES
Marian Epps, CFO, Epps Aviation, DeKalb-Peachtree Airport,
Atlanta, GA.................................................... 3
Martha King, Co-Owner, Co-Chairman, King Schools, Inc., San
Diego, CA...................................................... 5
Kenneth J. Button, George Mason University, University Professor,
Director, Center for Transportation, Policy, Operations and
Logistics; and, Director, Aerospace Policy Research Center,
Arlington, VA.................................................. 7
Brad Pierce, President, Restaurant Equipment World, Orlando, FL.. 9
APPENDIX
Prepared Statements:
Marian Epps, CFO, Epps Aviation, DeKalb-Peachtree Airport,
Atlanta, GA................................................ 22
Martha King, Co-Owner, Co-Chairman, King Schools, Inc., San
Diego, CA.................................................. 26
Kenneth J. Button, George Mason University, University
Professor, Director, Center for Transportation, Policy,
Operations and Logistics; and, Director, Aerospace Policy
Research Center, Arlington, VA............................. 30
Brad Pierce, President, Restaurant Equipment World, Orlando,
FL......................................................... 39
Questions for the Record:
None
Answers for the Record:
None
Additional Materials for the Record:
Ed Oberholtzer Letter for the Record......................... 45
Letter to President Obama Opposing Aviation User Fees........ 46
USER FEES IN THE AVIATION INDUSTRY: TURBULENCE AHEAD
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WEDNESDAY, SEPTEMBER 12, 2012
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 1:00 p.m., in room
2360, Rayburn House Office Building, Hon. Sam Graves (Chairman
of the Committee) presiding.
Present: Representatives Graves, Mulvaney, West, Hanna,
Schilling, Velazquez, and Schrader.
Chairman Graves. Good afternoon, everyone. I want to call
the hearing to order and welcome everybody for joining us.
We have an excellent panel here today to examine President
Obama's proposal to impose per flight user fees on aviation
operators. Unfortunately, this isn't a new proposal. Previous
Presidents have suggested a user fee system for aviation in
addition to the current taxes and fees that are already levied
as a way to bolster the Airport and Airways Trust Fund.
Fortunately, these proposals have never been enacted. And
today we are going to discuss how important it is that they are
never enacted.
In the fiscal year 2013 budget, President Obama proposed a
$100 per flight user fee on general aviation operators.
Imposing such a plan has the very real potential to stifle the
general aviation industry as a whole and harm job creation. The
general aviation industry is predominantly made up of small
businesses. Annually, it accounts for 27 million flight hours,
carries 166 million passengers to around 5,000 communities. And
according to the National Air Transportation Association, more
than two-thirds of general aviation flights are for business
purposes.
Overall, general aviation both operations and manufacturing
employs about 1.2 million people and contributes approximately
$150 billion to our gross domestic product. The bottom line is,
general aviation is a very significant part of our national
economy.
The general aviation community has always contributed
financially to the national air transportation infrastructure.
And since the inception of the Airport and Airways Trust Fund,
the general aviation community has paid its share through a
21.9 cent per gallon tax on jet fuel and a 19.4 cent per gallon
tax on aviation gasoline, all without the need for a large
bureaucracy to collect these taxes from hundreds of thousands
of individual pilots and aircraft owners. This is a far more
equitable and efficient way to address our aviation and
infrastructure needs.
Imposing a $100 per flight user fee on operators is simply
the wrong approach, and the President offered very few details
as to how such a system would be established and even less
analysis on how it would impact the aviation industry. I
believe this is very bad policy, and there is little doubt it
would stifle job creation and economic growth in the United
States. I would also like to remind my colleagues on the
Committee of the broad and bipartisan opposition from Congress
to the President's proposal. And I would ask unanimous consent
that a letter that was sent and signed by 195 Members of
Congress expressing concerns be submitted into the record.
Without objection, we will do that. It is so ordered. And
again I want to thank our witnesses for taking the time to be
with us today, and I look forward to hearing all of the
testimony that we are going to hear today.
I would now yield to Ranking Member Velazquez for her
opening statement.
Ms. Velazquez. Thank you, Mr. Chairman.
Good afternoon.
The U.S. economy is as complex as it is vibrant, requiring
frequent travel throughout the Nation. For small businesswomen
and men, this may mean traveling at the last minute or to
remote areas that are not served regularly by commercial
airlines. As a result, general aviation and the flexibility it
provides plays a key role in our Nation's growth. In fact,
general aviation directly generated $22.1 billion in 2009 and
has an overall impact of $76.5 billion, employing nearly half a
million workers. This contribution will no doubt grow as the
economy continues to recover.
With this important role in mind, it is critical that we
carefully examine any potential policy that could impact this
industry and the workers it employs. One such policy is the
administration's proposal to levy a $100 fee on takeoffs and
landings for commercial airplanes and corporate jets. While all
piston and emergency aircraft will be exempt, this new fee
structure could create new burdens for the aviation community
while requiring a new bureaucracy to monitor compliance. It is
important to carefully consider whether the benefits of the new
user fee system outweighs the cost of its implementation.
While it is sensible to talk about this user fee proposal,
doing so really misses the elephant in the room today. And that
elephant is sequestration and the across-the-board cuts on all
Federal spending that will take effect in January. Estimates
show that the FAA stands to lose $1 billion through funding as
a result. According to a study by the Aerospace Industry
Association, this could force the layoff of almost 1,500 air
traffic controllers, nearly 10 percent of the total, and the
closing of more than 240 airport control towers around the
country. Many of these closings will likely occur at smaller
airports that handle less traffic, those that are most used by
the general aviation community.
Additionally, passenger traffic could drop by 10 percent,
causing aircraft manufacturing to fall, costing the economy
another 11,000 to 22,000 jobs. So while it is important to
discuss the imposition of user fees, it is equally if not more
important to talk about the effects of fiscal belt tightening
on the general aviation industry. This issue is not unique to
the FAA or aviation, but it will have to be addressed jointly
by the government and the private citizens that rely on those
specific services.
Whether it is crop insurance for farmers, loans for small
businesses, entrance fees at national parks, or traffic control
services for pilots and their passengers, reduced Federal
funding creates difficult choices. Tough decisions will have to
be made, and hearings like the one that we are having today can
help us determine what the best solution is.
Ensuring that the general aviation industry remains strong
in light of these current fiscal challenges is a priority for
this Committee. It plays an important role in the U.S. economy
particularly for areas that lack other transportation
infrastructure, and it is poised to grow stronger over the next
20 years. Through its presence, it not only creates jobs but
also serves as an economic anchor for many rural communities.
I would like to thank the distinguished panel of witnesses
for traveling here today. And I look forward to their
testimony.
Thank you, Mr. Chairman. I yield back.
Chairman Graves. Thanks, Nydia.
Our witnesses today.
STATEMENTS OF MARIAN EPPS, CFO, EPPS AVIATION, DEKALB-PEACHTREE
AIRPORT, ATLANTA, GEORGIA, TESTIFYING ON BEHALF OF THE NATIONAL
AIR TRANSPORTATION ASSOCIATION; MARTHA KING, CO-OWNER, CO-
CHAIRMAN, KING SCHOOLS, INC., SAN DIEGO, CALIFORNIA, TESTIFYING
ON BEHALF OF THE NATIONAL BUSINESS AVIATION ASSOCIATION;
KENNETH J. BUTTON, GEORGE MASON UNIVERSITY, UNIVERSITY
PROFESSOR, DIRECTOR, CENTER FOR TRANSPORTATION, POLICY,
OPERATIONS AND LOGISTICS; AND DIRECTOR, AEROSPACE POLICY
RESEARCH CENTER, ARLINGTON, VIRGINIA; AND BRAD PIERCE,
PRESIDENT, RESTAURANT EQUIPMENT WORLD, ORLANDO, FLORIDA,
TESTIFYING ON BEHALF OF THE AIRCRAFT OWNERS AND PILOTS
ASSOCIATION
Chairman Graves. Our first witness is Marian Epps, CFO of
Epps Aviation, which is a fixed base operator based in DeKalb-
Peachtree Airport in Atlanta, Georgia. Marian joined the family
business in 1993 in a marketing role. And in 1995, she was
promoted to the position of CFO and elected to the board of
directors in 2007. She manages accounting operations,
information technology. She oversees charter and aircraft
management, and Pilatus aircraft sales.
Ms. Epps is testifying on behalf of the National Air
Transportation Association.
Thank you for taking the time to be here, Marian. We
appreciate it.
STATEMENT OF MARIAN EPPS
Ms. Epps. Chairman Graves, Ranking Member Velazquez, and
members of the Committee, the National Air Transportation
Association appreciates the opportunity to appear before the
Committee to discuss the detrimental impact user fees would
have on the general aviation industry.
My name is Marian Epps. I am the CFO of Epps Aviation in
Atlanta, Georgia. Epps is one of NATA's member companies and is
located at the second busiest airport in Georgia. Our owner and
founder, Pat Epps, my father, has come a long way since his
father, Ben Epps, built and flew Georgia's first aircraft at
the age of 19 in 1907.
Pat was the youngest boy of 10 children, eight of whom
became pilots. Let's fast forward to 1965, when my father
bought a small fixed base operation at the DeKalb-Peachtree
Airport. For 47 years now, Epps Aviation has served the
business and public aviation communities. We started with 19
employees, two hangars, on 21 acres of leased land. Today we
have 145 employees, down from our pre-recession high of over
200. Our workforce includes line technicians, A&P mechanics,
avionic technicians, client service representatives, and
pilots. They serve U.S. and international customers 24/7, 365
days a year.
We have made improvements on our 21 acres of leased space,
not with government funds but with company profits. We built a
terminal lobby, maintenance facilities, five 10,000 square foot
corporate hangars, 40 T-hangars, and a fuel farm. Today these
facilities are home base to over 100 aircraft owners. Many of
these aircraft owners are small businesses themselves that use
aviation to grow their business, such as a seafood wholesaler,
a lighting manufacturer, an industrial packaging company, and a
chicken farmer.
These small businesses rely on aviation, just like ours,
and they have felt the effects of a slower economy. They are
struggling to build back to prerecession levels.
So why am I here? The administration has included a tax
proposal in the deficit reduction plan that would require all
air transportation providers to pay a $100 per flight departure
fee. This departure fee would kill small businesses like ours
and hurt organizations around the country that depend on
general aviation. Imposing a user fee would also be detrimental
to the many States with little or no commercial airline
service. They need general aviation for economic job growth.
Let me give you some more data on why aviation is so
critically important to our economy. The industry employs 1.2
million workers and generates $150 billion annually in economic
activity. And let me tell you why user fees would negatively
impact general aviation in the U.S. No doubt many operators
would fly less due to the increased cost of using the National
Airspace System. Less activity will have a ripple effect
throughout the industry with many businesses such as ours
suffering due to the lower fuel sales, maintenance, and other
services. And it would be an enormous administrative burden for
both the government and the aircraft operators. Just look at
the countries that have a user fee system. None of these
countries have the level of aviation activity of the United
States. Most bill after flights are conducted for the air
traffic services, and their delayed billing systems are error-
prone, and they cost more to administer than what they collect.
Why build a new system when we have one that works? The
current fuel tax ensures that the aviation trust fund will
receive the appropriate contribution the minute fuel is
purchased, without having to wait weeks or even months for
payments.
Let me wrap up by saying that Congress and the aviation
industry have been in opposition to any user fee proposals on
aviation. Over the past 5 years, numerous letters from the
House and Senate Members of Congress, industry coalitions, and
aviation associations have reiterated that per flight user fees
will cripple the aviation industry and the small businesses it
represents. We have seen this happen in other countries. The
government's first priority should be to create an environment
in which businesses can grow and make more important
contributions to the national economy. A user fee is little
more than a punitive tax that would have a lasting negative
effect on aviation.
We all agree that fuel taxes represent the best way for the
aviation industry to contribute revenue to the Federal
Government and support efforts to enhance the National Air
Transportation System. We look forward to working with the
Committee in resolving this issue, and we are eager to serve as
a valuable resource for aviation businesses during this debate.
Thank you for your time, and I really appreciate being
here.
Chairman Graves. Thank you Ms. Epps.
Our next witness is Martha King, who is the co-owner and
cochairman of King Schools, which is a flight training school
based in San Diego, California. In business for over 36 years,
King Schools focuses on innovative technologies to help train
pilots over a wide range of certifications. Martha is the first
and only woman to hold every category and class of FAA rating
on her pilot and instructor certificates.
Ms. King is testifying on behalf of the National Business
Aviation Association.
Welcome to the Committee, Martha.
STATEMENT OF MARTHA KING
Ms. King. Thank you very much.
My name is Martha King, and I am honored to be here today
to represent the National Business Aviation Association, NBAA.
NBAA has over 9,000 members, and all have one thing in common:
they rely on business aviation to meet some of their companies'
travel challenges.
Mr. Chairman, as you say, I am co-owner and co-chairman of
King Schools, a flight training company that my husband and I
started in 1975. King Schools is a member of NBAA, and I serve
on the association's Associate Member Advisory Council. King
Schools grew from its original two employees, my husband and
myself, in 1975 to a high of 90 employees in 2007.
Like thousands of startup companies all over the U.S., we
found that using a general aviation airplane made our company
more efficient and more productive. It allowed us to do more in
less time. It helped us survive, compete, and grow; 37 years
later, we still depend on our general aviation airplane.
Mr. Chairman, as you know, general aviation is one of our
Nation's most significant industries. It is one of the few U.S.
industries that contributes positively to our Nation's balance
of trade. It is fundamental to our Nation's manufacturing base.
It employs 1.2 million Americans at a time when our country
urgently needs jobs. It is an economic lifeline to thousands of
small- and mid-sized American communities with little or no
scheduled airline service. It helps companies of all sizes be
more efficient, more productive, and more competitive. And it
is vital to our Nation's humanitarian efforts.
The great recession has been devastating to the general
aviation industry. By virtually any measure, our industry
shrank by 30 to 60 percent. My company is down from 90
employees to 50. It is difficult to imagine how at a time when
the critical American industry is struggling the way that
general aviation is, people in Washington could be
contemplating an onerous, regressive, and administratively
burdensome new per flight tax, euphemistically called a ``user
fee.''
A $100 per flight tax on all turbine-powered aircraft would
be devastating for thousands of small businesses like mine. And
I hope that this important Committee will put an end to this
nonsensical proposal once and for all.
Here are some valuable facts: Most of the business
airplanes and component parts flying in the world today were
built in the U.S.; 85 percent of companies that use business
aviation are small- and mid-sized businesses. Most business
aviation flights fly to or from airports with no scheduled
airline service. And the average age of the U.S. general
aviation turbine airplane fleet is over 25 years old.
Mr. Chairman, I know that there are those who try to
promote a caricature of business aviation that is at odds with
these facts. But the reality is that my small business is very
representative of business aviation in the U.S. Our employees
are instructors, technicians, sales people, and customer
service representatives. And these are the people that fly on
our airplanes. We do not have an army of accountants standing
by to process a bunch of $100 per flight invoices from some new
Federal bureaucracy. And quite frankly, our country does not
need some new ``Sky-R-S,'' complete with auditors, billing
agents, and collectors. Today business aviation pays at the
pump through a per gallon fuel tax. It is simple. It is fair.
It is efficient, progressive, and environmentally friendly. And
it is adjustable. Congress can raise or lower the fuel tax. We
do not need to establish a foreign-style system of user fees in
the U.S. We have a better way. We have fuel taxes.
Make no mistake: A new $100 per flight fee on all turbine
airplane flights is a bad idea. It will hurt our economy, our
transportation system, and small towns. And it will hurt small
businesses like mine. We are counting on this Committee to make
sure that does not happen. We are counting on you to spread the
word that aviation fuel taxes work, and per flight fees
destroy.
Thank you for the opportunity to be here today. And I will
be happy to answer your questions.
Ms. Velazquez. Mr. Chairman, it is my pleasure to introduce
our witness, Kenneth Button.
Welcome, sir.
Let me properly introduce you to the Committee. He is a
university professor of public policy at George Mason
University, where he is the director of the Center For
Transportation Policy, Operations, and Logistics as well as the
director of the Aerospace Policy Research Center. He has
published or has in press some 80 books and over 400 academic
papers in the field of transportation economics aviation policy
and related subjects.
Professor Button is the editor of numerous academic
journals in the fields of aviation and aerospace policy,
tourism and transportation. Prior to coming to George Mason
University in 1997, he served as a transportation expert for
the OECD and taught at several universities around the world.
Welcome, sir.
STATEMENT OF KENNETH J. BUTTON
Mr. Button. Thank you very much.
I am very grateful for you inviting me to talk. Let me give
my conclusions first. There seems to be two separate issues
here. First of all, whether user charges are a good thing. I
actually disagree with the chairman on this. I think there
should be a move towards user charges in aviation. I believe
they should be genuine user charges, which I would call a
price. Basically user charges are a price for doing something.
Secondly, on the issue of whether one wants to simply add
an extra charge to the existing fuel charges, on whether this
particular charge is an ideal way of doing it, I must confess,
I do have some reservations.
The first point: Pricing is very effective for three
reasons. It allocates out the facilities you have got to the
people who make the best use of them. It allocates out these
facilities to the people who are willing to pay and thus
presumably make the largest financial return from using them.
In other words, the business people are the most efficient.
Secondly, you collect revenue from this which is directly
related to use. Fuel charges are not directly related to the
use of the system. And this direct relationship allows the FAA
and other bodies to decide where new investments are required
or where certain types of facilities may be truncated.
And thirdly, it provides a stream of revenue which is
independent of any form of taxation which allows the body--the
FAA in this case--to actually provide additional capacity and
to finance it. That is why a lot of countries have moved toward
user charges.
The user charges have had some problems where they have
been introduced. The reasons for this are partly the nature of
the charges. They have not been imposed particularly well.
There has been a certain experimentation involved. And of
course, the United States has an advantage here. It can learn
the lessons from elsewhere.
So I am very much in favor of user charges. I don't think
they pose the problems which we sometimes hear.
These particular charges which are being proposed here I
think one has to look at them fairly carefully. I think there
is a need to remember that general aviation does use the
infrastructure in the same way as commercial aviation. It does
not pay as much for using that infrastructure. But on the other
hand, it doesn't necessarily use all of that infrastructure. It
doesn't need everything large commercial aircraft do. There are
some issues about a flat charge across everything because users
of the system use different amounts of it.
This particular charge I think has got some issues that
need to be looked at. I do agree we do have to raise some
additional revenue. The air transport system does need
additional money. I do believe this small debt which has been
accumulated in the United States getting on for $17 trillion
has to somehow be paid down. It has to be paid down I think so
it is not a burden on future generations, but also so we don't
have the burden, as the economy recovers, of higher interest
payments on it. Inevitably, interest rates will go up as the
economy recovers. Somehow that has to be paid for.
My concern about this particular charge is, it has been
floated as a form of trying to help pay off some of the
national deficit. According to my calculations, if this is the
sole source of money, it would take something over 13,000 years
to actually pay off the national deficit, assuming there is no
interest on that deficit. So I think putting it forward as a
method of paying off the deficit is inappropriate.
Secondly, it has been put forward as a method of getting to
greater equality. My view is, we should have equality as much
between generations as between groups at the moment. Therefore,
I think we need user charges which ensure the aviation industry
in this country--be it large commercial undertakings, general
aviation, business aviation, flying schools, or whatever--are
efficient at what they do, that they have the appropriate
facilities provided to them. They pay the appropriate--I will
use the word again, the ``appropriate'' price for that
infrastructure and that infrastructure has a viable method of
funding.
I have some reservations therefore about this particular
proposal. Although I do have considerable sympathy with the
underlying idea; we have much more efficient user charges on
aviation, or pricing aviation, as I like to say. I have
provided some written testimony, and clearly, I have provided a
very short summary of it. Thank you.
Chairman Graves. Rounding out our panel today is Brad
Pierce, who is the president of Restaurant Equipment World,
REW, in Orlando, Florida. Started by Brad's father Jerry in
1976, REW remains a family owned and operated company that
sells professional grade kitchen equipment from both their
showroom in Orlando and across the world online. The company
currently employs approximately 50 individuals.
He is testifying on behalf of the Aircraft Owners and
Pilots Association.
I want to thank you for being here today, Mr. Pierce. We
appreciate it.
STATEMENT OF BRAD PIERCE
Mr. Pierce. Thank you. Well, it is certainly an honor to be
speaking with you here today. I am here today representing the
Aircraft Owners and Pilots Association, also known as the AOPA.
We have been an AOPA member since 1997 and are also proud to be
a member of the National Business Aviation Association.
Restaurant Equipment World was founded more than 35 years
ago by my father, Jerry Pierce. We provide restaurant and food
service equipment throughout the Southeast and beyond from our
headquarters in Orlando, Florida. We are proud to have
approximately 48 employees. And through our efficiencies, we
have sold products to more than 100,000 customers in all 50
States and more than 110 countries internationally.
My testimony today will make three points: Number one,
general aviation has been a critical factor for the growth of
our business and has given us important competitive advantages.
Number two, general aviation users pay to fund the aviation
system through excise taxes on fuels. This system is effective.
It is proven and should continue to be the means by which users
pay into the system. Number three, user fees would be
devastating to businesses like myself that depend on general
aviation.
General aviation grows businesses. Restaurant Equipment
World depends on it each and every day to conduct business. We
currently fly a Turbo Cirrus SR 22 aircraft, and we have a
deposit placed on a Cirrus Vision Jet, which will be the fourth
business aircraft for our company. I consider my airplane to be
one of my best employees. It has consistently allowed me to
expand our boundaries and our service area because it allows me
to reach our potential clients fast, even when they are located
hundreds of miles away. I have personally flown our business
aircraft to 49 States in an effort to maintain existing
relationships, attend industry events and pursue new business
for our company.
Our airplanes allows us to control our own travel schedule
so we are able to stay onsite with our customers to make sure
that our interactions are complete and that they are satisfied
with the services that we have provided, all the while not
needing to worry about cutting things short, catching a
commercial flight.
As recently as 2 weeks ago, our aircraft allowed me to
shift my travel schedule in order to meet a new client as well
as being able to make an impromptu visit to a manufacturing
partner on a way to an industry event. On more than one
occasion, our planes provided us a competitive advantage of
allowing us to move very, very quickly. We had a call from a
potential client up in North Carolina. I was able to arrange a
meeting in a matter of hours, something that would have taken
me 2 full days back and forth on a commercial airliner. We
arrived faster than even their local competition, and we got
the contract.
Our airplane allows us to meet multiple customers in
multiple cities and multiple States in a matter of a single
day. We can respond quickly to our customer needs. We can build
relationships with them. And we can help our customers grow
their businesses. And many of our customers are small
businesses themselves.
Both senior management and my rank-and-file staff members
utilize our aircraft as an important tool to serving our
customers' needs. And I am not alone. In my home State of
Florida, for example, general aviation is associated with more
than 7 million jobs and has an estimated economic impact of
$7.5 billion. That is because thousands of other business
owners just like myself use general aviation to grow their
companies.
The current recession has been a challenge for Restaurant
Equipment World. In order to survive and thrive, we have had to
be laser-focused with efficiency. We can't just throw money
wildly at problems and opportunities. We need to be there for
our customers now more than ever. At a time when we have seen
multiple competitors failing, we have been able to grow our
business and have been able to continue hiring employees.
General aviation pays at the pump. Every general aviation
operator pays to support the aviation infrastructure every time
we fly through an excise tax on fuel. This tax has been an
effective way of paying into the system since the earliest days
of powered flight. It directly reflects how much we fly because
we are taxed on the amount of fuel that we use.
The current system requires no additional bureaucracy or
administrative costs for either the system users or the Federal
Government, and Congress sets the tax rate. It is within your
ability to adjust the rate as needed. The $100 per flight fee
would require a new system just to administer and collect this
tax. And once the bureaucracy was in place, that fee could be
changed at any time without congressional input or oversight.
For business owners like myself, there would be an additional
cost just to reconcile and pay these results and invoices.
Today's system of excise taxes works. Creating a new type
of tax would increase costs and decrease efficiency for
everyone involved. The proposed $100 per flight fee would be
devastating to small businesses like my own. Adding an
additional $100 to cover every flight would impact how many
clients we could go and see, especially in rural areas where it
just simply would not be worth stopping for that extra $100 fee
that is imposed.
Our business depends on being responsive to our clients'
needs and building relationships in person. This fee would
absolutely devastate that, and our value proposition would
change dramatically.
In conclusion, I would like to thank you for the
opportunity to testify here before you today. And I urge you to
reject new taxes in the form of user fees for general aviation.
General aviation has made it possible for us to grow Restaurant
Equipment World from a five-person company to one with
approximately 48 employees today. We want to continue to create
jobs but we need general aviation to be able to do it. Allow us
to continue to pay at the pump so we can focus our energy on
making our business stronger instead of paying new fees. Thank
you for your time.
Chairman Graves. Thanks, Mr. Pierce.
I will now go with questions. And I am going to turn to Mr.
West to start us off.
Mr. West. Thank you, Mr. Chairman and ranking member.
And in full disclosure, I want to say that the wings on my
lapel are representative of the fact that I failed the Army
aviation test. So I got into the line to be a paratrooper. That
was a lot simpler.
Now, with that being said, Dr. Button, you said something
in your oral testimony. You said that fuel charges are not
directly related to use. So, I mean, to me, you have got to
have fuel for an aircraft to take off. So fuel charges have to
be directly related to use. So, in a way, we are already
talking about a user fee that is being paid by these users of
the aviation assets. Why do we need to go to a $100 user fee?
And you just debunked the whole thing about the debt and
deficit. So can you explain to us, is there something wrong
with the Airport and Airway Trust Fund where we need to change
the system by which we are supposed to be replenishing it?
Mr. Button. Yes. Thank you for the question. I think there
is an issue here about what pricing does. And I think the
American economy is built upon market principles and pricing.
The importance of direct pricing is that it basically, as I
said, it allocates what you have got. It indicates where you
need more or less. And it provides resources for doing so. The
fuel tax is a tax. There is no direct link between the fuel
charge and the actual use of the system. In a sense, depending
on how far you fly, where you fly and so on, that is not
directly linked to the actual cost of providing air traffic
control services at airports. There is a linkage. I agree with
you. But the linkage is a little bit akin to the fuel tax on
roads. The fuel tax on roads is the same per gallon
irrespective of whether you are driving in the sense of
congested Washington or out in the middle of West Virginia. The
charge is the same. It does not reflect the cost of the system
you are using. And by affecting the cost of what you are using,
you are making sure resources are properly deployed.
My view on the charging is the whole thing needs to be
looked at, so we move forward to a system where you have direct
charging for what you use. This is gradually taking place in
the road services where we have tolls and so on which are
beginning to actually reflect the use made of the system and
the quality of the system. You are going to pay more to go on
the Beltway at 70 miles an hour and possibly even in Texas, you
can drive at 85 miles an hour if you pay enough. That may be a
little extreme. But the fact is, you have got the people using
it----
Mr. West. Well, that is State, like the Florida Turnpike,
the New Jersey Turnpike, Pennsylvania. You are talking about
something that is Federal now.
Mr. Button. May I ask you a question then, sir, what is the
difference economically between a federally supplied facility
and a State supplied facility?
Mr. West. Well, what I am trying to ascertain is, what is
broken with this trust fund system that we need to go from what
we have with a fuel based system, where we can initiate
legislation. I am sure that we can raise the taxes on the fuel
in to this $100. And I would also like to know, who came up
with $100?
Mr. Button. The answer to your second question is actually
also posed in my written evidence. I mean, it is a number. It
could be $95, $250. There doesn't seem to be any rhyme or
reason to go with that particular number.
Mr. West. That is my problem. There is no rhyme or reason.
Someone in the Federal bureaucracy just came up with a dollar
amount. I don't--did they consult with any of the users out
there? I think that is what we are talking about. We are
talking about a problem going around looking for a solution.
Mr. Button. But what you do have I think is a need for
additional revenue for the FAA. And perhaps you do need some
form of an additional charge. I would personally remove the
fuel charge and in some way have a direct user charge, which
may amount to a combination of the two sums of money. It may
not. But different types of aviation use the system in
different ways. And that should be reflected. It should be
reflected in the price they pay. I take the point that general
aviation and business aviation is important. I have done work
on the small airports in Virginia and it is quite clear they
contribute significantly to the local economy. So I don't
disagree at all with any of my colleagues here. It is very,
very important. But it is also important to use it wisely and
sensibly.
You have got to remember small businesses use general
aviation and business aviation, but they also use commercial
aviation. I imagine the bulk of small businesses in this
country actually use commercial aviation. And you have to have
the appropriate balance between the two to benefit small
business in its entirety in this country and not simply look at
the suppliers of aviation services.
Mr. West. Real quickly, what would this do to your profit
margins if we went to this $100----
Ms. Epps. Our profit margins would just diminish. It really
would kill the general aviation community. Pilots already shop
around for the cheapest fuel price they can get because it is a
commodity. And when you whop a $100 departure tax--it is just
going to add incrementally to your cost and drive people away
from using aviation. And once people are driven away from using
aviation, jobs are lost and revenues for example, at our county
airport--are going to just fall off a cliff.
Mr. West. Thank you, Mr. Chairman.
I yield back because I am over time.
Chairman Graves. Ms. Velazquez.
Ms. Velazquez. Thank you.
Mr. Button, clearly, there is a large difference in prices
that commercial airlines and corporate jets pay for using the
same level of air traffic services. Do you believe that this
is--that this difference is too great and should be reduced
whether through fuel taxes, user fees, or some other mechanism?
Mr. Button. I believe it should be reduced. I don't think
they necessarily should pay the same because I think that
commercial aircraft demand additional facilities not required
by general aviation or business planes. So I don't think they
necessarily pay the same, but I think the differential is
extremely large. I think one reason for this is the commercial
air business in a sense generates more revenue and, therefore,
is seen as a mechanism for raising more money, which is not
necessarily the most efficient way of allocating resources. So
I certainly think they should be closed. By how much I think
requires a serious study. But there should be some closing of
that gap in some way or the other.
Ms. Velazquez. Thank you. It appears that both the current
system of fuel taxes and the proposed user fees do not result
in accurate prices. If you were to design a pricing system from
the beginning and did not have any constraint in doing so,
would you build off the current fuel tax system or start fresh
based on a user fee approach?
Mr. Button. I would go to a user fee approach. I think
there may be reasons for taxation on aviation to do with the
environmental implications, which we are not talking about
here, I don't think. But for using the system, I think people
should pay for what they use. That is quite common in virtually
every other part of the economy.
Ms. Velazquez. Given the concerns that were raised by the
witnesses here regarding a user fee that is too onerous, that
it creates another bureaucracy, that compliance will create a
problem for them, what is your reaction to that?
Mr. Button. Well, the reaction to the latter one on the
administration is, I would get rid of the fuel surcharge and
the takeoff fee and have one simple charging mechanism, which
could be meted on the aircraft and you get a bill like your
telephone bill. I think that is not beyond the wisdom of man,
and we do it on the tollways anyway. This mechanism is there.
So the actual administrative charge is once and for all and a
not very large change in the mechanism in my view.
Ms. Velazquez. Let's talk about sequestration for a moment.
You know, it is slated to begin in January, and the FAA stands
to lose $1 billion from its budget. It has been estimated that
air traffic services will have to be curtailed significantly.
If this does occur, how would you recommend the FAA go about
determining where it should reduce air traffic control
services?
Mr. Button. Well, my problem is with the current system of
charging; we have got no indicator of where the best parts of
the system are. The charging system doesn't actually tell you
where the largest demands are. So you have got no mechanism. I
could sit down and do some econometric work. I am by training
an econometrician. But I imagine my results would be far off
the mark. These analyses are. They have a major problem finding
$1 billion. And I think how you actually cut it back, I think
that probably the best way would simply be to ask the guys at
the FAA who have every day contact with the industry, and you
get a rough and ready answer.
Ms. Velazquez. Thank you.
Ms. Epps, I gathered from your testimony that you support
raising fuel taxes instead of user fees, given the fact that it
hasn't been raised for quite a while.
Ms. Epps. Ranking Member Velazquez, they have not been
raised in over 20 years. And the current system of collecting
the tax in the fuel is the most efficient system. It would
eliminate any additional administrative costs.
Ms. Velazquez. Okay. If we have a shortfall and
sequestration takes effect, would you support raising fuel
taxes?
Ms. Epps. That would be the preference over a new user fee.
Ms. Velazquez. Thank you.
Ms. King. Yes, absolutely that would be the preference.
And I disagree with Dr. Button that fuel charges are not
related directly to the use of the system because the more an
aircraft flies and the more sophisticated it is, and the more
it needs the airline type airports, the more fuel it is going
to use and the more tax it will pay.
Ms. Velazquez. Dr. Button, would you like to respond?
Mr. Button. I don't disagree with that. But I would like to
have a much closer correlation between the two. It is
absolutely true, as I said, that there is some correlation. The
correlation I think is not particularly clear. And I think that
needs clarifying. And I think the charges should be closer to
the costs.
Ms. Velazquez. Thank you.
Mr. Pierce, what is your position regarding, if we face a
shortfall, how would we be able to make it up?
Mr. Pierce. If there is a shortfall and Congress votes to
raise these fees and the fees are coming in some form or
another, then I would prefer it to be in a fuel tax. In our
case, we pay quite a bit of taxes into the system. I fly, as I
mentioned, into 49 States. I fly extensively. Therefore, I am
paying a lot more than the people who would fly locally.
Ms. Velazquez. What you are stating is that you would
support raising the fuel tax?
Mr. Pierce. I would support the--if a tax is voted on and
is approved by Congress, that then, at that point, I would
prefer the tax----
Ms. Velazquez. So that is a ``yes'' to my question?
Mr. Pierce. I do not specifically advocate that we--without
knowing the facts and knowing what this amount is, I can't
blanket say that we should or should not raise a specific tax.
Ms. Velazquez. My question was a simple one. If we are out
of money, how are we going to make up for the shortfall? Either
we impose a user fee, or we raise fuel taxes.
Mr. Pierce. I think that it is more complex in looking at
how people use the system. When the system is built for the
airline industry, we may need to raise their taxes at a
different rate than we raise general aviation taxes is my
personal opinion. But I think that it is more complex.
Ms. Velazquez. Mr. Chairman, thank you.
Chairman Graves. For the record, I think all of the
organizations here were in full agreement with an increase in
aviation fuel taxes when we went through the last round of
taking a look at that in the Transportation Committee.
Mr. Hanna.
Mr. Hanna. Thank you, Mr. Chairman.
In the interest of disclosure I am an AOP member, a pilot.
I have watched your videos. Ms. King, you are actually good on
videos but great here today. Thank you for being here,
everyone.
If the assumption is--and that doesn't bias me. I think it
gives me certain input and insights. Although it may bias me, I
am also an airport owner. It is kind of the law of the bigger
fool theory. I bought one, lost a lot of money, and sold it to
another guy who had more money than me. And I am happy about
it.
But what possible reason, Dr. Button, do you have to think
that money collected nationally, $100 at one airport or
another, will make it distributed more fairly or more properly,
as you put it? There is not a lot of evidence----I mean, if you
take, for example, the transportation bill, which is very much
underfunded, we have a formula. The formula doesn't necessarily
go. So I question your major premise that that would be an
outcome.
Mr. Button. First of all, I agree with you entirely about
the allocation of the transportation bill. It is not an ideal
mechanism. In this case, I am very much in favor of assuming--
and this is a strong assumption--the FAA acts sensibly and
rationally. And the FAA is a public agency, which is to serve
the public. It is getting revenue in. It knows where the
revenue is coming from. Therefore, it should direct its
investments to areas where there is a large amount of revenue.
And there is clearly a demand for the services in that area.
That is a rather strong assumption I would agree with.
But if I am treating it as a private business, a private
business--many air traffic control systems in the world in
airports now are corporatized or, in the British case, are
semi-privatized, they have signals from the fees they get where
the investment is needed, required----
Mr. Hanna. Professor, I appreciate that. But let's be
honest--it is subjective. And there is very little evidence
about--throughout this country that every dollar we collect
from the States we send back, if they are lucky, some much
smaller percentage of it. This won't change this. We have a
mechanism that works perfectly well that is, as Ms. King said,
bigger planes that require more runway, more everything, they
burn a hell of a lot more fuel. There is not necessarily a
relationship between the number of times you take off and land
and the amount you actually use. But there is a much more
direct correlation with the fuel in that regard.
Mr. Button. Well, it is true. But you may expend more fuel
taking off and landing, but are you incurring the same
proportional change in infrastructure which is needed? That is
the question.
Mr. Hanna. But that is a question that that doesn't
necessarily answer. I mean, you can still--the fuel tax can
still take that, can still account for that. And we know where
fuel is collected. So we also have a system to do exactly what
you want to do, which is recognize how much money was collected
at what airport, and they can allocate it already without this
additional bureaucracy. I can tell you within--give me a day,
and I can tell you how much fuel is burned at every airport in
America.
Mr. Button. Yes. I can do that as well.
Mr. Hanna. But the point is that you have the ability to
allocate it now.
Mr. Button. We do have. But you have also got to link this
to cost. At the moment, the allocations are not done that way.
If you take a large jet into an airport, you sure as heck burn
a lot more fuel and collect more revenue. But the costs of that
jet landing are not the same as a smaller jet coming in which
burns less fuel. You collect less money from the smaller jet,
it takes up the same length of runway. It takes up basically
the same amount of air traffic control time.
Mr. Hanna. You are actually wrong about that. It doesn't
take up the same length of runway.
Mr. Button. You are right. It is a shorter amount. But that
is my point, by the way, in response to the earlier question.
You would have a differential rate for different types of
aircraft. They would not be bought together. There would be a
gap.
Mr. Hanna. I am listening carefully to you. And I believe
you believe this. Having flown a lot in my life, I frankly find
no benefit to adding this additional bureaucracy and no added
ability to allocate differently or more thoughtfully. And just
the opportunity, though, to eat up a bigger piece of revenue
through bureaucracy that we don't have yet.
Mr. Button. Well, I would simply substitute--I would simply
get rid of the existing charges and have a direct user charge
with one bureaucracy----
Mr. Hanna. So you want to eliminate the gas tax?
Mr. Button. Eliminate it, I think you should pay for what
you use in a society. And in that sense, you tend not to get
overspending too often. You don't run up large deficits too
often.
Mr. Hanna. I yield back.
Thank you, sir.
Chairman Graves. Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman.
It seems like we are off into academic exercises and
thoughtfulness, and that is excellent. I guess one thing I
would take from this is that at some point--hopefully sooner
rather than later--it will be interesting to have general
aviation and the FAA and others participate in some sort of
thoughtful discussion and/or study of, is there a better way to
allocate the costs of general aviation? And I think that would
be fine. I don't know enough about--I am a pilot, but I am a
four- to six-seater plane, so I am not even going to pay any of
these things at the end of the day. So maybe I should be favor
of the new fee.
But general aviation, obviously, has come out in favor of
not doing this. And based on the ranking member's questions,
they are inclined--if there has to be a fee, that they prefer
to do the fuel tax. And so I guess I am just a country doctor
from western Oregon, and if that is what the industry wants and
they are willing to pay for it, regardless of perceived
inequities, in order to balance our budget and help things go
forward--we have a problem right now. A sequester would be
horrible. But we have a debt and deficit problem right now.
And while I think Dr. Button has good points, we are not
going to balance the budget on the aviation industry. If
everyone pays a teeny little bit, which I think Americans are
willing to do their fair share, I think we would come a long
way to fixing our country's problems.
So that is just a comment more than a question, Mr.
Chairman. I think the industry itself has come up with a
reasonable solution. It seems like most of the panel is
moderately interested in that solution. I think most of us are
interested in that solution. Maybe that is a suggestion we can
make to the administration to not cause a problem, but let's
help the industry do what it does best, which is fly people
around, create jobs, and be market and job builders for our
great country and just have it where we do some adjustment of a
gas fee and the jet fuel fee for right now. And then let's
study the problem and figure out if we have a better long-term
solution.
So just a comment, Mr. Chairman.
I yield back.
Chairman Graves. Mr. Schilling.
Mr. Schilling. Thank you, Chairman.
A couple of things. I don't fly at all. I have a few
friends that fly. I do make a pretty mean pizza--at least that
is what they tell me. But one of my concerns is the fact that
this will create another government agency when we already have
a system in place.
And I guess this question is to Dr. Button. The analogy of
the bigger plane--or just the statement on the bigger plane
landing on the runway versus the smaller plane. The bigger is
going to use a lot more fuel; therefore, it will pay more in
taxes. I don't believe that they do make the same impact on the
airports when they are landing or taking off--specifically, I
guess, it would be taking off. It would be like saying the Ford
Escort versus the semitruck using the road. It is kind of that
idea.
But the one thing that I look at is, you know, we have got
pretty much everybody here agreeing that they are willing to
pay more in the fuel tax, just like Mr. Schrader said. So one
of my concerns, again, also is the fact that you were going to
start out with a number out of the hat, $100. Where does it go?
And I do have a young man that--and I guess, what do I tell the
18-year-old kid that is trying to get his, as he is starting to
fly, and that every time he is going to take off or land, it is
going to cost him a couple hundred bucks? I think we are
discouraging new pilots for long term down the road. That gets
pretty expensive, especially for some young folks that are out
there. But when I go back home this weekend, what do I tell
this 18-year-old pilot with the $100 fee? How do I sell that to
him?
Mr. Button. Me? Well, first of all, we would need him to
tell him to enroll in a new degree we are going to have at
George Mason, where you can get credits for acquiring a pilot's
license, so you can get a plus from that. I think the point is
very much--I am the academic here. Therefore, I am putting
forward the academic perspective because I think we have sort
of a consensus without me here. But I also do believe, though,
in user charges. From a pragmatic short-term point of view, you
may want to raise fuel taxes. The administration is saying that
is easy. That does not avoid the arbitrariness of the system,
though. You are talking about $100 being arbitrary. How much
are you going to raise the fuel tax by? What amount? That is
equally arbitrary.
Mr. Schilling. No, it is not.
Mr. Button. But why isn't it? If you want to raise a
certain sum of money, then you can----
It is arbitrary in the sense, if you push up the fuel tax,
you are going to raise a sum of money. You have a target sum of
money you want to raise, you raise the fuel tax to get that
target sum of money. So you have got to have the target sum of
money. Ditto when you have $100, you have got a target sum of
money, $1.2 billion, I believe. That is a target. So the target
is there whichever way you go. Both are arbitrary.
As for your son, I think you ought to say he has a great
future in aviation, that the aviation industry is growing. And
in the longer term, if the economy picks up, there will be a
lot of opportunities for flying, and he will be earning a large
salary, perhaps producing pizzas and flying them around. I
don't know.
Mr. Schilling. Next question.
Mr. Pierce, the small business you are in, being a small
business, the one thing that is very frustrating is we work on
fractions. You are running this business, you are paying
utilities, rent, what have you. The government continues to
come in and wants to take another piece of that fraction.
Between the regulations and everything going on, I mean, do you
find that that is a big problem within your business?
Mr. Pierce. Absolutely. The social cost of doing business
is perhaps one of our largest challenges. The economy has
obviously hurt our industry and a lot of my competitors, as I
have mentioned. And you are so focused on trying to just to
work to serve your customers and to do what you need to do to
take care of your employees and allow them to have good places
to come to work and grow as individuals and care for their
families. And more and more regulations just tend to keep kind
of poking their nose in where more and more time is spent, not
only looking at the regulations but also determining what costs
to allocate in terms of budgetary items for accountants and
lawyers and everybody else to make it so that a small
businessperson, like myself, can understand all of these new
charges and regulations and how to properly comply with them.
And I think that when we look at things like the administrative
cost of this new proposal, this would add to that burden in
addition to the other social costs we are already incurring.
Mr. Schilling. Does your food service company absorb that
cost? Or do you pass it on to your customers?
Mr. Pierce. We have absorbed to some degree as much as we
can. You take part of the pain, and eventually you figure out
that if you take all the pain, you are going to go out of
business yourself. So that has been passed along to our end
user customers and has increased, obviously, their costs for
equipment and their cost for services, which is then revenue
that they can't use to pay to grow their own companies.
Mr. Schilling. That they pass on to their customers also.
Mr. Pierce. Absolutely.
Mr. Schilling. So the bottom line is, all of these fees go
down to the hardworking people of the United States of America.
With that, I yield back.
Mr. Pierce. Thank you, sir.
Chairman Graves. A couple points of clarification.
In the hearings about the proposed user fee, the $100 user
fee that the administration is putting forth, what it is is
revenue mining, plain and simple. There is no indication
whatsoever that this money is going to go to the airport trust
fund. There is none. It goes into general revenue. An increase
in fuel taxes however or fuel taxes going into the general
aviation trust fund to pay for infrastructure that we use on
our airports. What this is is revenue mining on the
administration's part. And it would cripple aviation.
But I do have a question for Dr. Button. In terms of paying
for what you use or making it equitable, how you are going to
do it. And you would have a different fee structure for
different aircraft. But if you take two different daily
operations and you take a crop duster out there that is flying
an air tractor, which is a turbine, and he makes 50 takeoffs
and 50 landings in one day but never exceeds 200 feet above
ground level, and you have got a King Air that takes off from
point A to point B, and he pays that $100 fee, whatever it is,
and that crop-duster pays that $100 fee for all 50 of those
operations, how is that equitable when that crop duster never
accesses the system nor does he use the air traffic control
system? And how can you argue that that is an equitable system
but a fuel charge is not?
Mr. Button. I entirely agree with you. I don't think that
is equitable. I think the issue is that there should be a
charging system to reflect the fact one chap is doing 50-odd
trips. The charge would probably not be that large because he
is not using air traffic control facilities in that sense.
Those that fly higher do; therefore, their fees would be
higher.
And that would be, you know, based on the actual cost of
using the system. The problem with any fixed charge is that it
is largely arbitrary, and this is true of the $100. It is an
arbitrary number. The cut-off point for what aviation types pay
and don't pay is also arbitrary. So there is a certain
arbitrariness about that.
I am very much in favor of a general user charge. How much
does it cost for that plane in terms of the costs imposed on
the FAA and the other providers in the air transport
infrastructure? The airports, it may be zilch in the case of a
crop-duster taking off from a field, or it may be large in the
case of a large commercial aircraft. They should pay for the
appropriate cost of using the airport and the air traffic
control system. Just like if we go and purchase anything else,
we pay the cost of producing it and if we--a lot of us want it,
the price goes up, and the supplier supplies more. There are
signals in the pricing mechanism. That is the way the American
system works. Apple uses it pretty well, and they are the most
successful company in the world.
Chairman Graves. Then how do you account for the rest of
the general aviation out there, the non-turbine aircraft, the
piston-tire aircraft, the weekend flyers.
Mr. Button. I think it is like anything else, there should
be an appropriate charge for them if they use any publicly
provided facilities. If they use a private air field, that is
their own cost. If they don't use any form of an air traffic
control facility, that is not a cost to the Nation. But if they
do, they should pay.
Chairman Graves. Well, my question, you mentioned, you
know, that you just meter this by that takeoff and you get a
bill in the mail for that takeoff. How on earth are you ever
going to police something like this, and put a bureaucracy in
place to try to account for that and decide who is taking off
from the private field, who is not taking off from a private
field, when you have aviation fuel taxes that pretty much
account for that?
Mr. Button. Well, the aviation fuel taxes. If you take--why
are you paying an aviation fuel tax if you are taking off from
your own field? You are not using up any controlled air space.
I mean, why should you pay the government for that facility
which you are not using. I have got some sympathy, I think you
know, in the case of general aviation taking off from a private
field, landing and flying through uncontrolled air space. You
are not using any national resources. I would sympathize there
should be no payment for that.
Chairman Graves. Okay, let's take out private air fields
and just talk about smaller air fields.
Mr. Button. Small air fields if they are privately owned,
the private company owning them presumably would pay an
appropriate take-off landing fee.
Chairman Graves. Very, very, very few--I am talking about
municipal airports. The vast majority of airports in this
country, municipal county-owned.
Mr. Button. Well, presumably the airport, which someone has
to pay for that airport somewhere along the line. Why not pay
directly for the facilities used? We do this in virtually every
other thing we do in society. Certainly, we don't do it
perfectly. Let's. You know I am not----
Chairman Graves. It is effective. But isn't that exactly
what fuel charges do is pay directly for the use of that----
Mr. Button. It is paid directly for the fuel you use, but
you may have a runway of a certain length, which two aircraft
of slightly different sizes use, one burning more fuel than the
other; therefore, one pays more tax than the other one, but
they are using exactly the same facility.
Chairman Graves. Well, see, then you get right back into
the situation in which you are going to have to put a
bureaucracy in place which is going to cost money just to be
able to determine if, you know, how much a Stinson 108 uses as
opposed to a Gulfstream, how much runway they are going to use.
Mr. Button. I accept there is a bureaucratic cost. I think
I would get rid of the existing charges, which would reduce the
burden of that. But the other charges do not involve actually
the Federal systems, the point and factor over here, because a
lot of the airports are owned by States or municipal
authorities, and the airport themselves, presumably, should act
commercially in the way they set their fees. The air traffic
control, which is, as far as I can see, is the primary issue,
which is the FAA----
Chairman Graves. Before we have a vote--we have a series of
votes coming up and I would like to ask you if you would like
to weigh in at all, anyone else on what I have asked?
Ms. King.
Ms. King. Yes, I would like to address the fact, Dr.
Button's position was taken by the head of the FAA equivalent
in Australia, and what they did is pursue exactly that
philosophy that if you are out in the outback and you are not
coming into town, why should you be paying fuel taxes? We will
get rid of the fuel taxes, and we will put in user fees at all
of the towered airports. They did that. It has been
devastating. The airports--the philosophy was that with the
user fees, the pilots using the airport will have an incentive
to control the costs that are being charged to them. But the
power is so unequal between the government and an individual
pilot, that that is not an effective mechanism. It did not
work. And I don't believe that it will work. And it has been
devastating to flight training organizations in areas like
Sydney and many other places up and down the east coast where
they did flight training. What is left in Australia has moved
inland, away from the air traffic system.
The point is that air traffic is a national transportation
resource and even the air tractor that is flying out of a crop-
duster field and not taking off and landing from an airport
with a tower, that pilot trained somewhere. The aircraft was
built and certified by the FAA. There is a whole lot of FAA
cost and national cost involved in it. And I think that the
national fuel system is the best way to pay for it. The issue
of the runway and, a big airplane versus a small airplane
landing on it, the runway is the length that it is, the longer
length in smaller towns, because they want the bigger business
aircraft there. And so they pay more to essentially compensate
the municipality for being willing to finance that big of a
runway.
Chairman Graves. I apologize to Mr. Mulvaney for not
getting to your questions. I want to apologize for the vote
series that we have. It is going to probably take, because we
have got a motion to recommit in there. It is probably going to
take about an hour, so unfortunately, I am probably going to go
ahead and adjourn the hearing so you all don't have to sit
around and wait on us to do our job.
But I want to thank all of our witnesses for being here
today.
It is very evident to me, and 195 of my colleagues which
signed the letter opposing the per flight user fee on
operations in the aviation industry, is a very bad policy. It
is going to add to an already massive federal bureaucracy, and
it is going to create a lot of unnecessary financial and
regulatory burdens on small businesses. My job and the job of
this Committee is going to be watched very carefully what
happens when we do an omnibus spending bill at the end of the
year, to make sure that user fees are not in that particular
piece of legislation, and to watch when it comes to
sequestration, which we will have a hearing in this Committee
on sequestration this week, in fact tomorrow, and we will have
another hearing next week, and another hearing on the financial
cliff that is coming.
But we are going to do everything we can to make sure that
user fees are not included in any end-of-the-year spending
measures.
And with that, I would ask unanimous consent that members
have 5 legislative days to submit statements and supportive
materials for the record.
Without objection, that is so ordered. And with that, the
hearing is adjourned. I appreciate very much all of the
witnesses for coming today.
[Whereupon, at 2:09 p.m., the committee was adjourned.]
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