Federal Aviation Administration: Cost Allocation Practices and
Cost Recovery Proposal Compared with Selected International
Practices (08-JUN-07, GAO-07-773R).
Anticipating the expiration of the Federal Aviation
Administration's (FAA) current authorization at the end of fiscal
year 2007, the administration submitted a proposal on February
14, 2007, for reauthorizing FAA and the excise taxes that fund
most of its budget. This proposal would introduce cost-based
charges for commercial users of air traffic control services,
eliminate many current taxes, substantially raise fuel taxes for
general aviation users to pay for their use of air traffic
control services, and charge commercial and general aviation
users a fuel tax to pay primarily for airport capital
improvements. In January 2007, FAA released the results of a
recently completed cost allocation study in support of the
administration's proposal for transitioning to user fees. FAA and
the administration used this study to determine the factors that
drive the costs of providing air traffic control services,
allocate these costs to various users of air traffic control
services, and support the development of alternative methods to
recover those costs. On March 21, 2007, we testified before the
House Subcommittee on Aviation, providing our observations on
selected changes to FAA's funding and budget structure contained
in the administration's reauthorization proposal. As requested,
we are also providing comparative information to further assist
Congress in considering FAA's funding proposal. Accordingly, we
addressed the following question: How do the proposed practices
for allocating and recovering the cost of FAA's air traffic
control operations compare to the practices of other countries?
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-773R
ACCNO: A70497
TITLE: Federal Aviation Administration: Cost Allocation
Practices and Cost Recovery Proposal Compared with Selected
International Practices
DATE: 06/08/2007
SUBJECT: Air traffic control systems
Allocation (Government accounting)
Authorization
Commercial aviation
Comparative analysis
Cost analysis
Energy costs
Excise taxes
Fuel taxes
Prices and pricing
Proposed legislation
Tax administration
User fees
Policy evaluation
International organizations
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GAO-07-773R
* [1]PDF6-Ordering Information.pdf
* [2]Order by Mail or Phone
June 8, 2007
The Honorable James L. Oberstar
Chairman
The Honorable John L. Mica
Ranking Republican Member
Committee on Transportation and Infrastructure
House of Representatives
The Honorable Jerry F. Costello
Chairman
The Honorable Thomas E. Petri
Ranking Republican Member
Subcommittee on Aviation Committee on Transportation and
Infrastructure
House of Representatives
Subject: Federal Aviation Administration: Cost Allocation Practices and
Cost Recovery Proposal Compared with Selected International Practices
Anticipating the expiration of the Federal Aviation Administration's (FAA)
current authorization at the end of fiscal year 2007, the administration
submitted a proposal^1 on February 14, 2007, for reauthorizing FAA and the
excise taxes that fund most of its budget. This proposal would introduce
cost-based charges for commercial users of air traffic control services,
eliminate many current taxes, substantially raise fuel taxes for general
aviation users to pay for their use of air traffic control services, and
charge commercial and general aviation users a fuel tax to pay primarily
for airport capital improvements. In January 2007, FAA released the
results of a recently completed cost allocation study^2 in support of the
administration's proposal for transitioning to user fees. FAA and the
administration used this study to determine the factors that drive the
costs of providing air traffic control services, allocate these costs to
various users of air traffic control services, and support the development
of alternative methods to recover those costs. On March 21, 2007, we
testified before the House Subcommittee on Aviation,^3 providing our
observations on selected changes to FAA's funding and budget structure
contained in the administration's reauthorization proposal. As requested,
we are also providing comparative information to further assist Congress
in considering FAA's funding proposal. Accordingly, we addressed the
following question: How do the proposed practices for allocating and
recovering the cost of FAA's air traffic control operations compare to the
practices of other countries?
^1Two bills were introduced on request in the House and Senate, H.R. 1356
and S. 1076, respectively, the Next Generation Air Transportation System
Financing Reform Act of 2007.
^2Federal Aviation Administration, FY 2005 Cost Allocation Report
(Washington, D.C., Jan. 31, 2007).
To address this question, we reviewed FAA's 2007 cost allocation report
and the administration's reauthorization proposal. We interviewed
officials from FAA, selected air navigation service providers (ANSP) ^4
in other countries whose practices we previously reviewed,^5
EUROCONTROL,^6 and international aviation industry associations. We
selected the ANSPs in Australia and Canada--Airservices Australia and NAV
CANADA, respectively--and EUROCONTROL as illustrative of similarities and
differences in the way that air traffic control costs can be allocated and
recovered. Both Australia and Canada have relatively high levels of
general aviation activity, which makes their ANSPs particularly useful for
comparison to FAA, since the United States has the highest level of
general aviation activity in the world. Significant inherent differences
between the U.S. and other countries' ANSPs worldwide cannot be accounted
for in this study. For instance, the administrative management function of
each country's ANSP differs. NAV CANADA is a privately owned ANSP, while
Airservices Australia is a wholly government-owned ANSP. Our selection of
ANSPs is a nonprobability sample, and information presented about them
cannot be used to make inferences about the ANSPs we did not review. We
compared the practices described in FAA's 2007 cost allocation report to
the cost allocation practices of the selected ANSPs. We also compared the
cost recovery practices set forth in the administration's proposed cost
recovery legislation to the cost recovery practices of the selected ANSPs.
(See enc. I for additional information on our methodology.) We conducted
our work from April 2007 through June 2007 in accordance with generally
accepted government auditing standards.
^3GAO, Federal Aviation Administration: Observations on Selected Changes
to FAA's Funding and Budget Structure in the Administration's
Reauthorization Proposal, GAO-07-625T (Washington, D.C.: Mar. 21, 2007).
^4An ANSP is an organization that provides air navigation services to
ensure safe flights in an efficient and cost-effective way. FAA's Air
Traffic Organization is the ANSP for the United States, while Airservices
Australia and NAV CANADA are the ANSPs for Australia and Canada,
respectively.
^5GAO, Air Traffic Control: Characteristics and Performance of Selected
International Air Navigation Service Providers and Lessons Learned from
Their Commercialization, GAO-05-769 (Washington, D.C.: July 29, 2005).
^6EUROCONTROL is the European Organisation for the Safety of Air
Navigation, which comprises 37 member states, including the United
Kingdom, Germany, and France. The agency is responsible for developing a
seamless pan-European air traffic management system in coordination with
each country's government/ANSP.
Summary
The practices FAA used to allocate air traffic control costs to users and
the administration proposed to recover these costs from users differ
somewhat from the practices employed by ANSPs in other countries. The
International Civil Aviation Organization (ICAO)^7 has established
guidance for allocating and recovering costs attributed to air
traffic-related services, but member states are not legally bound to
follow its principles. In its 2007 cost allocation study, FAA allocated
its total air traffic control costs to the three air traffic service
categories that drive these costs--terminal services, en route services,
and oceanic services. ^8 FAA then assigned the costs for providing these
services to two types of aircraft--high-performance aircraft, which
include all fixed wing turbine-engine aircraft, and piston aircraft, which
include fixed-wing piston-engine aircraft and helicopters--because
different aircraft types affect costs differently. More specifically,
turbine- and piston-engine aircraft fly at different altitudes and speeds,
and these differences in operating characteristics lead to differences in
the costs of providing air traffic control services. The ANSPs with
cost-based charges that we reviewed also allocate costs to each of their
service categories--although the percentages allocated to each category
vary by country--but none of these ANSPs further allocate costs by the
type of aircraft used. To recover costs, the administration proposes
charging commercial aircraft users for en route services based on distance
traveled and for terminal services based on airport size and aircraft
weight. This proposed practice for recovering terminal costs generally
resembles the practices of the other ANSPs we reviewed,^9 but the proposed
practice for recovering en route costs differs because the other ANSPs
also consider aircraft weight--a factor that increases the share of costs
recovered from larger aircraft that can carry more fare-paying passengers.
To recover costs from general aviation users, the administration is
proposing a fuel tax of 56.4 cents per gallon for air traffic control
services.^10 By contrast, some other ANSPs^11 currently charge users of
small general aviation aircraft an annual fee based on such factors as
aircraft weight and number of flight operations.
^7ICAO is an advisory organization affiliated with the United Nations that
aims to promote the establishment of international civil aviation
standards and recommended practices and procedures.
^8Terminal services are air traffic control services that FAA staff
provide to guide flights from the terminal to the runway and through
takeoff. These services rely primarily on control towers and terminal
radar approach control centers (TRACON). TRACONs then pass flights off to
air route traffic control centers, which provide en route control until
the flights near their destinations; these services are referred to as en
route services. Oceanic services are analogous to en route services,
except that the aircraft is flying over the ocean, where fewer
communication, navigation, and surveillance capabilities are available
than over land. FAA also allocates costs to flight service stations (FSS),
which provide pilot and weather briefings through automated flight service
stations. However, FAA did not further allocate FSS costs among users
because (1) costs are expected to decline substantially in future years,
(2) the cost recovery proposal funds these costs from the General Fund,
and (3) charging user fees for these services would encourage general
aviation pilots to fly "outside the system," which would negatively affect
safety.
^9NAV CANADA does not vary terminal charges by airport size.
^10The administration would impose an additional fuel tax of 13.6 cents a
gallon to fund the Airport Improvement Program, Essential Air Services,
and Research, Engineering, and Development, bringing the total fuel tax to
70 cents per gallon.
^11Some European ANSPs do not charge general aviation users an annual fee.
Background
FAA currently receives the majority of its support (82 percent) from the
Airport and Airway Trust Fund (trust fund), whose revenues come from a
series of excise taxes paid by aircraft operators. These excise taxes are
associated with purchases of airline tickets and aviation fuel, as well as
with cargo shipment. In fiscal year 2006, the ticket tax was the largest
single source of trust fund revenue, followed by the international
departure and arrival tax, the passenger segment tax,^12 and fuel taxes.
These trust fund revenues are then available for use subject to
appropriations. In addition to these revenues, General Fund revenues have
been used in most years to fund FAA. About $2.6 billion was appropriated
for fiscal year 2006 from the General Fund for FAA's operations. This
amount represents about 18 percent of FAA's total appropriation.
FAA has expressed concern that under the current funding structure,
revenues depend heavily on factors such as ticket prices that are not
connected to FAA's workload and costs. In addition, FAA maintains that
every cost allocation study the agency has done over the last three
decades has found that general aviation is responsible for at least 11
percent of air traffic costs, yet general aviation users pay roughly 3
percent of the taxes that go into the trust fund.^13 According to FAA,
under the current structure, increases in the agency's workload may not be
accompanied by revenue increases because users are not directly charged
for the costs that they impose on FAA for their use of the national
airspace system. Revenues collected from ticket taxes--which are 7.5
percent of ticket prices--are primarily dependent on the ticket price and
the number of airplane passengers, while air traffic workload is primarily
driven by the number of flights, the airports that aircraft use, and the
distances that aircraft fly. This disconnect raises three key concerns
about the current funding structure--its long-term revenue adequacy,
equity, and efficiency. The administration has cited these concerns as its
reasons for proposing major changes in FAA's funding, including
introducing user fees to recover the costs of air traffic services.
ICAO has established guidance on ascertaining the full costs of air
navigation services and developing a charging system aimed at recovering
those costs. The policies allow for different methods of allocating costs
attributed to en route, terminal, and oceanic services and recovering
those costs from users. Member states are not legally bound to follow ICAO
policies, but many ANSPs worldwide charge some type of user fees to
recover their air navigation services costs. However, the schemes for
charging and recovering these user fees vary. The ANSPs we reviewed rely
on user charges as their primary source of revenue, but ANSPs can also
choose to recover less than the full costs of some services in recognition
of local, regional, or national benefits. According to FAA, its
methodology for allocating air traffic control costs and the method
contained in the administration's reauthorization proposal to recover
these costs follow ICAO guidance.
^12The passenger segment tax is levied on each segment of a passenger's
domestic flight. For example, a passenger flying from New York to Seattle,
with a connection in Chicago, travels two segments--the first from New
York to Chicago and the second from Chicago to Seattle. The segment tax
rate was $3.30 in 2006.
^13The 3 percent of taxes that go into the trust fund does not include
taxes paid by air taxis and fractionally owned aircraft. Similarly, the
amounts FAA attributed to general aviation in its 2007 cost allocation
study do not include costs driven by air taxis or fractionally owned
aircraft.
Proposed FAA Practices for Allocating Costs Differ from Those of Selected
Providers
FAA's methodology for allocating air traffic control costs and the method
contained in the administration's reauthorization proposal to recover
these costs from users differ somewhat from practices currently employed
by ANSPs in other countries. In its 2007 cost allocation study, FAA
allocated its total air traffic control costs to the three air traffic
service categories that drive its costs and then assigned the costs for
providing these services to two user groups defined by aircraft type.^14
The ANSPs we reviewed also allocate costs to each of their service
categories but do not further allocate costs by aircraft type. To recover
costs from commercial users, the administration proposes charging
commercial aircraft for (1) en route services based on distance traveled
and (2) terminal services based on airport size and aircraft weight. The
other ANSPs employ an aircraft weight factor that increases the share of
en route costs recovered from larger aircraft. To recover costs from
general aviation users, the administration proposes a fuel tax; in
contrast, the ANSPs we reviewed charge users of small general aviation
aircraft an annual rate based on such factors as aircraft weight or number
of flight operations. In addition, the administration proposes a
congestion fee for all aircraft landings and takeoffs at congested
large-hub airports. While other ANSPs do not charge a congestion fee, ICAO
standards indicate that such fees are appropriate.
Both FAA and Selected ANSPs Allocate Air Traffic Control Costs by Type of
Service, but FAA Differs in Allocating Costs by Type of Aircraft
In its January 2007 study, FAA employed a two-stage methodology to
allocate the costs of providing air traffic control services. First, FAA
allocated its total air traffic control costs among the air traffic
service categories that drive its costs--terminal services, en route
services, and oceanic services. Based on an analysis of activities at
service category locations, FAA allocated about 51 percent of its air
traffic control costs to terminal services, about 46 percent to en route
services, and about 3 percent to oceanic services.^15 FAA then assigned
air traffic costs to user groups based on aircraft type.
The two principal user groups are the high-performance group, which
includes all fixed-wing turbine-engine aircraft operations, and the piston
aircraft group, which includes fixed-wing piston-engine aircraft
operations and helicopters. According to FAA, this cost allocation
methodology is based on the assumptions that high-performance users
generally compete for the same air traffic control resources, have more
time-sensitive operations, and require more complex air traffic equipment
and procedures than do piston aircraft operations. Differences in the
speed and cruising altitudes of the two aircraft types also affect their
en route costs.
^14Under the FAA proposal for funding air traffic control services, some
aircraft (such as military aircraft and air ambulances) would be exempt
from charges. The cost allocated to exempt aircraft would be covered by
general revenue funds.
^15This analysis does not include costs allocated to flight service
stations.
The other ANSPs we reviewed employ a different methodology for allocating
air traffic control service costs. Like FAA, most foreign ANSPs we
reviewed allocate costs based on their services and operational
activities, according to the Civil Air Navigation Service Organization
(CANSO).^16 However, the foreign ANSPs we reviewed differ from FAA in that
they do not allocate costs by specific user group or by aircraft engine
type. Officials from CANSO and NAV CANADA also told us that FAA would be
unique among ANSPs in further allocating terminal and en route service
costs to user groups as proposed. In addition, the proportion of costs
allocated to various services varies by country. For instance, in fiscal
year 2003, NAV CANADA allocated about 53 percent of its total air traffic
control costs to en route services, 43 percent to terminal services, and
the remaining 4 percent to oceanic services. In Europe, EUROCONTROL member
states' ANSPs allocate on average about 80 percent of their costs to en
route services and about 20 percent to terminal services.^17 EUROCONTROL
member states' ANSPs also allocate a portion of their cost base to the
administrative services provided by EUROCONTROL, according to CANSO.
Both Proposed FAA and Selected ANSP En Route Charges Are Based on
Distance, but ANSPs Factor Weight into Charges and Only FAA Imposes a
Congestion Charge
Under the administration's proposal for recovering the costs of air
traffic control services, FAA's practices would both resemble and differ
from those of the other ANSPs we reviewed. (See table 1 for a comparison
of these practices). Like these providers, FAA would charge user fees to
commercial aircraft for air traffic control services. FAA's en route
service charge is based on the distance an aircraft flies in
U.S.-controlled airspace.^18 Other ANSPs charge fees for en route services
based on the distance traveled but also factor aircraft weight into their
fees. For instance, Airservices Australia bases its en route charge on
both the distance flown in an Australian flight information region^19 and
the maximum permissible takeoff weight of the aircraft. Hence, the charge
for a given distance varies in part with the maximum
takeoff weight of the aircraft. For example, Airservices Australia charges
a unit rate
of $3 for a Boeing 747-100 weighing 324 metric tons, while it charges a
unit rate of $0.68 for a Gates Learjet 35A weighing about 8 metric tons.20
According to an official from NAV CANADA, which also uses a weight factor
in determining en route charges, aircraft weight is an indicator of the
value of service provided because the ability of an aircraft to carry
passengers or cargo is related to its weight. According to EUROCONTROL,
aircraft weight is included to reflect the relative contributing
capacities, or payload, of different aircraft because larger and heavier
planes carry more passengers and generate more revenues and can therefore
pay relatively more for air navigation services than smaller and lighter
planes flying the same distances. Including weight as a factor results in
a larger share of the costs being recovered from heavier aircraft than if
cost recovery is based on distance alone. Incorporating weight as a factor
in determining charges is consistent with ICAO guidance.
^16CANSO is an international trade organization that represents the
interests of ANSPs worldwide. FAA--along with NAV CANADA, Airservices
Australia, EUROCONTROL member states' ANSPs, and other ANSPs--is a member
of CANSO.
^17The composition of air traffic differs among countries and could
account for the variation in the proportion of costs allocated to various
services. For example, the United States has a significantly larger
general aviation segment than other countries.
^18FAA currently charges overflight fees to operators of aircraft that fly
in U.S.-controlled airspace but neither take off nor land in the United
States. These fees are purely mileage based, with no weight factor.
^19An Australian flight information region is the entire airspace over
continental Australia and other airspace allocated by ICAO to Australia.
Table 1: FAA and Selected ANSP Cost Recovery Practices
Uses an Uses Uses Uses Uses Levies a Charges Charges
aircraft airport weight distance congestion fuel tax an business
weight size as factor factor pricing for annual jets
factor a factor for en for en general fee for user
for for route route and most fees
terminal terminal charges charges commercial general
charges charges aviationa aviation
United X X X X X
States
Australia X X X X X X
Canada X X X X X
EUROCONTROL X X X b X
member
states
Sources: FAA, Airservices Australia, NAV CANADA, EUROCONTROL.
a European Union member states levy fuel taxes for private pleasure
flying.
b Some EUROCONTROL member states charge a flat rate to general aviation
aircraft using visual flight rules.
Under the administration's proposal, FAA would recover its costs for
terminal services much as our selected ANSPs do, basing its charges for
commercial aircraft on airport size and aircraft weight. For example, the
rate for landing at a large U.S. hub airport--one with at least 1 percent
of total U.S. passenger enplanements--would be somewhat higher than the
rates at smaller airports that have FAA air traffic control towers. FAA
would vary rates for aircraft weight because larger aircraft require
greater separation, thus imposing greater terminal airspace costs,
according to FAA officials. Similarly, EUROCONTROL member states and NAV
CANADA take the maximum permissible takeoff weight of the aircraft into
account when setting terminal service charges. Airservices Australia also
bases terminal service charges on the weight of the aircraft but
incorporates location-specific charges. For instance, Airservices
Australia currently charges a rate of $4 per metric ton for an aircraft
that weighs more than 5.7 metric tons to land in Sydney, but $3.50 if the
same aircraft
lands in Melbourne.^21 Airservices Australia developed location-specific
charges to ensure that funding for air traffic services would be
decentralized and locally driven. NAV CANADA differs somewhat from some of
its ANSP counterparts in that it does not vary its charges for terminal
services by airport size.
20All financial amounts have been converted to U.S. dollars from each
country's local currency using the Organization for Economic Cooperation
and Development's purchasing power parities for gross domestic products.
The tonnage is also shown in metric tons.
The administration's proposal to charge a congestion fee for all aircraft
takeoffs and landings at congested large-hub airports would also differ
from the practices of the other ANSPs we reviewed. These ANSPs do not
currently charge a congestion fee for all aircraft takeoffs and landings.
However, beginning in March 2008, NAV CANADA will charge $8 a day for
aircraft weighing less than 3 metric tons. Most of these are general
aviation aircraft that depart from seven major international airports,
including Vancouver, Toronto Pearson, and Montreal Trudeau international
airports. According to a NAV CANADA official, this daily charge was
created because there was a need for small general aviation aircraft to
contribute more for services at these airports. The official also noted
that NAV CANADA recognized that this daily charge might encourage some
aircraft operators to use alternative airports, which would promote
efficiency by helping minimize the incidence of larger aircraft having to
wait for smaller aircraft to take off or land.^22 Airservices Australia
also charges small general aviation aircraft additional fees for services
at six airports, including Sydney and Melbourne (see the following section
for a description of Airservices Australia's fees for general aviation
users). Neither NAV CANADA nor Airservices Australia refers to the higher
fees charged to general aviation for using specified airports as
congestion charges.
FAA Charges a Fuel Tax for General Aviation Users, while ANSPs Impose an
Annual Fee
Under the administration's proposal, FAA's practices for recovering costs
from general aviation users would differ from the practices of the other
ANSPs we reviewed. Specifically, all general aviation operators would be
charged a fuel tax of 56.4 cents per gallon for air traffic control
services, an increase of about 35 cents per gallon over the 21.8 cents
fuel tax that general aviation operators currently pay into the trust fund
to fund FAA. By contrast, the ANSPs we reviewed charge a fee that they
collect annually from operators of small general aviation aircraft.^23 For
instance, NAV CANADA charges $58 for aircraft weighing up to 2 metric tons
and $192 for some aircraft weighing over 2 but less than 3 metric tons.
Thus, for example, small aircraft--such as a Cessna 172 that weighs about
1 metric ton--pay $58 annually for
air navigation services.^24 NAV CANADA adopted this annual fee method
primarily because it is administratively simple. In addition, the modest
fee level recognizes that a substantial percentage of small general
aviation aircraft operate at airports with no air traffic control towers
and that many small aircraft have relatively few flights per year.
Airservices Australia charges operators of general aviation aircraft
weighing less than 2.5 metric tons and flying 200 or fewer flights per
year annually from about $44 to more than $928 depending on how many
flights an operator makes and whether the operator also uses Airservices
Australia's en route services.^25 This approach is similar to the
administration's proposal in that increased aircraft operation will result
in a higher fee. However, unlike the administration's proposal, the fee
level is not set to recover a specified share of costs. In Canada and
Australia, business jets and other aircraft that weigh more than 3 and 2.5
metric tons, respectively, are charged flight-specific user fees.^26
^21Airservices Australia's rate for aircraft weighing more than 5.7 metric
ton is as of June 2006. The rate will be increasing in Melbourne beginning
on July 1, 2007.
^22In some European countries, airports may charge higher landing fees.
^23Countries may charge a fuel tax for purposes other than air navigation
services. For example, in Canada, the federal government charges an excise
tax on aviation gasoline and jet fuel. The government considers the
revenue from those excise taxes on fuel as general tax revenue.
Agency Comments
We provided copies of a draft of this report to the Department of
Transportation for review and comment. The Federal Aviation Administration
responded and generally agreed with the report's contents, noting that its
cost allocation and proposed cost recovery practices differ somewhat from
those of the other ANSPs discussed in the report. FAA further noted that
its cost allocation method is more detailed than the methods of the other
ANSPs. In addition, FAA provided technical clarifications, which we
incorporated into the report as appropriate.
________________________________________
We are sending copies to the Secretary of Transportation and the
Administrator of the Federal Aviation Administration, and other interested
parties. In addition, the report will be available on the GAO Web site at
http://www.gao.gov.
^24Except for private aircraft not used for business purposes--that is,
those used exclusively for recreational purposes--the fee for these
aircraft is composed of a base rate of $58 regardless of the aircraft
weight. This same fee also applies to aircraft between 2 and 3 metric tons
restricted to aerial agricultural spraying.
^25Airservices Australia's annual charge is as of June 2006. Its annual
charge will increase beginning on July 1, 2007. The annual charge also
does not include flights into six specified airports, including Sydney and
Melbourne.
^26Some countries in Europe charge general aviation an additional approach
fee if the aircraft is using an instrument landing system, regardless of
aircraft weight.
If you or your staffs have any questions about this report, please contact
me at (202) 512-2834 or [email protected] . Contact points for our
Offices of Congressional Relations and Public Affairs may be found on the
last page of this report. Individuals making key contributions to this
report are listed in enclosure II.
Gerald L. Dillingham, Ph.D.
Director, Physical Infrastructure Issues
Enclosures
Enclosure I: Scope and Methodology
To compare the practices set forth in the Federal Aviation
Administration's (FAA) cost allocation system and the administration's
reauthorization proposal with the practices of other countries' air
navigation service providers (ANSP)--Airservices Australia and NAV
CANADA--we reviewed FAA's cost allocation report and the administration's
reauthorization proposal and Airservices Australia's and NAV CANADA's cost
allocation and cost recovery policies and documents, including their
charging schemes, which were publicly available. We selected the latter to
illustrate the similarities and differences in the way air traffic control
costs can be allocated and recovered. In addition, Australia and Canada
have relatively high levels of general aviation activity, which make
Airservices Australia and NAV CANADA particularly useful for comparison to
FAA, since the United States has the highest level of general aviation
activity in the world. Significant inherent differences between the U.S.
and other countries' ANSPs worldwide cannot be accounted for in this
study. We examined FAA's method of allocating costs in order to compare it
with other ANSPs' methods. Our selection of these ANSPs is a
nonprobability sample, and our observations about them cannot be used to
make inferences about the ANSPs we did not review. We also interviewed
officials from FAA, NAV CANADA, the Civil Air Navigation Service
Organization, EUROCONTROL (the European Organisation for the Safety of Air
Navigation), and the International Air Transport Association.
We converted the local currency of each country into U.S. dollars using
the Organization for Economic Cooperation and Development's purchasing
power parities for gross domestic products. We also examined the
International Civil Aviation Organization's guidance document, Policies on
Charges for Airports and Air Navigation Services, and compared it with
FAA's cost allocation practices and the administration's cost recovery
proposal. In addition, we reviewed prior GAO reports and testimony and
interviewed FAA officials. Finally, we reviewed FAA's January 2007 cost
allocation report and analyzed the administration's proposed legislation,
the Next Generation Air Transportation System Financing Reform Act of
2007. We conducted our review from April 2007 through June 2007 in
accordance with generally accepted government auditing standards.
Enclosure II: GAO Contact and Staff Acknowledgments
GAO Contact
Gerald L. Dillingham, Ph.D., (202) 512-2834 or [email protected]
Staff Acknowledgments
In addition to the contact named above, Ed Laughlin, Jay Cherlow, Bess
Eisenstadt, Jennifer Kim, Maureen Luna-Long, Maren McAvoy, and Jack Warner
made key contributions to this report.
(540149)
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