users-the passengers through passenger ticket tax and the general aviation community through fuel taxes-would pay for airport development with the federal government serving the role of collector and distributor of the revenues in a Trust Fund held for purposes of airport and airway development. Unfortunately, the concept has not worked as well as planned although there have been no federal contributions to airport development from the general taxpayer since 1970. The concept failed simply because the monies collected from the users were held by the federal government as a exercise in budget strategy rather than being spent for capital improvements in accordance with the objectives of the original Act. Further, the mere fact that the federal government acted as the collector and the distributor of funds carried with it the inherent bureaucratic requirements of federal control and supervision. Thus the goal of further deferalization is a worthy one, provided that it can be introduced in a manner that will not affect adversely any class of aviation or disturb present air transportation patterns. As we testified last year, we are concerned with the potential of curtailed access to major hubs, either by excessive charges or inadequate or inappropriate general aviation passenger facilities, inadequate services and inadequate runway capacity. This would not be conducive to the continued growth of general aviation. We consider ourselves a full partner in the airport and airway system and expect to be treated fairly and equitably in the use of the system. It is recognized that the Bill provides for the continuation of the assurances of public use contained in Section 13 of this Bill, and Section 18 of the Act of 1970 may not be terminated. Although these assurances should guarantee the continued access by general aviation, it is not at all clear how further airport development for the accommodation of growth of both air carrier and general aviation will be funded. The language of the bill is that future development at the defederalized airports will come from air carriers. It is stated specifically in the declaration of policy "that such (ineligible) airports can replace the money they otherwise would have received as federal assistance under this Act by renegotiation rates and charges paid by air carriers for the use of such airports.' Óne can visualize a situation where a primary airport has a single runway system used by both air carrier and general aviation. Growth continues to the point where safety and efficiency dictates that a shorter parallel runway be built to accommodate most of general aviation and thus relieve the long runway. Inasmuch as funds would not be available from the user financed Trust Fund, the airport management would look to the air carriers for increased rates and fees to pay for the general aviation runway. We would be surprised if the air carrier tenants would agree to such a proposal. Airport management would next look to the general aviation based aircraft for an assessment to pay for the new runway, such as a large increase in landing fees. This proposal would be opposed by all general aviation interests since they had been contributing fuel taxes for the very purpose of building runways wherever needed. The next solution would be to seek new property and build a reliever airport which could be financed from the Trust Fund at more expense, inconvenience and effort to everyone concerned. Perhaps a more equitable approach to defederalization would be to eliminate the enplanement entitlements for ineligible airports, but retain their eligibility for Trust Fund projects needed for safety or capacity and which could not be financed from other sources. Further, the bill is very specific concerning the equality of treatment of air carriers on rates, fees and schedules, but does not provide any assurances to general aviation in this regard, except through interpretations of the "unjust discrimination" provisions in individual cases. It would be very difficult to devise language as specific for general aviation as is the language for air carriers, but we suggest the following addition to Section 24(a)(4): Insert the words "considering historical uses, patterns of users and access, and past patterns of fees," immediately after the words "without unjust discrimination" on line five of page 72. This amendment would provide at least broad guidelines that past practices are to be considered in matters dealing with general aviation access. BLOCK GRANTS TO THE STATES In the past, we have been concerned about expanding the state involvement and control over the federally funded portion of the airport development program unless adequate safeguards were provided to prevent a duplication of bureaucracy, to prohibit the use of Trust Funds for state administrative costs, and to avoid a possible trend away from a national system of airports. Our review of the requirements for authorization for state participation in the Block Grant Programs, as proposed in this Bill, appears to satisfy all our concerns. The Bill provides for participating states to proceed with active airport programs, with a minimum of 75-804 0-81-9 federal involvement. At the same time, it permits the continuation of federal supervision of programs in states that do not care, or are not yet equipped, to participate. This is a major in our position. We have recently reviewed the significant role of the states in airport development and believe that the general aviation airport program can best be handled by them. However, because of metropolitan airport planning requirements, we believe that the reliever airport program should be handled on the current basis. JOINT USE OF MILITARY AIRPORTS We support the joint use of military airports and airport facilities contemplated in this Bill. The requirement that the Secretary of Defense, the Secretary of Transportation, and the Comptroller General submit to the Congress a joint evaluation of the military airport system, and a plan to make domestic military airports and airport facilities available for the civil use to the maxmum extent compatible with national defense requirements, is a major step forward toward realization of the goal of joint use. In view of current budgetary requirements, and difficulty in building new airports, it is even more important that existing airport capacity be utilized wherever possible. AIRWAY IMPROVEMENT PROGRAM We are concerned about the restrictive language of authorizing "not less than nor more than" for each fiscal year or in total for a number of fiscal years. For example, the airways facilities program is funded at levels which appear to be reasonably based on past appropriations. While past levels provide some guide, there are two factors that make them somewhat unreliable. One, each year's appropriation request was limited to the amount that the administration was willing to seek in light of the then existing budgetary climate (notwithstanding the fact that the funds had been accumulated from the users to avoid that kind of limitation). Two, past appropriations do not reflect the need for major system changes. We know the system is facing the need for extensive replacement of computer systems, which will be very expensive, and overhaul of the surveillance and communication systems to keep up with demand. In fact the past Administration published a list of system developments and capital needs that greatly exceed the levels of funding in this Bill. In many cases, greater expenditures in the facilities and equipment appropriations will result in a reduction of manpower requirements. Total system economy may dictate substantial capital improvements to gain major productivity and safety benefits and reduce operation costs. While we do not suggest changes in the minimum amount specified, we do suggest that the maximums be unspecified, with those maximums subject to availability of Trust Fund revenues, expected benefits to be derived, and other items now unforeseeable but which may be considered on their merits as occasion arises. Therefore, we suggest that all of the "not less than nor more than" language be revised to read simply "not less than." OTHER SUGGESTED AMENDMENTS We have some suggested amendments that support our statement. We will be glad to work with staff on specific language. Page 3.-Insert between lines 20 and 21, "that certain other airports have the ability to finance their capital and operating needs necessary for the operating of air carriers without federal assistance should no longer receive federal assistance for such operations, but may require federal assistance for capacity expansion to accommodate both general aviation and air carrier operations." Funds may be made available to this group of airports for capacity improvements but no funds would be regularly assigned on an enplanement basis or for terminal construction. Page 4.-It is recommended that the definition of "air traffic hub" be changed to read “means all of the commercial service, and general aviation airports serving the same geographical areas." The reason for this change is that an air traffic shub should include all facilities available for air transportation within the same geographical area. Since all general aviation airports act in some way as reliever airports, they should be included in order to assess the true impact and benefit of air transportation to a specific geographical area. Page 10.-Redefine “reliever airport” as “means a general aviation airport within an air traffic hub." Page 26.-The Bill provides for $225 million to be distributed to reliever airports during the five year life of the Bill. However, there is no minimum amount of funds for each of the years and the funds are to be derived from primary hub funds and discretionary funds. It is suggested that at least $70 million per year be set aside out of the primary funds for reliever airports (which by our definition is all general aviation airports in the primary hub geographical area) and augmented by discretionary funds as needed. USER CHARGES Although user charges are not part of this Bill, the proposals by the Administration to increase general aviation fuel taxes from 7 cents per gallon to a 20 percent ad valorem tax, an increase of over 460 percent based on December 1980 fuel taxes, dictate comment because they are inflationary, counter-productive, and unrealistic. Despite avowals to reduce taxes and encourage productivity, the Administration proposal would vastly increase taxes and significantly decrease productivity and thus inhibit the growth of general aviation. The general aviation fuel tax costs would jump from $88.5 million, based on 7 cents per gallon and 1980 fuel usage, to nearly $413 million based on a 20 percent tax and December 1980 fuel costs. We know that general aviation flying has been impacted by rising fuel costs. We know that fuel costs have already risen past the December 1980 levels without adding an exorbitant tax, and we see no way to divorce fuel costs, including taxes, from productivity. Our industry has consistently supported user taxes to help pay for the capital improvements of the airport/airway system. We have consistently supported a fuel tax at an established rate, rather than an ad valorem fuel tax. With the price of aviation fuel escalating so rapidly, and the variation in prices throughout the country, an established tax is more equitable and just to all users of the system. We realize this is not the time to testify at length on a user charge bill, which is not yet before the Congress, but we did want to express our concern over the Administration's announced plans to tax general aviation in a discriminatory and inappropriate manner. We will present our views in detail when Congress considers the revenue companion of this Bill. [The following information was subsequently received for the record:] Hon. HOWARD W. CANNON, Washington, D.C. GENERAL AVIATION MANUFACTURERS ASSOCIATION, DEAR SENATOR CANNON: In response to the written questions submitted following last month's hearings, we have prepared the following answers. Question 1. You begin your testimony noting the importance of a reliever airport program, but then you go on to criticize defederalization. If it becomes necessary to cut airport development funds despite your desires to the contrary, what airports do you think should take the cut in funds? Response. Any reduction in airport funding levels should be spread equitably with safety and capacity needs receiving higher priority. More fundamentally, the GAMA statement raises questions about the current entitlement system whereby funds are distributed according to formula rather than need. As an alternative to expanding the entitlement systems, we would suggest a larger discretionary funding level that would essentially permit the disbursement of monies on an as needed basis rather than by way of an enplaned passenger count. Such a plan would affect both large and small airports. Question 2. On page six and seven, you provide a scenario under which you don't believe air carriers would pay for a general aviation runway to relieve congestion. But the airlines already pay the costs of underwriting entire general avaiation airports, such as Tampa's Peter O. Knight reliever and the Plant City airport to take traffic away from Tampa International, because of their higher costs from delays and because the airport operator really didn't give them a choice. Can you name some specific examples where major airports have used ADAP to build a general aviation runway over the airlines' objections? The National Business Aircraft Association (NBAA) and GAMA, is now underway to increase reliever airport capacity. I have no specific examples where the airlines have objected to the building of a new general aviation runway. Runways have been extended to accommodate airline needs and, in some cases, general aviation. While ADAP funds have been used for new relievers as well as improving general aviation facilities at existing airports, these funds have come from the Trust Fund and are paid for by contributions of the passenger ticket tax as well as general aviation fuel taxes. The situation at Tampa's Peter O. Knight and Plant City airports is in our opinion, unique. The major air carriers operating out of Tampa International have budget approval authority for both general aviation airports. In turn, the airlines make up any budget deficit and furthermore, they guarantee a substantial portion of any revenue bond measures initiated for airport development or improvement. Our concern is that without ADAP at some of these airports, new general aviation facilities will be victims of contract negotiation between the airport operator and the air carriers that serve that facility. As a result of economics and other factors, new needed facilities would not be built. Question 3. I do agree with you that a 20 percent fuel tax is excessive. If an increase above the historic 7¢/gal. becomes a political necessity, what are the parameters which you think general aviation could live with? Response. General aviation could live with an increase in fuel taxes based on a step increase at a set rate per gallon, not an ad valorem type tax. Before a final commitment is made to a specific number, the authorization and program levels of the ADAP legislation should be established. Overall, we would support a more moderate approach similar to the 8.5 cents per gallon taken last year by the House Ways and Means Committee and the Senate Finance Committee with some step increase for inflation. The General Aviation Manufacturers Association appreciates this opportunity to respond to your questions and stands ready to further assist in any way possible. Sincerely, EDWARD W. STIMPSON, President. Senator KASSEBAUM. John Baker, president, Aircraft Owners and Pilot Association. STATEMENT OF JOHN L. BAKER, PRESIDENT, AIRCRAFT OWNERS AND PILOTS ASSOCIATION, WASHINGTON, D.C., ACCOMPANIED BY LARRY GRAVES, VICE-PRESIDENT, CONGRESSIONAL RELATIONS Mr. BAKER. With me is Mr. Larry Graves, vice president of congressional relations. Madam Chairman, I am John L. Baker, president of the Aircraft Owners and Pilots Association. AOPA represents more than a quarter of a million pilot members throughout all 50 States. We are the world's largest aviation organization. We carry more people intercity than the combined total of 22 of the 31 certificated route airlines. AOPA members do the vast majority of business flying in America. I am personally deeply disappointed that this hearing must be held in an atmosphere clouded by the recent decision of the Reagan administration to propose a 1,000-percent increase in the fuel tax paid by general aviation. We are now over the $2 mark generally for the 100 octane low lead fuel, the basic fuel used by the nonturbojet general aviation portion of the community. I have paid $1.99 in Minneapolis, $1.98 in Milwaukee, $1.99 in Dallas, $1.98 in San Antonio, and $1.99 in Knoxville in the first week. So it's pretty much across the the board at this point $2 fuel. So we are looking at 1000 percent tax increase, essentially. We were stunned, disappointed, and frustrated when we learned that the so-called tax cut package called for an unnecessary, unwarranted, and ill-advised increase in the fuel tax we pay. We find it particularly unbelievable that the rationale for the increase was to require general aviation to pay for the "benefits” it receives in the form of FAA regulatory activities. We have attached to our statement a how-goes-it kind of survey we run on a monthly basis. If you will notice the back page of the statement, every area of growth and activity is down dramatically. [The chart follows:] |