Sunday, July 30, 2017

Why Are Private Jets Being Subsidized By You and Me?

By Drew Johnson 
Opinion


The National Business Aviation Association’s (NBAA) vocal opposition to modernizing the air traffic control (ATC) system has more to do with preserving the status quo for private jet owners than protecting the interests of the flying public.

The NBAA has frequently opposed proposals to modernize the nation’s ATC system on the basis that reforming it will require corporate jets to pay for their use of the system instead of relying on airline passenger taxes to foot their share of the bill.

Yet for years, many of its corporate members have milked a set of tax loopholes that allow private jet owners to lower their tax burden and pass on the cost of their travel to consumers.

Private jet owners can write off much of the cost of their aircraft at the expense of commercial passengers and taxpayers. The IRS permits owners to deduct the depreciation on commercial jets over a five-year period — two years faster than commercial airlines. This gap allows a corporate owner to write off as much as 60 percent of the value of a company jet in the first three years.

Even though corporate jets use almost $1 billion of air traffic control resources, they only contribute around $200 million in fuel taxes, letting commercial passengers pick up their tab.  

Generally, corporate jets are exempt from the Federal Aviation Administration’s (FAA) air transportation tax, a fee on the number of passengers and amount of cargo transported, which funds 95 percent of ATC operations.

The maintenance and improvement of the ATC system’s equipment and infrastructure is paid through the Airport and Airway Trust Fund (AATF), which is made up of excise taxes collected on aviation fuel, passenger transport and use of international air facilities.

While general aviation is at least subject to the fuel tax, high-end general aviation aircraft — the majority of which are corporate-owned — contributed only about 1 percent of the AATF’s receipts in 2014, despite using an estimated 10 percent of the system the AATF supports.

The NBAA has been living the special interest dream for way too long.  Instead of blocking efforts to modernize ATC, it should stop standing in the way of making long-needed improvements to the dated system.

While today’s automobiles can use hyper-accurate GPS to practically drive themselves, U.S. ATC continues to rely on a ground-based radar system first developed in 1943. Deployment of NextGen, a satellite-based upgrade to flight navigation and communications, has been languishing under a bloated government bureaucracy and hamstrung by a congressional budget process that funds it in fits-and-starts.

Proposals to modernize the system would transfer authority for managing all but the safety functions of ATC from the FAA to a federally-chartered, nonprofit entity where NextGen improvements could be deployed more swiftly, minimizing flight delays, reducing fuel consumption and lowering carbon emissions.

Everyone benefits from an ATC system that is state-of-the-art, agile, sustainable and safe, and the system’s users should pay their fair share for its maintenance.  As Congress advances proposals to transform our nation’s ATC, the NBAA needs to put aside the interests of corporate jet owners and support a proposal that will benefit the rest of the country — which flies coach.

Drew Johnson is Senior Fellow at the Taxpayer Protection Alliance, a non-partisan nonprofit think tank dedicated to exposing the effects of government policy on deficits and debt.

http://www.newsweek.com

2 comments:

Anonymous said...

This article is far off base and inaccurate. First, its not the modernization of ATC that NBAA is fighting. Our ATC system is modern and continues to be updated as technology develops and is proven reliable. The argument is against PRIVATIZATION of ATC services. Which is completely different. As a passenger car driver how would you feel if the highway system was privatized? Would you want the trucking companies to own the highways you drive on? Do you think you would pay more or fewer tolls on a road owned by the trucking companies? You already pay tax on the fuel you use and DOT inspections of your vehicle, license, registration, etc. These all fund the highway system. Its not much different for those flying private airplanes. And we arent talking about just private jets, we are talking about people that fly small Cessna's etc and training aircraft. Privatizing ATC will kill private aviation in the United States just like it has in many other parts of the world. Then you can write an article on how the airlines in the United States have a monopoly on who gets to use the airspace above the USA. Think your airline fares will remain inexpensive?

Anonymous said...

"Private jet owners can write off much of the cost of their aircraft at the expense of commercial passengers and taxpayers."

WHAT?? - They still have to pay for their aircraft and expenses.

If that is the problem, then change the tax laws. Will never happen. Too much; and jobs to loose at the direct sales level.