ICYMI: The Business Traveler's Case for Air Traffic Reform
As the summer vacation season heats up, millions of Americans are taking to the air. While not every traveler will be flying for pleasure, all passengers will be faced with the prospect of headaches caused by flight delays and cancellations due to our antiquated air traffic control system. With this in mind, we want to bring the following editorial by Michael McCormick, the Executive Director and COO of the Global Business Travel Association, to your attention on the importance of reforming our aviation system to make it more efficient for all flyers:
The business traveler's case for air traffic reform
By Michael W. McCormick
July 18, 2017
Several editorial boards, associations and others have commented extensively about the need for modernization of our nation’s air traffic control system and the value of moving operations out of the Federal Aviation Administration. Little has been said about the impact on business travelers, a constituency that pays the most, has the most to gain, but also the most to lose from the status quo. Under House Transportation and Infrastructure Chairman Bill Shuster’s (R-Pa.) proposal, the 21st Century AIRR Act, our nation’s air traffic control would undergo meaningful reform, deliver better, cheaper and safer service for an important user: the business traveler.
Modernization of our nation’s air traffic control (ATC) system is a key priority for the business traveler. Full implementation of NextGen would result in less expensive fares, shorter flight times and more flights. However, implementation has been slowed by bureaucracy, politics and a lack of consistent funding.
Countless government reports have documented these delays and inefficiencies. The AIRR Act offers a path forward by moving ATC operations into an independent, non-profit organization governed by a board of directors represented by virtually every stakeholder in commercial and private aviation. To his credit, Shuster has worked to ensure that no one stakeholder would control this new non-profit entity.
The non-profit entity would leverage the best parts of our air traffic control system: its impeccable safety record, and the air traffic controllers, an experienced and proven workforce. This approach also ensures that NextGen is delivered to the American taxpayers on time by cutting out government bureaucracy that delivers projects at a glacial pace.
In the United States, the more you fly, the more you pay, which is fair. User fees should be assessed when appropriate and reinvested back into the system. Given that the collection of fees and taxes is a public trust, stewards of that money should exercise the greatest level of efficiency when spending that money. Currently, operations of air traffic control are paid for, in part, by a 7.5 percent excise tax on airline tickets. In fiscal year 2016, the federal government collected nearly $9.9 billion from passengers, thereby providing nearly 70 percent of the revenue collected to fund the Airport and Airway Trust Fund. It should be noted that that 7.5 percent excise tax is just one tax of many assessed on airline tickets. Others include the Passenger Facility Charge and the Passenger Security Fee. One only need look at the final price of their airline ticket to see that approximately 25 percent of your ticket is composed of taxes and fees.
Under the AIRR Act, operations of air traffic control would move out of the federal government. Under the current proposal, passengers would have saved an estimated $8 billion in taxes on airline tickets in 2016. Operations of the new non-profit will be paid for by user fees on the carriers themselves. More than likely, the airlines will likely pass those costs onto the consumer. However, this should not be treated as a dollar for dollar exchange. Under the AIRR Act, the new non-profit will not be fettered by a legislative calendar or politics, thus resulting in new efficiencies and returns. Additionally, the AIRR Act requires that any change to the user fee requires a notice period to provide the public an opportunity to comment.
But what does that translate to in value for the economy? Where would that $8 billion in savings go? The Global Business Travel Association’s 9,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually. For every 1 percent increase in business travel spending, the U.S. economy gains an additional 71,000 jobs, nearly $5 billion in GDP, $3 billion in wages and $1.2 billion in tax collections. Suffice to say, investments in business travel, such as additional efficiencies and savings in airline ticket prices, have a positive effect for our nation’s economy. Eliminating that 7.5 percent excise tax means bigger budgets, more business travel and ultimately, more returns for the economy.
This is a gamble of billions. The scale and scope of what the AIRR Act proposes to do has never been tested and its implementation would need to be carefully managed. However, the AIRR Act offers Congress a rare opportunity to lessen the burden on both the business traveler and the American taxpayer by improving efficiency and saving money. It’s rare that such an opportunity presents itself, and I urge Congress to support enactment of the AIRR Act.
Michael W. McCormick is the Executive Director and Chief Operating Officer of the Global Business Travel Association. GBTA represents the voice of the business traveler. Its 9,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually.
For more information on the 21st Century AIRR Act, visit the bill's homepage.