Why Are Private Jets Being Subsidized by You and Me?

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.

BACK