FAA Faces “Formidable Challenge” On User Fees

The FAA has an uphill battle to convince its masters that a user-fee-based system is the best way to tackle the funding challenges of the next decade, according to a report from the Department of Transportations Office of Inspector General (OIG). And even if the agency can make the case for user fees (which, because they arent taxes, dont require Congressional oversight) the OIG says that shouldnt mean unfettered access to that big pot of cash. We believe that any proposal to give FAA more flexibility and additional funds needs to be accompanied by strong oversight mechanisms to ensure funds are spent efficiently, says the report, which is entitled “DOTs Top Management Challenges” (FAA reauthorization ranks second). Notwithstanding its cautious stance, however, the OIG seems to think that user fees offer the best hope of creating the sort of funding base that offers adequate investment for new technology while creating incentives for users to make more efficient use of the system. The report appears to agree with FAA Administrator Marion Blakeys oft-repeated sentiment that the current system of excise taxes isnt directly linked to the cost drivers within the agency. User charges can provide incentives for users to be more efficient in their use of FAA services and for FAA to control costs, the report says. These incentives become stronger the closer the charges approximate cost-based fee-for-service charges and the degree to which there is appropriate user oversight of the charges and their expenditure. However, given the rancorous debate over the user-fee issue and the FAAs checkered past in financial management, the OIG suggests the agency has a fight on its hands to convince Congress to give it the enormous powers such a sea change would provide. Should FAA determine that a user charge can be developed that promotes the efficient use of FAA services, it faces a formidable challenge in making the case for change and obtaining consensus on what that change should entail, the report says. To meet this challenge, FAA would need to demonstrate clearly and convincingly why the current excise tax financing mechanism is not adequate and how its proposed solution would fix this problem.