May 11, 2015 2:16 PM
The Tax Foundation today released a new report, “Improving Airport Funding to Meet the Needs of Passengers.” Authored by Tax Foundation economist Alan Cole, the report notes that airport funding and financing in the U.S. is skewed against the users-pay principle and that the passenger facility charge (PFC) represents a welcome alternative to federal airport cross-subsidization schemes.
The PFC is a local user charge that airports can use to fund or finance a narrow class of improvements, as permitted by the Federal Aviation Administration. The PFC has been capped at a maximum of $4.50 per enplanement since 2000. Inflation has eroded that buying power by about half. CEI, along with airports and other aviation industry stakeholders, supports increasing the cap to $8.50 and then indexing it to inflation. In the report, Cole endorses this position, writing, “The current $4.50 cap should be modernized and indexed to meet the needs of today and future growth.”
Some have incorrectly labeled the PFC a tax. As I explain in detail here, it is not a tax and raising the federal cap on PFCs certainly cannot constitute a tax increase.
The report goes on to say that harnessing local user fees such as PFCs can allow airports to eventually wean themselves off federal funding. The major reason CEI supports PFCs, and all transportation system user charges, over taxes is that, as Cole notes in his report, they resemble charges you would see if these were private, market institutions.
May 4, 2015 10:32 AM
We saw two announcements on air traffic control modernization last week. The first was that the Federal Aviation Administration (FAA) had finally completed its En Route Automation Modernization (ERAM) deployment, a critical component of the Next Generation Air Transportation System (NextGen) update of National Airspace System (NAS) management.
ERAM greatly improves flight tracking, communications, and controller displays by harnessing new technologies that have been developed in the last several decades. This is all well and good, but ERAM rollout was supposed to have been completed by 2010. Five years late and several hundred million dollars over budget, it is a bit rich for the FAA to be declaring victory. But perhaps this is to be expected from a broken agency culture. Recall that the automated flight tracking computer system ERAM is replacing, the Host, suffered from serious delays when it was implemented… in the 1980s.
The second big air traffic control announcement was the comprehensive review of NextGen published by the National Research Council. Appropriately described by The Washington Post’s Ashley Halsey as “scathing,” the NRC report, which was ordered by Congress in the FAA Modernization and Reform Act of 2012, calls out FAA’s failings in implementing NextGen. Halsey highlights some quotes:
- “The original vision for NextGen is not what is being implemented today.”
- “This shift in focus has not been clear to all stakeholders.”
- “Airlines are not motivated to spend money on equipment and training for NextGen.”
- “Not all parts of the original vision will be achieved in the foreseeable future.”
- “NextGen, as currently executed, is not broadly transformational.”
- “‘NextGen’ has become a misnomer.”
April 24, 2015 11:18 AM
Today, I submitted comments to the Federal Aviation Administration (FAA) on behalf of CEI on its notice of proposed rulemaking for small unmanned aircraft systems (sUAS) certification and operations. We make three main points.
First, we question why the FAA is using its case-by-case exemption authority as the basis for this rulemaking, as opposed to the actual rulemaking section of the same law that Congress passed in 2012. This was the last FAA reauthorization and Congress included a subtitle on unmanned aircraft systems. Section 332, among other things, ordered the FAA to promulgate final rules integrating sUAS into the National Airspace System. But instead of relying on Section 332, as Congress required, the FAA in this proceeding is relying on Section 333, which granted the FAA authority to approve sUAS operations on a case-by-case basis until it had promulgated the sUAS integration rules mandated by Section 332. There are several potential explanations for why the FAA is relying on Section 333, none of them good, but we ask the FAA to explain its reasoning.
March 26, 2015 5:24 PM
I saw some unfortunate news today: Grover Norquist’s Americans for Tax Reform sent a letter to Congress opposing a possible increase in the cap of the airport Passenger Facility Charge (PFC). ATR is often an ally in CEI’s libertarian battles, but here they are both wrong on the facts and inadvertently supporting a tax-and-spend federal regime that the PFC and other facility user charges can help counter.
Before I get to why ATR is completely wrong on federalist and free-market grounds in opposing a PFC cap increase, let’s be clear about what a PFC is, why it exists as it does, and what Congress may (or may not) do with the cap.
First, the PFC is a local user charge. Congress authorized its creation in 1990 and it allows airports to charge per-passenger enplanement fees. The revenue raised can then only be used for a very narrow class of airport improvement projects. These funds are collected locally and never touch the federal Treasury.
Second, the only reason the PFC exists is because Congress outlawed user-based airport charges in the Airport Development Acceleration Act of 1973 (widely known as the “Anti-Head Tax Act” and codified at 49 U.S.C. § 40116). Why, you might ask, would Congress intervene? Well, this was a case of pure cronyism. In 1970, Evansville-Vanderburgh Airport Authority enacted an ordinance requiring that airlines using their airport collect and remit a $1 per passenger fee, minus any administrative costs the airlines assumed in the collection process. Delta Air Lines sued, challenging the charge on Commerce Clause grounds. Ultimately, the U.S. Supreme Court accepted the case and rejected Delta’s rent-seeking arguments in 1972. In response to their loss before the Supreme Court, Delta and other carriers then lobbied Congress to outlaw airport user fees, only taking one year to get their terrible law enacted.
Third, the PFC cap currently stands at $4.50. This was last raised in 2000 and inflation has eroded its buying power by approximately half since then. While CEI supports uncapping PFCs (and ideally repealing both the Anti-Head Tax Act and the PFC-creating section of the Aviation Safety and Capacity Act of 1990, and then letting airports decide their user-fee regimes without federal approval), this is unlikely in this Congress. Instead, we agree with the airports that raising the PFC cap to $8.50 and then indexing it to inflation is a sound move. Note that the PFC cap is not a charge itself, only the limit at what airports can locally decide to charge per passenger. This distinction is important in understanding why ATR’s opposition to the PFC makes no sense.
February 20, 2015 9:51 AM
Over at CNN.com, I have a piece arguing against the Department of Transportation’s (DOT) forthcoming rule aimed at outlawing “vapes on a plane.” I explain why the rule is both unjustified on risk-based grounds and an illegal implementation of the law written by Congress that outlaws tobacco smoking aboard aircraft.
Due to the limitations of the op-ed format, I wasn’t able to address a few items related to the airplane electronic cigarette rulemaking. Here are some additional thoughts:
First, DOT’s official timeline shifted earlier this week (inconveniently in Word .docx format). Instead of the end of April, the Department released its updated milestones in its February “Report on DOT Significant Rulemakings”:
The new estimated publication date is sometime by the end of June. It is fairly likely that this will be delayed again. The impact of this delay will likely be minimal. Currently, U.S. domestic airlines voluntarily prohibit their passenger from using e-cigarettes.
February 18, 2015 4:06 PM
As I continue to digest the sUAS NPRM, which is expected to be published in the Federal Register on Monday, I came across Canadian drone attorney Diana Marina Cooper’s post comparing the proposed U.S. small drone framework with Canada's regime:
Practicing in the Canadian jurisdiction, I believe that one of the most valuable aspects of our system is its flexibility and the fact that the system rewards safe operators. For instance, in Canada, first time SFOC applicants are typically rewarded narrow certificates in terms of time, geography and level of operational risk. As operators develop a track record of conducting safe operations, they are able to receive ‘standing certificates’ allowing them to operate for up to three years over large regions of the country.
The FAA should consider adopting a similar approach that rewards safe operators by allowing them to complete less restrictive operations. For instance, the proposed rules state that operators would not be able to fly over persons not involved in the operation. If an operator has a good track record of conducting safe flights, there is no reason why the FAA should not consider removing this burden.
As the FAA crafts its final regulations, it is important to find ways to build flexibility into the system, and to not only focus on punishing irresponsible behavior but also rewarding safe operators.
It does appear, as Ms. Cooper notes, that the FAA/USDOT approach skews heavily toward preventing a parade of airborne horribles rather than fostering a regulatory environment that would let this very promising technology thrive.
But we shouldn’t stop our search for aviation policy lessons learned from Canada at drones. In fact, a far more important lesson, which could also impact the UAS industry, concerns air navigation services. Right now, the U.S. is one of the few remaining industrialized nations in the world that has yet to separate its air traffic control operations from its aviation safety regulator. Canada famously did this in the mid-1990s, creating nonprofit Nav Canada to manage its airspace with great success that has become a model for the rest of the world.
Bob Poole of the Reason Foundation, who has promoted this sort of institutional innovation in aviation for several decades, has crafted a plan to bring 21st century management to U.S. air traffic control. The problems FAA has experienced in its attempt to integrate UAS into the national airspace system are almost certainly in part due to its outdated institutional model.
To be sure, making large changes to ossified bureaucracies is never easy. Fortunately, U.S. reformers need not look far to see the advantages that alternatives can offer us over the status quo.
February 15, 2015 11:38 AM
At 10am on Sunday, the Federal Aviation Administration (FAA) announced its draft rules to govern small unmanned aircraft systems (UAS). The announcement is not particularly surprising, especially given the fact that FAA apparently accidentally uploaded a key rulemaking document for a few minutes over the weekend. Thankfully, the Internet never forgets.
Small UAS (up to 55 pounds) operators will now have a formal certification process. Previously, the FAA was issuing case-specific exemptions for commercial operators under Section 333 of the FAA Modernization and Reform Act of 2012, the same law in which Congress ordered the agency to integrate UAS into the National Airspace System by September 2015. Under the newly proposed framework, small UAS operators may be certified if a number of conditions are met, including:
- Operations are within 500 feet above ground level;
- Operators maintain line-of-site monitoring at all times;
- Operators pass a written FAA-certified aeronautical knowledge test;
- The UAS will not be carrying external-loads (i.e., no package delivery);
- Operations occur during daylight hours; and
- All operations are manually directed in accordance with FAA’s see-and-avoid requirements (i.e., no automated operations).
November 18, 2014 10:52 AM
Earlier this morning, a full panel of the National Transportation Safety Board (NTSB) overturned a previous ruling from an NTSB administrative law judge in the Pirker case.
In Pirker, the FAA had assessed a $10,000 fine against a photographer for using an unmanned aircraft system (UAS), or drone, to take photos on the University of Virginia campus. The administrative law judge held that the FAA lacked the authority to regulate a “model aircraft” as was used by Raphael Pirker.
In reversing this order, the full NTSB today noted that the distinction between “model aircraft” and “aircraft” is irrelevant. Model aircraft were never formally exempted from FAA regulation (a nonbinding 1981 guidance document is as close as we get, which is not close at all), so the FAA claiming Pirker was unsafely operating an aircraft is a reasonable interpretation of the governing statute and implementing regulation defining “aircraft.” The NTSB remanded the case back to the judge for a full factual hearing to determine whether or not Pirker operated his UAS “in a careless or reckless manner so as to endanger the life or property of another.”
While the ruling is likely to upset UAS enthusiasts, it is reasonable given the incredibly broad authority FAA has been granted to manage and police the airspace. Rather than denying that the FAA has the authority to do pretty much it wants with respect to the airspace, we should be focusing on actual reforms that might more rapidly usher in commercial UAS operations.
October 31, 2014 5:09 PM
The crash of a test flight of billionaire Richard Branson’s Virgin Galactic SpaceShipTwo, which cost the life of one, riveted many around the globe on Friday afternoon.
Branson headed to the California site, tweeting, “Thoughts with all @virgingalactic & Scaled, thanks for all your messages of support. I’m flying to Mojave immediately to be with the team.”
An investigation will show what happened. The LA Times noted the reawakening to how dangerous these ventures can be. Peopled were lulled into thinking the Virgin craft looked safer than a rocket, but, as an analyst noted, “People will now realize this is space travel...and you’re getting into a rocket.”
We should be careful that governmental responses do not aggravate risks in the future, however. I discussed some of these concerns in a Forbes column a couple years ago about keeping regulators “earthbound”:
…No one should look at these [low-earth orbit flights] as joyrides or tinkering; rather, they lay the groundwork for humanity’s next evolution in transportation, even if one is skeptical (as I am) about manned flights to asteroids or Mars. Future generations’ ability to deliver goods or hop from New York to Tokyo or Sydney in the time it takes to ride the D.C. Metro today could utterly change the world yet again…
…Commercial space’s real hurdle, if it can avoid entangling alliances with government, is dealing with inevitable dangers in a grown-up way by fostering the right risk-management institutions.
Basically, industries that don’t exist yet aren’t over-regulated yet, and thus have the potential to create extraordinary wealth. We must lay the groundwork for the fundamental risk-management institutions that enhance safety better than tossing everything to regulators. …
Over-regulation can easily cripple this industry while making it more risky. Political “regulation” can undermine actual regulation and governance … and hobble the commercial space industry for generations to come.
…Don’t call it “self-regulation” though; It is a misnomer in free markets since business partners and suppliers, investors, insurance companies and Wall Street all regulate and discipline errant behavior. …
Regulators also likely will attempt to “help” the industry with waivers of liability (or conversely, undermine the ability to contract away liability like the waiver I had to sign to fly a powered parachute). Taking that path means the commercial space industry future shall be one of regulation of the kind that doesn’t actually regulate and discipline and that hampers progress, and leaves us with a few big players who capture the regulators. ...
...New kinds of business insurance/liability products as well as safety engineering itself should emerge more aggressively…
A Washington Post story noted that the first colonists of Mars would likely agree to never return — that they’d remain as permanent settlers. This represents the extreme case, but we can handle it. Still, the legal institutions required to allow someone to contract to embark on such a trip and likely fatal endeavor seem not to exist and need to be bolstered. No one wants any injury whatsover, and we certainly will not tolerate what society used to withstand in the late 1890s when one lineman in two were killed on the job. But we can cope with and allow adventure and the right to explore new frontiers.
Today was a reminder that when innovators and the aspirational among us raise the bar, danger is often nearby.
September 25, 2014 4:06 PM
In May, I criticized the Department of Transportation’s opening of a rulemaking on airline ancillary fees (baggage, seat assignments, etc.), noting that the primary motivation appeared to be continued expansion of the department’s unfair and deceptive practices authority. In addition, the department’s apparent opinion that consumers are unable to understand ancillary fees, and compare fares and fees across airlines, is completely unsupported.
Yesterday, I filed comments on behalf of CEI fleshing out some of these objections.
To be sure, no one is advocating that airlines be permitted to deceive and defraud consumers on ancillary fees. The core of the debate is whether or not the current regulations requiring ancillary fee disclosure do too little to protect consumers. Under current regulations, airlines are required to post online comprehensive listings of their fees. Here is the page produced by American Airlines. While the table is certainly lengthy, is it too complicated for the average consumer? I think not.