OP ED: Ticket Tax Puts Burden On Corp. Buyer

One of the most urgent issues confronting the new Congress will be to decide how to finance the Federal Aviation Administration and our nation's air traffic control system. What Congress decides will have a profound impact on business travelers, corporate travel service managers and those who live in smaller, rural communities.

Under the former FAA funding mechanism-a 10 percent tax on the price of airline tickets, a system that expired on Dec. 31-passengers traveling between two cities on the same aircraft paid wildly different amounts for the same FAA services.

A business traveler with a $780 ticket paid a $78 tax, for example, while a leisure traveler with a $180 ticket paid only $18 for the exact same air traffic control services. A return to the ticket tax will restore this unfair allocation of costs to business travelers, making business travel unnecessarily expensive and reducing substantially the number of trips that fixed travel budgets can accommodate.

Leading the move toward a more equitable usage-based system is the Coalition for Fair FAA Funding-a group made up of the seven major U.S. network carriers (American, Continental, Delta, Northwest, TWA, United and USAir) and the 69 smaller airlines represented by the Regional Aviation Association. These airlines, which carry more than three-quarters of the nation's air passengers, are committed to having all passengers pay their fair share of FAA costs-no more, no less.

The coalition proposes a usage-based passenger tax based on the three known elements of air traffic control expense: aircraft departures and landings, distance between cities and size of aircraft. Unlike the expired ticket tax, all passengers traveling between two cities would pay exactly the same amount for the air traffic control services they use. What could be more fair?

The coalition's proposal is simple and direct. It is based on measurable aircraft activities already computed by every passenger airline (miles flown, seats operated, passengers carried) and reported to the Department of Transportation on a regular basis. Moreover, it is not affected by the vagaries of airline price wars and rapidly changing fares, which could cause a shortfall in government revenues during periods of steep discounting.

Most important, the coalition's usage proposal is designed to replace, dollar for dollar, the estimated $5 billion to $6 billion formerly produced annually by the 10 percent excise tax-but in a manner fair to business and leisure travelers alike.

Despite the compelling equities of the coalition proposal, there is predictable pressure from some discount airlines to maintain the ticket tax-and the subsidies they now reap from this inequitable system. Simply put, they do not now pay their fair share of ATC costs, and they want to convert this benefit into a permanent federal entitlement. According to a recent General Accounting Office report, Southwest Airlines-the largest discount airline and the airline leading the charge to preserve the ticket tax-accounts for 10 percent of the industry's departures but contributed only 6.3 percent of the revenues collected under the ticket tax.

During this debate, coalition members have made clear that they are eager to discuss what the cost-allocation formula should be. So far, the discount airlines have declined to engage in such a discussion.

As every frequent business traveler knows, our nation's air system is increasingly beset with delays and cancellations caused by out-of-date air traffic control systems and methods. The coalition's proposal is a critical first step toward much-needed FAA reform.

<I>Elliott Seiden is vice president, law & government affairs for Northwest Airlines.