Washington Wire - 1996-12-16

<FONT SIZE="+3"><B>Washington Wire</B>

By Barbara Cook, <I>Washington Correspondent</I>

<B>A Ticket Tax Comeback?</B>

Senate leaders are urging members of the Finance Committee to make reinstatement of the aviation excise taxes their first order of business when the new Congress convenes next month. The taxes-the 10 percent passenger ticket tax, the 6.25 percent cargo waybill tax, the $6-per-person international departure tax and certain general aviation fuel taxes-expire on Dec. 31. Although the taxes make up more than 90 percent of the aviation trust fund, which is used to finance airport and airway safety improvements, the ticket tax alone accounts for more than 85 percent of the trust fund receipts.

A political dispute over funding caused the ticket taxes to lapse for nine months in 1996; they were brought back only briefly at the end of the year.

In a just-released report, the General Accounting Office criticized the proposal by seven airlines-United, American, Delta, Northwest, Continental, USAir and TWA-to substitute the current tax system with user fees. If the tax were replaced by user fees, the charge to these carriers for air traffic control services in 1997 would decrease by nearly $600 million, while the cost to low-fare and small airlines would climb by nearly $550 million, GAO estimated.

The Clinton administration has estimated that the Federal Aviation Administration will experience a $12 billion funding shortfall in the next seven years and has endorsed its own system of direct charges to pilots and aircraft owners to raise additional revenue.

<B>Majors Shut Out StartUps</B>

New carriers are being shut out by major carriers' control of gates and landing slots, says a study recently released by the General Accounting Office.

The study found that travelers are paying higher prices, especially in the Southeast and upper Midwest, because of barriers to new entrants. Of the 43 U.S. airports classified by the Federal Aviation Administration as large hubs, airfares are 31 percent higher at 10 of the facilities that are affected by operating barriers, GAO said. These 10 airports-Cincinnati, Pittsburgh, Washington National, Minneapolis-St. Paul, New York LaGuardia, Detroit, Newark, Chicago O'Hare, New York Kennedy and Charlotte, N.C.-accounted for 22 percent of the 516 million scheduled passenger enplanements in 1995.

The federal government could mitigate the slot problem, GAO suggested, by periodically withdrawing some slots that were grandfathered to the major incumbents and holding a lottery to distribute them to new carriers.

The problem also could be alleviated by making an airport's willingness to make gates available to new carriers a factor in the FAA's decisions on making federal grants to those airports, GAO recommended.

<B>Govt. Per Diems Rise</B>

Effective Jan. 1, 1997, the standard per diem rate for federal business travelers will increase to $80, up from today's $66, marking the first hike in the base rate in eight years.

The new rates-which include a maximum of $50 for lodging and $30 for meals and incidentals-apply to official travel in the 48 states plus the District of Columbia. Higher, individual rates apply for 497 U.S. cities determined to be more expensive. For example, the current rate for New York City is $180; the new rate is $195.

The complete list of new rates, which are set by the General Services Administration, is available on the Internet's World Wide Web at http://policyworks.gov/per diem; or from federal information centers at 800-688-9889; TDD/TTY users call 800-326-2996.