Washington Wire - 1997-03-03

Budget Would Ax Tax

President Clinton's proposed budget for the next fiscal year, which begins Oct. 1, 1997, envisions that the U.S. government by the turn of the century will scrap the present system of excise taxes (see item below) to fund the air traffic control system and instead adopt cost-based user fees. The administration recommended that during fiscal years 1999-2002, aviation user fees totaling $36.34 billion be collected from the airlines to fund the Federal Aviation Administration.

Clinton also asked Congress for funds to allow the FAA to hire 500 new air traffic controllers, 173 new aviation security staff and 273 safety inspectors and other personnel. The FAA would be funded at a total of $8.4 billion for the year, about $100 million less than the current total. In addition, the president called for $423 million in capital expenditures for Amtrak and $202 million for operating support.


Congress Passes Excise Tax Bill

Both the House of Representatives and the Senate last week approved a bill to reinstate the aviation excise taxes--which include the 10 percent ticket tax and the $6 international departure charge--through Sept. 30, the end of this fiscal year. The taxes, which will be levied on all ticket purchases regardless of the travel date, are expected to raise $2.7 billion over the next seven months. President Clinton said he would sign the measure.


Major Crashes Set 10-Year Fatality Record

Pushed up by the TWA and ValuJet crashes, the number of aviation deaths involving large U.S. airlines rose to 380 last year, the most since 1985, according to the National Transportation Safety Board in its annual review.

On domestic airlines of all sizes, 1,070 people lost their lives in 2,040 aviation accidents last year; in 1995, 962 people died in 2,175 accidents. The fourteen passengers who died in a runway collision involving a United Express plane in Illinois last November surpassed the nine people who died in commuter carrier accidents in 1995, but was still the lowest fatality rate in 15 years for commuter flights.


US-UK talks Make Some Progress

The mid-February round of aviation negotiations between the United States and the United Kingdom didn't produce the hoped-for open skies accord. but, according to a statement issued after the talks ended, the two sides made progress on the text of a new bilateral. No date has been set for the next round. Meanwhile, the United States continues to press for bilateral advances in key Asian markets. Talks with Japan are set for March 5 and 6.


NTSB Wants Rudder Replacement

The National Transportation Safety Board is calling for the Federal Aviation Administration to accelerate its two-year program for a redesign of the rudder controls on Boeing 737s, which are suspected in two fatal crashes--the 1994 crash near Pittsburgh of a USAir plane and the 1991 downing of a United aircraft in Colorado Springs. The FAA is not required to adhere to the NTSB's recommendations but must at least respond.


Carriers Lift Liability Cap

Twelve U.S. airlines have received approval from the Department of Transportation to lift the $75,000 liability cap for passengers suffering losses. The updating of the 70-year-old limits contained in the Warsaw Convention is expected to reduce both litigation and legal costs for victims and their families, who can claim the full amount of damages unless the carrier can prove it was not negligent. The agreement also permits U.S. citizens to obtain damages even if they sue in a foreign country. The airlines are American, American Eagle, AMR Combs, Continental, Delta, Hawaiian, Northwest, TWA, United, USAir, Continental, Micronesia and Tower Air.



Another Attempt To Boost Meal Deduction

Sen. Daniel Inouye (D-Hawaii) has introduced legislation that would boost the tax deduction for business meals and entertainment back up to 80 percent from the current 50 percent. The legislation, S.114, has been referred to the Senate Finance Committee. The House version, sponsored by Rep. Neil Abercrombie (D-Hawaii), would restore the deduction to 100 percent and also reinstate the deduction for the travel expenses of others accompanying a taxpayer on a business trip.