Washington Wire - 1997-06-09

Majors Lobby Ticket Tax

American, Continental, Delta, Northwest, TWA, United and US Airways once again have urged for a replacement of the present domestic ticket tax--now set at 10 percent--with a program that charges airlines for their individual use of the nation's air traffic control system. The seven major airlines, appearing as the Coalition for Fair FAA Funding, presented their case late last month before the National Civil Aviation Review Commission, a 21-member panel charged with developing long-term funding options for the FAA.

Their testimony, however, was refuted by Southwest Airlines Chairman Herb Kelleher, who claimed that a user-fee system levied on the carriers would injure quick-turn, low-fare carriers to the detriment of the traveling public.

National Business Aircraft Association president John Olcott defended the current system of excise taxes as a "prudent" funding mechanism, adding that the FAA's financial problems are related to management practices, not its revenue stream.

Meanwhile, a congressional staff task force has drafted a proposal to replace the current ticket tax system with a smaller tax on airline tickets coupled with a per passenger fee. The proposal so far has received no support and the issue of pinpointing a future FAA funding vehicle at this point appears to remain wide open.


U.S., New Zealand Expand Open Skies

The United States and New Zealand have agreed on the text of a new open skies aviation agreement that will allow for unrestricted airline services between the two nations. The accord will permit airline operations beyond the standard language in existing open skies agreements, according to the Transportation Department, since it stipulates seventh freedom cargo rights, allowing U.S. airlines to fly freight from New Zealand to third countries.

The U.S. open skies initiative in Asia was launched in mid-1996 and so far agreements have been reached with Taiwan, Singapore and Brunei. Negotiations continue with Malaysia and South Korea.