Brad’s Testimony Before U.S. Congress – Aviation User Fees

I recently had the honor of testifying before the U.S. Congress Committee on Small Business regarding aviation user fees.  The hearing was entitled, User Fees in the Aviation Industry: Turbulence Ahead, and took place on Wednesday, September 12, 2012 in Washington, DC.  This hearing was initiated by Congressman Sam Graves (R-MO), who is Chairman of the committee.  The purpose of this hearing was to discuss the impact on small businesses of an additional $100 per flight fee proposed by the Obama administration.  I was speaking to the committee on behalf of the Airplane Owners and Pilots Association (AOPA).

My testimony focused on the important role general aviation has played to help build my business, increase our sales despite a sluggish economy, and hire additional employees.  I own and operate a Turbo Cirrus SR22 Aircraft which I can honestly say is one of my absolute best employees.  It allows myself and my staff members to travel quickly, safely and efficiently to customer locations, industry events and to manufacturing partner facilities.  I’ve flown my Cirrus to 49 states in pursuit of new business and to nurture and grow existing relationships successfully.  We simply could not do what we do without our airplane.

The current system of taxation is based upon fuel consumption, ie: each gallon of fuel purchased has a federal excise tax included, which congress has the ability to adjust if necessary.  This is a straightforward taxation method (perhaps the most simple and effective in our government), wherein those who fly more tend to burn more fuel and therefore pay more taxes.  I fly a lot, a whole lot.  I fly far (nationwide), I burn a lot of fuel, and I pay a lot more taxes than an individual who’s making small regional flights burning less fuel.  That makes sense – I’m going further distances and using more services, therefore I should be paying more into the system and am happy to do so.  The system works, it’s not broken, so this feels very much like a solution looking for a problem to solve.

The Obama administration has proposed that each flight should be charged an additional $100 user fee on top of the current excise fuel tax.  This makes no sense to me as there’s no direct correlation between usage and the proposed new taxation method.  There’s been a position among some proponents that this is “fair” because everyone pays the same additional equal amount.  Each aircraft paying an equal amount however is not “fair”.  The aviation infrastructure was built for the commercial airlines, not for the general aviation sector.  For instance, when I landed my Cirrus at Washington’s Dulles International Airport to attend this hearing, I landed on an 11,500 foot runway that was 150 feet wide and several feet deep of concrete.  This runway wasn’t built for my Cirrus or many other general aviation planes, it was built to handle heavy airliners.  I needed only a fraction of the available runway (length, width and depth) to land safely.  Saying that the cost of that runway (that’s part of our aviation infrastructure) should be split “fairly” and “equally” between both of us would be like going out to dinner and ordering a salad while your friend gets a five course meal then suggests it’s “fair” and “equal” to split the check down the middle.  It just doesn’t make sense.

In addition to the inequality I demonstrated above, another important factor to recognize is the massive infrastructure that would need to be put into place in the government to administer and collect from a user fee based system.  We’d effectively create a whole new bureaucracy, aptly referred to by many in the aviation industry to be named the SKY-R-S.  This new administration could raise fees (taxes) at any time without congressional approval which is a very dangerous proposition.  Given the vast amount of resources and personnel needed for such a program, it’s highly probably an increase in fees would be necessary just to cover this additional overhead.

Equally troublesome is the thought of having to dedicate additional resources and manpower within my own small business for the accounting function of auditing, paying, and handling these fees.  This money would add expense (beyond the flat $100 fee) to our operations which could better be spent growing our business and helping our customers grow their businesses. There is no need to add this additional burden to businesses who are already needing to be laser focused on efficiencies to compete effectively.

I invite you to watch the video presentation of the full hearing for a better understanding of this issue and all of the various points presented.  I was truly honored to be among an esteemed panel of individuals, most notably Martha King of King Schools, who did a phenomenal job expressing her position on behalf of the NBAA.  (As a side note, both John and Martha King are incredibly warm and wonderful people.  I can’t express how much I enjoyed getting to know them and was honored to testify along with Martha).  As you watch the video during the question and answer period, you may notice there was a brief tense moment between myself and the ranking Congresswoman on the committee.  Due to the phrasing of her question, I simply could not allow myself to advocate writing a “blank check” proclaiming that we should should raise aviation taxes.  I feel this is a more complex issue (including the numerous reasons I stated above) and that it’s necessary to look into the details and implications further.  I was clear in my answer however that if congress votes to increase aviation taxes, I would prefer for it to be done in the form of the existing excise fuel tax method instead of by creating new user fees.  While it was slightly uncomfortable to be in disagreement, I’m glad that I chose to stand up for my beliefs and not agree with a position I did not fully support.

I hope that each person reading this narrative will recognize that you too can make a difference when it comes to government and legislation.  I’m a normal guy who operates a small business and uses a general aviation aircraft to grow my business.  I’m not an aviation legend or a household name, but I stepped forward to support my beliefs and genuinely feel like I made a difference.  I invite each of you to do the same, contact your Congressmen and Senators.  Express your concern and let them hear your story of how aviation user fees will affect your business.  Together, we can make a difference and get user fees off the table once and for good.

Lastly, I would like to give a very special thanks to the Airplane Owners and Pilots Association (AOPA) as well as to the National Business Aviation Association (NBAA).  Both of these organizations work diligently on behalf of the general aviation industry and do a phenominal job.  I’ve gotten to know many of the staff members and leaders from both organizations and can adamantly say they are among the best, brightest and most dedicated people I’ve ever known.  They care about all interests in general aviation, both big and small, and I’m honored to be a member of both organizations.   I would also like to thank Congressman Sam Graves for initiating this hearing, along with the respected Congressional leaders who attended and participated in it.  Their time and energy invested was greatly appreciated and I was honored to have the opportunity to speak before them regarding this important issue.

Links to More Information and Resources:

User Fees in the Aviation Industry: Turbulence Ahead – Hearing Information

User Fees in the Aviation Industry: Turbulence Ahead – Brad Pierce – Testimony

User Fees in the Aviation Industry: Turbulence Ahead – Video of Hearing

 

11 Comments

Matthew tang

about 6 years ago

Hi Brad, good job! Keep it up. Haven' talk to u for a long time, my son just graduated from georgia tech, and joint fairway Snce march this year. you guys just open a new restaurant Eq store in Dubai ? how business there ? Are u working more in Orlando or Dubai? If u are in Orlando, like to have my son Randolph Meet u, might be we can convince him taking flying Lesson, I haven't been flying since 1985. if Randolph Taking the flying lesson, then I might have a chance Flying with him someday. Give me a call if u are in Orlando. Matthew Tang

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Dave Scott

about 6 years ago

What you said is right on. I would add, that they are looking at this from the corporate side of general aviation and not people flying any single engine aircraft. For any one burning kerosene $100.00 per trip is spitting in the ocean. For small aircraft it is setting up a dangerous scenario. Pilot with an instrument ticket is taking a short trip - 150 miles - 1,000 ft ceiling - what is he or she going to do - pay $100.00 to fly IFR or borderline skud run VFR? Raising the fuel tax one cent wold raise as much money - I suspect.

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Brad Pierce

about 6 years ago

One comment I recently received pointed out that this proposal excluded piston aircraft. That's only partially correct, there are a huge number of piston aircraft whom would NOT be exempt. According to the proposal, "Military aircraft, public aircraft, recreational piston aircraft, air ambulances, aircraft operating outside of controlled airspace, and Canada-to-Canada flights would be exempted." The key word to pay attention to is "recreational". The means that I'd still be liable for the fee since I utilize my airplane for business. If your aircraft is registered under a business name, it's no longer recreational. Do you partake in flight training? That's a business as well, subject to a $100 per flight fee. There are too many scenarios where the term "recreational" no longer applies that I can't list them all. The bottom line is that general aviation user fees will harm the industry and those who depend upon it. The full White House proposal can be viewed online at: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf

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Jim

about 6 years ago

I'm all for people paying their fair share but this user fee proposal is absurd. I am a private pilot and I fly a small, six passenger, turbo prop airplane. I usually fly alone, mostly for business. I just checked my logbook and I flew 160 flights of varying distances and durations over the past 12 months. Most less than one hour. At $100 per flight, this proposal will add $16,000 to my annual flying expense. Today, I spend $26,000 per year on fuel, another $20,000 on insurance, hanger, and maintenance for the plane. So my annual outlay will increase by 35% based on this proposal. Clearly, this entire, and growing category of aircraft has been overlooked by this proposal. The point of $100 per flight being a "drop in the bucket" does not apply here and it is an extraordinary disincentive to owners and operators of these airplanes. I also fully agree with the points made regarding the cost of the infrastructure both for the government and for business to manage this proposed system. Even more concerning is the path that could be taken on this type of taxation over time. Now it is just turbines. Soon, it could easily be all flights and I can even imagine the "menu of services" approach that has been proposed in the past. This wholes idea creates real safety concerns in my mind. A good example is the 15 minute flight I make frequently for maintenance on my plane. According to this proposal, if I can remain in "uncontrolled" airspace for the whole flight, I don't get charged. Hardly seems worth a hundred bucks to go 15 minutes away and I can avoid controlled airspace by flying low, avoiding the use of ATC traffic avoidance services, and avoiding the use of ATC flight plans, all of which increase the risk of flight to me and others in the area. I don't know why nobody is talking about safety. Maybe the safety concerns will be mitigated by the fact that GA will simply stop flying. If we need to better fund the US aviation infrastructure, I'm OK with paying my fair share, even if that means increased annual costs to me and my business. But let's make sure we find a way through mechanisms that fairly measure that share. The current fuel taxation system works quite well. This flat tax is just wrong.

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Jim

about 6 years ago

Great point, Brad. I read the whitehouse report and didn't catch this. How many of us own our GA aircraft in LLC's so we can buy a plane with a partner or just create some liability cushion? If all THESE airplanes are subject to this tax, the proposal is far more damaging to the GA industry than I initially thought.

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James

about 6 years ago

It's true, we all want something for nothing. For corporate aviation (calling it "general" aviation is a misnomer), they want the same ATC services and infrastructure that the airlines pay much more for. They want it subsidized. It's not unnatural to want to take advantage of a situation to the fullest extent possible. So I propose, make the fuel tax so high that it's unbearable, then we'll lose REAL general aviation at the same time. Somehow we have to raise revenue, and it's not enough that there are all the corporate tax breaks out there (especially for corporate aviation). Don't think for one second that corporate aviation is doing this to "save" general aviation. By opposing the $100/flight tax to pay for ATC services, you just might hurt general aviation more in the long run. $15/g gas anyone?

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DC

about 6 years ago

Great job, well said!

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Brad Pierce

about 6 years ago

I don't think anyone is proposing that we should receive something for nothing. We already pay into the system via excise fuel taxes - those of us who fly more tend to use more services and pay more. Those who fly less and use less services pay less. There's no taking advantage of the situation, it's a fair method of tax collection. A fuel tax increase would need to be voted upon by Congress. Therefore, the likelihood that they would raise taxes to the point of being $15/gallon isn't realistic. We're fortunate enough to have many representatives in the House who understand the huge value General Aviation brings to businesses and the communities they serve - and the devastating effects that would come with such an outlandish increase. On the flip side of this proposal, a user fee could however be increased without Congressional approval. That's scary. In terms of raising revenue, it's important to note that this proposal does not stipulate the money raised would even go towards the aviation system. If our government has a shortfall, we need to work together to find ways to cut costs and determine who is actually using which services. It doesn't make sense that we should add an arbitrary $100 per flight fee to airplane operators to help make up for the general budget deficit. Lastly, I for one am "corporate aviation" and I am doing this to "save" general aviation. I run a business, I employee great people, I contribute positively to my community. There are thousands of others just like me who use their airplanes for business each and every day. Each of us are a part of the General Aviation community and the Corporate Aviation community. We're willing to step forward and do our fair share, but fair doesn't necessarily equate to equal in such a complex situation.

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juan c almiron

about 6 years ago

How many people under the umbrella of congress was and is at this hearings costing us millions of dollars from the taxpayers ! This country is still trying to survive the aftermath of the other governments expenses ; we do not have any more because there is no more to be made ,we are surviving !! Hello congress of USA !!tap the money from every ship that brings oil from petroleum company's to our shores ;then you will see the cost of gasoline increase 5 cents a gallon the next day !!

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Maynard McKillen

about 6 years ago

It is sad to see that well-meaning members of the aviation community such as Mr. Pierce and the redoubtable Ms. King of King Schools fame are being used by a privileged minority to preserve the entitlement status of the corporate-jet crowd. Shame on Mr. Graves for employing well-meaning Americans in such a Dog and Pony Show, such a calculated misdirection. To abuse their desire to serve the aviation community, and the nation, to take their good intentions and place them in the service of a corrupt political party and a still-born supply-side economic ideology is a travesty. For over thirty years this nation has endured tax policies that, without merit, without equity, without sound economic reasoning, have shifted the tax burden to the middle class and granted irrational entitlements to the affluent and the corporate class. Thank Mr. Reagan and the puppeteers who made his mouth move for these abominations. User Fees are a sideways admission, made by politicians of all stripes, much as they dread to admit it, that starving the government of the revenue it uses to maintain an infrastructure that benefits all Americans, is profoundly stupid. And to grant affluent Americans and corporations exemption from contributing to the maintenance of said infrastructure is right-wing madness. All that income and all those assets sheltered in off-shore tax havens must be documented and taxed. It's the patriotic thing to do, though the affluent freeloaders have no particular loyalty to this nation. With such diversified assets, as well as hidden assets, they have no particular stake in the economic health of the United States. It is a toy to play with, a mouse the cat likes to bat around. Hmmm...what does the cat finally do with the mouse? Credit Mr. Graves and his handlers for skillful spin-doctoring, though. Hide the goals of the affluent freeloaders behind legitimate small-business owners and hint these admirable Americans, the latter group that is, might become the victims of that regulatory/taxing demon of legend. Never mind that the current crop of politicians are failing to act responsibly for the benefit of this and future generations, failing to resist the temptations of affluence, failing to choose the more lasting and tangible rewards of legislating with integrity instead of short-term partisan gain. They do, in fact, hold the reins of that regulatory/taxing demon, but lack the balls to tax their wealthy campaign contributors at an equitable level. Recognize the User Fees proposal as a bargaining position, used to force a discussion about how we fund our aviation infrastructure. As currently proposed, it is a non-starter. Exemptions need to be added for turbine-engined crop dusters, for example. Thoughtful contributors have pointed out other problems, such as the status of training flights and recreational use of business-registered aircraft. But these oversights can be hammered out. Recognize, too, that “...GA drives approximately 16 percent of the costs of air traffic services. Nearly 10 percent is related to high performance GA aircraft such as corporate jets, while 6 percent is related to piston GA aircraft...In contrast, GA currently contributes just over 3 percent of the taxes that flow into the Airport and Airway Trust Fund.” “The proposal would increase GA’s share of the user taxes and fees to 11 percent — with 10 percent coming from jets and other high performance aircraft and only 1 percent from piston users. While this is higher than GA’s current share, it is still well below their share of the costs.” “Simply adjusting the fuel tax rates for inflation would result in rates of roughly $0.36 per gallon for jet fuel and $0.32 per gallon for aviation gasoline. However, these rates would still not cover the air traffic control costs that GA activity drives.” (Source: http://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=8747) We who support private aviation don't need to be concerned about a User Fee for the corporate class and the trust fund babies. It's a mere poke in the eye, directed at those who have enjoyed decades of unearned ease, and deferential treatment from the government, at the expense of the rest of us. Private pilots, I say to you that this alphabet-soup of aviation advocacy groups are, sadly, mouthpieces, influence peddlers and apologists for an affluent minority who want to perpetuate the status quo, i.e., their subsidized air travel carve-out. Why else have they tried to focus your attention on User Fees and away from a taxing, legislative and economic climate that works to benefit only a minority of Americans? To protest User Fees is to reach for the low hanging fruit. To defeat them is to achieve a short-term victory that does nothing to invigorate private aviation. It will, however, comfort the comfortable. What we need to do is vote in a congress that passes tax reform legislation to restore taxing equity. Enough of these tax breaks and entitlement programs for the already wealthy. They benefit from the infrastructure my taxes built for them, but insist their prosperity was self-made? Psychotic delusion. Megalomania. Avarice-addiction Syndrome. You want to see all talk of User Fees vanish? Elect a real congress, focused on restoring taxing equity. And then, what has for decades passed as normal, this prolonged malaise, this suffocation of the economy by supply-side entitlement programs, this deregulatory dementia, this strangulation of the middle class, this decades-long class warfare, will be seen for the aberration it is.

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Bill

about 6 years ago

Mr. McKillen, very, very well put with so many of the underlying issues truly pointed out. Thank you for your comments. They reinforce and further what I also ardently believe.

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