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Meeting the Needs of Airports in Today’s
Aviation System
A New Airport-Airline Partnership
January 2015 Edition
A Playbook for Successfully Reforming the FAA and
Airport Programs
Airport Policy Report
Airport Policy Report
A Playbook for Successfully Reforming the FAA and Airport Programs | January 20152
For the first time in over a decade, 2015 is shaping up to be a year of policy possibilities for airports. ICF International will be sharing an analysis of policy reform for clients and other interested parties. The “Airport Policy Report” is written and edited by Stephen D. Van Beek, Vice President of Airport Advisory Services, with assistance from consultants in ICF’s aviation, transportation and federal practices.
The first three issues will be:January 2015: A Playbook for Successfully Reforming the FAA and Airport ProgramsFebruary 2015: Meeting the Needs of Airports in Today’s Aviation SystemMarch 2015: A New Airport-Airline Partnership
Welcome to the First Edition of the Airport Policy Report
A Playbook for Successfully Reforming the FAA and Airport ProgramsAfter several years of policymaking that created uncertainty and harm to airports and aviation, 2015 could turn out to be an historic year for airports and aviation. As we count down the legislative days to the September 30 expiration of the Federal Aviation Administration (FAA) authorization, a growing consensus of policymakers and aviation stakeholders are calling for fundamental reform of the FAA’s funding, governance and policy frameworks.
To those who have not followed recent developments in our nation’s capital, this consensus may be surprising given the budgetary and policy dysfunction of 2011-2013. The effects of the dysfunction were widespread on aviation, including government shutdowns, furloughs of air traffic controllers, closure of the FAA Academy that trains controllers, decisions to forego maintaining navigation aids at many of our nation’s airports, reductions of funds held in trust for airport capital projects, delays in aircraft and part certifications, and many others. This series of events exposed for all to see how uniquely vulnerable our National Airspace System (NAS) is to political failure and disruption of FAA operations. Addressing that vulnerability has become a major priority for aviation stakeholders, including airports.
ICF International | Airport Policy Report 3
Background to ReformThe realization that FAA operational performance and capital investments tie directly with budgetary politics has helped to fuel a determination to better sort out the regulatory and quasi-commercial activities the federal government provides to the NAS. Fortunately, in contrast to previous years, policymakers passed a full-year appropriation that runs up to the September 30, 2015 expiration of the current FAA authorization. This gives the industry a window of opportunity to fix the problems. Given how busy the transportation authorizing committees will be this year, some extension of the FAA authorization is likely.
If successful, FAA reform holds the promise of eliminating the frequent operational disruptions of the NAS as well as the “on-again, off-again” capital investments in air traffic control modernization (referred to as NextGen). Reform also could support the industry through the creation of more pro-competitive, business-like, and efficient policies. In recent years, many observers have bemoaned the lack of U.S. leadership on aviation; 2015 presents an opportunity to address that.
The opening salvo for reform occurred early in 2014, when the FAA’s Management Advisory Council (MAC)—a representative group of aviation stakeholders and key government representatives (including three professionals active in the airport industry)—issued its unanimous report to FAA Administrator Michael Huerta.
In the report, MAC members reviewed the three previous years’ events and analyzed future trends to make a compelling case that the current aviation funding, governing and policy frameworks were unsustainable and required reform. The MAC offered four principles to help guide consideration of reform (a copy of the full report is available here)
Airport Policy Report
A Playbook for Successfully Reforming the FAA and Airport Programs | January 20154
1. CREATE A SUSTAINABLE FINANCIAL FUTURE FOR THE FAA: Provide dedicated and sufficient user-based revenues to pay for existing FAA obligations. MAC members believed that general fund (or taxpayer) support for the aviation industry should be phased out as soon as possible in order to insulate the agency and the provision of user services from the kind of politics that led to NAS disruptions.
2. SEPARATE A NEW COMMERCIALIZED AIR TRAFFIC ORGANIZATION (ATO) FROM THE FAA: Remove the service-oriented ATO from the FAA and appoint a board consisting of customers (or users) and aviation stakeholders to oversee its work. MAC members strongly believe that air traffic reform needs to be accompanied by overall aviation policy reform due to the tight links between policy and funding decisions.
3. ASSESS AND CODIFY FAA AUTHORITIES AND PROGRAMS: Simplify statutes, regulations and policy by reviewing existing rules and procedures and eliminating redundant regulatory oversight. MAC members believe that this process will result in significant savings to the FAA and will obviate the need for a near-term increase in user fees or taxes after the phase-out of general fund support.
4. REFORM THE TAX STRUCTURE: Eliminate the current mix of Airport and Airway Trust Fund taxes and fees and replace it with transparent schedules of cost-based fees that provide sufficient funding for services such as air traffic control and aircraft certification. MAC members believe that new schedules should be (1) “revenue neutral” and (2) flexible in their administration in order to gain the confidence of stakeholders and facilitate the transition to a new system.
If reform were to track these principles, it would be the most significant since at least 1990 (the passage of the Airport Noise & Capacity Act) and probably since the Airline Deregulation Act of 1978 became law. Encouraging signs for reform have come from two Washington policymakers who would help lead and support the effort and share the desire for a wide-ranging consideration of alternatives by the industry and government.
Late in 2013, FAA Administrator Michael Huerta in an Aero Club luncheon stated:
“One thing I think is vitally important is for
the aviation industry to start having serious
conversations about the structure of our
aviation system, as well as the way to fund it
… We’re going to have to have a thoughtful
conversation about what it makes sense for
the FAA to continue doing, and what we might
be able to stop doing or do differently”
ICF International | Airport Policy Report 5
Speaking at an industry conference in Orlando, House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) posited:
“We need to think bigger than a simple FAA reauthorization. I believe it needs to be a
transformational bill. We can reform U.S. policy if we concentrate on the common ground …
and avoid battling one another on narrow issues.” (coverage from www.aopa.org “Shuster Calls
for Bold Thinking on FAA Reauthorization,” Oct. 21, 2014).
Airports and ReformAirport leadership agrees. Gina Marie Lindsey, MAC Chairman between 2011 and 2012 and Executive Director of Los Angeles World Airports, suggested to industry stakeholders including airports, airlines and general aviation that we “drop our parochial views on funding and policies because we keep cancelling each other out on the Hill. Instead [we should] craft our collective futures together and create a new national aviation policy that recognizes change.” Working together is a must for an authorization as it considers not only the funding of airport infrastructure and the provision of air traffic control, but a myriad of other issues that range from safety regulation to aircraft certification.
Her practical political advice also recognizes that it is always easier for policymakers to put off decisions when stakeholders elevate their disagreements over the interests they have in common. For their part, for over a decade, airports have spent less time discussing aviation system needs and more time unsuccessfully pursuing an agenda that includes raising the current $4.50 ceiling on the Passenger Facility Charge (PFC) and increasing or, at least, stabilizing the funding level for the Airport Improvement Program (AIP).
Airport Policy Report
A Playbook for Successfully Reforming the FAA and Airport Programs | January 20156
Just how unsuccessful airports have been with this approach is clear by comparing the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21) passed in 2000 with this year’s FY 2015 appropriation levels. AIR-21’s authorized funding levels extended out to 2003. Despite vigorous lobbying by airports and their representatives, there has been no progress on AIP funding or the $4.50 PFC ceiling (also legislated in AIR-21) in the12 years since that authorization expired.
This year AirportsUnited—the coalition of airports put together by Airports Council International-North America, the American Association of Airport Executives, and the U.S. Travel Association—has adopted familiar goals to raise the PFC ceiling and protect AIP funding levels (for a complete guide to the plan see airportsunited.com).
In $
billi
ons
Ops
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
F&E AIPAIR-21 2003 Authorization FFY 2015 Appropriations
$7.36
$9.47
$2.98 $2.60$3.35$3.40
12.8%31.2% 1.2%
FAA Program Funding 2003 vs. 2015
ICF International | Airport Policy Report 7
Dr. Van Beek is a well-known industry expert who was recently a member of the Federal Aviation Administration’s Management Advisory Council, an Executive Vice President for Airports Council International–North America and the Associate Deputy Secretary of the U.S. Department of Transportation. Dr. Van Beek and ICF International offer a wide variety of business planning and policy services for airports. For more information, please contact Steve by email at [email protected].
Given continued airline lobbying against a PFC increase, MAC-identified problems with the sustainability of the Airport and Airway Trust Fund (AATF), and pressures on general fund support for aviation and transportation programs, these initiatives appear to be once again political long shots (for more on the financial challenges of today’s system see the MAC report, especially pp. 10-17). If airports and other interests focus solely on their parochial needs, the most likely result is a status quo bill that does not address airport or industry’s needs.
Instead, airports and their representatives should start by supporting MAC-like FAA reforms in the areas of financial sustainability, industry governance and policy. Such measures would remove key parts of the aviation system from the political and budgetary process and place the operation of air traffic control, and investments in it, on more sustainable foundations. No longer would severe cuts in funding levied by events such as sequestration, the failure to raise the statutory limit on the national debt, and the absence of government appropriations wreak havoc on the users and employees of the aviation system. That would be a good start.
Tackling the 85% of the issues the industry has in common and achieving consensus on them usefully changes the political calculus and playing field for individual airport proposals, whether they are measures addressing infrastructure support, increasing competitive air service, managing airside and terminal congestion or better aligning economic regulation with airports’ commercial realities. While undoubtedly a complex technical and political exercise, reform is the aviation industry and airports’ best bet for positive change.
In February, we discuss key airport issues for reauthorization, including infrastructure funding, increasing competitive air service, managing congestion, and completing airport economic deregulation.
