Federal Aviation Administration: Cost Allocation Practices and Cost Recovery Proposal Compared with Selected International Practices

Anticipating the expiration of the Federal Aviation Administration's (FAA) current authorization at the end of fiscal year 2007, the administration submitted a proposal on February 14, 2007, for reauthorizing FAA and the excise taxes that fund most of its budget. This proposal would introduce cost-based charges for commercial users of air traffic control services, eliminate many current taxes, substantially raise fuel taxes for general aviation users to pay for their use of air traffic control services, and charge commercial and general aviation users a fuel tax to pay primarily for airport capital improvements. In January 2007, FAA released the results of a recently completed cost allocation study in support of the administration's proposal for transitioning to user fees. FAA and the administration used this study to determine the factors that drive the costs of providing air traffic control services, allocate these costs to various users of air traffic control services, and support the development of alternative methods to recover those costs. On March 21, 2007, we testified before the House Subcommittee on Aviation, providing our observations on selected changes to FAA's funding and budget structure contained in the administration's reauthorization proposal. As requested, we are also providing comparative information to further assist Congress in considering FAA's funding proposal. Accordingly, we addressed the following question: How do the proposed practices for allocating and recovering the cost of FAA's air traffic control operations compare to the practices of other countries?