Airport Business

APR 2013

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managing airports today the RyanAir model and "unbundled" their tickets in order to increase profitability, that same practice tilts the competitive playing field among airlines with different business models and, by reducing the taxable base of tickets, costs the FAA valuable revenues. And in general aviation, record fuel prices have reduced flight hours and parked planes. Added to this challenging mix are the higher costs and lack of the accountability for security and customs services. Focus on Funding When it takes 23 short-term extensions of FAA authority before H.R. 658 (a four-year status quo FAA reauthorization bill) finally passes; when we have continuing resolutions dribbling out A top industry priority should be to return to a funding system that is stable, reliable and removed as much as possible from politics. FAA appropriations in days, weeks or months; and when Washington's political brinkmanship almost immediately translates into service disruptions throughout the NAS, it is time to acknowledge that a funding problem exists. The AATF was designed as a vehicle to provide a long-term and predictable revenue stream to the FAA, enabling capital investments in air traffic control and airports as well as offsetting a portion of FAA operations spending. By providing a source of industry funding through excise taxes and fees, it was a sensible and elegant workaround to the lack of a federal capital budget and the annual appropriations process. The problem today is that the AATF has become a pay-as-you-go account (with less than a month's reserve) that is fully susceptible to the vicissitudes of both the cyclical aviation industry and Washington politics. While taxpayers historically made up the difference between AATF revenues and the proposed FAA budget (normally between 15 to 30 percent of the FAA budget) that too has become unreliable in this age of fiscal constraint. A top industry priority should be to return to a funding system that is stable, reliable and removed as much as possible from politics. This may even require the industry to wean itself off taxpayer dollars entirely (except for military operations) and support the parts of the system that cannot recover their costs. Such a step requires careful consideration and attention to FAA's spending and methods of revenue collection. traffic control—but as a provider of federal jobs and community support. This micromanagement, together with the excessive number of legislative mandates and reports that constrain and distract FAA leadership, needs to be curtailed and accompanied by a process of codification to simplify and streamline its legislative authorities. One way of achieving this goal is to put together a publicly accountable board of directors for the FAA, made up of industry stakeholders, which would oversee federal investments and the strategic direction of FAA's leadership but leave the tactical delivery of services to the FAA. In the next few weeks, the organization will release four reform principles that will specifically address each of these challenges. While MAC does not expect these ideas will immediately resonate with and convince all parts of the industry, it is hoped the MAC agenda will begin a dialogue that leads to the industry coming together to fix its collective problems. Guide Governance The FAA performs many roles, including setting priorities for the NAS, overseeing system safety, investing in infrastructure and delivering services. It is for this reason that the AATF's schedule of taxes and fees were designed— passengers and shippers who use the system's resources should pay at least a portion of the revenues necessary for it to exist and grow. But today all of the FAA's roles are conflated when it comes to FAA governance. Congress rightly sets public goals for the system, provides resources through the AATF and taxpayer funding, and oversees FAA's execution of laws. However, Congress also gets into more dubious matters such as how services are delivered, even to a level where it decides what air traffic facilities the FAA is permitted to open or close. That is perhaps the greatest distinction between the FAA and its counterpart agencies around the world; our FAA is not treated as a service provider performing what is essentially a commercial service—the provision of air about the author Stephen D. Van Beek, Executive Director of Policy and Strategy, LeighFisher With more than 25 years of experience as a senior executive, policy analyst and transportation professional, Stephen D. Van Beek currently serves as executive director of policy and strategy for LeighFisher, a global transportation management consultant focusing on the delivery of financial advisory, planning and operations solutions. Van Beek advises airport and transport clients and coordinates policy and business strategy across the consulting firm's lines of business. Current projects include strategic planning and policy analysis, multi-modal planning, transportation funding, and finance, as well as federal laws/ regulations/policy. April 2013 www.AviationPros.com 19

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