Airlines OK Proposal for FAA Funding

From Bloomberg News

U.S. airlines have agreed on a proposal that would replace passenger ticket taxes with user fees to fund the $14.3-billion Federal Aviation Administration budget.

The plan, which took more than a year to negotiate, will be the basis of industry lobbying aimed at persuading Congress to change the way it finances the air-traffic control system.

"Today we are unified," Southwest Airlines Co. Chairman Herb Kelleher said in Washington. Airline chief executives who make up the board of the Air Transport Assn. signed off on the plan Thursday, he said.

The proposal calls for the $10 billion that airlines pay each year in taxes and other fees to be replaced with a system that charges airlines based on airspace use. The formula will probably include a fee for taking off and additional charges based on time spent using air-traffic control services, said James May, the association president.

The taxes that fund air-traffic control expire next year. Bush administration officials want a new approach because they say taxes tied to tickets don't produce a predictable revenue flow.

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