Airport Improvement Program: The House bill would authorize a total of $15.8 billion for AIP during the next four years and increase AIP funding by $100 million per year – $3.8 billion in FY08, $3.9 billion in FY09, $4 billion in FY10 and $4.1 billion in FY11. This is the same funding levels included in the Senate version of the bill. The Administration proposed significantly less for AIP -- $2.75 billion in FY08, $2.9 billion in FY09 and $3.05 billion in FY10 for a total of $8.7 billion.

In addition to urging Congress to increase AIP funding to keep up with increasing demand and construction costs, AAAE and ALA have been urging lawmakers and maintain the budget protections that make it difficult for Congress to appropriate less than the full amount authorized for AIP. Like the Senate bill, the House bill would extend those protections through FY11.

The House bill also rejects the Administration’s proposal to dramatically change how the AIP program is funded. Under the Administration’s plan, funding for airport improvements would still come from the Airport and Airway Trust Fund. However, money going into the trust fund would come from the increase in commercial and general aviation fuel taxes described above and revenue generated from reduced international departure and arrival taxes.

FAA Operations: The House bill includes $8.726 million for FAA Operations in FY08, $8.978 million in FY09, $9.305 million in FY10 and $9.590 million in FY11. The Senate bill includes the same funding levels.

Facilities and Equipment: The House bill includes $3.12 billion for F&E in FY08, $3.246 billion in FY09, $3.259 billion in FY10 and $3.353 billion in FY11. Of those amounts, the bill would provide $8 million for the acquisition and installation of runway incursion reduction programs in FY08, $10 million in FY09, $12 million in FY10 and F11. It would also provide $15 million for runway status lights in FY08, $27 million in FY09, $12 million in FY10 and $20 million in FY11.

Passenger Facility Charges

PFC Cap: The House bill would raise the PFC cap from $4.50 to $7.00 – a 56% increase, and it would allow airports to impose PFCs in $.50 increments. According to DOT, if those airports that are currently collecting $4.50 PFCs increase their fees to $7.00, raising the cap would generate approximately $1.1 billion in additional revenue per year. Without compensating for increasing passenger levels or those airports that might increase their PFCs even though they are not currently at the maximum amount, the proposal would generate an additional $4.4 billion over the next four years.

As we have previously reported, the Administration’s FAA reauthorization plan would raise the PFC cap to $6.00 and up to $7.00 for those airports that participate in a navigational equipment pilot program. Due to strong opposition from the airlines and the rural makeup of the Senate Commerce Committee, the Senate bill would keep the PFC cap at $4.50. A handful of airports would theoretically be allowed to collect unlimited PFCs if they agree to participate in a PFC pilot program. However, participating airports would be prohibited from using air carriers to collect the fees.

No Additional Requirements for PFCs Above $4.50: The House bill does not include any additional requirements for PFCs above $4.50. Rep. James Obserstar (D-MN), the Chairman of the House Transportation and Infrastructure Committee, has repeatedly voiced his concerns that airports have only used 17% of their PFC revenue for airside capacity enhancing projects. We argued that airports rely on PFCs for capacity-enhancing projects and other critical airport projects. We also provided information to Oberstar to show that the percentage of PFCs used for airside projects increased to 32% in 2006 and that PFCs accounted for 44% of the revenue used for major runway projects at 15 of the busiest airports in the FAA’s Operational Evolution Plan.
PFC Streamlining: The House bill rejects the Administration’s proposal to streamline the lengthy PFC application and approval process. The Senate version of the bill called for streamlining the PFC application and approval process but would require DOT approval before an airport could impose a higher PFC level.

PFC Flexibility: The House bill does not incorporate the Administration’s proposal to expand PFC eligibility to include “any capital cost that an airport could pay for with airport revenue and remove almost all approval criteria in current statute.” However, the House bill would allow PFCs to construct “secure bicycle storage facilities that are to be used by passengers at the airports and that are in compliance with acceptable security standards.” (This provision will likely be the subject of a “news” video during AAAE’s Aviation Issues Conference in January.)

Air Navigational Facilities Pilot Program: The House bill also rejects the Administration’s proposal to create a new air navigational facilities pilot program that would allow the FAA “to transfer to up to 10 medium or large hub airports terminal area navigational equipment, such as instrument landing systems and approach lighting systems.” Under the Administration’s plan, participating airports would be able to charge a $7.00 PFC. The Senate version of the bill includes a similar provision without the added incentive of being able to charge a higher PFC.

Intermodal Ground Access Project Pilot Program: The House bill would require DOT to create a pilot program that would allow no more than 5 airports to use PFC revenue for intermodal ground access projects.

Connecting Passengers: The House bill would require DOT to initiate a study to evaluate “the differences in facility needs, and the costs of constructing, maintaining, and operating those facilities, for airports at which the majority of passengers are connecting passengers as compared to airports at which the majority of passengers are originating and destination passengers.” It would also require the agency to examine “the potential effects on airport revenues of requiring airports to charge different levels of passenger facility charges on connecting passengers and originating and destination passengers.” DOT would be required to submit the report to Congress within one year after the study begins.

Airport Improvement Program Modifications

Entitlements

Entitlements for Large Hub Airports: The House bill would eliminate entitlements for large hub airports that collect PFCs above $4.50. Under the Administration’s plan, entitlements for large and medium hub airports would be reduced by 50% in FY08 and FY09 before being completely eliminated in FY10 whether they impose a higher PFC or not. The Senate bill would not eliminate entitlements for large or medium hub airports.

Small Airport Fund: Like the Senate version of the bill, the House bill would keep the Small Airport Fund intact. The Administration’s proposal would replace the Small Airport Fund, which is supported by turnbacks from large and medium hub airports, with a new Small Airport Set-Aside. Under the Administration’s plan, small airports would receive 20% of discretionary funds instead.

State Apportionment: Currently, 20% of AIP is used to fund state and nonprimary apportionments. The Administration is proposing to de-link the two and use 10% of AIP for state apportionments instead. The plan calls for a minimum level of $300,000 per year for state apportionments – about the same amount that states received in FY06. The House bill includes a similar proposal.

Nonprimary Apportionment: The House bill does not include the Administration’s proposal to replace the $150,000 apportionment for nonprimary commercial service, general aviation and reliever airports with tiered funding levels. Under the Administration’s plan, airports with 100 or more based aircraft would receive $400,000, and airports with less than 10 based aircraft would not receive an annual apportionment. Both the House and Senate bills would keep the $150,000 apportionment intact.

Cargo Apportionment: Like the Administration’s proposal, the House bill would keep the cargo apportionment at 3.5% of AIP. The bill approved by the Senate Commerce Committee would increase the cargo apportionment to 4%.

Discretionary

Funding Level: The House bill would increase the minimum amount for discretionary funds from $148 million to $520 million. The Administration’s plan and the Senate Commerce Committee-approved bill also call for increasing the minimum amount for discretionary funds to $520 million.

Noise Set-Aside: The House bill would change current law that requires that 35% of discretionary funds be used for the noise set-aside. Instead the bill calls for $300 million for noise compatibility planning. Similar to the Administration’s proposal and the Senate bill, the House measure would broaden the noise set-aside by allowing airports to use funds for water quality mitigation projects that are approved as part of an environmental record of decision. By contrast, the Administration proposed a new “environmental set-aside” that would receive 8% of all AIP apportioned funds rather than 35% of discretionary funds as required under current law for the narrower noise set-aside.

Changes to the Federal Matching Share

Federal Share for Large and Medium Hub Airports: Neither the House nor the Senate bill includes the Administration’s proposal to reduce the government’s maximum share for airfield pavement and rehabilitation projects for runways, taxiways at large and medium hub airports from 75% to 50%. AAAE and the ALA opposed the Administration’s proposal to reduce the federal share for large and medium hub airports.

Transition from Small to Medium Hubs: The House bill would allow small hub airports that have recently been reclassified as medium hubs to continue to retain their eligibility for up to a 90% federal share for two years. The Administration’s proposal and the Senate Commerce Committee approved bill includes a similar provision.

Federal Share for Small Hub and Smaller Airports: Surprisingly, the House bill does not include a provision strongly supported by AAAE and the ALA that would maintain the 95% federal matching share for small hub and smaller airports. Vision 100 increased the federal share for small airports from 90% to 95% through FY07. The Senate bill would extend that higher federal matching share through FY11 while the Administration’s proposal would decrease the federal share for many small airports to 90%.

Federal Share for Airports in Economically Depressed Communities: However, the House bill calls for a 95% federal matching share for airports that are receiving subsidized air service and are located economically depressed communities”

AIP Eligibility

ADS-B Support Pilot Program: The House bill does not include the Administration’s proposal to allow up to10 airports to participate in a pilot program to encourage non-Federal ownership and maintenance of Automatic Dependent Surveillance-Broadcast (ADS-B) equipment. The Administration’s proposal, which was approved by the Senate Commerce Committee, would allow states and local governments to use AIP funds to purchase ADS-B equipment.

Replacing or Relocating Facilities: The Administration’s proposal would allow airports to use AIP entitlement funds to “move or replace a facility when the need to relocate or replace it was beyond the owner’s control (such as new design standards that render the facility a safety hazard).” It would also make a change to the grant assurance regarding replacing or relocating facilities. The House and Senate bills include similar provisions.

Firefighting and Rescue Equipment: The House bill includes the Administration’s proposal to change the definition of airport development to include firefighting and rescue equipment at airports that serve scheduled air carrier operations in aircraft designed for more than 9 passenger seats (rather than 20 passenger seats as prescribed in current law) and less than 31 passengers seats..

Mobile Fuel Truck Containment Systems: The House bill also includes the Administration’s proposal to allow nonprimary airports to use AIP funds for mobile fuel truck containment systems if such systems are required by EPA. The Administration’s proposal and the Senate Commerce Committee approved bill includes a similar provision.

AIP Flexibility for Non-Primary Airports: The House bill also includes the Administration’s proposal to allow nonprimary airports to use their entitlements for revenue-producing aeronautical support facilities such as new fuel farms and hangers.

Other AIP Modifications

Competition Plans: In recent years the ALA has strongly urged Congress and the Administration to eliminate the current law that prevents certain large and medium hub airports from receiving AIP funds or collecting new PFCs unless they file lengthy competition plans with DOT. The Administration’s proposal would eliminate the need for airports to provide DOT with information on patterns of air service and comparative airfare levels, which the agency points out is already publicly available. The House bill includes a similar provision.

Competitive Access Reports: Vision 100 included a provision that requires a large and medium hub airport to file semi-annual competition disclosure reports if that airport was unable to accommodate an airline’s request for access to gates or other facilities. Like the Administration’s proposal, the House bill would extend that requirement from 2008 to 2012 even though DOT admits that no reports have been filed. The Senate bill would permanently extend that requirement.

Sale of Private Airport to Public Sponsor: The Administration’s proposal includes a provision to facilitate the sale of a private airport, which has received AIP funds, to a public entity such as a state or local government. The House and Senate bills include a similar provision.

Small Community Programs

Small Community Air Service Development Program: Like the bill approved by the Senate Commerce Committee, the House bill would authorize $35 million for the popular Small Community Air Service Development Program through FY11 – the same amount included in the Senate version of the bill. Vision 100 authorized $35 million per year for the program through Fiscal Year 2008. The Administration did not recommend any funding for this program, and the ALA recommended increasing funding $50 million per year.

Ground Handling Services: The National Air Transportation Association (NATA) urged lawmakers to include a provision in the bill that would prevent small communities from using Small Community Air Service Development Program funds to provide ground handling services. We strongly opposed this proposal and argued that DOT should continue to have the option of providing funds to certain eligible small communities that are seeking to improve commercial air service by reducing the costs of ground handling services. That proposal is not included in the bill.

Essential Air Service Program: The House bill rejects the Administration’s proposal to cut Essential Air Service (EAS) funding to $50 million per year -- $60 million less than the total amount that Congress approved for Fiscal Year 2007. Like the Senate bill, the House bill includes $50 million from overflight fees for the program and authorizes an additional $83 million for a total of $133 million per year. The House bill would also split any excess overflight funds between EAS and the Small Community Air Service Development Program.

Contract Tower Program: The House bill would authorize $8.5 million for the contract tower cost share program in FY08 and increases that amount $500,000 per year through FY11. The bill would also increase the maximum federal participation in new contract tower construction from $1.5 million to $2 million. It would also give airports that dip below the 1.0 benefit to cost ratio 18 months to adequately budget for local cost-share funds. Similar funding levels and provisions are included in the Senate bill.

Environmental and Research Provisions

Airport Funding of Special Studies or Reviews: Vision 100 included a provision that allowed airports to pay for additional FAA staff and/or contract support to help expedite the environmental reviews for capacity projects. The Administration’s plan would “broaden that authority to include voluntary agreements with airports that request FAA support to conduct special environmental studies that have research and development aspects for ongoing environmental reviews. It would also include similar studies resulting from approved Part 150 program (noise mitigation) measures….” The House and Senate bills include a similar provision.

Airport Cooperative Research Program: As we recently reported, the aviation research bill that the House Science and Technology Subcommittee on Space and Aeronautics approved last week would authorize a total of $55 million for the program -- $10 million in FY08 and $15 million per year in FY09 through FY11. However, the bill would also specify how that funding is distributed. In FY08, for instance, the bill would provide $2 million for capacity research, $3 million for environmental research and $5 million for safety research.

State Block Grant Program: The Administration’s proposal would codify current practice that state participants in the state block grant program have “responsibility and authority to comply with NEPA and other applicable environmental requirements for projects at non-commercial service airports within the purview of the block grant program.” The House and Senate bills include a similar provision.

Grant Eligibility for Assessment of Flight Procedures: The Administration’s proposal would “encourage the implementation of environmentally-beneficial aircraft flight procedures at airports by supporting with AIP assistance the environmental review of airport-proposed procedures that are approved by the FAA under 14 CFR part 150, Airport Noise Compatibility Planning.” The House and Senate bills include a similar provision.

Environmental Mitigation Demonstration Pilot Program: Similar to the Administration’s proposal and the Senate bill, the House measure would create a new pilot program that would allow the FAA to fund six environmental mitigation demonstration projects at public-use airports. Funds would come from the environmental set-aide, which the Senate bill would fund at $300 million per year. The FAA would pay for 50 percent of the project costs up to $2.5 million per project. However, the House proposal would allow airports to use PFC funds for this purpose.

Airport Environmental Management Planning: The House bill would clarify that the development of environmental management systems (EMS) for an airport is AIP-eligible. EMS planning allows an airport to assess the environmental footprint of the airport. This may be particularly beneficial to medium and small hub airports that do not necessarily have in house environmental expertise.

Stage 1 and Stage 2 Aircraft: Like bill Senate Commerce Committee-approved bill, the House measure would phase out Stage 1 and Stage 2 aircraft with a maximum weight of 75,000 pounds by December 31, 2012. The phase out would not apply to those airports that notify DOT of their willingness to allow Stage 1 and Stage 2 aircraft to operate at their facilities. Robert Bogan, the Deputy Director at the Morristown Municipal Airport airport, urged House lawmakers to approve the phase out when he testified before the House Aviation Subcommittee in March.


Misc.

Airport Privatization: The House bill would make it less appealing for airports to participate in the airport privatization pilot program and make it more challenging for them to gain airline approval. For instance, the bill would eliminate AIP entitlements and discretionary funds for those airports that participate in the airport privatization pilot program.

The bill would also make it more difficult for airports to gain airline approval to participate in the program and to increase their fees. Current law allows the Secretary of Transportation to exempt participating airports from revenue diversion prohibitions if 65% of the air carriers serving the airport approve. The House bill would increase that requirement to 75%. It would also increase the percentage of airlines that must approve a fee increase at participating airports from 65% to 75%.

By contrast, the Administration’s proposal would expand the airport privatization pilot program to 15 airports and allow more than one large-hub airport to apply. Current law limits the program to 5 airports and allowed only 1 large hub airport to apply. The Senate bill did not include any provisions related to airport privatization.

Slots at DCA: The House bill would increase the number of slot exemptions at Ronald Reagan Washington National Airport beyond the perimeter from 24 to 34. The Senate Commerce Committee narrowly adopted an amendment offered by Senator Gordon Smith (R-OR) and Senator Maria Cantwell (D-WA) to increase the number of slots for service beyond the perimeter by 12 and the number of slots within the perimeter by 8.

Airline Customer Service: The House bill would require each carrier providing covered service to a large or medium hub airport and each operator of a large or medium hub airport to submit emergency contingency plans to DOT for approval. The airport contingency plans must include information on “how the airport operator, to the maximum extent practicable, will provide for the sharing of facilities and make gates available at the airport in an emergency.” Airline contingency plans would also include a process for airlines to make gates available in an emergency and a process for providing food, water and restroom facilities for passengers stuck on the tarmac for long periods of time.

Slot Allocation at LaGuardia: Neither the House nor the Senate version of bill includes provisions related to slot allocation at New York’s LaGuardia International Airport. The Administration’s proposal would allow DOT to allocate slots at LaGuardia using market-based mechanisms such as auctions, congestion or peak-hour pricing.

Market-Based Mechanisms: Similarly, neither the House nor the Senate version of bill includes provisions related to market-based mechanisms. The Administration’s proposal would allow up to 10 congested airports to participate in a pilot program to evaluate market-based mechanisms.

Other Proposals Not Included in the Bill

Qualifications-Based Selection: The Airport Consultants Council, the American Council of Engineering Companies and other organizations drafted a proposal that would require airports to use Qualifications-Based Selection (QBS) for architectural, planning and engineering for PFC-funded projects. A grant assurance requires airports to use QBS for those types of projects when using AIP funds, and the initial proposal would extend that grant assurance to PFC-funded projects.

The ALA expressed strong concerns about an initial proposal to apply a federal grant assurance to PFCs, which are local – not federal funds. We suggested that extending an AIP grant assurance to PFC-funded projects would open the door for other grant assurances being applied to PFC-funded projects. In recent years, the ALA has been urging Congress and the Administration to eliminate unnecessary grant assurances and to streamline the PFC application and approval process as part of our call for regulatory streamlining. Applying a federal grant assurance to PFC-funded projects runs contrary to both efforts. The QBS proposal is not included in the bill.

Aircraft Rescue and Firefighters Standards: The ALA strongly opposed several new Aircraft Rescue and Firefighters Standards proposed by the International Association of Fire Fighters (IAFF) that would dramatically increase equipment and staffing requirements for airports. We argued that additional operating costs would likely force many small airports to raise their fees and make it more difficult for them to retain and attract new commercial air service. We also pointed out that additional equipment costs would eat into AIP funds at a time when airports are focusing on trying to build more capacity to accommodate increasing demand. The IAFF proposals are not included in the bill.

PFCs and Part 135 Operators: NATA also drafted a proposal that would require airports to: 1) attempt to contact air taxi operators through NATA when airports plan to impose a PFC; and 2) exclude any air taxis from PFC collection that are responsible for no more than 1% of total passenger enplanements. (Currently, airports may request that collection of PFCs not be required for any class of carriers if the number of passengers enplaned by the carrier is not more than 1% of the total number of enplaned passengers.)

The ALA raised objections to airports being forced to notify NATA when they plan to impose a PFC – a proposition that could create opposition to new PFC projects and delay their implementation. Moreover, we argued that airports should not be forced to exclude air taxis from paying PFCs. The NATA proposal is not included in the bill.

Outlook

The House Transportation and Infrastructure Committee is scheduled to markup the FAA reauthorization bill and other measures today at noon. It is our understanding that there may be only two amendments offered tomorrow – one regarding the labor dispute between the air traffic controllers and the FAA and the other regarding FedEx and the Railway Labor Act.

Rep. James Oberstar (D-MN), the Chairman of the House Transportation and Infrastructure Committee, told ALA’s Todd Hauptli last night that the bill should reach the House floor sometime in July. Ideally, House and Senate lawmakers would complete action on the authorization bill before Vision 100 and the current excise taxes expire at the end of September. However, that’s not expected to be an easy task.

The Senate Commerce Committee approved its version of the bill on May 16th. But progress has been stalled due in part because the Senate Finance Committee has not yet held a hearing on the tax portions of the bill. Even if the Finance Committee manages to complete its action on the bill in July, it’s unclear whether there would be an opening in the schedule to allow Senate leaders to bring the bill to floor next month. Congress will be in recess in August. So, that leaves only the month of September for lawmakers to wrap up consideration of the bill before the current one expires.

Labor provisions that may be added to the House bill tomorrow coupled with the Senate’s controversial $25 per flight surcharge could also delay final passage of the bill. General aviation groups strongly object to the proposed fee, and their allies in the Senate will likely attempt to strike the provision from the bill. Senator Trent Lott (R-MS), the Ranking Member of the Senate Aviation Subcommittee, suggested in May that he and Senator Jay Rockefeller (D-WV), the Chairman of the Aviation Subcommittee, may “pull the plug” on the bill unless it includes the surcharge.

The introduction of the FAA reauthorization bill in the House last night is a step in the right direction. But we have a long way to go before the next FAA reauthorization bill is enacted into law. Because of the time constraints and controversial issues surrounding the authorization bill, Congress may opt to pass a short- or long-term extension instead.