The National Air Traffic Controllers Association has already gone on record vociferously opposing user fees as a funding mechanism for the FAA and, especially, for ATC.

When the FAA and Air Transport Association began talking in early 2005 about instituting user fees, NATCA commissioned aviation economist and consultant Darryl Jenkins to analyze the concept. Not surprisingly, Jenkins' white paper, titled "Turbulence Ahead: How User Fees Could Ground the FAA" and which readers can access on NATCA's Web site (www.natca.org), debunks user fees as an ATC funding mechanism, since the concept fails to recognize the impact of economic fluctuations and the fact that when fee collections plummet due to reduced activity in the system, the air navigation service provider (ANSP) cannot respond in kind, i.e., the radar can't be turned off, the controllers sent home, and service reduced as the airlines do. The system still has to function.

The user fee proposal scares the controllers as much as the general aviation lobbies because they see it as the first step to taking ATC out of the congressional funding process and privatizing it. They point to other countries' experiences with privatized air navigation services --principally, Canada and the United Kingdom -- noting that fee hikes have been common (multiple times at Nav Canada) and, in some cases, privatized ANSPs have had to be bailed out by governments that spun them into the private sector in the first place (e.g., the U.K.'s NATS).

In addition to an infusion of technology to keep up with growing traffic demands on the system, NATCA claims the ATC system also desperately needs more "software" -- in this case bodies, not computer programs. "The FAA long ago fell behind [the retirement] curve and cannot keep up," NATCA spokesman Doug Church told B&CA. "We have over 1,300 fewer controllers [7.5 percent] working today than two years ago. And I guarantee you that traffic has not decreased 7.5 percent."

Just as B&CA was going to press, we were able to obtain a draft of a second NATCA-commissioned paper by consultant Jenkins, "An Examination of the U.S. Commercial Aviation Pricing Environment Since 9/11," which challenges the economic model the FAA is using as the premise for its argument that existing funding mechanisms should be replaced with user fees. Essentially, Jenkins is saying that the feds are fudging their data to make it appear that post-9/11 ticket sales simply cannot generate sufficient tax revenue from passengers to support the ATC system.

While Jenkins admits that air fares plummeted after the terrorist attacks of 2001 as the carriers instituted seat sales to entice passengers back on board, those fares are now heading back up at what the author claims are "high historical rates." This -- plus the fact that tax revenue is also increasing at a commensurate rate -- is an indicator of "a healthy aviation economy" and a demonstration that the Aviation Trust Fund is in no danger of depletion.

The problem with the FAA's argument, Jenkins points out, is that it is based on a faulty interpretation of data. "The FAA's current pricing forecast should be flat out rejected," he says. "It is economically flawed, as forecasts should never be drawn from either the peak or the trough of a market. Furthermore, it is not reflective of the actual financial information the airlines are providing to Wall Street."

Statisticians must be careful about using yields as an aggregate measure of prices in aviation markets, Jenkins cautions, since excise taxes are not paid as a function of yield but rather on the actual dollar amount. An airline might increase its yield by attracting passengers through discount pricing, but the head taxes are assessed on the ticket prices, not the number of bodies in seats.

The post-9/11 data FAA is using as the basis was old, Jenkins maintains, and does not reflect current rising markets. Furthermore, Jenkins claims, the FAA and its advisors assumed the decline of the early decade would become a paradigm, that fares would continue to go down and not rise sufficiently to restore funding from ticket taxes. But this assumption was debased last year when fares began to sharply increase. "During the 12 calendar months of 2005," Jenkins writes, "there were more than 30 attempts by airlines to raise fares, and at least 17 were successful. This is actually more than has occurred in the past 15 years . . . [a] fact that went all but ignored by user fee proponents."

But according to Jenkins, to justify its premise, the FAA then added insult to injury by dividing the 2005 fare increases by a factor of five years to "dilute" their importance. The point here is not necessarily the manipulation of data (Harry Truman's "lies, damn lies and statistics" observation comes to mind) but that "those who have been advocating user fees stated that fares would continue to go down and that the FAA would run out of money."

And while airlines continue to lose money at "historical rates," this is due, Jenkins believes, not to a downward trend in fares but the "rapid run-up of jet fuel prices." In fact, aggregate fare levels currently hover about where they were during the late 1990s, the last period in which the "legacy carriers" made money. "There is no reason to assume this trend will reverse any time soon," Jenkins concludes.