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Airport and Airway Trust Fund: Issues Related to Determining How Best to Finance FAA

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Report Type Reports and Testimonies
Report Date Feb. 5, 1997
Report No. T-RCED-97-59
Subject
Summary:

On December 31, 1996, the government's authority to collect the taxes that finance the Airport and Airway Trust Fund, which has historically provided about three-quarters of the Federal Aviation Administration's (FAA) funding, lapsed. A coalition of the nation's largest airlines has proposed replacing the tax on domestic airline tickets, which has been the Trust Fund's main source of revenue, with fees on domestic operations. The coalition airlines contend that they pay for more than their fair share of the costs incurred by FAA in running the airport and airway system and that competing low-fare airlines underpay. This testimony discusses (1) the status of the Trust Fund, (2) issues raised by the coalition's proposal, (3) potential effects of the coalition's proposal on domestic competition, and (4) potential competitive impacts of alternative options for financing FAA.

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