Aviation Finance: Observations on the Current FAA Funding Structure's Support for Aviation Activities, Issues Affecting Future Costs, and Proposed Funding Changes

The Federal Aviation Administration (FAA) operates one of the safest air transportation systems in the world, but this system is under growing strain as the demand for air travel increases. Recognizing the need to transform this system, Congress created the Joint Planning and Development Office (JPDO), housed within FAA, to plan and develop the Next Generation Air Transportation System (NextGen). The current authorization for FAA, the Airport and Airway Trust Fund (Trust Fund), and most of the excise taxes that support the Trust Fund will expire September 30, 2007. Several proposals, including two reauthorization bills--H.R. 2881 and S. 1300--identify various funding sources for FAA activities, including NextGen. Among these are current excise taxes, fees, and flight surcharges. Concerned about the need for stable, sustainable financing for the nation's multibillion-dollar transportation infrastructure investments, including NextGen, GAO has designated transportation financing as high risk. GAO's statement addresses (1) the extent to which the current funding structure can support FAA's activities, including NextGen, (2) issues that could affect the overall cost of NextGen, and (3) the implications of selected proposals to fund aviation activities. The statement is based on recent GAO reports and testimonies.