oversight

FAA Financing: Issues and Options in Deciding to Reinstate or Replace the Airline Ticket Tax

Published by the Government Accountability Office on 1997-02-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   United States General Accounting Office

GAO                Testimony
                   Before the Committee on Finance,
                   U.S. Senate




For Release
on Delivery
Expected at
                   FAA Financing
10:00 a.m. EST
Tuesday,
February 4, 1997



                   Issues and Options
                   in Deciding to
                   Reinstate or Replace
                   the Airline Ticket Tax
                   Statement of John H. Anderson, Jr.,
                   Director, Transportation Issues,
                   Resources, Community, and Economic
                   Development Division




GAO/T-RCED-97-56
    Mr. Chairman and Members of the Committee:

    We appreciate the opportunity to testify on issues related to the financing
    of the Federal Aviation Administration (FAA). 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 FAA’s funding, lapsed. In December 1996, we reported to you, Mr.
    Chairman, and other members of the Senate and House on the status of
    the Trust Fund and on a proposal by a coalition of the nation’s largest
    airlines to replace the tax on domestic airline tickets, which has been the
    Trust Fund’s primary source of revenue, with fees on domestic operations.1
     The coalition airlines2 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.

    Our testimony today discusses the (1) 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. Our main points are as follows:

•   On December 9, 1996, we reported that, based on estimates provided by
    FAA and the U.S. Treasury, the money available in the Trust Fund to
    finance new commitments would reach zero by July 1997, unless the taxes
    were reinstated or another financing mechanism adopted. The estimates
    by FAA and Treasury assumed that airlines would pay most of the taxes
    that they owed for the last several months of 1996 by the end of the year.
    However, when making these estimates, FAA and the Treasury were
    unaware of a regulatory interpretation provided to the airlines by the
    Internal Revenue Service (IRS) that allowed airlines to delay these
    payments. When the taxes are paid, they cannot be transferred from the
    General Fund to the Trust Fund because the authority to do so also lapsed
    at the end of 1996. While FAA and Treasury are still trying to determine
    when the Trust Fund would run out of money, based on FAA and Treasury
    data, FAA may have to stop making new capital commitments as early as
    March 1997 in order to ensure that the agency can pay its workforces
    through the end of the fiscal year. To prevent this, the Congress would
    need to grant the authority to transfer the tax payments by March, which
    would allow FAA to fund new capital commitments to late July 1997. If the

    1
     Airport and Airway Trust Fund: Issues Raised by Proposal to Replace the Airline Ticket Tax
    (GAO/RCED-97-23, Dec. 9, 1996).
    2
     The coalition comprises the seven largest airlines—American Airlines, Continental Airlines, Delta Air
    Lines, Northwest Airlines, Trans World Airlines, United Airlines, and USAir.



    Page 1                                                                           GAO/T-RCED-97-56
    Congress reinstates the taxes or some other alternative by July, the Trust
    Fund should be able to fully finance its portion of FAA’s fiscal year 1997
    budget.
•   To the extent possible, commercial users of the nation’s airspace should
    pay a fair, cost-based share of the total costs of the nation’s airport and
    airway system. As our December 1996 report indicated, because the airline
    ticket tax is computed based on the fares paid and not on factors that
    relate to FAA’s costs for providing service, the extent to which the tax
    fairly allocates costs among system users is open to question. Recognizing
    the need for better cost data, the Congress in October 1996 directed that
    (1) an independent assessment of FAA’s funding needs and the costs
    imposed on the system by each segment of the aviation industry be
    completed by February 1997, (2) we assess how air traffic control costs
    are allocated between FAA and the Department of Defense (DOD), with a
    report due to the Congress by April 1997, and (3) a national commission
    study how best to finance FAA in light of these assessments, with a report
    due to the Secretary of Transportation by August 1997.3 These studies will
    be critical pieces in determining if the ticket tax fairly allocates system
    costs among users and in designing a new fee system if the Congress
    decides to replace the ticket tax.
•   While many factors drive FAA’s costs, such as the number of aircraft
    departures and aircraft miles flown, we found that the coalition airlines’
    proposal only incorporates factors that would substantially increase the
    taxes paid by low-fare and small airlines and decrease the taxes paid by
    the seven coalition airlines. As a result, the proposal would dramatically
    redistribute the taxes among airlines and could have substantial
    implications for domestic competition.4
•   If the Congress decides to replace the ticket tax with a different financing
    mechanism, numerous options exist, including a tax on such common
    usage indicators as aircraft departures or passenger enplanements. Such
    options entail tradeoffs between their ease of administration, effect on
    how efficiently the nation’s airports and airways are used, and ability to
    produce an equitable system in which commercial users pay their fair
    share of the costs. Similarly, the potential competitive impacts of these
    options vary widely. Examining potential financing alternatives will


    3
     The Federal Aviation Reauthorization Act of 1996 (P.L. 104-264). On November 18, 1996, FAA
    contracted with Coopers & Lybrand to conduct the independent cost assessment. As of late
    January 1997, the national commission had not yet been formed.
    4
     The extent to which airlines were able to shift some or all of the costs associated with the ticket tax to
    consumers depended on consumers’ sensitivity to changes in airfares. Prior studies have shown that
    consumers’ sensitivity to fare changes varies and that in some cases small fluctuations in fares can
    have a large impact on an airline’s ridership. Thus, redistributing taxes among airlines could have
    substantial competitive impacts depending on the subsequent effects on fares and ridership.



    Page 2                                                                              GAO/T-RCED-97-56
                      require careful consideration of these factors to ensure that, in the long
                      term, FAA has a secure funding source; the nation’s airports and airspace
                      are used as efficiently as possible; commercials users of the system pay
                      their fair share; and a strong, competitive airline industry continues to
                      exist.


                      The Airport and Airway Trust Fund was established by the Airport and
Background            Airway Revenue Act of 1970 (P.L. 91-258) to finance FAA’s investments in
                      the airport and airway system, such as construction and safety
                      improvements at airports and technological upgrades to the air traffic
                      control system. Historically, about 87 percent of the tax revenues for the
                      Trust Fund has come from a tax on domestic airline tickets. Before it
                      lapsed at the end of 1996, the tax was 10 percent of the fares paid. The
                      remainder of the Trust Fund was financed by a $6 per passenger charge on
                      flights departing the United States for international destinations, a
                      6.25 percent charge on the amount paid to transport domestic cargo by air,
                      a 15-cents-per-gallon charge on purchases of noncommercial aviation
                      gasoline, and a 17.5-cents-per-gallon charge on purchases of
                      noncommercial jet fuel.


                      In fiscal year 1997, under current law, the Trust Fund is to provide
Status of the Trust   $5.3 billion (62 percent) of FAA’s budget of $8.6 billion.5 FAA and the
Fund                  Treasury originally estimated that if the taxes that finance the Trust Fund
                      lapsed on December 31, 1996, the Trust Fund would be about $1 billion
                      short of the funding needed to finance its portion of FAA’s budget.
                      However, in late January 1997, the Treasury acknowledged that it had
                      miscalculated the balance of the Trust Fund because the agency
                      incorrectly assumed that airlines would pay most of the taxes that they
                      owed for the last several months of 1996 by the end of the year. However,
                      under a regulatory interpretation provided to the airlines by IRS, they do
                      not have to make most of those payments until late February 1997, and
                      most airlines have not as yet paid. When these taxes are paid, they cannot
                      be transferred from the General Fund to the Trust Fund because the
                      authority to do so lapsed at the end of 1996. As a result, the Trust Fund
                      may be about $2 billion short of the funding needed to finance its portion
                      of FAA’s fiscal year 1997 budget.

                      FAA and Treasury officials are still attempting to determine the precise
                      amount of the shortfall. However, based on FAA and Treasury data, a

                      5
                       Department of Transportation’s Appropriations Act for Fiscal Year 1997 (P.L. 104-205).



                      Page 3                                                                           GAO/T-RCED-97-56
                        shortfall of $2 billion would mean that in order to pay its workforces
                        through the end of fiscal year 1997, FAA would have to stop making new
                        capital commitments about March 1997. Reinstating the authority to move
                        tax receipts from the General Fund to the Trust Fund by March would
                        provide FAA with money to fund new capital commitments to late
                        July 1997. If the Congress reinstates the taxes (or some other financing
                        mechanism) by July, the Trust Fund should be able to fully finance its
                        portion of FAA’s fiscal year 1997 budget.


                        FAA is responsible for a wide range of functions, from certifying new
Whether Ticket Tax      aircraft to inspecting the existing fleet to providing air traffic services,
Results in Users        such as controlling takeoffs and landings and managing the flow of aircraft
Paying Their Fair       between airports. Over the past decade, the growth of domestic and
                        international air travel has greatly increased the demand for FAA’s
Share of the System’s   services. At the same time, FAA must operate in an environment of
Costs Is Uncertain      increasingly tight federal resources. In this context, we have generally
                        supported FAA’s consideration of charging commercial users for its
                        services and believe that the various commercial users of the nation’s
                        airspace and airports should pay their fair share of the costs that they
                        impose on the system.6 In particular, we have previously suggested that
                        FAA examine the feasibility of charging fees to new airlines for the
                        agency’s certification activities and to foreign airlines for flights that pass
                        through our nation’s airspace. In addition, to ensure full cost recovery, we
                        have suggested that FAA consider raising the fees that it charges for the
                        certification and surveillance of foreign repair stations.

                        Because the airline ticket tax is based on the fares paid by travellers and
                        not on factors that relate to system costs, it may not fairly allocate costs
                        among the users of the airport and airway system. For example, two
                        airlines flying the same number of passengers on the same type of aircraft
                        from Minneapolis to Des Moines at the same time of day will impose the
                        same costs on the airport and air traffic control system. However, because
                        the ticket tax is based on the fares paid, the airline that charges the lower
                        fares will pay less for the system’s use. Citing such examples, the coalition
                        airlines contend that they pay for more than their fair share of the system’s
                        costs and that competing low-fare airlines underpay.

                        However, comparing the relative share of airlines’ payments under the
                        ticket tax to some common measures of domestic system usage does not

                        6
                         Certification of New Airlines: Department of Transportation Has Taken Action to Improve Its
                        Certification Process (GAO/RCED-96-8, Jan. 11, 1996), and Management Reform: Implementation of
                        the National Performance Review’s Recommendations (GAO/OCG-95-1, Dec. 5, 1994).



                        Page 4                                                                      GAO/T-RCED-97-56
provide conclusive evidence that the ticket tax is unfair. As figure 1 shows,
the coalition airlines accounted for almost 80 percent of the total
payments made under the ticket tax in 1995. Their percentage of system
use was lower than this for some common indicators of system use such
as domestic departures, passenger enplanements, and miles flown.
However, the coalition airlines accounted for 81 percent of the fuel
consumed by commercial airlines in domestic operations in 1995, another
indicator of system usage. Airlines that compete with the coalition airlines,
such as Southwest Airlines and America West, accounted for about
17 percent of the payments made under the ticket tax in 1995 but
accounted for 21 percent of all domestic departures and 22 percent of
enplanements. On the other hand, their share of miles flown and fuel used
was the same as their share of ticket tax payments. Reaching definitive
conclusions based on these comparisons is further complicated by the fact
that most major commuter carriers are owned by or affiliated with one of
the coalition airlines.




Page 5                                                      GAO/T-RCED-97-56
Figure 1: Comparison of the Relative
Share Paid Under the Ticket Tax        100.0      Percent
Compared With the Relative Share of
                                           90.0
Common Domestic System Usage
Indicators, 1995                           80.0

                                           70.0

                                           60.0

                                           50.0

                                           40.0

                                           30.0

                                           20.0

                                           10.0

                                             0

                                                   Coalition                 Competing   Commuters
                                                   airlines                  airlines



                                                               Ticket tax payments

                                                               Departures

                                                               Enplanements

                                                               Miles flown

                                                               Fuel consumed



                                       Source: GAO’s analysis of DOT’s data.




                                       Currently, FAA has insufficient cost information to show whether the
                                       ticket tax or any of the system usage indicators shown in figure 1 would be
                                       good proxies for fairly allocating FAA’s costs among commercial users.
                                       The Congress in October 1996 directed that, among other things, an
                                       independent assessment of FAA’s costs be completed by February 1997
                                       and that a national commission recommend to the Secretary of
                                       Transportation by August 1997 how best to finance FAA in light of the
                                       independent assessment.7 Additionally, the Congress required that we
                                       assess how costs are allocated between FAA and DOD and that we report

                                       7
                                        Under the Federal Aviation Reauthorization Act of 1996, after receiving the national commission’s
                                       report, the Secretary of Transportation is required to consult with the Secretary of Treasury and report
                                       to the Congress by October 1997 on the administration’s recommendations on how best to finance
                                       FAA.



                                       Page 6                                                                            GAO/T-RCED-97-56
                         to the Congress by April 1997. Because about 18 percent of DOD services
                         are provided to civilian users, according to DOD, information regarding
                         DOD’s costs may also be relevant in assessing financing alternatives for
                         FAA. As a result, better information should be available later this year on
                         FAA’s costs that will allow for an evaluation of the ticket tax and potential
                         alternative options for financing FAA.


                         Motivated by their belief that the ticket tax unfairly subsidizes their
Proposal by Larger       low-fare competitors, the coalition airlines in May 1996 proposed that the
Airlines Would           ticket tax be replaced by user fees on domestic operations. Under the
Increase the Share       proposal, airlines would pay fees for domestic operations according to the
                         following three-part formula: (1) $4.50 per originating passenger; (2) $2.00
Paid by Other Airlines   per jet seat on aircraft with 71 or more seats and $1.00 per seat on jets and
and Could Have           turboprop aircraft with 70 or fewer seats; and (3) $0.005 per nonstop
                         passenger mile.8
Substantial
Competitive Impacts      By using two factors in particular—originating passengers and nonstop
                         passenger miles—the formula tends to favor the larger airlines, which
                         operate hub-and-spoke systems, at the expense of the low-fare and small
                         airlines, which tend to operate point-to-point systems. This relationship
                         can best be shown by example. Consider the two possible routings
                         between St.Louis and Orlando shown in figure 2. The hubbing airline first
                         takes the passenger from St. Louis to a hub, such as Chicago’s O’Hare
                         Airport, to connect to another flight to Orlando. The point-to-point carrier
                         takes the St. Louis passenger nonstop to Orlando.




                         8
                          Air Traffic Control User Fees: A Proposal by the Coalition for Fair FAA Funding, revised June 7, 1996.
                         The proposal defines originating passenger based on the beginning point of the trip, irrespective of the
                         number of take offs and landings made during the journey.



                         Page 7                                                                            GAO/T-RCED-97-56
Figure 2: Comparison of Potential
Hubbing and Point-To-Point Service
Options Between St. Louis and
Orlando




                                                                     O'Hare




                                                              iles
                                                              m
                                                          297



                                                                            11
                                                                              57
                                                  St. Louis




                                                                                 m
                                                                                iles
                                                                  99
                                                                     6
                                                                     m
                                                                         ile
                                                                            s




                                                                                            Orlando




                                                    Route taken by hubbing airline
                                                    Route taken by point-to-point airline




                                     The airline that picks up a passenger in St. Louis and then lands at O’Hare
                                     to transfer the passenger to another flight to Orlando has twice as many
                                     takeoffs and landings as the airline that flies nonstop between St. Louis
                                     and Orlando. As a result, the costs imposed by the hubbing airline on the
                                     air traffic control system are greater. However, by charging $4.50 per
                                     “originating” passenger the airline that flies the passenger from St. Louis to
                                     Orlando via Chicago O’Hare would pay the same amount as an airline that
                                     flies the passenger nonstop between St. Louis and Orlando, even though
                                     the hubbing carrier puts a greater burden on the system.

                                     In addition, by charging $0.005 per “nonstop passenger mile”—or the
                                     straight-line distance between the points of origin and destination—the



                                     Page 8                                                           GAO/T-RCED-97-56
formula does not charge the hubbing airlines for the circuitous routings
that are common to their hub-and-spoke operations. As a result, the airline
transporting a passenger 297 miles from St. Louis to O’Hare and then flying
that passenger 1,157 miles to Orlando would be charged the same as an
airline flying a passenger nonstop from St. Louis to Orlando, even though
the hubbing carrier placed a greater burden on the air traffic control
system.

Because the seven largest airlines operate hub-and-spoke systems and
most low-fare and small airlines operate point-to-point systems, the
proposed user fee would shift the fees for using the system away from the
larger airlines and onto their competitors. As shown in appendix I, for
example, if this proposal had been in place in 1995 instead of the ticket
tax, the cost to the nation’s seven largest airlines would have been nearly
$550 million less while the cost to Southwest Airlines, America West, and
other low-fare and small airlines would have been about $500 million
more. In addition, the coalition’s proposal would charge commuter
carriers $1.00 per seat while charging airlines $2.00 per seat. Because most
major commuter carriers are owned by or affiliated with one of the
coalition airlines, the proposal would thereby provide an additional benefit
to the coalition airlines by charging commuter carriers less per seat.

Implementing a proposal that would shift about $500 million in costs from
one segment of the industry to another could have substantial competitive
impacts. For Southwest Airlines, for example, the increased amount paid
would represent about 7 percent of the airline’s total passenger revenue.
According to the Department of Transportation (DOT), competition from
low-fare airlines such as Southwest influences airfares in markets that
account for about 40 percent of domestic passengers. In addition,
according to DOT, these passengers tend to be the most price sensitive. As
a result, such a substantial increase in costs would likely force Southwest
and the other low-fare and smaller airlines to raise their fares and could
result in a reduction in passenger demand in those markets, which tend to
be in the West and Southwest. To the extent that these airlines stopped
serving markets that were no longer profitable, competition would be
reduced. On the other hand, consumers in the East and upper Midwest,
who have not experienced the entry of low-fare airlines to the same
extent, could pay relatively less than they did under the ticket tax and may
benefit from an increase in airline competition that may result from any
increase in passenger demand, if the larger airlines passed their reduced
tax payments onto consumers by reducing ticket prices.




Page 9                                                      GAO/T-RCED-97-56
                        While the ticket tax might provide a competitive advantage for low-fare
                        airlines, other public policies favor some large carriers. For example, a
                        few large airlines control nearly all the takeoff and landing slots at the four
                        slot-controlled airports9, which give them an advantage over their
                        competitors. Simply eliminating the potential “subsidy” to low-fare airlines
                        created by the ticket tax, while leaving the other policies in place that
                        provide a competitive advantage to some large airlines, might result in
                        higher fares and a reduction in service options for consumers.


                        Determining how best to finance FAA is a complex problem that requires
Impacts and Tradeoffs   careful study and good cost data. FAA’s costs vary depending on the
Associated With the     amount, type, and timing of various airline operations.10 For example,
Numerous Alternative    hubbing operations at congested airports increase the peak service
                        demands on the system and increase FAA’s costs. However, this cost has
Options Available for   not yet been quantified and neither the 10-percent ticket tax nor the large
Financing FAA Vary      airlines’ proposal accounts for these costs. A financing system that doesn’t
                        take such factors into consideration could result in costs not being fairly
                        allocated among system users. As a result, any potential financing
                        mechanism for FAA should be assessed from the standpoint of the data
                        currently being developed on FAA’s actual costs.

                        If the Congress ultimately decides to replace the ticket tax with a different
                        fee system, numerous financing options are available for it to consider.
                        Possible options include taxing one or more of the common indicators of
                        system use, such as departures, passenger enplanements, seats flown, fuel
                        consumed, or a combination of these indicators. However, the potential
                        competitive impact of using these indicators as a basis for allocating FAA’s
                        costs varies greatly depending on which indicator is used. For example, if
                        a tax on passenger enplanements were adopted and designed to generate
                        about the same amount of revenue as the ticket tax, the amount paid by
                        the coalition airlines would decline by about $251 million while the
                        amount paid by the competing airlines would increase by $269 million and



                        9
                         To minimize flight delays, FAA limits the number of operations (takeoffs and landings) that can occur
                        during certain periods of the day at four key congested airports—Chicago O’Hare, Washington
                        National, New York Kennedy, and LaGuardia. The authority to conduct a single operation during these
                        periods is commonly referred to as a “slot.”
                        10
                          The issue of how various users of air traffic and other FAA services impose costs on the system is
                        complex. Past studies of FAA’s costs have found that the nature of how air traffic and associated
                        services are produced entails many costs that are “common”—that is they cannot be allocated to any
                        one type of user. As a result, a full allocation of system costs may require a mechanism for assigning
                        these common costs.



                        Page 10                                                                           GAO/T-RCED-97-56
commuter carriers by $61 million.11 (See app. II.) In contrast, a fuel tax
would keep the amount paid by each airline group about the same as each
paid under the ticket tax. (See app. III.)

The impact of the financing options also varies among airlines within the
coalition and competing airline groupings. For example, under a system
that taxed both fuel use and passenger enplanements, the amount paid by
four coalition airlines would decrease but would increase for the other
three coalition members. Similarly, under a financing system that taxed
departures and aircraft miles, the amount paid by Southwest Airlines
would increase by about $135 million but would decrease by about
$7 million for the other airlines in the competing airlines grouping. In
general, such variances result from differences between airlines in
operating factors, such as type of operation, average age of their aircraft
fleet, and average distance of their flights.

The various financing options for FAA also present tradeoffs between
their ease of administration, impact on how efficiently the airport and
airway system is used, and ability to produce an equitable system in which
users pay their fair share. For example, a formula that combines several of
the common system usage indicators might provide the most exact
method to ensure that all users pay their fair share of system costs.
However, such a formula may also be so complex that it would be difficult
to administer. Similarly, taxing airlines for their use of the most congested
airports may result in a more efficient use of the nation’s airspace.
However, because the coalition airlines are the primary users of these
airports, this approach may not produce the most equitable result from
their point of view.

Such tradeoffs and the potential competitive impacts of a new fee system
will need to be carefully studied over the next year by the national
commission and the Secretary of Transportation. The financing alternative
that is finally selected should be relatively easy to administer and help
ensure that, in the long term, FAA has a secure funding source, the
nation’s airports and airways are used as efficiently as possible,
commercial users of the system pay their fair share, and a strong,
competitive airline industry continues to exist. Ultimately, it will be a
policy call for the Congress to decide on how to achieve these goals.




11
  A tax of $10 per enplanement would generate about $79 million more than was generated under the
ticket tax in 1995.



Page 11                                                                       GAO/T-RCED-97-56
Mr. Chairman, this concludes our prepared statement. We would be glad
to respond to any questions that you or any member of the Committee may
have.




Page 12                                                 GAO/T-RCED-97-56
Page 13   GAO/T-RCED-97-56
Appendix I

Change in the Amount Paid by Grouping
Under the Coalition’s Proposal Compared
With the Ticket Tax, 1995

              1000.0      Dollars (millions)

               800.0

               600.0
                                            481.3

               400.0

               200.0

                   0

               -200.0                                      -75.6

               -400.0

               -600.0
                                 -534.3
               -800.0

              -1000.0
                             s



                                             es



                                                          rs
                           ne




                                                         ute
                                            lin
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                                                     mm
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                                 Co




              Notes: Charge is $4.50 per embarkment, $2 per jet seat, $1 per turboprop seat, and $0.005 per
              nonstop passenger mile.

              Proposal would generate about $128.6 million less than was generated by the ticket tax in 1995.




              Page 14                                                                       GAO/T-RCED-97-56
Appendix II

Change in the Amount Paid by Grouping
Under a $10 Tax Per Enplanement
Compared With the Ticket Tax, 1995

              1000.0      Dollars (millions)

               800.0

               600.0

               400.0
                                            268.6
               200.0
                                                         60.9
                   0

               -200.0

               -400.0            -250.5

               -600.0

               -800.0

              -1000.0
                             s



                                             es



                                                          rs
                           ne




                                                         ute
                                            lin
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                                          air



                                                     mm
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                                   mp
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                                 Co




              Notes: Charge is $10 per enplanement.

              Option #1 would generate about $79 million more than was generated by the ticket tax in 1995.

              Data based on total domestic enplanements by each grouping in calendar year 1995.




              Page 15                                                                      GAO/T-RCED-97-56
Appendix III

Change in the Amount Paid by Grouping
Under a $0.42 Tax Per Gallon Compared
With the Ticket Tax, 1995

               1000.0      Dollars (millions)

                800.0

                600.0

                400.0

                200.0
                            72.7
                    0

                                                   -1.4
                -200.0                                           -71.9

                -400.0

                -600.0

                -800.0

               -1000.0
                              s



                                              es



                                                                rs
                            ne




                                                               ute
                                             lin
                           irli



                                         air



                                                           mm
                         na



                                        ng



                                                          Co
                     tio



                                       eti
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                                  Co




               Notes: Charge is 42 cents per gallon.

               Option #2 would generate about $1 million less than was generated by the ticket tax in 1995.

               Data based on total gallons consumed by each grouping in domestic operations in calendar year
               1995.




(341522)       Page 16                                                                        GAO/T-RCED-97-56
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