Case Overview, Aviation Trust Fund (AIR-21)

This document provides background information and summarizes the debate over the Aviation Trust Fund. The links to the left will lead you to public documents that we have found.



          The money that pays for capital improvements at airports comes from the Aviation Trust Fund. In turn, the money in the Fund comes primarily from a tax on airline tickets. Thus it's a user fee rather than a general tax-those who use airports pay for them. The federal government collects the ticket tax from the airlines and then makes grants to airports to pay for their projects, such as the construction of new terminals, runways, or other capital improvements.

          As air travel increased during the 1990's, the Aviation Trust Fund began to grow. In simple terms, more money was coming in that was going out. This angered airport executives who saw this surplus as evidence that the federal government wanted to use some of the Trust Fund to pay down the national debt. Lobbies for the airports pushed hard to require, by statute, that money in the Aviation Trust Fund had to be spent on the improvement of airports. The law they pushed, renewing and amending the Aviation Trust Fund, became widely known as "Air-21." The American Association of Airport Executives asked its members rhetorically, "Why should you back this bill?", and then answered, "In a nutshell, more money!"



          The interest groups working on this formed a broad coalition to back a renewal of the law and a mandate to spend all the funds collected on airport-related improvements. Carol Hallet of the Air Transport Association headed the coalition. As mentioned above, the American Association of Airport Executives was involved as was the Airline Pilots Association. The major airlines were active as well. The Aircraft Owners and Pilots Association, which represented those who fly private planes, worked to end the fuel tax on the gasoline used by airplanes.

          On Capitol Hill, the critical player was Representative Bud Shuster (R-PA). Shuster chaired the House Transportation and Infrastructure Committee and was the driving force behind Air-21. As one lobbyist recalled, "Shuster got us in this room and said, 'Let's work this thing.'" One committee staffer noted, "Shuster is unrelenting. When he wants something he grabs the bull by the horns and doesn't let go." On the Senate side, John McCain (R-AZ) chaired the Committee on Commerce, Science, and Transportation. Work on the bill in the Senate was slowed down by McCain's campaign for the Republican nomination for president and by his poor relations with Trent Lott (R.-MS), the Majority Leader in the 106th Congress. McCain did not fervently embrace the issue but was not an opponent either.




          Proponents had two primary arguments in favor of Air-21. The first was that a trust fund should be restricted to funding the programs it was created to support. Sponsors stressed this, depicting any use of funds for deficit reduction as a violation of the Aviation Trust Fund's purpose and as deceitful behavior on the part of government. Shuster's slogan was "Spend it or cut it." In other words, if the tax revenues weren't all going to be spent on airport-related projects, the user fee (the airline ticket tax) ought to be reduced so consumers didn't have to pay the portion of the fee that ended up as surplus.

          The second argument was that the capacity of the nation's aviation infrastructure was being overwhelmed by the increasing number of passengers and flights. Since part of this money could be used for additional runways and modernizing air traffic control equipment, Air-21 proponents encouraged the belief that the legislation would reduce some of the stress on the nation's overcrowded airports. One lobbyist said in an interview that the money would be used for "more gates, for growth in capacity, to handle the tremendous growth in aviation. We have 22,000 flights a day. We have 16 million take-offs a year."


          There was no significant, overt opposition to the substance of Air-21. No one from the administration wanted to speak in favor of letting the surplus build. Opposition to the legislation came from some congressional committee chairs who felt that Shuster's plan violated some procedural rules concerning budgeting. The budget committees in each house want to control spending and, as one legislative staffer put it, "They don't like [trust funds]...They don't want any funds sequestered off. They want all the revenues in a way that maximizes flexibility."


          Senator McCain was a stumbling block for three reasons. Although he was not an avowed opponent, there was little indication that he saw the legislation as a priority. Second, while the bill was progressing through the House McCain was spending his time outside of Washington campaigning for the Republican nomination for president. Third, his deteriorating relations with Trent Lott, who made little secret of his disdain for McCain, made brokering a deal in the Senate more difficult. Once McCain ended his candidacy, the legislation moved forward.

          Another problem, though not a terribly serious one, was skepticism by some concerning how the money would actually be spent. Not everyone bought the argument that significant improvements in the aviation infrastructure would result from the passage of Air-21. Airport operators need to look out for their facility's bottom line and their priorities may not match the flying public's. One lobbyist said sarcastically, "it would be good if they used that money to increase capacity instead of building shopping malls in the airport."

          Finally, there were differences between the large airlines and the smaller ones on a side issue. The smaller carriers, like Southwest, were much more resistant to a proposed increase in the tax on tickets. The ticket tax, which is the same for all tickets regardless of price, is a larger percentage of the low fares that some of the smaller carriers rely on to attract customers. Compromise kept the coalition together.



          This issue was largely fought inside the Congress. The key committees and the leadership moved the legislation forward. The White House was uninvolved and the Federal Aviation Administration didn't appear to be a major influence either.


Lobbying Activities and Tactics

          There was extensive direct lobbying of legislators by representatives from all the various industry groups pushing Air-21. The coalition backing the legislation worked closely with Shuster and followed his lead in developing its lobbying campaign. Like any coalition, it divided up the membership of the two houses and had the various trade groups and companies who had good relations with particular legislators take the initiative in meeting with them. There was no significant public relations effort on the part of the Air-21 lobby. The Aircraft Owners and Pilots Association did try to mobilize its members to contact their legislators.