User Pays — Can the User Afford the Cost?

For example, the original GAIT fee proposed by the FAC, which was based on recovering estimated costs, was double that which was eventually introduced. The FAC bore the initial loss and, in the intervening years, has worked hard to contain increases in GAIT to CPI equivalents while reducing costs and generating additional non aviation income on the airports. The CAA, in its many guises, also worked to contain costs while initiating the phased-in policy of cost recovery recommended by Henry Bosch.

It is arguable whether the balance of charges was right or not but the unacceptability of any significant increases was highlighted when the government tried to walk away from its earlier agreement to fund the cost of Safety Regulation. Following industry wide objections, and the realisation of many of Henry Bosch’s earlier warnings about trying to cost recover such a safety service, the government was forced to resume its responsibility. Unfortunately, this also resulted in the subsequent splitting of the CAA into two separate authorities with all the additional costs of duplicated support services which will now have to be met by the industry.

Right from the beginning there were those in the industry who cautioned that if the authority went to the extremes of a ‘user pays’ philosophy there would inevitably be some services which were used only by a few, were expensive to provide and were essential to retain. One such example that occurred early in the exercise was the extension of the tarmac at the Sydney International Terminal. This additional concrete, costing several million dollars, could only be used by the international operators yet it was impractical to increase their landing and terminal charges sufficiently to recover the costs. It was then argued that without this additional tarmac international flights to Australia would be restricted, the flow on of passengers to the domestic airlines would be reduced and, finally, many tourist dollars would be lost to the economy. It soon became apparent that there were many beneficiaries, far exceeding the few direct users, who should bear part of the cost. So the argument shifted from the overly simplistic ‘user pays’ to the now familiar ‘beneficiary pays’.

Despite the fact that the 10 years allowed by the Bosch Report for full cost recovery have elapsed, not all the collection problems have been solved. In fact, it could be said that those which were pushed into the too hard basket have finally surfaced and must be both faced and resolved. And they are not insignificant. The two most obvious are the continuing use of Avgas fuel excise to pay for the air traffic services at the capital city secondary airports and the lack of a mechanism to recover the cost of IFR enroute services for Avgas aircraft.

When cost recovery was first introduced, and Flight Service existed for GA, it was agreed by industry to attribute the existing Avgas fuel excise towards the cost of providing enroute and terminal services. Specific enroute charges based on kilometres flown, similar to those introduced for Avtur aircraft, were considered and rejected because of the difficulty in, and high cost of, determining where the Avgas aircraft actually went. And, since the excise was already in place, there was no increase in cost to the users. Since then the enroute services have been largely withdrawn for VFR aircraft and, most recently, the actual cost of providing tower services at the capital city secondary airports was identified. CASA now accepts industry’s arguments that fuel excise is inappropriate to recover non-existent enroute services however, it has been retained until an alternative, appropriate and affordable method of recovering the cost of the towers can be determined.

AOPA argues that this misuse of fuel excise must be discontinued as soon as possible and recommends replacing it with a system of user specific landing fees. In principle, such a system has much going for it, but the concept has proved difficult to introduce in practice. The FAC originally considered just such a system and rejected it in favour of the inequitable, but simpler and hence cheaper, GAIT system. Their reasons were the high cost of recording all the movements (which are still not recorded today) and the associated high cost of administering the system. These costs would have to be passed on and the resultant cost to the high volume users, particularly training schools, would be so high as to force them off the field. Their departure would result in fewer movements, higher costs per movement, higher costs to the individual, more departures etc with the spiralling costs resulting in unacceptably high costs for all users. AOPA argues that these costs can be contained and that significant economies can be achieved in the operation of the towers. Hopefully it is right because a solution to this problem is long overdue.

Which still leaves the problem of recovering the cost of IFR enroute services from Avgas operators. The Airspace Study Group is presently considering the shape, size and nature of our new alphabet airspace system with particular emphasis on the air traffic needs of the commercial operators. In a user pays scenario it would seem only reasonable for the IFR operators to meet the cost of such services however, how will it work? If the pilot cancels IFR enroute does this cancel the costs for the segment flown VFR? How much would it cost to administer a system where the cash register is constantly being switched on and off? But if it can’t be switched on and off what of the unscrupulous operator who declares VFR and presses on into IMC without telling anyone. How safe then is the Class E, or whatever, airspace?

These are very real problems which are yet to be resolved. One solution could be to fund the bulk of aviation services from a general tax on fuel or passenger tickets with the balance recovered from reasonable user charges. The industry is already being taxed with fuel excise and the arguments only arise because of what is considered unfair attribution. Perhaps it is time to consider fuel excise for what it really is, a non-attributable tax, and fund the system accordingly.

Why not use a central pool of tax based revenue to fund the essential services with reasonable user charges to discourage waste and unreasonable demands? Such a system may not achieve all the efficiencies of a user pays system of cost recovery but the end cost to the industry could well result in charges which are both acceptable and encouraging for future growth. And surely that is what we all need — a safe and effective aviation system that is both self funding and affordable.