If It’s On the Internet It Must Be Safe

April 24, 2017

By Rebecca Mulholland, Director, Legislative Affairs and Chief of Staff

As NATA prepares for Congress to release its FAA reauthorization legislation, we meet with Members of Congress and their staffs on potential issues (see our Major Policy Issues for the 115th Congress), a big part of that is protecting against provisions that undermine safety and/or are harmful to our members. One such provision would create “flying Uber” websites (examples include Flytenow, AirPooler, and others) that deliberately bypass the FAA’s safety net of required pilot training and aircraft maintenance for commercial flights.

Earlier this month, I attended a listening session on Capitol Hill that focused on aviation innovation. A Flytenow representative gave Hill staff and other attendees an overview of the company’s structure and attempted to defend the company’s business model.  Following the overview, the audience had the opportunity to ask questions. Flytenow’s answers were instructive of how internet innovators often miss the point of various FAA safety regulations.

How many hours of flight time are required, under the company’s model, before a Flytenow pilot can fly passengers?

  • Flytenow Answer: The private pilot can fly, and share the cost of the flight, with passengers with as little as 40 hours of flight time.
  • Fact: Would you put your family into an aircraft with someone you don’t know who has 40 hours of flight time? The general public is not trained to judge what constitutes enough flight hours or what levels of certification are needed to ensure a safe flight. The consumer doesn’t know how to evaluate what they are getting. On an Uber ride, I know enough about driving to know if the driver is acting dangerously or breaking the law. But how am I to know if aircraft safety checks were performed, or if a storm is coming that the pilot should not be flying in? Placing the burden of rating the safety ability of a pilot on the consumer is inappropriate.

How informed do passengers need to be?  Do the methods of communication matter?

  • Flytenow answer: We are slowly moving away from the days of posting a flight on a bulletin board at the airport, and extending the practice to the internet seems like a logical progression. As stated during the listening session, “You shouldn’t have to put your flight on a bulletin board, you should communicate with the latest and greatest technology.” A March 16th Wall Street Journal article, authored by Mercatus Center fellows, noted that using the internet will allow private pilots to find more passengers, save on fuel costs, fly more routes, and gain proficiency.
  • Fact: NATA President Marty Hiller responded in the Wall Street Journal shortly after the article appeared that “Supporters of this proposal continue to try and distract readers by focusing on the technology used to communicate, despite clear direction from the FAA and courts that it isn’t the method but rather the intent and outcome of the communication that matters.” Pilots can communicate via telegram, phone call, email, text or snapchat to make arrangements for legitimate, permissible expense sharing flights. Already, there are other startup software apps that have legally entered the field, including FlyOtto and Linear Air, who are eager to support methods to bring more air taxi capacity online. These companies are successfully working with smaller operators to offer affordable single-engine piston charter (typical of that envisioned by Flytenow).

What about the issue of compensation?

  • Flytenow answer: The Flytenow model does not benefit the pilot – it is simply a service whereby private pilots and the general public can share the cost of a flight and fly to a destination. The intention is to make flying more accessible, fun and enjoyable.
  • Fact: Those who offer the public transportation by air and receive compensation for it (not just money, but through the accumulation of flight hours and gaining proficiency as well as savings on fuel costs – mentioned above) are common carriers. They must be a commercial pilot and often must have an air carrier certification. The FAA has always said that the money received from sharing expenses is compensation. But when a pilot is sharing expenses with passengers with whom he/she shares a common purpose, the FAA created an exception to the otherwise well-established need for a commercial pilot/air carrier certification (FAR 61.113). Also, FAA Legal Interpretation 1985-24 states, “…any payment for a flight, even partial payment, means that a flight is for compensation or hire. This is true even if payment is made under the expense sharing provisions…” During the listening session, it was admitted that flight-sharing “helps me to fly more so I can be a more current and safer pilot.” That’s true, and it’s important to build hours and gain experience, but not at the expense of the safety of the traveling public. Compensation does not mean strictly monetary compensation, so holding out for a flight so you can fly more means you’re building flight hours, which constitutes compensation and requires more stringent certification standards and aircraft maintenance.

As I go from Hill office to Hill office, I have been gratified by the response we are receiving to the real facts. Once they understand that if you want to fly people for compensation or hire, you need higher levels of certification and aircraft maintenance, staffers get it. More than just opposing a dangerous idea, we also suggest policymakers consider additional steps to streamline the process to grow the pool of pilots that could provide safe single-engine piston charter. Such a proposal will help young professionals build time to meet the 1500-hour Airline Transport Pilot certificate requirement and reduce the growing problem of illegal charter. This would increase the number of people already available to offer that service legally and safely, regardless of the means of communication – it helps everyone.


Devil in the Details

April 11, 2017

By Bill Deere

The challenge of writing political columns for quarterly journals like ours is the risk they will be overtaken by events before the ink is even dry. That should certainly be the case with a new Administration and Congress; but as we approach the 50-day mark, to date, there has been a lot of heat but not a lot of light. Let’s look at a few of the issues confronting the new Administration and Congress that pose potential risks and rewards for the aviation business community. The common theme in all of them—the devil is in the details.

Tax Reform—The United States has the highest corporate tax rate in the developed world. As a result, tax reform holds tremendous potential for our membership, particularly its central tenants, lowering the overall corporate tax rate and allowing companies to immediately deduct the cost of new investments. A tax reform bill would also serve as the vehicle for finally putting to rest the 2012 IRS Chief Counsel opinion applying the federal excise tax to aircraft management services. The trick is crafting comprehensive tax reform in a way that creates economic stimulus without exploding the size of the national debt. A centerpiece of one House proposal is offsetting some of the costs of tax reform through a “border adjustment tax,” a proposal requiring companies to pay income taxes to the U.S. on the value of their imports. Conversely, under the proposal, companies would no longer be required to pay income taxes to the U.S. on their income from exports. The adjustment tax potentially impacts our nation’s aviation industry and any move in this direction will need to be carefully crafted to ensure one of the jewels of American exports is maintained.

Infrastructure Funding—One of the Trump Administration’s campaign promises was to leverage public-private partnerships and private investments through tax incentives, to spur $1 trillion in infrastructure investment over ten years. As you read in Marty’s column, the airport sector alone has tremendous infrastructure needs if they are to keep pace with projected passenger growth and groundside needs created by the efficiencies resulting from the Federal Aviation Administration’s (FAA) NextGen modernization program. The President has returned to the need for infrastructure investment several times since his inauguration, mentioning it most recently at his appearance before a joint session of Congress. But we continue to lack the details of his plan. At a February White House meeting with airline and airport leaders, President Trump did not signal his support for increasing the Airport Passenger Facility Charge—indicating he opposed tax increases, while telling airport executives they would nonetheless love his plan. Even the recently released “budget blueprint” contains no more detail, though it states the President has tapped a group of “infrastructure experts” to evaluate investment options.

Similar to tax reform, there are fundamental questions associated with this campaign proposal. While tax incentives are good, private investment requires a return on investment. Would there be support for a seemingly massive increase in the number of the nation’s toll roads and bridges? Of particular importance to our members is the difficulty in securing a return on infrastructure investment in rural areas. It will be challenging and begs the question as to whether infrastructure improvements from such a proposal will be spread evenly throughout the country.

Air Traffic Control Reform—Proponents of separating the nation’s air traffic control operation from its safety function no longer use terms like ATC “privatization,” or “corporatization,” but rather “modernization.” As if disguising the intention somehow makes it more palatable to general aviation and rural America, the big losers under such a proposal. In a February meeting with leaders in the airport and airline industry, the President asked why modernization had been allowed to proceed to its current state. One airline CEO unintentionally let slip the real airline agenda replying, “We’re not in control.” Lately, the airlines have added that allowing the FAA’s safety and air traffic operations to communicate is akin to mingling “church and state.” That sounds disturbing, unless of course you realize that important, constant communication between the FAA’s safety offices and ATC operation has resulted in the world’s safest, busiest, and most complex system.

Consequently, we were disturbed when the President included language in his March 16th budget blueprint suggesting a “multi-year reauthorization proposal to shift the air traffic control function of the Federal Aviation Administration to an independent, non-governmental organization.”

Like others in general aviation, NATA wants to work with the new Administration and Congress toward a more efficient FAA. The contract tower program demonstrates improvements can occur within the agency’s current structure. Separating air traffic control from the FAA simply poses too many leaps of faith for aviation business. The risks include: losing the momentum resulting from the current deployment of NextGen technology; building walls between the FAA’s safety functions and air traffic potentially undermining the system’s safety integrity; and, allowing airlines to establish the costs to operate in the system for aviation businesses like our air charter community, potentially forcing general aviation out of the important airports and airways that our customers need.

We hope in the coming days the Administration will move away from confrontation with general aviation and instead pursue the path of national dialogue and consensus that Transportation Secretary Chao called for during her confirmation hearing.

Finally, recall a President’s budget proposal is just that—a proposal. Or as Senator Bill Nelson (D-FL) observed, “The President proposes, the Congress disposes.” Fortunately, joining Senator Nelson are other important voices in this debate. The bipartisan leadership of the Senate Appropriations Committee wrote the Senate Commerce Committee opposing the development of legislation separating air traffic control from the FAA. These senior senators praised the results of NextGen initiatives noting that “the progress already being made to synchronize investment from government and industry related to safety, equipage, training operational changes and overall integration would be lost.” Senate Appropriators also disputed the notion that the current budget process cannot keep up with air traffic control funding needs—pointing out that, since 2008, Congress has funded air traffic functions at 99% of the requested amount.

The debate is no longer academic. There will be a heated policy battle in Congress over this proposal so we ask you to stand ready. Your voice at critical points in the upcoming debate may very well be the key to future of general aviation in this country.

Republished from the 2017 Q1 Aviation Business Journal.


2016 Aviation Business Conference | Gathering in Washington During Interesting Times

June 20, 2016

NATA members attending the association’s second annual Aviation Business Conference are arriving in Washington, D.C. at an interesting time. Congress will still be in session but can already see on its horizon July 15th, the date it will adjourn for the two national political conventions and its annual summer recess. Returning shortly after Labor Day, Congress will meet for only a few short weeks before adjourning to campaign in advance of the November 8th general election.

Not by coincidence, July 15th is also the date of the expiration of the FAA’s current authorization. On the House side, Chairman Shuster’s (R-PA) proposal to create an air traffic corporation continues to languish due to objections from other congressional committees, conservative Republicans, and virtually the entire House Democratic Caucus. NATA continues to voice its strong objections to the corporation concept at any and all venues that provide us the opportunity to discuss the dangers it poses to general aviation. Like presidential candidates, NATA has been on the road, updating the aviation business community in Florida, Wisconsin, Illinois, South Carolina, Indiana and Texas on the status of the Shuster proposal. We also continue to work the issue at the national level, educating the press and appearing at public policy forums here in Washington, D.C., to rebut the outrageous claims of the airline interests campaigning for ATC corporatization.

I am also pleased to report that in April the United States Senate took a different, more hopeful path than the House, approving by a vote of 95-3 a bipartisan FAA bill that does not include provisions to create an ATC corporation. The legislation instead embraces NATA’s long-stated belief that Congress should build upon its previous work and continue to improve the consistency of FAA decisions across its offices and regions, streamline the FAA certification process to better reflect today’s pace of innovation, and assist the agency in operating as efficiently as possible.

The Senate’s action now puts the impetus for further action in the hands of House Transportation Committee Chairman Shuster to decide whether or not to continue to press forward on his proposal to create a user fee-funded, air traffic control corporation, accept the Senate proposal, or simply extend the FAA’s authorization beyond its current expiration on July 15th. Senator John Thune (R-SD), Chairman of the Senate Commerce Committee, who steered the legislation through the Senate, has publically expressed his hope there will be no more extensions and that the House will give serious consideration to the bipartisan approach taken by the Senate.

This puts NATA members in Washington, D.C. this June smack dab in the middle of it all. Our annual fly-in on June 9th will once again feature key aviation policymakers sharing their perspectives on the FAA reauthorization debate. We are also fortunate that once again Tom Hendricks and the leaders of the other general aviation associations will brief you in advance of your trip to the Capitol Building. And, of course, we will also gather informally that evening on Capitol Hill with aviation policymakers and their staffs for our annual industry reception.

However, the Aviation Business Conference is more than about politics. For that reason, we will be joined by TSA Administrator Peter Neffenger, who will discuss the security challenges facing our nation. FAA Associate Administrator for Aviation Safety Peggy Gilligan will be on hand to answer your questions about the FAA’s regulatory agenda. Finally, the conference will be packed with sessions providing insights on the state of the industry and the latest in effective business and safety practices.

So bring some good walking shoes (we can never guarantee the operating state of our subway), your questions and your insights. We look forward to seeing you in our nation’s capital!

By Bill Deere, Senior Vice President for Government and External Affairs (republished from Q2 2016 Aviation Business Journal)


The Lightning Legislation

April 22, 2016

In my almost three decades of experience on—or working with— Capitol Hill, I have come to the conclusion that Congress only has two speeds—glacial or lightning. In most instances, no matter how common sense or progressive the policy change you seek, one is resigned to the fact that it may take several sessions of Congress in order to achieve a policy goal. The typical holdup: timing. In other words, for various reasons, the stars just do not align—even if a proposal is recognized as helpful and noncontroversial. This is what made it especially satisfying last year when, after years of kicking the can down the road, NATA and other major associations in Washington were able to secure two important long-term changes in investment tax policy after years of short-term extensions.

As you could no doubt tell from the President’s column, when it comes to this year’s FAA reauthorization, we are in the equivalent of a congressional lightning round—and that’s when you have to be on your guard.

After years of seemingly endless policy forums, congressional “listening sessions,” and official hearings, the House Transportation Committee put pen to paper, drafted an FAA reauthorization bill, and released it for the world to see in early February 2016. At one level, the bill [H.R. 4441, the Aviation Innovation, Reform and Reauthorization (AIRR Act)] offered no surprises. The Chairman of the Transportation Committee, Representative Bill Shuster (R-PA), has been upfront with his intentions since the summer of 2015. Recall, he shared his thinking with NATA members at the 2015 Aviation Business Conference. Chairman Shuster believes that, despite the encouragement and additional authorities provided by Congress over the years, the FAA’s handling of modernization and operations is too broken to be fixed and offered his solution–separating air traffic control from the FAA and operating it as a not-for-profit, user fee-funded corporation.

We respectfully disagree. Changes in the relationship between the agency’s air traffic control operation and its safety regulatory component should be carefully viewed in terms of the problem to be addressed, and whether the solution will continue to maintain a stable, safe and efficient system that protects access for all users of our system. Creating a potentially adversarial relationship between the remaining portion of FAA and an air traffic control corporation will create unintended consequences. In the end, we concluded that, while this has been a healthy policy debate, focused policy initiatives will better achieve the goal of a more efficient and flexible agency, well positioned to maintain America’s dominance in aviation.

The general rule in Washington: the faster you try to move a piece of major legislation, the more likely the goal is to avoid delving into its specifics. So, you know what came next. The aviation community was expected to digest an almost 300-page proposal—including a major shift in the FAA’s organization and funding—and be prepared to share its views on it with congressional decision makers at a hearing one week later. Even more problematic, the bill was voted on by the House Transportation Committee the very next day.

NATA swiftly posted our analysis of the bill on our website. NATA staff briefed our Board, Presidents Council and our committees on its implications and provided lawmakers with testimony. The night before markup, we waded through approximately 100 filed amendments looking for the good and the bad. We also found time to rebut the contention made at the hearing on the legislation that charter operations were largely high-end passenger jets like G5s or G6s and their paying user fees was “fair.”

The AIRR Act survived the committee and vote — barely. The vote was along party lines and two pilot members, Republicans Sam Graves (R-MO) and Todd Rokita (R-IN), joined all Transportation Democrats in opposition. The next step in the Transportation Committee’s legislative blitz, a vote on the House floor was slated to occur shortly after committee consideration. That was when, with your help, the proposal started taking flak from all sides. The general aviation community, particularly NATA members, weighed in with their elected representatives through our special webpage (www.nata.aero/nocorporation). Facing united Democratic opposition, concerns from other major House committees impacted by the proposal, and conservatives with grave suspicions about whether such a proposal was really just an open-ended invitation to increase travel costs through user fees— the House Leadership chose, at least for the moment, to shelve the proposal and turn to other priorities.

As Tom mentioned in his column, the shame in all this is: absent the air traffic control corporation proposal, the remainder of the AIRR Act represents a serious, bipartisan effort to help the FAA operate in a more efficient manner. Thanks to the help of NATA’s committees, we proposed to policy makers a number of ideas that have, in fact, been incorporated in the legislation. However, the good in this case does not outweigh the threat the legislation poses to aviation businesses and, indeed, to all of general aviation.

Though the AIRR Act appears bottled up for the moment, know that corporation proponents will not just walk away, they have sunk too much time and energy into the effort. So if you have not already, I urge you to go to our website (www.nata.aero/ nocorporation) and engage with your Congressman and Senators on this issue.

By Bill Deere, Senior Vice President for Government and External Affairs (republished from Q1 2016 Aviation Business Journal)


Airlines…..Unplugged

April 1, 2016

I had the opportunity last week to attend the U.S. Chamber’s annual Aviation Summit. “Aviation” in the title is really a misnomer. Despite the fact the Chamber has member companies with corporate flight departments, and even a wide array of other aviation businesses, make no mistake about it — this was an airline conference. The summit’s lack of balance was startling; this was a vehicle for airlines to get their message out and other viewpoints need not apply. Comfortable in what was clearly an enabling setting, airline executives felt empowered to say what they really think.

The leaders of the so-called low cost carriers were in lockstep about the dangers posed by four airlines with 80-percent domestic market share. Through their dialogue, they invited us to peak behind the curtain for a look at the impact of global joint ventures, noting for example three mega-alliances controlling 87 percent of the transatlantic market. They called upon the Department of Transportation to revisit these anti-trust waivers and immunized joint ventures…..and in the next breath they called upon Congress to adopt the Shuster proposal to create an airline dominated air traffic control corporation.

This is a demonstration of the old political adage, “where you are is where you sit.” Market concentration, it appears, is dangerous….unless of course you are part of it. This inability to either see or understand other perspectives is disappointing from people who are seemingly aware of the dangers created by market concentration. Even if we all saw creating an air traffic control corporation as a good idea, which we don’t, why would aviation businesses willingly sign up for a proposal that leaves their future costs to be determined by airlines?

However, the low cost carriers were just the warmup act, next came the airline association and a representative CEO from the big carriers. These speeches were carefully orchestrated and honed to two messages. First, congressional policymakers who offer pro-consumer proposals related to airline seats or pricing of various airline fees are intent on nothing less than re-regulating the airline industry. The airlines’ view of consumer legislation was best summarized by the head of their trade association who told the crowd, “Members of Congress, with all due respect, if you want to run an airline, buy some planes, hire some employees and sell some tickets.” Well, to paraphrase Ricky Bobby, he did say, “with all due respect.”

The wrath of these airline leaders was especially reserved for those who dare oppose their plan to create an air traffic control corporation. Those in opposition to the corporation are nothing more than “entrenched interests fighting to maintain their advantage.” Their response to the bipartisan work of Senate Commerce Committee Chairman John Thune and Ranking Member Bill Nelson that did not include a proposal to corporatize air traffic control, “The Senate took the easy way out.”

Worse are the half-statements that come along with addresses of these sort. For example, we were told airlines believe in a user fee-funded corporation so much they are willing to write their own checks to the corporation for the air traffic services they use. How altruistic. Except of course the real cost will be borne by the customer and the corporation proposal neatly removes accountability for those costs from a consumer’s direct scrutiny — let alone the costs the airlines will attempt to shift to general aviation. Other whoppers rehashed in front of a largely adoring crowd included the suggestion that air traffic controllers are using 1950’s technology, or that 60 countries currently operating corporatized systems are in some way more efficient or safer than ours.

Airlines also tried to dispel the notion they don’t want to run the corporation by noting the composition of the air traffic control board was changed late in the House committee process with the addition of two more seats for general aviation, bringing GA to the same number of seats as the airlines. While no doubt equal in number, it’s arguable those seats are not equal in weight. The corporation CEO, who also holds a board vote, will undoubtedly feel the pressure of the four votes that represent the overwhelming amount of corporation funding. In addition, this is not a proposal that is yet set in stone.   Neatly forgotten by these airline leaders during the conference, their complaint to Congress that the original proposal already lacked a sufficient number of airline stakeholders, particularly given the representation from general aviation — stakeholders that in their view pay next to nothing. We should not expect the airlines to give up on their attempts to “perfect” the board’s composition.

I report all this to remind you that despite some press reports, the airline industry is not giving up. Between now and July 15th (when the current FAA reauthorization again expires) we must be vigilant and engaged with our elected lawmakers if we are to withstand the imposition of the airline worldview on consumers and general aviation.

By Bill Deere, Senior Vice President for Government and External Affairs


NATA 75: An Industry Voice Is More Important Than Ever

December 28, 2015

 

As we launch into our anniversary year, reading the excellent history of the association written by Paul Seidenman and David J. Spanovich (page 18) underscores just how important it is for aviation businesses to have a voice to represent them in the public policy arena. As the article demonstrates, NATA’s birth was directly linked to the future of civil aviation, when the association’s founders had the vision to join together and intervene at a critical juncture, not letting the military in effect—take over—American aviation. In fact, the article is replete with examples, large and small, of how the association’s intervention made a difference in supporting aviation businesses’ contin­ued growth in this vital, and uniquely American, part of our economy.

It is easy to understand the advantages of membership when viewed from a purely business perspective. Many NATA members, for example, take advantage of the association’s industry leading workers’ compensa­tion insurance program or perhaps its Safety 1st training. However, the need for a public policy presence is not something that is always readily apparent nor easily quantified.

Perhaps because of our history, NATA members see that need. In our recent membership survey, advocacy was rated as one of the most important aspects of membership. It is also borne out by the fact that when the call for help goes out to aviation businesses, NATA members respond.

Looking ahead to 2016 we, like our founders, continue to see challenges and opportunities for aviation busi­nesses. On our immediate horizon is the upcoming FAA reauthorization bill. While events in 2015, the leadership crisis that resulted in a new Speaker of the House, Paul Ryan, and the difficul­ties of financing a multi-year surface transportation bill, slowed down the FAA bill in Congress—make no mis­take about it—the airlines still want the keys to the air traffic control system.

In early December, Airlines for America (the trade group representing the major carriers) and the CEOs of the nation’s six major airlines were in Washington, D.C., talking to lawmak­ers about their desire to create an independent, user-fee funded air traffic control organization. Don’t think they are serious? When the world’s largest airline, Delta, announced it was leav­ing the trade group in a disagreement over this and other policies the airlines are pursuing, the remaining members waived the association’s required de­parture notice allowing Delta to leave immediately.

The idea of privatizing air traffic control has been one pursued by others as well, some frustrated by the pace of modernization, others concerned the congressional budget process has bro­ken down to the point where funding for the agency may no longer be able to keep up with the future needs of the system.

While NATA agrees the FAA could certainly stand the injection of more private sector practices, we view the unknowns associated with corporati­zation as simply too great to risk. Can such a proposal be safely implemented in a system many times larger and far more complex than any other in the world? Will its implementation set back the cause of modernization rather than enhance it? And what happens to general aviation, a uniquely American user not really a large factor elsewhere in the world? Will new costs and fees in effect deny your businesses and cus­tomers access to airports and airways necessary to your operating a viable business?

While a huge concern, I don’t want to leave you with the impression this is the sole issue confronting avia­tion businesses. We are still working to unwind a 2012 IRS opinion that concluded that aircraft management fees are “transportation” and therefore management service providers should be assessing the 7.5 percent commer­cial ticket tax on amounts paid for those services. We are also working as part of a broad national coalition to bring certainty to investment policy by making permanent bonus depreciation and Section 179 expensing. Finally, the NATA regulatory team is working across a myriad of issues, before the FAA, the TSA, and Customs, among others, looking to bring common-sense and your real world perspective to the issues under consideration by the exec­utive branch.

Our issues are not always defen­sive. Our committee members were instrumental in developing a positive agenda for the FAA reauthorization bill. In fact one agenda item, requiring the investigative arm of Congress, the Government Accountability Office, to conduct a study of diversions of non-commercial jet fuel tax revenues to the Highway Trust Fund, was just incorporated into the recently enacted surface transportation bill. We are also particularly proud of the ongoing effort by NATA and AAAE members to identify and address the issues that divide and can unite airports and their tenants.

So as Tom Hendricks says, our future is bright and getting brighter by the day. As we move into what could be a watershed year in aviation, stay involved, and stay engaged. In the end, you are aviation businesses best advocates!

By Bill Deere, Senior Vice President for Government and External Affairs


Speaker Boehner’s Parting Gift

November 2, 2015

No one could have predicted the circumstances under which Congress and the Administration were able to bring about last week’s long-term budget agreements.

The resignation announcement by House Speaker John Boehner immediately cleared the way for a bill funding the government through December 11th.  It also allowed the outgoing Speaker to “clean up the barn” and resolve potentially debilitating issues for incoming Speaker Paul D. Ryan.  In a move worthy of the climactic scene in The Godfather, outgoing Speaker Boehner settled political scores by successfully negotiating a two-year adjustment to federal discretionary spending levels and raising the nation’s debt ceiling through March, 2017.

This is good news for aviation.  As NATA’s President Tom Hendricks observed earlier in the week, the legislation addresses two threats to our industry – the ramifications of defaulting on our nation’s debts and a potential shutdown of the Federal Aviation Administration. Let’s look at the numbers behind the agreement and talk about what happens next.

The Deal

The Bipartisan Budget Act of 2015 amends the discretionary spending caps (the 30% of federal spending directly appropriated by Congress on an annual basis) for fiscal years 2016 and 2017 as seen below:

Discretionary Spending Caps (in billions)
Old Cap FY16 Revised FY16 Old Cap FY17 Revised FY17
Defense $523 $548 $536 $551
Non-defense $493 $518 $503 $518
Total $1,016 $1,066 $1,039 $1,069

One interesting question is whether all parties involved will consider this a two-year spending deal.  After all, the agreement includes virtually no increase in spending between FY2016 and FY2017.  However, veteran appropriators have observed the 2013 Ryan-Murray deal had a similar tight spending level in year two and all parties involved lived within it.As you see, these levels represent increases of $50 billion and $30 billion respectively over the FY16 and FY17 spending levels established in 2011.  Recall that in his February budget request, President Obama proposed a $75 billion discretionary spending increase above the FY2016 caps.

Next Steps

So the chances of a government shutdown have been dramatically reduced but we are not completely out of the woods yet.

Remember, the current continuing resolution (CR) temporarily funds the government by continuing funding levels from the prior year, but it expires on December 11th.  The increases in overall discretionary spending provided in the agreement will allow congressional appropriators the budget ceiling needed to complete work on the FY2016 federal budget –including funding for the FAA.  However one issue still remains, will policy riders, typically in the form of prohibitions against certain types of spending, derail concluding work on the FY2016 budget?

Reports indicate that work on the spending bills has already begun and will likely result in the dreaded “omnibus” appropriation bill where the twelve separate spending bills will be rolled into one mega spending bill.

By Bill Deere, Senior Vice President for Government and External Affairs