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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

August 2007: 

Very Light Jets: 

Several Factors Could Influence Their Effect on the National Airspace 
System: 

Very Light Jets: 

GAO-07-1001: 

GAO Highlights: 

Highlights of GAO-07-1001, a report to congressional requesters 

Why GAO Did This Study: 

For several years, a number of aviation manufacturers have been 
designing and testing very light jets, a type of small jet aircraft 
equipped with advanced technologies and priced below other business 
jets. Aviation forecasters predict that thousands of very light jets 
will enter the National Airspace System (NAS) over the next two 
decades, contributing to the overall growth of the general aviation 
fleet. While some experts predict that very light jets will be used in 
ways that are similar to current general aviation aircraft, others 
predict that they will be used to expand the air taxi market to provide 
on-demand, point-to-point air transportation. In 2006, the Federal 
Aviation Administration (FAA) certified the first very light jets for 
flight. This report identifies (1) current very light jet forecasts and 
what factors could affect very light jet deliveries, (2) how increasing 
numbers of very light jets might affect the capacity and safety of the 
NAS, (3) how FAA is planning to accommodate the entry of very light 
jets into the NAS, and (4) how very light jets might affect FAA’s costs 
and Airport and Airway Trust Fund revenues. To address these issues, 
GAO reviewed relevant documents and interviewed agency officials and 
aviation experts. 

GAO is not making recommendations in this report. The Department of 
Transportation provided technical clarifications, which were 
incorporated as appropriate. 

What GAO Found: 

The eight very light jet forecasts GAO examined provided a range of 
both the number of very light jets projected to be delivered (roughly 
3,000 to 7,600) and the dates by which those numbers would be reached 
(from 2016 to 2025). The forecasts were based on limited information 
about the market for very light jets and varied based on a number of 
assumptions, particularly regarding the development of the air taxi 
market. 

The studies GAO reviewed and the experts GAO contacted expressed 
varying opinions about the impact of very light jets on NAS capacity; 
however, most of the experts believed that very light jets would have 
little overall effect on safety. The studies found that the type of 
airports used by very light jets will influence very light jets’ effect 
on capacity. Experts also mentioned other factors that could affect 
capacity such as aircraft usage, trip length, and altitude. Most 
experts GAO contacted believed that very light jets will likely have 
little impact on safety due to FAA’s certification procedures for 
aircraft, pilots, and maintenance. 

According to FAA officials, the agency currently has policies and 
procedures in place to accommodate the entry of very light jets into 
the NAS because the aircraft will operate similarly to other aircraft 
and will enter the NAS incrementally. Nonetheless, FAA is taking steps 
to address issues associated with very light jets by establishing a 
cross-organizational group to facilitate communication about very light 
jets across the agency. In addition, FAA expects that the deployment of 
modern air traffic management technologies will help to integrate very 
light jets in the long run. 

The impact of very light jets on FAA’s costs and Trust Fund revenues 
will depend on factors such as the number of very light jets deployed, 
the extent to which they replace existing aircraft, and whether they 
facilitate a large-scale air taxi industry. The Congress is considering 
legislation that could affect how very light jets are taxed but, as 
with the current funding structure, there is too much uncertainty about 
very light jets to accurately compare the revenue effects of these 
proposed alternative funding structures. 

Figure: Examples of Very Light Jet Aircraft 

[See PFD for image]

Source: Adam A700; Adam Aircraft Industries (left) and Eclipse 500; (c) 
copyright, Eclipse Aviation Corporation, 2007 (right). 

[End of figure] 

[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1001]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Susan Fleming at (202) 
512-2834 or flemings@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Current Market Forecasts for Very Light Jets Vary Widely, Reflecting 
Differences in Assumptions and Limited Available Information: 

Studies and Expert Opinions Varied on How Very Light Jets Will Affect 
Capacity, but Most Experts Believe Very Light Jets Will Have Little 
Effect on Safety: 

FAA Officials Believe Procedures and Policies Are in Place to 
Accommodate Very Light Jets, but FAA Is Taking Steps to Prepare for 
Their Introduction: 

Several Factors Will Influence the Effect of Very Light Jets on FAA's 
Costs and Trust Fund Revenues: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Use Categories of General Aviation: 

Table 2: Summary of Assumptions Influencing Very Light Jet Forecasts: 

Table 3: Estimated Excise Tax Contribution for a Very Light Jet by Type 
of Flight: 

Figures: 

Figure 1: FAA Activities and Services: 

Figure 2: Proposed Very Light Jet Models as of July 2, 2007: 

Figure 3: Total Forecasted Number of Very Light Jets: 

Abbreviations: 

ADS-B: Automatic Dependent Surveillance-Broadcast: 

FAA: Federal Aviation Administration: 

MIT: Massachusetts Institute of Technology: 

NAS: National Airspace System: 

NASA: National Aeronautics and Space Administration: 

United States Government Accountability Office: 

Washington, DC 20548: 

August 24, 2007: 

The Honorable John Mica: 
Ranking Republican Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

The Honorable Jerry Costello: 
Chairman: 
The Honorable Thomas Petri: 
Ranking Republican Member: 
Subcommittee on Aviation Committee on Transportation and 
Infrastructure: 
House of Representatives: 

For several years, a number of aviation manufacturers have been 
designing and testing very light jets, a new type of small jet aircraft 
that are priced below other business jets and which will come equipped 
with advanced avionics and can be certified for single-pilot operation. 
In 2006, the Federal Aviation Administration (FAA) certified the first 
very light jets to fly in the National Airspace System (NAS). According 
to very light jet manufacturers, six very light jets had been delivered 
as of March 31, 2007. Business aviation forecasters predict that 
thousands of very light jets will enter the airspace over the next 
couple of decades, some of which may be used for air taxi operations 
(i.e., on-demand point-to-point air transportation service), 
contributing to the overall growth of the general aviation fleet. Some 
industry experts have raised concerns about increased congestion 
resulting from very light jets' entry into the NAS given projected 
growth in commercial air travel, which FAA predicts will increase from 
740 million passengers flying in fiscal year 2006 to 1 billion 
passengers in 2015. 

Recognizing that the current aviation system cannot expand to meet this 
projected growth in demand for air travel, FAA currently is involved in 
a multiagency planning effort to transform the nation's current air 
traffic control system to a more modern system that is intended to 
safely accommodate a possible tripling of air traffic by 2025. As FAA 
works to begin implementing improvements to the air traffic system, the 
question of how to fund this modernization effort has come under 
review, especially since most of the excise taxes that go into the 
Airport and Airway Trust Fund (Trust Fund)--which funds most of FAA's 
budget--are scheduled for reauthorization at the end of fiscal year 
2007. Because of the importance of meeting the nation's air 
transportation demands, you asked us to study the possible effects of 
the introduction of very light jets on the NAS and on FAA. Accordingly, 
we addressed the following questions: (1) What are the current 
forecasts for very light jet deliveries and what factors could affect 
very light jet deliveries? (2) How might increasing numbers of very 
light jets affect the capacity and safety of the NAS? (3) How is FAA 
planning to accommodate the entry of very light jets into the NAS? (4) 
What factors will influence very light jets' effect on FAA's costs and 
Trust Fund revenues? 

To identify current forecasts for very light jets, we reviewed 
government, academic, and aviation industry studies and interviewed 
aviation experts to compile a list of publicly and commercially 
available forecasts. We selected eight forecasts to review on the basis 
of criteria that we established (e.g., being published within the past 
12 months and providing a specific number of aircraft within a 
timeframe). We reviewed the forecasts and determined that they were 
sufficiently reliable for our purposes. To identify factors that could 
affect the number of very light jets delivered, we obtained information 
from organizations and individuals with expertise in general and 
business aviation. To determine how increasing numbers of very light 
jets could affect the capacity and safety of the NAS, we reviewed 
industry studies and interviewed government officials and aviation 
experts. To understand how FAA plans to accommodate potential very 
light jet demand, we met with FAA officials to discuss how FAA handles 
new aircraft and its plans for modernizing the air traffic control 
system. We also asked selected government and industry organizations to 
identify what actions FAA should be taking to prepare for very light 
jets. To determine the effect of very light jets on FAA's costs and 
Trust Fund revenues, we met with FAA officials to discuss the way they 
allocate costs to aviation users, including very light jet operators, 
and the taxes that are typically paid by general and business aviation 
users. We discussed how the administration's reauthorization proposal 
would treat general and business aviation users, including very light 
jet operators. We reviewed congressional alternatives to the 
administration's proposal. We also discussed aviation taxes with excise 
tax experts from the Internal Revenue Service's Office of Chief 
Counsel. We conducted our work from September 2006 through July 2007 in 
accordance with generally accepted government auditing standards. See 
appendix I for a more detailed explanation of our scope and 
methodology. 

Results in Brief: 

The eight forecasts we examined provided a range of both the number of 
very light jets projected to be delivered (roughly 3,000 to 7,600) and 
the dates by which those numbers would be reached (from 2016 to 2025). 
The factors used to estimate the number of very light jets and the 
assumptions about them varied. Factors that might affect the number of 
very light jet deliveries, according to the forecasts, included the 
development of the air taxi market, economic growth, production 
constraints, insurance and training requirements, and expected aircraft 
retirements, among others. In addition to examining very light jet 
forecasts, we spoke with aviation experts about the factors that they 
thought would most affect the number of very light jet deliveries over 
the next 10 to 20 years. The factor they mentioned most often was the 
growth of the air taxi market, although some believed the air taxi 
market could significantly increase the demand for very light jets 
while others believed that air taxi operations would not succeed on a 
large scale. We found that the eight forecasts we examined were based 
on limited information. For example, since very light jet manufacturers 
have just begun to produce new aircraft, there is little information on 
delivery trends for these aircraft. In addition, there was less 
consensus across the very light jet forecasts compared to other 
business jet forecasts, and past very light jet forecasts have failed 
to accurately predict when these aircraft would enter the NAS. 

According to studies we reviewed and aviation experts we contacted, we 
found that there were various opinions about how increasing numbers of 
very light jets would affect capacity in the NAS, although most experts 
believed that very light jets would have little effect on safety. We 
examined two studies that found that the type and location of airports 
used by very light jet operators will influence the effect of these 
aircraft on NAS capacity. Experts we spoke with also indicated that the 
type of airports used by very light jet operators was important. For 
example, many experts believed that very light jets will travel to 
small airports that have excess runway capacity. However, a few experts 
believed that very light jets will travel to large airports and thus 
could affect NAS capacity by contributing to airline delays. In 
addition to airport type, experts indicated that the effect of very 
light jets on NAS capacity depends on other factors including the 
various uses of very light jets in the airspace, the trip length and 
altitude of very light jet flights, the implementation of new air 
traffic control technologies and equipment, the performance 
capabilities of very light jets, and the rate of integration of very 
light jets. Most experts we contacted believed that very light jets 
will likely have little overall effect on safety due to FAA's 
certification processes and procedures for aircraft, pilots, and 
maintenance, all of which apply to very light jets. 

According to FAA, the agency currently has the policies and procedures 
in place to accommodate the entry of very light jets--which it believes 
will occur incrementally--into the NAS. These officials, and several 
other experts with whom we spoke, agreed that very light jets are 
similar to other aircraft currently in operation and do not require 
substantial changes to existing policies and procedures. However, FAA 
is taking additional steps to specifically address any unique issues 
surrounding the integration of very light jets as a precautionary 
measure to ensure that these aircraft are integrated smoothly. For 
example, FAA established a cross-organizational group to facilitate 
communication about very light jets across FAA departments. FAA 
officials stated that large numbers of very light jets may pose 
resource challenges, but the agency has plans in place to address this 
issue as needed. For example, according to officials, FAA is planning 
on redeploying resources and is having discussions with local FAA 
offices that are expecting to see increased demand for inspectors. In 
the long term, FAA expects that the deployment of new technologies, 
such as communications equipment that will enable pilots and 
controllers to have a common picture of airspace and traffic, will help 
integrate very light jets into the NAS. Because the aircraft will have 
advanced avionics, they will be able to take full advantage of new air 
traffic control technologies. Most experts we contacted expressed 
support for FAA's modernization activities as a way to maintain system 
capacity and safety for all aircraft, including very light jets, but 
encouraged FAA to work to rapidly deploy such technologies. 

The effect of increasing numbers of very light jets on FAA's costs and 
Trust Fund revenues will depend on several factors in addition to the 
number of very light jets deployed, such as the extent to which they 
replace existing aircraft and whether they are operated for commercial 
or noncommercial purposes. There is uncertainty, however, about these 
factors that leads to uncertainty about the effect on costs and 
revenues. For example, one critical but largely speculative factor is 
the extent to which a market for air taxi services using very light 
jets will develop. If very light jets are used in air taxi operations 
it would add to FAA's costs, but also increase revenues, because the 
planes would have a higher rate of use than very light jets used in 
noncommercial operations. The administration has submitted a proposal 
for reauthorizing FAA that calls for a change in the current excise tax 
structure, and Congress is considering funding alternatives as well. 
However, due to the amount of uncertainty regarding the number and use 
of very light jets, there is too little information to accurately 
assess the revenue impacts under the various proposals. 

We provided a draft of this report to the Department of Transportation 
for review and comment. The Department of Transportation provided 
technical clarifications, which we incorporated in the report as 
appropriate. 

Background: 

FAA is responsible for regulating and promoting the safety of general 
aviation, including very light jets, by overseeing manufacturers and 
operators to require full compliance with safety regulations. General 
aviation includes all civil aircraft not flown by commercial carriers 
or the military.[Footnote 1] To this end, FAA must certify any new 
aircraft design before that aircraft can be registered in the United 
States for private or commercial operations. When aircraft 
manufacturers request approval of a new aircraft type design, FAA uses 
the type certification process to ensure that the design complies with 
applicable requirements and airworthiness standards. FAA issues 
production certificates, which allow manufacturers to obtain an 
airworthiness certificate for duplicate aircraft produced under an FAA- 
approved type design. FAA also is responsible for establishing and 
enforcing standards for the certification of pilots and instructors as 
well as maintenance technicians and repair stations. FAA expects that 
most owner operators of very light jets will already have a pilot 
certification and the associated flight experience. 

Another of FAA's primary functions is managing air traffic, which 
includes a variety of complex activities that guide and control the 
flow of aircraft through the NAS. Generally, commercial aircraft fly 
under instrument flight rules that require air traffic services, which 
are provided by FAA. Control towers guide these flights in the terminal 
and runway areas and through takeoffs and landings. Once in the air and 
beyond the immediate vicinity of the airport, aircraft rely on the 
terminal radar approach control centers to guide them out of the 
airspace surrounding the airport.[Footnote 2] Then, the flight is 
passed to air route traffic control centers to provide en route control 
until they near their destinations. (See fig. 1.) Nearly all business 
jets and roughly half of general aviation piston engine flights fly 
under instrument flight rules and file flight plans that are used by 
air traffic control to reserve time and location in the NAS.[Footnote 
3] However, many general aviation flights operate entirely under visual 
flight rules and may not use air traffic control services at all if 
they fly from and to airports that do not have towers. Other general 
aviation flights operating under visual flight rules may require ground 
control and traffic advisories, which are provided by air traffic 
control towers, and other air traffic centers. 

Figure 1: FAA Activities and Services: 

[See PDF for image] 

Source: GAO (data); Art Explosion (images).

[End of figure] 

Very light jets are a new entrant into the U.S. airspace. Very light 
jet is a marketing term with no single definition, although most 
aviation experts describe these aircraft using a combination of the 
following elements: weight and price. Generally speaking, very light 
jets are jet aircraft with a maximum take-off weight of 10,000 pounds, 
certificated for single pilot operations, equipped with advanced 
avionic systems, and priced below other business jets.[Footnote 4] By 
this definition, we identified nine proposed very light jet models as 
of July 2, 2007 (see figure 2). Two of these models--the Cessna 
Citation Mustang and Eclipse 500--have received FAA type and production 
certification and begun delivering aircraft. 

Figure 2: Proposed Very Light Jet Models as of July 2, 2007: 

[See PDF for image] 

Source: Very light jet manufacturers (data).

Note: We did not include a number of developmental very light jet 
aircraft in figure 2, such as the Cirrus Jet, the Excel-Jet Sport-Jet, 
and the Spectrum 33 jet because of the lack of sufficient performance 
and price information. 

[End of figure] 

The aviation industry considers very light jets to be general aviation 
aircraft because of the way they will operate in the NAS. FAA divides 
general aviation activities into use categories, including: air taxi, 
business, corporate, instructional, personal, and other uses (see table 
1). In addition, general aviation aircraft can be used in a fractional 
ownership arrangement, which is when a person or company buys or leases 
a fractional interest in one aircraft. Over the course of the lease, 
they can use that aircraft for a certain number of hours or days per 
year, as do the aircraft's other fractional owners. In 2005, the U.S. 
general aviation fleet consisted of 224,352 active general aviation 
aircraft that flew about 27 million hours. Turbojets--a category of 
aircraft that will include very light jets--made up 4.3 percent or 
9,823 of the total active general aviation fleet. The rest of the 
active aircraft included, among others, piston engine aircraft, 
turboprops, and rotorcraft. 

Table 1: Use Categories of General Aviation: 

Use: Air taxi
Percentage of total general aviation flight hours in 2005: 10.6; 
Description: On-demand passengers and all cargo operations. 

Use: Business; 
Percentage of total general aviation flight hours in 2005: 12.0; 
Description: Use of aircraft in connection with pilot's occupation or 
private business. 

Use: Corporate; 
Percentage of total general aviation flight hours in 2005: 11.4; 
Description: Use of aircraft owned or leased by a corporation or 
business and flown by a professional pilot. 

Use: Instructional; 
Percentage of total general aviation flight hours in 2005: 13.5; 
Description: Flying under the supervision of a flight instructor. 

Use: Personal; 
Percentage of total general aviation flight hours in 2005: 34.3; 
Description: Use of aircraft for pleasure or personal transportation 
and not for business purposes. 

Use: Other uses; 
Percentage of total general aviation flight hours in 2005: 17.9; 
Description: Examples include: Federal, state, or local government 
owned or leased aircraft used for a government function. 

Use: Total[A]; 
Percentage of total general aviation flight hours in 2005: 100; 
Description: [Empty]. 

Source: FAA. 

[A] The total was rounded to 100 percent. 

[End of table] 

Aviation Experts Identified Features that Make Airports Attractive to 
Air Taxi Operators:

* Fluid base operators to provide fuel and other supplies to aircraft 
operators.

* Availability of ground transportation such as taxi cab operators and 
rental car companies.

* Close proximity to customer populations.

* Technology providing precise navigation and landing guidance.

It is expected that very light jets will be used in ways that are 
similar to other types of general aviation aircraft, such as in 
corporate fleets and as business or personal aircraft.[Footnote 5] 
However, some companies also are planning to use very light jets as air 
taxis and air charters--operations providing on-demand, point-to-point 
flights. For example, an air taxi operator called DayJet is planning to 
use very light jets to offer per-seat on-demand flights on planes 
servicing selected airports in the southeastern United States. This is 
a departure from the traditional charter business model, which requires 
clients to charter the entire airplane for their flight, and sometimes 
pay for associated repositioning costs. In addition, at least one 
current air taxi company plans to sell individual seats on scheduled 
flights.[Footnote 6] 

Current Market Forecasts for Very Light Jets Vary Widely, Reflecting 
Differences in Assumptions and Limited Available Information: 

The eight very light jet forecasts we examined predicted a range of 
3,016 to 7,649 in the number of very light jet deliveries as well as a 
range in the dates by which those numbers would be reached, from 2016 
to 2025.[Footnote 7] These forecasts were based on assumptions related 
to a number of factors that could affect the number of very light jet 
deliveries, especially regarding the success or failure of air taxi 
operations. Aviation experts also identified several factors that could 
affect overall deliveries, such as growth of the air taxi market, 
dissatisfaction with other forms of transportation, low purchase price 
and operating costs, access to airports, training and insurance 
requirements, and production constraints. Forecasts were primarily 
based on expert opinion and used the limited information available on 
the business markets for very light jets. 

Very Light Jet Forecasts Estimated a Range of Very Light Jet 
Deliveries: 

The eight very light jet forecasts we examined predicted different 
numbers of very light jet deliveries--from 3,016 to 7,649--and 
different dates by which those numbers of aircraft would be reached, 
from 2016 to 2025 (see fig. 3).[Footnote 8] Of the forecasts we 
examined, all except FAA and Velocity Group (an aviation consulting 
firm) forecasts included international deliveries of very light jets. 
Several forecasts predicted that most very light jet deliveries would 
go to customers in North America; one analyst noted that sales in the 
United States could represent around 70 percent of total deliveries. 
The definition of a very light jet differed somewhat across the 
forecasts. For example, some of the forecasts included predictions for 
single-engine very light jets, such as the proposed Diamond D-Jet, 
while other forecasts did not include single-engine aircraft. However, 
most of the forecasts included five new aircraft models that 
manufacturers have scheduled to enter service over the next several 
years: Adam A700, Cessna Citation Mustang, Eclipse 500, Embraer Phenom 
100, and HondaJet. 

Figure 3: Total Forecasted Number of Very Light Jets: 

[See PDF for image] 

Source: GAO analysis of very light jet forecasts.

[End of figure] 

Almost all of the very light jet forecasts we examined were based on 
expert opinion regarding business markets for very light jets and 
analyses of proposed aircraft models. For example, one of the main 
sources of information for developing the FAA forecast was an October 
2006 aviation expert workshop jointly hosted by the Transportation 
Research Board and FAA. Forecasters also relied heavily on projected 
economic trends and variables, such as expected growth in the gross 
domestic product and corporate profits.[Footnote 9] One of the very 
light jet forecasts surveyed corporate flight departments and general 
aviation operators about their purchase expectations. 

Very Light Jet Forecasts' Assumptions Vary, Especially Regarding the 
Air Taxi Market: 

The forecasts we examined considered a number of factors that might 
affect the number of very light jet deliveries, including the 
development of the air taxi market, economic growth, production 
constraints, insurance and training requirements, and expected aircraft 
retirements, to name a few. The forecasts made several assumptions 
regarding these factors as shown in table 2. 

Table 2: Summary of Assumptions Influencing Very Light Jet Forecasts: 

Forecast organization: Embraer; 
Assumptions on which very light jet forecasts are based: 
* Increasing corporate profits, S&P growth rates, world gross national 
product, and U.S. interest rates; 
* No serious/ major/significant terrorist incidents or worldwide 
pandemics; 
* Successful development of air taxi operations; 
* New aircraft models;
* Aging business jet fleet;
* Growth in fractional ownership. 

Forecast organization: Forecast International; 
Assumptions on which very light jet forecasts are based: 
* Continuing economic growth and rising corporate profits;
* No new user fees;
* Long term success of air taxi operations dependent on surpassing 
regulatory obstacles and airport access issues;
* New aircraft models lead to increased purchases;
* Increased demand for new aircraft because of low number of used 
business jets available;
* The reputations of established manufacturers potentially providing an 
advantage over startup companies;
* Insurance and training considerations. 

Forecast organization: Honeywell; 
Assumptions on which very light jet forecasts are based: 
* Purchase expectations of corporate flight departments and general 
aviation owner/operators;
* No unforeseen events, such as war, major economic shock, fuel crisis, 
or new regulatory restrictions;
* Moderate economic growth with modest cyclical perturbations;
* New aircraft models lead to increased purchases;
* Demand from emerging air taxi operations is not factored into the 
estimates and would be considered additive to overall demand should the 
air taxi business model prove widely viable. 

Forecast organization: PMI Media Limited; 
Assumptions on which very light jet forecasts are based: 
* Moderate economic growth with a slowdown in 2010-2012, followed by a 
recovery;
* Air traffic congestion fears are unfounded;
* Air taxi operators will consolidate and eventually evolve into 
fractional ownership operations;
* Advantage of manufacturers familiar with the certification process 
with other aircraft;
* Time to develop high volume production as the supply chain ramps up. 

Forecast organization: The Teal Group Corporation; 
Assumptions on which very light jet forecasts are based: 
* High corporate profits, high commodity prices, and growth in emerging 
markets;
* Organic growth in the number of corporate flight departments;
* A large number of aircraft retirements are expected;
* Established manufacturers having an edge over newcomers;
* The air taxi market will not succeed, except on a small scale;
* Very light jets serving as replacement aircraft for high-end 
turboprops;
* Extensive training, insurance, and financing as barriers to entry. 

Forecast organization: Velocity Group; 
Assumptions on which very light jet forecasts are based: 
* Air taxi operations capturing a percentage of high yield customers 
(i.e., domestic airline travel at full fare coach, business class or 
first class);
* Higher demand for air taxi service in communities with poor 
commercial service;
* The timing of demand growth, the expected utilization of aircraft, 
and passenger load forecasts;
* Very light jets capturing twenty percent of the total turbine market 
sold in the $0.5 to $4 million price category for use in private, 
charter, and fractional operations. 

Forecast organization: Federal Aviation Administration; Assumptions on 
which very light jet forecasts are based: * Moderate economic growth;
* No major geopolitical events;
* Sufficient infrastructure to handle projected levels of activity and 
keep pace with demand;
* Sufficient growth in the on-demand air taxi market to absorb a 
majority of projected very light jet deliveries;
* Production on pace with predicted demand;
* The aircraft perform as advertised. 

Forecast organization: Rolls-Royce; 
Assumptions on which very light jet forecasts are based: 
* Infrastructure on pace with growth;
* Strong future macro economic growth with rising corporate and 
personal wealth; 
* New aircraft models lead to increased deliveries;
* A large number of aircraft retirements are expected;
* Markets outside the U.S. are ramping up;
* No substantive air taxi network;
* Demand for very light jets resulting from a shift from turboprops. 

Source: GAO analysis of very light jet forecasts. 

[End of table] 

Each of the eight forecasts we reviewed included assumptions about the 
effect of economic growth and the expansion of the air taxi market. The 
forecasts all assumed moderate to strong economic growth, while 
assumptions regarding the air taxi market varied considerably. For 
example, the Teal Group forecast predicted the air taxi market would 
not expand on a large scale. However, several other forecasts included 
predictions of several thousand very light jet deliveries to air taxi 
operators. For example, Embraer forecasted that the air taxi market 
might be responsible for 2,500 to 3,000 very light jet deliveries by 
2016 if there is demand for air taxi services. 

In addition, very light jet forecasts included assumptions regarding 
other factors: 

* Replacement market. Customers may purchase very light jets to upgrade 
from existing aircraft, which could affect the number of very light jet 
deliveries. There is also an expectation that a large number of 
aircraft will be retired in the future, which could create further 
demand for very light jets to replace aging aircraft. 

* Large number of aircraft models. The large number of very light jet 
models gives customers more options to choose from and might strengthen 
demand. For example, Rolls-Royce notes that there tends to be a high 
correlation between total aircraft deliveries and the number of models 
on the market. 

In addition to the information gathered from the forecasts, we asked 18 
aviation experts from the federal government, academia, aviation 
equipment manufacturers, industry associations, air taxi operators, and 
aviation insurance companies to identify factors they thought would 
most impact the number of very light jet deliveries over the next 10 to 
20 years.[Footnote 10] The factor mentioned most often was the growth 
in the air taxi market, which could significantly affect very light jet 
demand if successful. However, several experts did not think air taxi 
operations will succeed on a large scale and noted that the on-demand 
business model is nothing new. They argued that if the point-to-point 
on-demand air taxi business model were so attractive, it could have 
become popular already using similar existing business jets and 
propeller aircraft. 

The 18 experts also identified several other factors that they thought 
might influence very light jet demand, including: 

* Dissatisfaction with other forms of transportation. Increased hassle 
associated with commercial airline and automobile travel may lead to 
higher demand for very light jets. 

* Low purchase price and operating costs. The relatively low costs of 
acquiring and operating very light jets may lead to increased demand. 

* Access to airports with the appropriate infrastructure. According to 
aircraft manufacturers, very light jets will be able to use a 
relatively large number of private and public airports, which could 
help increase demand. However, infrastructure needs, such as hangar 
space and availability of ground transportation, may limit access to 
these airports and thus limit demand for very light jets. Difficulty 
accessing metropolitan airports, which are already congested, might 
also limit demand for these aircraft. 

* Training and insurance requirements. The time and money needed to 
achieve the necessary levels of training and insurance could become 
burdensome to potential pilots and limit demand to some extent. 

* Production constraints. The ability of aircraft manufacturers to 
produce enough very light jets to meet demand may influence the number 
of aircraft delivered. 

Limited Information Is Available for Forecasting Very Light Jet 
Deliveries: 

The very light jet forecasts we reviewed were primarily from the 
forecasters' own expert opinions about potential markets and business 
models, but the forecasters had limited information on which to make 
their predictions about very light jet deliveries. For example, since 
very light jet manufacturers have just begun delivering the new 
aircraft, there is little information about product demand. Forecasters 
indicated that they based their assumptions about very light jet demand 
on information about past deliveries for other aircraft in comparable 
price classes, such as light jets and turboprop airplanes; however, 
these aircraft do not have exactly the same performance characteristics 
as very light jets. For example, several forecasts examined the markets 
for turboprop aircraft and predicted the proportion of customers who 
might instead purchase new very light jets. 

In addition, forecasts were based on limited information regarding the 
air taxi market. There is an ongoing debate about the extent to which 
the availability of very light jets will facilitate an expansion of the 
air taxi market. Some aviation experts stated that very light jets will 
reduce acquisition and operating costs compared with other business 
jets, which will enable a number of variations on current on-demand air 
taxi and air charter business models. However, the first delivery to an 
air taxi company took place at the end of March 2007. Without past 
market information, it is difficult to predict the overall effect of 
air taxi operations on the number of very light jet deliveries. 

We compared very light jet forecasts to more general business jet 
forecasts and found that there was less consensus among forecasters 
about the expected number of very light jet deliveries than there was 
about other aircraft deliveries, which demonstrates the divergence of 
opinion about very light jet deliveries. Specifically, four of the 
eight organizations with very light jet forecasts that we examined also 
produced overall business jet forecasts for the years 2015 to 
2016.[Footnote 11] The range in the predicted number of very light jet 
deliveries for these four forecasts is from 3,016 to 5,715 aircraft, an 
approximately 47 percent difference. However, the range in predicted 
number of other business jet deliveries for the forecasts was much 
closer, from 7,000 to 8,984 aircraft, only an approximately 22 percent 
difference.[Footnote 12] 

We also examined four past very light jet forecasts and found that they 
did not accurately predict very light jet deliveries. For example, in 
February 2006, FAA predicted 100 very light jets would enter the active 
air fleet during fiscal year 2006, but manufacturers did not deliver 
any very light jets during the fiscal year. The other three forecasts 
also overestimated the number of very light jet deliveries for 2006. In 
addition, in 2002, the Transportation Research Board and FAA sponsored 
an aviation expert workshop, which suggested up to 5,000 very light 
jets may arrive by the year 2010. Yet none of the eight current very 
light jet forecasts that we examined predict 5,000 deliveries over the 
next 3 years. 

Studies and Expert Opinions Varied on How Very Light Jets Will Affect 
Capacity, but Most Experts Believe Very Light Jets Will Have Little 
Effect on Safety: 

Two studies we reviewed and 20 experts we contacted had various 
opinions regarding how very light jets will affect NAS capacity; the 
experts believed that very light jets would have little effect on 
safety.[Footnote 13] The studies indicated that the effect of very 
light jets on capacity will be determined to some extent by the type 
and location of airport they use. Many experts believed very light jets 
will travel to small airports, such as reliever and general aviation 
airports, and will have little effect on the capacity and safety of the 
NAS.[Footnote 14] A few experts believed very light jets will travel to 
large airports, such as hub airports, and have a significant effect on 
capacity through increased air traffic operations. In addition to 
airport type, experts indicated the effect of very light jets on the 
NAS depends on other factors including: uses of very light jets 
entering the NAS, trip length and flight altitude, implementation of 
new air traffic control technologies and equipment, and aircraft 
performance capabilities. Most of the experts we contacted indicated 
that very light jets will likely have little overall effect on safety. 

Studies and Experts Identified Factors That Would Influence Very Light 
Jets' Effect on Capacity: 

The two studies we reviewed--one by the National Aeronautics and Space 
Administration (NASA) and one by the Massachusetts Institute of 
Technology (MIT)--indicated that the type and location of airports used 
by very light jets will influence very light jets' effect on 
capacity.[Footnote 15] However, the studies differed in results because 
of, among other things, differing assumptions. The NASA study assumed 
that very light jets would not travel to hub airports because of the 
cost and congestion involved in flying to these airports.[Footnote 16] 
The NASA study found that very light jets used for air taxi operations 
could increase commercial delays for the year 2025 by an estimated 1.3 
percent if very light jets do not use hub airports. The NASA study also 
looked at a scenario in which very light jets are not excluded from hub 
airports that have significant general aviation traffic today, although 
the study concluded that this was an unlikely scenario. NASA concluded 
that, under such a scenario, the increase in total delay for commercial 
passenger flights could be as much as 9.8 percent. The MIT study 
predicted that very light jets used as air taxi services, fractional 
ownership programs, recreational flights, and freight carriers will 
have a significant effect on air traffic growth at high activity 
airports including hubs located within metropolitan areas. The study 
concluded that some of these airports will ultimately reach their 
capacity limit. The MIT study assumed that very light jets' performance 
and capabilities would be similar to the performance of light jets and 
found that very light jets would operate at the top regional airport 
systems that currently exhibit high density and capacity constraints. 
MIT also found that very light jets will not significantly affect 
airports outside of metropolitan areas because these airports have 
excess runway capacity to handle additional aircraft. The study 
indicated that very light jets will increase controllers' workload 
because of very light jets' lower climb performance and cruise speed 
compared to other jets in the en route environment. As a result, the 
study noted that air traffic controllers will need to separate very 
light jets from faster traffic in high density routes between large 
cities such as New York City and Chicago, which could increase delays. 

In addition to the studies, we also spoke with experts from federal 
agencies, industry associations, academia, and others who indicated 
that the extent of very light jets' effect on capacity depends on 
numerous factors. Similar to the NASA and MIT studies, the experts 
believed that the type of airport at which very light jets would 
operate was a key factor influencing the effect on capacity. Many 
experts we spoke with believed that very light jets would operate at 
reliever and general aviation airports, where they could have little 
effect on capacity because of excess runway capacity at these airports. 
However, a few of these experts noted that even though very light jets 
may not operate at hub airports, their use of secondary airports near 
major metropolitan airports could affect capacity by increasing 
commercial delays. Other experts believed that very light jets would 
operate at hub airports with significant airline traffic, which could 
negatively affect capacity by causing airline delays. 

The experts we contacted also identified other factors influencing very 
light jets' effect on capacity, including the following: 

* Uses of very light jets in the airspace. The various ways that very 
light jets might operate in the NAS, such as an air taxi or 
recreational aircraft, will help to determine the extent of their 
effects on capacity. Very light jets operating as air taxis will likely 
have a greater effect on capacity as opposed to other users because of 
a higher utilization rate in the NAS.[Footnote 17] In FAA's 2007 
forecast, the agency assumed that very light jets operating as air 
taxis will average 1,500 hours per year, fractional owners 1,200 per 
year, and recreational use 350 hours per year.[Footnote 18] Very light 
jets operating as recreational aircraft would likely have less effect 
on capacity due to lower utilization rates and operating at general 
aviation airports with excess runway capacity. 

* Trip length and altitude of very light jet flights. Very light jets 
might operate shorter flights and travel at lower altitudes than 
commercial planes and have little effect on capacity. If many very 
light jets fly at higher altitudes and longer distances, they could 
have a greater effect on capacity, resulting in delays and congestion. 

* Implementation of new air traffic control technologies and equipment. 
Very light jets likely will be equipped with new technologies and 
equipment, such as Automatic Dependent Surveillance-Broadcast (ADS-B) 
that, once deployed by airports nationwide, would help to increase 
capacity by providing position, intent, velocity, and other information 
between aircraft and ground systems to manage air traffic. 

* Performance capabilities of very light jets. Very light jets have 
slower climb rates and cruising speeds than commercial airlines, which 
could influence their effect on capacity when mixing with other 
aircraft in the terminal and en route environments. FAA and several 
experts, including experts representing active air traffic controllers, 
believe that very light jets will increase the complexity of the 
airspace due to their performance capabilities. FAA indicated that 
controllers will segregate very light jet traffic from airline traffic 
if they travel in the same airspace. 

* Rate of integration of very light jets. FAA officials told us that 
they do not expect very light jets to significantly affect capacity in 
the next 5 to 6 years because of the incremental integration of very 
light jets into the airspace. FAA assumes that 400 to 500 very light 
jets will enter the NAS annually starting in 2008. 

Very Light Jets Will Likely Have Little Effect on Safety, According to 
Experts: 

The experts we contacted believed very light jets will likely have 
little overall effect on safety due to FAA's certification processes 
and procedures for aircraft, pilots, and maintenance and the advanced 
technology used to navigate the aircraft. In addition, several experts 
stated that very light jets do not cause safety concerns because they 
will operate like existing aircraft in the airspace. However, FAA and 
some experts noted that very light jets could introduce safety concerns 
such as recreational pilots' lack of experience flying jets. To address 
these concerns, FAA and the aviation industry have established 
guidelines for developing pilot training programs for very light jets 
and a voluntary scenario-based training to enhance general aviation 
safety. Aviation insurance companies, along with very light jet 
manufacturers, are working together to institute a proficiency index to 
assess pilots' experience and training needs and develop programs such 
as mentor pilot training for new pilots of very light jets.[Footnote 
19] 

FAA Officials Believe Procedures and Policies Are in Place to 
Accommodate Very Light Jets, but FAA Is Taking Steps to Prepare for 
Their Introduction: 

FAA officials stated that procedures and policies are in place to 
successfully integrate very light jets into the NAS because very light 
jets will operate similarly to other aircraft and will enter 
incrementally. Nonetheless, FAA is taking several steps to address 
issues associated with very light jets, including the development of a 
cross-organizational group to facilitate coordination, as well as 
collaborating with air taxi operators and providing information to air 
traffic controllers. FAA officials and aviation experts also believe 
very light jets will benefit from new technologies and procedures being 
developed as part of FAA's modernization efforts. 

FAA Officials Stated They Have Procedures and Policies in Place to 
Handle the Introduction of Very Light Jets: 

According to FAA officials, existing aviation standards and regulations 
are adequate to successfully integrate very light jets into the NAS. 
These officials and several other experts agreed that very light jets 
are similar to other aircraft currently in operation and do not require 
substantial changes to existing procedures and policies. For example, 
very light jets are required to meet aircraft certification standards 
set out in Federal Aviation Regulations Part 21 and 23.[Footnote 20] 
These regulations set out certification procedures and airworthiness 
standards for aircraft weighing less than 12,500 pounds and will be 
applied to new very light jets, according to FAA officials. FAA also 
stated that, as part of the certification process, it will meet with 
manufacturers to outline "special conditions," which are specific 
requirements developed for those aircraft seen by FAA as using novel or 
unique technologies. The two very light jet models currently operating 
in the NAS--the Eclipse 500 and the Cessna Citation Mustang--were 
required to pass these certification and airworthiness standards, 
including special conditions. In addition to aircraft certification 
requirements, FAA is responsible for establishing and enforcing 
standards for the certification of pilots and instructors as well as 
maintenance technicians and repair stations. These standards are based 
on the complexity and classification of the aircraft and type of 
operation.[Footnote 21] 

Although there may eventually be thousands of very light jets in the 
NAS, FAA stated that these aircraft are expected to enter 
incrementally, which will allow for their gradual integration into the 
NAS. Several forecasters and FAA are predicting fewer than 400 very 
light jets will be delivered in 2007. FAA officials also noted that 
very light jets are currently entering the NAS at a slower rate than 
many previously predicted. 

FAA Is Taking Steps to Prepare for the Introduction of Very Light Jets: 

Although FAA officials believe they have policies and procedures in 
place to accommodate the integration of very light jets into the NAS, 
FAA is taking several steps to specifically address issues arising from 
an increased number of very light jets. According to one FAA official, 
the agency is taking these steps as a precautionary measure to ensure 
that very light jets are integrated smoothly. For example, in July 
2005, FAA developed a cross-organizational group to identify and 
address issues regarding very light jets related to the following: 
pilot training and checking, inspector training, flight operations, 
maintenance, and air traffic. The cross-organizational group includes 
approximately 35 representatives from numerous lines of business and 
service organizations within FAA, such as the Air Traffic Organization-
-responsible for moving air traffic safely and efficiently--and Flight 
Standards Service--responsible for setting certification standards and 
oversight of pilots, aircraft operators, and designees. According to 
one FAA official, the cross-organizational group was formed to 
communicate ideas across FAA departments, as a way to avoid 
coordination problems. FAA officials also stated that the cross- 
organizational group has developed inspector training for several of 
the new very light jets, conducted briefings to air traffic controllers 
on very light jet performance characteristics, and is working with 
manufacturers and air taxi operators on an ongoing basis. 

Aside from the cross-organizational group, FAA is conducting several 
other activities including: 

* Continuing to work with an industry association to bring air taxi 
operations into the collaborative decision making process.[Footnote 22] 

* Continuing to make air traffic control centers aware of any unique 
very light jet operational requirements through bulletins, briefings, 
and traffic management courses. 

* Establishing a very light jet computer simulation model for use 
during qualification and annual refresher training for air traffic 
controllers. 

* Planning to conduct operational test flights with DayJet to observe a 
very light jet as it works through the airspace environments. 

* Conducting a wake turbulence study to examine potential impacts of 
turbulence generated by large aircraft on very light jets. 

* Funding research on the potential effect of very light jets on U.S. 
airports, including an examination of future operations by category of 
airport, geographic location, and type of operation, as well as 
potential infrastructure, facilities, and services that particular 
airports will need to accommodate future very light jet activity. 

FAA stated that a large influx of very light jets might necessitate the 
reallocation of inspector resources. FAA is aware of this challenge and 
has developed an Aviation Safety Workforce Plan. FAA is planning on 
redeploying resources to meet demand as needed, according to the 
official we contacted. Discussions are ongoing with the local Flight 
Standard District Offices where FAA is expecting to see increased 
demand for inspectors, such as in Albuquerque, New Mexico, where 
Eclipse Aviation is based. FAA officials also stated they have 
developed a course to train maintenance and avionics inspectors at 
these locations. However, GAO noted in 2006 that very light jets could 
create workload challenges for FAA inspectors to expeditiously issue 
and monitor certificates.[Footnote 23] In addition, aviation experts 
have raised concerns about the number of FAA inspectors. For example, 
in a May 2007 testimony, the Inspector General of the Department of 
Transportation reported that 28 percent of FAA's inspector workforce is 
eligible to retire this year and that FAA will face oversight 
challenges as large numbers of very light jets begin to operate in the 
NAS. Other aviation experts with whom we spoke also expressed concern 
over certification delays arising from limited FAA inspector resources. 
According to FAA, the number of safety inspectors increased between 
fiscal year 2005 and fiscal year 2006 and the agency plans to continue 
to increase its inspector workforce through fiscal year 2008. 

FAA Officials Believe That NAS Modernization Will Accommodate Very 
Light Jet Demand for FAA Services: 

FAA stated that NAS modernization efforts and new technologies will 
improve efficiency and safety for all aircraft, including very light 
jets. FAA and other government agencies are developing the Next 
Generation Air Transportation System (NextGen), which is intended to 
provide services to what is expected to be two to three times more air 
traffic in 2025 compared with today, while being agile enough to 
accommodate a changing fleet that includes very light jets.[Footnote 
24] According to the FAA, NAS modernization will reduce congestion, 
assist with separation standards, and increase overall system capacity. 
Aviation experts and very light jet manufacturers we spoke with stated 
that very light jets have advanced avionics and are expected to be able 
to take full advantage of NextGen systems. 

Eleven of the 14 aviation experts we spoke with regarding FAA's plans 
to integrate very light jets into the NAS noted that FAA needs to 
continue to adopt and implement new technologies to maintain system 
capacity. Experts stated that the current air traffic control system is 
antiquated and cannot be scaled up to meet projected increases in air 
traffic. Experts encouraged FAA to adopt and implement NextGen 
technologies, such as ADS-B, at a rapid pace to maintain current system 
capacity. FAA and aviation experts also pointed to the importance of 
continuing to develop more precise routes through Area Navigation and 
Required Navigation Performance procedures, which, according to FAA, 
may increase system capacity and safety by enabling closer aircraft 
spacing with less intervention from air traffic control. 

Several Factors Will Influence the Effect of Very Light Jets on FAA's 
Costs and Trust Fund Revenues: 

The effect of very light jets on FAA's costs to provide air traffic 
control services[Footnote 25] and on Trust Fund revenues will depend on 
several factors in addition to the number of very light jets deployed, 
such as the extent to which they replace existing aircraft and how 
their use is distributed between commercial and noncommercial 
operations. One critical but particularly speculative factor likely to 
affect FAA's costs and revenues is the extent to which a market for air 
taxi service using very light jets will develop. Both the 
administration and Congress have proposed changes in the current 
funding structure for FAA for fiscal year 2009, which, if adopted, 
would affect how very light jet operators are taxed. 

Several Factors Will Influence the Effect of Very Light Jets on FAA's 
Costs: 

A number of factors will determine the effect on FAA's costs of 
introducing very light jets into the NAS. Several of these factors 
suggest that FAA's costs might increase, although the extent of any 
increase is uncertain at this time. Factors include what type of 
aircraft, if any, very light jets will replace; the type of operations 
for which very light jets will primarily be flown; and where and when 
very light jets are flown. However, there is enough uncertainty about 
these factors to make the overall effect on costs unclear. For example, 
if flights using very light jets replace flights using other high- 
performance aircraft (such as another business jet or turboprop 
aircraft) on a one for one basis, there may be little or no net effect 
on FAA's costs because they would be replacing flights that, according 
to FAA, impose similar costs on the air traffic control 
system.[Footnote 26] However, there are at least three scenarios where 
FAA's costs would rise with the introduction of very light jets. First, 
if very light jet flights replace flights made with piston engine 
aircraft--again on a one for one basis--FAA's costs may increase 
because, according to FAA, controlling a high-performance aircraft such 
as a very light jet generally requires more complex air traffic 
equipment and procedures than needed to control a piston engine 
aircraft. These additional requirements arise because of differences in 
flight characteristics between the types of aircraft. For example, jets 
are more likely than piston engine aircraft to be flown under 
instrument flight rules at a higher altitude. Second, because of the 
smaller number of passengers that can be carried on very light jets, 
these flights could replace other high-performance flights on a more 
than one for one basis. In such cases, FAA's costs could rise as it 
would have to control more flights to carry the same number of 
passengers. Third, flights by very light jets that would be new flights 
not previously made (e.g., a business traveler who used to drive to a 
meeting 200 miles away and begins using an air taxi service or a small 
corporation that purchases a very light jet as its first corporate 
plane) will require services from FAA's air traffic control system that 
had not been required previously, increasing costs for FAA. 

The type of operations for which very light jets are flown-- 
noncommercial or commercial--will also be a factor that will affect 
FAA's costs. If current trends hold, very light jets used in 
noncommercial service (e.g., corporate jets) would have a lower 
utilization rate--approximately 300 hours per year for each corporate 
aircraft according to FAA's 2005 data--and cost FAA around the same as 
current jet aircraft used in noncommercial operations. Very light jets 
used for commercial operations (e.g., air taxis) would entail higher 
costs because of the higher utilization rates. It is unclear at this 
point in time, however, what percentage of very light jets will be used 
for commercial operations and what will be the utilization rates for 
air taxi operators. In 2005, according to FAA data, air taxi operators 
used each aircraft on average 413 hours per year. But some air taxi 
operators are anticipating that that they will fly a very light jet up 
to 1,500 revenue hours per year--substantially more than current 
commercial air taxi operators. Such use of very light jets could 
significantly affect FAA's costs. 

Another factor that will affect FAA's costs is the extent to which very 
light jets will compete for resources currently provided to other 
aircraft. That is, very light jets might impose more costs if they are 
used more frequently where and when there is substantial congestion in 
terminal airspace. If they are most commonly used at less congested 
airports or at less busy times of the day, then the additional costs to 
FAA might be less, even if their use leads to a total increase in the 
number of flights. 

Several Factors Will Influence the Effect of Very Light Jets on Trust 
Fund Revenues: 

Several factors about which there is uncertainty--including some of the 
same ones that will impact FAA's costs--would influence the effect of 
very light jets on Trust Fund revenues. These factors include the 
distribution of flights between commercial and noncommercial 
operations, whether the flights replace existing flights on a one to 
one basis or represent additional flights, and whether there is a rapid 
expansion of the air taxi market. 

FAA currently is funded from two sources: the Trust Fund and the 
General Fund.[Footnote 27] The Trust Fund collects revenues from a 
series of aviation-related excise taxes, including taxes on airfares 
and fuel. The distribution of very light jet flights between commercial 
and noncommercial operations would affect Trust Fund revenues because 
very light jet operators would be responsible for different excise 
taxes depending on the purpose of the flight. Commercial operators, 
such as air taxi and charter operators, pay passenger ticket taxes, 
passenger segment taxes, and fuel taxes. Noncommercial business, 
corporate, and personal users pay only fuel taxes, but the fuel tax 
rate is higher than for commercial operations (see table 3). Very light 
jets used for commercial purposes could provide more revenue to the 
Trust Fund than those used for business or corporate use. The overall 
effect on revenues depends on miles traveled, number of passengers, 
fares charged, and other factors that are uncertain at this time. 

Table 3: Estimated Excise Tax Contribution for a Very Light Jet by Type 
of Flight: 

Approximately 300-mile flight from Tallahassee to Boca Raton. 

Number of passengers; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): 2; 
Approximately 300- mile flight from Tallahassee to Boca Raton: 
Corporate trip (noncommercial use): 2. 

Average fare per passenger; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): $900; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate 
trip (noncommercial use): [A]. 

Gallons of fuel used; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): 100; 
Approximately 300- mile flight from Tallahassee to Boca Raton: 
Corporate trip (noncommercial use): 100. 

Passenger ticket tax[B]; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): $135; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate 
trip (noncommercial use): [A]. 

Passenger segment tax[C]; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): $6.80; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate 
trip (noncommercial use): [A]. 

Fuel tax[D]; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): $4.30; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate 
trip (noncommercial use): $21.80. 

Total tax revenue ; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi 
service (commercial use): $146.10; 
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate 
trip (noncommercial use): $21.80. 

Source: GAO analysis of FAA and industry data. 

[A] Not applicable. 

[B] The passenger ticket tax is 7.5 percent of the ticket price. 

[C] The passenger segment tax is $3.40 per passenger segment during 
calendar year 2007. Each segment consists of one takeoff and landing. 

[D] The commercial fuel tax is $0.043 per gallon and the noncommercial 
jet fuel tax is $0.218 per gallon. 

[End of table] 

In cases where the very light jet is purchased as a replacement 
aircraft, the effect on the Trust Fund's revenues depends on the use of 
the aircraft they are replacing. If the very light jet is used in a 
similar manner to the aircraft it replaces, there may be little to no 
net change in revenue. If the very light jet is used for a purpose 
different from the aircraft it is replacing, there could be more or 
less revenue depending on comparative uses. Very light jets that 
provide additional flights rather than replace flights made by existing 
aircraft will provide additional excise tax revenue. 

Successful expansion of the air taxi market would affect the Trust 
Fund's revenues because some operators predict substantial increases in 
aircraft utilization rates. As discussed above, some commercial 
operators predict that very light jets used in commercial air taxi 
operations would be flown more frequently than in current air taxi 
operations thereby generating relatively more fuel and passenger ticket 
tax revenue. A couple of aviation experts suggested that successful air 
taxi operations may attract new passengers who currently travel by 
automobile, potentially leading to increased demand for commercial 
flights and additional revenue. However, experts suggested that 
successful air taxi operations could reduce revenue from traditional 
commercial airlines if they encourage first class passengers to travel 
by air taxi instead. At this time, however, the implication for Trust 
Fund revenue is unclear because the air taxi model has yet to prove 
itself. According to FAA officials, it will be at least 10 years before 
there is an observable decrease in the number of commercial airline 
flights because of passengers transferring to air taxi operations, 
though effects on revenue could appear earlier. 

Reauthorization Proposals Call for Changes to Funding Structure: 

In February 2007, the administration submitted a proposal for 
reauthorizing FAA and the excise taxes that fund most of its budget, 
which called for a mix of user fees and fuel taxes for the purpose of 
providing a more stable and cost-based funding structure. Congress is 
considering alternatives to the administration's proposal. For example, 
the Senate Commerce, Science, and Transportation Committee has reported 
out legislation that would retain the existing excise taxes but add a 
modernization surcharge of $25 that would be imposed on most jet 
aircraft flights, with some exceptions.[Footnote 28] The House 
Transportation and Infrastructure Committee has reported out its own 
version of the FAA reauthorization bill, H.R. 2881, which also does not 
impose user fees as the administration recommended.[Footnote 29] A 
recommendation from the House Committee on Transportation and 
Infrastructure to the House Committee on Ways and Means to increase the 
tax rates for general aviation jet fuel and aviation gasoline would 
increase Trust Fund revenues. As with the current funding structure, 
there is too much uncertainty about very light jets to accurately 
compare the revenue effects of these proposed alternative funding 
structures, other than to note that the factors discussed in the 
previous section would continue to affect revenues. 

Agency Comments: 

We provided a draft of this report to the Department of Transportation 
for review. We received comments and technical clarifications by e-mail 
from FAA's Office of the Associate Administrator for Airports, Office 
of the Associate Administrator for Aviation Safety, and Air Traffic 
Organization, which we incorporated into the report as appropriate. 

We are sending copies of this report to the appropriate congressional 
committees, the Secretary of Transportation, and the FAA Administrator. 
We also will make copies available to others upon request. In addition, 
the report will be available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov].

If you or your staff have any questions about this report, please 
contact me at (202) 512-2834 or flemings@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix II. 

Signed by:

Susan Fleming: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

We examined (1) the current forecasts for very light jet deliveries and 
the factors that contribute to the differences among the forecasts, (2) 
the potential effect very light jets may have on capacity and safety of 
the National Airspace System (NAS), (3) the Federal Aviation 
Administration's (FAA) plans for accommodating the entry of very light 
jets into the NAS, and (4) the potential effect very light jets may 
have on FAA's costs and Airport and Airway Trust Fund (Trust Fund) 
revenues. 

To identify current forecasts for very light jet production, we 
conducted a literature review of government, aviation industry, and 
academic publications and interviewed aviation industry experts, FAA 
officials, and academic experts. From these sources, we compiled a list 
of publicly and commercially available forecasts. We contacted the 
entities that produced the forecasts and obtained information about 
their forecasts. We developed criteria for selecting forecasts to 
include in our review. The forecasts we selected had to be published 
within the past 12 months and estimate the number of aircraft for a 
specific timeframe. We did not include five predictions for very light 
jet deliveries because they did not include a timeframe or were demand 
models that provided multiple very light jet estimates based on a 
number of inputs. For example, Eclipse Aviation, a very light jet 
manufacturer, had a prediction for potentially higher very light jet 
deliveries (8,995 annually) than any of the forecasts included in our 
analysis. This forecast, however, emphasized very light jet demand once 
the market hits maturity, but, since it did not indicate when that 
might happen, we did not include it in our review. We also did not 
include several dynamic growth models, which are capable of producing 
very light jet demand estimates for air taxi operations based on a 
number of changing inputs. Based on our criteria, we selected eight 
forecasts to include in our review, which were produced by FAA, the 
Teal Group, Honeywell, Rolls-Royce, Forecast International, PMI Media 
Limited, Embraer, and Velocity Group. We reviewed these forecasts and 
determined that they were sufficiently reliable for our purposes. We 
developed a data collection instrument to collect information from each 
of the forecasts (e.g., projected number of very lights, forecast date, 
underlying assumptions, factors affecting growth, etc.) and examined 
this information to identify similarities and differences among the 
forecasts. From this comparison, we identified the factors and 
assumptions affecting the total number of very light jet deliveries 
discussed most often. In order to obtain additional information about 
the factors that would affect the number of very light jets delivered, 
we contacted selected organizations and individuals with expertise in 
general and business aviation, including: 

* federal government officials (FAA's Office of Aviation Policy and 
Plans, FAA's Flights Standards Service, National Aeronautics and Space 
Administration), 

* academic researchers (Virginia Polytechnic Institute and State 
University, Massachusetts Institute of Technology, George Mason 
University), 

* an air taxi service company (DayJet), 

* aircraft equipment manufacturers (Adam Aircraft, Eclipse Aviation, 
Pratt & Whitney), 

* aviation insurance companies (Global Aerospace, AIG Aviation), 

* an air traffic manager of a general aviation airport (Chicago 
Executive Airport), 

* an aviation consulting firm (Boyd Group), and: 

* industry associations (American Association of Airport Executives, 
Aircraft Owners and Pilots Association, Air Transport Association, 
General Aviation Manufacturers Association, National Business Aviation 
Association). 

We developed the list of organizations to contact by interviewing 
experts from FAA and general aviation associations and asking for the 
names of other experts knowledgeable about issues affecting general and 
business aviation and about factors affecting very light jet 
production. 

To determine how increasing numbers of very light jets could affect the 
capacity and safety of the NAS, we reviewed government, academic, and 
aviation industry studies that described how very light jets might 
operate in the future and their potential effects on FAA's air traffic 
management system. We reviewed GAO reports and FAA regulations in order 
to obtain information about how FAA regulates general aviation aircraft 
safety and manages aircraft operations. We developed the list of 
organizations to contact by interviewing experts from FAA and general 
aviation associations and asking for the names of other experts who are 
knowledgeable about how general aviation aircraft currently operate and 
how very light jets could operate in the future. To obtain information 
about these issues, we contacted: 

* federal government officials (FAA, National Transportation Safety 
Board, National Aeronautics and Space Administration), 

* academic researchers (Virginia Polytechnic Institute and State 
University, Massachusetts Institute of Technology, George Mason 
University), 

* an air taxi service company (DayJet), 

* aircraft equipment manufacturers (Cessna Aircraft Company, Adam 
Aircraft, Eclipse Aviation), 

* aviation insurance companies (Global Aerospace, AIG Aviation), 

* air traffic managers of general aviation airports (Chicago Executive 
Airport, Boca Raton Airport), and: 

* industry associations (American Association of Airport Executives, 
Aircraft Owners and Pilots Association, Air Transport Association, 
General Aviation Manufacturers Association, National Business Aviation 
Association, National Air Traffic Controllers Association). 

We also asked the aforementioned agencies and organizations to identify 
factors that could influence the effect of very light jets on capacity 
and safety. We analyzed the responses and summarized the findings. 
Based on suggestions from these experts, we reviewed two studies 
conducted by the National Aeronautics and Space Administration and the 
Massachusetts Institute of Technology evaluating the effect of very 
light jets on the NAS and determined that they were sufficiently 
reliable for our purposes. 

To determine how FAA is planning to accommodate potential very light 
jet demand, we met with FAA officials from the Air Traffic 
Organization, Office of Aviation Policy and Plans, Flight Standards 
Service, and the very light jet cross organizational group to discuss 
FAA's current procedures for handling new aircraft and plans for 
additional action. We also discussed with FAA's Air Traffic 
Organization the agency's plans for transforming the air traffic 
control system to the Next Generation Air Transportation System 
(NextGen) and how this relates to the future entry of very light jet 
aircraft into the NAS. We reviewed GAO and FAA reports describing plans 
for implementing NextGen policies and technologies. To obtain 
information about what FAA should be doing to prepare for very light 
jets, we contacted selected organizations and individuals with 
expertise in general and business aviation, including: 

* federal government officials (National Aeronautics and Space 
Administration), 

* academic researchers (Virginia Polytechnic Institute and State 
University, Massachusetts Institute of Technology, George Mason 
University), 

* an air taxi service company (DayJet), 

* aircraft equipment manufacturers (Adam Aircraft, Eclipse Aviation), 

* aviation insurance companies (Global Aerospace, AIG Aviation), 

* an air traffic manager of a general aviation airport (Chicago 
Executive Airport), and: 

* industry associations (American Association of Airport Executives, 
Aircraft Owners and Pilots Association, Air Transport Association, 
General Aviation Manufacturers Association, National Business Aviation 
Association). 

To determine the potential effect of very light jets on FAA's costs and 
revenues, we met with FAA officials from the Office of Aviation Policy 
and Plans to discuss FAA's allocation of costs and the excise taxes 
that fund the Airport and Airway Trust Fund. We also discussed the 
administration's reauthorization proposal and how the proposed excise 
taxes could affect general aviation users. We reviewed the Senate and 
House reauthorization proposals for information about how they could 
affect general aviation users. We reviewed GAO and FAA reports for 
information about FAA's costs, excise taxes, and revenues. We 
interviewed aviation excise tax experts from the Internal Revenue 
Service to determine which excise taxes apply to different general 
aviation users. 

We conducted our work between September 2006 and July 2007 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Susan Fleming, (202) 512-2834 or flemings@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, key contributors to this report 
were Gerald Dillingham, Hal Brumm, Jay Cherlow, Matt Cook, Seth Dykes, 
Colin Fallon, Dave Hooper, Gail Marnik, Sara Ann Moessbauer, Faye 
Morrison, and Joshua Ormond. 

FOOTNOTES 

[1] According to FAA, there is no standard definition for the term 
general aviation; its definition changes depending on, among other 
things, whether one is referring to safety statistics or user 
categories. In addition, for purposes of its recent cost allocation 
study, FAA included air taxis, which are sometimes considered general 
aviation aircraft, as commercial aircraft based on the taxes that are 
assessed to air taxi operators. 

[2] Depending on the airport's location, the approach control 
facilities may be located within the airport's control tower or at 
separate facilities. 

[3] Business jets are turbojet aircraft weighing less than 100,000 
pounds maximum gross takeoff weight, with wingspans less than 100 feet 
that are used by companies to conduct their business. 

[4] In 2006, the average price for a business jet aircraft was $18.71 
million. 

[5] In a previous report, GAO contacted the Department of 
Transportation and industry officials regarding the use of very light 
jets for serving small communities, especially in the near term. These 
officials noted that current very light jet business models indicate 
operators will provide premium point-to-point service between cities 
that are larger than the communities that participate in the Essential 
Air Service program. The Essential Air Service program was established 
by Congress as part of the Airline Deregulation Act of 1978 to help 
areas that face limited air service. See, GAO, Commercial Aviation: 
Programs and Options for Providing Air Service to Small Communities, 
GAO-07-793T (Washington, D.C.: Apr. 25, 2007). 

[6] According to FAA, although current regulations do not allow very 
light jets to operate in scheduled service, FAA is in the process of 
proposing new rules to allow for the operation of these aircraft in 
scheduled service. 

[7] Deliveries refers to the number of aircraft shipped and received, 
not the total number of aircraft in the NAS. 

[8] See appendix II for our selection criteria for the forecasts we 
examined. 

[9] According to the Commerce Department's Bureau of Economic Analysis, 
gross domestic product is the market value of goods and services 
produced by labor and property in a country, regardless of nationality. 

[10] The aviation experts we interviewed were not selected randomly, 
and their views and opinions cannot be generalized to the larger 
population of experts and aviation officials. (See app. I for a 
discussion of scope and methodology.) 

[11] The Rolls-Royce forecast predicts very light jet and overall 
business jet demand in 2025 and was considered an outlier for the 
purposes of this illustration. 

[12] Percent differences were calculated by subtracting the lowest 
number in the range from the highest number and then dividing the 
result by the highest number of the range. 

[13] The aviation experts we interviewed were not selected randomly and 
their views and opinions cannot be generalized to the larger population 
of experts and aviation officials. (See app. I for more information.) 

[14] Reliever airports are airports that must have 100 or more based 
aircraft or 25,000 annual itinerant operations, and that provide 
operators such as general aviation aircraft an alternative to using hub 
airports. General aviation airports are airports not classified as 
commercial service. 

[15] National Aeronautics and Space Administration, The Effects of Very 
Light Jet Air Taxi Operations on Commercial Air Traffic, NASA/CR-2006- 
214519 (Hampton, Virginia; October 2006); and Massachusetts Institute 
of Technology, Investigation of the Potential Impacts of the Entry of 
Very Light Jets in the National Airspace System (Cambridge, 
Massachusetts; Oct. 30, 2006). 

[16] A hub airport is a primary airport that has 0.05 percent or more 
of all annual U.S. enplanements. 

[17] Utilization rate is the average number of hours an aircraft is 
flown per year. Some references cite revenue hours as opposed to total 
hours. 

[18] Federal Aviation Administration, FAA Aerospace Forecasts Fiscal 
Years 2007-2020 (Washington, D.C; March 2007).

[19] The mentor pilot training is used to, among other things, observe 
a pilot's handling of aircraft and use of automation and provide 
feedback to the pilot. 

[20] 4 C.F.R. §§ 21 and 23. Part 21 is Certification Procedures for 
Products and Parts. Part 23 is Airworthiness Standards: Normal, 
Utility, Acrobatic, and Commuter Category Airplanes. 

[21] 14 inspectors with oversight responsibilities for more complex 
aircraft and types of operation must meet higher minimum 
qualifications, including additional training and experience. For 
example, standards are higher for an aircraft requiring a type rating. 
In addition, operations in which passengers are carried for hire are 
more stringently regulated than flights solely for personal use. 
Private pilots may not carry passengers for hire. 

[22] Collaborative decision making is a joint government/industry 
initiative aimed at improving air traffic management through increased 
information exchange among the various parties in the aviation 
community. The collaborative decision making program is made up of 
representatives from government, general aviation, airlines, private 
industry, and academia who are working together to create technological 
and procedural solutions to traffic flow problems that face the NAS. 

[23] See GAO, Aviation Safety: FAA's Safety Efforts Generally Strong 
but Face Challenges, GAO-06-1091T (Washington, D.C.: Sept. 20, 2006). 

[24] GAO has reported that the NAS is expected to accommodate a variety 
of new aircraft, such as the jumbo Airbus A380, which can hold more 
than 500 passengers. See GAO, Commercial Aviation: Potential Safety and 
Capacity Issues Associated with the Introduction of the New A380 
Aircraft, GAO-07-483 (Washington, D.C.: Apr. 20, 2007). 

[25] FAA incurs costs for other services it provides, such as aircraft 
maintenance or certification, but we have limited our examination of 
the effect on FAA's costs to those costs associated with the provision 
of air traffic control services. 

[26] In January 2007, FAA released a new cost allocation study. This 
report sets forth a methodology for assigning air traffic costs to user 
groups on the basis of aircraft type. The two principal user groups are 
the high-performance group, which includes all fixed-wing turbine 
engine aircraft operations, and the piston engine aircraft group, which 
includes piston engine fixed-wing aircraft operations and helicopters. 
According to FAA, this cost allocation methodology is based on the 
assumption that high-performance users generally compete for the same 
air traffic control resources and their operations are more time- 
sensitive than piston aircraft operations, requiring more complex air 
traffic equipment and procedures. Piston aircraft operations, on the 
other hand, tend to be less time-sensitive and typically rely on less 
complex equipment. Differences in speed and cruising altitudes of the 
two aircraft types also affect their en route costs. Federal Aviation 
Administration, FY2005 Cost Allocation Report (Washington, D.C; Jan. 
31, 2007). 

[27] The General Fund historically has been used to pay for portions of 
FAA's budget, with contributions towards the agency's overall budget 
averaging about 20 percent in recent years. 

[28] S.1300, 110th Cong., 1st Sess. § 106 (May 3, 2007). Exceptions to 
the $25 surcharge include, among others, military and public aircraft, 
air ambulances, piston engine aircraft, and turboprop aircraft 
operating outside of controlled airspace. 

[28] H.R.2881, 110th Cong., 1st Sess. (June 27, 2007). 

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