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Highlights

GAO discussed issues related to the financing of the Federal Aviation Administration (FAA), focusing on the: (1) status of the Airport and Airway Trust Fund; (2) issues raised by the coalition of the nation's largest airlines to replace the tax on domestic airline tickets with fees on domestic operations; (3) potential effects of the coalition's proposal on domestic competition; and (4) potential competitive impacts of alternative options for financing FAA.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Congress The financing alternative that is finally selected should be relatively easy to administer and help ensure that, in the long term, FAA has a secure funding source, the nation's airports and airways are used as efficiently as possible, commercial users of the system pay their fair share, and a strong, competitive airline industry continues to exist. Ultimately, it will be a policy call for the Congress to decide on how to achieve these goals.
Closed - Implemented

Recommendation status is Closed - Implemented.

On February 28, 1997, the President signed the Airport and Airway Trust Fund Tax Reinstatement Act of 1997. The Joint Committee on Taxation and FAA estimate that the act will generate $3.5 billion in additional revenues for the Airport and Airway Trust Fund in FY 1997. In a December 1996 report, February 1997 testimony, and a set of briefings and direct assistance to congressional committee staff during the period leading up to the statutory action, GAO played a critical role in congressional reinstatement of the excise taxes that finance the Trust Fund.

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