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AIR TRAVEL SAFETY MAY BE SHORTCHANGED DURING GOLDEN AGE OF AIRPORT DEVELOPMENT, AAA TELLS NATIONAL AIRLINE COMMISSION

 WASHINGTON, June 1 /PRNewswire/ -- The American Automobile Association warned today that the nation may be entering a "golden age of airport development" at the expense of air travel safety.
 In testimony prepared for delivery to the National Airline Commission, AAA President Paul R. Verkuil said enormous amounts of money are going to be spent on airport projects paid for by air travelers through recently enacted passenger facility charges -- some of which may be of limited safety value overall to the aviation system. Passenger facility charges, or PFCs, are a flat tax of up to $12 on each roundtrip ticket that go directly to airports.
 Verkuil is co-author of a book on airline deregulation, "Public Control of Business," with David Boies, an attorney specializing in airline bankruptcy. Verkuil appeared as part of a panel on the public interest aspects of the airline industry.
 The commission is holding hearings to determine how best to deal with issues confronting the U.S. airline and aero-space industries.
 In his prepared statement, Verkuil said that adequate funding for air travel safety is threatened by ticket tax revenues going to the general treasury to help make the federal deficit look smaller, by passenger facility charges that go directly to airports, and by legislation to allow airlines to use accumulated net operating losses to offset such excise taxes as the passenger ticket tax.
 The Airport and Airway Trust Fund receives most of its money from a 10 percent tax on domestic airline tickets. Eighty percent of the tax goes to the trust fund; the other 20 percent goes to the general treasury for deficit reduction.
 AAA and other critics complain that the trust fund has been allowed to accumulate balances rather than being spent for air system improvements.
 Verkuil said passenger facility charges may depress the price of an air ticket and thus deprive the aviation trust fund of needed revenues. Instead of adding the PFC to the cost of a ticket, airlines may have to absorb the tax to keep their fares competitive. When this happens, the taxable portion of the ticket is reduced and the aviation trust fund is robbed of needed funds.
 In the meantime, said Verkuil, such projects as the modernization of the air traffic control system, critical research and personal needs that are paid for by the aviation trust fund are not being fully met because of budget constraints.
 "AAA members and the traveling public would prefer that there be enough air traffic controllers using a state-of-the-art air traffic control system, that there are enough aircraft inspectors to check the safety of aging planes, and that money be spent on research into human factors causing aviation accidents, rather than on building, improving or expanding passenger terminals," said Verkuil.
 "The commission needs to ascertain whether PFCs in particular are funding a golden age of airport development at the expense of other crucial segments of the aviation system," he said.
 A more recent threat to the trust fund has been posed by legislation introduced last week in the House that would allow airlines to offset the ticket taxes they must "pay" the trust fund with their accumulated net operating losses.
 "If such legislation is passed, airlines would, in effect, repay the taxes when they are making money, but in the form of corporate income taxes that would not be dedicated to the aviation trust fund," said Verkuil.
 AAA recommended that the Commission give serious study to the effects of these threats to the financial health of the trust fund.
 AAA is a not-for-profit federation of 139 motor clubs with more than 950 accredited full-service travel agencies in the U.S. and Canada that provide members and the public with air, cruise and rail tickets; tours; car rentals; and travel packages. AAA has more than 34 million members.
 -0- 6/1/94
 /CONTACT: Dick Hebert, 202-942-2050 of Jerry Cheske, 407-444-8000, both of the American Automobile Association/


CO: American Automobile Association; National Airline Commission ST: Florida, District of Columbia IN: AIR LEI SU:

AW-JB -- FL004 -- 4107 06/01/93 16:24 EDT
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Date:Jun 1, 1993
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