NATA Statement on GAO Report on Fuel Fraud Diversion

Washington, DC, August 8, 2016 – Today, the Government Accountability Office (GAO) released a report on the impact of diversions of non-commercial jet fuel tax revenues from the Airport and Airway Trust Fund to the Highway Trust Fund. The National Air Transportation Association (NATA) requested the report from lawmakers during development of the FAA reauthorization legislation. An amendment to the 2015 highway bill, offered by Representative Mike Pompeo of Kansas, accelerated work on the issue. The GAO report concludes the diversion of funds stemming from a 2005 change in tax law has resulted in a loss to the aviation fund of between one and two billion dollars intended for airport improvements and system modernization. The report also casts doubt on the rationale behind the 2005 change in tax law and the provision’s utility going forward.

Andrew Priester, Chairman of the NATA Board of Directors, praised the report stating, "NATA deeply appreciates the work of Dr. Gerald Dillingham, GAO’s Director of Physical Infrastructure Issues, and his team. The report quantifies the dramatic impact of this revenue diversion that is undermining the viability of the Airport and Airway Trust Fund. The amounts lost to the Trust Fund as revealed today by the GAO are simply staggering. Consider how many new runways, instrument approaches, or additional air traffic control towers could have been built, had this money been available for its intended purpose.” 

NATA Senior Vice President William R. Deere added, “The GAO report lays bare the fact there was never much utility to the provision – either then or today. In 2005, the policy change was justified by a belief the 2.5-cent per gallon difference between the highway diesel and jet fuel tax rates somehow incented truckers to use jet fuel. This ignores the fact that in 2005 the average price of highway diesel was $1.30 less than jet fuel. Today, the disparity between those prices is even greater. Further, the GAO report validates NATA’s assertion that using jet fuel in modern diesel engines is harmful to those engines.”

“The report also highlights how the situation was exacerbated by its implementation. The GAO has demonstrated the mechanisms that were intended to allow for the transfer of tax revenues to the aviation fund simply do not work,” Deere continued. “The FAA presciently predicted at the time the refund process would create ‘a new and significant administrative burden’ that would harm the Airport and Airway Trust Fund.”