Aviation: Direct Federal Spending, 1918-1998

Aviation: Direct Federal Spending, 1918-1998

Order Code RL30050
CRS Report for Congress
Received through the CRS Web
Aviation: Direct Federal Spending, 1918-1998
February 3, 1999
(name redacted)
Specialist in Transportation
and
(name redacted)
Economics Division
Congressional Research Service ˜ The Library of Congress

ABSTRACT
The federal government has provided large financial resources in support of commercial
aviation since 1918. This report details the amounts and types of federal spending that have
occurred over this 80 year period. The report also discusses some of the issues that have
shaped federal policy toward aviation and identifies some of the issues likely to affect
federal spending in the future. This report will not be updated.

Aviation: Direct Federal Spending, 1918 - 1998
Summary
The federal government has played a large role in the development of aviation.
In the ten years prior to 1918 this role was exclusively military in origin. Beginning
in 1918, with the first air mail flights, commercial aviation became a growing focus
of federal attention and assistance. In the intervening 80 years the federal
government has spent $155 billion in support of aviation activities.
This report details, and comments on, federal assistance provided directly in
support of commercial aviation. Direct assistance in this view can take several forms;
for example, the physical components of the air traffic control system can be
regarded as infrastructure; direct payments to airlines can be regarded as subsidies,
and the operating expenses of the Federal Aviation Administration (FAA) and its
predecessor agencies can be construed as operational support. Indirect assistance,
such as that provided through military research and development (R&D), and by
R&D provided by agencies other than the Department of Transportation and its
predecessor agencies is not detailed in this report.
In the early years of federal support for aviation most assistance came in the
form of designated subsidies to foster the growth of what has become the
commercial aviation industry. This was in keeping with the aviation sector's
embryonic nature. As the industry has matured, the level and expense of the federal
effort has expanded and spending for capital infrastructure and operational activities
have become specific components of annual federal budgets.
The debate today is not so much about whether a federal role in aviation is
appropriate. Rather the debate is about how to pay for federal programs and who
should pay for it. In the first half of this century almost all aviation expenses came
from U.S. Treasury general funds. In the trust fund era this contribution has
diminished as designated user fees have provided a majority of direct aviation-related
funding. The general fund contribution, however, remains significant, and
controversial.

Contents
Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Early History, 1918-1938 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Regulated Era: 1938 - 1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Airline Subsidies, 1939-1984 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Guaranteed Loans for Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Essential Air Service (EAS): 1979 - 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Airways, 1926 - 1970 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Airports, 1926 - 1970 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Trust Fund Era: 1971 - 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FAA Programs and Spending, FY1971 - FY1998 . . . . . . . . . . . . . . . . . . . 10
Trust Fund Revenues, FY1971 - FY1998 . . . . . . . . . . . . . . . . . . . . . . . . . 12
The National Weather Service (NWS) and Aviation . . . . . . . . . . . . . . . . . . . . . 14
Summary of Federal Spending on Aviation . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
List of Tables
Table 1. Federal Subsidies to Airlines: 1954-1983 . . . . . . . . . . . . . . . . . . . . . . 5
Table 2. Guaranteed Loans to Air Carriers, 1957-1983 . . . . . . . . . . . . . . . . . . . 6
Table 3: Essential Air Service Expenditures:
Fiscal Years 1979-1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 4. Federal Airway Expenditures, 1942-1970 . . . . . . . . . . . . . . . . . . . . . . 8
Table 5. Federal Airport Expenditures, 1953-1970 . . . . . . . . . . . . . . . . . . . . . 10
Table 6. FAA Expenditures: Fiscal Years 1971-1998 . . . . . . . . . . . . . . . . . . . 11
Table 7. Aviation Trust Fund Revenues, FAA Appropriations, and General Fund
Contribution: Fiscal Years 1971-1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 8. National Weather Service Expenditures for Aviation
FY1977-FY1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 9. Summary of Federal Direct Spending on Aviation, 1918-1998 . . . . . . 15

Aviation: Direct Federal Spending, 1918 - 1998
The dawn of human flight occurred less than a century ago. Yet in that short
period, flight has gone from novelty to utility. Air travel, in the eyes of many, is now
nothing more than a ho hum reality, notable mostly for its mystery meals and lost
luggage. In fact, the benefits of aviation permeate our society in ways that are both
visible to us, such as airline travel, and largely invisible to most of us, such as the
rapid transport of human organs for transplantation.
1
The federal government has played a large role in the development of aviation.
In the ten years prior to 1918 this role was exclusively military in origin. Beginning
in 1918, with the first air mail flights, commercial aviation became a growing focus
of federal attention and assistance. In the intervening 80 years the federal
government has spent $155 billion in direct support of aviation.
Framework
This report details, and comments on, federal assistance provided directly in
support of commercial aviation. Direct assistance in this view can take several
forms; for example, the physical components of the air traffic control system can be
regarded as infrastructure; direct payments to airlines are historically categorized as
subsidies ,
2 and the operating expenses of the Federal Aviation Administration (FAA)
and its predecessor agencies can be construed as operational support. Indirect
assistance, such as that provided through military research and development (R&D),
and by R&D provided by agencies other than the Department of Transportation and
its predecessor agencies is not detailed in this report.
For the purposes of this report commercial aviation is composed primarily of
the air carrier industry (airlines) and general aviation.3 Military aviation is a separate
1 The historical information in this report draws heavily from two previous CRS Reports:
U.S. Library of Congress. Congressional Research Service. Federal Aid to Domestic
Transportation. CRS Report 77-112E. by Stephen Thompson, Barbara Maffei, and William
Lipford; and Federal Aid to Domestic Transportation: A Brief History from the 1800s to the
1980s. CRS Report 88-574E. by Nancy Heiser. The first of these reports contains detailed
information on levels of assistance and provides an explanation of how and why specific
subsidy determinations were made. The second report is a shortened update of the earlier
product.
2Subsidies refer to historical data identified as such in source documents.
3 General aviation is a bucket term that refers to all types of aviation activities except air
(continued...)

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activity not detailed in this report. There are, however, numerous overlaps between
commercial and military aviation. The air traffic control system, for example, has
both civilian and military components and serves both types of aviation, often using
the same facilities.
The authors of this report exercise some judgement as to whether or not to
include certain agency information. Costs that cannot be directly viewed as having
a direct impact on aviation activities are omitted. The operating expenses for the
now defunct Civil Aeronautics Board (CAB), for example, have been omitted,
whereas assistance to airlines provided as a result of CAB actions is included. The
data in this report is presented using actual dollars. The period covered by this report
examines a wide range of federal activities that cannot be easily compared in fact or
in monetary terms. Hence the use constant dollars is not viewed as being helpful for
this analysis.
Federal assistance to commercial aviation has taken numerous forms. In some
instances, federal assistance is readily identifiable, and can be detailed using federal
budget documents. However, identifying spending in the era prior to the adoption
of a unified federal budget, which occurred in 1969, is somewhat problematic. It is
often not possible to find original source data for the pre-1969 period. As a result,
this analysis draws heavily on secondary sources for this information.
In addition, it is often difficult to distinguish whether pre-1969 data reflects
fiscal year data or calendar year data. This distinction does not affect the results and
trends enumerated in this report, however. Post 1970 data in this report is all fiscal
year data.
The research for this report has identified a number of data inconsistencies for
federal accounting of aviation activities. Most of these inconsistencies exist because
of choices made by earlier research about what should, or should not, be counted as
federal aid. To adjust for these problems, this report uses what CRS feels are the
most consistent data sources. For the most part, however, data differences are
relatively small in numerical terms and would not have a major affect on the
spending trends presented in this report.
Early History, 1918-1938
The federal government has had a direct financial involvement in the
development and support of domestic air transportation since the aforementioned
beginning of air mail service by the Post Office Department in 1918. Air mail
service remained mainly a Post Office Department endeavor until 1928. The
estimated cost to the federal government from 1918 to 1928 for the provision of this
3(...continued)
carriers and the military. Corporate jets and crop dusters are examples of general aviation.

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service was $12 million.4 The Air Mail Act of 1925, also known as the Kelly Act,
allowed for the hiring of private contractors to replace the existing government
operation of the air mail service. By 1928 this transfer was largely complete.
Between 1926 and 1930, the federal government paid more than $31 million to
contractors, while collecting less than $15 million in postal revenues for air mail
service. As a result, the service was provided at a deficit of slightly over $17
million.5
In 1930, Congress passed the Watres Act which permitted higher compensation
to air carriers by relating payments to the cost of operation rather than keying them
to the actual volume of mail carried. During the period of airmail operation under
the Watres Act, 1931 to 1934, total postal expenditures exceeded postal revenues by
approximately $53.6 million. More importantly from the perspective of federa
6
l
policy, the Post Office began requiring that air mail contractors carry passengers. It
was the hope of the Post Office that passenger traffic could eventually lead to a
reduction in the need for air mail subsidies. In 1934, the Post Office terminated all
air mail contracts on the grounds that contractors were colluding on pricing. The
fledgling U.S. Army Air Corps was pressed into mail delivery service with disastrous
results. Numerous accidents and deaths revealed an Air Corps with severe operating
deficiencies in need of correction.
To rectify the situation, Congress passed the Air Mail Act of 1934 (P.L. 73-
308), which contained several significant changes in Government policy regarding
airmail operations. The Act reopened all airmail routes to competitive bidding and
authorized the Postmaster General to contract with private firms to provide airmail
service. It also transferred economic regulation of aid to carriers and rates of
compensation from the Post Office Department to the Interstate Commerce
Commission (ICC), and moved safety regulation from the Post Office Department
to the Department of Commerce. From the enactment of the Air Mail Act of 1934
until 1938, air passenger-miles doubled and airmail pound-miles rose substantially.
During this time, the Federal Government incurred a deficit from airmail activities
of $26.4 million.7
The Regulated Era: 1938 - 1978
Airline Subsidies, 1939-1984
For many years, the issue of subsidy payments to airlines was among the most
controversial of all transportation issues considered by Congress. The airline
industry’s once major competition, the passenger railroads, railed at the unfair
4 U.S. Congress. House. Committee on Interstate and Foreign Commerce. Public Aid to
Domestic Transportation. Report submitted by the Board of Investigation and Research.
Washington, U.S. Govt. Print. Off., 1941. p. 110. (Here after referred to as Board Report.)
5Board Report, p. 439.
6Board Report, p. 439.
7Board Report, p. 439.

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advantage which they believed accrued to the airline industry as a result of subsidy
payments. Long-term arguments about how to count subsidies and what they meant
continued throughout the 1940s, 1950s, and into the 1960s. Some serious attempts
were made by the federal government to put airline industry subsidies into
perspective. The results of these studies are reflected in the following discussion and
table.8
In 1938, Congress passed the Civil Aeronautics Act which created a five
member, independent regulatory agency called the Civil Aeronautics Authority
(CAA). At the same time, the Act also created an Air Safety Board which is the
predecessor of today’s National Transportation Safety Board (NTSB). In 1940, an
Executive Order reorganized the CAA, renamed it the Civil Aeronautics Board
(CAB), and made it part of the Department of Commerce. The CAB had authority
to fix airmail rates and hence, subsidy levels. Prior to the 1938 Act the payment of
air mail subsidies to encourage airline passenger travel was implicit. The 1938 Act
was explicit in its subsidy provisions. Federal subsidies to airlines from 1939 to
1953 totaled $310,890,000.
9
During the regulated era, 1938 - 1978, airlines operated on routes prescribed by
the CAB. The CAB also regulated fares, market entry, and other facets of the airline
industry’s activities. The CAB never regulated frequencies (the number of flights per
day) between markets. The regulated era is viewed as the maturation period of the
airline industry, which under the CAB’s watchful eye moved into the jet age and
became the nation’s principal common carrier of passenger service.
In 1953, airline subsidies were separated from airmail compensation and
provided independently .
10 After that date, the Post Office paid airmail compensation
and the CAB made all airline subsidy payments. For all practical purposes, direct
subsidy to the largest airlines was phased out by the end of the 1950s. After that date
almost all remaining subsidy was focused on local air service and other specialized
services, such as those provided in Alaska and Hawaii.

Shortly after World War II the CAB participated in the creation of a new class
of air carriers, the local service carriers, whose primary purpose was to provide
service to destinations lacking air service from the large trunkline air carriers. Most
local service carriers originally started as small scale operations performing extensive
short-hop type service. Over time these airlines evolved into significant service
providers (U.S. Airways is a direct descendent of one of the local service carriers).
The local service airlines were provided with designated assistance long after the
subsidies to trunk lines ended. In addition, these air carriers were major recipients
of aid from the aircraft guaranteed loan program that will be discussed later in this
report. Local service subsidies, known over part of their life as the Section 406
8Op Cit. Footnote 1.
9 U.S. Civil Aeronautics Board. Subsidy for United States Certified Air Carriers.
Washington, U.S. Govt. Print. Off., March 1974. Appendix I.
1 0This split was accomplished by Executive Order of the Eisenhower Administration,
Reorganization Plan No. 10.

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program, terminated in the early 1980s, but some residual subsidy was provided as
late as 1984.
Subsidy payments by the CAB from 1954 to 1983 totaling almost $1.9 billion
are detailed in Table 1.
Table 1. Federal Subsidies to Airlines: 1954-1983
($ thousands)
Alaskan
Hawaiian
Local
Domestic
Year
Carriers
Carriers
Helicopter
Service
Trunkline
Total
1954
$8,303
$689
$2,574
$24,299
$3,822
$39,687
1955
7,902
293
2,656
22,358
2,773
35,982
1956
7,619
291
2,735
24,122
1,790
36,557
1957
7,707
216
3,771
28,444
1,572
41,710
1958
8,179
45
4,419
32,703
2,283
47,629
1959
7,337
168
4,860
36,450
1,201
50,016
1960
8,818
330
4,930
51,498
—
65,576
1961
9,313
505
5,538
56,300
—
71,656
1962
9,056
338
5,781
64,835
—
80,010
1963
9,690
520
5,000
67,700
—
82,910
1964
9,411
802
4,300
65,482
2,566
82,561
1965
8,163
995
3,358
61,412
3,475
77,403
1966
6,509
1,124
1,170
58,402
3,089
70,294
1967
5,939
567
—
54,966
2,477
63,949
1968
5,984
—
—
47,982
1,343
55,219
1969
5,421
789
—
40,513
—
46,723
1970
4,896
—
—
34,830
—
39,726
1971
4,499
—
—
55,940
—
60,439
1972
4,394
—
—
62,160
—
66,554
1973
4,365
—
—
60,206
—
64,571
1974
4,329
—
—
68,470
—
72,799
1975
4,345
—
—
59,043
—
63,388
1976a
4,360
—
—
68,162
—
72,522
1977
4,273
—
—
77,888
—
82,161
1978
2,989
—
—
70,944
—
73,933
1979
3,916
—
—
68,227
—
72,143
1980
5,530
—
—
74,544
—
80,074
1981
9,505
—
—
97,118
—
106,693
1982
10,022
—
—
45,085
—
55,107
1983
—
—
—
0
—
0
Total
192,684
7,672
51,092
1580083
26,391
1,857,992
Source: For years 1954 through 1975: U.S. Civil Aeronautics Board. Subsidy for U.S.
Certificated Air Carriers, Washington, U.S. Govt. Print. Off., March 1974, Appendix I, and March
1976 edition, Appendix VII. For years 1976 through 1983: The U.S. Office of Management and
Budget. The Budget of the United States Government, Appendix. Fiscal years 1978 through 1985.
Figures for 1976-1983 are net obligations incurred. Totals may not add due to rounding.
Guaranteed Loans for Aircraft
The aircraft loan guarantee program began in 1957 (P.L. 85-307) and expired
in 1983. During its lifetime, the program authorized federal guarantees of up to 90
percent of private loans for the purchase of equipment by local, short-haul, and feeder
air carriers. The program was instituted to help carriers replace equipment with

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newer and lower cost operating equipment. The rationale for the program was that
lower costs would likely reduce the amount of subsidy paid to the carriers by the
Federal Government. These loan guarantees totaled $924 million over the years 1957
to 1983, as shown in Table 2. Funding for this program was subject to appropriations
and is considered spending for the purposes of this report.
The absolute amount of assistance to airlines provided by the loan guarantee
program is not clear. If the airline could have obtained credit on essentially similar
terms without a guarantee, the subsidy issue would be essentially moot. However,
if the airline could not have obtained the loan without a Government guarantee, it
would have benefitted greatly from the program. Since there is little evidence to
indicate whether the loans could have been obtained, or on what terms, in the absence
of a Government guarantee, the amount of subsidy to airlines cannot be accurately
determined.
However, the Federal Government does bear the cost of the loan program if
airlines default. The guarantee shifts the cost of default away from the private market
to the public-at-large. During the program’s existence, 12 airlines defaulted on 23
loans for a total of $183,038,430. Airlines have paid back just over $132 million of
these defaulted loans for a net cost to the Government of approximately $50.5
million. There are no outstanding loans.
11
Table 2. Guaranteed Loans to Air Carriers, 1957-1983
Amount of
Amount of
Year
Guarantee
Year
Guarantee
1958
$13,234,950
1971
0
1959
9,273,839
1972
0
1960
3,414,600
1973
24,300,000
1961
7,220,484
1974
9,558,000
1962
4,630,500
1975
47,014,369
1963
810,000
1976
69,245,550
1964
5,850,000
1977
77,029,158
1965
359,640
1978
0
1966
2,547,742
1979
14,096,826
1967
2,432,551
1980
246,170,595
1968
0
1981
372,372,680
1969
0
1982
10,693,744
1970
0
1983
3,816,000
Total
924,071,228
Note: The loan amounts guaranteed are up to 90 percent of the total loan.
Source: For years FY1978 - FY1983: The Federal Aviation Administration, FAA Aircraft Purchase
Loan Guarantee Program, 1958- 1983, Experience and Lessons for the Future. {FAA Internal
Report}. May 5, 1983. p. A13-A16. For FY1958 -FY1977: U.S. Library of Congress. Congressional
Research Service. Federal Aid to Domestic Transportation: A Brief History from the 1800s to the
1980s. CRS Report 88-574E. by Nancy Heiser. p. 31.
Essential Air Service (EAS): 1979 - 1998
The only assistance that might be categorized as subsidies which continue today
are those provided under the Essential Air Service (EAS) Program created by Section
11Federal Aviation Administration. Unpublished data January 1999.

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419 of the Airlines Deregulation Act of 1978 (P.L. 95-504). The program was
designed to provide air service to communities that lost service as a result of
deregulation. EAS could be viewed as a successor to the Section 406 program with
which it overlapped for several years. The EAS program, however, was broader in
its intent and was designed to potentially serve more markets than the section 406
program. The program was originally created with a 10-year authorization. Until
January 1, 1985 the EAS program was administered by the CAB. Since that date it
has been operated by the Office of the Secretary of Transportation (OST).
The EAS program has now survived into a third decade. Given the numerous
attempts to eliminate the program by fiscal conservatives as an unnecessary expense
for a relatively small number of communities, its continued existence would be
viewed by some as remarkable. Perhaps the most important reason for the program’s
survival, however, was a change in its source of funding. Since FY1992, EAS has
received all of its funding from the Airport and Airway Trust Fund (also known as
the Aviation Trust Fund). Over its lifetime the program has received almost $588.2
million in trust fund and general fund monies.
Table 3: Essential Air Service Expenditures:
Fiscal Years 1979-1998 ($ thousands)
Year
Amount
Year
Amount
Year
Amount
1979
507
1986
24,291
1993
35,571
1980
9,053
1987
26,679
1994
31,827
1981
15,007
1988
28,393
1995
23,000
1982
26,075
1989
25,567
1996
39,000
1983
57,019
1990
33,237
1997
39,000
1984
35,264
1991
26,126
1998
39,000
1985
34,949
1992
38,600
Total:
588,165
Source: U.S. Office of Management and Budget. The Budget of the United States Government,
Appendix. Fiscal years 1981 through 1999. Figures for FY1979-FY1991 are net obligations
incurred. Figures for FY1992-FY1998 are appropriations funded out of the Airport and Airway Trust
Fund.
Airways, 1926 - 1970
Enactment of the Air Commerce Act of 1926, gave the federal government its
first formal role in the regulation and development of civil aviation. As a result of
the Act, the Department of Commerce became responsible for establishing a system
of airways, maintaining necessary aids-to-navigation, licencing pilots, issuing
airworthiness certificates for aircraft, and investigating accidents.
Airways are paths through the navigable airspace developed by the Federal
Government to control the movement of aircraft in an orderly fashion. The airways
system includes physical attributes such as control towers and radar equipment. Only
the Federal Government provides domestic airway facilities.
As the aviation system developed the airway and air navigation systems also
grew in sophistication. In the mid 1930s, the first airway traffic control center,

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operated by the airline industry, was established in Newark, NJ. On July 6, 1936 the
federal government took over operation of the Newark center and two other
established centers. All new airway centers would be constructed and staffed by the
federal government from this point forward. On November 1, 1941 airport towers
came under federal control as well.
The Civil Aeronautics Administration (CAA) was responsible for maintaining
and operating the airways system until 1958. In that year, the Federal Aviation Act
of 1958 created the Federal Aviation Administration (FAA). At that time, the FAA
essentially assumed all non-regulatory activities, such as safety oversight and
operation of the air traffic control system. In 1966, the FAA lost its independence
and became an operating agency of the newly created Department of Transportation
(DOT).
For the years 1925 through 1941, the governments’s airway costs totaled almost
$112 million. Federal airw
12
ay expenditures for 1942 through 1970, shown in Table
4, totaled just over $9 billion. Therefore, expenditures on airways from 1925 through
1970 were just over $9.1 billion.
Table 4. Federal Airway Expenditures, 1942-1970
($ thousands)
Year
Amount
Year
Amount
1942
$34,200
1957
208,586
1943
39,500
1958
302,801
1944
36,600
1959
353,895
1945
65,300
1960
420,527
1946
51,000
1961
515,644
1947
84,700
1962
509,889
1948
90,300
1963
555,443
1949
108,600
1964
614,486
1950
130,100
1965
580,750
1951
122,800
1966
578,619
1952
109,900
1967
645,030
1953
119,500
1968
690,266
1954
111,500
1969
806,234
1955
115,200
1970
990,040
1956
123,800
Total
$9,115,210
Sources: For years 1942 through 1956: U.S. Congress. Senate. Committee on Commerce. 87th
Congress, 1st Session. National Transportation Policy. Report No. 445, Washington, U.S. Govt.
Print. Off., 1961. p. 182. (Construction & operations; R &D, Flight Standards, and “other necessary
expenses”) For years 1957 through 1970: U.S. Department of Transportation. Estimated Federal
Expenditures on Domestic Transportation Capital Improvements and Operating Programs, by State,
Fiscal Years 1957-1971, Washington, U.S. Govt. Print. Off., 1974. p. xii.
Airports, 1926 - 1970
The Air Commerce Act of 1926 did not authorize the Secretary of Commerce
to establish, operate, and maintain airports. The Act followed the precedents set by
12Board Report, p. 78.

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maritime laws which authorized federal aid for areas such as safety and weather
forecasting, but not for the construction and improvement of docks and terminal
facilities. Prohibition of federal aid for airport development remained in law until
the passage of the Civil Aeronautics Act of 1938.
Although the Air Commerce Act of 1926 specifically prohibited federal support
for airport development, the economic programs of the 1930s, created to relieve the
effects of the Great Depression, used federal funds for airport construction, as they
did for waterway and road projects. This support, which began as an emergency
employment and income measure, marked the first period of substantial federal
funding for airport development. Federal aid under these work-relief programs
totaled $393,306,703.13 However, approximately 60 percent of the airports built
under these work-relief projects were eventually converted to other uses. This can
be accounted for by reducing program expenditures, $393,306,703, by 60 percent for
an estimate of $157,322,618.
The Civil Aeronautics Act of 1938 (P.L. 75-706) authorized the CAB to survey
the existing airport systems and recommend whether or not, and to what extent, the
Federal Government should participate in the construction, improvement,
development, operation, and maintenance of airports. In March 1939, the CAB
submitted its report to Congress, recommending that the Federal Government
participate in the development and maintenance of airports and that preference be
given to airports along the major trade routes of the nation or to those useful to the
national defense. During World War II, many airports were constructed to facilitate
the war effort, but the value of these airports cannot be accurately determined.
Although World War II intervened before Congress could implement the CAB’s
recommendations, they did become the starting point for consideration of legislation
which became the Federal Airport Act of 1946 (P.L. 79-377). This Act provided a
program of grants-in-aid for airport development. The Airport and Airway
Development Act of 1970 (P.L. 91-258) marked the beginning of a strong Federal
Government commitment to airport development, including increased funding and
the creation of an airport and airway trust fund.
Federal expenditures for airports prior to 1953, excluding work-relief programs
and the Federal-Aid Airport Program, were almost $403 million. Federa
14
l
expenditures on airports from 1953 to 1970 were just over $1 billion as shown in
Table 5.
U.S.
13
Congress. Senate. The National Airport Program; Report of the Airport Panel of the
Transportation Council of the Department of Commerce on the Growth of the United States
Airport System. Senate Document No. 83-95, 83rd Cong., 2d Session. Washington, U.S.
Govt. Print. Off., 1954. p. 34.
14Ibid.

CRS-10
Table 5. Federal Airport Expenditures, 1953-1970
Year
Amount
Year
Amount
1953
$11,007,007
1963
75,279,543
1954
-855,556
1964
71,596,981
1955
19,698,475
1965
59,587,993
1956
17,794,280
1966
64,296,000
1957
45,141,216
1967
71,690,000
1958
70,325,745
1968
82,785,000
1959
72,956,360
1969
112,256,000
1960
82,202,876
1970
93,446,000
1961
73,783,676
1962
46,381,321
Total
1,069,372,917
Note: The amounts include outlays for grants-in-aid and for Dulles International Airport and
Washington National Airport which were owned and operated by the FAA until 1986.
Source: For years 1953 through 1965: U.S. Congress. House. Continuing Federal Airport
Program. 89th Congress, 2d Session, Report No. 2164. Washington, 1966. p. 5. For years 1966
through 1971: U.S. Department of Transportation. Estimated Federal Expenditures on Domestic
Transportation Capital Improvement and Operating Programs, by State, 1957-1971. Washington,
U.S. Govt. Print. Off., 1974. p. xii.
The Trust Fund Era: 1971 - 1998
Prior to the passage of the Airport and Airway Development Act of 1970, none
of the federal taxes paid by airlines, general aviation operators, or passengers were
specifically designated for airport and airway construction improvements. Although
many observers considered these taxes a partial offset to the expense of constructing
and maintaining the airport and airway system, they were paid into the general fund
of the U.S. Treasury.
The airport and airway trust fund was created by the revenue title of the Airport
and Airway Development Act of 1970 (P.L. 91-258). The “aviation trust fund,” as
it is also known, was established to provide funding for capital improvements to the
nation’s airport and airway system. The scope of the aviation trust fund has been
expanded over time. The most recent full reauthorization of aviation programs
occurred with passage of Federal Aviation Administration Authorization Act of 1996
(P.L. 104-264). A six-month extension to that authorization approved in the waning
moments of the 105 Congress in the Omnibus Consolidated and Emergenc
th
y
Supplemental Appropriations Act of 1998 (P.L. 105-277) expires on March 31, 1999.
The most recent change in the levels of revenue dedicated to the trust fund occurred
as part of the Taxpayers Relief Act of 1996 (P.L. 105-34 ).
FAA Programs and Spending, FY1971 - FY1998
The trust fund, at present, provides funding for all four of the FAA budget’s
major components: Operations and Maintenance (O&M), Facilities and Equipment
(F&E), Research, Engineering, and Development (RE&D), and the Airport
Improvement Program (AIP). The trust fund provides all funding for all but the
O&M account. Funding for the O&M account is derived from both the trust fund
and U.S. Treasury general fund (issues concerning this split will be discussed in the
next section).

CRS-11
As can be seen in Table 6, FAA program spending has risen dramatically since
FY1971. Although increases have occurred in all spending categories , the increases
in the O&M account have been the most substantial on a relative basis. A source of
growth in spending has been the ongoing, and controversial, upgrade of the air traffic
control system which began in the early 1980s and is still many years from
completion. Most of this spending shows up in the F&E account, but this spending
has affected other accounts as well.
A close examination of this table reveals some apparent anomalies in growth
trends. In most instances, these are the results of specific events, such as the air
traffic controllers strike of 1981. As a result, the anomalies should probably be
regarded as transient effects on what has been, and is likely to remain, a scenario of
steady growth.
Table 6. FAA Expenditures: Fiscal Years 1971-1998
($ millions)
Year
O & M
F & E
R E & D
AIP1
Total
1971
1,026
238
49
193
1,506
1972
989
302
78
15
1,384
1973
1,170
213
70
635
2,088
1974
1,292
250
62
0
1,604
1975
1,419
227
58
0
1,704
1976
1,567
246
67
515
2,395
1977
1,738
200
74
510
2,522
1978
1,898
209
81
555
2,743
1979
2,033
345
75
644
3,097
1980
2,170
293
75
677
3,215
1981
2,340
350
85
570
3,345
1982
2,292
261
72
450
3,075
1983
2,579
625
103
750
4,057
1984
2,587
750
264
800
4,401
1985
2,699
1,358
265
925
5,247
1986
2,725
895
237
885
4,742
1987
2,959
805
142
1,025
4,931
1988
3,184
1,108
153
1,269
5,714
1989
3,445
1,384
160
1,400
6,389
1990
3,825
1,721
170
1,425
7,141
1991
4,037
2,095
205
1,800
8,137
1992
4,360
2,409
218
1,900
8,887
1993
4,530
2,302
230
1,800
8,862
1994
4,579
2,055
254
1,690
8,578
1995
4,572
1,960
252
1,450
8,234
1996
4,643
1,855
186
1,450
8,134
1997
4,955
1,938
208
1,460
8,561
1998
5,337
1,901
199
1,700
9,137
Totals
80,950
28,295
4,092
26,493
139,830
The AIP was created in 1982. The airport assistance
1
program from FY1971-FY1982 was
known as the Airport Development Aid Program (ADAP).
Source: U.S. Congress. Senate Budget Committee [based on Federal Aviation Administration
data]. Financing FAA: Airport and Airway Trust Fund and General Fund Shares. Washington, The
Committee, [1999] 4 p.

CRS-12
Note: During Fiscal Years 1971 and 1972 some trust fund monies were transition funds
transferred from the general fund to avoid shortfalls during the trust fund’s first years. The FAA data
used did not break out the amount of general fund revenues used for these appropriations.
Trust Fund Revenues, FY1971 - FY1998
There is a longstanding debate in the aviation community about the usefulness
and/or desirability of user fees as a mechanism for funding the FAA. In 1970 it was
decided that a user fee system was desirable for funding the aviation trust fund. This
was far from the end of the debate, however. The trust fund has gone through several
modifications over the years and on two occasions, 1980-1982 and 1996, disputes
over funding and/or programs led to lapses in the operation of the trust fund.
The existing tax system is certainly based on collections from users, but this
system is viewed by many observers as a less than perfect proxy for a user fee
system. The ticket tax, for example, is collected on the basis of a wide range of fares
charged by airlines for what is essentially a standard product, an airline seat. The
operating requirements of the air traffic control (ATC) system, however, are based
on the movement of aircraft. A 200-seat aircraft and a 20-seat aircraft, operating
under positive air traffic control, require a similar level of ATC services, but pay into
the trust fund at very different rates. Changes were made in 1997 to create
15
a
segment fee in addition to the ticket tax that was intended to address the differential
use issue. These changes, however, have engendered at least as much discussion as
the predecessor system. It is unlikely, given the bifurcated nature of the aviation
industry and its various interests groups that any system could be devised that would
satisfy all groups. Hence, it is likely that there will be calls for Congress to revisit
the user fee system in the future.
Another long-standing issue surrounding the trust fund is the appropriateness
of spending trust fund revenues for FAA operating expenses. The trust fund was
originally established as a means of paying for aviation capital needs. Every
presidential Administration since the trust fund was established, however, has sought
additional O&M funding from the trust fund. As can be seen in Table 7, the general
fund share of FAA spending has varied over time, but on the whole, the trust fund
share of the overall FAA budget has grown, to the point that it now accounts for
approximately 70% of spending in most recent years.
A final, and related issue, is the question of the accumulation of unexpended
funds in the trust fund over time. During most of its life the trust fund has had
16
a
large unexpended balance. The unexpended balances have several origins, but one
of the most important is the annual accumulation of interest to the fund by virtue of
the investment of the unexpended balance in U.S. Treasury financial instruments.
1 5 For a historical perspective on the user fee issue see: U.S. Library of Congress.
Congressional Research Service. Reorganization of the Federal Aviation Administration:
Safety and Efficiency Issues. CRS Report 94-371 E, by (name redacted), J.Glen Moore, and
Pamela Hairston.
For
16
a discussion of trust fund balances and the budgetary treatment of trust funds see: U.S.
Library of Congress. Congressional Research Service. Transportation Trust Funds:
Budgetary Treatment. CRS Report 98-63E. by (name redacted).

CRS-13
The temporary expiration of the trust fund in 1996 largely eliminated the
unexpended balance. By all predictions, however, the trust fund’s unexpended
balance is expected to grow dramatically in the next few years unless additional trust
fund spending is allocated for capital or operating expenses in the next FAA
reauthorization cycle. This new unexpended balance is likely to provide the debating
points for those who want more spending on aviation capital activities and for those
who wish to see the general fund contribution to aviation reduced.
Table 7. Aviation Trust Fund Revenues, FAA Appropriations, and
General Fund Contribution: Fiscal Years 1971-1998 ($ millions)
Year
FY Trust
FY Trust
FY Trust
FY General
Total
Fund
Fund
Fund App.
Fund App.
FAA App.
Revenue
Interest
1971
1,184
0
299
1,207
1,506
1972
1,551
0
1,369
15
1,384
1973
832
0
918
1,170
2,088
1974
840
28
312
1,292
1,604
1975
962
96
285
1,419
1,704
1976
1,215
147
828
1,567
2,395
1977
1,191
194
1,034
1,488
2,522
1978
1,326
219
1,120
1,623
2,743
1979
1,526
282
1,364
1,733
3,097
1980
1,874
400
1,370
1,845
3,215
1981
21
561
1,530
1,815
3,345
1982
133
542
1,593
1,482
3,075
1983
2,165
533
2,755
1,302
4,057
1984
2,499
546
1,814
2,586
4,400
1985
2,851
746
3,658
1,589
5,247
1986
2,736
829
2,444
2,298
4,742
1987
3,060
880
2,593
2,337
4,930
1988
3,189
893
3,356
2,358
5,714
1989
3,665
1,009
3,415
2,974
6,389
1990
3,700
1,245
4,124
3,017
7,141
1991
4,910
1,297
6,103
2,034
8,137
1992
4,644
1,273
6,637
2,250
8,887
1993
3,261
1,040
6,611
2,251
8,862
1994
5,217
837
6,293
2,285
8,578
1995
6,363
757
6,112
2,122
8,234
1996
2,369
759
5,714
2,420
8,134
1997
4,027
481
5,307
3,255
8,562
1998
8,065
543
5,701
3,435
9,136
Totals
75,376
16,137
84,659
55,169
139,828
Source: U.S. Congress. Senate Budget Committee [based on Federal Aviation Administration
data]. Financing FAA: Airport and Airway Trust Fund and General Fund Shares. Washington, The
Committee, [1999] 4 p. Trust fund revenue and trust fund interest data for table 7 were drawn from
the following sources: for FY1971 to FY1988, U.S. Congressional Budget Office. Status of the
Airport and Airway Trust Fund: a Special Study. Dec. 1988. Washington, 1988. p. 12-13.; for
FY1989 to FY1998, U.S. Library of Congress. Congressional Research Service. Transportation
Trust Funds: Budgetary Treatment, (name redacted). CRS Report 98-63 E. Updated April 6, 1998.
p. 22.; for FY1998 interest, U.S. Office of Management and Budget. Budget of the United States
Government: Fiscal Year 2000: appendix. Washington, 1999. p. 744.
Note: Transition quarter data for trust fund revenue and interest are included as FY1996 data.
During Fiscal Years 1971 and 1972 some trust fund monies were transition funds transferred from

CRS-14
the general fund to avoid shortfalls during the trust fund’s first years. The FAA data used did not
break out the amount of general fund revenues used for these appropriations. Totals may not add due
to rounding.
The National Weather Service (NWS) and Aviation
The National Weather Service (NWS) provides aids to aviation. For example,
the NWS provides routine weather forecasts and warnings. The assistance provided
by the NWS can be viewed as either direct, in the sense that it provides specific
services to aviation, or indirect, because the Service would exist exclusive of the
needs of the aviation system. The information on NWS spending is included because
it has been an identified item in the FAA budget during much of the discussion
period. Expenditures by the NWS totaling $672,933,000 since FY1977 are shown
in Table 8. Additional NWS expenditures detailed in the NWS budget might be
construed as aids to aviation by some observers, but are not detailed here.
Table 8. National Weather Service Expenditures for Aviation
FY1977-FY1998 ($ thousands)
Year
Amount
Year
Amount
1977
$22,516
1989
28,717
1978
23,719
1990
29,583
1979
24,817
1991
32,580
1980
26,507
1992
35,389
1981
26,564
1993
35,596
1982
26,700
1994
50,056
1983
26,700
1995
35,596
1984
27,000
1996
35,596
1985
27,000
1997
35,596
1986
26,796
1998
35,596
1987
30,309
1988
30,000
Total
$672,933
Source: For Fiscal Years 1977 through FY1986: The National Weather Service, unpublished
data provided July 1988; For FY1987 through FY1998: Federal Coordinator for Meteorological
Services and Supporting Research, National Oceanic and Atmospheric Administration. Federal Plan
For Meteorological Services and Supporting Research [Annual volumes for years 1988 through
1998}. Figure for FY1998 is an estimate.
Summary of Federal Spending on Aviation
In the early years of federal support for aviation most assistance came in the
form of designated subsidies to foster the growth of what has become the
commercial aviation industry. This was in keeping with the aviation sector's
embryonic nature. As the industry has matured, the level and expense of the federal
effort has expanded and spending for capital infrastructure and operational activities
have become specific components of annual federal budgets.
The debate today is not so much about whether a federal role in aviation is
appropriate, which by most accounts it is. Rather the debate is about how to pay for
federal programs and who should pay for it. In the first half of this century almost
all aviation expenses came from U.S. Treasury general fund. In the trust fund era this

CRS-15
contribution has diminished as designated user fees have provided a majority of
direct aviation related funding. The general fund contribution, as discussed earlier,
remains significant, and controversial.
As Table 9 demonstrates the federal contribution to aviation has been and
continues to be substantial. All forecasts suggest that short of an unforseen major
policy change, the federal financial contribution to aviation activities will increase
in the years ahead, not decrease.

Table 9. Summary of Federal Direct Spending on Aviation, 1918-1998
Type of Aid
Estimate
Airmail Operations by Post Office, 1918-1928
$12,000,000
Airmail Contract Operations, 1926-1930
17,096,464
Airmail Contract Operations, 1931-1934
53,570,447
Airmail Contract Operations, 1935-1938
26,398,568
Airmail Subsidies, 1939-1953
310,890,000
Airline Subsidies, 1954-1984
1,857,992,000
Loan Guarantee Program,, 1958-1983
924,071,228
Essential Air Service, 1979 - 1998
588,165,000
Airways, 1925-1941
111,881,934
Airways, 1942-1970
9,115,210,000
FAA Facilities and Equipment (trust fund), FY1971-
28,295,000,000
FAA Research, Engineering & Development (trust
4,092,000,000
Airports: Federal Work-Relief Projects
157,322,618
Airports: Other aid prior to 1953
402,783,870
Airports, 1953-1970
1,069,372,917
Airports (trust fund), 1971-1998
26,493,000,000
FAA Operations and Maintenance (general fund),
54,941,000,000
FAA Operations and Maintenance (trust fund),
26,009,000,000
National Weather Service, 1977-1987
672,933,000
Total Spending for Aviation, 1918 - 1998
155,149,688,046
Trust Fund Revenues, FY1971-FY1998
75,376,000,000
Trust Fund Interest Revenues, FY1971-FY1998
16,012,000,000
Total Trust Fund Income, FY1971-FY1998
91,388,000,000
.
Source: Data presented in this report. Totals may not add due to rounding.

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