PRESENT LAW AND BACKGROUND INFORMATION 

RELATING TO THE AIRPORT AND 

AIRWAY TRUST FUND 

 

Scheduled for a Public Hearing 

Before the 

HOUSE COMMITTEE ON WAYS AND MEANS 

on May 7, 2009 

 

Prepared by the Staff 

of the 

JOINT COMMITTEE ON TAXATION 

 

May 4, 2009 

JCX-26-09 
i 

CONTENTS 

Page

INTRODUCTION AND SUMMARY ........................................................................................... 1

A. Airport and Airway Trust Fund Taxes ................................................................................ 2

B. Airport and Airway Trust Fund Expenditures and Balances ............................................ 13
1 

INTRODUCTION AND SUMMARY 

The Committee on Ways and Means has scheduled a hearing for May 7, 2009, regarding 

the Airport and Airway Trust Fund and related taxes. This document1 describes present law and 

provides background information on the excise taxes that fund the Airport and Airway Trust 

Fund and projections of those taxes and trust fund balances. 

The Airport and Airway Trust Fund provides funding for capital improvements to the 

U.S. airport and airway system and funding for the Federal Aviation Administration (“FAA”), 

among other purposes. The excise taxes imposed to finance the Airport and Airway Trust Fund 

are:

2

 taxes imposed on the transportation of persons by air; 

 an international air facilities tax; 

 taxes imposed on the transportation of property by air; 

 taxes imposed on fuel used in noncommercial aviation (19.3 cents per gallon for 

aviation gasoline, 21.8 cents per gallon for jet fuel (kerosene) and other aviation 

fuels); and 

 taxes imposed on fuel used in commercial aviation (4.3 cents per gallon). 

Domestic commercial aviation (the use of an aircraft in a business of transporting persons 

or property for compensation) is subject to the tax on the transportation of persons and property 

by air, the international air facilities taxes, and the 4.3-cent-per-gallon fuel tax. Noncommercial 

aviation is subject only to the fuel taxes, but at rates higher than that imposed on commercial 

aviation.3

 With the exception of 4.3 cents per gallon of the fuel taxes, the aviation excise taxes 

do not apply after September 30, 2009. In fiscal year 2008, the aviation excise taxes raised 

approximately $11.8 billion for the trust fund. 

 1

 This document may be cited as Present Law and Background Information Relating to the 

Airport and Airway Trust Fund, JCX-26-09 (May 4, 2009). This document also may be found at 

www.jct.gov. 

2

 Sec. 9502(b)(1). Unless otherwise stated, all section references are to the Internal Revenue 

Code of 1986, as amended (the “Code”). The Airport and Airway Trust Fund also is credited with 

interest under sec. 9602(b), amounts equivalent to civil penalties collected under section 47107(n) of Title 

49 of the United States Code, and amounts appropriated to the Airport and Airway Trust Fund as required 

to make authorized expenditures (sec. 9502(c)). 

3

 For commercial aviation, the fuel tax consists of two components: 4.3 cents per gallon 

dedicated to the Airport and Airway Trust Fund and 0.1 cent per gallon dedicated to the Leaking 

Underground Storage Tank Trust Fund. The higher fuel tax imposed on noncommercial aviation 

similarly consists of an Airport and Airway Trust Fund component (21.8 cents per gallon or 19.3 if 

aviation gasoline) plus 0.1 cent per gallon for the Leaking Underground Storage Tank Trust Fund. This 

pamphlet focuses on the components of the taxes dedicated to the Airport and Airway Trust Fund. 
2 

A. Airport and Airway Trust Fund Taxes 

The Airport and Airway Trust Fund provides funding for the national aviation system. It 

was created by the Airport and Airway Revenue Act of 1970.4 Revenues from aviation-related 

excise taxes support the Airport and Airway Trust Fund. The supporting taxes are taxes on the 

transportation of persons by air (the domestic passenger ticket tax, segment tax, and a tax on 

amounts paid to air carriers for the right to provide mileage awards), a tax on the transportation 

of property by air, a use of international air facilities tax, and taxes on aviation fuels. The taxes, 

summarized in the table below, are scheduled to expire (or in the case of aviation fuel be 

reduced) on October 1, 2009.5

Table 1.–Summary of Airport and Airway Trust Fund Taxes 

Tax Type Tax Rate 

Transportation of persons by air 

 Domestic ticket tax (ad valorem tax) 

 Domestic flight segment tax (a flight 

segment is one takeoff and one landing)

 7.5 percent of ticket price (or amounts 

paid for the right to provide mileage 

awards) 

 $3.60 (indexed) per segment during 

2009 (does not apply to flights to and 

from rural airports) 

Use of international air facilities tax (flat tax 

that applies to passengers arriving or departing 

for foreign destinations that are not subject to 

the ticket tax) 

$16.10 (indexed) per arrival/departure during 

2009 ($8.00 (indexed) for departures from 

Alaska and Hawaii) 

Transportation of property by air (ad valorem 

tax) 

6.25 percent of amount paid for the 

transportation of property by air 

Noncommercial aviation fuel Aviation gasoline: 19.3 cents per gallon 

Other aviation fuel: 21.8 cents per gallon 

Commercial aviation fuel 4.3 cents per gallon 

Table 2 shows the projected baseline revenues for the Airport and Airway Trust Fund 

taxes. 

 4

 Pub. L. No. 91-258. sec. 208 (1970). 

5

 Sec. 4261(j)(1)(A)(ii) (taxes on transportation of persons by air and use of international air 

facilities tax); sec. 4271(d)(1)(A)(ii) (tax on transportation of property by air) and sec. 

4081(d)(2)(reducing the tax on aviation fuel, including aviation gasoline, to 4.3 cents per gallon). 
3 

Table 2.−Baseline Projections of Aviation Excise Taxes 

(dollars in millions) 

Source: Congressional Budget Office (March 2009 baseline).

Aviation Excise Taxes 2008 2009 2010 2011 2012 2013 2014 2015 2016  Transportation of persons by air 8,243 7,654 8,110 8,559 9,027 9,504 9,983 10,434 10,892 

 Transportation of property by air 535 535 557 594 635 679 724 767 811 

 Use of international air facilities 2,313 2,296 2,341 2,449 2,599 2,756 2,913 3,066 3,226  Aviation fuel for commercial use 536 520 528 549 572 595 617 634 650  Aviation fuel (other than gasoline) 234 227 231 240 250 260 269 277 284  Aviation gasoline 35 34 34 35 36 37 39 39 40  AATF refunds* -56 -56 -56 -56 -56 -56 -56 -56 -56 Total net aviation taxes 11,895 11,266 11,802 12,427 13,119 13,830 14,545 15,218 15,903  Airport and Airways Trust Fund (net) 11,839 11,210 11,746 12,371 13,063 13,774 14,489 15,162 15,847 

* The Airport and Airway Trust Fund reimburses the General Fund for taxes paid on aviation fuels used for nontaxable purposes.** Numbers may not add due to rounding.
4 

Taxes on the transportation of persons by air

Domestic air passenger excise taxes (ad valorem tax and flight segment tax)

Domestic air passenger transportation generally is subject to a two-part excise tax. The 

first component is an ad valorem tax imposed at the rate of 7.5 percent of the amount paid for the 

transportation.6

 The second component is a flight segment tax. For 2009, the flight segment tax 

rate is $3.60.7 A flight segment is defined as transportation involving a single take-off and a 

single landing. For example, travel from New York to San Francisco, with an intermediate stop 

in Chicago, consists of two flight segments (without regard to whether the passenger changes 

aircraft in Chicago). 

The flight segment component of the tax does not apply to segments to or from qualified 

“rural airports.”8 For any calendar year, a rural airport is defined as an airport that in the second 

preceding calendar year had fewer than 100,000 commercial passenger departures, and (1) is not 

located within 75 miles of another airport that had more than 100,000 such departures in that 

year, (2) is receiving payments under the Federal “essential air service” program, or (3) is not 

connected by paved roads to another airport.9

The domestic air passenger excise taxes apply to taxable transportation. Taxable 

transportation means transportation by air that begins in the United States or in the portion of 

Canada or Mexico that is not more than 225 miles from the nearest point in the continental 

United States and ends in the United States or in such 225-mile zone.10 If the domestic 

transportation is paid for outside of the United States, it is taxable only if it begins and ends in 

the United States. 

Taxable transportation does not include uninterrupted international air transportation. 

Uninterrupted international air transportation is any transportation that does not both begin and 

 6

 Sec. 4261(a). 

7

 Sec. 4261(b)(1) and 4261(e)(4). The Code provides for a $3.00 tax during 2002 and thereafter, 

which is indexed annually for inflation, resulting in the current rate of $3.60 for 2009. 

8

 Sec. 4261(e)(l)(A). 

9

 Sec. 4261(e)(l)(B). In the case of an airport qualifying as “rural” because it is not connected by 

paved roads to another airport, only departures for flight segments of 100 miles or more are considered in 

calculating whether the airport has fewer than 100,000 commercial passenger departures. Sec. 

4261(e)(l)(B)(i). Rural airports not connected by paved roads could include those on an island, or in very 

remote areas, such as in Alaska. The Department of Transportation has published a list of airports that 

meet the definition of rural airports. See Rev. Proc. 2005-45. 

10 Sec. 4262(a). 
5 

end in the United States or in the 225-mile zone and does not have a layover time of more than 

12 hours.11 The tax on international air passenger transportation is discussed below. 

Use of international air facilities taxes

For 2009, international air passenger transportation is subject to a tax of $16.10 per 

arrival or departure in lieu of the taxes imposed on domestic air passenger transportation if the 

transportation begins or ends in the United States.12 The definition of international transportation 

includes certain domestic transportation that is associated with an international journey. Under 

these rules, a passenger traveling on separate domestic segments integral to international travel is 

exempt from the domestic air passenger taxes on those segments if the stopover time at any point 

within the United States does not exceed 12 hours. 

In the case of a domestic segment beginning or ending in Alaska or Hawaii, the tax 

applies to departures only and is $8.00 for calendar year 2009.13

“Free” travel

Both the domestic air passenger tax and the use of international air facilities tax apply 

only to transportation for which an amount is paid. Thus, free travel, such as that awarded in 

“frequent flyer” programs and nonrevenue travel by airline industry employees, is not subject to 

tax. However, amounts paid to air carriers (in cash or in kind) for the right to award free or 

reduced-fare transportation are treated as amounts paid for taxable air transportation, and are 

subject to the 7.5 percent ad valorem tax (but not the flight segment tax or the use of 

international air facilities tax).14 Examples of such payments are purchases of miles by credit 

card companies and affiliates (including airline affiliates) for use as “rewards” to cardholders. 

 11 Sec. 4262(c)(3). 

12 Sec. 4261(c) and 4261(e)(4). The international arrival and departure tax rate of $12.00 is 

indexed annually for inflation, effective each January 1, resulting in the current rate of $16.10 for 2009. 

13 Sec. 4261(c)(3) and 4261(e)(4). The special rule for Alaska and Hawaii tax rate of $6.00 is 

indexed annually for inflation, effective each January 1, resulting in the current rate of $8.00 for 2009. 

14 Sec. 4261(e)(3). 
6 

Tax on the transportation of property by air

Domestic transportation of property by air is subject to a 6.25 percent ad valorem excise 

tax on the amount paid for the transportation.15 The tax generally applies only to transportation 

that both begins and ends in the United States. 16 

Taxes on fuel used in aviation 

Taxation of taxable fuel generally

Under section 4081, an excise tax is imposed upon (1) the removal of any taxable fuel 

from a refinery or terminal,17 (2) the entry of any taxable fuel into the United States for 

consumption, use, or warehousing, or (3) the sale of any taxable fuel to any person who is not 

registered with the IRS to receive untaxed fuel, unless there was a prior taxable removal or 

entry.18 The tax does not apply to any removal or entry of taxable fuel transferred in bulk by 

pipeline or vessel to a terminal or refinery if the person removing or entering the taxable fuel, the 

operator of such pipeline or vessel (excluding deep draft vessels), and the operator of such 

terminal or refinery are registered with the Secretary.19 If the bulk transfer exception applies, tax 

is not imposed until the fuel “breaks bulk,” i.e., when it is removed from the terminal, typically 

by rail car or truck, for delivery to a smaller wholesale facility or retail outlet, or removed 

directly from the terminal into the fuel tank of an aircraft.20 

The term “taxable fuel” means gasoline, diesel fuel, and kerosene.21 The term includes 

kerosene used in aviation as well as aviation gasoline. 

 15 Sec. 4271. 

16 Sec. 4272(a) and (b). 

17 A “terminal” is a taxable fuel storage and distribution facility that is supplied by pipeline or 

vessel and for which taxable fuel may be removed at a rack. Treas. Reg. sec. 48.4081-1(b). A “rack” is a 

mechanism capable of delivering taxable fuel into a means of transport other than a pipeline or vessel. A 

terminal can be located at an airport, or fuel may be delivered to the airport from a terminal located off 

the airport grounds. Id. 

18 Sec. 4081(a)(1). 

19 Sec. 4081(a)(1)(B). 

20 In general, the party liable for payment of the taxes when the fuel breaks bulk at the terminal is 

the “position holder,” the person shown on the records of the terminal facility as holding the inventory 

position in the fuel. Treas. Reg. sec. 48.4081-2(c). However, when fuel is removed directly into the fuel 

tank of an aircraft for use in commercial aviation, the person who uses the fuel is liable for the tax. The 

fuel is treated as used when such fuel is removed into the fuel tank. Sec. 4081(a)(4). 

21 Sec. 4083(a). 
7 

Section 4041(c) provides a back-up tax for liquids (other than aviation gasoline) that are 

sold for use as a fuel in aircraft and that have not been previously taxed under section 4081. 

Kerosene

In general, section 4081 imposes a tax of 24.3 cents per gallon on kerosene. However, 

for kerosene removed directly from a terminal into the fuel tank of an aircraft, reduced rates 

apply.22 For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in 

commercial aviation, the tax rate is 4.3 cents per gallon.23 For kerosene removed directly from a 

terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is 21.8 

cents per gallon.24 If kerosene that is taxed at 24.3 cents per gallon is used in aviation a credit or 

refund is allowable for the difference between the tax imposed and the applicable aviation use 

rate.25

“Commercial aviation” generally means any use of an aircraft in the business of 

transporting persons or property for compensation or hire by air.26 Commercial aviation does not 

include transportation exempt from the taxes on the transportation or persons or property by air 

by reason of section 4281, 4282, 4261(h), or 4261(i). Thus, small aircraft operation on 

nonestablished lines (sec. 4281), air transportation for affiliated group members (sec. 4282), air 

transportation for skydiving (sec. 4261(h)), and certain air transportation by seaplane (sec. 

 22 If certain conditions are met, present law permits the removal of kerosene from a refueler 

truck, tanker, or tank wagon to be treated as a removal from a terminal for purposes of determining 

whether kerosene is removed directly into the fuel tank of an aircraft. A refueler truck, tanker, or tank 

wagon is treated as part of a terminal if: (1) the terminal is located within an airport, (2) any kerosene 

which is loaded in such truck, tanker or wagon at such terminal is for delivery only into aircraft at the 

airport in which such terminal is located, and (3) no vehicle licensed for highway use is loaded with 

kerosene at such terminal, except in exigent circumstances identified by the Secretary in regulations. In 

order to qualify for the special rule, a refueler truck, tanker, or tank wagon must: (1) have storage tanks, 

hose, and coupling equipment designed and used for the purposes of fueling aircraft; (2) not be registered 

for highway use; and (3) be operated by the terminal operator (who operates the terminal rack from which 

the fuel is unloaded) or by a person that makes a daily accounting to such terminal operator of each 

delivery of fuel from such truck, tanker, or tank wagon. Sec. 4081(a)(3). 

23 Sec. 4081(a)(2)(C)(i). An airline seeking to buy fuel at the reduced rate for commercial 

aviation must be registered with the IRS and the fuel terminal must be located within a secured area of an 

airport. The IRS has published a list of airports with secured areas in which a terminal is located. See 

Notice 2005-4, 2005-1 C.B. 289, at sec. 4(d)(2)(ii) (2005) (adopting the list from H.R. Conf. Rep. No. 

755, 108th Cong., 2d Sess. 692 n. 718 (2004) with modifications) and Notice 2005-80, 2005-2 C.B. 953, 

at sec. 3(c)(2) (2005). 

24 Sec. 4081(a)(2)(C)(ii). 

25 Sec. 6427(l). 

26 Sec. 4083(b). 
8 

4261(i)) are excluded from the definition of commercial aviation (and taxed as noncommercial 

aviation for purposes of the fuel taxes). 

It is possible for an aircraft to be used both for commercial aviation and noncommercial 

aviation purposes. For example, a private corporate aircraft is treated as engaged in commercial 

air transportation when it transports persons for compensation. When that same aircraft 

transports only employees of the owner corporation, it is treated as engaged in noncommercial 

aviation. Thus, the determination of whether an aircraft is engaged in commercial or 

noncommercial aviation is made on a flight-by-flight basis. 

Aviation gasoline

The tax on aviation gasoline is 19.3 cents per gallon. If aviation gasoline is used in 

commercial aviation or for an exempt purpose, a credit or refund is allowable for the difference 

between the tax imposed and the applicable rate.27 

 27 See, sec. 6421(f)(2), sec. 6416(a), sec. 6420 (farming purposes), sec. 6421(c). 
9 

B. Select Legislative History and Committee Activity 

Before the establishment of the Airport and Airway Trust Fund, a five-percent tax rate 

was imposed on passenger transportation beginning in 1960 with revenue going to the General 

Fund. There was also an aviation gasoline tax imposed at two cents per gallon. 

The Airport and Airway Development Act of 197028 (“1970 legislation”) increased the 

five-percent tax rate to eight percent concurrently with the establishment of the Airport and 

Airway Trust Fund in 1970. The use of international air facilities tax was first imposed at a $3 

per passenger rate (on departures only) by the 1970 legislation. The 1970 legislation also 

established the tax on the transportation of property by air at five percent and increased the 

aviation gasoline tax rate to seven cents per gallon and imposed a tax on other aviation fuel (jet 

fuel) used in noncommercial aviation at the same rate.29

Except for the period from October 1, 1980 through August 31, 1982, when there was a 

general expiration of the Airport and Airway Trust Fund taxes, the rates for the domestic air 

passenger tax, and tax on the transportation of property by air, remained the same until the 

enactment of the Omnibus Budget Reconciliation Act of 199030 (“OBRA 1990”). During the 

period when the Airport and Airway Trust Fund taxes were expired (October 1, 1980 through 

August 31, 1982) the tax on jet fuel was zero and the tax on aviation gasoline reverted to the rate 

of two cents per gallon. When the Airport and Airway Trust Fund taxes were reinstated in 1982, 

the aviation gasoline tax was increased to 12 cents per gallon, and the jet fuel tax rate was 

increased to 14 cents per gallon.31 

The Omnibus Budget Reconciliation Act of 1989 increased the international air facilities 

tax from $3 to $6.32 In OBRA 1990, the passenger transportation tax rate was increased from 

eight percent to 10 percent for a five-year period (through December 31, 1995). The tax on 

transportation of property by air was increased from five percent to 6.25 percent. OBRA 1990 

increased the aviation gasoline tax rate from 12 cents to 15 cents per gallon, and increased the jet 

fuel tax rate from 14 cents to 17.5 cents per gallon. 

 28 Pub. L. No. 91-258 (1970). 

29 The 1970 legislation imposed an annual civil aircraft use tax through 1980. The tax rate was 

$25 plus, 3.5 cents per pound of the maximum certificated takeoff weight for turbine aircraft, or two cents 

per pound for maximum certificated takeoff weight in excess of 2,500 pounds for other aircraft (jet 

aircraft). 

30 Pub. L. No. 101-508 (1990). 

31 Pub. L. No. 97-248 (1982).

32 Pub. L. No. 101-239 (1989). Except for the period from October 1, 1980 through August 31, 

1982, when the tax expired, the international air facilities tax rate remains the same until 1989. 
10 

The Omnibus Reconciliation Act of 199333 (“OBRA 1993”) imposed an additional 4.3 

cents per gallon General Fund deficit reduction tax on aviation fuels (for a total tax of 19.3 for 

aviation gasoline and 21.8 for jet fuel). Fuels used in commercial aviation were exempt through 

September 30, 1995, after which the 4.3-cents-per-gallon tax applied. The OBRA 1993 4.3-

cents-per-gallon tax did not have a sunset and therefore does not expire. 

The aviation taxes lapsed on January 1, 1996, for almost eight months. The Small 

Business Job Protection Act of 199634 reinstated the taxes for the period August 27, 1996 

through December 31, 1996. 

The taxes lapsed again on January 1, 1997, for approximately two months. The Airport 

and Airway Trust Fund Tax Reinstatement Act of 199735 reinstated the taxes through September 

30, 1997. 

The Taxpayer Relief Act of 199736 (effective October 1, 1997), extended the aviation 

excise taxes for 10 years, until September 30, 2007. It converted the 10-percent tax into the 

present law combination of a 7.5 percent ad valorem tax and a phased-in flight segment tax. It 

also imposed a new 7.5 percent tax on payments to airlines for frequent flyer miles and similar 

awards by banks and credit card companies. It increased the international air facilities tax from 

$6 to $12 and applied the tax to arrivals in addition to departures. The $6 departure tax for 

Alaska and Hawaii was indexed. The tax on the transportation of property by air and the fuel 

taxes were retained. The act transferred the 4.3 cents per gallon deficit reduction fuel tax from 

the General Fund to the Airport and Airway Trust Fund. 

Prior to the enactment of the American Jobs Creation Act of 200437 (“AJCA”), instead of 

being taxed upon removal from the terminal rack, kerosene for aviation was taxed upon sale of 

the fuel by a producer or importer. Sales by a registered producer to another registered producer 

were exempt from tax with the result that, as a practical matter, aviation kerosene was not taxed 

until the fuel was used at the airport (or sold to an unregistered person). The ability to remove 

large quantities of fuel without payment of tax prior to placing it into the fuel tank of an aircraft 

prompted concerns about the diversion of aviation fuel to highway uses and fuel tax evasion. 

The AJCA treated aviation-grade kerosene as a taxable fuel, generally taxed upon removal from 

the terminal rack at 21.8 cents per gallon, unless the fuel was going directly into the fuel tank of 

an aircraft for use in commercial aviation (taxed at 4.3 cents per gallon or zero). 

 33 Pub. L. No. 103-66 (1993). 

34 Pub. L. No. 104-188 (1996). 

35 Pub. L. No. 105-2 (1997). 

36 Pub. L. No. 105-34 (1997). 

37 Pub. L. No. 108-357 (2004). 
11 

For kerosene not placed directly into the fuel tank of an aircraft, the Safe, Accountable, 

Flexible, Efficient Transportation Equity Act: A Legacy for Users38 (“SAFETEA-LU”) 

equalized the tax rate for aviation-grade kerosene and other kerosene, taxing both at 24.3 cents 

per gallon, and providing for a refund of the difference between 24.3 cents per gallon and the 

appropriate rate (commercial or noncommercial) if the fuel was used for an aviation purposes. 

SAFETEA-LU also made several modest changes to the aviation excise taxes. Under 

prior law crop dusters were exempt from fuel taxes while operating over a farm if they received 

consent from the farmer to claim the refund. SAFETEA-LU repealed the consent requirement 

and provided that the exemption applied to fuel used in travel to and from a farm as well. Prior 

law exempted helicopters used in timber operations from the ticket and flight segment taxes. 

SAFETEA-LU expanded the exception to cover fixed-wing aircraft. SAFETEA-LU expanded 

the definition of rural airports to include airports annually having fewer than 100,000 

commercial passengers departing by air on flights of at least 100 miles and that also are not 

connected to another airport by paved roads. Tax exemptions for certain transportation by 

seaplane and for sightseeing flights also were established by SAFETEA-LU. 

110th Congress and 111th Congress extensions

The aviation excise taxes, initially scheduled to expire September 30, 2007, have been the 

subject of a series of extensions through continuing resolutions and other public laws.39 The 

most recent extension, the Federal Aviation Administration Extension Act of 2009, continues the 

aviation excise taxes through the end of fiscal year 2009 (September 30, 2009). 

Congressional committee activity

110th Congress

On September 18, 2007, the Committee on Ways and Means marked up H.R. 3539, the 

“Airport and Airway Trust Fund Financing Act of 2007.” H.R. 3539 would have extended the 

taxes and Airport and Airway Trust Fund expenditure purposes through fiscal year 2011, 

increased the fuel taxes for noncommercial aviation, and required that the revenues attributable 

to the increase in tax rates be used only for air traffic control modernization. With regard to the 

fuel tax increase, the bill would have increased the tax on aviation gasoline from 19.3 cents per 

gallon to 24.1 cents per gallon. The tax on aviation-grade kerosene would have increased from 

21.8 cents per gallon to 35.9 cents per gallon. The tax rates for fuel used in commercial aviation 

would have been unchanged by the bill. The bill was reported out of Committee in H.R. Rpt. 

 38 Pub. L. No. 109-59 (2005). 

39 Pub. L. Nos. 110-92, 110-116, 110-137, and 110-149 (continuing resolutions), the Department 

of Transportation Appropriations Act, 2008 (Pub. L. No. 110-161), the Airport and Airway Extension Act 

of 2008 (Pub. L. No. 110-190), the Federal Aviation Administration Extension Act of 2008 (Pub. L. No. 

110-253), the Federal Aviation Administration Extension Act of 2008, Part II (Pub. L. No. 110-330), and 

the Federal Aviation Administration Extension Act of 2009 (Pub. L. No. 111-12). 
12 

No. 110-334. The substance of H.R. 3539 was included as Title X in H.R. 2881, the “FAA 

Reauthorization Act of 2007.” H.R. 2881 passed the House on September 20, 2007. 

On September 20, 2007, the Senate Committee on Finance marked up S. 2345, the 

“American Infrastructure Investment and Improvement Act.” S. 2345 contained many 

provisions both related and unrelated to the Airport and Airway Trust Fund. With respect to the 

Airport and Airway Trust Fund, S. 2345 would have extended the taxes and Airport and Airway 

Trust Fund expenditure purposes through fiscal year 2011. The bill would have increased the tax 

on aviation-grade kerosene from 21.8 cents per gallon to 35.9 cents per gallon. The tax rates for 

fuel used in commercial aviation would have been unchanged by the bill. S. 2345 also would 

have made several other changes related to the aviation excise taxes. The bill would have 

increased the international air facilities tax to $16.65 (indexed), established an Air Traffic 

Control System Modernization Account within the Airport and Airway Trust Fund, imposed a 

$58 departure tax on aircraft that are part of a fractional aircraft ownership program, and 

repealed the passenger tax exemption for small aircraft operating on nonestablished lines (while 

retaining the exemption for aircraft operating solely for sightseeing purposes). The bill was 

reported in S. Rpt. No. 110-228. No further action was taken on this bill. 

The Senate Committee on Commerce, Science and Transportation reported S. 1300, the 

“Aviation Investment and Modernization Act of 2007,” in S. Rpt. No. 110-144. Included among 

the provisions of S. 1300 was a direction to the FAA to impose a surcharge of $25 per flight on 

owners or operators of passenger aircraft to fund modernization of the air traffic control system. 

No further action was taken on this bill. 

111th Congress

On March 5, 2009, the House Committee on Transportation and Infrastructure marked up 

and ordered reported H.R. 915, the “FAA Reauthorization Act of 2009.” The bill covers a 

reauthorization period through fiscal year 2012, but does not contain provisions extending the 

aviation excise taxes. H.R. 915 also was referred to the House Committee on Science and 

Technology Subcommittee on Space and Aeronautics, where it is pending. 

 
13 

C. Airport and Airway Trust Fund Expenditures and Balances 

As noted above, the Airport and Airway Trust Fund was created in 1970 to finance a 

major portion of the Federal expenditures on national aviation programs. The statutory 

provisions relating to the Airport and Airway Trust Fund were placed in the Code in 1982.40 

Authorized expenditures for the Airport and Airway Trust Fund include the Airport 

Improvement Program (“AIP”) (funds construction and safety projects at airports), Facilities and 

Equipment (“F&E”) program (funds the costs of acquiring, establishing, and improving the air 

traffic control facilities), Research, Engineering, and Development (“RED”) program (funds 

projects in connection with FAA research and development activities), and the Operation and 

Maintenance (“O&M”) programs. In addition to the aviation excise taxes dedicated to the 

Airport and Airway Trust Fund, the General Fund contributes toward FAA operations. As the 

chart below indicates, for fiscal year 2009, the Congressional Budget Office (“CBO”) anticipates 

that the General Fund will contribute 24 percent toward aviation expenditures. 

 40 Sec. 9502. 
14 

Table 3 below shows the CBO projections of Airport and Airway Trust Fund balances 

and expenditures. There is no single method for projecting uncommitted balances in the Airport 

and Airway Trust Fund under CBO’s baseline for FAA spending because projections of total 

spending for the agency—which historically receives a mix of funding from the trust fund and 

general fund—do not specify the proportional split of funding sources. In other words, there 

could be many alternative combinations of funding levels from the trust fund and the general 

fund that would provide the FAA with total funding levels projected in the baseline. One simple 

method for estimating uncommitted balances, presented in the following table, assumes that the 

amount of funding provided from the general fund for FAA operations remains at the 2009 

enacted level plus inflation. Under that assumption, CBO estimates that the General Fund would 

provide roughly one-fourth of FAA’s funding in future years. Actual balances will be driven by 

future Congressional actions and will depend on revenue receipts to the Airport and Airway 

Trust Fund. 

Operations and Maintenance

33%

Airport and Improvement

Program

24%

Facilities and Equipment

17%

Research Engineering and  

Development

1%

Carrier Payments

1%

General Fund Contributions

to Operations

24%

Projected Fiscal Year 2009 Trust Fund

and General Fund Expenditures
Assumptions: Revenues = March 2009 baseline

Spending = March 2009 baseline with inflation

GF share of FAA operations = enacted level plus inflation

AIP outlays controlled by oblim; oblims = 2009 level plus inflation

Uncommitted balances reflect AIP contract authority

Assumes trust fund provides resources for payments to air carriers

Assumes extension of AIP contract authority, trust fund expenditure authority, and taxes

CASH BALANCES 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

BOY cash balance 9,706 9,310 9,176 9,619 10,621 12,240 14,455 17,204 20,476 24,293 28,712

Deposits (revenues and interest) 11,360 11,911 12,571 13,319 14,107 14,886 15,647 16,443 17,287 18,147 19,069

Outlays 11,756 12,045 12,128 12,318 12,488 12,671 12,898 13,172 13,469 13,728 14,054

EOY cash balance 9,310 9,176 9,619 10,621 12,240 14,455 17,204 20,476 24,293 28,712 33,727

BOY unpaid authority 8,270 8,558 8,790 9,060 9,263 9,417 9,553 9,666 9,745 9,777 9,802

New Budget Authority (BA and CA) 12,044 12,277 12,398 12,521 12,642 12,807 13,011 13,251 13,501 13,753 14,023

Outlays 11,756 12,045 12,128 12,318 12,488 12,671 12,898 13,172 13,469 13,728 14,054

EOY unpaid authority 8,558 8,790 9,060 9,263 9,417 9,553 9,666 9,745 9,777 9,802 9,771

EOY cash balance 9,310 9,176 9,619 10,621 12,240 14,455 17,204 20,476 24,293 28,712 33,727

EOY uncommitted balance 752 386 559 1,358 2,823 4,902 7,538 10,731 14,516 18,910 23,956

Change in uncommitted balance -683 -366 173 798 1,465 2,079 2,636 3,192 3,786 4,394 5,046

SUMMARY OF FUNDING 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

BUDGETARY RESOUCES FROM TRUST FUND

TF share of Operations 5,238 5,425 5,520 5,616 5,714 5,840 5,994 6,174 6,360 6,551 6,753

Grants-in-aid for airports (AIP contract authority) 3,820 3,820 3,820 3,820 3,820 3,820 3,820 3,820 3,820 3,820 3,820

Facilities and Equipment (F&E) 2,742 2,784 2,808 2,832 2,854 2,889 2,935 2,990 3,049 3,105 3,168

Research, Engin. & Devel. (RED) 171 174 176 178 179 182 185 189 193 197 201

Payments to Air Carriers 73 74 74 75 75 76 77 78 79 80 81

 Total, Budgetary Resources from Trust Fund 12,044 12,277 12,398 12,521 12,642 12,807 13,011 13,251 13,501 13,753 14,023

BUDGETARY RESOURCES FROM GENERAL FUND

Contribution to FAA Operations 3,804 3,940 4,009 4,079 4,150 4,241 4,353 4,484 4,619 4,758 4,904

TOTAL FUNDING (budget authority + contract authority) 15,848 16,217 16,407 16,600 16,792 17,048 17,364 17,735 18,120 18,511 18,927

General fund appropriation as % of total funding 24% 24% 24% 25% 25% 25% 25% 25% 25% 26% 26%

REFERENCE

Grants-in-aid for airports obligation limitation 3,515 3,549 3,571 3,594 3,612 3,646 3,692 3,751 3,812 3,871 3,935

Total discretionary resources (BA plus oblim) 15,543 15,946 16,158 16,374 16,584 16,874 17,236 17,666 18,112 18,562 19,042

General fund appropriation as % discretionary resources 23% 22% 22% 22% 22% 22% 21% 21% 21% 21% 21%

CBO March 2009 Baseline with Fixed General Fund Contribution to FAA Operations

AIRPORT AND AIRWAY TRUST FUND (AATF)

PROJECTION OF TRUST FUND BALANCES

Note: Estimates of trust fund balances reflect CBO's best estimate of likely outcomes under current law. Actual balances could be higher or lower, 

depending on the accuracy of revenue and spending estimates. 

Table 3

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