133 
under subsection (b) of this section the Secretary decides 
another air carrier will not provide essential air service 
to the place on a continuing basis, the Secretary shall re-
quire the air carrier providing service to continue to pro-
vide service for additional 30-day periods until another air 
carrier begins providing service on a continuing basis. At 
the end of each 30-day period, the Secretary shall decide 
if another air carrier will provide service on a continuing 
basis. 
‘‘(d) CONTINUATION OF COMPENSATION AFTER NO-
TICE PERIOD.—If an air carrier receiving compensation 
under this subchapter for providing essential air service 
to an eligible place is required to continue to provide serv-
ice to the place under this section after the 90-day notice 
period under subsection (a) of this section, the Secretary 
shall continue to pay that compensation after the last day 
of that period. The Secretary shall pay the compensation 
until the Secretary finds another air carrier to provide the 
service to the place or the 180th day after the carrier filed 
notice to suspend service, whichever is earlier. If, after the 
180th day, the Secretary has not found another air carrier 
to provide the service, the carrier required to continue to 
provide that service shall receive compensation sufficient 
to pay for the fully allocated actual cost to the air carrier 
of performing the essential air service that was being pro-
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vided when the 90-day notice was given under subsection 
(a) of this section plus a reasonable return on investment 
that is equal to 5 percent of operating costs. 
‘‘(e) 
FINDING
REPLACEMENT
SERVICE
PRO-
VIDERS.—When the Secretary requires an air carrier to 
continue to provide essential air service to an eligible 
place, the Secretary shall promptly issue a request for pro-
posals to find another air carrier to provide at least the 
essential air service set forth in section 41732 to the place 
on a continuing basis.’’. 
(e) COMPENSATION GUIDELINES.—Section 41737 is 
amended to read as follows: 
‘‘§ 41737. Compensation guidelines, limitations, and 
claims 
‘‘(a) COMPENSATION GUIDELINES.— 
‘‘(1) The Secretary of Transportation shall pre-
scribe guidelines governing the rate of compensation 
payable under this subchapter. The guidelines shall 
be used to determine the reasonable amount of com-
pensation required to ensure the continuation of air 
service or air transportation under this subchapter. 
The guidelines shall— 
‘‘(A) provide for a reduction in compensa-
tion when an air carrier does not provide serv-
ice or transportation agreed to be provided; 
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‘‘(B) consider amounts needed by an air 
carrier to promote public use of the service or 
transportation for which compensation is being 
paid; and 
‘‘(C) include expense elements based on 
representative costs of air carriers providing 
scheduled air transportation of passengers, 
property, and mail on equipment of the type the 
Secretary decides is appropriate for providing 
the service or transportation for which com-
pensation is being provided. 
‘‘(2) Promotional amounts described in para-
graph (1)(B) of this subsection shall be a special, 
segregated element of the compensation provided to 
a carrier under this subchapter. 
‘‘(b) CLAIMS.—Not later than 15 days after receiving 
a written claim from an air carrier for compensation under 
this subchapter, the Secretary shall— 
‘‘(1) pay or deny the United States Govern-
ment’s share of a claim; and 
‘‘(2) if denying the claim, notify the person of 
the denial and the reasons for the denial. 
‘‘(c) AUTHORITY TO MAKE AGREEMENTS AND INCUR 
OBLIGATIONS.—The Secretary may make agreements and 
incur obligations from the Airport and Airway Trust Fund 
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established under section 9502 of the Internal Revenue 
Code of 1986 (26 U.S.C. 9502) to pay compensation 
under this subchapter. An agreement by the Secretary 
under this subsection is a contractual obligation of the 
Government to pay the Government’s share of the com-
pensation. 
‘‘(d) ELIGIBILITY DETERMINATIONS.— 
‘‘(1) In making all determinations on eligibility 
for compensation under this subchapter, the Sec-
retary shall rank all compensated points in their 
order of relative decreasing driving distance from the 
nearest large or medium hub airport. The term 
‘‘driving distance’’ means the shortest driving dis-
tance as determined by the Federal Highway Admin-
istration. 
‘‘(2) If the funds appropriated under Section 
41742 are not sufficient to pay for service to all of 
the eligible places, the Secretary shall provide sub-
sidy first to the eligible communities that do not 
have highway access to a medium or large hub air-
port, then to the most isolated community, as deter-
mined under paragraph (1), that requires compensa-
tion and then the next most isolated community re-
quiring compensation, and so on, in order, until the 
Secretary has obligated not more than the amount 
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137 
authorized to be appropriated from the Airport and 
Airway Trust Fund under 49 U.S.C. 48203(b), 
which shall remain available until expended.’’. 
(e) AUTHORIZATION.—Section 41742 is amended to 
read as follows: 
‘‘§ 41742. Essential Air Service authorization 
‘‘Beginning in fiscal year 2009, $50,000,000 is au-
thorized and shall be made available immediately for obli-
gation and expenditure to the Secretary of Transportation 
out of the Airport and Airway Trust Fund established 
under section 9502 of the Internal Revenue Code of 1986 
(26 U.S.C. 9502), to carry out the essential air service 
program under this subchapter for each fiscal year. Such 
amount shall remain available until expended.’’. 
(f) REPEALED PROVISIONS.— 
(1) Sections 41735, 41736, 41745, 41747, and 
41748 are repealed. 
(2) Subchapter III of chapter 417 is repealed. 
(g) CONFORMING AMENDMENTS.— 
(1) The analysis to chapter 417 is amended by 
striking the items relating to sections 41735, 41736, 
41745, 41747, and 41748. 
(2) The analysis to chapter 417 is amended by 
striking all of the items relating to subchapter III. 
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138 
(3) Section 41738 is amended by deleting ‘‘or 
air transportation to a place designated under 
41736’’. 
SEC. 803. TERMINATION OF DOT AUTHORITY TO SET INTER-
NATIONAL MAIL RATES. 
(a) ELIMINATION OF INTERNATIONAL MAIL RATE 
SETTING AUTHORITY.—Section 41901(b)(1) is amended 
by striking ‘‘in foreign air transportation or’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall become effective 16 months after the 
date of enactment of this Act. 
SEC. 804. AIR CARRIAGE OF INTERNATIONAL MAIL. 
(a) ELIMINATION OF REQUIREMENT TO FILE CON-
TRACT.—Section 5402(b) of title 39, United States Code, 
is amended by striking the last three sentences. 
(b) ELIMINATION OF SCHEDULES FOR MAIL TRANS-
PORTATION.—Section 41902 is amended— 
(1) in subsection (a) by striking ‘‘in foreign air 
transportation or’’; 
(2) by revising subsection (b) to read as follows: 
‘‘(b) STATEMENTS ON PLACES AND SCHEDULES.— 
Every air carrier shall file with the United States Postal 
Service a statement showing— 
‘‘(1) the places between which the carrier is au-
thorized to transport mail in Alaska; 
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‘‘(2) every schedule of aircraft regularly oper-
ated by the carrier between places described in 
clause (1) of this subsection and every change in 
each schedule; and 
‘‘(3) for each schedule, the placed served by the 
carrier and the time of arrival at, and departure 
from, each place.’’; 
(3) by deleting subsections (e) and (f). 
(c) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall become effective 16 months after the 
date of enactment of this Act. 
SEC. 805. CONTENTS OF COMPETITION PLANS. 
Section 47106(f)(2) is amended— 
(1) by striking ‘‘patterns of air service,’’; 
(2) by inserting ‘‘and’’ before ‘‘whether’’; and 
(3) by striking ‘‘, and airfare levels (as com-
piled by the Department of Transportation) com-
pared to other large airports’’. 
SEC. 806. AIRPORT PRIVATIZATION. 
Section 47134 is amended— 
(1) in the first sentence of subsection (b), by 
striking ‘‘5 airports’’ and inserting ‘‘15 airports’’; 
(2) by revising paragraph (b)(1)(A) to read as 
follows: 
‘‘(1) USE OF REVENUES.— 
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‘‘(A) IN
GENERAL.—The Secretary may 
grant an exemption to a sponsor from the pro-
visions of section 47107(b) and 47133 of this 
title (and any other law, regulation, or grant 
assurance) to the extent necessary to permit the 
sponsor to recover from the sale or lease of the 
airport such amount as may be approved by the 
Secretary after the sponsor has consulted— 
‘‘(i) in the case of a primary airport, 
with each air carrier and foreign air car-
rier serving the airport as determined by 
the Secretary; or 
‘‘(ii) in the case of a non-primary air-
port, with at least 65 percent of the own-
ers of aircraft based at that airport, as de-
termined by the Secretary.’’; 
(3) by striking subparagraph (b)(1)(C); 
(4) in subsection (c), by— 
(A) striking paragraphs (4), (5), and (9) 
and redesignating paragraphs (6) through (8) 
as paragraphs (4) through (6) respectively; and 
(B) adding a new paragraph (7) at the end 
to read as follows: 
‘‘(7) No part of a fee charged to an air carrier 
or a foreign air carrier may include a return on in-
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141 
vestment or recovery of principal with respect to 
consideration paid to the public agency for the lease 
or sale of the airport unless such part of the fee is 
approved by the air carrier or foreign air carrier.’’; 
and 
(5) by striking paragraph (d) and redesignating 
paragraphs (e) through (m) as (d) through (l) re-
spectively. 
SEC. 807. CLARIFICATION OF AIR CARRIER FEE DISPUTES. 
Section 47129 is amended— 
(1) by inserting ‘‘and foreign air carrier’’ after 
‘‘air carrier’’ in the section heading, in the heading 
for subsection (d), and in the paragraph heading for 
paragraph (d)(2); 
(2) by striking ‘‘air carrier’’ each place it ap-
pears in text, and inserting ‘‘air carrier or foreign 
air carrier’’; 
(3) by striking ‘‘air carrier’s’’ each place it ap-
pears and inserting ‘‘air carrier’s or foreign air car-
rier’s’’; 
(4) by striking ‘‘air carriers’’ each place it ap-
pears and inserting ‘‘air carriers or foreign air car-
riers’’; and 
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142 
(5) by striking ‘‘(as defined in section 40102 of 
this title)’’ in subsection (a) and inserting ‘‘(as those 
terms are defined in section 40102 of this title)’’. 
SEC. 808. AMENDMENTS TO CHAPTER 415. 
(a) IN GENERAL.—Chapter 415 is amended— 
(1) by revising section 41501 to read as follows: 
‘‘§ 41501. Establishing reasonable prices, classifica-
tions, rules and practices for foreign air 
transportation 
‘‘Every air carrier and foreign air carrier shall estab-
lish, comply with, and enforce reasonable prices, classifica-
tions, rules and practices related to foreign air transpor-
tation.’’. 
(2) by revising section 41502 to read as follows: 
‘‘§ 41502. Establishing joint prices for through routes 
with other carriers 
‘‘An air carrier, including an indirect air carrier, may 
establish reasonable joint prices and through service with 
another carrier.’’. 
(3) by repealing sections 41503, 41505, 41506, 
41508, and 41510. 
(4) by revising section 41504(a) to read as fol-
lows: 
‘‘(a) FILING AND CONTENTS.—In the way prescribed 
by regulation by the Secretary of Transportation, any air 
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143 
carrier or foreign air carrier providing foreign air trans-
portation between places designated by the Secretary, and 
any air carrier or foreign air carrier granted immunity 
from the antitrust laws for the coordination of prices pur-
suant to section 41308 of this title, shall file with the Sec-
retary, publish, and keep open to public inspection, tariffs 
showing the prices for the foreign air transportation pro-
vided by the carrier or provided by the carrier and another 
air carrier or foreign air carrier in which through service 
and joint prices have been established. A tariff— 
‘‘(1) shall contain— 
‘‘(A) to the extent the Secretary requires 
by regulation, a description of the classifica-
tions, rules, and practices related to the foreign 
air transportation; 
‘‘(B) a statement of the prices in money of 
the United States; and 
‘‘(C) other information the Secretary re-
quires by regulation; and 
‘‘(2) may contain— 
‘‘(A) a statement of the prices in money 
that is not money of the United States; and 
‘‘(B) information that is required under 
the laws of a foreign country in or to which the 
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144 
air carrier or foreign air carrier is authorized to 
operate.’’; and 
(5) by striking subsection 41509(e) and redes-
ignating subsections 41509(f) and (g) as 41509(e) 
and (f) respectively. 
(b) CONFORMING AMENDMENTS.— 
(1) The analysis for chapter 415 is amended by 
striking the items relating to sections 41503, 41505, 
41506, 41508, and 41510; 
(2) Section 40109(c) is amended by striking 
‘‘41505,’’; 
(3) Section 41110(a)(2)(B) is amended— 
(A) by striking ‘‘41503,’’; 
(B) by striking ‘‘41506,’’; and 
(C) by striking ‘‘41510,’’ 
(4) Section 46301 is amended by striking 
‘‘41505,’’. 
TITLE IX—INTERNAL REVENUE 
CODE AMENDMENTS 
SEC. 901. AMENDMENT OF 1986 CODE. 
Except as otherwise expressly provided, whenever in 
this Title an amendment or repeal is expressed in terms 
of an amendment to, or a repeal of, a section or other 
provision, the reference shall be considered to be made to 
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a section or other provision of the Internal Revenue Code 
of 1986. 
SEC. 902. MODIFICATIONS TO TAX ON AVIATION FUEL. 
(a) IN GENERAL.—Effective October 1, 2008, section 
4081(a)(2) (relating to rates of tax) is amended— 
(1) in paragraph (A) by inserting before the 
comma at the end of subparagraph (A)(ii) ‘‘, except 
that the rate of tax imposed on and after October 
1, 2008, shall be 70.0 cents per gallon’’; 
(2) by revising paragraph (C) to read as fol-
lows: 
‘‘(C) TAXES IMPOSED ON FUEL USED IN 
AVIATION.—In the case of kerosene for use in 
aviation, the rate of tax under subparagraph 
(A)(iii) shall be— 
‘‘(i) in the case of use for commercial 
aviation by a person registered for such 
use under section 4101 and in which the 
fuel is removed from any refinery or ter-
minal directly into the fuel tank of an air-
craft, 4.3 cents per gallon, except that the 
rate of tax imposed on and after October 
1, 2008, shall be 13.6 cents per gallon; 
and 
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‘‘(ii) in the case of use for aviation 
not described in clause (i), 21.8 cents per 
gallon, except that the rate of tax imposed 
on and after October 1, 2008, shall be 
70.0 cents per gallon in a case in which 
the fuel is removed from any refinery or 
terminal directly into the fuel tank of an 
aircraft.’’; and 
(3) by inserting at the end the following: 
‘‘(E) INFLATION
ADJUSTMENT
OF
TAX 
RATES.—In the case of taxable events in a cal-
endar year after 2009, the amount per gallon 
specified in subparagraph (C)(i) shall be in-
creased by an amount equal to such amount, 
multiplied by the cost-of-living adjustment de-
termined under section 1(f)(3) for such cal-
endar year by substituting ‘‘2008’’ for ‘‘1992’’ 
in subparagraph (B) thereof. Any increase de-
termined under the preceding sentence shall be 
rounded to the nearest tenth of a cent. 
‘‘(F) ADJUSTMENT OF TAX RATES TO RE-
FLECT COST IMPOSED ON THE SYSTEM.—In the 
case of taxable events in a calendar year after 
2009, the amount per gallon specified in sub-
paragraphs (A)(ii) and (C)(ii) in excess of the 
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rate specified in (C)(i) shall be an amount 
based on the costs, as defined in section 
45305(b)(6), imposed by operators who use fuel 
on which such taxes are paid as determined by 
the Federal Aviation Administration’s cost allo-
cation system, and shall be increased or de-
creased once every two years as necessary to 
cover such costs by an amount determined by 
the Federal Aviation Administration. Any in-
crease or decrease determined under the pre-
ceding sentence shall be rounded to the nearest 
tenth of a cent.’’. 
(b) CONFORMING CHANGES
TO FUEL TAX RATE 
PROVISIONS.— 
(1) TAX RATES UNDER SECTION 4081(d)(2).— 
Effective October 1, 2007, section 4081(d)(2) (relat-
ing to aviation fuel tax termination) is amended to 
read as follows: 
‘‘(2) AVIATION FUELS.—The rates of tax speci-
fied in subsection (a)(2)(A)(ii), (a)(2)(C)(i), and 
(a)(2)(C)(ii) shall be 0.00 cents per gallon after Sep-
tember 30, 2017.’’. 
(2) TAX RATES UNDER SECTION 4041.—Effec-
tive October 1, 2008, section 4041(c)(3) (relating to 
certain liquids used as a fuel in aviation) is amended 
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by inserting before the period at the end of para-
graph (3) ‘‘, except that the rate of tax imposed on 
and after October 1, 2008, shall be the rate, after 
adjustment for inflation under 4081(a)(2)(E), appli-
cable under section 4081(a)(2)(C)(i) with respect to 
any fuel sold for use or used for commercial avia-
tion, 
and 
under 
section 
4081(a)(2)(A)(ii) 
or 
4081(a)(2)(C)(ii) with respect to any other fuel sold 
for use or used in aircraft.’’. 
(c) FUEL TAX REFUND LIMITATIONS.—Effective Oc-
tober 1, 2008, section 6427(l) is amended— 
(1) in subsection (l)(4), by inserting before the 
period at the end of subsection (l)(4)(A)(ii) ‘‘and, on 
and after October 1, 2008, so much of the rate of 
tax specified in section 4081(a)(2)(A)(iii) as does 
not 
exceed 
the 
tax 
specified 
in 
section 
4081(a)(2)(C)(i), after adjustment for inflation 
under 4081(a)(2)(E)’’; and 
(2) in subsection (l)(5), by inserting before the 
period at the end of subsection (l)(5)(A)(ii) ‘‘and, on 
and after October 1, 2008, so much of the rate of 
tax specified in section 4081(a)(2)(A)(iii) as does 
not 
exceed 
the 
tax 
specified 
in 
section 
4081(a)(2)(C)(ii), after adjustment for inflation 
under 4081(a)(2)(E).’’. 
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SEC. 903. MODIFICATIONS TO TAX ON TRANSPORTATION OF 
PERSONS BY AIR. 
(a) ONE-YEAR EXTENSION OF CURRENT TAXES.— 
(1) Section 4261(j)(1)(ii) (relating to imposition of tax on 
persons) is amended by striking ‘‘September 30, 2007,’’ 
and inserting ‘‘September 30, 2008’’. 
(2) Section 4271(d)(1)(A)(ii) (relating to imposition 
of tax on property) is amended by striking ‘‘September 
30, 2007,’’ and inserting ‘‘September 30, 2008’’. 
(b) MODIFICATIONS TO TAXES.—Effective October 1, 
2008, section 4261 (relating to imposition of tax) is 
amended— 
(1) in subsection (c), 
(A) by inserting before the period at the 
end of subsection (c)(1) ‘‘, except that the rate 
of tax imposed for transportation beginning on 
and after October 1, 2008, shall be $6.39’’; 
(B) by amending subsection (c)(2) to read 
as follows: 
‘‘(2) EXCEPTION
FOR
CERTAIN
TRANSPOR-
TATION.—This subsection shall not apply to any 
transportation that consumes fuel taxed under sec-
tion 4081(a)(2)(C)(i).’’; 
(C) by inserting after ‘‘In any case’’ in 
subsection (c)(3) ‘‘involving transportation be-
ginning before October 1, 2008, and’’; and 
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(D) by inserting before the period at the 
end of subsection (e)(4)(B)(ii) ‘‘, except that 
the last nonindexed year is 2009 in the case of 
the dollar amounts contained in subsection (c) 
that apply to taxable events in a calendar year 
after 2009.’’; and 
(2) by amending subsection (j) to insert the fol-
lowing at the end: 
‘‘(3) EXTENSION OF TAXABLE PERIOD IN THE 
CASE
OF
INTERNATIONAL
TRAVEL
FACILITIES.— 
Notwithstanding paragraph (1), the taxes imposed 
by subsection (c) of this section shall apply to— 
‘‘(A) transportation beginning during the 
period beginning on March 7, 1997, and ending 
on September 30, 2017; and 
‘‘(B) amounts paid during such period for 
transportation beginning after such period.’’. 
SEC. 904. EXTENSION OF AIRPORT AND AIRWAY TRUST 
FUND EXPENDITURE AUTHORITY. 
(a) IN GENERAL.—Paragraph (1) of section 9502(d) 
of the Internal Revenue Code of 1986 (relating to expendi-
tures from Airport and Airway Trust Fund) is amended— 
(1) by striking ‘‘October 1, 2007’’ and inserting 
‘‘October 1, 2017’’; and 
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151 
(2) by inserting before the semicolon at the end 
of subparagraph (A) the following: ‘‘, or the Next 
Generation Air Transportation System Financing 
Reform Act of 2007’’. 
(b) CONFORMING AMENDMENT.—Paragraph (2) of 
section 9502(f) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘October 1, 2007’’ and inserting 
‘‘October 1, 2017’’. 
Æ 
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