AVIATION: DIRECT FEDERAL SPENDING, 1918-1998

CRS Report for Congress
Aviation: Direct Federal Spending, 1918-1998
February 3, 1999
John W. Fischer
Specialist in Transportation
and
Robert S. Kirk
Economics Division

Congressional Research Service ˜ The Library of Congress

A^BSTRACT
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, and the operating expenses of the Federal Aviation Administration (FAA)²
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 of³

the air carrier industry (airlines) and general aviation. Military aviation is a separate
The historical information in this report draws heavily from two previous CRS Reports:¹
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.
Subsidies refer to historical data identified as such in source documents. ²
General aviation is a bucket term that refers to all types of aviation activities except air³
(continued...)

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

(...continued)³
carriers and the military. Corporate jets and crop dusters are examples of general aviation.

service was $12 million. The Air Mail Act of 1925, also known as the Kelly Act,⁴
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 by⁶
approximately $53.6 million. More importantly from the perspective of federal
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

U.S. Congress. House. Committee on Interstate and Foreign Commerce. Public Aid to⁴
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.)
Board Report, p. 439.⁵
Board Report, p. 439.⁶
Board Report, p. 439.⁷

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 to⁹

1953 totaled $310,890,000.

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. After that date, the Post Office paid airmail compensation¹⁰
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

Op Cit. Footnote 1.⁸
U.S. Civil Aeronautics Board. Subsidy for United States Certified Air Carriers.⁹
Washington, U.S. Govt. Print. Off., March 1974. Appendix I.
This split was accomplished by Executive Order of the Eisenhower Administration,¹⁰
Reorganization Plan No. 10.

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^a

1976 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

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 $50.5¹¹
million. There are no outstanding loans.
Table 2. Guaranteed Loans to Air Carriers, 1957-1983
Amount ofAmount 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

Federal Aviation Administration. Unpublished data January 1999.¹¹

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 38,600 588,165Total:

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,

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 airway expenditures for 1942 through 1970, shown in Table¹²
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. 87^th^st
Congress, 1 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

Board Report, p. 78.¹²

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. However, approximately 60 percent of the airports built¹³
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. Federal¹⁴
expenditures on airports from 1953 to 1970 were just over $1 billion as shown in
Table 5.

U.S. Congress. Senate. The National Airport Program; Report of the Airport Panel of the¹³
Transportation Council of the Department of Commerce on the Growth of the United States^rd
Airport System. Senate Document No. 83-95, 83 Cong., 2d Session. Washington, U.S.
Govt. Print. Off., 1954. p. 34.
Ibid.¹⁴

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
196173,783,676
1962 46,381,321 1,069,372,917Total
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^th
Program. 89 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^th
moments of the 105 Congress in the Omnibus Consolidated and Emergency
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).

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)
YearO & MF & ER E & DAIPTotal¹
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
19985,3371,9011991,700 9,137
Totals 80,950 28,295 4,092 26,493 139,830
The AIP was created in 1982. The airport assistance program from FY1971-FY1982 was¹
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.

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 a¹⁵
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 a¹⁶
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.

For a historical perspective on the user fee issue see: U.S. Library of Congress.¹⁵
Congressional Research Service. Reorganization of the Federal Aviation Administration:
Safety and Efficiency Issues. CRS Report 94-371 E, by John W. Fischer, J.Glen Moore, and
Pamela Hairston.
For a discussion of trust fund balances and the budgetary treatment of trust funds see: U.S.¹⁶
Library of Congress. Congressional Research Service. Transportation Trust Funds:
Budgetary Treatment. CRS Report 98-63E. by John W. Fischer.

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)
YearFY TrustFY Trust FY TrustFY GeneralTotal
FundFundFund App.Fund App.FAA App.
RevenueInterest
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
19771,191194 1,0341,4882,522
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, John W. Fischer. 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

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
198730,309
1988 30,000 $672,933Total
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

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 AidEstimate
Airmail Operations by Post Office, 1918-1928$12,000,000
Airmail Contract Operations, 1926-193017,096,464
Airmail Contract Operations, 1931-193453,570,447
Airmail Contract Operations, 1935-193826,398,568
Airmail Subsidies, 1939-1953310,890,000
Airline Subsidies, 1954-19841,857,992,000
Loan Guarantee Program,, 1958-1983 924,071,228
Essential Air Service, 1979 - 1998588,165,000
Airways, 1925-1941111,881,934
Airways, 1942-19709,115,210,000
FAA Facilities and Equipment (trust fund), FY1971-28,295,000,000
FAA Research, Engineering & Development (trust4,092,000,000
Airports: Federal Work-Relief Projects157,322,618
Airports: Other aid prior to 1953402,783,870
Airports, 1953-19701,069,372,917
Airports (trust fund), 1971-199826,493,000,000
FAA Operations and Maintenance (general fund),54,941,000,000
FAA Operations and Maintenance (trust fund),26,009,000,000
National Weather Service, 1977-1987672,933,000
Total Spending for Aviation, 1918 - 1998155,149,688,046
Trust Fund Revenues, FY1971-FY199875,376,000,000
Trust Fund Interest Revenues, FY1971-FY199816,012,000,000
Total Trust Fund Income, FY1971-FY199891,388,000,000
.
Source: Data presented in this report. Totals may not add due to rounding.