Very Light Jets
Several Factors Could Influence Their Effect on the National Airspace System Gao ID: GAO-07-1001 August 24, 2007For several years, a number of aviation manufacturers have been designing and testing very light jets, a type of small jet aircraft equipped with advanced technologies and priced below other business jets. Aviation forecasters predict that thousands of very light jets will enter the National Airspace System (NAS) over the next two decades, contributing to the overall growth of the general aviation fleet. While some experts predict that very light jets will be used in ways that are similar to current general aviation aircraft, others predict that they will be used to expand the air taxi market to provide on-demand, point-to-point air transportation. In 2006, the Federal Aviation Administration (FAA) certified the first very light jets for flight. This report identifies (1) current very light jet forecasts and what factors could affect very light jet deliveries, (2) how increasing numbers of very light jets might affect the capacity and safety of the NAS, (3) how FAA is planning to accommodate the entry of very light jets into the NAS, and (4) how very light jets might affect FAA's costs and Airport and Airway Trust Fund revenues. To address these issues, GAO reviewed relevant documents and interviewed agency officials and aviation experts. GAO is not making recommendations in this report. The Department of Transportation provided technical clarifications, which were incorporated as appropriate.
The eight very light jet forecasts GAO examined provided a range of both the number of very light jets projected to be delivered (roughly 3,000 to 7,600) and the dates by which those numbers would be reached (from 2016 to 2025). The forecasts were based on limited information about the market for very light jets and varied based on a number of assumptions, particularly regarding the development of the air taxi market. The studies GAO reviewed and the experts GAO contacted expressed varying opinions about the impact of very light jets on NAS capacity; however, most of the experts believed that very light jets would have little overall effect on safety. The studies found that the type of airports used by very light jets will influence very light jets' effect on capacity. Experts also mentioned other factors that could affect capacity such as aircraft usage, trip length, and altitude. Most experts GAO contacted believed that very light jets will likely have little impact on safety due to FAA's certification procedures for aircraft, pilots, and maintenance. According to FAA officials, the agency currently has policies and procedures in place to accommodate the entry of very light jets into the NAS because the aircraft will operate similarly to other aircraft and will enter the NAS incrementally. Nonetheless, FAA is taking steps to address issues associated with very light jets by establishing a cross-organizational group to facilitate communication about very light jets across the agency. In addition, FAA expects that the deployment of modern air traffic management technologies will help to integrate very light jets in the long run. The impact of very light jets on FAA's costs and Trust Fund revenues will depend on factors such as the number of very light jets deployed, the extent to which they replace existing aircraft, and whether they facilitate a large-scale air taxi industry. The Congress is considering legislation that could affect how very light jets are taxed but, as with the current funding structure, there is too much uncertainty about very light jets to accurately compare the revenue effects of these proposed alternative funding structures.
GAO-07-1001, Very Light Jets: Several Factors Could Influence Their Effect on the National Airspace System
This is the accessible text file for GAO report number GAO-07-1001
entitled 'Very Light Jets: Several Factors Could Influence Their Effect
on the National Airspace System' which was released on August 24, 2007.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
August 2007:
Very Light Jets:
Several Factors Could Influence Their Effect on the National Airspace
System:
Very Light Jets:
GAO-07-1001:
GAO Highlights:
Highlights of GAO-07-1001, a report to congressional requesters
Why GAO Did This Study:
For several years, a number of aviation manufacturers have been
designing and testing very light jets, a type of small jet aircraft
equipped with advanced technologies and priced below other business
jets. Aviation forecasters predict that thousands of very light jets
will enter the National Airspace System (NAS) over the next two
decades, contributing to the overall growth of the general aviation
fleet. While some experts predict that very light jets will be used in
ways that are similar to current general aviation aircraft, others
predict that they will be used to expand the air taxi market to provide
on-demand, point-to-point air transportation. In 2006, the Federal
Aviation Administration (FAA) certified the first very light jets for
flight. This report identifies (1) current very light jet forecasts and
what factors could affect very light jet deliveries, (2) how increasing
numbers of very light jets might affect the capacity and safety of the
NAS, (3) how FAA is planning to accommodate the entry of very light
jets into the NAS, and (4) how very light jets might affect FAA‘s costs
and Airport and Airway Trust Fund revenues. To address these issues,
GAO reviewed relevant documents and interviewed agency officials and
aviation experts.
GAO is not making recommendations in this report. The Department of
Transportation provided technical clarifications, which were
incorporated as appropriate.
What GAO Found:
The eight very light jet forecasts GAO examined provided a range of
both the number of very light jets projected to be delivered (roughly
3,000 to 7,600) and the dates by which those numbers would be reached
(from 2016 to 2025). The forecasts were based on limited information
about the market for very light jets and varied based on a number of
assumptions, particularly regarding the development of the air taxi
market.
The studies GAO reviewed and the experts GAO contacted expressed
varying opinions about the impact of very light jets on NAS capacity;
however, most of the experts believed that very light jets would have
little overall effect on safety. The studies found that the type of
airports used by very light jets will influence very light jets‘ effect
on capacity. Experts also mentioned other factors that could affect
capacity such as aircraft usage, trip length, and altitude. Most
experts GAO contacted believed that very light jets will likely have
little impact on safety due to FAA‘s certification procedures for
aircraft, pilots, and maintenance.
According to FAA officials, the agency currently has policies and
procedures in place to accommodate the entry of very light jets into
the NAS because the aircraft will operate similarly to other aircraft
and will enter the NAS incrementally. Nonetheless, FAA is taking steps
to address issues associated with very light jets by establishing a
cross-organizational group to facilitate communication about very light
jets across the agency. In addition, FAA expects that the deployment of
modern air traffic management technologies will help to integrate very
light jets in the long run.
The impact of very light jets on FAA‘s costs and Trust Fund revenues
will depend on factors such as the number of very light jets deployed,
the extent to which they replace existing aircraft, and whether they
facilitate a large-scale air taxi industry. The Congress is considering
legislation that could affect how very light jets are taxed but, as
with the current funding structure, there is too much uncertainty about
very light jets to accurately compare the revenue effects of these
proposed alternative funding structures.
Figure: Examples of Very Light Jet Aircraft
[See PFD for image]
Source: Adam A700; Adam Aircraft Industries (left) and Eclipse 500; (c)
copyright, Eclipse Aviation Corporation, 2007 (right).
[End of figure]
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1001].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Susan Fleming at (202)
512-2834 or flemings@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Current Market Forecasts for Very Light Jets Vary Widely, Reflecting
Differences in Assumptions and Limited Available Information:
Studies and Expert Opinions Varied on How Very Light Jets Will Affect
Capacity, but Most Experts Believe Very Light Jets Will Have Little
Effect on Safety:
FAA Officials Believe Procedures and Policies Are in Place to
Accommodate Very Light Jets, but FAA Is Taking Steps to Prepare for
Their Introduction:
Several Factors Will Influence the Effect of Very Light Jets on FAA's
Costs and Trust Fund Revenues:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Use Categories of General Aviation:
Table 2: Summary of Assumptions Influencing Very Light Jet Forecasts:
Table 3: Estimated Excise Tax Contribution for a Very Light Jet by Type
of Flight:
Figures:
Figure 1: FAA Activities and Services:
Figure 2: Proposed Very Light Jet Models as of July 2, 2007:
Figure 3: Total Forecasted Number of Very Light Jets:
Abbreviations:
ADS-B: Automatic Dependent Surveillance-Broadcast:
FAA: Federal Aviation Administration:
MIT: Massachusetts Institute of Technology:
NAS: National Airspace System:
NASA: National Aeronautics and Space Administration:
United States Government Accountability Office:
Washington, DC 20548:
August 24, 2007:
The Honorable John Mica:
Ranking Republican Member:
Committee on Transportation and Infrastructure:
House of Representatives:
The Honorable Jerry Costello:
Chairman:
The Honorable Thomas Petri:
Ranking Republican Member:
Subcommittee on Aviation Committee on Transportation and
Infrastructure:
House of Representatives:
For several years, a number of aviation manufacturers have been
designing and testing very light jets, a new type of small jet aircraft
that are priced below other business jets and which will come equipped
with advanced avionics and can be certified for single-pilot operation.
In 2006, the Federal Aviation Administration (FAA) certified the first
very light jets to fly in the National Airspace System (NAS). According
to very light jet manufacturers, six very light jets had been delivered
as of March 31, 2007. Business aviation forecasters predict that
thousands of very light jets will enter the airspace over the next
couple of decades, some of which may be used for air taxi operations
(i.e., on-demand point-to-point air transportation service),
contributing to the overall growth of the general aviation fleet. Some
industry experts have raised concerns about increased congestion
resulting from very light jets' entry into the NAS given projected
growth in commercial air travel, which FAA predicts will increase from
740 million passengers flying in fiscal year 2006 to 1 billion
passengers in 2015.
Recognizing that the current aviation system cannot expand to meet this
projected growth in demand for air travel, FAA currently is involved in
a multiagency planning effort to transform the nation's current air
traffic control system to a more modern system that is intended to
safely accommodate a possible tripling of air traffic by 2025. As FAA
works to begin implementing improvements to the air traffic system, the
question of how to fund this modernization effort has come under
review, especially since most of the excise taxes that go into the
Airport and Airway Trust Fund (Trust Fund)--which funds most of FAA's
budget--are scheduled for reauthorization at the end of fiscal year
2007. Because of the importance of meeting the nation's air
transportation demands, you asked us to study the possible effects of
the introduction of very light jets on the NAS and on FAA. Accordingly,
we addressed the following questions: (1) What are the current
forecasts for very light jet deliveries and what factors could affect
very light jet deliveries? (2) How might increasing numbers of very
light jets affect the capacity and safety of the NAS? (3) How is FAA
planning to accommodate the entry of very light jets into the NAS? (4)
What factors will influence very light jets' effect on FAA's costs and
Trust Fund revenues?
To identify current forecasts for very light jets, we reviewed
government, academic, and aviation industry studies and interviewed
aviation experts to compile a list of publicly and commercially
available forecasts. We selected eight forecasts to review on the basis
of criteria that we established (e.g., being published within the past
12 months and providing a specific number of aircraft within a
timeframe). We reviewed the forecasts and determined that they were
sufficiently reliable for our purposes. To identify factors that could
affect the number of very light jets delivered, we obtained information
from organizations and individuals with expertise in general and
business aviation. To determine how increasing numbers of very light
jets could affect the capacity and safety of the NAS, we reviewed
industry studies and interviewed government officials and aviation
experts. To understand how FAA plans to accommodate potential very
light jet demand, we met with FAA officials to discuss how FAA handles
new aircraft and its plans for modernizing the air traffic control
system. We also asked selected government and industry organizations to
identify what actions FAA should be taking to prepare for very light
jets. To determine the effect of very light jets on FAA's costs and
Trust Fund revenues, we met with FAA officials to discuss the way they
allocate costs to aviation users, including very light jet operators,
and the taxes that are typically paid by general and business aviation
users. We discussed how the administration's reauthorization proposal
would treat general and business aviation users, including very light
jet operators. We reviewed congressional alternatives to the
administration's proposal. We also discussed aviation taxes with excise
tax experts from the Internal Revenue Service's Office of Chief
Counsel. We conducted our work from September 2006 through July 2007 in
accordance with generally accepted government auditing standards. See
appendix I for a more detailed explanation of our scope and
methodology.
Results in Brief:
The eight forecasts we examined provided a range of both the number of
very light jets projected to be delivered (roughly 3,000 to 7,600) and
the dates by which those numbers would be reached (from 2016 to 2025).
The factors used to estimate the number of very light jets and the
assumptions about them varied. Factors that might affect the number of
very light jet deliveries, according to the forecasts, included the
development of the air taxi market, economic growth, production
constraints, insurance and training requirements, and expected aircraft
retirements, among others. In addition to examining very light jet
forecasts, we spoke with aviation experts about the factors that they
thought would most affect the number of very light jet deliveries over
the next 10 to 20 years. The factor they mentioned most often was the
growth of the air taxi market, although some believed the air taxi
market could significantly increase the demand for very light jets
while others believed that air taxi operations would not succeed on a
large scale. We found that the eight forecasts we examined were based
on limited information. For example, since very light jet manufacturers
have just begun to produce new aircraft, there is little information on
delivery trends for these aircraft. In addition, there was less
consensus across the very light jet forecasts compared to other
business jet forecasts, and past very light jet forecasts have failed
to accurately predict when these aircraft would enter the NAS.
According to studies we reviewed and aviation experts we contacted, we
found that there were various opinions about how increasing numbers of
very light jets would affect capacity in the NAS, although most experts
believed that very light jets would have little effect on safety. We
examined two studies that found that the type and location of airports
used by very light jet operators will influence the effect of these
aircraft on NAS capacity. Experts we spoke with also indicated that the
type of airports used by very light jet operators was important. For
example, many experts believed that very light jets will travel to
small airports that have excess runway capacity. However, a few experts
believed that very light jets will travel to large airports and thus
could affect NAS capacity by contributing to airline delays. In
addition to airport type, experts indicated that the effect of very
light jets on NAS capacity depends on other factors including the
various uses of very light jets in the airspace, the trip length and
altitude of very light jet flights, the implementation of new air
traffic control technologies and equipment, the performance
capabilities of very light jets, and the rate of integration of very
light jets. Most experts we contacted believed that very light jets
will likely have little overall effect on safety due to FAA's
certification processes and procedures for aircraft, pilots, and
maintenance, all of which apply to very light jets.
According to FAA, the agency currently has the policies and procedures
in place to accommodate the entry of very light jets--which it believes
will occur incrementally--into the NAS. These officials, and several
other experts with whom we spoke, agreed that very light jets are
similar to other aircraft currently in operation and do not require
substantial changes to existing policies and procedures. However, FAA
is taking additional steps to specifically address any unique issues
surrounding the integration of very light jets as a precautionary
measure to ensure that these aircraft are integrated smoothly. For
example, FAA established a cross-organizational group to facilitate
communication about very light jets across FAA departments. FAA
officials stated that large numbers of very light jets may pose
resource challenges, but the agency has plans in place to address this
issue as needed. For example, according to officials, FAA is planning
on redeploying resources and is having discussions with local FAA
offices that are expecting to see increased demand for inspectors. In
the long term, FAA expects that the deployment of new technologies,
such as communications equipment that will enable pilots and
controllers to have a common picture of airspace and traffic, will help
integrate very light jets into the NAS. Because the aircraft will have
advanced avionics, they will be able to take full advantage of new air
traffic control technologies. Most experts we contacted expressed
support for FAA's modernization activities as a way to maintain system
capacity and safety for all aircraft, including very light jets, but
encouraged FAA to work to rapidly deploy such technologies.
The effect of increasing numbers of very light jets on FAA's costs and
Trust Fund revenues will depend on several factors in addition to the
number of very light jets deployed, such as the extent to which they
replace existing aircraft and whether they are operated for commercial
or noncommercial purposes. There is uncertainty, however, about these
factors that leads to uncertainty about the effect on costs and
revenues. For example, one critical but largely speculative factor is
the extent to which a market for air taxi services using very light
jets will develop. If very light jets are used in air taxi operations
it would add to FAA's costs, but also increase revenues, because the
planes would have a higher rate of use than very light jets used in
noncommercial operations. The administration has submitted a proposal
for reauthorizing FAA that calls for a change in the current excise tax
structure, and Congress is considering funding alternatives as well.
However, due to the amount of uncertainty regarding the number and use
of very light jets, there is too little information to accurately
assess the revenue impacts under the various proposals.
We provided a draft of this report to the Department of Transportation
for review and comment. The Department of Transportation provided
technical clarifications, which we incorporated in the report as
appropriate.
Background:
FAA is responsible for regulating and promoting the safety of general
aviation, including very light jets, by overseeing manufacturers and
operators to require full compliance with safety regulations. General
aviation includes all civil aircraft not flown by commercial carriers
or the military.[Footnote 1] To this end, FAA must certify any new
aircraft design before that aircraft can be registered in the United
States for private or commercial operations. When aircraft
manufacturers request approval of a new aircraft type design, FAA uses
the type certification process to ensure that the design complies with
applicable requirements and airworthiness standards. FAA issues
production certificates, which allow manufacturers to obtain an
airworthiness certificate for duplicate aircraft produced under an FAA-
approved type design. FAA also is responsible for establishing and
enforcing standards for the certification of pilots and instructors as
well as maintenance technicians and repair stations. FAA expects that
most owner operators of very light jets will already have a pilot
certification and the associated flight experience.
Another of FAA's primary functions is managing air traffic, which
includes a variety of complex activities that guide and control the
flow of aircraft through the NAS. Generally, commercial aircraft fly
under instrument flight rules that require air traffic services, which
are provided by FAA. Control towers guide these flights in the terminal
and runway areas and through takeoffs and landings. Once in the air and
beyond the immediate vicinity of the airport, aircraft rely on the
terminal radar approach control centers to guide them out of the
airspace surrounding the airport.[Footnote 2] Then, the flight is
passed to air route traffic control centers to provide en route control
until they near their destinations. (See fig. 1.) Nearly all business
jets and roughly half of general aviation piston engine flights fly
under instrument flight rules and file flight plans that are used by
air traffic control to reserve time and location in the NAS.[Footnote
3] However, many general aviation flights operate entirely under visual
flight rules and may not use air traffic control services at all if
they fly from and to airports that do not have towers. Other general
aviation flights operating under visual flight rules may require ground
control and traffic advisories, which are provided by air traffic
control towers, and other air traffic centers.
Figure 1: FAA Activities and Services:
[See PDF for image]
Source: GAO (data); Art Explosion (images).
[End of figure]
Very light jets are a new entrant into the U.S. airspace. Very light
jet is a marketing term with no single definition, although most
aviation experts describe these aircraft using a combination of the
following elements: weight and price. Generally speaking, very light
jets are jet aircraft with a maximum take-off weight of 10,000 pounds,
certificated for single pilot operations, equipped with advanced
avionic systems, and priced below other business jets.[Footnote 4] By
this definition, we identified nine proposed very light jet models as
of July 2, 2007 (see figure 2). Two of these models--the Cessna
Citation Mustang and Eclipse 500--have received FAA type and production
certification and begun delivering aircraft.
Figure 2: Proposed Very Light Jet Models as of July 2, 2007:
[See PDF for image]
Source: Very light jet manufacturers (data).
Note: We did not include a number of developmental very light jet
aircraft in figure 2, such as the Cirrus Jet, the Excel-Jet Sport-Jet,
and the Spectrum 33 jet because of the lack of sufficient performance
and price information.
[End of figure]
The aviation industry considers very light jets to be general aviation
aircraft because of the way they will operate in the NAS. FAA divides
general aviation activities into use categories, including: air taxi,
business, corporate, instructional, personal, and other uses (see table
1). In addition, general aviation aircraft can be used in a fractional
ownership arrangement, which is when a person or company buys or leases
a fractional interest in one aircraft. Over the course of the lease,
they can use that aircraft for a certain number of hours or days per
year, as do the aircraft's other fractional owners. In 2005, the U.S.
general aviation fleet consisted of 224,352 active general aviation
aircraft that flew about 27 million hours. Turbojets--a category of
aircraft that will include very light jets--made up 4.3 percent or
9,823 of the total active general aviation fleet. The rest of the
active aircraft included, among others, piston engine aircraft,
turboprops, and rotorcraft.
Table 1: Use Categories of General Aviation:
Use: Air taxi
Percentage of total general aviation flight hours in 2005: 10.6;
Description: On-demand passengers and all cargo operations.
Use: Business;
Percentage of total general aviation flight hours in 2005: 12.0;
Description: Use of aircraft in connection with pilot's occupation or
private business.
Use: Corporate;
Percentage of total general aviation flight hours in 2005: 11.4;
Description: Use of aircraft owned or leased by a corporation or
business and flown by a professional pilot.
Use: Instructional;
Percentage of total general aviation flight hours in 2005: 13.5;
Description: Flying under the supervision of a flight instructor.
Use: Personal;
Percentage of total general aviation flight hours in 2005: 34.3;
Description: Use of aircraft for pleasure or personal transportation
and not for business purposes.
Use: Other uses;
Percentage of total general aviation flight hours in 2005: 17.9;
Description: Examples include: Federal, state, or local government
owned or leased aircraft used for a government function.
Use: Total[A];
Percentage of total general aviation flight hours in 2005: 100;
Description: [Empty].
Source: FAA.
[A] The total was rounded to 100 percent.
[End of table]
Aviation Experts Identified Features that Make Airports Attractive to
Air Taxi Operators:
* Fluid base operators to provide fuel and other supplies to aircraft
operators.
* Availability of ground transportation such as taxi cab operators and
rental car companies.
* Close proximity to customer populations.
* Technology providing precise navigation and landing guidance.
It is expected that very light jets will be used in ways that are
similar to other types of general aviation aircraft, such as in
corporate fleets and as business or personal aircraft.[Footnote 5]
However, some companies also are planning to use very light jets as air
taxis and air charters--operations providing on-demand, point-to-point
flights. For example, an air taxi operator called DayJet is planning to
use very light jets to offer per-seat on-demand flights on planes
servicing selected airports in the southeastern United States. This is
a departure from the traditional charter business model, which requires
clients to charter the entire airplane for their flight, and sometimes
pay for associated repositioning costs. In addition, at least one
current air taxi company plans to sell individual seats on scheduled
flights.[Footnote 6]
Current Market Forecasts for Very Light Jets Vary Widely, Reflecting
Differences in Assumptions and Limited Available Information:
The eight very light jet forecasts we examined predicted a range of
3,016 to 7,649 in the number of very light jet deliveries as well as a
range in the dates by which those numbers would be reached, from 2016
to 2025.[Footnote 7] These forecasts were based on assumptions related
to a number of factors that could affect the number of very light jet
deliveries, especially regarding the success or failure of air taxi
operations. Aviation experts also identified several factors that could
affect overall deliveries, such as growth of the air taxi market,
dissatisfaction with other forms of transportation, low purchase price
and operating costs, access to airports, training and insurance
requirements, and production constraints. Forecasts were primarily
based on expert opinion and used the limited information available on
the business markets for very light jets.
Very Light Jet Forecasts Estimated a Range of Very Light Jet
Deliveries:
The eight very light jet forecasts we examined predicted different
numbers of very light jet deliveries--from 3,016 to 7,649--and
different dates by which those numbers of aircraft would be reached,
from 2016 to 2025 (see fig. 3).[Footnote 8] Of the forecasts we
examined, all except FAA and Velocity Group (an aviation consulting
firm) forecasts included international deliveries of very light jets.
Several forecasts predicted that most very light jet deliveries would
go to customers in North America; one analyst noted that sales in the
United States could represent around 70 percent of total deliveries.
The definition of a very light jet differed somewhat across the
forecasts. For example, some of the forecasts included predictions for
single-engine very light jets, such as the proposed Diamond D-Jet,
while other forecasts did not include single-engine aircraft. However,
most of the forecasts included five new aircraft models that
manufacturers have scheduled to enter service over the next several
years: Adam A700, Cessna Citation Mustang, Eclipse 500, Embraer Phenom
100, and HondaJet.
Figure 3: Total Forecasted Number of Very Light Jets:
[See PDF for image]
Source: GAO analysis of very light jet forecasts.
[End of figure]
Almost all of the very light jet forecasts we examined were based on
expert opinion regarding business markets for very light jets and
analyses of proposed aircraft models. For example, one of the main
sources of information for developing the FAA forecast was an October
2006 aviation expert workshop jointly hosted by the Transportation
Research Board and FAA. Forecasters also relied heavily on projected
economic trends and variables, such as expected growth in the gross
domestic product and corporate profits.[Footnote 9] One of the very
light jet forecasts surveyed corporate flight departments and general
aviation operators about their purchase expectations.
Very Light Jet Forecasts' Assumptions Vary, Especially Regarding the
Air Taxi Market:
The forecasts we examined considered a number of factors that might
affect the number of very light jet deliveries, including the
development of the air taxi market, economic growth, production
constraints, insurance and training requirements, and expected aircraft
retirements, to name a few. The forecasts made several assumptions
regarding these factors as shown in table 2.
Table 2: Summary of Assumptions Influencing Very Light Jet Forecasts:
Forecast organization: Embraer;
Assumptions on which very light jet forecasts are based:
* Increasing corporate profits, S&P growth rates, world gross national
product, and U.S. interest rates;
* No serious/ major/significant terrorist incidents or worldwide
pandemics;
* Successful development of air taxi operations;
* New aircraft models;
* Aging business jet fleet;
* Growth in fractional ownership.
Forecast organization: Forecast International;
Assumptions on which very light jet forecasts are based:
* Continuing economic growth and rising corporate profits;
* No new user fees;
* Long term success of air taxi operations dependent on surpassing
regulatory obstacles and airport access issues;
* New aircraft models lead to increased purchases;
* Increased demand for new aircraft because of low number of used
business jets available;
* The reputations of established manufacturers potentially providing an
advantage over startup companies;
* Insurance and training considerations.
Forecast organization: Honeywell;
Assumptions on which very light jet forecasts are based:
* Purchase expectations of corporate flight departments and general
aviation owner/operators;
* No unforeseen events, such as war, major economic shock, fuel crisis,
or new regulatory restrictions;
* Moderate economic growth with modest cyclical perturbations;
* New aircraft models lead to increased purchases;
* Demand from emerging air taxi operations is not factored into the
estimates and would be considered additive to overall demand should the
air taxi business model prove widely viable.
Forecast organization: PMI Media Limited;
Assumptions on which very light jet forecasts are based:
* Moderate economic growth with a slowdown in 2010-2012, followed by a
recovery;
* Air traffic congestion fears are unfounded;
* Air taxi operators will consolidate and eventually evolve into
fractional ownership operations;
* Advantage of manufacturers familiar with the certification process
with other aircraft;
* Time to develop high volume production as the supply chain ramps up.
Forecast organization: The Teal Group Corporation;
Assumptions on which very light jet forecasts are based:
* High corporate profits, high commodity prices, and growth in emerging
markets;
* Organic growth in the number of corporate flight departments;
* A large number of aircraft retirements are expected;
* Established manufacturers having an edge over newcomers;
* The air taxi market will not succeed, except on a small scale;
* Very light jets serving as replacement aircraft for high-end
turboprops;
* Extensive training, insurance, and financing as barriers to entry.
Forecast organization: Velocity Group;
Assumptions on which very light jet forecasts are based:
* Air taxi operations capturing a percentage of high yield customers
(i.e., domestic airline travel at full fare coach, business class or
first class);
* Higher demand for air taxi service in communities with poor
commercial service;
* The timing of demand growth, the expected utilization of aircraft,
and passenger load forecasts;
* Very light jets capturing twenty percent of the total turbine market
sold in the $0.5 to $4 million price category for use in private,
charter, and fractional operations.
Forecast organization: Federal Aviation Administration; Assumptions on
which very light jet forecasts are based: * Moderate economic growth;
* No major geopolitical events;
* Sufficient infrastructure to handle projected levels of activity and
keep pace with demand;
* Sufficient growth in the on-demand air taxi market to absorb a
majority of projected very light jet deliveries;
* Production on pace with predicted demand;
* The aircraft perform as advertised.
Forecast organization: Rolls-Royce;
Assumptions on which very light jet forecasts are based:
* Infrastructure on pace with growth;
* Strong future macro economic growth with rising corporate and
personal wealth;
* New aircraft models lead to increased deliveries;
* A large number of aircraft retirements are expected;
* Markets outside the U.S. are ramping up;
* No substantive air taxi network;
* Demand for very light jets resulting from a shift from turboprops.
Source: GAO analysis of very light jet forecasts.
[End of table]
Each of the eight forecasts we reviewed included assumptions about the
effect of economic growth and the expansion of the air taxi market. The
forecasts all assumed moderate to strong economic growth, while
assumptions regarding the air taxi market varied considerably. For
example, the Teal Group forecast predicted the air taxi market would
not expand on a large scale. However, several other forecasts included
predictions of several thousand very light jet deliveries to air taxi
operators. For example, Embraer forecasted that the air taxi market
might be responsible for 2,500 to 3,000 very light jet deliveries by
2016 if there is demand for air taxi services.
In addition, very light jet forecasts included assumptions regarding
other factors:
* Replacement market. Customers may purchase very light jets to upgrade
from existing aircraft, which could affect the number of very light jet
deliveries. There is also an expectation that a large number of
aircraft will be retired in the future, which could create further
demand for very light jets to replace aging aircraft.
* Large number of aircraft models. The large number of very light jet
models gives customers more options to choose from and might strengthen
demand. For example, Rolls-Royce notes that there tends to be a high
correlation between total aircraft deliveries and the number of models
on the market.
In addition to the information gathered from the forecasts, we asked 18
aviation experts from the federal government, academia, aviation
equipment manufacturers, industry associations, air taxi operators, and
aviation insurance companies to identify factors they thought would
most impact the number of very light jet deliveries over the next 10 to
20 years.[Footnote 10] The factor mentioned most often was the growth
in the air taxi market, which could significantly affect very light jet
demand if successful. However, several experts did not think air taxi
operations will succeed on a large scale and noted that the on-demand
business model is nothing new. They argued that if the point-to-point
on-demand air taxi business model were so attractive, it could have
become popular already using similar existing business jets and
propeller aircraft.
The 18 experts also identified several other factors that they thought
might influence very light jet demand, including:
* Dissatisfaction with other forms of transportation. Increased hassle
associated with commercial airline and automobile travel may lead to
higher demand for very light jets.
* Low purchase price and operating costs. The relatively low costs of
acquiring and operating very light jets may lead to increased demand.
* Access to airports with the appropriate infrastructure. According to
aircraft manufacturers, very light jets will be able to use a
relatively large number of private and public airports, which could
help increase demand. However, infrastructure needs, such as hangar
space and availability of ground transportation, may limit access to
these airports and thus limit demand for very light jets. Difficulty
accessing metropolitan airports, which are already congested, might
also limit demand for these aircraft.
* Training and insurance requirements. The time and money needed to
achieve the necessary levels of training and insurance could become
burdensome to potential pilots and limit demand to some extent.
* Production constraints. The ability of aircraft manufacturers to
produce enough very light jets to meet demand may influence the number
of aircraft delivered.
Limited Information Is Available for Forecasting Very Light Jet
Deliveries:
The very light jet forecasts we reviewed were primarily from the
forecasters' own expert opinions about potential markets and business
models, but the forecasters had limited information on which to make
their predictions about very light jet deliveries. For example, since
very light jet manufacturers have just begun delivering the new
aircraft, there is little information about product demand. Forecasters
indicated that they based their assumptions about very light jet demand
on information about past deliveries for other aircraft in comparable
price classes, such as light jets and turboprop airplanes; however,
these aircraft do not have exactly the same performance characteristics
as very light jets. For example, several forecasts examined the markets
for turboprop aircraft and predicted the proportion of customers who
might instead purchase new very light jets.
In addition, forecasts were based on limited information regarding the
air taxi market. There is an ongoing debate about the extent to which
the availability of very light jets will facilitate an expansion of the
air taxi market. Some aviation experts stated that very light jets will
reduce acquisition and operating costs compared with other business
jets, which will enable a number of variations on current on-demand air
taxi and air charter business models. However, the first delivery to an
air taxi company took place at the end of March 2007. Without past
market information, it is difficult to predict the overall effect of
air taxi operations on the number of very light jet deliveries.
We compared very light jet forecasts to more general business jet
forecasts and found that there was less consensus among forecasters
about the expected number of very light jet deliveries than there was
about other aircraft deliveries, which demonstrates the divergence of
opinion about very light jet deliveries. Specifically, four of the
eight organizations with very light jet forecasts that we examined also
produced overall business jet forecasts for the years 2015 to
2016.[Footnote 11] The range in the predicted number of very light jet
deliveries for these four forecasts is from 3,016 to 5,715 aircraft, an
approximately 47 percent difference. However, the range in predicted
number of other business jet deliveries for the forecasts was much
closer, from 7,000 to 8,984 aircraft, only an approximately 22 percent
difference.[Footnote 12]
We also examined four past very light jet forecasts and found that they
did not accurately predict very light jet deliveries. For example, in
February 2006, FAA predicted 100 very light jets would enter the active
air fleet during fiscal year 2006, but manufacturers did not deliver
any very light jets during the fiscal year. The other three forecasts
also overestimated the number of very light jet deliveries for 2006. In
addition, in 2002, the Transportation Research Board and FAA sponsored
an aviation expert workshop, which suggested up to 5,000 very light
jets may arrive by the year 2010. Yet none of the eight current very
light jet forecasts that we examined predict 5,000 deliveries over the
next 3 years.
Studies and Expert Opinions Varied on How Very Light Jets Will Affect
Capacity, but Most Experts Believe Very Light Jets Will Have Little
Effect on Safety:
Two studies we reviewed and 20 experts we contacted had various
opinions regarding how very light jets will affect NAS capacity; the
experts believed that very light jets would have little effect on
safety.[Footnote 13] The studies indicated that the effect of very
light jets on capacity will be determined to some extent by the type
and location of airport they use. Many experts believed very light jets
will travel to small airports, such as reliever and general aviation
airports, and will have little effect on the capacity and safety of the
NAS.[Footnote 14] A few experts believed very light jets will travel to
large airports, such as hub airports, and have a significant effect on
capacity through increased air traffic operations. In addition to
airport type, experts indicated the effect of very light jets on the
NAS depends on other factors including: uses of very light jets
entering the NAS, trip length and flight altitude, implementation of
new air traffic control technologies and equipment, and aircraft
performance capabilities. Most of the experts we contacted indicated
that very light jets will likely have little overall effect on safety.
Studies and Experts Identified Factors That Would Influence Very Light
Jets' Effect on Capacity:
The two studies we reviewed--one by the National Aeronautics and Space
Administration (NASA) and one by the Massachusetts Institute of
Technology (MIT)--indicated that the type and location of airports used
by very light jets will influence very light jets' effect on
capacity.[Footnote 15] However, the studies differed in results because
of, among other things, differing assumptions. The NASA study assumed
that very light jets would not travel to hub airports because of the
cost and congestion involved in flying to these airports.[Footnote 16]
The NASA study found that very light jets used for air taxi operations
could increase commercial delays for the year 2025 by an estimated 1.3
percent if very light jets do not use hub airports. The NASA study also
looked at a scenario in which very light jets are not excluded from hub
airports that have significant general aviation traffic today, although
the study concluded that this was an unlikely scenario. NASA concluded
that, under such a scenario, the increase in total delay for commercial
passenger flights could be as much as 9.8 percent. The MIT study
predicted that very light jets used as air taxi services, fractional
ownership programs, recreational flights, and freight carriers will
have a significant effect on air traffic growth at high activity
airports including hubs located within metropolitan areas. The study
concluded that some of these airports will ultimately reach their
capacity limit. The MIT study assumed that very light jets' performance
and capabilities would be similar to the performance of light jets and
found that very light jets would operate at the top regional airport
systems that currently exhibit high density and capacity constraints.
MIT also found that very light jets will not significantly affect
airports outside of metropolitan areas because these airports have
excess runway capacity to handle additional aircraft. The study
indicated that very light jets will increase controllers' workload
because of very light jets' lower climb performance and cruise speed
compared to other jets in the en route environment. As a result, the
study noted that air traffic controllers will need to separate very
light jets from faster traffic in high density routes between large
cities such as New York City and Chicago, which could increase delays.
In addition to the studies, we also spoke with experts from federal
agencies, industry associations, academia, and others who indicated
that the extent of very light jets' effect on capacity depends on
numerous factors. Similar to the NASA and MIT studies, the experts
believed that the type of airport at which very light jets would
operate was a key factor influencing the effect on capacity. Many
experts we spoke with believed that very light jets would operate at
reliever and general aviation airports, where they could have little
effect on capacity because of excess runway capacity at these airports.
However, a few of these experts noted that even though very light jets
may not operate at hub airports, their use of secondary airports near
major metropolitan airports could affect capacity by increasing
commercial delays. Other experts believed that very light jets would
operate at hub airports with significant airline traffic, which could
negatively affect capacity by causing airline delays.
The experts we contacted also identified other factors influencing very
light jets' effect on capacity, including the following:
* Uses of very light jets in the airspace. The various ways that very
light jets might operate in the NAS, such as an air taxi or
recreational aircraft, will help to determine the extent of their
effects on capacity. Very light jets operating as air taxis will likely
have a greater effect on capacity as opposed to other users because of
a higher utilization rate in the NAS.[Footnote 17] In FAA's 2007
forecast, the agency assumed that very light jets operating as air
taxis will average 1,500 hours per year, fractional owners 1,200 per
year, and recreational use 350 hours per year.[Footnote 18] Very light
jets operating as recreational aircraft would likely have less effect
on capacity due to lower utilization rates and operating at general
aviation airports with excess runway capacity.
* Trip length and altitude of very light jet flights. Very light jets
might operate shorter flights and travel at lower altitudes than
commercial planes and have little effect on capacity. If many very
light jets fly at higher altitudes and longer distances, they could
have a greater effect on capacity, resulting in delays and congestion.
* Implementation of new air traffic control technologies and equipment.
Very light jets likely will be equipped with new technologies and
equipment, such as Automatic Dependent Surveillance-Broadcast (ADS-B)
that, once deployed by airports nationwide, would help to increase
capacity by providing position, intent, velocity, and other information
between aircraft and ground systems to manage air traffic.
* Performance capabilities of very light jets. Very light jets have
slower climb rates and cruising speeds than commercial airlines, which
could influence their effect on capacity when mixing with other
aircraft in the terminal and en route environments. FAA and several
experts, including experts representing active air traffic controllers,
believe that very light jets will increase the complexity of the
airspace due to their performance capabilities. FAA indicated that
controllers will segregate very light jet traffic from airline traffic
if they travel in the same airspace.
* Rate of integration of very light jets. FAA officials told us that
they do not expect very light jets to significantly affect capacity in
the next 5 to 6 years because of the incremental integration of very
light jets into the airspace. FAA assumes that 400 to 500 very light
jets will enter the NAS annually starting in 2008.
Very Light Jets Will Likely Have Little Effect on Safety, According to
Experts:
The experts we contacted believed very light jets will likely have
little overall effect on safety due to FAA's certification processes
and procedures for aircraft, pilots, and maintenance and the advanced
technology used to navigate the aircraft. In addition, several experts
stated that very light jets do not cause safety concerns because they
will operate like existing aircraft in the airspace. However, FAA and
some experts noted that very light jets could introduce safety concerns
such as recreational pilots' lack of experience flying jets. To address
these concerns, FAA and the aviation industry have established
guidelines for developing pilot training programs for very light jets
and a voluntary scenario-based training to enhance general aviation
safety. Aviation insurance companies, along with very light jet
manufacturers, are working together to institute a proficiency index to
assess pilots' experience and training needs and develop programs such
as mentor pilot training for new pilots of very light jets.[Footnote
19]
FAA Officials Believe Procedures and Policies Are in Place to
Accommodate Very Light Jets, but FAA Is Taking Steps to Prepare for
Their Introduction:
FAA officials stated that procedures and policies are in place to
successfully integrate very light jets into the NAS because very light
jets will operate similarly to other aircraft and will enter
incrementally. Nonetheless, FAA is taking several steps to address
issues associated with very light jets, including the development of a
cross-organizational group to facilitate coordination, as well as
collaborating with air taxi operators and providing information to air
traffic controllers. FAA officials and aviation experts also believe
very light jets will benefit from new technologies and procedures being
developed as part of FAA's modernization efforts.
FAA Officials Stated They Have Procedures and Policies in Place to
Handle the Introduction of Very Light Jets:
According to FAA officials, existing aviation standards and regulations
are adequate to successfully integrate very light jets into the NAS.
These officials and several other experts agreed that very light jets
are similar to other aircraft currently in operation and do not require
substantial changes to existing procedures and policies. For example,
very light jets are required to meet aircraft certification standards
set out in Federal Aviation Regulations Part 21 and 23.[Footnote 20]
These regulations set out certification procedures and airworthiness
standards for aircraft weighing less than 12,500 pounds and will be
applied to new very light jets, according to FAA officials. FAA also
stated that, as part of the certification process, it will meet with
manufacturers to outline "special conditions," which are specific
requirements developed for those aircraft seen by FAA as using novel or
unique technologies. The two very light jet models currently operating
in the NAS--the Eclipse 500 and the Cessna Citation Mustang--were
required to pass these certification and airworthiness standards,
including special conditions. In addition to aircraft certification
requirements, FAA is responsible for establishing and enforcing
standards for the certification of pilots and instructors as well as
maintenance technicians and repair stations. These standards are based
on the complexity and classification of the aircraft and type of
operation.[Footnote 21]
Although there may eventually be thousands of very light jets in the
NAS, FAA stated that these aircraft are expected to enter
incrementally, which will allow for their gradual integration into the
NAS. Several forecasters and FAA are predicting fewer than 400 very
light jets will be delivered in 2007. FAA officials also noted that
very light jets are currently entering the NAS at a slower rate than
many previously predicted.
FAA Is Taking Steps to Prepare for the Introduction of Very Light Jets:
Although FAA officials believe they have policies and procedures in
place to accommodate the integration of very light jets into the NAS,
FAA is taking several steps to specifically address issues arising from
an increased number of very light jets. According to one FAA official,
the agency is taking these steps as a precautionary measure to ensure
that very light jets are integrated smoothly. For example, in July
2005, FAA developed a cross-organizational group to identify and
address issues regarding very light jets related to the following:
pilot training and checking, inspector training, flight operations,
maintenance, and air traffic. The cross-organizational group includes
approximately 35 representatives from numerous lines of business and
service organizations within FAA, such as the Air Traffic Organization-
-responsible for moving air traffic safely and efficiently--and Flight
Standards Service--responsible for setting certification standards and
oversight of pilots, aircraft operators, and designees. According to
one FAA official, the cross-organizational group was formed to
communicate ideas across FAA departments, as a way to avoid
coordination problems. FAA officials also stated that the cross-
organizational group has developed inspector training for several of
the new very light jets, conducted briefings to air traffic controllers
on very light jet performance characteristics, and is working with
manufacturers and air taxi operators on an ongoing basis.
Aside from the cross-organizational group, FAA is conducting several
other activities including:
* Continuing to work with an industry association to bring air taxi
operations into the collaborative decision making process.[Footnote 22]
* Continuing to make air traffic control centers aware of any unique
very light jet operational requirements through bulletins, briefings,
and traffic management courses.
* Establishing a very light jet computer simulation model for use
during qualification and annual refresher training for air traffic
controllers.
* Planning to conduct operational test flights with DayJet to observe a
very light jet as it works through the airspace environments.
* Conducting a wake turbulence study to examine potential impacts of
turbulence generated by large aircraft on very light jets.
* Funding research on the potential effect of very light jets on U.S.
airports, including an examination of future operations by category of
airport, geographic location, and type of operation, as well as
potential infrastructure, facilities, and services that particular
airports will need to accommodate future very light jet activity.
FAA stated that a large influx of very light jets might necessitate the
reallocation of inspector resources. FAA is aware of this challenge and
has developed an Aviation Safety Workforce Plan. FAA is planning on
redeploying resources to meet demand as needed, according to the
official we contacted. Discussions are ongoing with the local Flight
Standard District Offices where FAA is expecting to see increased
demand for inspectors, such as in Albuquerque, New Mexico, where
Eclipse Aviation is based. FAA officials also stated they have
developed a course to train maintenance and avionics inspectors at
these locations. However, GAO noted in 2006 that very light jets could
create workload challenges for FAA inspectors to expeditiously issue
and monitor certificates.[Footnote 23] In addition, aviation experts
have raised concerns about the number of FAA inspectors. For example,
in a May 2007 testimony, the Inspector General of the Department of
Transportation reported that 28 percent of FAA's inspector workforce is
eligible to retire this year and that FAA will face oversight
challenges as large numbers of very light jets begin to operate in the
NAS. Other aviation experts with whom we spoke also expressed concern
over certification delays arising from limited FAA inspector resources.
According to FAA, the number of safety inspectors increased between
fiscal year 2005 and fiscal year 2006 and the agency plans to continue
to increase its inspector workforce through fiscal year 2008.
FAA Officials Believe That NAS Modernization Will Accommodate Very
Light Jet Demand for FAA Services:
FAA stated that NAS modernization efforts and new technologies will
improve efficiency and safety for all aircraft, including very light
jets. FAA and other government agencies are developing the Next
Generation Air Transportation System (NextGen), which is intended to
provide services to what is expected to be two to three times more air
traffic in 2025 compared with today, while being agile enough to
accommodate a changing fleet that includes very light jets.[Footnote
24] According to the FAA, NAS modernization will reduce congestion,
assist with separation standards, and increase overall system capacity.
Aviation experts and very light jet manufacturers we spoke with stated
that very light jets have advanced avionics and are expected to be able
to take full advantage of NextGen systems.
Eleven of the 14 aviation experts we spoke with regarding FAA's plans
to integrate very light jets into the NAS noted that FAA needs to
continue to adopt and implement new technologies to maintain system
capacity. Experts stated that the current air traffic control system is
antiquated and cannot be scaled up to meet projected increases in air
traffic. Experts encouraged FAA to adopt and implement NextGen
technologies, such as ADS-B, at a rapid pace to maintain current system
capacity. FAA and aviation experts also pointed to the importance of
continuing to develop more precise routes through Area Navigation and
Required Navigation Performance procedures, which, according to FAA,
may increase system capacity and safety by enabling closer aircraft
spacing with less intervention from air traffic control.
Several Factors Will Influence the Effect of Very Light Jets on FAA's
Costs and Trust Fund Revenues:
The effect of very light jets on FAA's costs to provide air traffic
control services[Footnote 25] and on Trust Fund revenues will depend on
several factors in addition to the number of very light jets deployed,
such as the extent to which they replace existing aircraft and how
their use is distributed between commercial and noncommercial
operations. One critical but particularly speculative factor likely to
affect FAA's costs and revenues is the extent to which a market for air
taxi service using very light jets will develop. Both the
administration and Congress have proposed changes in the current
funding structure for FAA for fiscal year 2009, which, if adopted,
would affect how very light jet operators are taxed.
Several Factors Will Influence the Effect of Very Light Jets on FAA's
Costs:
A number of factors will determine the effect on FAA's costs of
introducing very light jets into the NAS. Several of these factors
suggest that FAA's costs might increase, although the extent of any
increase is uncertain at this time. Factors include what type of
aircraft, if any, very light jets will replace; the type of operations
for which very light jets will primarily be flown; and where and when
very light jets are flown. However, there is enough uncertainty about
these factors to make the overall effect on costs unclear. For example,
if flights using very light jets replace flights using other high-
performance aircraft (such as another business jet or turboprop
aircraft) on a one for one basis, there may be little or no net effect
on FAA's costs because they would be replacing flights that, according
to FAA, impose similar costs on the air traffic control
system.[Footnote 26] However, there are at least three scenarios where
FAA's costs would rise with the introduction of very light jets. First,
if very light jet flights replace flights made with piston engine
aircraft--again on a one for one basis--FAA's costs may increase
because, according to FAA, controlling a high-performance aircraft such
as a very light jet generally requires more complex air traffic
equipment and procedures than needed to control a piston engine
aircraft. These additional requirements arise because of differences in
flight characteristics between the types of aircraft. For example, jets
are more likely than piston engine aircraft to be flown under
instrument flight rules at a higher altitude. Second, because of the
smaller number of passengers that can be carried on very light jets,
these flights could replace other high-performance flights on a more
than one for one basis. In such cases, FAA's costs could rise as it
would have to control more flights to carry the same number of
passengers. Third, flights by very light jets that would be new flights
not previously made (e.g., a business traveler who used to drive to a
meeting 200 miles away and begins using an air taxi service or a small
corporation that purchases a very light jet as its first corporate
plane) will require services from FAA's air traffic control system that
had not been required previously, increasing costs for FAA.
The type of operations for which very light jets are flown--
noncommercial or commercial--will also be a factor that will affect
FAA's costs. If current trends hold, very light jets used in
noncommercial service (e.g., corporate jets) would have a lower
utilization rate--approximately 300 hours per year for each corporate
aircraft according to FAA's 2005 data--and cost FAA around the same as
current jet aircraft used in noncommercial operations. Very light jets
used for commercial operations (e.g., air taxis) would entail higher
costs because of the higher utilization rates. It is unclear at this
point in time, however, what percentage of very light jets will be used
for commercial operations and what will be the utilization rates for
air taxi operators. In 2005, according to FAA data, air taxi operators
used each aircraft on average 413 hours per year. But some air taxi
operators are anticipating that that they will fly a very light jet up
to 1,500 revenue hours per year--substantially more than current
commercial air taxi operators. Such use of very light jets could
significantly affect FAA's costs.
Another factor that will affect FAA's costs is the extent to which very
light jets will compete for resources currently provided to other
aircraft. That is, very light jets might impose more costs if they are
used more frequently where and when there is substantial congestion in
terminal airspace. If they are most commonly used at less congested
airports or at less busy times of the day, then the additional costs to
FAA might be less, even if their use leads to a total increase in the
number of flights.
Several Factors Will Influence the Effect of Very Light Jets on Trust
Fund Revenues:
Several factors about which there is uncertainty--including some of the
same ones that will impact FAA's costs--would influence the effect of
very light jets on Trust Fund revenues. These factors include the
distribution of flights between commercial and noncommercial
operations, whether the flights replace existing flights on a one to
one basis or represent additional flights, and whether there is a rapid
expansion of the air taxi market.
FAA currently is funded from two sources: the Trust Fund and the
General Fund.[Footnote 27] The Trust Fund collects revenues from a
series of aviation-related excise taxes, including taxes on airfares
and fuel. The distribution of very light jet flights between commercial
and noncommercial operations would affect Trust Fund revenues because
very light jet operators would be responsible for different excise
taxes depending on the purpose of the flight. Commercial operators,
such as air taxi and charter operators, pay passenger ticket taxes,
passenger segment taxes, and fuel taxes. Noncommercial business,
corporate, and personal users pay only fuel taxes, but the fuel tax
rate is higher than for commercial operations (see table 3). Very light
jets used for commercial purposes could provide more revenue to the
Trust Fund than those used for business or corporate use. The overall
effect on revenues depends on miles traveled, number of passengers,
fares charged, and other factors that are uncertain at this time.
Table 3: Estimated Excise Tax Contribution for a Very Light Jet by Type
of Flight:
Approximately 300-mile flight from Tallahassee to Boca Raton.
Number of passengers;
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): 2;
Approximately 300- mile flight from Tallahassee to Boca Raton:
Corporate trip (noncommercial use): 2.
Average fare per passenger;
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): $900;
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate
trip (noncommercial use): [A].
Gallons of fuel used;
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): 100;
Approximately 300- mile flight from Tallahassee to Boca Raton:
Corporate trip (noncommercial use): 100.
Passenger ticket tax[B];
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): $135;
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate
trip (noncommercial use): [A].
Passenger segment tax[C];
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): $6.80;
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate
trip (noncommercial use): [A].
Fuel tax[D];
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): $4.30;
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate
trip (noncommercial use): $21.80.
Total tax revenue ;
Approximately 300-mile flight from Tallahassee to Boca Raton: Air taxi
service (commercial use): $146.10;
Approximately 300-mile flight from Tallahassee to Boca Raton: Corporate
trip (noncommercial use): $21.80.
Source: GAO analysis of FAA and industry data.
[A] Not applicable.
[B] The passenger ticket tax is 7.5 percent of the ticket price.
[C] The passenger segment tax is $3.40 per passenger segment during
calendar year 2007. Each segment consists of one takeoff and landing.
[D] The commercial fuel tax is $0.043 per gallon and the noncommercial
jet fuel tax is $0.218 per gallon.
[End of table]
In cases where the very light jet is purchased as a replacement
aircraft, the effect on the Trust Fund's revenues depends on the use of
the aircraft they are replacing. If the very light jet is used in a
similar manner to the aircraft it replaces, there may be little to no
net change in revenue. If the very light jet is used for a purpose
different from the aircraft it is replacing, there could be more or
less revenue depending on comparative uses. Very light jets that
provide additional flights rather than replace flights made by existing
aircraft will provide additional excise tax revenue.
Successful expansion of the air taxi market would affect the Trust
Fund's revenues because some operators predict substantial increases in
aircraft utilization rates. As discussed above, some commercial
operators predict that very light jets used in commercial air taxi
operations would be flown more frequently than in current air taxi
operations thereby generating relatively more fuel and passenger ticket
tax revenue. A couple of aviation experts suggested that successful air
taxi operations may attract new passengers who currently travel by
automobile, potentially leading to increased demand for commercial
flights and additional revenue. However, experts suggested that
successful air taxi operations could reduce revenue from traditional
commercial airlines if they encourage first class passengers to travel
by air taxi instead. At this time, however, the implication for Trust
Fund revenue is unclear because the air taxi model has yet to prove
itself. According to FAA officials, it will be at least 10 years before
there is an observable decrease in the number of commercial airline
flights because of passengers transferring to air taxi operations,
though effects on revenue could appear earlier.
Reauthorization Proposals Call for Changes to Funding Structure:
In February 2007, the administration submitted a proposal for
reauthorizing FAA and the excise taxes that fund most of its budget,
which called for a mix of user fees and fuel taxes for the purpose of
providing a more stable and cost-based funding structure. Congress is
considering alternatives to the administration's proposal. For example,
the Senate Commerce, Science, and Transportation Committee has reported
out legislation that would retain the existing excise taxes but add a
modernization surcharge of $25 that would be imposed on most jet
aircraft flights, with some exceptions.[Footnote 28] The House
Transportation and Infrastructure Committee has reported out its own
version of the FAA reauthorization bill, H.R. 2881, which also does not
impose user fees as the administration recommended.[Footnote 29] A
recommendation from the House Committee on Transportation and
Infrastructure to the House Committee on Ways and Means to increase the
tax rates for general aviation jet fuel and aviation gasoline would
increase Trust Fund revenues. As with the current funding structure,
there is too much uncertainty about very light jets to accurately
compare the revenue effects of these proposed alternative funding
structures, other than to note that the factors discussed in the
previous section would continue to affect revenues.
Agency Comments:
We provided a draft of this report to the Department of Transportation
for review. We received comments and technical clarifications by e-mail
from FAA's Office of the Associate Administrator for Airports, Office
of the Associate Administrator for Aviation Safety, and Air Traffic
Organization, which we incorporated into the report as appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Transportation, and the FAA Administrator.
We also will make copies available to others upon request. In addition,
the report will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-2834 or flemings@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions
to this report are listed in appendix II.
Signed by:
Susan Fleming:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
We examined (1) the current forecasts for very light jet deliveries and
the factors that contribute to the differences among the forecasts, (2)
the potential effect very light jets may have on capacity and safety of
the National Airspace System (NAS), (3) the Federal Aviation
Administration's (FAA) plans for accommodating the entry of very light
jets into the NAS, and (4) the potential effect very light jets may
have on FAA's costs and Airport and Airway Trust Fund (Trust Fund)
revenues.
To identify current forecasts for very light jet production, we
conducted a literature review of government, aviation industry, and
academic publications and interviewed aviation industry experts, FAA
officials, and academic experts. From these sources, we compiled a list
of publicly and commercially available forecasts. We contacted the
entities that produced the forecasts and obtained information about
their forecasts. We developed criteria for selecting forecasts to
include in our review. The forecasts we selected had to be published
within the past 12 months and estimate the number of aircraft for a
specific timeframe. We did not include five predictions for very light
jet deliveries because they did not include a timeframe or were demand
models that provided multiple very light jet estimates based on a
number of inputs. For example, Eclipse Aviation, a very light jet
manufacturer, had a prediction for potentially higher very light jet
deliveries (8,995 annually) than any of the forecasts included in our
analysis. This forecast, however, emphasized very light jet demand once
the market hits maturity, but, since it did not indicate when that
might happen, we did not include it in our review. We also did not
include several dynamic growth models, which are capable of producing
very light jet demand estimates for air taxi operations based on a
number of changing inputs. Based on our criteria, we selected eight
forecasts to include in our review, which were produced by FAA, the
Teal Group, Honeywell, Rolls-Royce, Forecast International, PMI Media
Limited, Embraer, and Velocity Group. We reviewed these forecasts and
determined that they were sufficiently reliable for our purposes. We
developed a data collection instrument to collect information from each
of the forecasts (e.g., projected number of very lights, forecast date,
underlying assumptions, factors affecting growth, etc.) and examined
this information to identify similarities and differences among the
forecasts. From this comparison, we identified the factors and
assumptions affecting the total number of very light jet deliveries
discussed most often. In order to obtain additional information about
the factors that would affect the number of very light jets delivered,
we contacted selected organizations and individuals with expertise in
general and business aviation, including:
* federal government officials (FAA's Office of Aviation Policy and
Plans, FAA's Flights Standards Service, National Aeronautics and Space
Administration),
* academic researchers (Virginia Polytechnic Institute and State
University, Massachusetts Institute of Technology, George Mason
University),
* an air taxi service company (DayJet),
* aircraft equipment manufacturers (Adam Aircraft, Eclipse Aviation,
Pratt & Whitney),
* aviation insurance companies (Global Aerospace, AIG Aviation),
* an air traffic manager of a general aviation airport (Chicago
Executive Airport),
* an aviation consulting firm (Boyd Group), and:
* industry associations (American Association of Airport Executives,
Aircraft Owners and Pilots Association, Air Transport Association,
General Aviation Manufacturers Association, National Business Aviation
Association).
We developed the list of organizations to contact by interviewing
experts from FAA and general aviation associations and asking for the
names of other experts knowledgeable about issues affecting general and
business aviation and about factors affecting very light jet
production.
To determine how increasing numbers of very light jets could affect the
capacity and safety of the NAS, we reviewed government, academic, and
aviation industry studies that described how very light jets might
operate in the future and their potential effects on FAA's air traffic
management system. We reviewed GAO reports and FAA regulations in order
to obtain information about how FAA regulates general aviation aircraft
safety and manages aircraft operations. We developed the list of
organizations to contact by interviewing experts from FAA and general
aviation associations and asking for the names of other experts who are
knowledgeable about how general aviation aircraft currently operate and
how very light jets could operate in the future. To obtain information
about these issues, we contacted:
* federal government officials (FAA, National Transportation Safety
Board, National Aeronautics and Space Administration),
* academic researchers (Virginia Polytechnic Institute and State
University, Massachusetts Institute of Technology, George Mason
University),
* an air taxi service company (DayJet),
* aircraft equipment manufacturers (Cessna Aircraft Company, Adam
Aircraft, Eclipse Aviation),
* aviation insurance companies (Global Aerospace, AIG Aviation),
* air traffic managers of general aviation airports (Chicago Executive
Airport, Boca Raton Airport), and:
* industry associations (American Association of Airport Executives,
Aircraft Owners and Pilots Association, Air Transport Association,
General Aviation Manufacturers Association, National Business Aviation
Association, National Air Traffic Controllers Association).
We also asked the aforementioned agencies and organizations to identify
factors that could influence the effect of very light jets on capacity
and safety. We analyzed the responses and summarized the findings.
Based on suggestions from these experts, we reviewed two studies
conducted by the National Aeronautics and Space Administration and the
Massachusetts Institute of Technology evaluating the effect of very
light jets on the NAS and determined that they were sufficiently
reliable for our purposes.
To determine how FAA is planning to accommodate potential very light
jet demand, we met with FAA officials from the Air Traffic
Organization, Office of Aviation Policy and Plans, Flight Standards
Service, and the very light jet cross organizational group to discuss
FAA's current procedures for handling new aircraft and plans for
additional action. We also discussed with FAA's Air Traffic
Organization the agency's plans for transforming the air traffic
control system to the Next Generation Air Transportation System
(NextGen) and how this relates to the future entry of very light jet
aircraft into the NAS. We reviewed GAO and FAA reports describing plans
for implementing NextGen policies and technologies. To obtain
information about what FAA should be doing to prepare for very light
jets, we contacted selected organizations and individuals with
expertise in general and business aviation, including:
* federal government officials (National Aeronautics and Space
Administration),
* academic researchers (Virginia Polytechnic Institute and State
University, Massachusetts Institute of Technology, George Mason
University),
* an air taxi service company (DayJet),
* aircraft equipment manufacturers (Adam Aircraft, Eclipse Aviation),
* aviation insurance companies (Global Aerospace, AIG Aviation),
* an air traffic manager of a general aviation airport (Chicago
Executive Airport), and:
* industry associations (American Association of Airport Executives,
Aircraft Owners and Pilots Association, Air Transport Association,
General Aviation Manufacturers Association, National Business Aviation
Association).
To determine the potential effect of very light jets on FAA's costs and
revenues, we met with FAA officials from the Office of Aviation Policy
and Plans to discuss FAA's allocation of costs and the excise taxes
that fund the Airport and Airway Trust Fund. We also discussed the
administration's reauthorization proposal and how the proposed excise
taxes could affect general aviation users. We reviewed the Senate and
House reauthorization proposals for information about how they could
affect general aviation users. We reviewed GAO and FAA reports for
information about FAA's costs, excise taxes, and revenues. We
interviewed aviation excise tax experts from the Internal Revenue
Service to determine which excise taxes apply to different general
aviation users.
We conducted our work between September 2006 and July 2007 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II GAO Contact and Staff Acknowledgments:
GAO Contact:
Susan Fleming, (202) 512-2834 or flemings@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, key contributors to this report
were Gerald Dillingham, Hal Brumm, Jay Cherlow, Matt Cook, Seth Dykes,
Colin Fallon, Dave Hooper, Gail Marnik, Sara Ann Moessbauer, Faye
Morrison, and Joshua Ormond.
FOOTNOTES
[1] According to FAA, there is no standard definition for the term
general aviation; its definition changes depending on, among other
things, whether one is referring to safety statistics or user
categories. In addition, for purposes of its recent cost allocation
study, FAA included air taxis, which are sometimes considered general
aviation aircraft, as commercial aircraft based on the taxes that are
assessed to air taxi operators.
[2] Depending on the airport's location, the approach control
facilities may be located within the airport's control tower or at
separate facilities.
[3] Business jets are turbojet aircraft weighing less than 100,000
pounds maximum gross takeoff weight, with wingspans less than 100 feet
that are used by companies to conduct their business.
[4] In 2006, the average price for a business jet aircraft was $18.71
million.
[5] In a previous report, GAO contacted the Department of
Transportation and industry officials regarding the use of very light
jets for serving small communities, especially in the near term. These
officials noted that current very light jet business models indicate
operators will provide premium point-to-point service between cities
that are larger than the communities that participate in the Essential
Air Service program. The Essential Air Service program was established
by Congress as part of the Airline Deregulation Act of 1978 to help
areas that face limited air service. See, GAO, Commercial Aviation:
Programs and Options for Providing Air Service to Small Communities,
GAO-07-793T (Washington, D.C.: Apr. 25, 2007).
[6] According to FAA, although current regulations do not allow very
light jets to operate in scheduled service, FAA is in the process of
proposing new rules to allow for the operation of these aircraft in
scheduled service.
[7] Deliveries refers to the number of aircraft shipped and received,
not the total number of aircraft in the NAS.
[8] See appendix II for our selection criteria for the forecasts we
examined.
[9] According to the Commerce Department's Bureau of Economic Analysis,
gross domestic product is the market value of goods and services
produced by labor and property in a country, regardless of nationality.
[10] The aviation experts we interviewed were not selected randomly,
and their views and opinions cannot be generalized to the larger
population of experts and aviation officials. (See app. I for a
discussion of scope and methodology.)
[11] The Rolls-Royce forecast predicts very light jet and overall
business jet demand in 2025 and was considered an outlier for the
purposes of this illustration.
[12] Percent differences were calculated by subtracting the lowest
number in the range from the highest number and then dividing the
result by the highest number of the range.
[13] The aviation experts we interviewed were not selected randomly and
their views and opinions cannot be generalized to the larger population
of experts and aviation officials. (See app. I for more information.)
[14] Reliever airports are airports that must have 100 or more based
aircraft or 25,000 annual itinerant operations, and that provide
operators such as general aviation aircraft an alternative to using hub
airports. General aviation airports are airports not classified as
commercial service.
[15] National Aeronautics and Space Administration, The Effects of Very
Light Jet Air Taxi Operations on Commercial Air Traffic, NASA/CR-2006-
214519 (Hampton, Virginia; October 2006); and Massachusetts Institute
of Technology, Investigation of the Potential Impacts of the Entry of
Very Light Jets in the National Airspace System (Cambridge,
Massachusetts; Oct. 30, 2006).
[16] A hub airport is a primary airport that has 0.05 percent or more
of all annual U.S. enplanements.
[17] Utilization rate is the average number of hours an aircraft is
flown per year. Some references cite revenue hours as opposed to total
hours.
[18] Federal Aviation Administration, FAA Aerospace Forecasts Fiscal
Years 2007-2020 (Washington, D.C; March 2007).
[19] The mentor pilot training is used to, among other things, observe
a pilot's handling of aircraft and use of automation and provide
feedback to the pilot.
[20] 4 C.F.R. §§ 21 and 23. Part 21 is Certification Procedures for
Products and Parts. Part 23 is Airworthiness Standards: Normal,
Utility, Acrobatic, and Commuter Category Airplanes.
[21] 14 inspectors with oversight responsibilities for more complex
aircraft and types of operation must meet higher minimum
qualifications, including additional training and experience. For
example, standards are higher for an aircraft requiring a type rating.
In addition, operations in which passengers are carried for hire are
more stringently regulated than flights solely for personal use.
Private pilots may not carry passengers for hire.
[22] Collaborative decision making is a joint government/industry
initiative aimed at improving air traffic management through increased
information exchange among the various parties in the aviation
community. The collaborative decision making program is made up of
representatives from government, general aviation, airlines, private
industry, and academia who are working together to create technological
and procedural solutions to traffic flow problems that face the NAS.
[23] See GAO, Aviation Safety: FAA's Safety Efforts Generally Strong
but Face Challenges, GAO-06-1091T (Washington, D.C.: Sept. 20, 2006).
[24] GAO has reported that the NAS is expected to accommodate a variety
of new aircraft, such as the jumbo Airbus A380, which can hold more
than 500 passengers. See GAO, Commercial Aviation: Potential Safety and
Capacity Issues Associated with the Introduction of the New A380
Aircraft, GAO-07-483 (Washington, D.C.: Apr. 20, 2007).
[25] FAA incurs costs for other services it provides, such as aircraft
maintenance or certification, but we have limited our examination of
the effect on FAA's costs to those costs associated with the provision
of air traffic control services.
[26] In January 2007, FAA released a new cost allocation study. This
report sets forth a methodology for assigning air traffic costs to user
groups on the basis of aircraft type. The two principal user groups are
the high-performance group, which includes all fixed-wing turbine
engine aircraft operations, and the piston engine aircraft group, which
includes piston engine fixed-wing aircraft operations and helicopters.
According to FAA, this cost allocation methodology is based on the
assumption that high-performance users generally compete for the same
air traffic control resources and their operations are more time-
sensitive than piston aircraft operations, requiring more complex air
traffic equipment and procedures. Piston aircraft operations, on the
other hand, tend to be less time-sensitive and typically rely on less
complex equipment. Differences in speed and cruising altitudes of the
two aircraft types also affect their en route costs. Federal Aviation
Administration, FY2005 Cost Allocation Report (Washington, D.C; Jan.
31, 2007).
[27] The General Fund historically has been used to pay for portions of
FAA's budget, with contributions towards the agency's overall budget
averaging about 20 percent in recent years.
[28] S.1300, 110th Cong., 1st Sess. § 106 (May 3, 2007). Exceptions to
the $25 surcharge include, among others, military and public aircraft,
air ambulances, piston engine aircraft, and turboprop aircraft
operating outside of controlled airspace.
[28] H.R.2881, 110th Cong., 1st Sess. (June 27, 2007).
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM:
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400:
U.S. Government Accountability Office, 441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Susan Becker, Acting Managing, Beckers@gao.gov (202) 512-4800:
U.S. Government Accountability Office, 441 G Street NW, Room 7149:
Washington, D.C. 20548:
