April 12, 2024

Biden focuses on SpaceX’s tax-free ride in US airspace

Every time a rocket takes to the skies carrying satellites or supplies for the International Space Station, air traffic controllers on the ground must take crucial steps to ensure that commercial and passenger aircraft remain safe.

The controllers, hired by the Federal Aviation Administration, close airspace, provide real-time information about missiles and their debris, and then reopen airspace quickly after a launch is completed.

But unlike airlines, which pay federal taxes for the work of air traffic controllers every time their planes take off, commercial space companies don’t have to pay for their launches. That includes companies like Elon Musk’s SpaceX, which has launched more than 300 rockets over the past 15 years, often carrying satellites for its Starlink internet service.

The Biden administration wants to change that. President Biden’s latest budget proposal, released last month, suggests for-profit space companies will pay for their use of government resources.

Commercial aerospace companies are exempt from aviation taxes that fill the coffers of the Airport and Airway Trust Fund, which pays for the FAA’s work and will receive about $18 billion in tax revenue for the current fiscal year. The taxes are paid primarily by commercial airlines, which charge 7.5 percent of each ticket price and an additional fee of about $5 to $20 per passenger, depending on the destination of each flight.

Mr. Biden’s budget proposal promises to work with Congress to overhaul the tax structure and share the costs of operating the nation’s air traffic control system. His pledge is based in part on an independent safety assessment report commissioned by the FAA, which recommended that the federal government update excise taxes to charge commercial space companies.

“Every time SpaceX launches a flight, it requires enormous air traffic control resources to clear the airspace around the launch window for hours,” said David Grizzle, author of the safety report and former chief operating officer of the Air Traffic Organization, an agency within the FAA hiring the controllers. “And again, it pays zero.”

SpaceX did not respond to multiple requests for comment.

Biden’s call for an overhaul of the decades-old excise tax structure is part of his push to make wealthier Americans and wealthy companies “pay their fair share.” In his State of the Union address last month, Mr. Biden also called for raising taxes on private and business aircraft users, including increasing the tax they pay on jet fuel from 21.8 cents per gallon over time five-year term of $1.06 per gallon. That fuel tax currently makes up about 3 percent of the trust fund’s annual revenue, which relies heavily on what commercial airlines and their passengers pay.

Yet commercial space companies don’t contribute to that fund or share any of the costs the public bears when rockets are launched, says William J. McGee, a former FAA-licensed aircraft coordinator and a senior fellow at the American Economic Liberties Project, a consumer advocacy group.

“This is a matter of fundamental fairness,” Mr McGee said. “It would be the equivalent of having a toll system on a highway and waving by certain users and not others.”

Missile launches are a time-consuming process for the FAA, former air traffic controllers say. The agency must create a detailed plan outlining the exact airspace where aircraft should be closed and diverted before launch. Controllers must also respond quickly if something goes wrong.

“Think of a space launch as being similar to a hurricane making landfall,” says Michael McCormick, a former air traffic controller who worked for the FAA for more than 30 years and now teaches at Embry-Riddle Aeronautical University.

Hurricanes disrupt plans, close airports and force planes to divert. Rocket launches require equally complicated planning from controllers, Mr. McCormick said.

“In Florida — which is also one of the densest commercial aviation traffic corridors — you may start to see some very real impacts on the system,” said Michael P. Huerta, who served as FAA administrator during both the Obama and Trump administrations. government. the chairman of the safety assessment board who wrote the report. Commercial rockets now fly primarily from Vandenberg Space Force Base in California and Cape Canaveral, Florida, near Orlando.

The number of space launches has increased sharply in recent years, led by SpaceX, which puts dozens of satellites into orbit every month. In recent years, parts of NASA’s missions have also been outsourced to commercial space companies that transport supplies to the International Space Station.

In 2023, the FAA oversaw 117 launches, a significant jump from a decade earlier when there were only 15 flights. More than 30 rockets have been launched so far this year, setting the pace to surpass last year’s numbers by 2024. The number of launches includes U.S. rockets that lifted off from New Zealand, whose space agency regulates launches in its territory along with the FAA

The increase in launches is also prompting the FAA to devote more resources to overseeing and authorizing space activities, which is separate from the work of air traffic controllers. The administration is seeking $57 million for authorization and licensing of the commercial space industry for fiscal year 2025, an increase from the approximately $37 million spent in 2023. The FAA added 33 new employees to its industry licensing and oversight office last year.

Commercial space companies are rejecting the Biden administration’s suggestion to pay aviation taxes. Members of the industry argue that it is still in its early stages, with most companies struggling to break even. They also point out that missiles only take about 15 seconds to fly through the airspace and that the number of missile launches is still negligible compared to the approximately 16 million flights the FAA handles annually.

Taxing the industry is “not appropriate at this time,” said Karina Drees, president of the Commercial Spaceflight Federation, the industry group that represents more than 80 companies and universities. “The commercial space industry, working closely with its FAA regulator, continues to improve coordination of launch activities and avoid unnecessary impacts to U.S. airspace.

But Mr. Huerta and Mr. Grizzle said Congress should start looking for ways to tax the industry ahead of a boom in launches that is already beginning.

More missile launches are increasing pressure on the air traffic control system that is already marred by inadequate funding, staff shortages and overworked staff, the authors of the independent safety report said. Dozens of near-collisions reported last year — in which commercial airliners came dangerously close to each other — have shown that the FAA’s safety margins have already become thin.

The combination of staff shortages and insufficient funding for new equipment “presents a perfect storm for more serious events,” Mr. Grizzle said. The situation “will only get worse as the proliferation of newcomers who pay no taxes at all” continues.

The FAA said in a statement that the agency “is committed to safely handling rapidly increasing space operations while minimizing disruption to the flying public.”

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