After giving Sen. Howard W. Cannon (D-Nev.) fodder for his bill to reduce air fares and cut back on airport subsidies, the administration withheld its support for the measure.
In Testimony before the Senate Commerce Committee, Langhorne M. Bond, Federal Aviation administrator, agreed with Cannon that many of the airports now eligible for federal funds for capital improvements really don't need Uncle Sam's money.
"I believe hardly anyone would seriously argue that the 25 or so largest airports . . . really require an airport grant program for their economic survival," Bond admitted.
Would the administration then support eliminating the large airports from eligibility for funds from the aviation trust fund? Cannon asked. "At the moment, the answer is no," Bond replied.
Cannon didn't fare any better with his proposal to cut 6 percent from airline ticket prices by dropping the current ticket tax from 8 percent to 2 percent. "We believe that a tax reduction of this magnitude is contrary to the prevailing public mood concerning balanced budgets," Bond contended.
He agreed that action should be taken to reduce the growing and controversial trust fund surplus of almost $3 billion of uncommitted money generated by the 8 percent ticket tax. But instead of reducing the tax, Bond said the administration wants to transfer money from the trust fund to the Treasury at the rate of $1 billion-plus a year to pay for FAA operations, which now are underwritten by general funds.
Cannon wouldn't hear of it. The trust fund was established for a precise purpose, it would be unfair to return it to anyone but the users who created it in the first place, he said. A tax reduction would have a badly needed deflationary impact, considering last week's 9.5 percent increase in the fare ceiling because of rising fuel prices, Cannon noted.
Although it failed to get the administration's endorsement, Bond called Cannon's bill "visionary, far-sighted and thought-provoking."
The measure was cosponsored by Sens. Bob Packwood (R-Oreg.), Daniel K. Inouye (D-Hawaii) and Harrison N. Schmitt (R-N.M.). It would renew the federal government's role in aiding airport and airway development through the trust fund but would rework it to "defederalize" the 72 largest airports -- those boarding more than 700,000 passengers a year. The large airports could make up any shortfall in their capital needs by negotiating with the airlines for different fee payments
The laws that established the trust fund and feeds it expire on June 30, 1980, Congressional action is required to renew them before then.
Cannon's measure won the support of the airlines through the Air Transport Association. Paul R. Ignatius, ATA president, said it would be difficult to quantify the benefits of reduced red tape, the visibility of the 6 percent tax reduction and the increase in traffic it might stimulate, or the actual ability of airlines at the airports with reduced federal subsidy to raise fare to recover the increased fees and charges they might face at those airports.
"On the other hand, there is little doubt that direct investment in airport improvements will be more productive that investment via the trust fund," he said."For this reason the airlines have concluded that real benefits will accrue from this legislation."
In an obvious reference to recent statements by Sen. Edward M. Kennedy (D-Mass.) about a potential presidential race. Cannon said he hadn't made up his mind on the final form the bill should take "but my wife and family have told me they'll support any decision I make."