Glossary of Airline Terminology

Airport and Airway Trust Fund (AATF, Trust Fund)

Created by the Airport and Airway Revenue Act of 1970, the AATF provides funding for improvements to the nation’s airports and air traffic control system. Money in the fund comes solely from users of the system, principally from collections related to passenger tickets, passenger flight segments, international arrivals/departures, cargo waybills, aviation fuels and frequent-flyer mileage awards from nonairline sources like credit cards.

Additional Information: 
The Federal Aviation Administration (FAA) provides services to commercial, private, corporate and military aircraft. In large part, the General Fund of the U.S. Treasury supports the FAA noncommercial aviation functions. The balance of the FAA budget is funded primarily by airlines and their customers through the Airport and Airway Trust Fund (AATF), which Congress established in 1970 “to provide for the expansion and improvement of the nation’s airport and airway system.”

The Trust Fund initially aimed to address capital needs, such as runways and taxiways at airports and new computers and radar equipment for the air traffic control (ATC) system. Since then, however, Congress also has used Trust Fund revenues to cover much of the FAA operating budget.

Trust Fund revenues come from several excise taxes paid by air carriers, air travelers, shippers and other users of the nation’s airports and ATC services. Congress has increased these taxes, both in scope and size, several times in the last two decades. The cash balance has historically been counted as a credit against federal obligations, thus helping (albeit artificially) to balance the nation’s budget. With enactment of AIR-21, however, Congress mandated that all taxes and interest paid into the fund in any given year be expended the following year, ensuring that capital-development projects critical to FAA modernization are no longer neglected.

NOTE: Trust Fund taxes expired 1/1/96-8/26/96 and 1/1/97-3/6/97.

Sources: 
Airport and Airway Development and Airport and Airway Revenue Acts (Titles I and II, P.L. 91-258) 
FAA Office of Financial Services 
Office of Management and Budget, Appendices, Budget of the United States 
U.S. House of Representatives, House Report No. 91-601 
Congressional Budget Office, “The Status of the Airport and Airway Trust Fund: A Special Study,” December 1988

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