It’s not just sports teams. Operators of gleaming private jets that have become a symbol of wealth and success pay far less in taxes than airline passengers and other commercial flyers, according to a Bloomberg News analysis and government reports.

On a per flight basis, a private jet could generate as little as two per cent of the taxes and fees paid by airline passengers on an identical route, Bloomberg found in its review.

High-performance private planes make up about 10pc of US flights under air-traffic control, yet pay less than one per cent into a trust fund that finances air-traffic control and other Federal Aviation Administration operations, an agency study found this year.

“By and large, a private aircraft costs the same for the FAA to process as a large aircraft,” said Michael Ball, senior associate dean at the University of Maryland’s Robert H. Smith School of business and co-director of an aviation research consortium. “If you look at it from that standpoint, they clearly aren’t paying their due.”

Unlike most of the rest of the world, which charges fees based on aircraft weight and distance flown, the taxes private jets in the US pay are different from the ones imposed on airlines.

Private aircraft operators pay 21.8 cents per gallon of jet fuel. By contrast, airlines and charter operators have three separate taxes: an excise tax of 7.5pc on tickets or charter charges, a fee of $4.10 per passenger and 4.3 cents per gallon of jet fuel.

The result is that airline passengers are subsidising some of the world’s largest corporations and wealthiest people under the current system, said Matthew Gardner, a senior fellow at the non-profit Institute on Taxation and Economic Policy.

Bloomberg calculated the difference between airline and private-jet taxes on 10 domestic routes, ranging from 2,500 to 340 miles on a variety of typical aircraft.

On a per flight basis, a private jet could generate as little as two per cent of the taxes and fees paid by airline passengers on an identical route, Bloomberg found in its review

While the taxes can vary significantly due to many factors, there were sharp disparities in all of the examples. On average, private flights generated only about seven per cent of comparable airline taxes in the examples.

A transcontinental flight from New York to Los Angeles on a Virgin America Inc. Airbus SE A320, would be charged about $3,900 in taxes, assuming the plane was 85pc full and passengers paid the average fare calculated by the Transportation Department’s Bureau of Transportation Statistics.

The tax bill for a flight between the same cities on a privately owned Bombardier Global 6000, one of the world’s longest range corporate jets, would be about $525. That’s about 87pc less than the airline flight.

The differences can be far greater if the private plane is a smaller model that burns less fuel.

A trip from Nashville, Tennessee, to Philadelphia by Southwest Airlines, which typically uses a Boeing 737-700 on that route, would typically be charged more than $2,000 in taxes. An Embraer SA Phenom 100E, a smaller and more fuel efficient corporate jet, on the same leg would be assessed about $50, or roughly two per cent of the Southwest plane.

Groups representing private aircraft, known as general aviation, have vigorously fought attempts to alter the current tax system, calling it equitable.

“I haven’t seen anything to suggest we are not paying a fair share,” Ed Bolen, president and chief executive officer of the National Business Aviation Association, a Washington-based trade group representing more than 11,000 companies, said in an interview.

Business aircraft are an important segment of aviation tying rural areas to the rest of the US, and that sector supports $200bn in economic activity each year, Bolen said..

Mark Baker, president and chief executive officer of the Aircraft Owners and Pilots Association, which represents more than 300,000 private pilots, said the Bloomberg analysis was similar to the airline industry’s ‘false criticisms of general aviation.’

“The fact is that from infrastructure to technology to labour, the airlines drive the costs and general aviation is a very small part of that,” Baker said.

The starkly different tax rates have been a long-simmering point of contention between airlines and their brethren in the corporate aviation world, and they help explain why the two groups have been at each other’s throats on a House proposal to move the air-traffic system out of the FAA and into a non-profit corporation.

Any potential changes in the taxes on private aviation were effectively taken off the table this year by chairman of the House Transportation and Infrastructure Committee, Republican Bill Shuster.

The taxes on different aviation sectors fund the Airport and Airway Trust Fund, which helps pay for the FAA, air-traffic control and airport construction projects. Last year the trust fund contributed $14.3bn toward the FAA’s $16.3bn budget, or 88pc.

Overall, high-performance business aircraft — those powered by jets or turbo props — accounted for about 10pc of all flights overseen by FAA controllers last year and eight per cent of miles flown, according to an agency estimate.

The FAA estimated that these business planes contributed $104 million to the trust fund in 2016. That amounts to just 0.7pc of the overall aviation taxes. That compares to 92pc of the tax payments, or more than $13bn that came from US carriers, foreign airlines and charter carriers — most of which were paid directly by passengers.

While the use of private aircraft has occasionally drawn criticism — such as when Detroit automakers flew on separate company planes to Washington in 2008 to seek bailouts from Congress — it has tended to be short-lived.

Both George W. Bush and Barack Obama floated proposals to hike taxes or fees on private jets while they served as president. Both considered adding a per-flight fee for private flights and Obama in 2011 suggested changes in how private planes were depreciated on tax returns, which would have increased what owners paid. None of the plans came to fruition.

Bloomberg/The Washington Post Service

Published in Dawn, The Business and Finance Weekly, September 11th, 2017