History
Overview
After years of litigation, finally resolved in 2004, FAA resumed billing and collection of Overflight Fees in January 2005. The fees now in effect are identical to those originally established by FAA's Final Rule on Overflight Fees (PDF) dated August 20, 2001.
Initial Overflight Fees
Initially authorized by the Federal Aviation Reauthorization Act of 1996, FAA put these fees into effect in May 1997. The Air Transport Association of Canada (ATAC) and seven foreign air carriers challenged them in Court on several counts.
In January 1998, the U.S. Court of Appeals upheld FAA on three process and procedure points, but vacated the Rule because FAA's fee setting methodology violated the statute by using a measure of value (elasticity of demand) in deriving the fees. FAA suspended billing and refunded the $40 million it had collected.
Overflight Fee Rules
Following the 1998 refunds, FAA developed a new Overflight Fee Rule, deriving the fees from air traffic activity data and cost accounting data for Fiscal Year 1999. These fees were effective on August 1, 2000 and revised (reduced about 15%) on August 20, 2001 to reflect accounting adjustments. The ATAC and a slightly different group of seven foreign air carriers again challenged the 2000 and the 2001 Rules in Court. They argued the fees were not "directly" related to costs, and FAA had failed to consult with them. The cases were combined and litigated back and forth for over a year while FAA continued collections.
On April 8, 2003, the Court again ruled against FAA, stating that a November 2001 amendment of the authorizing statute that changed the fee standard in a way favorable to FAA was irrelevant to this litigation. The FAA immediately suspended billing operations and appealed, but the appeal was denied.
Meanwhile, the U.S. Congress, which had supported FAA during the litigation by twice enacting language that affirmed what FAA had done, responded to the Court with Section 229 of Vision 100 (the latest (2003) FAA Reauthorization Act), which legislatively adopted the two FAA Rules. Section 229 unfortunately contained ambiguous language that provided the potential for more litigation.
Administrative Order
In July 2004, the Administrator issued an Order interpreting the ambiguous terms of Vision 100. Under the Order, FAA kept some of the fees while essentially refunding (by giving credits to be applied to future billings) another portion of the fees. FAA then issued a Report to Congress and held a Consultation Meeting with industry users in September 2004. Both of these were preconditions under Vision 100 for FAA to resume billing and collecting fees.
FAA resumed billing operations in early January 2005, beginning with a 7-month bill for March through September 2004. That was followed by a 3-month bill for October through December 2004. FAA then issued several monthly bills, and is now back on its normal monthly billing cycle. All bills are due 30 days from their date.
Contact Us
Please email us any questions you have about Overflight Fees or questions about your own Overflight Fee bill or other billing and collection matters.
