In a push that could adversely impact private space companies, President Joe Biden is advocating for the inclusion of space launch operations within the scope of U.S. airspace taxes. This proposal, part of the president’s budget released last month, aims to revise the longstanding aviation excise tax framework to incorporate contributions from private space entities like Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin, as reported by The New York Times.
Biden’s plan was inspired in part by a 2023 independent safety assessment conducted on behalf of the Federal Aviation Administration. This report suggests that the federal government should revise excise tax policies to include commercial space enterprises.
“At present, NAS users such as commercial space companies and UAS operators, as well as planned advanced air mobility providers do not pay into the AATF nor are there any plans for them to do so. With these operations expected to be a growing share of future NAS operations, the imbalance of those contributing versus those benefitting from FAA services will continue to grow.”
National Airspace Safety Review Report
The FAA’s 2025 budget request is for $20.8 billion dollars, a large part of which is for hiring additional controllers and upgrading Air Traffic Control facilities nationwide.
David Grizzle, a former chief operating officer of the Air Traffic Organization under the FAA, highlighted the extensive resources required for space launches. “Whenever SpaceX launches a flight, it requires massive air traffic control resources to clear the airspace for hours around the launch window,” Grizzle told The Times, pointing out the current lack of financial contributions from these operations: “And again, it pays zero.”
The proposed changes seek to bolster the Airport and Airway Trust Fund, which is predominantly funded by commercial airlines through a 7.5% charge on ticket prices, amounting to approximately $5 to $20 per passenger. This fund is crucial for financing the Federal Aviation Agency (FAA), which is facing increasing challenges due to the rapid growth in commercial space launches.
Despite space launches constituting only about 10% of commercial airspace usage in 2023, their expected growth has raised concerns at the U.S. Government Accountability Office (GAO) and within the FAA itself. The agency reported a significant increase in launch activities, with 124 commercial space launches and re-entry events in 2023, a 48% increase from 2022, and more than double the number in 2021.
The FAA’s commercial space office has requested a 36% budget increase to address the escalating demand for its services. Kelvin Coleman, FAA associate administrator for commercial space transportation, emphasized the strain on their current workforce, stating at a media roundtable, “Right now we’re at about 140 people and they’re all pedaling as fast as they can,” as per spacenews.com.
SpaceX, which dominates the U.S. commercial space sector, has significantly contributed to this increase, with over 30 rocket launches already in 2024, following a record-breaking 96 launches in 2023. However, the industry has expressed concerns over the proposed taxes. Karina Drees, president of the Commercial Spaceflight Federation, argued that given the industry’s nascent stage and the minimal airspace usage per flight, imposing taxes now is “not appropriate at this time.” With commercial spaceflight in its infancy, many companies are struggling just to break even.
The Biden administration’s proposal is not limited to space launches but includes plans to increase contributions from private and corporate jet owners. The aim is to ensure that the wealthy and large corporations pay “their fair share,” with a proposed increase in the fuel tax to $1.06 per gallon over five years, up from 21.8 cents.
