The US Federal Aviation Administration is to refund millions of dollars in overflight fees charged to foreign air carriers between October 1997 and the end of January after a Federal Appeal Court decision questioning the basis of the fees.

The FAA says it will not appeal against the ruling and will instead come up with a new cost assessment system acceptable to the foreign airlines and the court. A total of $40 million was collected by the FAA, including about $10 million which is now being demanded back by Canadian carriers.

The ruling found that the FAA had imposed a value-oriented pricing scheme which did not relate directly to the cost of air traffic control services. The fees were designed to raise $100 million a year to cover FAA operating costs. British Airways and Qantas joined Canada in filing motions for a delay in the collection of the fees, arguing they were implemented too fast and without consultation.

The Clinton Administration has forwarded draft legislation to Congress calling for the detachment of the air traffic services (ATS) element of the FAA to a separate "performance based organisation" funded largely by user fees.

Airlines will move over to the new user charge system by 15 May, 2000, but general aviation will continue to pay via a fuel charge.

The planned start-up date is January 1999. Separate legislation would also increase passenger facility charges, which are used for airport improvement projects, from $3 to $4 per person.

Source: Flight International