Great Falls airport director: proposed tax increase to jet fuel could increase airfare, lower fuel purchases in Montana

A measure that would increase the tax on jet fuel for airlines eliminating the rebate for some of that tax is scheduled for a vote at the Montana Senate on Tuesday.

House Bill 661 would increase the tax airlines pay to 5 cents per gallon of jet fuel.

The revenues would be funneled to infrastructure needs at smaller airports around the state.

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John Faulkner, director of the Great Falls International Airport, said the tax is currently 2 cents per gallon with the option for a rebate on 1 cent.

“It’s a massive increase,” Faulkner said.

Faulkner said the revenue for the increased tax would generate anywhere from $2 million to $5 million annually.

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Many small airports across the state, Faulkner said, aren’t charging landing fees or other fees to pilots or airlines for use of their airport.

[READ: Small Montana airport data]

“Why not look at helping yourself before you go out and get funding from someone else,” Faulkner said, suggesting that those smaller airports could charge fees for services such as landing at their airport or hangar rentals.

The airlines operating out of Great Falls buy some of their jet fuel from Calumet Refining in the city or truck some in from the Billings refinery, Faulkner said. It’s stored at Holman Aviation.

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The Great Falls airport, like others in Montana, is a long way from other major hubs so airlines have to purchase fuel here.

But if the tax increase is approved, Faulkner said commercial service airports are worried that airlines will look to buy less fuel in the state of Montana, potentially cutting jobs and impacting the refineries statewide.

“This can’t do anything to improve the amount of fuel purchased in the state,” Faulkner said. “I think it is a bad idea.”

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Airlines would also look to recoup that cost and some of the additional tax could be passed on to passengers through increased airfare.

Faulkner said airfare in Montana is significantly higher than the national average and at the high-end, it’s 46 percent more. Great Falls is at the low-end of airfare among Montana airports, but it’s still 22 percent higher than the national average, Faulkner said.

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If prices go up, Montanans will pay more to travel, and what’s more concerning, Faulkner said, is the impact it could have on people coming into the state to visit and spend money here. Tourism is a major economic driver and higher airfare could have a negative impact, he said.

Faulkner said many airlines have been vocal about their opposition to the increase and that there are already existing flights that are marginal performers and are on the bubble of possibly being eliminated.

“It’s not good,” he said.

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Faulkner said that many of the smaller airports in Montana have reported to the U.S. Federal Aviation Administration that their infrastructure is fair to good. So it wasn’t clear to those at the commercial service airports what the funding was needed for.

“We have infrastructure needs too,” Faulkner said.

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Upcoming projects at the Great Falls airport include a $5 million road project to build some new roads and reroute others, in part due to new developments on the hill, like the planned Love’s Travel Stop. The airport has been planning, for several years, to move a road that lines up with the Air National Guard entrance.

Recently, the airport upgraded its snow removal facility and while doing that, installed utilities that allowed for the construction of a 40,000 square foot hangar.

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Eagle Jet Solutions broke ground in September on what will be the largest private hangar in the state. It was the first project in a 20-acre aviation park being developed by the Airport Authority. Development on the site has been planned since the Airport Authority Board approved the first major utility expansion to the site in 2014. There’s still room for two additional large hangar projects and dozens of small private hangars, according to Faulkner.

Eagle Jet has since purchased Front Range Aviation and is planning a ramp extension project, Faulkner said.

Faulkner said the larger commercial service airports are competing with the smaller airports for small plane traffic and private hangar rentals. If the smaller airports aren’t charging for services and then the legislature taxes commercial airlines to fund the smaller airports, it’s taking money that those commercial service airports like Great Falls use to fund their own infrastructure needs.

“We’ve gone out of our way to attract commercial development to generate revenue for infrastructure needs,” Faulkner said.

The airport has worked with local military units to coordinate improvements that benefit the military as well as the airport whenever possible.

A long-term plan includes relocating the airport terminal to the other side of the runway where there’s more room to expand. Faulkner said that’s on maybe a 30-year timeline.