Aviation fuel tax holiday raising concerns

Travelers using Bradley International Airport will soon have a new airline to choose from.

But it may come at a price -- putting airport improvements in other parts of the state on hold.

This summer, there was big excitement at Bradley International Airport, when Avelo Airlines announced this coming November it will open a gate there, serving seven destinations, including two international flights.

Connecticut Airport Authority (CAA) executive director Kevin Dillon told board members meeting this month if Avelo wanted to grow in our state, it needed to expand beyond its base at Tweed Airport in New Haven.

“I think they realized if they wanted to be in the international market they’re going to have to operate at Bradley. Very unlikely that there will ever be international customs service down at New Haven,” Dillon said.

A few years ago, Avelo told state leaders it would expand here if they put a temporary hold on the aviation fuel tax, and the state agreed to do that for two years.

But now that missing revenue, anywhere between $8 million and $11 million, depending on the year, is gone, possibly delaying or canceling projects including at general aviation airports like Groton-New London Airport.

“We’ve got some big capital projects coming up, especially in Groton. Over $10 million. And we don’t have comfort and/or the funding to go further with these unless that fuel tax comes back,” CAA Deputy Executive Director Mike Shea told board members.

The CAA said it has dipped into reserve funds to support some current capital projects.

In a statement to NBC Connecticut Investigates, the CAA said:

“The Connecticut Airport Authority's (CAA) five general aviation airports rely on proceeds from the state's tax on aviation fuel to fund their operations and capital development. In 2023, legislation was passed to temporarily suspend the state's tax on aviation fuel for a period of two years. The tax is scheduled to resume at a reduced rate in July 2025. The CAA is concerned that some may seek to prolong the fuel tax suspension in next year's legislative session, which would result in the CAA's need to delay or cancel important capital projects. The aviation fuel tax is effective at ensuring that Connecticut’s aviation system users fairly fund the state's aviation system, and not general taxpayers. The CAA will continue to advocate for the resumption of this tax to ensure that the facilities at its general aviation airports, as well as municipal airports across the state, do not suffer.”

Avelo Airlines countered with its own statement:

“Avelo is proud to offer service to underserved communities in the state of Connecticut with low fares and the most reliable operation in the country. Our growth has accelerated since Connecticut eliminated the tax on jet fuel in 2023. Since then, the number of destinations we serve out of Connecticut has grown from 13 to 29 – some of which, like San Juan, were directly the result of the change. Many other states tax jet fuel at zero or close to zero. Connecticut was an outlier on this issue before changes in the legislative session enabled significant growth and lower fares by all airlines in the state, including Avelo. Thanks to visionary leadership by Governor Lamont, Senator Looney, Speaker Ritter and many other state leaders, consumers across Connecticut have clearly benefitted. A tax on jet fuel paid by passenger airlines is a direct tax on the consumer and will result in higher fares, as these costs must be passed through over time. We object to any tax at an airport that funds operations outside of that airport, an abnormal practice compared to how most other states operate. In fact, a significant portion of tax revenue collected at Tweed and Bradley airports funds other general aviation airports in Connecticut, providing minimal direct benefit for the vast majority of consumers in the State.”

Connecticut House Speaker Matt Ritter said “The goal behind the tax cut was to make Connecticut airports attractive destinations for new fights - and we have seen success at Tweed and Bradley. The legislative session begins in January and I am sure the aviation fuel tax will be part of the discussions as we review and revisit recent policy initiatives and begin crafting the next state budget.”

Governor Lamont’s budget office also weighed in.

“CAA has not discussed this proposal with the administration. The aviation fuel tax holiday began on July 1, 2023, and is scheduled to expire on June 30, 2025. The administration will review the impact of the holiday, including CAA’s concerns as well as those of aviation stakeholders, and engage with the legislature next session on the merits of extending the holiday or allowing the holiday to expire.”

The 2025 legislative session in Connecticut begins Jan. 8.